WESTPORT, Conn., March 12 /PRNewswire-FirstCall/ -- Compass Diversified Trust (NASDAQ:CODI) and Compass Group Diversified Holdings LLC (collectively, the "Trust" or "CODI") announced today the consolidated results of operations for the year ended December 31, 2006.
For the year ended December 31, 2006, the Trust reported cash flow available for distribution of $23.7 million. For the year, the results reflect 46 days of activity of the Trust's initial businesses in the second quarter and the complete results of operations for the third and fourth quarter.
On January 5, 2007, the Trust's Board of Directors declared a distribution of $0.30 per share payable on January 24, 2007 to all Trust shareholders of record as of January 18, 2007. The Trust intends to continue to declare and pay regular quarterly cash distributions on all outstanding shares.
Based upon the Trust's reported cash flow available for distribution for the year ended December 31, 2006 of $23.7 million, the coverage ratio for the combined July 18, 2006 distribution of $0.1327 per share, the October 19, 2006 distribution of $0.2625 per share and the January 24, 2007 distribution of $0.30 per share was approximately 1.7x. Since the May 2006 initial public offering, the Trust has paid out $14.1 million in total cash distributions.
Commenting on the year, I. Joseph Massoud, CEO of the Company noted, "During 2006, CODI achieved several major milestones, including its May initial public offering and the acquisition of our four initial businesses. Other highlights from 2006 include the acquisition of one additional platform subsidiary and three subsidiary add-on acquisitions to increase the scope of our existing businesses. I am extremely pleased with our execution and the achievement of these significant milestones in a relatively short period of time. It is also worth noting that the November refinancing of our credit facility not only gives CODI a significantly lower cost of capital, it also provides the Trust with the flexibility and means to make acquisitions without subsidiary-specific third party financing, which we have found to be a significant competitive advantage in our pursuit of attractive acquisitions."
Mr. Massoud concluded, "Turning to the current year, we are pleased to have sold one of our subsidiaries at a significant gain to our shareholders and to have acquired two additional platform subsidiaries. More important than this acquisition and divestiture activity, however, is the continued strong performance of our subsidiary businesses, which is ultimately the driver of our ability to make and grow shareholder distributions over time."
On January 8, 2007, Compass announced its divestiture of Crosman Acquisition Corp. to Wachovia Capital Partners based on a total enterprise value of approximately $143 million. The majority of the proceeds were used to repay debt under the Trust's revolving credit facility. The Trust will recognize a gain in fiscal year 2007 from the sale of approximately $36-37 million.
On March 1, 2007, the Trust announced definitive agreements to acquire controlling interests in two new subsidiary companies, Halo Branded Solutions and Aeroglide Corporation. The total combined consideration for both purchases was based on an aggregate total enterprise value of approximately $119 million. Aeroglide is a leading global designer and manufacturer of industrial drying and cooling equipment that provides specialized thermal processing equipment, including conveyer driers and coolers, impingement driers, drum driers, rotary driers, toasters, spin cookers and coolers designed to remove moisture and heat as well as roasting, toasting and baking a variety of processed products. Halo Branded Solutions, through its two operating brand names of Halo and Lee Wayne, serves as a one-stop shop for over 30,000 customers providing design, sourcing, management and fulfillment services across all categories of its customer promotional product needs in effectively communicating a logo or marketing message to a target audience.
For the year ended December 31, 2006, the Trust reported a non-cash expense of $22.5 million associated with the Supplemental Put Agreement (the "SPA") between its subsidiary, Compass Group Diversified Holdings LLC (the "Company") and Compass Group Management, LLC (the "Manager"). Upon a termination of the Company's Management Services Agreement with the Manager, the Company is obligated to purchase the allocation interests owned by the Manager for a price (its "fair value") to be determined in accordance with the SPA. The Trust is required each quarter for accounting purposes to record the change in fair value of the obligation associated with the SPA in its earnings. This supplemental put accrual does not affect the Trust's cash flows or the calculation of cash flow available for distribution, but results in the recognition of a supplemental put expense in its income statement.
The accrual associated with the Supplemental Put Agreement primarily represents the portion of the estimated increase in the value of the subsidiary businesses over the Trust's book value in those businesses to which the Manager would be entitled if the Management Services Agreement were terminated. Importantly, it should be noted that this particular non-cash expense may fluctuate significantly in future reporting periods as changes in subsidiary operating performance and other factors could significantly impact this estimate.
Management will host a conference call this morning at 9:00 a.m. ET to discuss the latest corporate developments and financial results. The dial-in number for callers in the U.S. is (800) 810-0924 and the dial-in number for international callers is (913) 981-4900. The access code for all callers is 4579000. A live webcast will also be available on the Trust's website at http://www.compassdiversifiedtrust.com.
A replay of the call will be available through March 25, 2007. To access the replay, please dial (888) 203-1112 in the U.S. and (719) 457-0820 outside the U.S., and then enter the access code 4579000.
About Compass Diversified Trust
CODI was formed to acquire and manage a group of profitable middle market businesses that are headquartered in North America. CODI provides public investors with an opportunity to participate in the ownership and growth of companies which have historically been owned by private equity firms or wealthy individuals or families. CODI's disciplined approach to its target market provides opportunities to methodically purchase attractive businesses at values that are accretive to its shareholders. For sellers of businesses, CODI's unique structure allows CODI to acquire businesses efficiently with no financing contingencies and, following acquisition, to provide its companies with substantial access to growth capital.
Upon acquisition, CODI works with the executive teams of its subsidiary companies to identify and capitalize on opportunities to grow those companies' earnings and cash flows. These cash flows support distributions to CODI shareholders, which are intended to be steady and growing over the long term.
Subsidiary Businesses * Aeroglide Corporation and its consolidated subsidiaries, referred to as Aeroglide, is a leading global designer and manufacturer of industrial drying and cooling equipment, primarily used in the production of a variety of human foods, animal and pet feeds, and industrial products. Aeroglide is based in Cary, NC and was founded in 1940. * Anodyne Medical Device, Inc. and its consolidated subsidiaries, referred to as AMD, is a leading manufacturer of medical support surfaces and patient positioning devices, primarily used for the prevention and treatment of pressure wounds experienced by patients with limited or no mobility. AMD is based in Los Angeles, CA and was founded in 2005. * CBS Personnel Holdings, Inc. and its consolidated subsidiaries, referred to as CBS Personnel, is a provider of temporary staffing services in the United States. CBS Personnel is headquartered in Cincinnati, OH, operates 144 branch locations in 18 states and was founded in 1970. CBS Personnel is one of the largest commercial staffing companies in the nation. * Compass AC Holdings, Inc. and its consolidated subsidiary, referred to as Advanced Circuits, is a manufacturer of low-volume quick-turn and prototype rigid printed circuit boards ("PCBs"). Advanced Circuits is based in Aurora, CO and was founded in 1989. * Halo Branded Solutions, Inc. referred to as Halo, is a leading distributor of customized promotional products and serves more than 30,000 customers as a one-stop-shop resource for design, sourcing, management and fulfillment across all categories of its customers' promotional products needs. Halo is based in Sterling, IL and was founded in 1952. * Silvue Technologies Group, Inc. and its consolidated subsidiaries, referred to as Silvue, is a developer and manufacturer of proprietary, high-performance coating systems for polycarbonate, glass, acrylic, metals and other substrate materials used in the premium eyewear, aerospace, automotive and industrial markets. Silvue is based in Anaheim, CA and was founded in 1986.
To find out more about Compass Diversified Trust, please visit http://www.compassdiversifiedtrust.com.
This press release may contain certain forward-looking statements, including statements with regard to the future performance of the Trust. Words such as "believes," "expects," "projects," and "future" or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements, and some of these factors are enumerated in the risk factor discussion in the Form 10K filed by CODI with the Securities and Exchange Commission for the year ended December 31, 2006 and the Form 10Qs filed by CODI for the quarters ended March 31, 2006 June 30, 2006 and September 30, 2006 and other filings with the Securities and Exchange Commission. CODI undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Compass Diversified Trust Consolidated Balance Sheet (in thousands) December 31, 2006 Assets Current assets: Cash and cash equivalents $7,006 Accounts receivable, less allowances of $3,327 74,899 Inventories 4,756 Prepaid expenses and other current assets 7,059 Current assets of discontinued operations 46,636 Total current assets 140,356 Property, plant and equipment, net 10,858 Goodwill 159,151 Intangible assets, net 128,890 Deferred debt issuance costs, less accumulated amortization of $114 5,190 Other non-current assets 15,894 Assets of discontinued operations 65,258 Total assets $525,597 Liabilities and stockholders' equity Current liabilities: Accounts payable $14,314 Accrued expenses 38,586 Due to related party 469 Revolving credit facility 87,604 Current portion of supplemental put obligation 7,880 Current liabilities of discontinued operations 14,019 Total current liabilities 162,872 Supplemental put obligation 14,576 Deferred income taxes 41,337 Other non-current liabilities 17,336 Non-current liabilities of discontinued operations 6,634 Total liabilities 242,755 Minority interests 27,131 Stockholders' equity Trust shares, no par value, 500,000 authorized; 20,450 shares issued and outstanding 274,961 Accumulated earnings (deficit) (19,250) Total stockholders' equity 255,711 Total liabilities and stockholders' equity $525,597 Compass Diversified Trust Consolidated Statement of Operation (in thousands, except per share data) Year Ended December 31, 2006 Net sales $410,873 Cost of sales 311,641 Gross profit 99,232 Operating expenses: Staffing expense 34,345 Selling, general and administrative expenses 36,732 Supplemental put expense 22,456 Fees to Manager 4,376 Research and development expense 1,806 Amortization expense 6,774 Operating loss (7,257) Other income (expense): Interest income 807 Interest expense (6,130) Amortization of debt issuance costs (779) Loss on debt extinguishment (8,275) Other income, net 541 Loss from continuing operations before income taxes and minority interests (21,093) Provision for income taxes 5,298 Minority interest 1,245 Loss from continuing operations (27,636) Income from discontinued operations, net of income taxes 8,387 Net loss $(19,249) Basic and fully diluted loss per share $(1.52) Weighted average number of shares of Trust stock outstanding - basic and fully diluted 12,686 Cash dividends paid per share $0.3952 Compass Diversified Trust Consolidated Statement of Cash Flows (in thousands) Year Ended December 31, 2006 Cash flows from operating activities: Net loss $(19,249) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation of property and equipment 2,494 Amortization expense 7,796 Supplemental put expense 22,456 Loss on debt extinguishment 8,275 Minority interests 2,950 Loan forgiveness accrual 2,760 Deferred taxes (2,281) In-process research and development expense 1,120 Other (450) Changes in operating assets and liabilities, net of acquisition: Increase in accounts receivable (7,867) Increase in inventories (6,314) Increase in prepaid expenses and other current assets (72) Increase in accounts payable and accrued expenses 8,555 Decrease in due to related party (1,308) Increase in other liabilities 2,251 Other (553) Net cash provided by operating activities 20,563 Cash flows from investing activities: Acquisition of businesses, net of cash acquired (356,464) Purchases of property and equipment (5,822) Net cash used in investing activities (362,286) Cash flows from financing activities: Proceeds from the issuance of debt 85,004 Proceeds from the issuance of Trust shares, net 284,969 Debt issuance costs (11,560) Distributions paid (7,955) Other 615 Net cash provided by financing activities 351,073 Net increase in cash and cash equivalents 9,350 Foreign currency adjustment 260 Cash and cash equivalents - beginning of period 100 Cash and cash equivalents - end of period $9,710 Cash reflected in discontinued operations at December 31, 2006 $2,704 Compass Diversified Trust Consolidated Table of Cash Flows Available for Distribution ("CAD") (in thousands) Year Ended December 31, 2006 Net loss $(19,249) Adjustment to reconcile net loss to cash provided by operating activities: Depreciation and amortization 10,290 Supplemental put expense 22,456 Silvue's in process R&D expensed at acquisition date 1,120 Advanced Circuit's loan forgiveness accrual 2,760 Minority interest 2,950 Deferred taxes (2,281) Loss on Ableco debt retirement 8,275 Other (450) Changes in operating assets and liabilities (5,308) Net cash provided by operating activities 20,563 Plus: Unused fee on credit facilities(1) 1,291 Changes in operating assets and liabilities 5,308 Less: Maintenance capital expenditures(2) CBS Personnel 209 Crosman(3) 1,926 Advanced Circuits 392 Silvue 304 Anodyne 636 Estimated cash flow available for distribution $23,695 Distribution paid in July 2006 $(2,587) Distribution paid in September 2006 (5,368) Distribution declared in January 2007 (6,135) Total $(14,090) (1) Represents the commitment fee on the unused portion of our third-party loans. (2) Represents maintenance capital expenditures that were funded from operating cash flow and excludes approximately $2.3 million of growth capital expenditures for the period ended December 31, 2006. (3) Crosman was sold on January 5, 2007. Compass Diversified Trust Investor Relations Contact: James J. Bottiglieri KCSA Worldwide Chief Financial Officer Jeffrey Goldberger / Garth Russell 203.221.1703 212.896.1249 / 212.896.1250 email@example.com firstname.lastname@example.org / email@example.com
Source: Compass Diversified Trust