8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 5, 2015 (August 3, 2015)

COMPASS DIVERSIFIED HOLDINGS

(Exact name of registrant as specified in its charter)

Delaware	001-34927	57-6218917
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

COMPASS GROUP DIVERSIFIED

HOLDINGS LLC

(Exact name of registrant as specified in its charter)

Delaware	001-34926	20-3812051
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

Sixty One Wilton Road

Second Floor

Westport, CT 06880

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (203) 221-1703

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2    Financial Information

Item 2.01    Completion of Acquisition or Disposition of Assets

Compass Group Diversified Holdings LLC (the “Company”) and Compass Diversified Holdings (“Holdings” and, together with the Company, collectively “CODI,” “us” or “we”) acquires and manages small to middle market businesses in the ordinary course of its business. The following description relates to the recent divestiture of one such business.

CamelBak Products, LLC

On July 24, 2015, Vista Outdoor Inc., a Delaware corporation (“Buyer”), entered into a stock purchase agreement (the “CamelBak Purchase Agreement”) with CBAC Holdings, LLC, a Delaware limited liability company and a majority owned subsidiary of the Company (“CBAC”), and CamelBak Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of CBAC (“CamelBak Acquisition Corp.”), pursuant to which Buyer agreed to acquire all of the issued and outstanding capital stock of CamelBak Acquisition Corp., the parent of the operating entity, CamelBak Products, LLC (“CamelBak”).

On August 3, 2015, the Buyer completed the acquisition of all the issued and outstanding capital stock of CamelBak Acquisition Corp. pursuant to the CamelBak Purchase Agreement (the “Transaction”). The sale price for the Transaction was based on a total enterprise value for CamelBak of $412.5 million plus approximately $14.1 million of estimated cash and working capital adjustments. Acquisition-related costs were approximately $2.9 million. After the allocation of the adjusted sale price to CBAC’s non-controlling equityholders and the payment of all expenses, total proceeds to CODI from the Transaction were $367.8 million, including the repayment of approximately $99.3 million in inter-company loans. CODI expects to record a gain on the sale of CamelBak ranging between $150 million and $170 million.

The foregoing brief description of the CamelBak Purchase Agreement is not meant to be exhaustive and is qualified in its entirety by the full text of the CamelBak Purchase Agreement, which is incorporated herein by reference to Exhibit 99.1 to CODI’s Current Report on Form 8-K filed on July 27, 2015.

Section 8    Other Events

Item 8.01    Other Events

On August 3, 2015, CODI issued a Press Release announcing the closing of the CamelBak sale. The foregoing description of the Press Release is qualified in its entirety by reference to the complete text of the Press Release furnished as Exhibit 99.2 hereto, which is hereby incorporated by reference herein.

Section 9    Financial Statements and Exhibits

Item 9.01    Financial Statements and Exhibits

(b)     Pro Forma Financial Information.

The unaudited condensed consolidated pro forma balance sheet of Compass Diversified Holdings at June 30, 2015 and notes thereto and the unaudited condensed consolidated pro forma statements of operations for the years ended December 31, 2012, 2013 and 2014 and the six months ended June 30, 2015 and notes thereto are filed as Exhibit 99.1 hereto and incorporated by reference herein.

d)    Exhibits

The following exhibits are furnished herewith:

Exhibit	Description
99.1	Unaudited Condensed Consolidated Pro Forma Balance Sheet of Compass Diversified Holdings at June 30, 2015 and notes thereto and Unaudited Condensed Consolidated Pro Forma Statements of Operations for the years ended December 31, 2012, 2013 and 2014 and the six months ended June 30, 2015 and notes thereto
99.2	Press Release of the Company dated August 3, 2015 announcing the the sale of CamelBak Products, LLC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 5, 2015	COMPASS DIVERSIFIED HOLDINGS
	By:	/s/ Ryan J. Faulkingham
		Ryan J. Faulkingham
		Regular Trustee

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 5, 2015	COMPASS GROUP DIVERSIFIED HOLDINGS LLC
	By:	/s/ Ryan J. Faulkingham
		Ryan J. Faulkingham
		Chief Financial Officer

EX-99.1

Exhibit 99.1

Compass Diversified Holdings

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following unaudited pro forma condensed consolidated financial statements are presented to show the effect on the historical condensed consolidated financial statements of Compass Diversified Holdings (the “Company”) of the sale (the “CamelBak Disposition”) of the Company’s majority owned subsidiary, CBAC Holdings, LLC (“CamelBak”) for a total enterprise value of $412.5 million, and estimated net proceeds of approximately $268.5 million at closing after repayment of $99.3 million in inter-company loans. The CamelBak Disposition is further described in Item 2.01 of this Current Report on Form 8-K.

The following unaudited condensed consolidated pro forma statements of operations for the years ended December 31, 2012, 2013 and 2014, and for the six months ended June 30, 2015, are based on the assumption that the CamelBak Disposition was completed on January 1, 2012. The pro forma balance sheet as of June 30, 2015 is based on the assumption that the CamelBak Disposition was completed on June 30, 2015.

The “as reported” financial information for both Compass Diversified Holdings and CamelBak are derived from the audited financial statements of the Company for the years ended December 31, 2014, 2013 and 2012 as filed on Form 10-K dated March 2, 2015, March 11, 2014, and March 6, 2013, respectively, and the unaudited financial statements of the Company as of June 30, 2015 and for the six months ended June 30, 2015, as filed on Form 10-Q dated August 5, 2015.

The unaudited pro forma financial information is for informational purposes only and does not purport to present what our results would actually have been had this transaction actually occurred on the dates presented or to project our results of operations or financial position for any future period. The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable. You should read these unaudited pro forma condensed consolidated financial statements in conjunction with the accompanying notes, the CamelBak Purchase Agreement filed on July 27, 2015 and incorporated by reference to this Form 8-K, and the consolidated financial statements for the Company, including the notes thereto as previously filed.

The unaudited pro forma financial information is prepared in accordance with Article 11 of Regulation S-X. The pro forma adjustments are described in the accompanying notes and are based upon information and assumptions available at the time of the filing of this Current Report on Form 8-K.

The pro forma adjustments to the statements of operations for all periods presented do not include the following:

Ÿ The non-recurring gain on the CamelBak Disposition. The gain will be included in the Company’s results for the three and nine month periods ended September 30, 2015, and,

Ÿ Certain non-recurring transaction costs on closing of the sale estimated to be approximately $2.9 million.

Compass Diversified Holdings

Condensed Consolidated Pro Forma Balance Sheet

at June 30, 2015

(unaudited)

			CamelBak Disposition
(in thousands)	Compass Diversified Holdings as Reported		Less: CamelBak as Reported			CamelBak Pro Forma Adjustments				Pro Forma Consolidated Compass Diversified Holdings
Assets
Current assets:
Cash and cash equivalents	$	25,379	$	(1,761	)	$	178,800		(1a)	$	202,418
Accounts receivable, net	161,015		(27,946		)	—				133,069
Inventories	125,232		(30,773		)	—				94,459
Prepaid expenses and other current assets	28,149		(5,701		)	—				22,448
Total current assets	339,775		(66,181		)	178,800				452,394
Property, plant and equipment, net	111,521		(7,865		)	—				103,656
Equity method investment	242,948		—			—				242,948
Goodwill	350,958		(5,546		)	—				345,412
Intangible assets, net	467,626		(158,405		)	—				309,221
Deferred debt issuance costs, net	10,448		—			—				10,448
Other non-current assets	7,420		(2,213		)	—				5,207
Total assets	$	1,530,696	$	(240,210	)	$	178,800			$	1,469,286
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	73,439	$	(7,569	)	$	—			$	65,870
Accrued expenses	54,251		(7,517		)	—				46,734
Due to related party	6,124		—			—				6,124
Current portion, long-term debt	3,250		—			—				3,250
Other current liabilities	3,894		(843		)	846			(1b)	3,897
Total current liabilities	140,958		(15,929		)	846				125,875
Deferred income taxes	96,820		(7,397		)	—				89,423
Long-term debt, less original issue discount	503,532		—			(189,000		)	(1c)	314,532
Other non-current liabilities	15,775		(669		)	830			(1b)	15,936
Total liabilities	757,085		(23,995		)	(187,324		)		545,766
Stockholders’ equity										—
Stockholders’ equity	728,592		—			165,838			(1d)	894,430
Noncontrolling interest	45,019		(15,929		)	—				29,090
Total stockholders’ equity	773,611		(15,929		)	165,838				923,520
Total liabilities and stockholders’ equity	$	1,530,696	$	(39,924	)	$	(21,486	)		$	1,469,286

Compass Diversified Holdings

Condensed Consolidated Pro Forma Statement of Operations

for the year ended December 31, 2012

(unaudited)

				CamelBak Disposition
(in thousands, except per share data)	Compass Diversified Holdings as Reported			Less: CamelBak as Reported			CamelBak Pro Forma Adjustments				Pro Forma Consolidated Compass Diversified Holdings
Net sales	$	884,721		$	(157,633	)	$	—			$	727,088
Cost of sales	605,867			(85,424		)	—				520,443
Gross profit	278,854			(72,209		)	—				206,645
Operating expenses:
Selling, general and administrative expense	161,141			(36,829		)	—				124,312
Supplemental put expense	15,995			—			—				15,995
Management fees	17,633			—			2,113			(1e)	19,746
Amortization expense	30,268			(9,378		)	—				20,890
Impairment expense	—			—			—				—
Operating income	53,817			(26,002		)	(2,113		)		25,702
Other income (expense):
Interest expense, net	(25,001		)	22			420			(1f)	(24,559		)
Amortization of debt issuance costs	(1,811		)	—			—				(1,811		)
Other income, net	(183		)	(111		)	—				(294		)
Income (loss) before income taxes	26,822			(26,091		)	(1,693		)		(962		)
Provision for income taxes	21,069			(5,138		)	—				15,931
Net income (loss)	5,753			(20,953		)	(1,693		)		(16,893		)
Less: Net income attributable to noncontrolling interest	8,508			(692		)	—				7,816
Net loss attributable to Holdings	$	(2,755	)	$	(20,261	)	$	(1,693	)		$	(24,709	)
Basic and fully diluted loss per share attributable to Holdings	$	(0.06	)								$	(0.51	)

Compass Diversified Holdings

Condensed Consolidated Pro Forma Statement of Operations

for the year ended December 31, 2013

(unaudited)

				CamelBak Disposition
(in thousands, except per share data)	Compass Diversified Holdings as Reported			Less: CamelBak as Reported			CamelBak Pro Forma Adjustments				Pro Forma Consolidated Compass Diversified Holdings
Net sales	$	985,539		$	(139,943	)	$	—			$	845,596
Cost of sales	679,708			(78,588		)	—				601,120
Gross profit	305,831			(61,355		)	—				244,476
Operating expenses:
Selling, general and administrative expense	167,738			(33,958		)	—				133,780
Supplemental put expense (reversal)	(45,995		)	—			—				(45,995		)
Management fees	18,632			—			2,120			(1e)	20,752
Amortization expense	29,632			(8,978		)	—				20,654
Impairment expense	12,918			—			—				12,918
Operating income	122,906			(18,419		)	(2,120		)		102,367
Other income (expense):
Interest expense, net	(19,376		)	(4		)	510			(1f)	(18,870		)
Amortization of debt issuance costs	(2,123		)	—			—				(2,123		)
Loss on debt extinguishment	(1,785		)	—			—				(1,785		)
Other income, net	(77		)	(30		)	—				(107		)
Income before income taxes	99,545			(18,453		)	(1,610		)		79,482
Provision for income taxes	20,729			(2,198		)	—				18,531
Net income	78,816			(16,255		)	(1,610		)		60,951
Less: Net income attributable to noncontrolling interest	10,752			(406		)	—				10,346
Net income (loss) attributable to Holdings	$	68,064		$	(15,849	)	$	(1,610	)		$	50,605
Earnings per share - Basic and Fully Diluted
Net income attributable to Holdings	$	68,064									$	50,605
Less: Profit Allocation paid to Holders	15,990										15,990
Less: Effect of contribution based profit - Holding Event	1,480										1,480
Net income from Holdings attributable to Trust shares	50,594										33,135
Basic and diluted weighted average shares outstanding	48,300										48,300
Basic and fully diluted income per share attributable to Holdings	$	1.05									$	0.69

Compass Diversified Holdings

Condensed Consolidated Pro Forma Statement of Operations

for the year ended December 31, 2014

(unaudited)

				CamelBak Disposition
(in thousands, except per share data)	Compass Diversified Holdings as Reported			Less: CamelBak as Reported			CamelBak Pro Forma Adjustments				Pro Forma Consolidated Compass Diversified Holdings
Net sales	$	982,300		$	(148,675	)	$	—			$	833,625
Cost of sales	688,631			(86,003		)	—				602,628
Gross profit	293,669			(62,672		)	—				230,997
Operating expenses:
Selling, general and administrative expense	181,683			(35,547		)					146,136
Management fees	22,722			—			825			(1e)	23,547
Amortization expense	33,606			(8,712		)	—				24,894
Operating income	55,658			(18,413		)	(825		)		36,420
Other income (expense):
Interest expense, net	(27,068		)	7			2,334			(1f)	(24,727		)
Amortization of debt issuance costs	(2,243		)	—			—				(2,243		)
Gain (loss) on equity method investment	11,029			—			—				11,029
Gain on deconsolidation of subsidiary	264,325			—			—				264,325
Loss on debt extinguishment	(2,143		)	—			—				(2,143		)
Other income (expense), net	(139		)	(360		)	—				(499		)
Income before income taxes	299,419			(18,766		)	1,509				282,162
Provision for income taxes	8,264			(3,144		)	—				5,120
Net income	291,155			(15,622		)	1,509				277,042
Less: Net income attributable to noncontrolling interest	12,320			(467		)	—				11,853
Net income attributable to Holdings	$	278,835		$	(15,155	)	$	1,509			$	265,189
Earnings per share - Basic and Fully Diluted
Net income attributable to Holdings	$	278,835									$	265,189
Less: Profit Allocation paid to Holders	11,870										11,870
Less: Effect of contribution based profit - Holding Event	2,805										2,805
Net income from Holdings attributable to Trust shares	264,160										250,514
Basic and diluted weighted average shares outstanding	49,089										49,089
Basic and fully diluted income per share attributable to Holdings	$	5.38									$	5.10

Compass Diversified Holdings

Condensed Consolidated Pro Forma Statement of Operations

for the six months ended June 30, 2015

(unaudited)

				CamelBak Disposition
(in thousands, except per share data)	Compass Diversified Holdings as Reported			Less: CamelBak as Reported			CamelBak Pro Forma Adjustments				Pro Forma Consolidated Compass Diversified Holdings
Net sales	$	541,998		$	(79,496	)	$	—			$	462,502
Cost of sales	384,121			(45,364		)	—				338,757
Gross profit	157,877			(34,132		)	—				123,745
Operating expenses:
Selling, general and administrative expense	89,568			(17,892		)	—				71,676
Management fees	13,649			—			(532		)	(1e)	13,117
Amortization expense	19,428			(4,356		)	—				15,072
Impairment expense	9,165			—			—				9,165
Operating income	26,067			(11,884		)	532				14,715
Other income (expense):
Interest expense, net	(12,843		)	1			1,009			(1f)	(11,833		)
Amortization of debt issuance costs	(1,090		)	—			—				(1,090		)
Gain (loss) on equity method investment	(2,266		)	—			—				(2,266		)
Other income, net	633			(659		)	—				(26		)
Income before income taxes	10,501			(12,542		)	1,541				(500		)
Provision for income taxes	9,213			(3,656		)	—				5,557
Net income	1,288			(8,886		)	1,541				(6,057		)
Less: Net income attributable to noncontrolling interest	1,733			(539		)	—				1,194
Net income (loss) attributable to Holdings	$	(445	)	$	(8,347	)	$	1,541			$	(7,251	)
Earnings per share - Basic and Fully Diluted
Net loss attributable to Holdings	$	(445	)								$	(7,251	)
Less: Profit Allocation paid to Holders	—
Less: Effect of contribution based profit - Holding Event	2,779						(335		)	(1g)	2,444
Net loss from Holdings attributable to Trust shares	(3,224		)								(9,695		)
Basic and diluted weighted average shares outstanding	54,300										54,300
Basic and fully diluted loss per share attributable to Holdings	$	(0.06	)								$	(0.18	)

Notes to Pro Forma Condensed Consolidated Financial Statements

(Unaudited)

Pro forma information is intended to reflect the impact of the CamelBak Disposition on the Company's historical financial position and results of operations through adjustments that are directly attributable to the transaction, that are factually supportable and, with respect to the pro forma statements of operations, that are expected to have a continuing impact. In order to accomplish this, the Company eliminated the historical results of CamelBak from the Company's historical financial position and results of operations. CamelBak's historical operations, for the current and prior period, including the gain on sale, will be presented as discontinued operations for financial reporting purposes beginning with the Company's Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2015.

The information in Note 1 provides a description of the pro forma adjustments from each line item in the pro forma condensed financial statements together with information explaining how the amounts were derived or calculated.

Note 1 - Pro Forma Adjustments

Balance Sheet

The following adjustments correspond to those included in the unaudited condensed consolidated pro forma balance sheet as of June 30, 2015:

(1a) This adjustment reflects the cash proceeds from the CamelBak Disposition, net of the assumed debt payoff as discussed in footnote (1c) below.

(1b) This adjustment represents current and long-term payables to noncontrolling interest holders. The current amount is due approximately 60 days after the close of the CamelBak Disposition, and the long-term amount is due approximately one year after the close of the CamleBak Disposition.

(1c) This adjustment represents the payoff of all debt outstanding under our revolving credit facility. The Company did not reflect the payoff of term debt.

(1d) This adjustment reflects the estimated gain on the CamelBak Disposition as if the sale had occurred on June 30, 2015. This gain may not be representative of what will actually be recorded during the three and nine months ended September 30, 2015.

Statement of Operations

(1e) This adjustment reflects the effect of the CamelBak disposition and repayment of the revolving credit facility on the Management fee paid to our Manager during each of the periods presented.

(1f) This adjustment reflects the payoff of the average revolver debt outstanding during the respective periods using proceeds from the CamelBak Disposition. The effect of paying off all revolver debt was to reduce interest expense on the revolver debt for the periods presented and increase commitment (unused) fees associated with the revolver debt for the periods presented.

Earnings per Share

(1g) The Company uses the two-class method to compute basic and fully diluted earnings per share, effective July 1, 2013. The two-class method requires companies to allocate participating securities that have rights to earnings that otherwise would have been available only to common shareholders as a separate class of securities in calculating earnings per share. During the six months ending June 30, 2015, the effect of CamelBak Contribution Based Profit from a Holding Event is reflected as an adjustment to the calculation of earnings per share. CamelBak Contribution Based Profit from a Holding Event did not effect any of the other periods presented.

EX-99.2

Exhibit 99.2

Compass Diversified Holdings Ryan J. Faulkingham Chief Financial Officer 203.221.1703 ryan@compassequity.com Investor Relations and Media Contacts: The IGB Group Leon Berman / Matt Steinberg 212.477.8438 / 212.477.8261 lberman@igbir.com / msteinberg@igbir.com

Compass Diversified Holdings Closes Sale of

CamelBak Products, LLC

Westport, Conn., August 3, 2015 - Compass Diversified Holdings (NYSE: CODI) (“CODI” or the “Company”), an owner of leading middle market businesses, announced today that it has completed the sale of CamelBak Products, LLC (“CamelBak”) to Vista Outdoor Inc., pursuant to an agreement it entered into on July 27, 2015.

The sale price for CamelBak was based on a total enterprise value of $412.5 million plus an additional $14.1 million of estimated cash and working capital adjustments subject to customary post-closing true-ups. After the allocation of the sales price to non-controlling equityholders and the payment of transaction expenses, CODI received approximately $367.8 million of total proceeds from the sale at closing. This amount is in respect of the Company’s outstanding loans to CamelBak (including accrued interest) and its equity interests in CamelBak, which was acquired by CODI on August 24, 2011. The proceeds will be used to repay all outstanding debt under the Company’s revolving credit facility, with the balance increasing cash on the Company’s balance sheet. The Company anticipates recording a gain on the sale of CamelBak ranging between $150 million and $170 million during the quarter ended September 30, 2015.

Additional information on the transaction will be available on the Company’s current report on Form 8-K that will be filed with the Securities and Exchange Commission.

About Compass Diversified Holdings

CODI owns and manages a diverse family of established North American middle market businesses. Each of its current subsidiaries is a leader in its niche market.

CODI maintains controlling ownership interests in each of its subsidiaries in order to maximize its ability to impact long term cash flow generation and value. The Company provides both debt and equity capital for its subsidiaries, contributing to their financial and operating flexibility. CODI utilizes the cash flows generated by its subsidiaries to invest in the long-term growth of the Company and to make cash distributions to its shareholders.

Our nine majority-owned subsidiaries are engaged in the following lines of business:

• The manufacture of quick-turn, small-run and production rigid printed circuit boards (Advanced Circuits);

• The design and manufacture of promotionally priced upholstered furniture (American Furniture Manufacturing);

• The design and manufacture of medical therapeutic support surfaces and other wound treatment devices (Anodyne Medical Device, also doing business and known as Tridien Medical);

• The manufacture of engineered magnetic solutions for a wide range of specialty applications and end-markets (Arnold Magnetic Technologies);

• Environmental services for a variety of contaminated materials including soils, dredged material, hazardous waste and drill cuttings (Clean Earth);

• The design and marketing of wearable baby carriers, strollers and related products (Ergobaby);

• The design and manufacture of premium home and gun safes (Liberty Safe);

• The manufacture and marketing of branded, hemp-based food products (Manitoba Harvest); and

• The manufacture and marketing of portable food warming fuel and creative table lighting solutions for the foodservice industry (SternoCandleLamp).

In addition, we own approximately 41% of the common stock of Fox Factory Holding Corp. ("FOX", Nasdaq: FOXF), a former subsidiary business that completed its initial public offering in August 2013. FOX designs and manufactures high-performance suspension products primarily for mountain bikes, side-by-side vehicles, on-road and off-road vehicles and trucks, all-terrain vehicles, snowmobiles, specialty vehicles and applications, and motorcycles.

This press release may contain certain forward-looking statements, including statements with regard to the future performance of CODI. Words such as "believes," "expects," "projects," and "future" or similar expressions, are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements, and some of these factors are enumerated in the risk factor discussion in the Form 10-K filed by CODI with the SEC for the year ended December 31, 2014 and other filings with the SEC. Except as required by law, CODI undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.