Compass Diversified Holdings 8-K/A, filed Dec 28, 2020

Compass Diversified Holdings (CODI)

8-K/A 2020-12-28 For: 2020-10-16

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Added on April 10, 2026

About this 8-K/A

Compass Diversified Holdings filed this 8-K/A on December 28, 2020, reporting on events of October 16, 2020.

Items reported

Item 9.01: Financial statements and exhibits

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o			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


23.1						Consent of PricewaterhouseCoopers LLP

99.1						Audited consolidated financial statements of Boa as of and for the year ended December 31, 2019

99.2						Unaudited interim condensed consolidated financial statements of Boa as of and for the nine months ended September 30, 2020 and 2019

99.3						Unaudited condensed combined Pro Forma Balance Sheet of Compass Diversified Holdings at September 30, 2020 and notes thereto, and Unaudited condensed combined Pro Forma Statements of Operations for the year ended December 31, 2019 and the nine months ended September 30, 2020, and notes thereto

104						Cover Page Interactive Data File (embedded within the Inline XBRL document)


Date: December 28, 2020	COMPASS DIVERSIFIED HOLDINGS

	By:	/s/ Ryan J. Faulkingham

		Ryan J. Faulkingham
		Regular Trustee


Date: December 28, 2020	COMPASS GROUP DIVERSIFIED HOLDINGS LLC

	By:	/s/ Ryan J. Faulkingham

		Ryan J. Faulkingham
		Chief Financial Officer


Boa Technology Inc. and Subsidiaries
Index
December 31, 2019

		Page(s)
	Report of Independent Auditors	1

	Consolidated Financial Statements

	Balance Sheet	2

	Statement of Operations	3

	Statement of Changes in Stockholders' Equity	4

	Statement of Cash Flows	5

	Notes to Financial Statements	6


		2019
Assets
Current assets
	Cash and cash equivalents	$	50,174,174
	Short-term investments	11,989,674
	Trade accounts receivable, net	1,263,296
	Inventory, net	5,904,112
	Prepaid expenses and other current assets	824,274
	Income tax receivable	109,367
	Total current assets	70,264,897
Noncurrent assets
	Property, equipment and improvements, net	10,529,451
	Patents, trademarks and licenses, pending	1,443,586
	Patents, trademarks, licenses and capitalized development costs, net	2,220,641
	Deposits and other assets	1,527,168
	Total noncurrent assets	15,720,846
	Total assets	$	85,985,743

Liabilities and Stockholder's Equity
Current liabilities
	Accounts payable, trade	$	1,319,879
	Accounts payable to related parties	1,716,758
	Accrued expenses	4,266,823
	Deferred revenue	2,451,429
	Total current liabilities	9,754,889
Noncurrent liabilities
	Deferred lease incentive	2,174,567
	Deferred rent	775,951
	Deferred tax liabilties	52,374
	Other liabilities	230,092
	Total liabilities	12,987,873

Commitments and contingencies (Note 3)

Stockholder's equity
	Common stock, $0.001 par value; 100 shares authorized; 100 shares issued and outstanding at December 31, 2019	—
	Additional paid-in-capital	11,394,619
	Retained earnings	61,605,964
	Other comprehensive (loss)	(2,713)
	Total stockholders' equity	72,997,870
	Total liabilities and stockholders' equity	$	85,985,743


	2019
Net sales	$	105,147,072
Net sales to related parties	1,129,172
Total sales, net	106,276,244
Cost of goods sold	16,287,960
Cost of goods sold related parties	28,744,261
Total cost of goods sold	45,032,221
Gross profit	61,244,023
Operating expenses	37,860,499
Operating income	23,383,524
Other income (expense)
Interest and dividend income	939,749
Other (expense) income, net	(50,249)
Income before provision for income taxes	24,273,024
Provision for income taxes	(5,452,356)
Net income	$	18,820,668


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)		Total
Balances at December 31, 2018	100	$	—	$	10,410,517	$	42,785,296	$	—	$	53,195,813
Stock-based compensation expense	—	—		610,649		—		—		610,649
Capital contributions - options	—	—		373,453		—		—		373,453
Net income	—	—		—		18,820,668		—		18,820,668
Other comprehensive (loss)	—	—		—		—		(2,713)		(2,713)
Balances at December 31, 2019	100	$	—	$	11,394,619	$	61,605,964	$	(2,713)	$	72,997,870


			2019
Cash flows from operating activities:
	Net income		$	18,820,668
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization	3,981,805
		Stock-based compensation	610,649
		Loss on disposal of property, equipment and improvements	32,635
		Write-off of patent rights	16,109
		Deferred taxes	98,410
		Net changes in assets and liabilities
		Trade accounts receivable, net	1,062,379
		Inventory, net	(1,272,896)
		Prepaid expenses and other current assets	640,814
		Deposits and other assets	(290,617)
		Accounts payable, trade	(674,166)
		Accounts payable due to related parties	(968,816)
		Accrued expenses	364,343
		Deferred rent	142,230
		Income tax payable/receivable	280,249
		Deferred revenue	1,259,173
		Other liabilities	53,822
		Net cash provided by operating activities	24,156,791
Cash flows from investing activities
Purchases of short-term investments			(11,989,674)
Acquisition of property, equipment and improvements			(3,960,313)
Development of patent rights			(676,916)
Deferred lease incentive			(423,838)
		Net cash used in investing activities	(17,050,741)
Cash flows from financing activities
Proceeds from capital contributions - Options			373,453
		Net cash used in financing activities	373,453
		Net increase in cash	7,479,503
Cash and cash equivalents
	Beginning of year		42,694,671
	Ending of year		$	50,174,174
Supplemental disclosures of cash flow information
Cash paid for income taxes			$	5,019,876
Noncash activity
Accrued purchases of property, equipment and improvements			$	139,264
Accrued development of patent rights			99,589
Tenant improvements paid by lessor			63,000


	As of December 31, 2019
	As Previously Reported	Related Party Disclosure	As Adjusted
Accounts payable, trade	3,036,637	(1,716,758)	1,319,879
Accounts payable to related parties	—	1,716,758	1,716,758


	Year Ended December 31, 2019
	As Previously Reported	Related Party Disclosure	As Adjusted
Net sales	106,276,244	(1,129,172)	105,147,072
Net sales to related parties	—	1,129,172	1,129,172
Cost of goods sold	45,032,221	(28,744,261)	16,287,960
Cost of goods sold related parties	—	28,744,261	28,744,261


	2019
Athletic Business Unit	26,529,090
Mountain Business Unit	45,280,276
Professional Business Unit	34,466,878
Total Net Sales	$	106,276,244


Equipment						2-7 years
Sofware and computer equipment						3-5 years
Furntiture and fixtures						3-5 years
Tooling and molds						3 years
Vehicles						5 years
Leasehold improvements						Shorter of lease term or useful life


	2019
Assets under construction	$	726,414
Equipment	3,308,323
Software and computer equipment	4,347,098
Furniture and fixtures	1,196,186
Vehicles	120,743
Leasehold improvements	5,743,821
Tooling and molds	8,677,430
	24,120,015
Less: Accumulated Depreciation	(13,590,564)
	$	10,529,451


Years Ending December 31,
2020	$	233,593
2021	223,202
2022	223,202
2023	210,853
2024	193,095
Thereafter	1,136,696
	$	2,220,641


Level 1			Quoted prices for identical assets and liabilities traded in active exchange markets, such as the New York Stock Exchange.
Level 2			Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data. Level 2 also includes derivative contracts whose value is determined using a pricing model with observable market inputs or can be derived principally from or corroborated by observable market data.
Level 3			Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation; also, includes observable inputs for nonbinding single dealer quotes not corroborated by observable market data.


	Accounts Receivable
Customer	2019
A	24	%
B	14	%


	Options	Weighted-Average Exercise Price
Options outstanding at December 31, 2018	483,837	$	23.30
Granted	6,000	38.24
Exercised	(27,789)	13.44
Forfeited	(13,907)	26.18
Options outstanding at December 31, 2019	448,141	$	24.03


2019
Options Outstanding						Options Exercisable
Exercise Price		Number of Options	Weighted-Average Remaining Contractual Life	Weighted- Average Exercise Price		Number of Options	Weighted- Average Exercise Price
$	3.60	4,420	1.8 years	$	3.60	4,420	$	3.60
11.70		72,756	3.4 years	11.70		72,756	11.70
12.25		13,144	4.1 years	12.25		13,144	12.25
17.23		39,531	5.2 years	17.23		38,156	17.23
22.86		40,650	6.4 years	22.86		30,188	22.86
27.01		218,250	8.0 years	27.01		103,875	27.01
27.54		3,500	8.6 years	27.54		875	27.54
38.24		55,890	9.0 years	38.24		9,850	38.24
		448,141		$	24.03	273,264	$	20.43


			2019
Risk-free interest rate			1.9%
Expected dividend yield			None
Expected volatility factor			32.2%
Expected option term			6.5 years
Expected forfeitures			26.9%


2019
Phantom Stock Outstanding
Grant Price		Number of Options
$	17.23	43,500
22.86		20,500
27.01		6,250
27.54		5,000
38.24		3,000
		78,250


2020	$	4,604,297
2021	4,238,560
2022	4,052,647
2023	4,106,085
2024	4,167,467
Thereafter	2,758,043
	$	23,927,099


		2019
Current
Federal		$	4,313,755
Foreign		1,040,187
	Total current provision	5,353,942
Deferred
Federal		136,402
State		(37,988)
	Total deferred provision	98,414
	Total provision for income taxes	$	5,452,356


Noncurrent deferred tax assets (liabilities)	2019
Accrued liabilities	$	91,777
Inventory reserve	252,412
Warranty	95,363
Intangible assets	41,399
Net operating loss	845,528
Depreciation of property and equipment	(606,716)
Other	73,391
Valuation allowance	(845,528)
Total noncurrent deferred taxes, net	$	(52,374)


Boa Technology Inc. and Subsidiaries
Index
As of September 30, 2020 and December 31, 2019 and for the nine-months ended September 30, 2020 and 2019

		Page(s)
	Unaudited Consolidated Financial Statements
	Balance Sheets	1

	Statements of Operations	2

	Statements of Changes in Stockholders' Equity	3

	Statements of Cash Flows	4

	Notes to Financial Statements	5


		As of September 30, 2020		As of December 31, 2019
Assets
Current assets
	Cash and cash equivalents	$	81,558,025	$	50,174,174
	Short-term investments	—		11,989,674
	Trade accounts receivable, net	1,356,210		1,263,296
	Inventory, net	4,333,446		5,904,112
	Prepaid expenses and other current assets	856,030		824,274
	Income tax receivable	3,979,053		109,367
	Total current assets	92,082,764		70,264,897
Noncurrent assets
	Property, equipment and improvements, net	9,011,866		10,529,451
	Patents, trademarks and licenses, pending	1,588,653		1,443,586
	Patents, trademarks, licenses and capitalized development costs, net	2,402,908		2,220,641
	Deposits and other assets	1,393,497		1,527,168
	Deferred tax assets, net	169,799		—
	Total noncurrent assets	14,566,723		15,720,846
	Total assets	$	106,649,487	$	85,985,743

Liabilities and Stockholder's Equity
Current liabilities
	Accounts payable, trade	$	1,548,929	$	1,319,879
	Accounts payable to related parties	1,978,281		1,716,758
	Accrued expenses	5,247,705		4,266,823
	Deferred revenue	2,926,388		2,451,429
	Total current liabilities	11,701,303		9,754,889
Noncurrent liabilities
	Deferred lease incentive	1,812,139		2,174,567
	Deferred rent	827,757		775,951
	Deferred tax liabilties	—		52,374
	Other liabilities	293,583		230,092
	Total liabilities	14,634,782		12,987,873

Commitments and contingencies (Note 3)

Stockholder's equity
	Common stock, $0.001 par value; 100 shares authorized; 100 shares issued and outstanding at September 30, 2020 and December 31, 2019	—		—
	Additional paid-in-capital	11,944,460		11,394,619
	Retained earnings	79,972,659		61,605,964
	Other comprehensive income/(loss)	97,586		(2,713)
	Total stockholders' equity	92,014,705		72,997,870
	Total liabilities and stockholders' equity	$	106,649,487	$	85,985,743


	For the Nine-Months Ended
	September 30, 2020		September 30, 2019
Net sales	$	77,172,854	$	76,711,017
Net sales to related parties	—		1,129,172
Total sales, net	77,172,854		77,840,189
Cost of goods sold	11,130,464		11,764,742
Cost of goods sold related parties	19,943,131		21,128,019
Total cost of goods sold	31,073,595		32,892,761
Gross profit	46,099,259		44,947,428
Operating expenses	27,949,070		27,440,871
Operating income	18,150,189		17,506,557
Other income (expense)
Interest and dividend income	149,373		709,854
Other income (expense), net	172,507		(70,762)
Income before provision for income taxes	18,472,069		18,145,649
Provision for income taxes	(105,374)		(3,905,039)
Net income	$	18,366,695	$	14,240,610


Years Ending December 31,
2020 (remaining 3 months)	$	68,238
2021	255,925
2022	255,925
2023	242,247
2024	222,604
Thereafter	1,357,969
	$	2,402,908


			Nine-months ended September 30, 2019
Risk-free interest rate			1.9%
Expected dividend yield			None
Expected volatility factor			32.2%
Expected option term			6.5 years
Expected forfeitures			26.9%


2020 (remaining 3 months)	$	1,168,836
2021	4,238,560
2022	4,052,647
2023	4,106,085
2024	4,167,467
Thereafter	2,758,043
	$	20,491,638


		Nine-months ended
		September 30, 2020		September 30, 2019
Current
Federal		$	(889,888)	$	3,199,787
State		—		—
Foreign		1,217,434		654,815
	Total current provision	327,546		3,854,602
Deferred
Federal		(223,616)		91,269
State		1,444		(40,832)
	Total deferred provision	(222,172)		50,437
	Total provision for income taxes	$	105,374	$	3,905,039


	As of
	September 30, 2020		December 31, 2019
Noncurrent deferred tax assets (liabilities)
Accrued liabilities	$	117,534	$	91,777
Inventory reserve	260,300		252,412
Warranty	112,279		95,363
Intangible assets	28,210		41,399
Net operating loss	36,522		845,528
Depreciation of property and equipment	(417,949)		(606,716)
Other	93,733		73,391
Valuation allowance	(60,830)		(845,528)
Total noncurrent deferred taxes, net	$	169,799	$	(52,374)


(in thousands)	Compass Diversified Holdings as Reported		Boa as Reported		Pro Forma Adjustments			Pro Forma Combined Compass Diversified Holdings
Assets
Current assets:
Cash and cash equivalents	$	176,819	$	81,558	$	(171,225)	(a),(e)	$	87,152
Accounts receivable, net	242,947		1,356		—			244,303
Inventories	344,036		4,333		508		(b)	348,877
Prepaid expenses and other current assets	36,873		4,835		—			41,708
Total current assets	800,675		92,082		(170,717)			722,040
Property, plant and equipment, net	155,601		9,012		6,460		(b)	171,073
Goodwill	508,464		—		263,483		(b)	771,947
Intangible assets, net	619,925		3,992		232,708		(b)	856,625
Other non-current assets	107,319		1,563		13,105		(c)	121,987
Total assets	$	2,191,984	$	106,649	$	345,039		$	2,643,672
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	98,192	$	3,527	$	—		$	101,719
Accrued expenses	151,279		5,248		—			156,527
Due to related party	9,283		—		—			9,283
Other current liabilities	25,022		2,926		2,600		(c)	30,548
Total current liabilities	283,776		11,701		2,600			298,077
Deferred income taxes	30,854		—		62,315		(b)	93,169
Long-term debt	592,107		—		300,000		(a)	892,107
Other non-current liabilities	94,554		2,933		10,505		(c)	107,992
Total liabilities	1,001,291		14,634		375,420			1,391,345

Stockholders’ equity
Trust preferred shares, no par value	303,918		—		—			303,918
Trust common shares, no par value	1,008,564		—		—			1,008,564
Accumulated other comprehensive income (loss)	(4,447)		98		(98)		(d)	(4,447)
Accumulated deficit	(188,136)		91,917		(91,917)		(e)	(188,136)
Total stockholders’ equity attributable to Holdings	1,119,899		92,015		(92,015)			1,119,899
Noncontrolling interest	70,794		—		61,634		(b)	132,428
Total stockholders’ equity	1,190,693		92,015		(30,381)			1,252,327
Total liabilities and stockholders’ equity	$	2,191,984	$	106,649	$	345,039		$	2,643,672



(in thousands, except per share data)	Compass Diversified Holdings as Reported		Boa as Reported		Pro Forma Adjustments			Pro Forma Combined Compass Diversified Holdings
Net revenues	$	1,450,253	$	106,276	$	—		$	1,556,529
Cost of revenues	930,810		45,032		26		(f)	975,868
Gross Profit	519,443		61,244		(26)			580,661

Operating expenses:
Selling, general and administrative expense	335,181		37,637		95		(f)	372,913
Management fees	37,030		—		4,540		(g)	41,570
Amortization expense	54,155		223		15,378		(h)	69,756
Impairment expense	32,881		—		—			32,881
Operating income	60,196		23,384		(20,039)			63,541

Other income (expense):
Interest income (expense), net	(58,216)		940		(9,000)		(i)	(66,276)
Amortization of debt issuance costs	(3,314)		—		—			(3,314)
Loss on debt extinguishment	(12,319)		—		—			(12,319)
Loss on sale of securities (refer to Note C)	(10,193)		—		—			(10,193)
Other income (expense), net	(2,185)		(51)		—			(2,236)
Income (loss) from continuing operations before income taxes	(26,031)		24,273		(29,039)			(30,797)
Provision for income taxes	14,742		5,452		—			20,194
Net income (loss) from continuing operations	(40,773)		18,821		(29,039)			(50,991)
Less: Income from continuing operations attributable to noncontrolling interest	5,542		—		3,411		(j)	8,953
Net income (loss) attributable to Holdings	$	(46,315)	$	18,821	$	(32,450)		$	(59,944)

Basic and fully diluted loss per share attributable to Holdings	$	(2.17)						$	(2.39)

Weighted average number of shares	59,900							59,900


(in thousands)	Boa Acquisition
Cash	$	99,225
Revolving credit facility	300,000
	$	399,225


(in thousands)	September 30, 2020
Inventory	$	508
Property, plant and equipment	6,460
Intangible assets	232,708
Goodwill	263,483
Deferred tax liability	(62,315)
Noncontrolling interest	(61,634)
	$	379,210


(in thousands)						September 30, 2020
Right-of-use asset						13,105

Lease liability - current						2,600
Lease liability - long-term						10,505
						13,105


(in thousands)	Boa
Accumulated other comprehensive income	$	(98)


(in thousands)	Boa
Common stock	$	—
Additional-paid-in-capital	(11,944)
Retained earnings	(7,973)
Total Stockholders' equity	$	(19,917)