Indicate by check mark if the registrants are collectively a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yeso       Noþ

     Indicate by check mark if the registrants are collectively not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yeso       Noþ

     Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

Yesþ       Noo

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.þo

     Indicate by check mark whether the registrant isregistrants are collectively a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,”filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

     Indicate by check mark whether the registrants are collectively a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yeso       Noþ

     The aggregate market value of the outstanding shares of trust stock held by non-affiliates of Compass Diversified Holdings at June 30, 20082009 was $261,006,919$225,149,562 based on the closing price on the NasdaqNASDAQ Global Select Market on that date. For purposes of the foregoing calculation only, all directors and officers of the registrant have been deemed affiliates.

     There were 31,525,00036,625,000 shares of trust stock without par value outstanding at February 27, 2009.26, 2010.

     Certain information in the registrant’s definitive proxy statement to be filed with the Commission relating to the registrant’s 20092010 Annual Meeting of Stockholders is incorporated by reference into Part III.

In reading this Annual Report on Form 10-K, references to:

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 Annual Report on Form 10-K may not occur. These forward-looking statements are made as of the date of this Annual Report. 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.

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 that 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”). Our Manager is the sole owner of our Allocation Interests, as defined in our LLC Agreement.

We acquire controlling interests in and actively manage businesses that we believe operate in industries with long-term macroeconomic growth opportunities, and that have positive and stable cash flows, face minimal threats of technological or competitive obsolescence and have strong management teams largely in place.

Our unique public structure provides public investors with an opportunity to participate in the ownership and growth of companies which have historically been owned by private equity firms, wealthy individuals or families. Through the acquisition of a diversified group of businesses with these characteristics, we also offer investors an opportunity to diversify their own portfolio risk while participating in the ongoing cash flows of those businesses through the receipt of distributions.

Our disciplined approach to our target market provides opportunities to methodically purchase attractive businesses at values that are accretive to our shareholders. For sellers of businesses, our unique structure allows us to acquire businesses efficiently with little or no financing contingencies and, following acquisition, to provide our businesses with substantial access to growth capital.

We believe that private company operators and corporate parents looking to sell their businesses may consider us an attractive purchaser because of our ability to:

In particular, we believe that our outlook on length of ownership and active management on our part may alleviate the concern that many private company operators and parent companies may have with regard to their businesses going through multiple sale processes in a short period of time. We also believe this outlook both reduces the risk that businesses may be sold at unfavorable points in the overall market cycle and enhances our ability to develop a comprehensive strategy to grow the earnings and cash flows of our businesses, which we expect will better enable us to meet our long-term objective of paying distributions to our shareholders and increasing shareholder value. Finally, we have found that our ability to acquire businesses without the cumbersome delays and conditions typical of third party transactional financing can be very appealing to sellers of businesses who are interested in confidentiality and certainty to close.

We believe our management team’s strong relationships with industry executives, accountants, attorneys, business brokers, commercial and investment bankers, and other potential sources of acquisition opportunities offer us substantial opportunities to assess small to middle market businesses that may be available for acquisition. In addition, the flexibility, creativity, experience and expertise of our management team in structuring transactions allows us to consider non-traditional and complex transactions tailored to fit a specific acquisition target.

In terms of the businesses in which we have a controlling interest as of December 31, 2008,2009, we believe that these businesses have strong management teams, operate in strong markets with defensible market niches and maintain long standing customer relationships. We believe that the strength of this model, which provides for significant industry, customer and geographic diversity, willhas become even more apparent in the current challenging economic environment.

On January 4, 2008, we purchased a controlling interestFebruary 18, 2009, the Company reduced its debt and repaid at par, from cash on its balance sheet, $75.0 million of debt under its Term Loan Facility due in Fox Factory Holding Corp. (“Fox”) for approximately $80.4 million. Fox, headquartered in Watsonville, California, is a leading designer and manufacturerDecember of high-end suspension products for mountain bikes and power sports. We made loans to and purchased a controlling interest in Fox representing approximately 75.5% of the outstanding stock on a primary basis and approximately 69.8% on a fully diluted basis.2013.

On June 24, 2008,9, 2009 we sold our majority owned subsidiary, Aeroglide Holdings, Inc. (“Aeroglide”), forcompleted a total enterprise valuepublic offering of $95.0 million. Our5,100,000 shares at $8.85 per share of theraising $45.1 million in gross proceeds. The net proceeds to the Company, after accounting for the redemption of Aeroglide’s minority holdersdeducting underwriter’s discount and payment of transaction expenses,offering costs totaled approximately $85.6$42.1 million. Our Manager was paid a profit allocation from this sale in August 2008, totaling approximately $7.3 million. We recognized a gain on the sale of approximately $34.0 million or $1.08 per share.

We increased our quarterly distribution from $0.325 per share to $0.34 per share during the third quarter of 2008. For the 2008 fiscal year 2009 we maintained this quarterly distribution and declared distributions to our shareholders totaling $1.33$1.36 per share.share during the year.

Compass AC Holdings, Inc. (“Advanced Circuits or ACI”), with operations headquartered in Aurora, Colorado, is a provider of prototype,, quick-turn and quick-turnproduction rigid printed circuit boards, or PCBs,“PCBs”, throughout the United States. PCBs are a vital component of virtually all electronic products. The prototype and quick-turn portions of the PCB industry are characterized by customers requiring high levels of responsiveness, technical support and timely delivery. We made loans to and purchased a controlling interest in Advanced Circuits, on May 16, 2006, for approximately $81.0 million, representing approximatelymillion. We currently own 70.2% of the outstanding stock of Advanced Circuits on a primary and fully diluted basis.

and marketing industry through its focus on servicing its group of over 950600 account executives. We made loans to and purchased a controlling interest in HALO on February 28, 2007 for approximately $62.0 million, representing approximately 88.3%million. We currently own 88.7% of the outstanding equitycommon stock on a primary basis and 73.6%72.8% on a fully diluted basis.

Information returns will be filed by the Trusttrust and the Companycompany with the IRS, as required, with respect to income, gain, loss, deduction and other items derived from the company’s activities. The Companycompany has and will file a partnership return with the IRS and intends to issue a Schedule K-1 to the trustee. The trustee intends to provide information to each holder of shares using a monthly convention as the calculation period. For 2008,2009, and future years, the Trusttrust has, and will continue to file a Form 1065 and issue Schedules K-1 to shareholders. For 2008,2009, we delivered the Schedule K-1 to shareholders within the same time frame as we delivered the schedule to shareholders for the 2008 and 2007 taxable year. The relevant and necessary information for tax purposes is readily available electronically through our website. Each holder will be deemed to have consented to provide relevant information, and if the shares are held through a broker or other nominee, to allow such broker or other nominee to provide such information as is reasonably requested by us for purposes of complying with our tax reporting obligations.

We have filed with the SEC Forms S-1 and S-3 under the Securities Act, and Forms 10-Q, 10-K, and 8-K under the Exchange Act, which include exhibits, schedules and amendments, under the Securities Act. These forms can be inspected and copied at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549-1004. The public may obtain information about the operation of the public reference room by calling the SEC at 1-800-SEC-0300.amendments. In addition, the SEC maintains a web site at http://www.sec.govcopies of such reports are available free of charge that contains the Forms S-1 and S-3 as well as other reports, proxy and information statements and information regarding issuers that file electronically with the SEC. In addition, copies can be accessed indirectly thoroughthrough our websitehttp://www.compassdiversifiedholdings.com. and are available as soon as reasonably practicable after such documents are electronically filed or furnished with the SEC.

We haveOur Manager, CGM, has been engaged CGM, our Manager, to manage the day-to-day operations and affairs of the Company and to execute our strategy, as discussed below. Our management team while working for a subsidiary of CGI, originally acquired each of our initial businesses and Anodyne and oversaw their operations prior to our acquiring them. Our management team has worked together since 1998. Collectively, our management team has approximately 7590 years of experience in acquiring and managing small and middle market businesses. We believe our Manager is unique in the marketplace in terms of the success and experience of its employees in acquiring and managing diverse businesses of the size and general nature of our businesses. We believe this experience will provide us with an advantage in executing our overall strategy. Our management team devotes a majority of its time to the affairs of the Company.

We have entered into a management services agreement with our Manager (the “Management Services Agreement”) pursuant to which our Manager manages the day-to-day operations and affairs of the Company and oversees the management and operations of our businesses. We pay our Manager a quarterly management fee for the services it performs on our behalf. In addition, our Manager receives a profit allocation as a result ofwith respect to its ownership of Allocation Interests in us. See Part III, Item 13 “Certain Relationships and Related Transactions” for further descriptions of the management fees and profit allocation to be paid to our Manager. In consideration of our Manager’s acquisition of the Allocation Interests, we entered into a Supplemental Put agreement with our Manager pursuant to which our Manager has the right to cause us to purchase its Allocation Interests upon termination of the Management Services Agreement. Our Manager owns 100% of the Allocation Interests of the Company, for which it paid an aggregate of $100,000.

The Company’s Chief Executive Officer and Chief Financial Officer are employees of our Manager and have been seconded to us. Neither the Trust nor the Company has any other employees. Although our Chief Executive Officer and Chief Financial Officer are employees of our Manager, they report directly to the Company’s board of directors. The management fee paid to our Manager covers all expenses related to the services performed by our Manager, including the compensation of our Chief Executive Officer and other personnel providing services to us. The Company reimburses our Manager for the salary and related costs and expenses of our Chief Financial Officer and his staff, who dedicate 100%substantially all of their time to the affairs of the Company.

See Part III, Item 13, “Certain Relationships and Related Party Transactions”Transactions and Director Independence”.

We acquire and actively manage small to middle market businesses. We characterize small to middle market businesses as those that generate annual cash flows of up to $60 million. We believe that the merger and acquisition market for small to middle market businesses is highly fragmented and provides opportunities to purchase businesses at attractive prices. We believe that the following factors contribute to lower acquisition multiples for small to middle market businesses:

We believe that opportunities exist to augment existing management at such businesses and improve the performance of these businesses upon their acquisition. In the past, our management team has acquired businesses that were owned by entrepreneurs or large corporate parents. In these cases, our management team has frequently found that there have been opportunities to further build upon the management teams of acquired businesses beyond those in existence at the time of acquisition. In addition, our management team has frequently found that financial reporting and management information systems of acquired businesses may be improved, both of which can lead to improvements in earnings and cash flow. Finally, because these businesses tend to be too small to have their own corporate development efforts, we believe opportunities exist to assist these businesses as they pursue organic or external growth strategies that were often not pursued by their previous owners. Because we intend to fund acquisitions through the utilization of our Revolving Credit Facility, weWe believe the current financing environment is conducive to our ability to consummate acquisitions.

We have two primary strategies that we use in order to provide distributions to our shareholders and increase shareholder value. First, we focus on growing the earnings and cash flow from our businesses. We believe that the scale and scope of our businesses give us a diverse base of cash flow upon which to further build. Second, we identify, perform due diligence on, negotiate and consummate additional platform acquisitions of small to middle market businesses in attractive industry sectors in accordance with acquisition criteria established by the board of directors from time to time.

Our management strategy involves the proactive financial and operational management of the businesses we own in order to pay distributions to our shareholders and increase shareholder value. Our Manager oversees and supports the management teams of each of our businesses by, among other things:

Specifically, while our businesses have different growth opportunities and potential rates of growth, we expect our Manager to work with the management teams of each of our businesses to increase the value of, and cash generated by, each business through various initiatives, including:

In terms of the difficult economic environment we are currently facing, we and each of our subsidiary management teams arehave been, and will continue to be, intensely focused on performance and cost control measures through this economic cycle.

Our businesses may alsotypically acquire and integrate complementary businesses. We believe that complementary acquisitions will improve our overall financial and operational performance by allowing us to:

We incur third party debt financing almost entirely at the Company level, which we use, in combination with our equity capital, to provide debt financing to each of our businesses orand to acquire additional businesses We believe this financing structure is beneficial to the financial and operational activities of each of our businesses by aligning our interests as both equity holders of, and lenders to, our businesses, in a manner that we believe is more efficient than our businesses borrowing from third-party lenders.

Our acquisition strategy involves the acquisition of businesses that we expect to produce stable and growing earnings and cash flow. In this respect, we expect to make acquisitions in industries other than those in which our businesses currently operate if we believe an acquisition presents an attractive opportunity. We believe that attractive opportunities will continue to present themselves, as private sector owners seek to monetize their interests in longstanding and privately-held businesses and large corporate parents seek to dispose of their “non-core” operations.

     Our ideal acquisition candidate has the following characteristics:

We benefit from our Manager’s ability to identify potential diverse acquisition opportunities in a variety of industries. In addition, we rely upon our management team’s experience and expertise in researching and valuing prospective target businesses, as well as negotiating the ultimate acquisition of such target businesses. In particular, because there may be a lack of information available about these target businesses, which may make it more difficult to understand or appropriately value such target businesses, on our behalf, our Manager:

The process of acquiring new businesses is both time-consuming and complex. Our management team historically has taken from two to twenty-four months to perform due diligence, negotiate and close acquisitions. Although our management team is always at various stages of evaluating several transactions at any given time, there may be periods of time during which our management team does not recommend any new acquisitions to us.

In addition to acquiring businesses, we sell businesses that we own from time to time when attractive opportunities arise that outweigh the value that we believe we will be able to bring to such businesses consistent with our long-term investment strategy. As such, our decision to sell a business is based on our belief that doing so will increase shareholder value to a greater extent than through our continued ownership of that business. Upon the sale of a business, we may use the proceeds to retire debt or retain proceeds for acquisitions or general corporate purposes. Generally, weWe do not expect to make special distributions at the time of a sale of one of our businesses; instead, we expect to pay shareholder distributions over time through the earnings and cash flows of our businesses.

Since our inception in May 2006, we have recorded gains on sales of our businesses of over $100 million, or $3.00 per share. We sold Crosman in January 2007 and Aeroglide and Silvue in June 2008. We sold Crosman, our majority owned recreational products company for approximately $143 million and our net proceeds and gain on sale were approximately $110 million and $36 million, respectively. We sold Aeroglide, our majority owned designer and manufacturer of industrial drying and cooling equipment for approximately $95 million and our net proceeds and gain on sale were approximately $78 million and $34 million, respectively. Finally, we sold Silvue, our majority owned developer and producer of proprietary, high performance liquid coating systems for approximately $95 million and our net proceeds and gain on sale were approximately $64 million and $39 million, respectively.

Based on the experience of our management team and its ability to identify and negotiate acquisitions, we believe we are well-positioned to acquire additional businesses. Our management team has strong relationships with business brokers, investment and commercial bankers, accountants, attorneys and other potential sources of acquisition opportunities. In addition, our management team also has a successful track record of acquiring and managing small to middle market businesses in various industries. In negotiating these acquisitions, we believe our management team has been able to successfully navigate complex situations surrounding acquisitions, including corporate spin-offs, transitions of family-owned businesses, management buy-outs and reorganizations.

Our management team has a large network of over 2,000 deal intermediaries who we expect to expose us to potential acquisitions. Through this network, as well as our management team’s proprietary transaction sourcing efforts, we have a substantial pipeline of potential acquisition targets. Our management team also has a well established network of contacts, including professional managers, attorneys, accountants and other third-party consultants and advisors, who may be available to assist us in the performance of due diligence and the negotiation of acquisitions, as well as the management and operation of our businesses once acquired.acquired businesses.

Finally, because we intend to fund acquisitions through the utilization of our Revolving Credit Facility, we expect to minimize the delays and closing conditions typically associated with transaction specific financing, as is typically the case in such acquisitions. We believe this advantage is a powerful one, especially in the current credit environment, and is highly unusual in the marketplace for acquisitions in which we operate.

When evaluating businesses or assets for acquisition, our management team performs a rigorous due diligence and financial evaluation process. In doing so, we evaluate the operations of the target business as well as the outlook for the industry in which the target business operates. While valuation of a business is, by definition, a subjective process, we define valuations under a variety of analyses, including:

party experts to review key risk areas, including legal, tax, regulatory, accounting, insurance and environmental. We also engage technical, operational or industry consultants, as necessary.

A further critical component of the evaluation of potential target businesses is the assessment of the capability of the existing management team, including recent performance, expertise, experience, culture and incentives to perform. Where necessary, and consistent with our management strategy, we actively seek to augment, supplement or replace existing members of management who we believe are not likely to execute our business plan for the target business. Similarly, we analyze and evaluate the financial and operational information systems of target businesses and, where necessary, we enhance and improve those existing systems that are deemed to be inadequate or insufficient to support our business plan for the target business.

We have a Credit Agreement with a group of lenders led by Madison Capital, LLC. The Credit Agreement provides for a Revolving Credit Facility totaling $340.0 million, subject to borrowing base restrictions, and a Term Loan Facility totaling $153.0$76.0 million. The Term Loan Facility requires quarterly payments of $0.5 million that commenced March 31, 2008, and a final payment of the outstanding principal balance on December 7, 2013. The Revolving Credit Facility matures on December 7, 2012. The Credit Agreement permits

On February 18, 2009, we repaid $75.0 million of the Company to increase, over the next two years, the amount available under the Revolving Credit Facility by up to $10.0 million and theoutstanding Term Loan Facility by up to $145.0 million, subject to certain restrictionswith the unused portion of the proceeds from the sale of Aeroglide and Lender approval.Silvue in 2008.

The Credit Agreement provides for letters of credit under the Revolving Credit Facility in an aggregate face amount not to exceed $100 million outstanding at any time. At no time may the (i) aggregate principal amount of all amounts outstanding under the Revolving Credit Facility, plus (ii) the aggregate amount of all outstanding letters of credit, exceed the borrowing availability under the Credit Agreement. At December 31, 2008,2009, we had outstanding letters of credit totaling $61.9$66.2 million. The borrowing availability under the Revolving Credit Facility at December 31, 20082009 was approximately $289.3$136.8 million.

The Credit Agreement is secured by all of the assets of the Company, including all of its equity interests in, and loans to, its subsidiaries. (See Note K to the consolidated financial statements for more detail regarding our Credit Agreement).

We intend to finance future acquisitions through our Revolving Credit Facility, cash on hand and additional equity and debt financings. We believe, and it has been our experience, that having the ability to finance our acquisitions with the capital resources raised by us, rather than negotiating separate third party financing specifically relating to the acquisition of individual businesses, provides us with an advantage in acquiring attractive businesses by minimizing delay and closing conditions that are often related to acquisition-specific financings. This is especially true given the recent disruptions in the overall economy and current volatility in the financial markets. In this respect, we believe that in the future, we may need to pursue additional debt or equity financings, or offer equity in Holdings or target businesses to the sellers of such target businesses, in order to fund multiple future acquisitions.

than 2% of net sales. Advanced Circuits’ senior management, collectively, has approximately 90 years of experience in the electronic components manufacturing industry and closely related industries. Additional information is available at www.4pcb.com.

For the full fiscal years ended December 31, 2009, 2008 2007 and 2006,2007, Advanced Circuits had net sales of approximately $46.5 million, $55.4 million $52.3 million and $48.1$52.3 million, respectively and operating income of $16.3 million, $17.7 million $17.1 million and $12.0$17.1 million, respectively. Advanced Circuits had total assets of $74.0$72.6 million at December 31, 2008.2009. Net sales from Advanced Circuits represented 3.6%3.7%, 6.2%3.6% and 7.7%6.2% of our consolidated net sales for the years 2009, 2008 2007 and 2006,2007, respectively.

Advanced Circuits commenced operations in 1989 through the acquisition of the assets of a small Denver based PCB manufacturer, Seiko Circuits. During its first years of operations, Advanced Circuits focused exclusively on manufacturing high volume, production run PCBs with a small group of proportionately large customers. In 1992, after the loss of a significant customer, Advanced Circuits made a strategic shift to limit its dependence on any one customer. As a result, Advanced Circuits began focusing on developing a diverse customer base, and in particular, on providing research and development professionals at equipment manufacturers and academic institutions with low volume, customized prototype and quick-turn PCBs.

In 1997 Advanced Circuits increased its capacity and consolidated its facilities into its current headquarters in Aurora, Colorado. During 2001 through 2003, despite a recession and a reduction in United States PCB manufacturing, Advanced Circuits’ sales expanded by 29% as its research and development focused customer base continued to require PCBs to perform day-to-day activities. In 2003, to support its growth, Advanced Circuits expanded its PCB manufacturing facility by approximately 37,000 square feet or approximately 150%.

We acquiredpurchased a majoritycontrolling interest in Advanced Circuits on May 16, 2006.

The PCB industry, which consists of both large global PCB manufacturers and small regional PCB manufacturers, is a vital component to all electronic equipment supply chains as PCBs serve as the foundation for virtually all electronic products, including cellular telephones, appliances, personal computers, routers, switches and network servers. PCBs are used by manufacturers of these types of electronic products, as well as by persons and teams engaged in research and development of new types of equipment and technologies. According to IPC’s 2009 Industry Analysis and Forecast for Rigid PCB’s in North America (published August 2009, which we refer to as the IPC Fourth Quarter 2008 PCB Industry Forecast,2009 Analysis, the global PCB market, including both captive and merchant production, including both rigid and flex boards grew at a CAGR of over 9%8% from $31.6 billion in 2002 to an estimated $53.1$50.7 billion in 2008.

These categories can be further distinguished based on board complexity, with each portion facing different competitive threats. Advanced Circuits competes largely in the prototype and quick-turn production portions of the North American market, which have not been significantly impacted by the Asian based manufacturers due to the quick response time required for these products. The North American prototype and quick-turn production sectors combined represent approximately $1.45$1.2 billion in the PCB production industry in 2008 according to the IPC Report.2009 Analysis.

     Several significant trends are present within the PCB manufacturing industry, including:

Advanced Circuits generates images of the circuit patterns that are then physically developed on individual layers, using advanced photographic processes. Through a variety of plating and etching processes, conductive materials are selectively added and removed to form horizontal layers of thin circuits, called traces, which are separated by insulating material. A finished multilayer PCB laminates together a number of layers of circuitry. Vertical connections between layers are achieved by metallic plating through small holes, called vias. Vias are made by highly specialized drilling equipment capable of achieving extremely fine tolerances with high accuracy.

Advanced Circuits assists its customers throughout the life-cycle of their products, from product conception through volume production. Advanced Circuits works closely with customers throughout each phase of the PCB development process, beginning with the PCB design verification stage using its unique online FreeDFM.com tool.,tool, FreeDFM.com^TM, which was launched in 2002, enables customers to receive a free manufacturability assessment report within minutes, resolving design problems that would prohibit manufacturability before the order process is completed and manufacturing begins. The combination of Advanced Circuits’ user-friendly website and its design verification tool reduces the amount of human labor involved in the manufacture of each order as PCBs move from Advanced Circuits’ website directly to its computer numerical control, or CNC, machines for production, saving Advanced Circuits and customers cost and time. As a result of its ability to rapidly and reliably respond to the critical customer requirements, Advanced Circuits generally receives a premium for their prototype and quick-turn PCBs as compared to volume production PCBs.

Advanced Circuits manufactures all high margin prototypes and quick-turn orders internally but often utilizes external partners to manufacture production orders that do not fit within its capabilities or capacity constraints at a given time. As a result, Advanced Circuits constantly adjusts the portion of volume production PCBs produced internally to both maximize profitability and ensure that internal capacity is fully utilized.

The following table shows Advanced Circuits’ gross revenue by products and services for the periods indicated:

Advanced Circuits engages in continual research and development activities in the ordinary course of business to update or strengthen its order processing, production and delivery systems. By engaging in these activities, Advanced Circuits expects to maintain and build upon the competitive strengths from which it benefits currently. Research and development expenses were not material in each of the years 2009, 2008 2007 and 2006.2007.

There are currently an estimated 349309 active domestic PCB manufacturers. Advanced Circuits’ competitors differ amongst its products and services.

Competitors in the prototype and quick-turn PCBs production industry include larger companies as well as small domestic manufacturers. The three largest independent domestic prototype and quick-turn PCB manufacturers in North America are DDI Corp., TTM Technologies, Inc. and Merix Corporation.Viasystems Group, Inc. . Though each of these companies produces prototype PCBs to varying degrees, in many ways they are not direct competitors with Advanced Circuits. In recent years, each of these firms has primarily focused on producing boards with higher layer counts in response to the off shoring of low and medium layer count technology to Asia. Compared to Advanced Circuits, prototype and quick-turn PCB production accounts for much smaller portions of each of these firm’s revenues. Further, these competitors often have much greater customer concentrations and a greater portion of sales through large electronics manufacturing services intermediaries. Beyond large, public companies, Advanced Circuits’ competitors include numerous small, local and regional manufacturers, often with revenues under $20 million that have long-term customer relationships and typically produce both prototype and quick-turn PCBs and production PCBs for small OEMs and EMS companies. The competitive factors in prototype and quick-turn production PCBs are response time, quality, error-free production and customer service. Competitors in the long lead-time production PCBs generally include large companies, including Asian manufacturers, where price is the key competitive factor.

Advanced Circuits manufacturing operations and facilities are subject to evolving federal, state and local environmental and occupational health and safety laws and regulations. These include laws and regulations governing air emissions, wastewater discharge and the storage and handling of chemicals and hazardous substances. Advanced Circuits’ management believes that Advanced Circuits is in compliance, in all material respects, with applicable environmental and occupational health and safety laws and regulations. New requirements, more stringent application of existing requirements, or discovery of previously unknown environmental conditions may result in material environmental expenditures in the future. Advanced Circuits has been recognized three times for exemplary environmental compliance as it was awarded the Denver Metro Wastewater Reclamation District Gold Award for the years 2002, 2003 and 2005.2005, 2006 and 2008.

installed a new management structure led by Mr. Mike Thomas. Mr. Thomas successfully hired a new executive team and grew American Furniture’s administrative infrastructure in order to build a solid foundation to support future growth. In 2005, American Furniture began to aggressively pursue anpursued Asian sourcing strategy for fabrics and other assorted materials. Today American Furniture is a leading manufacturer of promotional upholstered furniture operating from an approximately 1.1 million sq. ft. of manufacturing and warehouse facility recentlycompletely restored from the February 2008 fire.

We acquired a majoritycontrolling interest in American Furniture on August 31, 2007.

have largely managed to compete effectively against Asian competitors when compared to other segments of the furniture industry. In addition, manufacturers in the promotional segment of the upholstered industry are even further insulated from offshore competition due not only to overall freight costs but also freight costs when compared to wholesale price of the product together with the prolonged lead-times to retailers and end customers in a market segment characterized very short lead-times and immediate delivery to the end consumer.

Retail price points in the promotional segment of the upholstered industry range from $99 - $1,399, whereas shipping costs from Asia on a per piece basis are generally in excess of $100 per piece ($3,000 — $4,000) per standard 40’40 foot container not including domestic shipping and insurance costs).

In addition to the increased cost, lead times also hinder Asian manufacturers’ ability to effectively compete in the promotional upholstered industry. As mentioned previously, retailers use promotional furniture to drive store traffic and provide immediately delivery to the end-user of value-priced, quality upholstered furniture products. AFM aims to ship customer orders 48 hours following receipt of an order with delivery occurring 1 — 3 days following depending on the customers’ location within the U.S. Asian manufacturers typically require at least 50 days (or 7 — 8 weeks depending on business days) from order receipt to customer delivery, resulting in a significant amount of increased inventory management and advertising planning in order to effectively source upholstered product from overseas manufacturers.

AFM manufactures two basic categories of promotional upholstered products, stationary and motion. Stationary products include sofas, loveseats and sectionals, these products accounted for approximately 63%70%, 64%63% and 63%64% of sales in fiscal 2009, 2008 2007 and 2006,2007, respectively. Motion products include single rocking recliner chairs, sofas with reclining end seats, loveseats with seats that rock together or separately and reclining sectionals with storage compartments. Motion and reclining products contributed approximately 33%28%, 33%34% and 34%33% of fiscal 2009, 2008 2007 and 20062007 gross sales, respectively. Beginning in 2005, AFM added a line of imported accent tables to its product mix to provide customers with complimentary accessory offering to AFM’s core furniture lines. For 2009, 2008 2007 and 2006,2007, accent tables and other miscellaneous revenue accounted for approximately 3%2%-4% of gross sales. AFM’s core product offerings with average retail prices are summarized below:

2426 styles of stationary sofas, loveseats and chairs — $299 -— $499
1213 styles of recliners — $99 -— $399
35 styles of motion sofas — $499 -— $599
3 styles of stationary sectionals — Up to $799
2 stylesstyle of motion sectionals — $999 -— $1,399

AFM’s products utilize common components and frames with limited fabric options, allowing AFM to reproduce established styles at value prices. Since 2004, AFM has continuously introduced 15 new styles which typically replace older designs and are primarily slight variations to existing products. AFM builds its products to stock and maintains adequate inventory levels to facilitate shipment to customers within 48 hours of an order. AFM’s quick-ship strategy allows customers to better manage inventory and product promotions yet maintain the ability to provide immediate availability to retail customers, a key attribute within the promotional furniture segment of the furniture industry.

AFM can re-engineer a new design, create a prototype and begin to solicit customer feedback within two weeks. AFM carefully controls its product line such that new styles typically replace older designs. As a result, AFM requires approximately 60 days to 90 days to wind-down a discontinued line and begin shipping truckload quantities of new designs to customers. Since 2004, AFM has introduced 15 new styles.

cushion in alleach category of its products.upholstery.. AFM’s piece-rate compensation plan and streamlined manufacturing process combine to give AFM a low cost structure

AFM’s efficient manufacturing process combined with its inventory strategy is designed to facilitate AFM’s 48-hour quick-ship service covering the entire product line. AFM’s expedited shipping capacity enables retailers to improve inventory turns and reduce lost sales due to stock-outs. AFM’s warehoused inventory is loaded on the delivery truck within 48 hours of order placement and typically arrives at a customer location within three days of shipping.

AFM delivers the majority of its products through a combination of its in-house trucking fleet and third-party freight service providers. Freight costs are generally paid by the customer, including fuel surcharges. AFM utilized third-party freight providers for approximately 70% of its customer shipments in 2009 compared to approximately 50% in prior years. We estimate that this saved approximately $1.0 million in 2009 in overall freight costs.

We believe that AFM is among the lowest-cost domestic manufacturers of promotional upholstered furniture. AFM maintains a competitive cost basis through an assembly-line production model and build-to-stock strategy. Specifically, AFM generates economies of scale through:

In addition, management has aligned AFM’s high-volume manufacturing strategy with a piece-rate incentive structure for its direct labor force. This structure drives workforce productivity. The incentive system also provides floor personnel with the opportunity to earn annual compensation at or above local standards, thereby facilitating AFM’s recruiting and retention efforts.

AFM’s efficient build-to-stock manufacturing operation facilitates AFM’s strategy of offering its customers shipment of product within 48 hours of order receipt. In turn, AFM’s customers are able to offer their retail customers quality, value-priced upholstered furniture for immediate delivery upon the day of sale, while only maintaining limited quantities of product inventory.

AFM serves a diverse base of approximately 800750 customers. Within its broader customer base, AFM specifically targets independent furniture retailers at the national, multi-regional and regional levels. AFM’s value proposition and the ability to ship any product within 48 hours, is highly valued by this segment of the marketplace that focuses broadly on demographic segments that demand immediate delivery of popular styles at competitive prices.

The availability of low-cost Asian products has had a far-reaching impact on the broader home furnishings market in the United States over the past ten years. In contrast to manufacturers serving other segments,segments. Until recently, AFM has had minimal exposure to off-shore competition due to the following:

AFM serves a base of approximately 800750 customers comprised of retailers and distributors at the regional, multi-regional and national levels. In 2009, 2008 2007 and 2006,2007, AFM’s top 20 customers accounted for approximately 56%62%, 50%56% and 49%51%, respectively, of AFM’s total sales, with the top customer, Value City, accounting for approximately 22.3%24%, 18.5%22% and 19.9%19% of total sales in 2009, 2008 2007 and 2006,2007, respectively. Other than this customer, no single customer has accounted for more than 6.5% of total sales in 2009, 2008 2007 and 2006.or 2007.

AFM has a sales force consisting of 15 independent, outside representatives that exclusively sell AFM’s products in an assigned geographic territory of up to six states. Sales representatives are compensated on a 100% commission basis. AFM maintains two permanent showrooms in High Point, North CarolinaNC and Tupelo, Mississippi,MS, host cities for furniture industry trade shows (High Point in April and October and Tupelo in January and August). In addition, AFM leases showroom space for the furniture trade show in Las Vegas Nevada.NV. Trade shows provide opportunities for AFM to display its existing products and introduce new designs into the marketplace.

American Furniture’s business is somewhat seasonal. Net sales have historically been higher in the period of January through April of each fiscal quarters ended June and December.year. We believe this seasonality is due in part to consumer demand increasing resulting from income tax refunds and the holiday season.refunds. Substantially all revenue is derived from sales within the United States.

AFM competes with certainselected large national manufacturers that produce and sell promotional products. However, promotional upholstered furniture often represents only a small percentage of revenue for these participants. Also, large diversified manufacturers tend not to place specific emphasis on developing quick-ship capabilities specifically for their promotional offerings. Therefore, AFM competes primarily with several smaller manufacturers that are typically thinly-capitalized, family owned businesses that we believe do not have the capacity, manufacturing capabilities, sourcing expertise or access to capital in order to build critical production volumes. Competition within the segment is largely based on value and delivery lead times, as opposed to product differentiation, providing AFM and its quick-ship capabilities with a key competitive advantage within the industry. AFM’s primary competitors include United Furniture Industries, Albany Industries and Hughes Furniture, among others.Ashley Furniture and Corinthian.

AFM’s top supplier, Independent Furniture Supply (“Independent”), is 50% owned by MikeMr. Thomas, AFM’s CEO. AFM purchases polyfoam from Independent on an arms-length basis and AFM performs regular audits to verify market pricing. AFM does not have long-term supply contracts with Independent or any other suppliers. A majority of AFM’s domestic suppliers are located near AFM due to a concentration of furniture manufacturers in northeastern Mississippi. Several of AFM’s key raw materials, including lumber, plywood and polyfoam, are sourced locally with alternative suppliers available at competitive prices, if necessary. In order to continually manage material costs, AFM actively sources products from Asia. AFM imports legs, show wood, chaises, ottomans, correlate chairs, accent tables and the majority of its fabric from China-based suppliers. The prices charged by manufacturers of products such as petro-chemicals and wire rod, which are the primary materials purchased by our suppliers of foam and drawn wire have declined slightly beginning in the fourth quarter of 2008.2009. It is too early to determine if we will realize a like kind reduction in our raw material costs in 20092010 as our vendors may reduce supplies in an effort to maintain higher prices. These actions would delay or eliminate price reductions from our suppliers. Raw material cost as a percent of sales was approximately 59%, 59% and 58% in 2009, 2008 and 59% in 2008, 2007, and 2006, respectively.

AFM’s manufacturing operations, facilities and operations are subject to evolving federal, state and local environmental and occupational health and safety laws and regulations. Such laws and regulations govern air emissions, wastewater discharge and the storage and handling of chemicals and hazardous substances. AFM believes that it is in compliance, in all material respects, with applicable environmental and occupational health and safety laws and regulations. New requirements, more stringent application of existing requirements, or discovery of previously unknown environmental conditions may result in material environmental expenditures in the future

As of December 31, 2008,2009, American Furniture employed 950832 persons. Of these employees, approximately 857758 were in production shipping and trucking, 15 were in salespurchasing with the remainder serving in executive, administrative office and administrative functions.other capacities. None of AFM’s employees are subject to collective bargaining agreements. We believe that AFM’s relationship with its employees is good.

support surfaces) while others may require electronically controlled, low air loss, lateral rotation, pulmonary therapy or alternating pressure air beds.surfaces (“powered” support surfaces). The design, engineering and manufacturing of all products are completed in-house (with the exception of PrimaTech products, which are manufactured in Taiwan) and are Food and Drug Administration (“FDA”)FDA compliant. Additional information is available at www.anodynemedicaldevice.com.

For the full fiscal years ended December 31, 2009, 2008 2007 and 2006,2007, Anodyne had net sales of approximately $54.1 million, $54.2 million $44.2 million and $23.4$44.2 million, and operating income of $7.4 million, $4.2 million $2.9 million and $0.3$2.9 million, respectively. Anodyne had total assets of $53.2$49.0 million as ofat December 31, 2008.2009. Net sales from Anodyne represented 3.5%4.3%, 5.2%3.5% and 3.1%5.2% of our consolidated net sales for fiscal years 2009, 2008 2007 and 2006,2007, respectively.

Anodyne was initially formed in February 2006 by CGI and Hollywood Capital, Inc., a private investment management firm led by Anodyne’s former Chief Executive Officer, to acquire AMF and SenTech, located in Corona, CA and Coral Springs, FL, respectively. AMF Support Surfaces, Inc. is a leading manufacturer of non-powered mattress systems, seating cushions and patient positing devices. SenTech is a leading designer and manufacturer of advanced electronically controlled, powered, alternating pressure, pulmonary therapy, low air loss and lateral rotation specialty support surfaces for the wound care industry. Prior to its acquisition SenTech had established a premium brand as a result of its proprietary technologies, in the less price sensitive therapeutic market while AMF competed primarily in the preventive care market.

On October 5, 2006, Anodyne acquired the patient positioning device business of Anatomic. The acquired operations were merged into Anodyne’s operations. Anatomic is a leading supplier of operating suite patient positioning devices and support surfaces focused on the price sensitive long term care and home healthcare markets.

On June 27, 2007, Anodyne purchased PrimaTech, a lower price-point distributor of powered medical support surfaces to the long term care and home healthcare markets. PrimaTech’s products are predominately designed in the US and manufactured pursuant to an exclusive manufacturing agreement with an FDA registered manufacturing partner located in Taiwan.

In October 2008, Anodyne and Hollywood Capital, IncInc. terminated their management services agreement which provided for, among other things, two principals of Hollywood Capital, Inc., assuming theresigning from their roles of Chief Executive Officer and Chief Financial Officer of Anodyne. Upon termination of the agreement, Anodyne appointed a new Chief Executive Officer and a new Chief Financial Officer.

We acquiredpurchased a controlling interest in Anodyne from CGI on August 1, 2006.

The medical support surfaces industry is fragmented and comprised of many small participants and niche manufacturers. Anodyne’s consolidation platform allows customers to source all leading support surface technologies for the acute care, long term care and home health care from a single source. Anodyne is a

According to the Centers for Disease Control and Prevention, between the years 1980 and 2000, obesity rates more than doubled among adults in the United States. Studies have shown that this increase in obesity has been a key factor in rising medical costs over the last 15 years. According to one study done at Emory University, increases in obesity rates have accounted for 27% of the increase in health care spending between 1987 and 2001. As an individual’s weight increases, so to does the probability that the individual will become immobile and, according to studies performed at the University of North Carolina, greater than 40% of obese adults aged 54 to 73 were at least partially immobile. As individuals become less mobile, they are more likely to require either preventative mattresses to better disperse weight and reduce pressure areas or therapeutic mattresses to shift weight and pressure. Similar to how obesity increases the occurrence of immobility, so too does an aging society. As life expectancy expands in the US due to improved health care and nutrition, so too does the probability that an individual will be immobile for a portion of their lives. In addition, as individual’s age, skin becomes more susceptible to breakdown increasing the likelihood of developing pressure ulcers.

Beyond favorable demographic trends, Anodyne’s management believes healthcare institutions are placing an increased emphasis on the prevention of pressure ulcers. Frost and Sullivan estimated that approximately 1 million pressure ulcers occur annually in the United States, generating an estimated $1.3 billion in annual costs to hospitals alone. According to recent Medicare reimbursement guidelines, pressure ulcers are eligiblehospitals would no longer be reimbursed for reimbursementthe treatment of in-house acquired wounds, resulting in management’s expectations for a greater focus by third party payers only when they are diagnosed upon hospital admission. Additionally, third party payers only provide reimbursement for preventative mattresses under limited circumstances.hospitals in preventing and treating such wounds. The end result is that if an at-risk patient develops pressure ulcers while at the hospital; the hospital is required to bear the cost of healing. As a result of increasing litigation and the high cost of healing pressures ulcers, healthcare institutions are now focusing on using pressure relief equipment to reduce the incidence of in-house acquired pressure ulcers.

Specialty beds, mattress replacements and mattress overlays (i.e. supporttherapeutic surfaces) are the primary products currently available for pressure relief and pressure reduction to treat and prevent decubitus ulcers. The market for specialty beds and supporttherapeutic surfaces include the acute care centers, long-term care centers, nursing home centers and home healthcare settings. Medical supporttherapeutic surfaces are designed to have preventative and/or therapeutic uses. The basic product categories are as follows:

The competition in the medical support surfaces market is based predominantly on product performance, features, price and durability. Other factors may include the technological ability of a manufacturer to customize their product offering to meet the needs of large distributors. Anodyne competes with manufacturers of varying sizes who then sell predominantly through distributors to the acute care, long term care and home health care markets. Specific competitors include Gaymar Industries, Inc., Span America and other smaller competitors. Anodyne differentiates itself from these competitors based on theits patented technologies, quality of the products it manufacturers as well as its design and engineering capabilities to produce a full linespectrum of foam and air mattresses and positioning devices.surfaces that provide the greatest therapeutic outcome for every price point. Many manufacturerscompetitors specialize in the production of a single type of support surface, and often outsource certain manufacturing as skills required to develop and manufacture products vary by materials used, Anodyne is able to offer its customers a full spectrum of support surfaces nationwidenationwide.

The companies listed below have been identified by management as Anodyne’s primary competitors.

Gaymar Industries, Inc.: Gaymar, a portfolio company of private equity firm Nautic Partners, develops, manufactures and markets medical devices for temperature and pressure ulcer management. Gaymar’s pressure ulcer management system includes, integrated bed systems, mattress replacement systems, pressure relieving overlays, lateral rotation systems, table and stretcher pads, chair cushions and heel care devices.

Span America Medical Systems (NASDAQ: SPAN):($59.355.9 million in fiscal 20082009 sales) Span America’s medical division predominantly makesincludes the sales of skin care products, bedside mats, and foam mattress overlays and replacement mattresses, including the PressureGuard therapeutic mattress, Span-Aid patient positioners (used to elevate and support body parts) and Dish pressure-relief seat cushions to aid wound healing. Span America reported that less than half their revenue in 2009 was attributed to their therapeutic surface segment. Span America also supplies safety catheters and makes specialty packaging products for use in outdoor furniture.

Anodyne’s management is focused on strategies to grow revenues, improve operating efficiency and improving gross margins. Of particular note, Anodyne has completed four acquisitions since its inception and believes thathas achieved numerous benefits to this consolidation exist within the support surfaces industry. The following is a discussion of these strategies:

Anodyne increasingly works with large distributorsis working to develop the next generation of products effectively positioning and integrating itself within their customers’ research and development initiatives. The customers demand innovative products with clinical efficacy at competitive price points.in surfaces as well as advanced wound care devices. The new product development process often requires 2-42 to 6 months for prevention products and 12-1812-24 months for treatment products, of research, engineering and testing cooperation. Anodyne will provide technical support and repair services for its products as well, a differentiating characteristic valued by its customers. During the each of the years 2009, 2008 2007 and 20062007, Anodyne incurred $0.9 million, $0.9 million and $0.7 million in research and development costs.costs and is expected to nearly double this spending for 2010. This increase in spending is to allow the company to focus on both the next generation products as well as research and development of new wound care technologies.

Support surfaces are primarily sold through distributors, who either rent or sell to acute care (hospitals) facilities, long term care facilities and home health care organizations. The acute care distribution market for support surfaces is dominated by large suppliers such as Stryker Corporation, Hill-Rom Holdings Inc. and Kinetic Concepts, Inc. Other national distributors usually provide specific types of support surface technology. Beyond national distribution intermediaries there are numerous smaller localmore regional distributors who will purchase more standardized support surfaces fromdeveloped by Anodyne as quantities ordered may not be adequate to justify further development and customization.certain brand lines are known in the market as providing proven therapy.

Anodyne has developed a full range of support surface products that are sold or rented to healthcare distributors and occasionally sold directly to the end customer. Anodyne also provides technical support and repair services for its products, an offering valued by all customers. While contracts with large distributors typically do not include minimum purchase orders, agreements typically call for rolling forecasts of orders to be given at the end of each month for the following three months.

Approximately 20%50%, 33.7% and 22%34.5% of Anodyne’s sales have been to one customerits two largest customers in 2009, 2008 and 2007, respectively. Anodyne’s top ten customers accounted for 76.9%80.1%, 72.9%76.9% and 70.9%72.9% of gross sales in 2009, 2008 and 2007, and 2006, respectively. Anodyne’s largest customer accounted for approximately 25% of sales in 2009.

Substantially all revenue is derived from sales within the United States.

Anodyne had approximately $3.1 million and $1.7 million in firm backlog orders at December 31, 2008. Backlog order data is not available for 2007.2009 and 2008, respectively.

Anodyne’s two primary raw materials used in manufacturing are polyurethane foam and fabric (primarily nylon and polycarbonate fabrics). Among Anodyne’s largest raw material suppliers are Foamex International, Inc., Dartex Coatings, Inc. and Uretek, LLC. Anodyne uses multiple suppliers for foam and fabric and believes that these raw materials are in adequate supply and are available from many suppliers at competitive prices. We expect these costs, particularly those related to polyurethane foam to decreaseincrease during fiscal 20092010 due to an expected declinerecent trends in related commodity prices. Actions taken by manufacturers of petro-chemical commodities such as capacity reductions could delay or eliminateinfluence price reductionschanges from our suppliers.supplier.

As of December 31, 2008,2009, Anodyne employed 174205 persons in all its locations. In addition, there were 227 leased employees consisting primarily of productionlocations together with 137 temporary employees. None of Anodyne’s employees are subject to collective bargaining agreements. We believe that Anodyne’s relationship with its employees is good.

Staffmark, headquartered in Cincinnati, Ohio, is a provider of temporary staffing services in the United States. CBS PersonnelStaffmark currently operates under the brand names CBS Personnel,name Staffmark, and Venturi Staffing Partners, (see “Rebrandingpage 45 “rebranding of CBS Personnel”). CBS PersonnelStaffmark also provides its clients with other complementary human resource service offerings such as employee leasing services, permanent staffing and temporary-to-permanenttemporary-to-hire placement services. CBS PersonnelStaffmark operated more than 260200 branch locations in various cities in 29 states during 2008. CBS Personnel2009. Staffmark and its subsidiaries have been associated with quality service in their markets for more than 30 years. CBS PersonnelStaffmark is one of the top 10 commercial staffing companies in the United States. CBS Personnel Holdings, Inc acquired Staffmark Investment LLC, a large privately held provider of temporary staffing services in January 2008. Find more information at www.staffmark.com.

Staffmark serves over 6,500approximately 6,400 corporate and small business clients and on an average week places over 38,00034,000 temporary employees in a broad range of industries, including manufacturing, transportation, retail, distribution, warehousing, automotive supply, and construction, industrial, healthcare and financial sectors. We believe the quality of CBS Personnel’sStaffmark’s branch operations and its strong sales force provides CBS Personnelit with a competitive advantage over other placement services. CBS Personnel’sStaffmark’s senior management, collectively, has over 80 years of experience in the human resource outsourcing industry and other closely related industries. Additional information is available at www.staffmark.com.

For each of the fiscal years ended December 31, 2009, 2008 and 2007, and 2006, CBS PersonnelStaffmark had revenues totaling approximately $1,006$745.3 million, $569.9 million$1.0 billion and $551.1 million,$1.2 billion, and operating income (loss) of $16.8$(55.6) million, $22.5$16.1 million and $23.2 million.$31.6 million, respectively, on a pro-forma basis, as if CBS Personnel Holdings, Inc had acquired Staffmark Investment LLC on January 1, 2007. Staffmark wrote off $50.0 million in goodwill during 2009. Staffmark had total assets of $329.4$277.7 million at December 31, 2008.2009. Revenues from CBS PersonnelStaffmark represented 65.4%59.7%, 67.7%65.4% and 89.2%67.7% of our total revenuesconsolidated net sales for 2009, 2008 2007 and 2006,2007, respectively.

In August 1999, CGI acquired Columbia Staffing through a newly formed holding company. Columbia Staffing iswas a provider of light industrial, clerical, medical, and technical personnel to clients throughout the southeast. In October 2000, CGI acquired through the same holding company CBS Personnel Services, Inc,Inc. a Cincinnati-based provider of human resources outsourcing. CBS Personnel Services, Inc. began operations in 1971 and is a provider of temporary staffing services in Ohio, Kentucky and Indiana, with a particularly strong presence in the metropolitan markets of Cincinnati, Dayton, Columbus, Lexington, Louisville, and Indianapolis. The name of the holding company that made these acquisitions was later changed to CBS Personnel Holdings, Inc.

According to the U.S. Bureau of Labor Statistics, or BLS, net employment in professional and business services super sector, (which includes staffing),the Temporary Help Services industry has grown by approximately 55%70.1% from 19921990 to 2008.2009. Further, BLS has projected that the employment services sector is expected to be the second fastest growing sector of the economy for employment growth between 2006 and 2016. Companies today are operating in a more global and competitive environment, which requires them to respond quickly to fluctuating demand for their products and services. As a result of the recent economic recession (2008-2009) companies seek greater workforce flexibility translating to an increasing demand for temporary staffing services. WeThe Temporary Help Services Industry is cyclical though, and through September 2009, net employment declined by approximately 34.9% before beginning to trend upward from October through December 2009. Additionally, we believe this growing demand for temporary staffing should remain consistent in the near future as temporary staffing becomes an integral component of corporate human capital strategy.

Fiscal 20082009 was a very difficult year for the temporary staffing industry. The already weak economic conditions and employment trends in the U.S., present at the start of 2008,2009, continued to worsen, aswith the year progressed. The most notable deterioration occurreddecrease in the fourth quarterfirst half of 2008 as the economic slowdown continued.2009. We believe the industry will continue to experience deteriorationhave seen a slight increase in temporary staffing through fiscal 2009.during the 2009 fourth quarter and year-to-date 2010.

posting and resume process which facilitates distribution of job descriptions to national and local online job boards. Individuals may also submit a resume through CBS Personnel’sStaffmark’s website.

At each branch location, local salespeople are incentivized to recruit new clients and increase usage by existing clients through their compensation programs, as well as through numerous contests and competitions. Regional or company-based marketing specialists are utilized to assist local salespeople in closing potentially large accounts, particularly when it may involve an on-site presence by CBS Personnel.Staffmark.

On an initial engagement, particularly for clients with larger temporary staffing assignments (10+ temporary workers), a CBS PersonnelStaffmark staff member will arrive on-site to register all employees hired for a particular assignment. If, for any reason, not all employees assigned to the job site arrive, the on-site CBS PersonnelStaffmark staff member can immediately react and oftentimes correct the shortfall within a matter of hours, ensuring that 100% of a client’s staffing needs are fulfilled.

CBS Personnel’s’Staffmark’s marketing activities are designed to effectively service and reach all current and prospective clients at the local, regional and national level, resulting in brand recognition and loyalty throughout many levels of a client’s organization.

Following a prospective employee’s identification, CBS PersonnelStaffmark systematically evaluates each candidate prior to placement. The employee application process includes an interview, skills assessment test, education verification and reference verification, and may include drug screening and background checks depending upon customer requirements.

CBS’sStaffmark’s business is somewhat seasonal. Historically, demand for temporary staffing is highest during the fiscal quarters ending September and December. We believe this seasonality is due to increased outdoor activities and projects during the summer months and the increased retail activity during the holiday season.

Substantially all revenue is derived from sales within the United States.

The temporary staffing industry is highly fragmented and, according to the U.S. Census Bureau in 2006,2008, was comprised of approximately 11,9004,500 service providers. According to the Census Bureau’s latest Economic Census in 2002, the vast majority of service providers generate less than $10 million in annual revenues. Staffing services firms with more than 10 establishments account for only 1.6% of the total number of service providers, or 187 companies, but generate 49.3% of revenues in the temporary staffing industry. The largest publicly owned companies specializing in temporary staffing services are Adecco, Randstad, Kelly Services Inc., Allegis Group, Manpower, and Manpower.Robert Half. The employee leasing industry consists of approximately 4,500 service providers. Our largest national competitors in employee leasing include Administaff, Inc., Gevity HR, and the employee leasing divisions of large business service companies such as Automatic Data Processing, Inc., and Paychex, Inc.

CBS PersonnelStaffmark competes with both large national and small local staffing companies in its markets for clients. Competition in the temporary staffing industry, we believe, revolves around quality of service, reputation and price. Notwithstanding this level of competition, CBS Personnel’sStaffmark’s management believes CBS PersonnelStaffmark benefits from a number of competitive advantages, including:

proven to be for a limited time and as such a limited window of opportunity for consolidation, as the following periods of economic recovery have led to a return in growth in the number of competitors.

Due to the difficult current economic environment that arose in the latter halffiscal 2008 and continued through most of 2008,2009, we believe many of our smaller, local competitors will strugglehave struggled and we anticipate further consolidation in the near term. We view this as an opportunity to potentially increase our market share in 20092010 and beyond.

CBS Personnel alsoStaffmark competes for qualified employee candidates in each of the markets in which it operates. Management believes that CBS Personnel’sStaffmark’s scale and concentration in each of its markets provides it with recruiting advantages. Key among the factors affecting a candidate’s choice of employers is the likelihood of reassignment following the completion of an initial engagement. CBS PersonnelStaffmark typically has numerous clients with significantly different hiring patterns in each of its markets, increasing the likelihood that it can reassign individual employees and limit the amount of time an employee is in transition. As employee referrals are a key component of its recruiting efforts, management believes local market share is also key to its ability to identify qualified candidates.

CBS PersonnelStaffmark uses the following tradenames:CBS Personnel^TM, CBS Personnel Services^TM, Columbia Staffing^TM,,Columbia HealthcareHistory of Fox