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Compass Diversified Holdings Reports Fourth Quarter and Full Year 2012 Financial Results

Compass Diversified Holdings Reports Fourth Quarter and Full Year 2012 Financial Results

Compass Diversified Holdings has announced today its consolidated operating results for the three and twelve months ended December 31, 2012.

Fourth Quarter 2012 Highlights

•             Generated Cash Flow Available for Distribution and Reinvestment ("CAD" or "Cash Flow") of $14.9 million for the fourth quarter of 2012 and $77.7 million for the full year 2012

•             Reported a net loss of $5.2 million for the fourth quarter of 2012 and net income of $4.3 million for the full year 2012 and

•             Paid a fourth quarter 2012 cash distribution of $0.36 per share in January 2013, bringing cumulative distributions paid to $8.8752 per share since CODI's IPO in May of 2006.

Alan Offenberg, CEO of Compass Group Diversified Holdings LLC, stated, "We are pleased to post strong operating results for the fourth quarter and full year 2012. CODI's Cash Flow for the three and twelve months ended December 31, 2012 increased year-over-year by 38.6% and 12.6%, respectively. The success we achieved throughout the year in leveraging the leadership position and comparative financial strength of our subsidiaries led to strong revenue and earnings growth, particularly in our branded product businesses consisting of CamelBak, ERGObaby, Fox and Liberty Safe. We also benefited from our newest platform business, Arnold Magnetic, which we acquired in March of 2012. As we maintain our focus on acquiring new businesses that are accretive to CAD, we continue to reinvest in our existing family of businesses. In 2012, capital expenditures totaled approximately $18.5 million, enhancing our ability to ensure the long-term health of our niche market leaders and drive future performance. With a strong balance sheet, we remain committed to capitalizing on both organic and acquisition-related growth opportunities while providing attractive cash distributions for our owners as we have consistently done in the past."

Operating Results

CODI reported Cash Flow (see note regarding use of Non-GAAP Financial Measures below) of $14.9 million for the quarter ended December 31, 2012, as compared to $10.7 million for the prior year comparable quarter. CODI's Cash Flow for the year ended December 31, 2012 was $77.7 million as compared to $69.0 million for the prior year period. CODI's weighted average number of shares outstanding for both the quarter and twelve months ended December 31, 2012 was approximately 48.3 million, as compared to 48.3 million and 47.3 million for the quarter and twelve months ended December 31, 2011, respectively.

The improvement in Cash Flow for the fourth quarter and full year 2012 as compared to the corresponding year-earlier periods was primarily due to the full inclusion of operating results from the Company's CamelBak subsidiary, which was acquired by CODI on August 24, 2011. In addition, Cash Flow for the fourth quarter and full year 2012 was positively impacted by the inclusion of operating results from the Company's Arnold Magnetic subsidiary, which was acquired on March 5, 2012. Partially offsetting these factors, Cash Flow for the fourth quarter and full year 2012 excluded the results from the Company's Staffmark subsidiary, which was sold on October 17, 2011. Additionally, Cash Flow for the second half of 2012 excluded the seasonally strong operating results from the Company's HALO subsidiary, which was sold on May 1, 2012.

CODI's Cash Flow is calculated after taking into account all interest expense, cash taxes paid and maintenance capital expenditures, and includes the operating results of each subsidiary for the periods during which CODI owned them. However, Cash Flow excludes the gains from sales of businesses, which have totaled approximately $198 million since 2007.

The net loss for the quarter ended December 31, 2012 was $5.2 million, as compared to net income of $58.6 million for the quarter ended December 31, 2011.  CODI recorded approximately $3.9 million in higher non-cash supplemental put expense in the 2012 fourth quarter as compared to the corresponding previous quarter. This expense is based on the periodic review of current cash flow generation of its subsidiaries, as well as anticipated market multiples for those businesses in the event they were to be sold in the current environment. During the fourth quarter ended December 31, 2011, CODI recorded an $88.6 million gain on the sale of Staffmark, partially offset by a $20.1 million non-cash impairment charge for the Company's American Furniture Manufacturing subsidiary.

For the twelve months ended December 31, 2012, CODI reported net income of $4.3 million, as compared to net income of $72.8 million for the twelve months ended December 31, 2011, which included the previously mentioned $88.6 million gain on the sale of Staffmark.

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