The Company and its subsidiaries are subject to legal proceedings and claims that arise in the ordinary course of business. The Company accrues a liability for a loss contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. For material loss contingencies that are reasonably possible or for which the amount of loss cannot be reasonably estimated, the Company discloses the nature of the contingency. The Lugano Investigation, the restatement of the Company’s previously issued consolidated financial statements and related matters may result in additional litigation, regulatory investigations and liabilities in future periods.

Following the Company’s announcement of the Lugano Investigation and restatement, several putative securities class actions were filed against the Company and certain of its officers and directors. The previously filed California actions were consolidated and later voluntarily dismissed so that the lead plaintiff could pursue its claims in the United States District Court for the District of Connecticut. The Connecticut action, originally captioned Moreno v. Compass Diversified Holdings LLC, et al., now known as In Re Compass Diversified Holdings Securities Litigation, asserts claims under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5. The lead plaintiff filed an amended complaint on February 6, 2026, and the defendants filed motions to dismiss on March 23, 2026. All motions are fully briefed. The Company believes it has defenses available and intends to vigorously defend the action. Management has determined that a loss is reasonably possible but cannot reasonably estimate a range of potential loss.

Several shareholder derivative actions have been filed, purportedly on behalf of the Company, against certain current and former officers and directors. The derivative actions generally assert claims for breach of fiduciary duty and violations of the federal securities laws based on allegations related to Lugano and the restatement. The California derivative actions have been consolidated and stayed, and the Connecticut derivative actions have been consolidated and stayed, in each case pending further developments in the securities class action. A derivative action was also recently filed in Delaware Chancery Court. All derivative actions are in the early stages. The Company believes defenses are available and intends to vigorously defend these matters. Management has determined that a loss is reasonably possible but cannot reasonably estimate a range of potential loss.

As a result of the Company’s withdrawal of reliance on its 2024, 2023 and 2022 financial statements, delayed periodic reporting and the underlying conduct at Lugano, the Company is subject to ongoing investigations by the SEC and the U.S. Department of Justice. The investigative process is inherently uncertain, and the Company cannot predict the outcome of these investigations. The Company is cooperating with the ongoing investigations.

Certain state court actions previously filed attempting to hold the Company responsible for the alleged conduct of Lugano, including Kraus v. Lugano Diamonds & Jewelry, Inc., et al., and Royal T Diamonds Group Ltd. v. Lugano Diamonds & Jewelry Inc., et al., have been dismissed. A similar case, Coyne v. Mordechai Haim Ferder, et al., was recently filed. Plaintiff seeks damages, plus interest, against the Company as the alleged successor in interest to Lugano. The Company believes defenses are available and intends to vigorously defend this matter. Management has determined that a loss is reasonably possible but cannot reasonably estimate a range of possible loss, if any, that may result from this matter.

On November 16, 2025, Lugano and certain of its subsidiaries filed voluntary Chapter 11 petitions under the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. As a result, Lugano was deconsolidated from the Company’s consolidated financial statements. On June 24, 2026, CODI entered into the Settlement Agreement and Plan Support Agreement described in Note B. The Bankruptcy Court confirmed the Plan of Liquidation on September 24, 2026, and the Plan became effective on September 30, 2026. The Settlement Agreement and applicable release provisions became effective in accordance with their terms. The releases are subject to the scope, conditions and exclusions set forth in the Settlement Documents, the Plan and the order confirming the Plan. The timing and amount of remaining recoveries are uncertain, and third parties not bound by the releases may assert claims against the Company. Such claims could result in significant defense costs, settlement payments or judgments.

In February 2026, the U.S. Supreme Court issued a decision holding that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") were not authorized under the statute. As a result, the legal and regulatory framework surrounding certain IEEPA tariffs continues to evolve, including the process for seeking potential refunds of previously paid tariffs. Several of the Company's subsidiaries submitted claims for refunds related to previously paid tariffs. During the three and nine months ended September 30, 2026, the Company recognized $6.9 million and $14.4 million, respectively, as a reduction of cost of goods sold in the consolidated statement of operations related to IEEPA refunds received. An additional $1.8 million in tariff refunds received reduced the balance of inventory for product that had not yet been sold. Our subsidiaries have submitted additional claims for refunds related to certain eligible tariffs paid; however, based on claims submitted and information currently available, the Company does not expect any remaining refunds to be material to its consolidated financial statements. At September 30, 2026, the Company had not recognized a receivable for these additional refund claims because recovery remained uncertain. The Company will continue to monitor developments and recognize a receivable when amounts are realized or realizable.

The Company and its subsidiaries lease office and manufacturing facilities, computer equipment and software under various arrangements. Certain of the leases are subject to escalation clauses and renewal periods. The Company and its subsidiaries recognize lease expense, including predetermined fixed escalations, on a straight-line basis over the initial term of the lease including reasonably assured renewal periods from the time that the Company and its subsidiaries control the leased property. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Certain of our subsidiaries have leases that contain both fixed rent costs and variable rent costs based on achievement of certain operating metrics. The variable lease expense was not a material component of our total lease expense for the three and nine months ended September 30, 2026 and 2025. The Company recognized $12.2 million and $36.6 million in the three and nine months ended September 30, 2026, respectively and $13.6 million and $39.9 million in the three and nine months ended September 30, 2025, respectively, in expense related to operating leases in the condensed consolidated statements of operations. The Company entered into one finance lease in the fourth quarter of 2024. In both the three and nine months ended September 30, 2026 and September 30, 2025 the Company recognized $0.2 million and $0.5 million, respectively, in interest expense related to its finance lease.


	Operating		Finance		Total
2026 (excluding the nine months ended September 30, 2026)	$	13,339	$	180	$	13,519
2027	49,329		7,040		56,369
2028	41,201		—		41,201
2029	34,001		—		34,001
2030	30,171		—		30,171
Thereafter	91,188		—		91,188
Total undiscounted lease payments	$	259,229	$	7,220	$	266,449
Less: Interest	93,013		389		93,402
Present value of lease liabilities	$	166,216	$	6,831	$	173,047

The calculated amount of the right-of-use assets and lease liabilities are impacted by the length of the lease term and discount rate used to present value the minimum lease payments. The Company's lease agreements often include one or more options to renew at the Company's discretion. In general, it is not reasonably certain that lease renewals will be exercised at lease commencement and therefore lease renewals are not included in the lease term. As the discount rate is rarely determinable, the Company utilizes the incremental borrowing rate of the subsidiary entering into the lease arrangement, on a collateralized basis, over a similar term as adjusted for any country specific risk.


	Line Item in the Company’s Consolidated Balance Sheet	September 30, 2026		December 31, 2025

Assets:
Operating lease right-of-use assets	Other non-current assets	$	150,496	$	146,755
Finance lease right-of-use assets	Other non-current assets	6,879		$	6,881
		$	157,375	$	153,636
Liabilities
Operating lease liabilities - current	Other current liabilities	$	33,330	$	37,854
Operating lease liabilities - non-current	Other non-current liabilities	132,887		126,084
Finance lease liabilities - current	Other current liabilities	6,830		47
Finance lease liabilities - non-current	Other non-current liabilities	—		6,820
		$	173,047	$	170,805


	Nine months ended September 30, 2026		Nine months ended September 30, 2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	38,190	$	41,932
Operating cash flows from finance leases	503		506
Financing cash flows from finance leases	36		33
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	31,771	$	20,430