SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

For the quarterly period ended ~~September 30, 2015~~March 31, 2016

For the transition period from to

(Exact name of registrant as specified in its charter)

(Exact name of registrant as specified in its charter)

Sixty One Wilton Road

As of ~~November 1, 2015,~~April 29, 2016, there were 54,300,000 shares of Compass Diversified Holdings outstanding.

~~Table of Contents~~

COMPASS DIVERSIFIED HOLDINGS

QUARTERLY REPORT ON FORM 10-Q

For the period ended ~~September 30, 2015~~March 31, 2016

TABLE OF CONTENTS



		Page Number
	Forward-looking Statements	4
Part I	Financial Information
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of ~~September 30, 2015~~March 31, 2016 (unaudited) and December 31, ~~2014~~2015	5
	Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~ (unaudited)	6
	Condensed Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~ (unaudited)	7
	Condensed Consolidated Statement of Stockholders’ Equity for the ~~nine~~three months ended ~~September 30, 2015~~March 31, 2016 (unaudited)	8
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~ (unaudited)	9
	Notes to Condensed Consolidated Financial Statements (unaudited)	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3733
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6958
Item 4.	Controls and Procedures	6958

Part II	Other Information	7059
Item 1.	Legal Proceedings	7059
Item 1A.	Risk Factors	7059
Item 6.	Exhibits	7160
Signatures		7261

~~Table of Contents~~

NOTE TO READER

In reading this Quarterly Report on Form 10-Q, references to:

the "Trust" and "Holdings" refer to Compass Diversified Holdings;

"businesses," "operating segments," "subsidiaries" and "reporting units" refer to, collectively, the businesses controlled by the Company;

the "Company" refer to Compass Group Diversified Holdings LLC;

the "Manager" refer to Compass Group Management LLC ("CGM");

the "initial businesses" refer to, collectively, Staffmark Holdings, Inc. ("Staffmark"), Crosman Acquisition Corporation, Compass AC Holdings, Inc. ("ACI" or "Advanced Circuits") and Silvue Technologies Group, Inc.;

the "2014 acquisitions" refer to, collectively, the acquisitions of Clean Earth Holdings, Inc. and ~~SternoCandleLamp;~~Sterno Products;

the "2015 acquisition" refer to the acquisition of Fresh Hemp Foods Ltd. ("Manitoba Harvest")

the "2015 dispositions" refer to, collectively, the sales of CamelBak Acquisition Corp. ("CamelBak") and AFM Holding Corp. ("American Furniture" or "AFM")

the "Trust Agreement" refer to the amended and restated Trust Agreement of the Trust dated as of November 1, 2010;

the "2011 Credit Facility" refer to a credit agreement (as amended) with a group of lenders led by Toronto Dominion (Texas) LLC, as agent, which provided for the 2011 Revolving Credit Facility and the 2011 Term Loan ~~Facility;~~

~~the "2011 Revolving Credit Facility" refer to the $320 million Revolving Credit Facility provided by the 2011 Credit Facility;~~

~~the "2011 Term Loan Facility" refer to the Term Loan Facility provided by the 2011 Credit~~ Facility;

the "2014 Credit Facility" refer to the credit agreement, as amended from time to time, entered into on June 6, 2014 with a group of lenders led by Bank of America N.A. as administrative agent, which provides for the 2014 Revolving Credit Facility and the 2014 Term Loan Facility;

the "2014 Revolving Credit Facility" refer to the $400 million Revolving Credit Facility provided by the 2014 Credit Facility that matures in June 2019;

the "2014 Term Loan" refer to the $325 million Term Loan Facility, provided by the Credit Facility that matures in June 2021;

the "LLC Agreement" refer to the fourth amended and restated operating agreement of the Company dated as of January 1, 2012; and

"we," "us" and "our" refer to the Trust, the Company and the businesses together.

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, contains both historical and forward-looking statements. We may, in some cases, use words such as "project," "predict," "believe," "anticipate," "plan," "expect," "estimate," "intend," "should," "would," "could," "potentially," or "may," or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q are subject to a number of risks and uncertainties, some of which are beyond our control, including, among other things:

our ability to successfully operate our businesses on a combined basis, and to effectively integrate and improve future acquisitions;

our ability to remove CGM and CGM’s right to resign;

our 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 reinvestment and our ability to make distributions in the future to our shareholders;

our ability to pay the management fee and profit allocation if and when due;

our ability to make and finance future acquisitions;

our ability to implement our acquisition and management strategies;

the regulatory environment in which our businesses operate;

trends in the industries in which our businesses operate;

changes in general economic or business conditions or economic or demographic trends in the United States and other countries in which we have a presence, including changes in interest rates and inflation;

environmental risks affecting the business or operations of our businesses;

our and CGM’s ability to retain or replace qualified employees of our businesses and CGM;

costs and effects of legal and administrative proceedings, settlements, investigations and claims; and

extraordinary or force majeure events affecting the business or operations of our businesses.

Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which we are not currently aware or which we currently deem immaterial could also cause our actual results to differ.

In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements. The forward-looking events discussed in this Quarterly Report on Form 10-Q may not occur. These forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances, whether as a result of new information, future events or otherwise, except as required by law.

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PART I

FINANCIAL INFORMATION

ITEM 1. — FINANCIAL STATEMENTS

Compass Diversified Holdings

Condensed Consolidated Balance Sheets


(in thousands)	September 30, 2015			December 31, 2014			March 31, 2016			December 31, 2015
	(unaudited)						(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	88,725		$	21,946		$	72,567		$	85,869
Accounts receivable, net	124,240			118,852			127,432			114,320
Inventories	74,296			58,308			78,994			68,371
Prepaid expenses and other current assets	24,363			23,357			20,610			22,803
Current assets held for sale	46,097			98,336
Total current assets	357,721			320,799			299,603			291,363
Property, plant and equipment, net	109,640			106,981			118,085			118,050
Equity method investment (refer to Note F)	254,733			245,214			191,439			249,747
Goodwill	376,064			353,634			413,735			398,488
Intangible assets, net	361,660			324,091			358,373			353,404
Deferred debt issuance costs, less accumulated amortization of $2,923 at September 30, 2015 and $1,233 at December 31, 2014	9,887			11,197
Other non-current assets	6,431			5,687			11,004			9,990
Non-current assets held for sale	—			179,827
Total assets	$	1,476,136		$	1,547,430		$	1,392,239		$	1,421,042
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	50,602		$	49,201		$	52,651		$	50,403
Accrued expenses	45,902			52,028			43,301			47,959
Due to related party	6,374			6,068			250			5,863
Current portion, long-term debt	3,250			3,250			3,250			3,250
Other current liabilities	6,268			6,311			9,974			9,004
Current liabilities held for sale	22,396			24,373
Total current liabilities	134,792			141,231			109,426			116,479
Deferred income taxes	101,067			91,616			105,608			103,745
Long-term debt, less original issue discount	313,888			485,547
Long-term debt							308,208			308,639
Other non-current liabilities	21,354			14,039			27,441			18,960
Non-current liabilities held for sale	—			6,663
Total liabilities	571,101			739,096			550,683			547,823
Stockholders’ equity
Trust shares, no par value, 500,000 authorized; 54,300 shares issued and outstanding at September 30, 2015 and December 31, 2014	825,321			825,321
Trust shares, no par value, 500,000 authorized; 54,300 shares issued and outstanding at March 31, 2016 and December 31, 2015							823,736			825,321
Accumulated other comprehensive loss	(6,973		)	(2,542		)	(5,107		)	(9,804		)
Accumulated earnings (deficit)	50,063			(55,348		)
Accumulated (deficit) earnings							(25,004		)	10,567
Total stockholders’ equity attributable to Holdings	868,411			767,431			793,625			826,084
Noncontrolling interest	36,624			25,711			47,931			47,135
Noncontrolling interest of discontinued operations	—			15,192
Total stockholders’ equity	905,035			808,334			841,556			873,219
Total liabilities and stockholders’ equity	$	1,476,136		$	1,547,430		$	1,392,239		$	1,421,042

See notes to condensed consolidated financial statements.

~~Table of Contents~~

Compass Diversified Holdings

Condensed Consolidated Statements of Operations

(unaudited)


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
	2015			2014			2015			2014			2016			2015
(in thousands, except per share data)
Net sales	$	164,056		$	120,975		$	464,375		$	488,967		$	169,761		$	144,296
Service revenues	44,092			20,318			122,923			20,318			38,286			35,129
Total net revenues	208,148			141,293			587,298			509,285			208,047			179,425
Cost of sales	110,498			81,133			314,102			330,928			112,235			99,032
Cost of service revenues	28,671			14,120			88,430			14,120			29,551			27,823
Gross profit	68,979			46,040			184,766			164,237			66,261			52,570
Operating expenses:
Selling, general and administrative expense	38,975			29,227			105,946			101,235			44,473			33,026
Management fees	6,461			5,751			19,860			15,259			6,458			6,733
Amortization expense	7,731			4,577			22,777			15,222			7,826			7,822
Impairment expense	—			—			9,165			—			—			8,907
Operating income	15,812			6,485			27,018			32,521
Operating income (loss)													7,504			(3,918		)
Other income (expense):
Interest expense, net	(11,205		)	(7,059		)	(24,047		)	(16,436		)	(11,462		)	(9,717		)
Amortization of debt issuance costs	(561		)	(545		)	(1,651		)	(1,698		)	(570		)	(545		)
Loss on debt extinguishment	—			—			—			(2,143		)
Gain on equity method investment	11,784			—			9,518			—
Gain on deconsolidation of subsidiary	—			264,325			—			264,325
Loss on equity method investment													(10,623		)	(13,447		)
Other income, net	(950		)	(425		)	(983		)	(177		)	3,420			10
Income from continuing operations before income taxes	14,880			262,781			9,855			276,392
Loss from continuing operations before income taxes													(11,731		)	(27,617		)
Provision for income taxes	3,756			3,676			9,274			8,485			3,296			2,393
Income from continuing operations	11,124			259,105			581			267,907
Loss from continuing operations													(15,027		)	(30,010		)
Income from discontinued operations, net of income tax	3,819			3,425			15,650			14,315			—			4,723
Gain on sale of discontinued operations, net of income tax	165,337			—			165,337			—
Loss on classification as held for sale	(14,262		)	—			(14,262		)	—
Net income	166,018			262,530			167,306			282,222
Less: Net income attributable to noncontrolling interest	1,428			1,388			2,622			10,364
Net loss													(15,027		)	(25,287		)
Less: Net income (loss) attributable to noncontrolling interest													996			(526		)
Less: Income from discontinued operations attributable to noncontrolling interest	90			44			629			382			—			141
Net income attributable to Holdings	$	164,500		$	261,098		$	164,055		$	271,476
Net loss attributable to Holdings													$	(16,023	)	$	(24,902	)
Amounts attributable to Holdings
Income (loss) from continuing operations	9,696			257,717			(2,041		)	257,543
Loss from continuing operations													(16,023		)	(29,484		)
Income from discontinued operations, net of income tax	3,729			3,381			15,021			13,933			—			4,582
Gain on sale of discontinued operations, net of income tax	151,075			—			151,075			—
Net income attributable to Holdings	$	164,500		$	261,098		$	164,055		$	271,476
Net loss attributable to Holdings													$	(16,023	)	$	(24,902	)
Basic and fully diluted income (loss) per share attributable to Holdings (refer to Note L)
Continuing operations	$	0.16		$	5.08		$	(0.09	)	$	5.05		$	(0.31	)	$	(0.55	)
Discontinued operations	2.85			0.07			3.06			0.29			—			0.08
	$	3.01		$	5.15		$	2.97		$	5.34		$	(0.31	)	$	(0.47	)
Weighted average number of shares of trust stock outstanding – basic and fully diluted	54,300			48,300			54,300			48,300			54,300			54,300
Cash distributions declared per share (refer to Note L)	$	0.36		$	0.36		$	1.08		$	1.08		$	0.36		$	0.36

See notes to condensed consolidated financial statements.

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Compass Diversified Holdings

Condensed Consolidated Statements of Comprehensive Income

(unaudited)


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
	2015			2014			2015			2014			2016			2015
(in thousands)
Net income	$	166,018		$	262,530		$	167,306		$	282,222
Net loss													$	(15,027	)	$	(25,287	)
Other comprehensive income (loss)
Foreign currency translation adjustments	(5,145		)	(921		)	(4,772		)	(783		)	5,220			(90		)
Pension benefit liability, net	12			(21		)	341			(64		)	(523		)	(60		)
Other comprehensive income (loss)													4,697			(150		)
Total comprehensive income, net of tax	$	160,885		$	261,588		$	162,875		$	281,375		(10,330		)	(25,437		)
Less: Net income (loss) attributable to noncontrolling interests													996			(385		)
Less: Other comprehensive income (loss) attributable to noncontrolling interests													1,226			(5		)
Total comprehensive loss attributable to Holdings, net of tax													$	(12,552	)	$	(25,047	)

See notes to condensed consolidated financial statements.

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Compass Diversified Holdings

Condensed Consolidated Statement of Stockholders’ Equity

(unaudited)


	Trust Shares
(in thousands)	Number of Shares	Amount		Accumulated Earnings (Deficit)			Accumulated Other Comprehensive Loss			Stockholders' Equity Attributable to Holdings			Non- Controlling Interest		Non-Controlling Interest Attrib. to Disc. Ops.			Total Stockholders’ Equity			Number of Shares	Amount			Accumulated Earnings (Deficit)			Accumulated Other Comprehensive Loss			Stockholders' Equity Attributable to Holdings			Non- Controlling Interest			Total Stockholders’ Equity
Balance — January 1, 2015	54,300	$	825,321	$	(55,348	)	$	(2,542	)	$	767,431		$	25,711	$	15,192		$	808,334
Balance — January 1, 2016																					54,300	$	825,321		$	10,567		$	(9,804	)	$	826,084		$	47,135		$	873,219
Net income (loss)	—	—		164,055			—			164,055			2,622		629			167,306			—	—			(16,023		)	—			(16,023		)	996			(15,027		)
Total comprehensive income, net	—	—		—			(4,431		)	(4,431		)	—		—			(4,431		)	—	—			—			4,697			4,697			—			4,697
Option activity attributable to noncontrolling shareholders	—	—		—			—			—			2,063		564			2,627			—	—			—			—			—			1,189			1,189
Effect of subsidiary stock options exercise	—	—		—			—			—			500		—			500			—	(578		)	—			—			(578		)	4,333			3,755
Acquisition of Manitoba Harvest	—	—		—			—			—			5,728		—			5,728
Disposition of CamelBak	—	—		—			—			—			—		(16,101		)	(16,101		)
Effect of classification of American Furniture as held for sale	—	—		—			—			—			—		(284		)	(284		)
Purchase of noncontrolling interest - Liberty (refer to Note N)																					—	(1,007		)	—			—			(1,007		)	(469		)	(1,476		)
Distributions to noncontrolling shareholders - Liberty (refer to Note N)																					—	—			—			—			—			(5,253		)	(5,253		)
Distributions paid	—	—		(58,644		)	—			(58,644		)	—		—			(58,644		)	—	—			(19,548		)	—			(19,548		)	—			(19,548		)
Balance — September 30, 2015	54,300	$	825,321	$	50,063		$	(6,973	)	$	868,411		$	36,624	$	—		$	905,035
Balance — March 31, 2016																					54,300	$	823,736		$	(25,004	)	$	(5,107	)	$	793,625		$	47,931		$	841,556

See notes to condensed consolidated financial statements.

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Compass Diversified Holdings Condensed Consolidated Statements of Cash Flows (unaudited)	Compass Diversified Holdings Condensed Consolidated Statements of Cash Flows (unaudited)						Compass Diversified Holdings Condensed Consolidated Statements of Cash Flows (unaudited)

	Nine months ended September 30,						Three months ended March 31,
(in thousands)	2015			2014			2016			2015
Cash flows from operating activities:
Net income	$	167,306		$	282,222
Net loss							$	(15,027	)	$	(25,287	)
Income from discontinued operations	15,650			14,315			—			4,723
Gain on sale of discontinued operations, net	151,075			—
Net income from continuing operations	581			267,907
Adjustments to reconcile net income to net cash provided by operating activities:
Net loss from continuing operations							(15,027		)	(30,010		)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation expense	16,310			10,308			5,859			5,549
Amortization expense	25,888			15,222			9,049			7,822
Impairment expense	9,165			—			—			8,907
Amortization of debt issuance costs and original issue discount	2,154			2,412			738			713
Loss on debt extinguishment	—			2,143
Unrealized loss on interest rate swap	8,044			2,809			7,228			4,314
Noncontrolling stockholder stock based compensation	2,063			2,883			1,189			795
Loss on equity method investment	(9,518		)	—			10,623			13,447
Net gain on deconsolidation of subsidiary	—			(264,325		)
Excess tax benefit from subsidiary stock options exercised	—			(1,662		)
Deferred taxes	(5,220		)	(3,460		)	214			(1,095		)
Other	287			270			(61		)	390
Changes in operating assets and liabilities, net of acquisition:
Increase in accounts receivable	(276		)	(11,348		)
(Increase) decrease in inventories	(10,772		)	10,289
Decrease (increase)in prepaid expenses and other current assets	1,345			(5,917		)
Decrease in accounts receivable							6,307			10,159
Increase in inventories							(1,170		)	(1,769		)
Decrease (increase) in prepaid expenses and other current assets							(610		)	418
Decrease in accounts payable and accrued expenses	(7,902		)	(7,382		)	(18,314		)	(21,285		)
Net cash provided by operating activities - continuing operations	32,149			20,149
Net cash provided by (used in) operating activities - continuing operations							6,025			(1,645		)
Net cash provided by operating activities - discontinued operations	14,322			26,011			—			4,932
Cash provided by operating activities	46,471			46,160			6,025			3,287
Cash flows from investing activities:
Acquisitions, net of cash acquired	(98,816		)	(292,223		)	(35,553		)	—
Purchases of property and equipment	(12,079		)	(6,980		)	(4,406		)	(3,657		)
Net proceeds from sale of equity investment							47,685			—
Payment of interest rate swap	(1,502		)	(1,502		)	(500		)	(495		)
Proceeds from sale of business	244,269			517
Proceeds from FOX stock offering	—			65,528
Purchase of noncontrolling interest (refer to Note N)							(1,476		)	—
Other investing activities	256			(58		)	97			125
Net cash provided by (used in) investing activities - continuing operations	132,128			(234,718		)	5,847			(4,027		)
Net cash provided by (used in) investing activities - discontinued operations	114,466			(3,181		)
Net cash used in investing activities - discontinued operations							—			(1,133		)
Cash provided by (used in) investing activities	246,594			(237,899		)	5,847			(5,160		)

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Compass Diversified Holdings Condensed Consolidated Statements of Cash Flows (unaudited)	Compass Diversified Holdings Condensed Consolidated Statements of Cash Flows (unaudited)						Compass Diversified Holdings Condensed Consolidated Statements of Cash Flows (unaudited)

	Nine months ended September 30,						Three months ended March 31,
(in thousands)	2015			2014			2016			2015
Cash flows from financing activities:
Borrowings under credit facility	197,000			476,000			—			35,500
Repayments under credit facility	(369,163		)	(307,813		)	(813		)	(17,038		)
Distributions paid	(58,644		)	(52,164		)	(19,548		)	(19,548		)
Net proceeds provided by noncontrolling shareholders	6,228			4,025
Distributions paid to noncontrolling shareholders	—			(11,870		)
Debt issuance costs	(295		)	(7,370		)
Excess tax benefit from subsidiary stock options exercised	—			1,662
Net proceeds provided by noncontrolling shareholders (refer to Note N)							3,755			—
Distributions paid to noncontrolling shareholders (refer to Note N)							(5,253		)	—
Other	(576		)	(139		)	(282		)	(227		)
Net cash (used in) provided by financing activities	(225,450		)	102,331
Net cash used in financing activities							(22,141		)	(1,313		)
Foreign currency impact on cash	(2,593		)	(552		)	(3,033		)	(67		)
Net increase (decrease) in cash and cash equivalents	65,022			(89,960		)
Net decrease in cash and cash equivalents							(13,302		)	(3,253		)
Cash and cash equivalents — beginning of period ⁽¹⁾	23,703			113,229			85,869			23,703
Cash and cash equivalents — end of period ⁽²⁾	$	88,725		$	23,269		$	72,567		$	20,450

⁽¹⁾Includes cash from discontinued operations of $1.8 million at January 1, ~~2015 and $2.6 million at January 1, 2014.~~2015.

⁽²⁾Includes cash from discontinued operations of ~~$2.3~~$3.1 million at ~~September 30, 2014.~~March 31, 2015.

See notes to condensed consolidated financial statements.

~~Table of Contents~~

Compass Diversified Holdings

Notes to Condensed Consolidated Financial Statements (unaudited)

~~September 30, 2015~~March 31, 2016

Note A — Organization and Business Operations

Compass Diversified Holdings, a Delaware statutory trust (the "Trust" or "Holdings"), was incorporated in Delaware on November 18, 2005. Compass Group Diversified Holdings, LLC, a Delaware limited liability company (the "Company" or "CODI"), was also formed on November 18, 2005 with equity interests which were subsequently reclassified as the "Allocation Interests". The Trust and the Company were formed to acquire and manage a group of small and middle-market businesses headquartered in North America. In accordance with the amended and restated Trust Agreement, dated as of April 25, 2006 (the "Trust Agreement"), the Trust is sole owner of 100% of the Trust Interests (as defined in the Company’s amended and restated operating agreement, dated as of April 25, 2006 (as amended and restated, the "LLC Agreement")) of the Company and, pursuant to the LLC Agreement, the Company has, outstanding, the identical number of Trust Interests as the number of outstanding shares of the Trust. The Company is the operating entity with a board of directors and other corporate governance responsibilities, similar to that of a Delaware corporation.

The Company is a controlling owner of eight businesses, or reportable operating segments, at ~~September 30, 2015.~~March 31, 2016. The segments are as follows: The Ergo Baby Carrier, Inc. ("Ergobaby"), Liberty Safe and Security Products, Inc. ("Liberty Safe" or "Liberty"), Fresh Hemp Foods Ltd. ("Manitoba Harvest"), Compass AC Holdings, Inc. ("ACI" or "Advanced Circuits"), AMT Acquisition Corporation ("Arnold" or "Arnold Magnetics"), Clean Earth Holdings, Inc. ("Clean Earth"), Candle Lamp Company, LLC ("~~SternoCandleLamp"~~Sterno Products") and Tridien Medical, Inc. ("Tridien"). Refer to Note E for further discussion of the operating segments. The Company also owns a non-controlling interest of approximately ~~41%~~33.1% in Fox Factory Holding Corp. ("FOX") which is accounted for as an equity method investment. Compass Group Management LLC, a Delaware limited liability company ("CGM" or the "Manager"), manages the day to day operations of the Company and oversees the management and operations of our businesses pursuant to a management services agreement ("MSA").

Note B — Presentation and Principles of Consolidation

The condensed consolidated financial statements for the three ~~and nine~~ month periods ended ~~September 30,~~March 31, 2016 and March 31, 2015, ~~and September 30, 2014,~~ are unaudited, and in the opinion of management, contain all adjustments necessary for a fair presentation of the condensed consolidated financial statements. Such adjustments consist solely of normal recurring items. Interim results are not necessarily indicative of results for a full year or any subsequent interim period. The condensed consolidated financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and presented as permitted by Form 10-Q and do not contain certain information included in the annual consolidated financial statements and accompanying notes of the Company. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2014.~~2015.

Seasonality

Earnings of certain of the Company’s operating segments are seasonal in nature. Earnings from Liberty are typically lowest in the second quarter due to lower demand for safes at the onset of summer. Earnings from Clean Earth are typically lower in the winter months due to reduced levels of construction and development activity in the Northeastern United States. Sterno Products typically has higher sales in the second and fourth quarter of each year, reflecting the outdoor summer season and the holiday season.

Consolidation

The condensed consolidated financial statements include the accounts of Holdings and all majority owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The results of operations of FOX are included in the Company's historical condensed consolidated results of operations through July 10, 2014, the date on which our investment in FOX fell below 50% and the FOX entity was deconsolidated.

Discontinued Operations

The Company completed the sale of its majority owned subsidiary, CamelBak Products, LLC ("CamelBak") during the third quarter of 2015. In October 2015, the Company sold its majority owned subsidiary, American Furniture Manufacturing, Inc. ("AFM" or "American Furniture") which met the criteria to be classified as a discontinued operation as of September 30, 2015. As a result, the Company reported the results of operations of CamelBak and American Furniture as discontinued operations in

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the condensed consolidated statements of operations for ~~all periods presented. In addition,~~ the ~~assets and liabilities associated with these businesses have been reclassified as discontinued operations in the condensed consolidated balance sheets.~~three months ended March 31, 2015. Refer to Note D for additional information. Unless otherwise indicated, the disclosures accompanying the condensed consolidated financial statements reflect the Company's continuing operations.

Recently Adopted Accounting Pronouncements

In ~~April 2014,~~November 2015, the Financial Accounting Standards Board ("FASB") issued an accounting standard update to simplify the presentation of deferred taxes by requiring companies to classify all deferred tax assets and liabilities, along with any related ~~to reporting discontinued operations~~valuation allowances, as noncurrent on the balance sheet. Adoption of this standard is required for annual periods beginning after December 15, 2016 and ~~disclosures~~early adoption is permitted. The Company adopted this guidance early, effective as of ~~disposals of components of an entity~~January 1, 2016, on a prospective basis, which ~~changes~~is permitted under the ~~criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. Under~~standard. At January 1, 2016, the ~~new guidance, a discontinued operation is defined as a disposal of a component or group of components that is disposed of or is~~Company had $6.1 million classified as ~~held for sale~~current deferred tax assets which was reclassified to long-term deferred tax assets, and "represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results." The new standard applies prospectively to new disposals and new classifications of disposal groupsno amount classified as ~~held for sale after the effective date. The amendment was effective for the Company on January 1, 2015.~~

~~Recently Issued Accounting Pronouncements~~

current deferred tax liabilities.

In September 2015, the FASB issued an accounting standard to simplify the accounting for measurement period adjustments in connection with business combinations by requiring that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The standard update is effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The standard update is to be applied prospectively to adjustments of provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. ~~We do not expect the~~The adoption of this standard todid not have ana significant impact on our condensed consolidated financial statements.

In July 2015, the FASB issued an accounting standard update intended to simplify the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. The new guidance applies only to inventory that is determined by methods other than last-in-first-out and the retail inventory method. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements. The guidance isamendment was effective for ~~public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption of~~ the ~~guidance is permitted.~~Company on January 1, 2016.

In April 2015, the FASB issued an accounting standard update intended to simplify the presentation of debt issuance costs in the balance sheet. The new guidance requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Prior to the issuance of the standard, debt issuance costs were required to be presented in the balance sheet as an asset. In August 2015, the FASB issued additional guidance which addresses the Security and Exchange Commission's ("SEC") comments related to the absence of authoritative guidance within the accounting standard update related to line-of-credit arrangements. The ~~Company is currently assessing~~SEC would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the ~~impact that adopting this new accounting guidance will have on its consolidated financial statements and footnote disclosures.~~deferred debt issuance cost ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings under the line of credit arrangement. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Retrospective adoption is required. The Company adopted this guidance on January 1, 2016 and has reclassified debt issuance costs associated with the Company's term debt of $4.4 million and $4.6 million as of March 31, 2016 and December 31, 2015, respectively, from long-term assets to long-term debt. Deferred debt issuance costs incurred in connection with the Company's revolving credit facility of $4.5 million and $4.9 million at March 31, 2016 and December 31, 2015, respectively, continue to be classified as long-term assets.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued an accounting standard update related to the accounting for leases which will require an entity to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. The standard update offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, the new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires modified retrospective adoption, with early adoption permitted. Accordingly, ~~the~~this standard is effective for the Company on January 1, ~~2016.~~2019. The Company is currently assessing impact of the new standard on our consolidated financial statements.

In July 2015, the FASB issued an accounting standard update intended to simplify the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. The new guidance applies only to inventory that is determined by methods other than last-in-first-out and the retail inventory method. The Company does not believe that the adoption of this new accounting guidance will have a significant impact on its consolidated financial statements. The guidance is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption of the guidance is permitted.

In May 2014, the FASB issued a comprehensive new revenue recognition standard. The new standard outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is designed to create greater comparability for financial statement users across industries, jurisdictions and capital markets and also requires enhanced disclosures. On July 9, 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for interim and annual

reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

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Note C — Acquisitions

Acquisition of Manitoba Harvest

On July 10, 2015, FHF Holdings Ltd., a majority owned subsidiary of the Company, and 1037269 B.C. Ltd., a wholly owned subsidiary of FHF Holdings Ltd. (together, the "Buyer"), closed on the acquisition of all the issued and outstanding capital stock of Fresh Hemp Foods Ltd. ("Manitoba Harvest") pursuant to a stock purchase agreement (the "Manitoba Harvest Purchase Agreement") among the Buyer, Manitoba Harvest, Mike Fata, as the Stockholders’ Representative and the Signing Stockholders (as such term is defined in the Manitoba Harvest Purchase Agreement), entered into previously on June 5, 2015.. Subsequent to the closing, 1037269 B.C. Ltd. merged with and into Manitoba Harvest.

Headquartered in Winnipeg, Manitoba, Manitoba Harvest is a ~~pioneer and~~ global leader in branded, hemp-based foods. ~~Manitoba Harvest’s products are currently carried in approximately 7,000 retail stores across the U.S. and Canada.The Company’s hemp-exclusive, 100% all-natural product lineup includes hemp hearts, hemp oil and protein powder.~~

The Company made loans to and purchased an 87% controlling interest in Manitoba Harvest. The purchase price, including proceeds from noncontrolling interest, was approximately ~~$101.4~~$102.7 million (C$~~128.6~~130.3 million). ~~The Company funded its portion of the acquisition price through drawings on its 2014 Revolving Credit Facility.~~ Manitoba Harvest management and a minority shareholder invested in the transaction along with the Company representing approximately 13% initial noncontrolling interest on a primary basis. The fair value of the noncontrolling interest was determined based on enterprise value of the acquired entity multiplied by the ratio number of shares acquired by the minority shareholders to total ~~shares, less a discount applied to account for the lack of marketability of the minority holders'~~ shares. The transaction was accounted for as a business combination. CGM acted as an advisor to the Company in the acquisition and will continue to provide integration services during the first year of the Company's ownership of Manitoba Harvest. CGM will receive integration services fees of $1.0 million which is payable quarterly during the twelve month period subsequent to acquisition as services are rendered.

The results of operations of Manitoba Harvest have been included in the consolidated results of operations since the date of acquisition. Manitoba Harvest's results of operations are reported as a separate operating segment. The estimated fair value of the assets acquired and liabilities assumed presented in the table below are provisional and are based on the information that was available as of the acquisition date. The amounts recorded for property, plant and equipment, intangible assets, goodwill and deferred tax liabilities are preliminary pending finalization of our valuation efforts. The table below provides the recording of assets acquired and liabilities assumed as of the acquisition date.



Manitoba Harvest
(in thousands)
Assets:
Cash	$	164
Accounts receivable	3,787
Inventory ⁽¹⁾	8,743
Property, plant and equipment	8,203
Goodwill	37,882
Intangible assets	63,687
Other current and noncurrent assets	986
Total assets	$	123,452

Liabilities and noncontrolling interest:
Current liabilities	$	3,267
Deferred tax liabilities	16,593
Other liabilities	23,332
Noncontrolling interest	7,638
Total liabilities and noncontrolling interest	$	50,830

Net assets acquired	$	72,622
Noncontrolling interest	7,638
Intercompany loans to business	23,593
	$	103,853

Manitoba Harvest
(in thousands)
Assets:
Cash $ 164
Accounts receivable 3,787
Inventory ⁽¹⁾
8,743
Property, plant and equipment 8,203
Goodwill 32,568
Intangible assets 63,765
Other current and noncurrent assets 1,131
Total assets $ 118,361

Liabilities and noncontrolling interest:
Current liabilities $ 2,386
Deferred tax liabilities 13,822
Other liabilities 24,120
Noncontrolling interest 5,728
Total liabilities and noncontrolling interest $ 46,056

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Net assets acquired	$	72,305
Noncontrolling interest	5,728
Intercompany loans to business	24,494
	$	102,527
Acquisition Consideration
Purchase price	$	102,527	$	104,437
Working capital adjustment	—		(584		)
Total purchase consideration	$	102,527	$	103,853
Less: Transaction costs	1,145		1,145
Purchase price, net	$	101,382	$	102,708

⁽¹⁾ Includes $3.1 million of step-up in the basis of inventory.

The Company incurred $1.1 million of transaction costs in conjunction with the acquisition of Manitoba Harvest during ~~the three and nine months ended September 30,~~ 2015 which ~~are~~were included in selling, general and administrative expenses in the consolidated statements of ~~income.~~income during the year ended December 31, 2015. The goodwill of ~~$32.6~~$37.9 million, which is not expected to be deductible for tax purposes, reflects the strategic fit of Manitoba Harvest into the Company's branded products businesses.

The values assigned to the identified intangible assets were determined by discounting estimated future cash flows associated with these assets to their present value. The intangible assets recorded in connection with the Manitoba Harvest acquisition are as follows (in thousands):

Intangible assets Amount Estimated Useful Life
Tradename (unamortizable) $ 13,636
N/a
Technology and processes 9,616
10 years
Customer relationships 40,513
15 years
$ 63,765

~~Acquisition of Clean Earth Holdings, Inc.~~

On August 26, 2014, CEHI Acquisition Corp., a subsidiary of the Company, closed on the acquisition of all the issued and outstanding capital stock of Clean Earth Holdings, Inc. pursuant to a stock purchase agreement among CEHI Acquisition Corp., Clean Earth, holders of stock and options in Clean Earth and Littlejohn Fund III, L.P., entered into on August 7, 2014.

Headquartered in Hatboro, Pennsylvania, Clean Earth provides environmental services for a variety of contaminated materials including soils, dredged material, hazardous waste and drill cuttings. Clean Earth analyzes, treats, documents and recycles waste streams generated in multiple end-markets such as power, construction, oil and gas, infrastructure, industrial and dredging. Treatment includes thermal desorption, dredged material stabilization, bioremediation, physical treatment/screening and chemical fixation. Before the company accepts contaminated materials, it identifies a third party "beneficial reuse" site such as commercial redevelopment or landfill capping where the materials will be sent after they are treated. Clean Earth holds the largest market share in the contaminated materials and dredged material management market and operates 14 permitted facilities in the Eastern U.S. Revenues from the environmental recycling facilities are generally recognized at the time of treatment.

The Company made loans to and purchased a 98% controlling interest in Clean Earth. The purchase price, including proceeds from noncontrolling interest, was approximately $251.4 million. The Company funded its portion of the acquisition through drawings on its 2014 Revolving Credit Facility and cash on hand. Clean Earth management invested in the transaction along with the Company representing an approximate 2% initial noncontrolling interest on a primary and fully diluted basis. The fair value of the noncontrolling interest was determined based on the enterprise value of the acquired entity multiplied by the ratio of the number of shares acquired by the minority holders to total shares. The transaction was accounted for as a business combination. CGM acted as an advisor to the Company in the acquisition and will continue to provide integration services during the first year

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of the Company's ownership of Clean Earth. CGM received integration service fees of approximately $2.5 million which was payable quarterly during a twelve month period as services were rendered beginning in the quarter ended December 31, 2014.

The results of operations of Clean Earth have been included in the consolidated results of operations since the date of acquisition. Clean Earth's results of operations are reported as a separate operating segment. The table below provides the recording of assets acquired and liabilities assumed as of the acquisition date.

Clean Earth
(in thousands)
Amounts recognized as of the acquisition date
Assets:
Cash $ 3,683
Accounts receivable ⁽¹⁾
41,821
Property, plant and equipment ⁽²⁾
43,437
Intangible assets 135,939
Goodwill 109,738
Other current and noncurrent assets 8,697
Total assets $ 343,315

Liabilities and noncontrolling interest:
Current liabilities $ 27,205
Other liabilities 149,760
Deferred tax liabilities 61,299
Noncontrolling interest 2,275
Total liabilities and noncontrolling interest $ 240,539

Net assets acquired $ 102,776
Noncontrolling interest 2,275
Intercompany loans to business 148,248
$ 253,299
Acquisition Consideration

Purchase price $ 243,000
Working capital adjustment 6,616
Cash 3,683
Total purchase consideration $ 253,299
Less: Transaction costs 1,935
Purchase price, net $ 251,364


⁽¹⁾	~~Includes $42.5 million of gross contractual accounts receivable of which $0.6 million was not expected to be collected. The fair value of accounts receivable approximated book value acquired.~~


⁽²⁾	~~Includes $20.9 million of property, plant and equipment basis step-up.~~

The Company incurred $1.9 million of transaction costs in conjunction with the Clean Earth acquisition during the year ended December 31, 2014 which was included in selling, general and administrative expense in the consolidated statements of income in 2014. The goodwill of $109.7 million reflects the strategic fit of Clean Earth into the Company's niche industrial businesses. The goodwill is not expected to be deductible for tax purposes.

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The values assigned to the identified intangible assets were determined by discounting the estimated future cash flows associated with these assets to their present value. The intangible assets recorded in connection with the Clean Earth acquisition are as follows (in thousands):

Intangible assets Amount Estimated Useful Life
Customer relationships $ 25,730
15 years
Permits and Airspace 93,209
10 - 20 years
Trade name 17,000
20 years
$ 135,939

~~Acquisition of SternoCandleLamp~~

On October 10, 2014, the Company, through its wholly owned subsidiary business, Sternocandlelamp Holdings, Inc., entered into a membership interest purchase agreement (the "Sterno Purchase Agreement") with Candle Lamp Holdings, LLC (the "Seller"), and Candle Lamp Company, LLC ("SternoCandleLamp") pursuant to which the Sternocandlelamp Holdings, Inc. acquired all of the issued and outstanding equity of SternoCandleLamp (the "Acquisition"). Headquartered in Corona, California, SternoCandleLamp is the leading manufacturer and marketer of portable food warming fuel and creative table lighting solutions for the food service industry. SternoCandleLamp’s product line includes wick and gel chafing fuels, butane stoves and accessories, liquid and traditional wax candles, catering equipment and lamps. The purchase price was approximately $160.0 million. In addition to its equity investment in SternoCandleLamp, the Company provided loans totaling approximately $91.6 million to SternoCandleLamp as part of the transaction. The transaction is accounted for as a business combination. CGM acted as an advisor to the Company in the acquisition and will continue to provide integration services during the first year of the Company's ownership of SternoCandleLamp. CGM received integration service fees of $1.5 million which was payable quarterly over a twelve month period as services were rendered beginning in the quarter ending December 31, 2014.

The results of operations of SternoCandleLamp have been included in the consolidated results of operations since the date of acquisition. SternoCandleLamp's results of operations are reported as a separate operating segment. The table below provides the recording of assets acquired and liabilities assumed as of the acquisition date.

SternoCandleLamp
(in thousands)
Assets:
Accounts receivable ⁽¹⁾
$ 18,534
Inventory ⁽²⁾
19,932
Property, plant and equipment ⁽³⁾
18,004
Intangible assets 90,950
Goodwill 33,717
Other current and non-current assets 1,734
Total assets $ 182,871
Liabilities:
Current liabilities 20,120
Other liabilities 91,647
Total liabilities $ 111,767

Net assets acquired 71,104
Intercompany loans to business 91,647
$ 162,751

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Acquisition Consideration
Purchase price $ 161,500
Working capital adjustment 1,251
Total purchase consideration $ 162,751
Less: Transaction costs 2,765
Purchase price, net $ 159,986


⁽¹⁾	~~Includes $18.8 million of gross contractual accounts receivable of which $0.2 million was not expected to be collected. The fair value of accounts receivable approximates book value acquired.~~


⁽²⁾	~~Includes $2.0 million in inventory basis step-up, which was charged to cost of goods sold during the year ended December 31, 2014.~~


⁽³⁾	~~Includes $6.9 million of property, plant and equipment basis step-up.~~

The Company incurred $2.8 million of transaction costs in conjunction with the SternoCandleLamp acquisition during the year ended December 31, 2014, which was included in selling, general and administrative expense in the consolidated statements of income during that period. The goodwill of $33.7 million reflects strategic fit of SternoCandleLamp into the Company's niche industrial businesses. The goodwill is expected to be deductible for tax purposes.

The values assigned to the identified intangible assets were determined by discounting the estimated future cash flows associated with these assets to their present value. The intangible assets recorded in connection with the SternoCandleLamp acquisition are as follows (in thousands):


Intangible assets	Amount		Estimated Useful Life	Amount		Estimated Useful Life
Tradename (unamortizable)				$	13,005	N/a
Technology and processes				9,616		10 years
Customer relationships	$	60,140	10 years	41,066		15 years
Trade name	30,810		Indefinite
	$	90,950		$	63,687

Unaudited pro forma information

The following unaudited pro forma data for the ~~nine~~three months ended ~~September 30,~~March 31, 2015 ~~and September 30, 2014~~ gives effect to the acquisition of ~~Clean Earth, SternoCandleLamp, and~~ Manitoba Harvest, as described above, as if the acquisition had been completed as of January 1, ~~2014,~~2015, and the sale of CamelBak and AFM as if the dispositions had been completed on January 1, 2014. The unaudited pro forma data for the three and nine months ended September 30, 2015 gives effect to the acquisition of Manitoba Harvest as if the acquisition had been completed as of January 1, 2014.2015. The pro forma data gives effect to historical operating results with adjustments to interest expense, amortization and depreciation expense, management fees and related tax effects. The information is provided for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the transaction had been consummated on the date indicated, nor is it necessarily indicative of future operating results of the consolidated companies, and should not be construed as representing results for any future period.

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(in thousands) Nine months ended
September 30,
2015 2014
Net sales $ 610,511
$ 731,463
Operating income 28,686
38,023
Net income 381
258,932
Net income attributable to Holdings (2,719 ) 248,056
Basic and fully diluted net income per share attributable to Holdings $ (0.10 ) $ 4.85



(in thousands)	Three months ended March 31, 2015
Net sales	$	190,055
Operating loss	(3,870		)
Net loss	(30,643		)
Net loss attributable to Holdings	(30,152		)
Basic and fully diluted net loss per share attributable to Holdings	$	(0.57	)

Other acquisitions

~~Clean Earth~~Sterno Products

On January 22, 2016, Sterno Products, a wholly owned subsidiary of the company, acquired all of the outstanding stock of Northern International, Inc. (NII), for a total purchase price of approximately $35.8 million (C$50.6 million), plus a potential earn-out opportunity payable over the next two years up to a maximum amount of $1.8 million (C$2.5 million), and is subject to working

capital adjustments. The contingent consideration was fair valued on a preliminary basis at $1.5 million, based on probability weighted models of the achievement of certain performance based financial targets. Refer to Note K - "Fair Value Measurements." for a description of the valuation technique used to fair value the contingent consideration. Headquartered in Coquitlam, British Columbia, Canada, NII sells flameless candles and outdoor lighting products through the retail segment. Sterno Products financed the acquisition and payment of the related transaction costs through the issuance of an additional $37.0 million in inter-company loans with the Company.

In connection with the acquisition, Sterno recorded a preliminary purchase price allocation of $11.6 million of goodwill, which is not expected to be deductible for income tax purposes, $8.8 in intangible assets and $1.2 million in inventory step-up. In addition, the earn-out provision of the purchase price was allocated a fair value of $1.5 million. The remainder of the purchase consideration was allocated to net assets acquired less net liabilities assumed. Sterno Products incurred $0.4 million in acquisition related costs in connection with the NII acquisition. The Company expects to finalize the purchase price allocation for NII during 2016 within the measurement period.

Manitoba Harvest

On December 15, ~~2014,~~2015, the Company's ~~Clean Earth~~Manitoba Harvest subsidiary completed the acquisition of ~~American Environmental Services,~~Hemp Oil Canada, Inc. ~~("AES")~~(HOCI), for a purchase price of ~~approximately $16.1~~$30.8 million ~~after~~(C$42.0 million). HOCI is a bulk wholesale producer, private label packager and custom processor of hemp food product ingredients, located in Ste. Agathe, Manitoba. Manitoba Harvest incurred $0.4 million (C$0.5 million) of acquisition related costs for the ~~settlement~~HOCI acquisition which are recorded in selling, general and administrative expenses in the consolidated results of operation for the year ending December 31, 2015. The purchase price is subject to standard working capital ~~adjustment related to~~adjustments. In connection with the acquisition of ~~$0.5~~HOCI, certain of the selling shareholders of HOCI invested $6.8 million ~~during~~(C$9.3 million) in Manitoba Harvest in exchange for approximately 11% noncontrolling interest in Manitoba Harvest. The Company has not completed the ~~second quarter~~preliminary allocation of 2015. AES provides environmental services, managing hazardous and nonhazardous waste from off-site generators. AES has two fully permitted hazardous waste facilities located in Calvert City, Kentucky and Morgantown, West Virginia, serving industrial and government customers across the ~~region. The acquisition expands Clean Earth's customer base and geographic market penetration. The~~ purchase price and has recorded the excess of ~~AES was allocated to~~the purchase price over the assets acquired ~~and liabilities assumed based on~~as goodwill at March 31, 2016. The Company expects to finalize the ~~estimated fair value as of December 15, 2014, with the excess~~ purchase price ~~allocated to goodwill.~~allocation for HOCI during 2016 within the measurement period.

Note D - Discontinued operations

Sale of CamelBak

On August 3, 2015, the Company sold its majority owned subsidiary, CamelBak, based on a total enterprise value of $412.5 million. The CamelBak purchase agreement contains customary representations, warranties, covenants and indemnification provisions, and the transaction is subject to customary working capital adjustments.

The Company received approximately $367.8 million in cash related to its debt and equity interests in CamelBak after payments to noncontrolling shareholders and payment of all transaction expenses. The Company recognized a gain of ~~$165.3~~$164.0 million, ~~for the three and nine months ended September 30,~~net of tax, during 2015 as a result of the sale of CamelBak.

~~Summarized operating results for the three and nine months ended September 30, 2015 and 2014 through the date of disposition are as follows (in thousands):~~

(in thousands) For the period July 1, 2015 through disposition Three months ended September 30, 2014 For the period Jan. 1, 2015 through disposition Nine months ended September 30, 2014
Net sales $ 17,023
$ 33,496
$ 96,519
$ 113,145
Gross profit 7,282
13,732
41,415
48,016
Operating income 2,713
2,833
14,348
14,517
Income from continuing operations before income taxes 4,315
3,275
16,607
14,995
Provision for income taxes 1,355
251
5,010
3,218
Income from discontinued operations ⁽¹⁾
$ 2,960
$ 3,024
$ 11,597
$ 11,777

(1) The results for the periods from July 1, 2015 through disposition and January 1, 2015 through disposition, and the three and nine months ended September 30, 2014, exclude $0.6 million, $3.9 million, $2.6 million and $8.0 million, respectively, of intercompany interest expense.

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Sale of AFM

On October 5, 2015, the Company sold its majority owned subsidiary, American Furniture, for a sale price of $24.1 million. The Company received approximately $23.5 million in net proceeds related to its debt and equity interests in American Furniture after payment of all transaction expenses. The sale of American Furniture met the criteria for the assets to be classified as held for sale as of September 30, 2015, and American Furniture is presented as discontinued operations in the accompanying condensed consolidated financial statements for all periods presented. The Company recognized a loss on the sale of American Furniture of $14.3 ~~million. This loss was recognized~~million during the quarter ended September 30, 2015 based on the initial write-down of American Furniture's carrying amounts to fair value. The fair value of the assets and liabilities of American Furniture have been classified as current at September 30, 2015.

Summarized operating results of discontinued operations for the three ~~and nine~~ months ended ~~September 30, 2015 and 2014 through the date of classification as held for sale at September 30,~~March 31, 2015 are as ~~follows (in thousands):~~follows:


									Three months ended March 31, 2015
(in thousands)	Three months ended September 30, 2015		Three months ended September 30, 2014		Nine months ended September 30, 2015		Nine months ended September 30, 2014		CamelBak		American Furniture		Total discontinued operations
Net sales	$	39,068	$	28,351	$	122,420	$	95,842	$	36,922	$	40,925	$	77,847
Gross profit	3,656		2,278		11,613		8,691		15,232		4,115		19,347
Operating income	901		401		4,126		2,538		4,351		1,676		6,027
Income from continuing operations before income taxes	902		401		4,134		2,538		4,029		1,681		5,710
Provision for income taxes	43		—		81		—		987		—		987
Income from discontinued operations ⁽¹⁾	$	859	$	401	$	4,053	$	2,538	$	3,042	$	1,681	$	4,723

⁽¹⁾The results for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2015 ~~and the three and nine months ended September 30, 2014,~~ exclude ~~$0.5~~$2.2 million ~~$1.5 million, $0.6 million and $1.7 million, respectively,~~ of intercompany interest expense.

~~The following table presents summary balance sheet information of the CamelBak and American Furniture businesses held for sale as of September 30, 2015 and December 31, 2014~~ ~~(in thousands)~~:

~~Table of Contents~~

September 30, 2015
December 31, 2014
American Furniture CamelBak American Furniture Total
Assets:
Cash $ 1,879
$ 975
$ 781
$ 1,756
Accounts receivable, net 17,666
22,492
16,191
38,683
Inventories 26,552
27,511
25,395
52,906
Prepaid expenses and other current assets —
4,627
364
4,991
Current assets held for sale $ 46,097
$ 55,605
$ 42,731
$ 98,336
Property, plant and equipment, net —
7,987
903
8,890
Goodwill —
5,546
—
5,546
Intangible assets, net —
162,761
368
163,129
Other non-current assets —
2,262
—
2,262
Noncurrent assets held for sale $ —
$ 178,556
$ 1,271
$ 179,827
Liabilities:
Accounts payable 19,976
6,431
6,468
12,899
Accrued expenses and other current liabilities 2,420
9,834
1,640
11,474
Current liabilities held for sale $ 22,396
$ 16,265
$ 8,108
$ 24,373
Deferred income taxes —
6,115
—
6,115
Other noncurrent liabilities —
548
—
548
Noncurrent liabilities held for sale $ —
$ 6,663
$ —
$ 6,663
Noncontrolling interest of discontinued operations $ 284
$ 14,932
$ 260
$ 15,192

Note E — Operating Segment Data

At ~~September 30, 2015,~~March 31, 2016, the Company had eight reportable operating segments. Each operating segment represents a platform acquisition. The Company’s operating segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies. A description of each of the reportable segments and the types of products and services from which each segment derives its revenues is as follows:

Ergobaby is a premier designer, marketer and distributor of wearable baby carriers and related baby wearing products, as well as infant travel systems (strollers, car seats and accessories). Ergobaby offers a broad range of wearable baby carriers, infant travel systems and related products that are sold through more than 450 retailers and web shops in the United States and throughout the world. Ergobaby has two main product lines: baby carriers (baby carriers and accessories) and infant travel systems (strollers, car seats and accessories). Ergobaby is headquartered in Los Angeles, California.

Liberty Safe is a designer, manufacturer and marketer of premium home, gun and ~~gun~~office safes in North America. From it’s over 314,000 square foot manufacturing facility, Liberty produces a wide range of home and gun safe models in a broad assortment of sizes, features and styles. Liberty is headquartered in Payson, Utah.

Manitoba Harvest is a pioneer and leader in the manufacture and distribution of branded, hemp-based foods. Manitoba Harvest’s products, which include Hemp Hearts™, Hemp Heart Bites™, Hemp Heart Bars™, and Hemp protein powders, are currently carried in over 7,000 retail stores across the U.S. and Canada. Manitoba Harvest is headquartered in Winnipeg, Manitoba.

Advanced Circuits, an electronic components manufacturing company, is a provider of small-run, quick-turn and volume production rigid printed circuit boards. ACI manufactures and delivers custom printed circuit boards to customers primarily in North America. ACI is headquartered in Aurora, Colorado.

Arnold Magnetics is a leading global manufacturer of engineered magnetic solutions for a wide range of specialty applications and end-markets, including energy, medical, aerospace and defense, consumer electronics, general industrial and automotive. Arnold Magnetics produces high performance permanent magnets (PMAG), flexible magnets (FlexMag) and precision foil products (Precision Thin Metals) that are mission critical in motors, generators, sensors and other systems and components.

~~Table of Contents~~

Based on its long-term relationships, Arnold has built a diverse and blue-chip customer base totaling more than 2,000 clients worldwide. Arnold Magnetics is headquartered in Rochester, New York.

Clean Earth provides environmental services for a variety of contaminated materials including soils, dredged material, hazardous waste and drill cuttings. Clean Earth analyzes, treats, documents and recycles waste streams generated in multiple end-markets such as power, construction, oil and gas, infrastructure, industrial and dredging. Clean Earth is headquartered in Hatboro, Pennsylvania and operates 14 facilities in the eastern United States.

~~SternoCandleLamp~~Sterno Products is a manufacturer and marketer of portable food warming fuel and creative table lighting solutions for the food service industry. ~~SternoCandleLamp's~~Sterno Products's products include wick and gel chafing fuels, butane stoves and accessories, liquid and traditional wax candles, catering equipment and lamps. ~~SternoCandleLamp~~Sterno Products is headquartered in Corona, California.

Tridien is a leading designer and manufacturer of powered and non-powered medical therapeutic support surfaces and patient positioning devices serving the acute care, long-term care and home health care markets. Tridien is headquartered in Coral Springs, Florida and its products are sold primarily in North America.

The tabular information that follows shows data for each of the operating segments reconciled to amounts reflected in the consolidated financial statements. The results of operations of each of the operating segments are included in consolidated operating results as of their date of acquisition. FOX was an operating segment of the Company until July 10, 2014, when FOX was deconsolidated and became an equity method investment. ~~The results of operations of FOX are included in the disaggregated and other financial data presented for the three and nine months ended September 30, 2014.~~

Segment profit is determined based on internal performance measures used by the Chief Executive Officer to assess the performance of each business. Segment profit excludes certain charges from the acquisitions of the Company’s initial businesses not pushed down to the segments which are reflected in the Corporate and other line item. There were no significant inter-segment transactions.

A disaggregation of the Company’s consolidated revenue and other financial data for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~ is presented below (in thousands):

International Revenues Three months ended
September 30, Nine months ended
September 30,
2015 2014 2015 2014
Ergobaby $ 12,829
$ 13,319
$ 36,059
$ 35,013
FOX —
—
—
79,306
Manitoba Harvest 5,206
—
5,206
—
Arnold Magnetics 10,798
14,415
33,812
44,003
$ 28,833
$ 27,734
$ 75,077
$ 158,322

Profit (loss) of operating segments ⁽¹⁾

Corporate and other ⁽²⁾

Accounts receivable September 30, 2015 December 31, 2014
Ergobaby $ 10,456
$ 9,671
Liberty 13,340
11,376
Manitoba Harvest 5,546
—
ACI 6,804
5,730
Arnold Magnetics 20,891
15,664
Clean Earth 41,855
52,059
SternoCandleLamp 16,959
21,113
Tridien 12,146
7,135
Total 127,997
122,748
Reconciliation of segment to consolidated totals:

Corporate and other —
—
Total 127,997
122,748
Allowance for doubtful accounts (3,757 ) (3,896 )
Total consolidated net accounts receivable $ 124,240
$ 118,852

Goodwill carried at Corporate level ⁽²⁾

Geographic Information



International Revenues	Three months ended March 31,
	2016		2015
Ergobaby	$	10,377	$	10,956
Manitoba Harvest	6,130		—
Arnold Magnetics	10,799		12,369
Sterno Products	5,192		684
	$	32,498	$	24,009

Note F - Equity Method Investment

FOX is a designer, manufacturer and marketer of high-performance ride dynamic products used primarily for bicycles, side-by-side vehicles, on-road vehicles with off-road capabilities, off-road vehicles and trucks, all-terrain vehicles, snowmobiles, specialty vehicles and applications, and motorcycles. FOX’s products offer innovative design, performance, durability and reliability that enhance ride dynamics by improving performance and control. FOX is headquartered in Scotts Valley, California. In July 2014, FOX, a former majority owned subsidiary of the Company that is publicly traded on the NASDAQ Stock Market under the ticker "FOXF," used a registration statement on Form S-1 under the Securities Act filed with the Securities and Exchange Commission ~~(the "SEC")~~ for a public offering of its common stock (the "FOX Secondary Offering"). CODI sold 4,466,569 shares of FOX common stock in connection with the FOX Secondary Offering. As a result of the sale of the shares by the Company in the FOX Secondary Offering, the Company’s ownership interest in FOX decreased to approximately ~~41%~~41.2%, which resulted in the deconsolidation of the FOX operating segment in the Company’s consolidated financial statements effective as of the date of the FOX Secondary Offering.

On March 15, 2016, the Company sold 2,500,000 of its FOX shares through a secondary offering at a price of $15.895 per share, which represented an underwriter's discount of 8.5% from the FOX share closing price on the date the offering was priced. Concurrently with the offering, FOX purchased 500,000 shares of their shares directly from the Company, also at a price of $15.895 per share. As a result of the sale of shares through the offering and the repurchase of shares by FOX, the Company sold a total of 3,000,000 shares of FOX common stock, with total net proceeds of approximately $47.7 million. Upon completion of the offering and repurchase of shares by FOX, the Company's ownership interest in FOX was reduced from approximately 41.2% to 33.1%. The Company currently owns approximately ~~15.1~~12.1 million shares of FOX common stock.

The Company has elected to account for its investment in FOX at fair value using the equity method beginning on the date the investment became subject to the equity method of accounting. The Company uses the equity method of accounting when it has the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. For equity method investments which the Company has elected to measure at fair value, unrealized gains and losses are reported in the consolidated statement of operations as gain (loss) from equity method investments. The equity method investment in FOX had a fair value of ~~$254.7~~$191.4 million on ~~September 30, 2015~~March 31, 2016 based on the closing price of FOX shares on that date. The Company

recognized a ~~gain~~loss of ~~$11.8~~$10.6 million for the three months ended ~~September 30, 2015, and a gain of $9.5 million for the nine months ended September 30, 2015, respectively,~~March 31, 2016 due to the change in the fair value of the FOX ~~investment.~~investment and the effect of the underwriter's discount on the sale of FOX shares.

The condensed balance sheet information and results of operations of the Company's FOX investment are summarized below ~~(in thousands)~~(in thousands):

Condensed Results of Operations ⁽¹⁾

Note G — Property, Plant and Equipment and Inventory

Property, plant and equipment

Property, plant and equipment is comprised of the following at ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014~~2015 (in thousands):

Depreciation expense was ~~$5.5 million and $16.3~~$5.9 million for the three ~~and nine~~ months ended ~~September 30, 2015,~~March 31, 2016, and ~~$3.4 million and $10.3~~$5.5 million for the three ~~and nine~~ months ended ~~September 30, 2014, respectively.~~March 31, 2015.

~~Table of Contents~~

Inventory

Inventory is comprised of the following at ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014~~2015 (in thousands):


	September 30, 2015			December 31, 2014			March 31, 2016			December 31, 2015
Raw materials and supplies	$	29,159		$	25,826		$	30,547		$	29,809
Work-in-process	9,961			7,147			10,085			9,035
Finished goods	39,496			30,315			43,018			33,653
Less: obsolescence reserve	(4,320		)	(4,980		)	(4,656		)	(4,126		)
Total	$	74,296		$	58,308		$	78,994		$	68,371

Note H — Goodwill and Other Intangible Assets

As a result of acquisitions of various businesses, the Company has significant intangible assets on its balance sheet that include goodwill and indefinite-lived intangibles (primarily trade names). Goodwill represents the difference between purchase cost and the fair value of net assets acquired in business acquisitions. Indefinite lived intangible assets are not amortized unless their useful life is determined to be finite. Long-lived intangible assets are subject to amortization using the straight-line method. The Company’s goodwill and indefinite-lived intangibles are tested and reviewed for impairment annually as of March 31st or more frequently if facts and circumstances warrant by comparing the fair value of each reporting unit to its carrying value. Each of the Company’s businesses represents a reporting unit, except Arnold, which comprises three reporting units.

~~2015 Interim goodwill impairment testing~~

In January 2015, one of Tridien's largest customer's informed the company that they would not renew their existing purchase agreement when it expires in the fourth quarter of 2015. This customer represented 20% of Tridien's sales in 2014. The expected lost sales and net income were significant enough to trigger an interim goodwill and indefinite-lived intangible asset impairment analysis. The result of the first step of the impairment test indicated that the fair value of Tridien was less than its carrying value; therefore, it was necessary to perform the second step of the impairment test. The Company estimated the fair value of the Tridien reporting unit using a weighted average of an income and market approach. The income approach was based on the present value of expected future cash flows, including terminal value, utilizing a market-based weighted average cost of capital ("WACC") of 15.7%. The market approach was based on earnings multiple data and guideline public companies. Based on the second step of the impairment test, the Company concluded on a preliminary basis during the quarter ended March 31, 2015 that the implied fair value of goodwill for Tridien was less than its carrying amount, resulting in impairment of the carrying amount of Tridien's goodwill of $8.9 million as of January 31, 2015. The Company completed the interim goodwill impairment testing of Tridien during the three months ended June 30, 2015 and recorded additional impairment expense of $0.2 million related to the Tridien technology and patent intangible assets.

~~2015~~2016 Annual goodwill impairment testing

The Company uses a qualitative approach to test goodwill for impairment by first assessing qualitative factors to determine whether it is ~~more-likely than-not~~more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step ~~evaluation including,~~goodwill impairment testing. The qualitative factors we consider include, in part, the general macroeconomic environment, industry and market specific conditions for each reporting unit, financial performance including actual versus planned results and results of relevant prior periods, operating costs and cost impacts, as well as issues or events specific to the reporting unit. The Company evaluated the qualitative factors of each reporting unit to determine if the fair values of the reporting units exceed their respective carrying values for the 2015 annual goodwill impairment testing. The CompanyAt March 31, 2016, we determined that ~~Liberty and two of Arnold’s three~~the Tridien reporting ~~units, Permanent Magnets and Assemblies ("PMAG") and Flexible Magnets ("Flexmag"),~~unit required further quantitative testing ~~(Step~~(step 1) ~~since the Company~~because we could not conclude that the fair value of the ~~Liberty and~~reporting unit exceeds its carrying value based on qualitative factors alone. For the ~~two Arnold~~ reporting units ~~exceeded their carrying values based solely on qualitative factors. Results~~that were tested qualitatively, the results of the ~~quantitative~~qualitative analysis indicated that the fair value of ~~these~~those reporting units ~~exceeds~~exceeded their carrying value. The Company expects to conclude the goodwill impairment testing during the quarter ended June 30, 2016.

2015 Interim goodwill impairment testing

~~Table~~In January 2015, one of ~~Contents~~Tridien's largest customers informed Tridien that they would not renew their purchase agreement when it expired in the fourth quarter of 2015. The expected lost sales and net income from this customer were significant enough to trigger an interim goodwill impairment analysis in the first quarter of 2015, which resulted in an impairment of the carrying amount of Tridien's goodwill of $8.9 million.

A summary of the net carrying value of goodwill at March 31, 2016 and December 31, 2015, is as follows (in thousands):



	Three months ended March 31, 2016			Year ended December 31, 2015
Goodwill - gross carrying amount	475,566			460,319
Accumulated impairment losses	(61,831		)	(61,831		)
Goodwill - net carrying amount	$	413,735		$	398,488

The following is a reconciliation of the change in the carrying value of goodwill for the ~~nine~~three months ended ~~September 30, 2015 and the year ended December~~March 31, ~~2014, is as follows~~2016 by operating segment (in thousands):

Nine months ended September 30, 2015 Year ended
December 31, 2014
Beginning balance:
Goodwill $ 406,537
$ 293,968
Accumulated impairment losses (52,903 ) (52,903 )
353,634
241,065
Impairment losses ⁽¹⁾
(8,928 ) —
Acquisition of businesses ⁽²⁾
32,568
157,864
Foreign currency translation (1,916 ) —
Adjustments to purchase accounting ⁽³⁾
706
—
Deconsolidation of subsidiary ⁽⁴⁾
—
(45,295 )
Total adjustments 22,430
112,569
Ending balance:

Goodwill 437,895
406,537
Accumulated impairment losses (61,831 ) (52,903 )
$ 376,064
$ 353,634



	Corporate (1)		Ergobaby		Liberty		Manitoba Harvest		ACI		Arnold (2)		Clean Earth		Sterno		Tridien		Total
Balance as of January 1, 2016	$	8,649	$	41,664	$	32,828	$	52,672	$	58,019	$	51,767	$	111,339	$	33,716	$	7,834	$	398,488
Acquisition of Northern International Inc. (3)	—		—		—		—		—		—		—		11,556		—		11,556
Foreign currency translation	—		—		—		3,691		—		—		—		—		—		3,691
Balance as of March 31, 2016	$	8,649	$	41,664	$	32,828	$	56,363	$	58,019	$	51,767	$	111,339	$	45,272	$	7,834	$	413,735


⁽¹⁾	~~Impairment loss relates~~Represents goodwill resulting from purchase accounting adjustments not "pushed down" to the ACI segment. This amount is allocated back to the respective segment for purposes of goodwill impairment ~~of the Tridien goodwill during the quarter ended March 31, 2015.~~testing.

⁽²⁾

~~Acquisition~~Arnold Magnetics has three reporting units PMAG, FlexMag and Precision Thin Metals with goodwill balances of ~~businesses during the year ended December 31, 2014 relates to the acquisition of Clean Earth in August 2014, SternoCandleLamp in October 2014,~~$40.4 million, $4.8 million and ~~the add-on acquisition of AES by Clean Earth in December 2014. Acquisition of businesses during the nine months ended September 30, 2015 relates to the acquisition of Manitoba Harvest in July 2015.~~$6.5 million, respectively.

⁽³⁾

The ~~$0.7 million in purchase accounting adjustments relate to adjustments made~~goodwill related to the ~~final purchase price allocation for Clean Earth during~~acquisition of NII by Sterno Products in the first quarter of ~~2015 to record deferred tax amounts~~2016 is based on ~~the state tax rate in effect for the state in which each of the intangible assets is utilized ($1.0 million), and adjustments to the~~a preliminary purchase price ~~allocation of AES during the first and second quarter of 2015 ($0.3 million, including the final settlement of working capital of $0.5 million received by Clean Earth).~~


⁽⁴⁾	As a result of the sale of the shares by the Company in the FOX Secondary Offering, the Company’s ownership interest in FOX decreased to approximately 41%, which resulted in the deconsolidation of the FOX operating segment in the Company’s consolidated financial statements effective July 10, 2014.allocation.

Other intangible assets

~~2015~~2016 Annual indefinite lived impairment testing

The Company uses a qualitative approach to test indefinite lived intangible assets for impairment by first assessing qualitative factors to determine whether it is more-likely-than-not that the fair value of an indefinite lived intangible asset is impaired as a basis for determining whether it is necessary to perform quantitative impairment testing. The Company evaluated the qualitative factors of each reporting unit that maintains indefinite lived intangible assets in connection with the annual impairment testing for ~~2015.~~2016. Results of the qualitative analysis indicate that the carrying value of the Company’s indefinite lived intangible assets did not exceed their fair value.

2015 long-lived asset impairment

The Company evaluates long-lived assets for potential impairment whenever events occur or circumstances indicate that the carrying amount of the assets may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. As noted above, Tridien's expected loss of a large customer atduring the ~~end of the third~~fourth quarter of 2015 triggered an interim goodwill impairment which resulted in Tridien recognizing impairment of both the goodwill and the technology and patent intangible asset. The Company completed the interim impairment testing during the second quarter of 2015 and recognized $0.2 million of impairment expense

~~Table of Contents~~

related to the technology and patent intangible asset during the three months ended June 30, 2015 in the condensed consolidated statements of operations.

Other intangible assets are comprised of the following at ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014~~2015 (in thousands):


	September 30, 2015			December 31, 2014			Weighted Average Useful Lives	March 31, 2016			December 31, 2015			Weighted Average Useful Lives
Customer relationships	$	226,299		$	187,976		12	$	232,636		$	226,722		12
Technology and patents	41,303			32,331			9	44,662			41,001			9
Trade names, subject to amortization ⁽¹⁾	25,047			7,070			17
Trade names, subject to amortization								27,563			25,130			17
Licensing and non-compete agreements	6,656			6,656			5	6,786			6,686			5
Permits and airspace	98,419			98,406			13	98,673			98,673			13
Distributor relations and other	606			606			5	606			606			5
	398,330			333,045				410,926			398,818
Accumulated amortization:
Customer relationships	(70,524		)	(58,257		)		(78,665		)	(74,519		)
Technology and patents	(18,027		)	(15,423		)		(20,118		)	(19,032		)
Trade names, subject to amortization	(4,256		)	(3,606		)		(5,127		)	(4,697		)
Licensing and non-compete agreements	(6,563		)	(6,299		)		(6,586		)	(6,575		)
Permits and airspace	(10,089		)	(3,104		)		(14,611		)	(12,313		)
Distributor relations and other	(606		)	(606		)		(606		)	(606		)
Total accumulated amortization	(110,065		)	(87,295		)		(125,713		)	(117,742		)
Trade names, not subject to amortization ⁽¹⁾	73,395			78,341				73,160			72,328
Total intangibles, net	$	361,660		$	324,091			$	358,373		$	353,404

⁽¹⁾ The trade name for Clean Earth was determined to be subject to amortization, resulting in a reclass from trade names not subject to amortization during the first quarter of 2015 as part of the finalization of the purchase price allocation for Clean Earth.

Amortization expense related to intangible assets was ~~$7.7~~$7.8 million and ~~$22.8~~$7.8 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015, ~~respectively, and $4.6 million and $15.2 million for the three and nine months ended September 30, 2014,~~ respectively. Estimated charges to amortization expense of intangible assets over the next five years, is as follows (in thousands):

2014 Credit Agreement

On June 6, 2014, the Company obtained a $725 million credit facility from a group of lenders (the "2014 Credit Facility") led by Bank of America N.A. as Administrative Agent. The 2014 Credit Facility provides for (i) a revolving credit facility of $400 million (as amended from time to time, the "2014 Revolving Credit Facility") and (ii) a $325 million term loan (the "2014 Term Loan Facility"). The 2014 Credit Facility permits the Company to increase the 2014 Revolving Credit Facility commitment and/ or obtain additional term loans in an aggregate of up to $200 million. The 2014 Credit Facility is secured by all of the assets of the Company, including all of its equity interests in, and loans to, its consolidated subsidiaries. The Company amended the 2014 Credit Facility in June 2015, primarily to allow for intercompany loans to, and the acquisition of, Canadian-based companies on an unsecured basis, and to modify provisions that would allow for early termination of a "Leverage Increase Period," thereby providing

additional flexibility as to the timing of subsequent acquisitions. The Company incurred additional debt issuance costs of approximately $0.3 million in connection with the amendment that was recorded as deferred debt issuance costs and will be amortized over the remaining term of the 2014 Credit Facility.

2014 Revolving Credit Facility

The 2014 Revolving Credit Facility will become due in June 2019. The Company can borrow, prepay and reborrow principal under the 2014 Revolving Credit Facility from time to time during its term. Advances under the 2014 Revolving Credit Facility can be either LIBOR rate loans or base rate loans. LIBOR rate revolving loans bear interest at a rate per annum equal to the London Interbank Offered Rate (the "LIBOR Rate") plus a margin ranging from 2.00% to 2.75% based on the ratio of consolidated net indebtedness to adjusted consolidated earnings before interest expense, tax expense and depreciation and amortization expenses (the "Consolidated Leverage Ratio"). Base rate revolving loans bear interest at a fluctuating rate per annum equal to the greatest of (i) the prime rate of interest, or (ii) the Federal Funds Rate plus 0.50% (the "Base Rate"), plus a margin ranging from 1.00% to 1.75% based upon the Consolidated Leverage Ratio.

2014 Term Loan Facility

The 2014 Term Loan Facility expires in June 2021 and requires quarterly payments of approximately $0.8 million that commenced September 30, 2014, with a final payment of all remaining principal and interest due on June 6, 2021. The 2014 Term Loan Facility was issued at an original issue discount of 99.5% of par value and bears interest at either the applicable LIBOR Rate plus 3.25% per annum, or Base Rate plus 2.25% per annum. The LIBOR Rate applicable to both base rate loans and LIBOR rate loans shall in no event be less than 1.00% at any time.

The proceeds of the 2014 Term Loan Facility and advances under the 2014 Revolving Credit Facility were/will be used to (i) refinance existing indebtedness of the Company, (ii) pay fees and expense, (iii) fund acquisitions of additional businesses, (iv) fund working capital needs and (v) to fund permitted distributions. The Company used approximately $290.0 million of the 2014 Term Loan Facility proceeds to pay all amounts outstanding under the 2011 Credit Agreement and to pay the closing costs. In addition, approximately $1.2 million of the 2014 Revolving Credit Facility commitment was utilized in connection with the issuance of letters of credit.

The 2014 Credit Facility provides for sub-facilities under the 2014 Revolving Credit Facility pursuant to which an aggregate amount of up to $100.0 million in letters of credit may be issued, as well as swing line loans of up to $25.0 million outstanding at one time. The issuance of such letters of credit and the making of any swing line loan reduces the amount available under the 2014 Revolving Credit Facility. The Company will pay (i) commitment fees on the unused portion of the 2014 Revolving Credit Facility ranging from 0.45% to 0.60% per annum based on its Consolidated Leverage Ratio, (ii) quarterly letter of credit fees, and (iii) administrative and agency fees.

~~In connection~~Deferred debt issuance costs represent the costs associated with the entering into the 2014 Credit Facility in which the loan syndication consisted of previous members of the syndicate under the 2011 Credit Facility who either maintained or increased their position as well as new syndication members, the debt issuance costs associated with the 2011 Credit Facility and the 2014 Credit Facility have been classified as either debt modification costs which have been capitalized and will be amortized over the term of the 2014 Credit Facility, or debt extinguishment costs which have been recorded as an expense in the accompanying condensed consolidated statement of operations. The Company paid debt issuance costs of $7.3 million in connection with the 2014 Credit Facility (of which $0.2 million was expensed as debt modification and extinguishment costs and $7.1 million is beingare amortized over the term of the related debt ininstrument. The Company's 2014 Credit Facility is comprised of the 2014 ~~Credit Facility) and recorded additional debt modification and extinguishment costs of $2.1 million to write-off previously capitalized debt issuance costs.~~

~~2011 Credit Agreement~~

On October 27, 2011, the Company entered into the 2011 Credit Facility with a group of lenders led by TD Securities for a $515 million credit facility, with an optional $135 million increase (the "2011 Credit Facility"). The 2011 Credit Facility provided for (i) a revolving line of credit of $290 million which was subsequently increased to $320 million (the "2011 Revolving Credit Facility"), and (ii) a $225 million term loan which was subsequently increased to $279 million (the "2011 Term Loan Facility"). The 2011 Revolving Credit Facility ~~was set to mature~~and the 2014 Term Loan Facility. Since the Company can borrow, repay and reborrow principal under the 2014 Revolving Credit Facility, the debt issuance costs associated with this facility have been classified as other non-current assets in ~~October~~the accompanying consolidated balance sheet. The debt issuance costs associated with the 2014 Term Loan are classified as a reduction of long-term debt in the accompanying consolidated balance sheet. The following table summarizes debt issuance costs at March 31, 2016 and December 31, 2015, and the ~~2011 Term Loan Facility required quarterly payments of approximately $0.71 million, with the final payment of all remaining outstanding principle and interest due~~balance sheet classification in ~~October 2017. The Company was required to pay commitment fees of 1% per annum~~each of the ~~unused portion of the 2011 Revolving Credit Facility. The 2011 Credit Facility was terminated~~ periods presents (in ~~June 2014.~~thousands):



	March 31, 2016			December 31, 2015
Deferred debt issuance costs	$	12,973		$	12,973
Accumulated amortization	(4,054		)	(3,508		)
Deferred debt issuance costs, less accumulated amortization	$	8,919		$	9,466

Balance Sheet classification:
Other non-current assets	$	4,529		$	4,863
Long-term debt	4,390			4,603
	$	8,919		$	9,466

The following table provides the Company’s debt holdings at ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014~~2015 (in thousands):

Net availability under the 2014 Revolving Credit Facility was approximately ~~$395.6~~$395.5 million at ~~September 30, 2015.~~March 31, 2016. Letters of credit outstanding at ~~September 30, 2015~~March 31, 2016 totaled approximately ~~$4.4~~$4.5 million. At ~~September 30, 2015,~~March 31, 2016, the Company was in compliance with all covenants as defined in the 2014 Credit Facility.

Note J — Derivative Instruments and Hedging Activities

On September 16, 2014, the Company purchased an interest rate swap ("New Swap") with a notional amount of $220 million. The New Swap is effective April 1, 2016 through June 6, 2021, the termination date of the 2014 Term Loan. The agreement requires the Company to pay interest on the notional amount at the rate of 2.97% in exchange for the three-month LIBOR rate. At ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, this Swap had a fair value loss of ~~$15.4~~$20.2 million and ~~$7.4~~$13.0 million, respectively, principally reflecting the present value of future payments and receipts under the agreement.

On October 31, 2011, the Company purchased a three-year interest rate swap (the "Swap") with a notional amount of $200 million effective January 1, 2014 through March 31, 2016. The agreement requires the Company to pay interest on the notional amount at the rate of 2.49% in exchange for the three-month LIBOR rate, with a floor of 1.5%. At ~~September 30, 2015 and~~ December 31, ~~2014,~~2015, the Swap had a fair value loss of ~~$1.0 million and $2.5 million, respectively.~~

~~At September 30, 2015~~$0.5 million. A final payment under the ~~Company's interest rate swaps had a fair value loss~~Swap of ~~$16.4 million, of which $1.0~~$0.5 million was ~~included in current liabilities and $15.4 million was included in other non-current liabilities in~~made on March 31, 2016 when the ~~condensed consolidated balance sheet, with its periodic mark-to-market value reflected as a component of interest expense.~~Swap contract ended.

The Company did not elect hedge accounting for the above derivative transactions and as a result, periodic mark-to-market changes in fair value are reflected as a component of interest expense in the consolidated statement of operations.

The following table reflects the classification of the Company's interest rate swaps on the consolidated Balance Sheets at March 31, 2016 and December 31, 2015 (in thousands):



	March 31, 2016		December 31, 2015
Other current liabilities	$	4,967	$	3,914
Other noncurrent liabilities	15,243		9,569
Total fair value	$	20,210	$	13,483

~~Table of Contents~~

Note K — Fair Value Measurement

The following table provides the assets and liabilities carried at fair value measured on a recurring basis at ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014~~2015 (in thousands):


	Fair Value Measurements at September 30, 2015											Fair Value Measurements at March 31, 2016
	Carrying Value			Level 1		Level 2			Level 3			Carrying Value			Level 1		Level 2			Level 3
Assets:
Equity method investment - FOX	$	254,733		$	254,733	$	—		$	—		$	191,439		$	191,439	$	—		$	—
Liabilities:
Call option of noncontrolling shareholder ⁽¹⁾	(25		)	—		—			(25		)	(25		)	—		—			(25		)
Put option of noncontrolling shareholders ⁽²⁾	(50		)	—		—			(50		)	(50		)	—		—			(50		)
Interest rate swaps	(16,371		)	—		(16,371		)	—
Contingent consideration - acquisition ⁽³⁾												(1,500		)	—		—			(1,500		)
Interest rate swap												(20,210		)	—		(20,210		)	—
Total recorded at fair value	$	238,287		$	254,733	$	(16,371	)	$	(75	)	$	169,654		$	191,439	$	(20,210	)	$	(1,575	)

Call option of noncontrolling shareholder ⁽¹⁾

Put option of noncontrolling shareholders ⁽²⁾

Reconciliations of the change in the carrying value of the Level 3 fair value measurements from January 1, ~~2015~~2016 through ~~September~~March 30, ~~2015 and from January 1, 2014 through September 30, 2014~~2016 are as follows (in thousands):

2015 2014
Balance at January 1st $ (75 ) $ (75 )
Contingent consideration - Sport Truck ⁽¹⁾
—
(19,035 )
Balance at March 31st $ (75 ) $ (19,110 )
Balance at June 30th $ (75 ) $ (19,110 )
Effect of deconsolidation of FOX —
19,035
Balance at September 30th $ (75 ) $ (75 )



	2016
Balance at January 1st	$	(75	)
Contingent consideration - acquisition	(1,500		)
Balance at March 31st	$	(1,575	)

Valuation Techniques

Contingent Consideration:

Sterno Products entered into a contingent consideration arrangement associated with the purchase of NII in January 2016. The earnout provision provides for payments up to $1.8 million over a two year period subsequent to acquisition. Earnings before interest, taxes, depreciation and amortization ("EBITDA") is the performance target defined and measured to determine the earnout payment due, if any, after each defined measurement period. The contingent consideration was valued at $1.5 million using probability weighted models.

~~Valuation Techniques~~

The Company has not changed its valuation techniques in measuring the fair value of any of its other financial assets and liabilities during the period. For details of the Company’s fair value measurement policies under the fair value hierarchy, refer to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2014.~~2015.

At ~~September 30, 2015,~~March 31, 2016, the carrying value of the principal under the Company’s outstanding 2014 Term Loan, including the current portion, was ~~$320.9~~$319.3 million, which approximates fair value because it has a variable interest rate that reflects market changes in interest rates and changes in the Company's net leverage ratio. The estimated fair value of the outstanding 2014 Term Loan is based on quoted market prices for similar debt issues and is, therefore, classified as Level 2 in the fair value hierarchy.

Nonrecurring Fair Value Measurements

The following table provides the assets carried at fair value measured on a non-recurring basis as of ~~September 30,~~December 31, 2015. There were no assets carried at fair value ~~measured~~measurement on a non-recurring basis as of ~~December~~March 31, ~~2014.~~2016.

⁽¹⁾ Represents the fair value of the respective assets at the Tridien business segment subsequent to the goodwill and long-lived asset impairment charge recognized during ~~the three and nine months ended September 30,~~ 2015. ~~Refer to "Note H - Goodwill and Other Intangible Assets" for further discussion regarding the impairment and valuation techniques applied.~~

~~Sale of American Furniture~~

On October 5, 2015, the Company sold its majority owned subsidiary, American Furniture, for a sale price of $24.1 million. The Company received approximately $23.5 million in net proceeds related to its debt and equity interests in American Furniture after payment of all transaction expenses. The sale of American Furniture met the criteria for the assets to be classified as held for sale as of September 30, 2015, and American Furniture is presented as discontinued operations in the accompanying condensed consolidated financial statements for all periods presented. The assets and liabilities of American Furniture were recognized at fair value as of September 30, 2015 based on the net proceeds received as a result of the sale. The Company recognized a loss on the sale of American Furniture of $14.3 million during the three months ended September 30, 2015.

Note L — Stockholders’ Equity

The Trust is authorized to issue 500,000,000 Trust shares and the Company is authorized to issue a corresponding number of LLC interests. The Company will at all times have the identical number of LLC interests outstanding as Trust shares. Each Trust share represents an undivided beneficial interest in the Trust, and each Trust share is entitled to one vote per share on any matter with respect to which members of the Company are entitled to vote.

Profit Allocation Interests

The Allocation Interests represent the original equity interest in the Company. The holders of the Allocation Interests ("Holders") are entitled to receive distributions pursuant to a profit allocation formula upon the occurrence of certain events. The distributions of the profit allocation isare paid upon the occurrence of the sale of a material amount of capital stock or assets of one of the Company’s businesses ("Sale Event") or, at the option of the Holders, at each five year anniversary date of the acquisition of one of the Company’s businesses ("Holding Event"). The ~~Manager, as the original holder of the Allocation Interests, previously had the right to cause the~~ Company to purchase the Allocation Interests upon termination of the MSA in accordance with a Supplemental Put Agreement. On July 1, 2013, the Company and the Manager amended the MSA to provide for certain modifications related to the Manager’s registration as an investment advisor under the Investment Advisor’s Act of 1940, as amended (the "Advisor’s Act"). In connection with the amendment resulting from the Managers’ registration as an investment advisor under the Advisor’s Act, the Company and the Manager agreed to terminate the Supplemental Put Agreement. The Company historically recorded the obligation associated with the Supplemental Put agreement as a liability that represented the amount the Company would have to

~~pay to physically settle the purchase of the Allocation Interests upon termination of the MSA. As a result of the termination of the Supplemental Put Agreement, the Company currently~~ records distributions of the profit allocation to the Holders upon occurrence of a Sale Event or Holding Event as ~~dividends~~distributions declared on Allocation Interests to stockholders’ equity when they are approved by the Company’s board of directors. The sale of FOX shares in March 2016 (refer to "Note F - Equity Method Investment") qualified as a Sale Event under the Company's LLC Agreement. As a result, in April 2016, the Company's board of directors approved and declared a profit allocation payment totaling $8.6 million profit allocation payment that will be paid to Holders during the second quarter of 2016.

~~Prior to the termination of the Supplemental Put Agreement,~~The Company calculates basic and diluted earnings per share ~~attributable to Holdings were calculated on a weighted average basis. Since the termination of the Supplemental Put Agreement, basic and diluted earnings per share is calculated~~ using the two-class method which requires the Company to allocate participating securities that have rights to earnings that otherwise would have been available only to Trust shareholders as a separate class of securities in calculating earnings per share. The Allocation Interests are considered participating securities that contain participating rights to receive profit allocations upon the occurrence of a Holding Event or Sale Event. The calculation of basic and diluted earnings per share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~ reflects the incremental increase during the period in the profit allocation distribution to Holders related to Holding Events.

Basic and diluted earnings per share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~ attributable to Holdings is calculated as follows:

Note M — Warranties

The Company’s Ergobaby, Liberty and Tridien operating segments estimate their exposure to warranty claims based on both current and historical product sales data and warranty costs incurred. The Company assesses the adequacy of its recorded warranty

liability quarterly and adjusts the amount as necessary. A reconciliation of the change in the carrying value of the Company’s warranty liability for the ~~nine~~three months ended ~~September 30, 2015~~March 31, 2016 and the year ended December 31, ~~2014~~2015 is as follows (in thousands):

Note N — Noncontrolling Interest

Noncontrolling interest represents the portion of the Company’s majority-owned subsidiary’s net income (loss) and equity that is owned by noncontrolling shareholders. The following tables reflect the Company’s ownership percentage of its majority owned operating segments and related noncontrolling interest balances as of ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014:~~2015:

% Ownership ⁽¹⁾

During the first quarter of 2016, the Company completed a recapitalization at Liberty whereby the Company entered into an amendment to the intercompany loan agreement with Liberty (the “Liberty Loan Agreement”). The Liberty Loan Agreement was amended to (i) provide for term loan borrowings of $38.0 million and revolving credit facility borrowings of $5.0 million to fund cash distributions totaling $35.3 million to its shareholders, including the Company, and (ii) extend the maturity dates of the term loans and revolving credit facility. Liberty’s noncontrolling shareholders received approximately $5.3 million in distributions as a result of the recapitalization. Immediately prior to the recapitalization, management exercised stock options for 75,095 shares of Liberty common shares, resulting in net proceeds from stock options at Liberty of $3.8 million. Liberty recognized $0.3 million in compensation expense related to the accelerated vesting of a portion of management's stock options at the time of exercise. The Company then purchased $1.5 million in Liberty common shares from members of Liberty management, resulting in Liberty's noncontrolling shareholders holding 11.4% of Liberty's outstanding shares subsequent to the recapitalization. The purchase of the Liberty common stock from noncontrolling shareholders and issuance of Liberty common stock related to the exercise of stock options by noncontrolling shareholders were at fair value and resulted in no change in control of Liberty. The difference between the consideration paid for the noncontrolling interest and the adjustment to the carrying amount of the Company's noncontrolling interest in Liberty was recognized in the Company's equity. Subsequent to the purchase of Liberty common shares and the exercise of the options, the Company owns 88.6% of Liberty on a primary basis and 84.7% on a fully diluted basis.

Note O — Income taxes

Each fiscal quarter the Company estimates its annual effective tax rate and applies that rate to its interim pre-tax earnings. In this regard, the Company reflects the full year’s estimated tax impact of certain unusual or infrequently occurring items and the effects of changes in tax laws or rates in the interim period in which they occur.

The computation of the annual estimated effective tax rate in each interim period requires certain estimates and significant judgment, including the projected operating income for the year, projections of the proportion of income earned and taxed in other jurisdictions, permanent and temporary differences and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, as additional information is obtained or as the tax environment changes.

The reconciliation between the Federal Statutory Rate and the effective income tax rate for the ~~nine~~three months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~ are as follows:

Expenses of Compass Group Diversified Holdings, LLC representing a pass through to shareholders ⁽¹⁾

Effect of gain on equity method investment ⁽²⁾

Effect of loss on equity method investment ⁽²⁾

Note P — Defined Benefit Plan

In connection with the acquisition of Arnold, the Company has a defined benefit plan covering substantially all of Arnold’s employees at its Lupfig, Switzerland location. The benefits are based on years of service and the employees’ highest average compensation during the specific period.

The unfunded liability of ~~$2.9~~$3.8 million is recognized in the consolidated balance sheet as a component of other non-current liabilities at ~~September 30, 2015.~~March 31, 2016. Net periodic benefit cost consists of the following for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014:~~ (in thousands):

During the ~~second~~first quarter of ~~2015,~~2016, Arnold recognized ~~a curtailment gain~~an increase in the unfunded pension liability primarily as a result of ~~the termination of certain employees at the Switzerland location who were participants in the defined benefit plan. The termination of the employees resulted in~~ a decrease in the ~~accumulated~~discount rate used to measure the pension benefit obligation. The discount rate decreased from 1.00% at December 31, 2015 to 0.45% at March 31, 2016, resulting in an increase to the pension benefit obligation ~~liability and a curtailment gain of $0.9 million. The curtailment gain was recognized in other comprehensive income during~~at March 31, 2016.

During the three months ended ~~June 30, 2015.~~

~~During the three and nine months ended September 30, 2015,~~March 31, 2016, per the terms of the pension agreement, Arnold contributed $0.1 million ~~and $0.3 million, respectively,~~ to the plan. For the remainder of ~~2015,~~2016, the expected contribution to the plan will be approximately ~~$0.2~~$0.4 million.

The plan assets are pooled with assets of other participating employers and are not separable; therefore the fair values of the pension plan assets at ~~September 30, 2015~~March 31, 2016 were considered Level 3.

Tridien's subsidiary, AMF Support Services, Inc. ("AMF") is subject to a workers' compensation claim in the State of California, being adjudicated by the Riverside County Workers' Compensation Appeals Board. ~~Tridien is a majority owned subsidiary of the Company.~~ The claim is the result of an industrial accident that occurred on March 2, 2013, and the injuries sustained by a contract employee working at Tridien's Corona, California facility. The employee is seeking workers' compensation benefits from AMF, as the special employer, and the staffing company who employed the worker, as the general employer. The employee has also alleged that the employee's injuries are the result of the employer's "serious and willful misconduct", and has made a claim under California Labor Code § 4553 for damages. If proven, the "serious and willful" penalty is fixed by statute at either $0 or 50% of the value of all workers' compensation benefits paid as a result of the injury and is not insurable. The underlying workers' compensation claims are still being adjudicated. On July 8, 2015, the California District Attorney's Office for the County of Riverside filed a complaint against Tridien in Superior Court of California, County of Riverside, alleging that Tridien committed a violation of Labor Code section 6425(a), a felony, by willfully and unlawfully violating an occupational safety and health standard, order, and special order, or Health and Safety Code section 25910, to wit, 8 CCR 4353(a) and 8 CCR 348(a), and that such violation caused the injuries resulting from the March 2, 2013 industrial accident referenced above. At this stage, it is not feasible to predict the outcome of or a range of loss, should a loss occur, from these proceedings. Accordingly, no amounts in respect of this matter have been provided in the Company's accompanying financial statements. The Company believes it has meritorious defenses to ~~all~~ the foregoing allegations and will continue to vigorously defend against the claims. In addition, in July 2015, the California District Attorney's Office for the County of Riverside filed a criminal complaint against Tridien/AMF in Superior Court of California, County of Riverside, alleging violations of the California Labor Code and Penal Code in connection with the above described industrial accident. In March 2016, Tridien/AMF pled no contest to a 6423(a) misdemeanor charge. As required by the sentence imposed by the court, in April 2016, Tridien made payments totaling $750,000 for fines, penalties, and assessments to the Riverside Superior Court and certain other agencies as directed by the court. Concurrently, Tridien made a payment of $49,875 to the California Division of Occupational Safety and Health Bureau of Investigations ("CAL OSHA") pursuant to a Stipulated Settlement Agreement (admitting no fault or liability) entered into by and between Tridien and CAL OSHA to end the appeal of seven OSHA citations issued by CAL OSHA related to the aforementioned accident. Tridien had previously accrued $750,000 for legal fees, costs and potential fines related to foregoing criminal matter.

Note R - Subsequent Events

~~Sale of American Furniture~~

On October 5, 2015, the Company sold its majority owned subsidiary, American Furniture, for a sale price of $24.1 million. The Company’s share of the net proceeds at closing, after accounting for the payment of transaction expenses, totaled $23.5 million.

The sale of American Furniture met the criteria for the assets to be classified as held for sale as of September 30, 2015, and the American Furniture subsidiary is presented as discontinued operations in the accompanying condensed consolidated financial

statements for all periods presented. The Company recognized a loss on the sale of American Furniture of $14.3 million during the quarter ended September 30, 2015 based on the initial write-down of American Furniture's carrying amounts to fair value.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Item 2 contains forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q 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" included elsewhere in this Quarterly Report as well as those risk factors discussed in the section entitled "Risk Factors" in our annual report on Form 10-K for the year ended December 31, ~~2014~~2015 and Item 1A. Risk Factors in Part II of this quarterly report.

Compass Diversified Holdings, a Delaware statutory trust ("Holdings" or the "Trust"), was incorporated in Delaware on November 18, 2005. Compass Group Diversified Holdings, LLC, a Delaware limited liability Company (the "Company"), was also formed on November 18, 2005. The Trust and the Company (collectively "CODI") were formed to acquire and manage a group of small and middle-market businesses headquartered in North America. The Trust is the sole owner of 100% of the Trust Interests, as defined in our LLC Agreement, of the Company. Pursuant to the LLC Agreement, the Trust owns an identical number of Trust Interests in the Company as exist for the number of outstanding shares of the Trust. Accordingly, our shareholders are treated as beneficial owners of Trust Interests in the Company and, as such, are subject to tax under partnership income tax provisions. The Company is the operating entity with a board of directors whose corporate governance responsibilities are similar to that of a Delaware corporation. The Company’s board of directors oversees the management of the Company and our businesses and the performance of Compass Group Management LLC ("CGM" or our "Manager"). Certain persons who are employees and partners of our Manager receive a profit allocation as owners of 58.8% of the Allocation Interests in us, as defined in our LLC Agreement.

The Trust and the Company were formed to acquire and manage a group of small and middle-market businesses headquartered in North America. We characterize small to middle market businesses as those that generate annual cash flows of up to $60 million. We focus on companies of this size because of our belief that these companies are often more able to achieve growth rates above those of their relevant industries and are also frequently more susceptible to efforts to improve earnings and cash flow.

In pursuing new acquisitions, we seek businesses with the following characteristics:

Our management team’s strategy for our businesses involves:

We are dependent on the earnings of, and cash receipts from our businesses to meet our corporate overhead and management fee expenses and to pay distributions. These earnings and distributions, net of any minority interests in these businesses, are generally available:

~~Table of Contents~~

Recent Events

Acquisition of ~~Manitoba Harvest~~Northern International Inc.

On ~~July 10, 2015, we closed on~~January 22, 2016, Sterno Products, a wholly owned subsidiary of the ~~acquisition of~~company, acquired all of the ~~issued and~~ outstanding ~~capital~~ stock of ~~Fresh Hemp Foods Ltd. ("Manitoba Harvest") pursuant to~~Northern International, Inc. (NII), for a ~~stock~~ purchase agreement entered into on June 5, 2015. Headquartered in Winnipeg, Manitoba, Manitoba Harvest is a pioneer and global leader in branded, hemp-based foods. Manitoba Harvest’s award-winning products are currently carried in about 7,000 retail stores across the U.S. and Canada.

price of approximately $35.8 million (C$50.6 million). The purchase price ~~was approximately $101.4~~includes an earn-out payable over two years of up to a maximum amount of $1.8 million (C$~~128.6~~2.5 million), and ~~acquisition related costs were approximately $1.1 million (C$1.4 million). We funded~~is subject to working capital adjustments. Headquartered in Coquitlam, British Columbia, Canada, NII sells flameless candles and outdoor lighting products through the retail segment. Sterno Products financed the acquisition and payment of the related transaction costs through ~~drawings on our 2014 Revolving Credit Facility. CGM acted as~~the issuance of an ~~advisor to us on~~additional $37.0 million in inter-company loans with the ~~deal and will continue to provide integration services during~~Company.

Partial Divestiture of FOX shares

During the first ~~year~~quarter of 2016, our ~~ownership of Manitoba Harvest. CGM receives integration service fees of approximately $1.0 million, which are payable quarterly as services are rendered, beginning September 30, 2015.~~

~~Sale of CamelBak~~

~~On August 3, 2015, pursuant to a stock purchase agreement dated July 24, 2015, we sold our majority owned subsidiary, CamelBak, based~~equity method investment, FOX, closed on a ~~total enterprise value~~secondary public offering of ~~$412.5 million. Our share~~2,500,000 shares of FOX common shares held by the Company. Concurrently with the closing of the ~~net proceeds, at closing, after accounting for~~offering, FOX repurchased 500,000 shares of FOX common stock held by the redemption of CamelBak’s noncontrolling holders and the payment of transaction expenses totaled $367.8 million. We recognized a gain of $165.3 million for the three and nine months ended September 30, 2015 asCompany. As a result of the sale of ~~CamelBak. Refer~~shares through the offering and the repurchase of shares by FOX, we sold a total of 3,000,000 shares of FOX common stock, with total net proceeds of approximately $47.7 million. Upon completion of the offering and repurchase of shares by FOX, our ownership interest in FOX was reduced from approximately 41% to ~~"Liquidity and Capital Resources, Subsequent Events - Profit~~33%. The sale of the portion of our FOX shares in March 2016 qualified as a Sale Event under the Company's LLC Agreement. During the second quarter, our Board of Directors declared a distribution to the Holders of the Allocation ~~Payments" for a discussion~~Interests of $8.6 million in connection with the Sale Event of FOX. The profit allocation payment ~~associated with the sale of CamelBak.~~

The transaction is subject to adjustments for certain changes in the working capital of CamelBak. The Stock Purchase Agreement contains customary representations, warranties, covenants and indemnification provisions.

~~Sale of American Furniture~~

On October 5, 2015, we sold our majority owned subsidiary, American Furniture, for a sale price of $24.1 million. The Company’s share of the net proceeds at closing, after accounting for the payment of transaction expenses, totaled $23.5 million. The sale of American Furniture met the criteria for the assets towill be classified as held for sale as of September 30, 2015, and the American Furniture subsidiary is presented as discontinued operations in the accompanying condensed consolidated financial statements for all periods presented. The Company recognized a loss on the sale of American Furniture of $14.3 million onmade during the quarter ended ~~September~~June 30, 2015 based on the initial write-down of American Furniture's carrying amounts to fair value. Refer to "Liquidity and Capital Resources, Profit Allocation Payments" for a discussion of the profit allocation associated with the sale of American Furniture.2016.

~~2015~~2016 Outlook

Middle market deal flow ~~remained steady~~ in the first quarter was down compared to both the first and fourth quarter of 2015, ~~year-to-date relative~~as purchase price multiples continue to ~~2014, in part due to continued attractive valuations for sellers.~~increase. High valuation levels continue to be driven by the availability of debt capital with favorable terms and financial and strategic buyers seeking to deploy available equity capital.

We remain focused on marketing the Company’s attractive ownership and management attributes to potential sellers of middle market businesses and intermediaries. In addition, we continue to pursue opportunities for add-on acquisitions by certain of our existing subsidiary companies, which can be particularly attractive from a strategic perspective. We completed an add-on acquisition at our Sterno Products subsidiary in the first quarter of 2016, and additional add-on acquisition at our Clean Earth subsidiary subsequent to the end of the first quarter.

Discontinued Operations

The ~~sale~~results of operations for CamelBak and American Furniture for the three months ended March 31, 2015 are presented as discontinued operations in our consolidated financial statements ~~for all periods presented.~~as a result of the sale of these operating segments in August and October 2015, respectively. See Note D - "Discontinued Operations", to our consolidated financial statements for further discussion of the operating results of our discontinued businesses.

Non-GAAP Financial Measures

U.S. GAAP refers to generally accepted accounting principles in the United States. A non-GAAP financial measure is a numerical measure of historical or future performance, financial position or cash flow that excludes amounts, or is subject to adjustments

~~Table of Contents~~

that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance with GAAP in our financial statements, and vice versa for measures that include amounts, or are subject to adjustments that effectively include amounts, that are excluded from the most directly comparable measure as calculated and presented. Our Manitoba Harvest acquisition uses the Canadian Dollar as its functional currency. We will periodically refer to net sales and net sales growth rates in the Manitoba Harvest management's discussion and analysis on a "constant currency" basis so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of Manitoba Harvest's business performance. "Constant currency" net sales results are calculated by translating current period net sales in local currency using the prior year’s currency conversion rate. Generally, when the dollar either strengthens or weakens against other currencies, the growth at constant currency rates or adjusting for currency will be higher or lower than growth reported at actual exchange rates. "Constant currency" measured net sales is not a measure of net sales presented in accordance with U.S. GAAP.

Results of Operations

We were formed on November 18, 2005 and acquired our existing businesses (segments) at ~~September 30, 2015~~March 31, 2016 as follows:




May 16, 2006	August 1, 2006	March 31, 2010	September 16, 2010

Advanced Circuits	Tridien	Liberty Safe	Ergobaby

March 5, 2012	August 26, 2014	October 10, 2014	July 10, 2015

Arnold Magnetics	Clean Earth	~~SternoCandleLamp~~Sterno Products	Manitoba Harvest

In the following results of operations, we provide (i) our actual consolidated results of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015, ~~and 2014,~~ which includes the historical results of operations of our businesses (operating segments) from the date of acquisition and (ii) comparative results of operations for each of our businesses on a stand-alone basis for the three ~~and nine~~ months ended ~~September 30, 2015~~March 31, 2016 and 2014. On July 10, 2014 our ownership interest in FOX decreased to 41% and as a result, beginning July 10, 2014 FOX no longer met the requirements for inclusion in our consolidated Results of Operations.2015.

In the table below we remove the results of operations of FOX that are included in our historical condensed consolidated results of operations through July 10, 2014, in order to provide a meaningful comparison of the combined results of operations of our majority-owned businesses for the three and nine month periods ended September 30, 2015 and 2014.

On a consolidated basis, net ~~of FOX, net~~ sales for the three months ended ~~September 30, 2015~~March 31, 2016 increased by approximately ~~$74.4~~$28.6 million or ~~55.6%~~16.0% compared to the corresponding period in ~~2014.~~2015. Our ~~acquisitions of Clean Earth and SternoCandleLamp in August and October 2014, respectively, contributed $55.5 million of the total increase, and our~~ acquisition of Manitoba Harvest in July 2015 contributed ~~an additional $8.9~~$13.7 million to the increase in net sales. During the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~2014,~~2015, we also saw notable sales increases at Liberty ($~~3.5~~3.1 million), Clean Earth ($3.2 million) and Sterno ($15.4 million, primarily due to the acquisition of NII in January 2016), offset by decreases in sales at Ergo ($1.3 million), Tridien ($~~5.7~~1.8 million) and Arnold Magnetics ($~~1.1~~3.8 million). Refer to "Results of Operations - Our Businesses" for a more detailed analysis of net sales by business segment.

We do not generate any revenues apart from those generated by the businesses we own. We may generate interest income on the investment of available funds, but we expect such earnings to be minimal. Our investment in our businesses is typically in the form of loans from the Company to such businesses, as well as equity interests in those companies. Cash flows coming to the Trust and the Company are the result of interest payments on those loans, amortization of those loans and dividends on our equity ownership. However, on a consolidated basis these items will be eliminated.

On a consolidated basis, ~~net of FOX,~~ cost of sales increased approximately ~~$49.1~~$14.9 million during the three month period ended ~~September 30, 2015,~~March 31, 2016, compared to the corresponding period in ~~2014. The 2014 acquisitions, less the period that Clean Earth was included in our results of operations subsequent to acquisition,~~2015. Manitoba Harvest accounted for ~~$37.9~~$6.7 million of the increase in cost of sales during the three months ended ~~September 30, 2015,~~March 31, 2016, and ~~our Manitoba Harvest~~Sterno's acquisition, NII, accounted for ~~$7.3~~$12.4 million of the ~~increase, including the amortization~~increase. These increases were offset by decreases in cost of ~~the step up in fair value of inventory associated with the purchase price allocation~~sales at other operating segments, particularly Arnold ($~~3.1~~2.7 million). Gross profit as a percentage of sales was approximately ~~33.1%~~31.8% in the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~32.7%~~29.3% in ~~2014.~~2015. Refer to "Results of Operations - Our Businesses" for a more detailed analysis of cost of sales by business segment.

On a consolidated basis, ~~net of FOX,~~ selling, general and administrative expense increased approximately ~~$11.1~~$11.4 million during the three month period ended ~~September 30, 2015,~~March 31, 2016, compared to the corresponding period in ~~2014.~~2015. The increase in expenses in the ~~2015~~2016 quarter compared to ~~2014~~2015 is principally the result of ~~including~~ the ~~expenses from our 2014 acquisitions ($6.8 million) and our~~ Manitoba Harvest acquisition in July 2015 ($~~4.7 million, including~~5.7 million), and Sterno Products' acquisition ~~costs).~~of NII in January 2016. Refer to "Results of Operations - Our Businesses" for a more detailed analysis of selling, general and administrative expense by business segment. At the corporate level, ~~selling,~~ general and administrative expense ~~decreased $0.2~~increased from $3.2 million in the three months ended ~~September 30,~~March 31, 2015 ~~compared~~ to $3.6 million in the ~~same period in 2014.~~three months ended March 31, 2016.

Pursuant to the Management Services Agreement, we pay CGM a quarterly management fee equal to 0.5% (2.0% annually) of our consolidated adjusted net assets. We accrue for the management fee on a quarterly basis. For the three months ended ~~September 30, 2015,~~March 31, 2016, we incurred approximately $6.5 million in expense for these fees compared to ~~$5.8~~$6.7 million for the corresponding period in ~~2014.~~2015. The ~~$0.7 million increase~~decrease in the three months ended ~~September 30, 2015~~March 31, 2016 is principally due to the ~~increase~~decrease in consolidated net assets resulting from the ~~acquisitions of SternoCandleLamp during the fourth quarter of 2014, and Manitoba Harvest in July 2015, partially offset by the effect of~~ the sale of CamelBak in August ~~2015.~~

~~On a consolidated basis, net of FOX, net sales for the nine months ended September 30,~~and AFM in October 2015, ~~increased~~partially offset by approximately $228.0 million or 63.5% compared to the corresponding period in 2014. Our acquisitions of Clean Earth and SternoCandleLamp in August and October 2014, respectively, contributed $201.3 million of the total increase, and the acquisition of Manitoba Harvest in July 2015 contributed an additional $8.9 million. During the nine months ended September 30, 2015 compared to 2014, we also saw notable sales increases at Ergobaby ($2.6 million), Liberty ($6.2 million), Advanced Circuits ($2.6 million) and Tridien ($8.1 million), offset in part by decreased sales at Arnold Magnetics ($1.8 million). Refer to "Results of Operations - Our Businesses" for a more detailed analysis of net sales by business segment.

On a consolidated basis, net of FOX, cost of sales increased approximately $161.2 million during the nine month period ended September 30, 2015, compared to the corresponding period in 2014. The 2014 acquisitions ($148.7 million) and Manitoba Harvest ($7.3 million of the increase, including the amortization of the step up in fair value of inventory associated with the purchase price allocation) were the primary drivers of the increase in cost of sales during the nine months ended September 30, 2015. Gross profit as a percentage of sales was approximately 31.5% in the nine months ended September 30, 2015 compared to 32.8% in 2014. Refer to "Results of Operations - Our Businesses" for a more detailed analysis of cost of sales by business segment.

On a consolidated basis, net of FOX, selling, general and administrative expense increased approximately $30.5 million during the nine month period ended September 30, 2015, compared to the corresponding period in 2014. The increase in expenses in 2015 compared to 2014 is principally the result of including the expenses from our 2014 acquisitions ($27.1 million) and Manitoba Harvest ($4.7 million, including acquisition costs) . Refer to "Results of Operations - Our Businesses" for a more detailed analysis of selling, general and administrative expense by business segment. At the corporate level, selling, general and administrative expense was flat in the nine months ended September 30, 2015, compared to the same period in 2014.

Pursuant to the Management Services Agreement, we pay CGM a quarterly management fee equal to 0.5% (2.0% annually) of our consolidated adjusted net assets. We accrue for the management fee on a quarterly basis. For the nine months ended September 30, 2015, we incurred approximately $19.9 million in expense for these fees compared to $15.3 million for the corresponding period in 2014. The $4.6 million increase in the nine months ended September 30, 2015 is principally due to the increase in consolidated net assets resulting from the acquisitions of Clean Earth and SternoCandleLamp during the third and fourth quarter of 2014.

In January 2015, one of Tridien's ~~largest~~larger customers informed ~~the Company~~Tridien that itthey would not renew ~~its~~their purchase agreement when it ~~expires~~expired in the fourth quarter of 2015. ~~This customer represented 20% of Tridien's sales in 2014.~~ The expected lost sales and net income from this customer were significant enough to trigger an interim goodwill and ~~indefinite-lived asset~~indefinite lived impairment analysis ~~which resulted~~ in ~~impairment of the Tridien goodwill of $8.9 million during~~ the first quarter of ~~2015. We completed the impairment testing during the second quarter~~2015, which resulted in a write down of ~~2015 and recorded an additional $0.3 million in impairment expense related to goodwill and long-lived assets.~~goodwill.

Results of Operations — Our Businesses

We categorize the businesses we own into two separate groups of businesses (i) branded products businesses and, (ii) niche industrial businesses. Branded products businesses are characterized as those businesses that we believe capitalize on a valuable brand name in their respective market sector. We believe that our branded products businesses are leaders in their particular category. Niche industrial businesses are characterized as those businesses that focus on manufacturing, servicing and selling particular products within a specific market sector. We believe that our niche industrial businesses are leaders in their specific market sector.

The following discussion reflects a comparison of the historical results of operations of each of our businesses for the three ~~and nine~~ month periods ending ~~September 30,~~March 31, 2016 and March 31, 2015 ~~and September 30, 2014~~ on a stand-alone basis. ~~For the 2014 acquisitions of Clean Earth~~

~~and SternoCandleLamp, the following discussion reflects pro forma results of operations for the three and nine months ended September 30, 2014 as if we had acquired the businesses on January 1, 2014.~~ For the 2015 acquisition of Manitoba Harvest, the following discussion reflects pro forma results of operations for the three ~~and nine~~ months ended ~~September 2014 and~~March 31, 2015 as if we had acquired Manitoba Harvest on January 1, ~~2014.~~2015. Where appropriate, relevant pro forma adjustments are reflected as part of the historical operating results. We believe this is the most meaningful comparison of the operating results for each of our business segments. The following results of operations at each our businesses are not necessarily indicative of the results to be expected for a full year.

Branded Products Businesses

Ergobaby, headquartered in Los Angeles, California, is a premier designer, marketer and distributor of wearable baby carriers and related baby wearing products, as well as infant travel systems consisting of strollers, car seats and accessories. Ergobaby offers a broad range of wearable baby carriers, infant travel systems and related products that are sold through more than 450 retailers and web shops in the United States and throughout the world. Ergobaby has two main product lines: baby carriers (baby carriers and accessories) and infant travel systems (strollers, car seats and accessories).

On September 16, 2010, we made loans to and purchased a controlling interest in Ergobaby for approximately $85.2 million, representing approximately 84% of the equity in Ergobaby.

On November 18, 2011, Ergobaby acquired all the outstanding stock of Orbit Baby for $17.5 million. Orbit Baby produces and markets a premium line of infant travel systems. Orbit Baby’s high-quality products include stroller frames, seats, car seats and bassinets that are interchangeable using a patented hub ring.

Results of Operations

The table below summarizes the income from operations data for Ergobaby for the three months ended March 31, 2016 and ~~nine month periods ended September 30, 2015 and September 30, 2014.~~March 31, 2015.

Net sales for the three months ended ~~September 30, 2015~~March 31, 2016 were ~~$21.9~~$19.4 million, a decrease of ~~$0.5~~$1.3 million or ~~2.2%~~6.1% compared to the same period in ~~2014.~~2015. During the three months ended ~~September 30, 2015,~~March 31, 2016, international sales were approximately ~~$12.8~~$10.4 million, representing a decrease of ~~$0.5~~$0.6 million over the corresponding period in ~~2014.~~2015. International sales of infant travel systems and baby carriers and accessories decreased by approximately ~~$0.2~~$0.1 million and ~~$0.3~~$0.5 million, respectively during the quarter ended ~~September 30, 2015~~March 31, 2016 as compared to the comparable quarter in ~~2014.~~2015. Ergobaby is currently in the process of moving to a direct sales model from a distributor model in Canada, which negatively impacted the year-over-year quarterly international sales comparison. Domestic sales were $9.1 million in the ~~third~~first quarter of ~~2015, the same as~~2016, reflecting a decrease of $0.7 million compared to the corresponding period in ~~2014.~~2015. The ~~flat~~decrease in domestic sales ~~activity in~~during the ~~third~~first quarter of ~~2015~~2016 compared to the same period in ~~2014~~2015 was due to ~~an increase~~a decrease in sales of baby carrier and accessories ($~~0.5~~0.3 million) to national and specialty retail accounts, ~~offset by~~and a decrease in domestic revenues for infant travel systems and accessories ($~~0.5~~0.4 million). The ~~increase~~decrease in baby carrier sales was attributable to ~~the demand~~lower orders for ~~the~~ Ergobaby’s 360 four position carrier ~~which was launched domestically late~~due to changes in the ~~second quarter~~timing of ~~2014.~~promotional activities for Ergobaby chain customers and inconsistent order patterns for boutique retail customers. The decrease in infant travel systems and accessories sales was primarily attributable to ~~higher revenues~~lower demand of travel systems compared to the comparable quarter in the three month period ended September 30, 2014, which was still a strong sell-in period for launch of the Orbit Baby G3 infant travel system, which includes stroller bases, various seats and accessories, into the domestic market.2015. Baby carriers and accessories represented ~~85.4%~~89.3% of sales in the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~82.7%~~85.5% in the same period in ~~2014.~~2015.

Cost of sales was approximately ~~$7.9~~$6.8 million for the three months ended ~~September 30, 2015,~~March 31, 2016, as compared to ~~$8.0~~$7.2 million for the three months ended ~~September 30, 2014,~~March 31, 2015, a decrease of ~~$0.1~~$0.4 million. The decrease in cost of sales was primarily attributable to lower sales compared to the prior period. Gross profit as a percentage of sales was ~~64.2%~~65.0% for the quarter ended ~~September 30, 2015~~March 31, 2016 compared to ~~64.4%~~65.4% for the same period in ~~2014.~~2015.

Selling, general and administrative expense for the three months ended ~~September 30, 2015 decreased~~March 31, 2016 increased to approximately ~~$7.6~~$7.8 million or ~~34.6%~~40.3% of net sales compared to ~~$8.7~~$7.3 million or ~~38.7%~~35.5% of net sales for the same period of ~~2014.~~2015. The ~~$1.1~~$0.5 million ~~decrease~~increase in the three months ended ~~September 30, 2015~~March 31, 2016 compared to the same period in ~~2014~~2015 was primarily attributable to to the timing of marketing spend, ~~lower legal fees in the 2015 period, and a decrease in foreign currency translation costs, partially offset by~~ increases in employee related costs due to increased ~~headcount.~~staffing levels, and higher professional fees, partially offset by decreased variable expenses, such as distribution and fulfillment and commissions, due to the decrease in domestic sales.

Income from operations for the three months ended ~~September 30, 2015 increased $0.8~~March 31, 2016 decreased $1.3 million, to ~~$5.7~~$4.1 million, compared to ~~$4.9~~$5.4 million for the same period of ~~2014,~~2015, based on the factors described above.

Net sales for the nine months ended September 30, 2015 were $64.1 million, an increase of $2.6 million or 4.3% compared to the same period in 2014. During the nine months ended September 30, 2015, international sales were approximately $36.1 million, representing an increase of $1.0 million over the corresponding period in 2014. International baby carrier and accessory sales increased by approximately $0.7 million, and international infant travel systems sales increased by approximately $0.3 million during the first nine months of 2015 as compared to the first nine months of 2014. Domestic sales were $28.0 million in the first nine months of 2015 reflecting an increase of $1.6 million over the corresponding period in 2014. The growth in domestic sales in the first nine months of 2015 compared to the same period in 2014 is attributable to increased sales of baby carrier and accessories ($3.9 million) to national and specialty retail accounts, offset by a decrease in domestic revenues for infant travel systems and accessories ($2.3 million). The increase in baby carrier sales was attributable to the demand for the Ergobaby’s 360 four position carrier, which was domestically available late in the second quarter of 2014. The decrease in infant travel systems and accessories sales was primarily attributable to higher revenues in the nine month period ended September 30, 2014 in which Ergobaby launched the new Orbit Baby G3 infant travel system, which includes stroller bases, various seats and accessories, into the domestic market. Baby carriers and accessories represented 85.7% of sales in the nine months ended September 30, 2015 compared to 81.8% in the same period in 2014.

Cost of sales was approximately $22.4 million for the nine months ended September 30, 2015 as compared to $22.2 million for the nine months ended September 30, 2014. The increase in cost of sales was primarily attributable to higher sales volume

compared to the prior period. Gross profit as a percentage of sales was 65.1% for the nine months ended September 30, 2015 compared to 63.8% for the same period in 2014. The 130 basis point increase is primarily attributable to product sales mix, with a larger percentage of higher margin baby carrier sales as compared to the prior period.

Selling, general and administrative expense for the nine months ended September 30, 2015 decreased to approximately $22.7 million or 35.4% of net sales compared to $23.1 million or 37.6% of net sales for the same period of 2014. The $0.5 million decrease in the nine months ended September 30, 2015 compared to the same period in 2014 was primarily attributable to timing in marketing spend and a decrease in foreign currency translation costs in the period; partially offset by higher personnel costs due to increased staffing levels.

Income from operations for the nine months ended September 30, 2015 increased $3.3 million, to $16.8 million, compared to $13.4 million for the same period of 2014, based on the factors described above.

Based in Payson, Utah and founded in 1988, Liberty Safe is the premier designer, manufacturer and marketer of home and gun safes in North America. From its over 314,000 square foot manufacturing facility, Liberty Safe produces a wide range of home and gun safe models in a broad assortment of sizes, features and styles ranging from an entry level product to good, better and best products. Products are marketed under the Liberty brand, as well as a portfolio of licensed and private label brands, including ~~Remington,~~ Cabela’s, Case IH and John Deere. Liberty Safe’s products are the market share leader and are sold through an independent dealer network ("Dealer sales") in addition to various sporting goods, farm and fleet and home improvement retail outlets ("Non-Dealer sales"). Liberty has the largest independent dealer network in the industry. Historically, approximately ~~60%~~55% of Liberty Safe’s net sales are Non-Dealer sales and ~~40%~~45% are Dealer sales.

We made loans to and purchased a controlling interest in Liberty Safe for approximately $70.2 million in March 2010, representing approximately 96% of the equity in Liberty.

Results of Operations

The table below summarizes the income from operations data for Liberty Safe for the three months ended March 31, 2016 and ~~nine month periods ended September 30, 2015 and September 30, 2014.~~March 31, 2015.

Net sales for the quarter ended ~~September 30, 2015~~March 31, 2016 increased approximately ~~$3.5~~$3.1 million or ~~17.5%~~12.2%, to ~~$23.4~~$29.0 million, compared to the corresponding quarter ended ~~September 30, 2014.~~March 31, 2015. Non-Dealer sales were approximately ~~$12.5~~$14.3 million in the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$12.2~~$14.6 million for the three months ended ~~September 30, 2014~~March 31, 2015, representing ~~an increase~~

a decrease of $0.3 million or ~~2.5%~~2.1%. Dealer sales totaled approximately ~~$10.9~~$14.7 million in the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$7.7~~$11.2 million in the same period in ~~2014,~~2015, representing an increase of ~~$3.2~~$3.5 million or ~~41.6%~~31.6%. The increase in ~~third~~first quarter ~~2015~~2016 sales is attributable to ~~a return to a more normalized level of~~stronger overall market demand ~~following the abnormal industry cycle in 2013~~ and ~~2014, particularly the market softening experienced during 2014. Liberty Safe has~~Liberty’s increased ~~its~~ability to meet that demand through increased production output ~~continuously to meet~~and the ~~current demand, and has reached targeted manufacturing output levels~~utilization of additional quantities of finished goods inventory that were built during the ~~third~~fourth quarter of 2015.

Cost of sales for the three months ended ~~September 30, 2015~~March 31, 2016 decreased approximately ~~$1.6~~$0.4 million when compared to the same period in ~~2014.~~2015. Gross profit as a percentage of net sales totaled approximately ~~30.8%~~32.1% and ~~10.8%~~22.3% for the quarters ended ~~September 30,~~March 31, 2016 and March 31, 2015, ~~and September 30, 2014,~~ respectively. The significant increase in gross profit as a percentage of sales during the three months ended ~~September 30, 2015~~March 31, 2016 compared to the same period in ~~2014~~2015 is attributable to favorable cost variances as a result of improved manufacturing efficiencies due to greater volume output, and favorable material costs.

Selling, general and administrative expense for the three months ended ~~September 30, 2015~~March 31, 2016 increased to approximately ~~$3.3~~$4.1 million or ~~13.9%~~14.0% of net sales compared ~~$2.7~~to $3.3 million or ~~13.8%~~12.6% of net sales for the same period of ~~2014.~~2015. The ~~$0.6~~$0.8 million increase during the three months ended ~~September 30, 2015~~March 31, 2016 is primarily attributable to ~~a higher level of dealer~~increased spending on radio and other advertising ~~expense,~~media, higher sales commission expense, and ~~an increased annual advertising allowances for national account customers.~~expenses of approximately $0.4 million related to accelerated vesting of employee stock options and legal fees associated with the recapitalization of Liberty in March 2016.

Amortization of intangibles

Amortization expense in the first quarter of 2016 decreased $0.7 million because certain intangibles assets that resulted from the purchase of Liberty in March 2010 are now fully amortized.

Income from operations increased ~~$5.2~~$3.4 million during the three months ended ~~September 30, 2015~~March 31, 2016 to ~~$3.5~~$4.8 million, compared to ~~a loss from operations of $1.7~~$1.4 million during the same period in ~~2014,~~2015, principally as a result of the increase in sales and gross profit, and decrease in amortization expense, as described above.

~~Nine months ended September 30, 2015 compared to the nine months ended September 30, 2014~~

Net sales for the nine months ended September 30, 2015 increased approximately $6.2 million or 9.2%, to $74.0 million, compared to the corresponding period ended September 30, 2014. Non-Dealer sales were approximately $39.9 million in the nine months ended September 30, 2015 compared to $38.1 million for the nine months ended September 30, 2014 representing an increase of $1.8 million or 4.7%. Dealer sales totaled approximately $33.9 million in the nine months ended September 30, 2015 compared to $29.6 million in the same period in 2014, representing an increase of $4.3 million or 14.5%. Higher production output coupled with the increase in market demand has facilitated the year over year sales growth. In addition, the increase in 2015 sales is attributable to a return to a more normalized level of market demand following the abnormal industry cycle in 2013 and 2014, particularly the market softening experienced during 2014. Liberty Safe’s sales backlog was approximately $9.7 million at September 30, 2015 compared to approximately $8.5 million at September 30, 2014.

Cost of sales for the nine months ended September 30, 2015 decreased approximately $3.4 million when compared to the same period in 2014. Gross profit as a percentage of net sales totaled approximately 26.4% and 14.6% for the nine months ended September 30, 2015 and September 30, 2014, respectively. The significant increase in gross profit as a percentage of sales during the nine months ended September 30, 2015 compared to the same period in 2014 is attributable to favorable cost variances as a result of improved manufacturing efficiencies due to greater volume output and favorable material costs.

Selling, general and administrative expense for the nine months ended September 30, 2015 increased to approximately $10.0 million or 13.5% of net sales compared to $8.9 million or 13.1% of net sales for the same period of 2014. The $1.1 million increase is primarily attributable to a higher level of dealer co-op advertising, higher sales commission expense, and an increased annual advertising allowance for national account customers.

Income from operations increased $9.9 million during the nine months ended September 30, 2015 to $7.7 million compared to a loss from operations of $2.2 million during the same period in 2014, principally as a result of the increase in sales and gross profit, as described above.

We made loans to and purchased a controlling interest in Manitoba Harvest for approximately ~~$101.4~~$102.7 million in July 2015 representing approximately 87% of the equity in Manitoba Harvest. On December 15, 2015, Manitoba Harvest acquired all of the outstanding stock of Hemp Oil Canada, Inc. ("HOCI") for approximately $30.8 million. HOCI is a wholesale supplier and a private label packager of hemp food products and ingredients.

Results of Operations


	Goodwill				Identifiable Assets				Depreciation and Amortization Expense								Accounts Receivable						Identifiable Assets				Depreciation and Amortization Expense
	Sept. 30,		December 31,		Sept. 30,		December 31,		Three months ended September 30,				Nine months ended September 30,				March 31,			December 31,			March 31,		December 31,		Three months ended March 31,
	2015		2014		2015 ⁽¹⁾		2014 ⁽¹⁾		2015		2014		2015		2014		2016			2015			2016 ⁽¹⁾		2015 ⁽¹⁾		2016		2015
Goodwill and identifiable assets of operating segments
Ergobaby	$	41,664	$	41,664	$	62,277	$	65,309	$	876	$	950	$	2,596	$	2,867	$	11,130		$	8,076		$	59,417	$	62,436	$	835	$	850
FOX	—		—		—		—		—		252		—		4,785
Liberty	32,828		32,828		30,746		34,139		648		1,582		2,880		4,663		12,783			12,941			29,255		31,395		656		1,592
Manitoba Harvest	30,652		—		76,889		—		4,011		—		4,011		—		8,262			5,512			88,769		88,541		1,314		—
ACI	57,615		57,615		16,426		19,334		726		1,278		2,207		3,836		6,747			5,946			18,421		17,275		841		757
Arnold Magnetics	51,767		51,767		74,318		77,610		2,182		2,152		6,561		6,363		18,006			15,083			69,013		72,310		2,237		2,194
Clean Earth	111,339		110,633		191,547		203,938		5,082		1,116		15,541		1,116		33,927			42,291			180,962		185,087		4,955		5,392
SternoCandleLamp	33,716		33,716		126,366		126,302		2,155		—		5,775		—
Sterno Products																	33,922			19,508			142,403		121,910		3,451		1,464
Tridien	7,834		16,762		15,680		14,844		641		604		1,835		1,900		6,301			8,571			14,421		15,526		619		619
Allowance for doubtful accounts																	(3,646		)	(3,608		)	—		—		—		—
Total	367,415		344,985		594,249		541,476		16,321		7,934		41,406		25,530		127,432			114,320			602,661		594,480		14,908		12,868
Reconciliation of segment to consolidated total:
Corporate and other identifiable assets	—		—		335,486		255,305		—		—		755		—		—			—			56,973		64,007		—		503
Equity method investment																	—			—			191,439		249,747		—		—
Amortization of debt issuance costs and original issue discount	—		—		—		—		729		713		2,154		2,412		—			—			—		—		738		713
Goodwill carried at Corporate level ⁽²⁾	8,649		8,649		—		—		—		—		—		—
Assets of discontinued operations	—		—		46,097		278,163		—		—		—		—
Total	$	376,064	$	353,634	$	975,832	$	1,074,944	$	17,050	$	8,647	$	44,315	$	27,942	$	127,432		$	114,320		$	851,073	$	908,234	$	15,646	$	14,084


Condensed Balance Sheet information
	September 30, 2015		December 31, 2014		March 31, 2016		December 31, 2015
Current assets	$	160,250	$	112,609	$	132,712	$	131,941
Non-current assets	145,345		145,828		149,688		145,775
	$	305,595	$	258,437	$	282,400	$	277,716

Current liabilities	$	89,813	$	60,825	$	71,809	$	73,970
Non-current liabilities	71,197		68,806		60,766		51,486
Stockholders' equity	144,585		128,806		149,825		152,260
	$	305,595	$	258,437	$	282,400	$	277,716

Condensed Results of Operations ⁽¹⁾
	Three months ended September 30, 2015		Nine months ended September 30, 2015		Three months ended March 31, 2016		Three months ended March 31, 2015
Net revenue	$	106,171	$	271,130	$	80,217	$	67,788
Gross profit	34,786		83,437		25,118		18,783
Operating income	13,821		25,897		5,694		1,539
Net income	$	10,591	$	18,124	$	3,262	$	770


	September 30, 2015			December 31, 2014			March 31, 2016			December 31, 2015
Machinery and equipment	$	130,024		$	114,797		$	137,866		$	135,357
Office furniture, computers and software	8,837			6,653			10,302			9,500
Leasehold improvements	8,579			6,476			9,419			8,706
Buildings and land	24,239			25,096			32,767			31,856
	171,679			153,022			190,354			185,419
Less: accumulated depreciation	(62,039		)	(46,041		)	(72,269		)	(67,369		)
Total	$	109,640		$	106,981		$	118,085		$	118,050


October 1, 2015 through Dec. 31, 2015	$	8,872
2016	35,488
April 1, 2016 through Dec. 31, 2016			$	22,317
2017	33,267		27,874
2018	31,100		26,902
2019	30,123		25,561
2020			25,315
	$	138,850	$	127,969


	September 30, 2015			December 31, 2014			March 31, 2016			December 31, 2015
Revolving Credit Facility	$	—		$	169,725		$	—		$	—
Term Loan	320,938			323,375			319,313			320,125
Original issue discount	(3,800		)	(4,303		)	(3,465		)	(3,633		)
Debt issuance costs - term loan							(4,390		)	(4,603		)
Total debt	$	317,138		$	488,797		$	311,458		$	311,889
Less: Current portion, term loan facilities	(3,250		)	(3,250		)	(3,250		)	(3,250		)
Long term debt	$	313,888		$	485,547		$	308,208		$	308,639



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Clean Earth
(in thousands)
Amounts recognized as of the acquisition date
Assets:
Cash	$	3,683
Accounts receivable ⁽¹⁾	41,821
Property, plant and equipment ⁽²⁾	43,437
Intangible assets	135,939
Goodwill	109,738
Other current and noncurrent assets	8,697
Total assets	$	343,315

Liabilities and noncontrolling interest:
Current liabilities	$	27,205
Other liabilities	149,760
Deferred tax liabilities	61,299
Noncontrolling interest	2,275
Total liabilities and noncontrolling interest	$	240,539

Net assets acquired	$	102,776
Noncontrolling interest	2,275
Intercompany loans to business	148,248
	$	253,299
Acquisition Consideration

Purchase price	$	243,000
Working capital adjustment	6,616
Cash	3,683
Total purchase consideration	$	253,299
Less: Transaction costs	1,935
Purchase price, net	$	251,364



Acquisition Consideration
Purchase price	$	161,500
Working capital adjustment	1,251
Total purchase consideration	$	162,751
Less: Transaction costs	2,765
Purchase price, net	$	159,986



(in thousands)	For the period July 1, 2015 through disposition		Three months ended September 30, 2014		For the period Jan. 1, 2015 through disposition		Nine months ended September 30, 2014
Net sales	$	17,023	$	33,496	$	96,519	$	113,145
Gross profit	7,282		13,732		41,415		48,016
Operating income	2,713		2,833		14,348		14,517
Income from continuing operations before income taxes	4,315		3,275		16,607		14,995
Provision for income taxes	1,355		251		5,010		3,218
Income from discontinued operations ⁽¹⁾	$	2,960	$	3,024	$	11,597	$	11,777


Net sales of operating segments	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2015		2014		2015		2014		2016		2015
Ergobaby	$	21,944	$	22,429	$	64,104	$	61,468	$	19,415	$	20,668
FOX	—		7,514		—		149,995
Liberty	23,404		19,916		74,013		67,768		29,000		25,854
Manitoba Harvest	8,856		—		8,856		—		13,717		—
ACI	22,234		22,027		66,734		64,175		21,517		21,418
Arnold Magnetics	32,590		31,456		93,138		94,902		27,383		31,188
Clean Earth	44,092		20,318		122,923		20,318		38,286		35,129
SternoCandleLamp	31,710		—		98,680		—
Sterno Products									43,969		28,604
Tridien	23,318		17,633		58,850		50,659		14,760		16,564
Total	208,148		141,293		587,298		509,285		208,047		179,425
Reconciliation of segment revenues to consolidated revenues:
Corporate and other	—		—		—		—		—		—
Total consolidated revenues	$	208,148	$	141,293	$	587,298	$	509,285	$	208,047	$	179,425


⁽¹⁾	Segment profit (loss) represents operating income (loss).


⁽²⁾	Primarily relates to management fees expensed and payable to CGM, and corporate overhead ~~expenses during 2015 and 2014, and the gain on deconsolidation of FOX in 2014.~~expenses.


⁽¹⁾	Does not include accounts receivable balances per schedule ~~above.~~


⁽²⁾	~~Represents~~above or goodwill ~~resulting from purchase accounting adjustments not "pushed down"~~balances - refer to ~~the ACI segment. This amount is allocated back to the respective segment for purposes of goodwill impairment testing.~~"Note H - Goodwill and Other Intangible Assets".


⁽¹⁾	The results of operations for FOX for the period from January 1, 2014 through July 10, 2014 are included in the results of operations of the Company in the accompanying condensed consolidation statements of income as the Company did not begin accounting for FOX as an equity method investment until July 10, 2014, the date that the Company's ceased holding a majority ownership interest in FOX.



	Nine months ended September 30, 2015			Year ended December 31, 2014
Beginning balance:
Goodwill	$	406,537		$	293,968
Accumulated impairment losses	(52,903		)	(52,903		)
	353,634			241,065
Impairment losses ⁽¹⁾	(8,928		)	—
Acquisition of businesses ⁽²⁾	32,568			157,864
Foreign currency translation	(1,916		)	—
Adjustments to purchase accounting ⁽³⁾	706			—
Deconsolidation of subsidiary ⁽⁴⁾	—			(45,295		)
Total adjustments	22,430			112,569
Ending balance:
Goodwill	437,895			406,537
Accumulated impairment losses	(61,831		)	(52,903		)
	$	376,064		$	353,634


⁽¹⁾	Represents a noncontrolling shareholder’s call option to purchase additional common stock in Tridien.


⁽²⁾	Represents put options issued to noncontrolling shareholders in connection with the Liberty acquisition.


⁽³⁾	Represents potential earn-out payable by Sterno Products for the acquisition of NII.


	Fair Value Measurements at December 31, 2014											Fair Value Measurements at December 31, 2015
	Carrying Value			Level 1		Level 2			Level 3			Carrying Value			Level 1		Level 2			Level 3
Assets:
Equity method investment - FOX	$	245,214		$	245,214	$	—		$	—		$	249,747		$	249,747	$	—		$	—
Liabilities:
Call option of noncontrolling shareholder ⁽¹⁾	(25		)	—		—			(25		)	(25		)	—		—			(25		)
Put option of noncontrolling shareholders ⁽²⁾	(50		)	—		—			(50		)	(50		)	—		—			(50		)
Interest rate swaps	(9,828		)	—		(9,828		)	—			(13,483		)	—		(13,483		)	—
Total recorded at fair value	$	235,311		$	245,214	$	(9,828	)	$	(75	)	$	236,189		$	249,747	$	(13,483	)	$	(75	)


									Expense
	Fair Value Measurements at September 30, 2015								Three months ended		Nine months ended		Fair Value Measurements at December 31, 2015								Year ended
(in thousands)	Carrying Value		Level 1		Level 2		Level 3		September 30, 2015		September 30, 2015		Carrying Value		Level 1		Level 2		Level 3		December 31, 2015

Technology ⁽¹⁾	$	376	$	—	$	—	$	376	$	—	$	237	$	220	$	—	$	—	$	220	$	237
Goodwill ⁽¹⁾	$	7,834	$	—	$	—	$	7,834	$	—	$	8,928	$	7,834	$	—	$	—	$	7,834	$	8,928


	Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
	2015		2014		2015			2014		2016			2015
Income (loss) from continuing operations attributable to Holdings	$	9,696	$	257,717	$	(2,041	)	$	257,543
Less: Profit Allocation paid to Holdings	—		11,870		—			11,870
Loss from continuing operations attributable to Holdings										$	(16,023	)	$	(29,484	)
Less: Effect of contribution based profit - Holding Event	910		649		2,837			1,728		850			618
Income from continuing operation attributable to Trust shares	$	8,786	$	245,198	$	(4,878	)	$	243,945
Loss from continuing operation attributable to Trust shares										$	(16,873	)	$	(30,102	)

Income from discontinued operations attributable to Holdings	$	154,804	$	3,381	$	166,096		$	13,933	$	—		$	4,582
Less: Effect of contribution based profit	—		—		—			29		—			180
Income from discontinued operations attributable to Trust shares	$	154,804	$	3,381	$	166,096		$	13,904	$	—		$	4,402

Basic and diluted weighted average shares outstanding	54,300		48,300		54,300			48,300		54,300			54,300

Basic and fully diluted income per share attributable to Holdings
Basic and fully diluted income (loss) per share attributable to Holdings
Continuing operations	$	0.16	$	5.08	$	(0.09	)	$	5.05	$	(0.31	)	$	(0.55	)
Discontinued operations	2.85		0.07		3.06			0.29		—			0.08
	$	3.01	$	5.15	$	2.97		$	5.34	$	(0.31	)	$	(0.47	)


	% Ownership ⁽¹⁾ September 30, 2015		% Ownership ⁽¹⁾ December 31, 2014		% Ownership ⁽¹⁾ March 31, 2016		% Ownership ⁽¹⁾ December 31, 2015
	Primary	Fully Diluted	Primary	Fully Diluted	Primary	Fully Diluted	Primary	Fully Diluted
Ergobaby	81.0	74.2	81.0	74.3	81.0	74.2	81.0	74.2
Liberty	96.2	84.6	96.2	84.8	88.6	84.7	96.2	84.6
Manitoba Harvest	86.5	72.8	n/a	n/a	76.6	65.6	76.6	65.6
ACI	69.4	69.3	69.4	69.3	69.4	69.3	69.4	69.3
Arnold Magnetics	96.7	87.3	96.7	87.5	96.7	86.9	96.7	87.3
Clean Earth	97.5	82.5	97.9	86.2	97.5	86.2	97.5	86.2
SternoCandleLamp	100.0	89.9	100.0	91.7
Sterno Products					100.0	89.7	100.0	89.7
Tridien	81.3	67.3	81.3	65.4	81.3	67.3	81.3	67.3


⁽¹⁾	The principal difference between primary and diluted percentages of our operating segments is due to stock option issuances of operating segment stock to management of the respective businesses.


	Noncontrolling Interest Balances				Noncontrolling Interest Balances
(in thousands)	September 30, 2015		December 31, 2014		March 31, 2016		December 31, 2015
Ergobaby	16,948		14,783		18,353		17,754
Liberty	2,815		2,547		1,937		2,934
Manitoba Harvest	5,310		—		14,114		14,071
ACI	3,503		790		5,237		4,295
Arnold Magnetics	2,103		1,950		2,117		2,113
Clean Earth	3,984		2,672		4,519		4,308
SternoCandleLamp	500		125
Sterno Products					778		644
Tridien	1,361		2,744		776		916
Allocation Interests	100		100		100		100
	$	36,624	$	25,711	$	47,931	$	47,135


⁽¹⁾	The effective income tax rate for the ~~nine~~three months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~ includes a significant loss at the Company's parent, which is taxed as a partnership.


⁽²⁾	The equity method investment in FOX is held at the Company's parent, which is taxed as a partnership, resulting in the gain or loss on the investment as a reconciling item in deriving the effective tax rate.


									Consolidated Results of Operations
	Three Months Ended September 30, 2015		Three Months Ended September 30, 2014						Three Months Ended March 31, 2016		Three Months Ended March 31, 2015
(in thousands)	Consolidated Results of Operations		Consolidated Results of Operations		Less: FOX (10 days)		Consolidated Results less FOX
Net sales	$	208,148	$	141,293	$	7,514	$	133,779	$	208,047	$	179,425
Cost of sales	139,169		81,133		5,190		90,063		141,786		126,855
Gross profit	68,979		46,040		2,324		43,716		66,261		52,570
Selling, general and administrative expense	38,975		29,227		1,328		27,899		44,473		33,026
Fees to manager	6,461		5,751		—		5,751		6,458		6,733
Amortization of intangibles	7,731		4,577		185		4,392		7,826		7,822
Operating income	$	15,812	$	6,485	$	811	$	5,674
Impairment expense									—		8,907
Operating income (loss)									$	7,504	$	(3,918	)



	Nine months ended September 30, 2015		Nine Months Ended September 30, 2014
(in thousands)	Consolidated Results of Operations		Consolidated Results of Operations		Less: FOX (191 days)		Consolidated Results less FOX
Net sales	$	587,298	$	509,285	$	149,995	$	359,290
Cost of sales	402,532		345,048		103,701		241,347
Gross profit	184,766		164,237		46,294		117,943
Selling, general and administrative expense	105,946		101,235		25,780		75,455
Fees to manager	19,860		15,259		—		15,259
Amortization of intangibles	22,777		15,222		3,220		12,002
Impairment expense	9,165		—		—		—
Operating income	$	27,018	$	32,521	$	17,294	$	15,227



(in thousands)
Ergobaby	$	19,953
Liberty	$	31,150
Manitoba Harvest	$	23,294
Advanced Circuits	$	59,547
Arnold Magnetics	$	73,700
Clean Earth	$	153,093
SternoCandleLamp	$	83,042
Tridien	$	12,231



(in thousands)
Ergobaby	$	13,753
Liberty	$	57,775
Manitoba Harvest	$	45,646
Advanced Circuits	$	53,952
Arnold Magnetics	$	71,265
Clean Earth	$	144,083
Sterno Products	$	108,191
Tridien	$	11,856



Description of Required Covenant Ratio	Covenant Ratio Requirement	Actual Ratio
Fixed Charge Coverage Ratio	greater than or equal to 1.5:1.0	~~2.85:~~3.72:1.0
Total Debt to EBITDA Ratio	less than or equal to 4.25:1.0	~~1.72:~~1.80:1.0



	Corporate			Ergobaby		Liberty		Manitoba Harvest			Advanced Circuits		Arnold Magnetics			Clean Earth			Sterno Candle Lamp		Tridien			Consolidated
Net income (loss)	$	141,400		$	8,576	$	2,968	$	(3,103	)	$	9,293	$	1,529		$	(3,394	)	$	1,802	$	(7,414	)	$	151,657
Adjusted for:
Provision (benefit) for income taxes	(285		)	5,210		1,373		(1,293		)	4,898		(335		)	(1,485		)	1,123		68			9,274
Interest expense, net	23,740			—		—		6			—		6			298			—		—			24,050
Intercompany interest	(31,186		)	3,077		3,257		407			4,274		5,250			8,929			5,191		801			—
Depreciation and amortization	902			2,836		3,007		4,029			2,485		6,822			15,909			5,945		1,876			43,811
EBITDA	134,571			19,699		10,605		46			20,950		13,272			20,257			14,061		(4,669		)	228,792
Gain on sale of discontinued operations	(151,075		)	—		—		—			—		—			—			—		—			(151,075		)
(Gain) loss on sale of fixed assets	—			—		7		1			—		(183		)	274			—		20			119
Non-controlling shareholder compensation	—			534		156		—			18		102			877			375		1			2,063
Impairment expense	—			—		—		—			—		—			—			—		9,165			9,165
Acquisition expenses	—			—		—		1,126			—		—			—			—		—			1,126
Integration services fee	—			—		—		250			—		—			1,875			1,125		—			3,250
Gain on equity method investment	(9,518		)	—		—		—			—		—			—			—		—			(9,518		)
Management fees	17,261			375		375		86			375		375			375			375		263			19,860
Adjusted EBITDA ⁽¹⁾	$	(8,761	)	$	20,608	$	11,143	$	1,509		$	21,343	$	13,566		$	23,658		$	15,936	$	4,780		$	103,782



Manitoba Harvest	509			—
SternoCandleLamp	1,047			—
Tridien	710			593
FOX CAD ⁽⁵⁾	—			15,716
Other	209			201
Estimated cash flow available for distribution and reinvestment	$	66,246		$	40,522
Distribution paid in April 2015/2014	$	(19,548	)	$	(17,388	)
Distribution paid in July 2015/2014	(19,548		)	(17,388		)
Distribution paid in October 2015/2014	(19,548		)	(17,388		)
	$	(58,644	)	$	(52,164	)

(State or other jurisdiction of
incorporation or organization)

(Commission
file number)

(I.R.S. employer
identification number)