TriMas Corporation
TRIMAS CORP (Form: 10-Q, Received: 07/28/2011 15:42:20)
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
 
 
x

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
For the Quarterly Period Ended June 30, 2011

Or

o

 

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from                    to                    .
Commission file number 001-10716
TRIMAS CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
(State or other jurisdiction of
incorporation or organization)
 
38-2687639
(IRS Employer
Identification No.)
39400 Woodward Avenue, Suite 130
Bloomfield Hills, Michigan 48304
(Address of principal executive offices, including zip code)
(248) 631-5450
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has 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 Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x     No  o .
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x     No  o .
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  o
 
Accelerated filer  x
 
Non-accelerated filer  o
 
Smaller reporting company  o
 
 
 
 
(Do not check if a
smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o     No  x
As of July 28, 2011 , the number of outstanding shares of the Registrant's common stock, $.01 par value, was 34,573,877 shares.

Table of Contents

TriMas Corporation
Index
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


1

Table of Contents

Forward-Looking Statements
This report contains forward-looking statements (as that term is defined by the federal securities laws) about our financial condition, results of operations and business. You can find many of these statements by looking for words such as "may," "will," "expect," "anticipate," "believe," "estimate" and similar words used in this report.
These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. We caution readers not to place undue reliance on the statements, which speak only as of the date of this report.
The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We do not undertake any obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.
You should carefully consider the factors discussed in Part I, Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2010 , which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deemed to be immaterial also may materially adversely affect our business, financial position and results of operations or cash flows.
We disclose important factors that could cause our actual results to differ materially from our expectations under Part I, Item 2., " Management's Discussion and Analysis of Financial Condition and Results of Operations, " and elsewhere in this report. These cautionary statements qualify all forward-looking statements attributed to us or persons acting on our behalf. When we indicate that an event, condition or circumstance could or would have an adverse effect on us, we mean to include effects upon our business, financial and other condition, results of operations, prospects and ability to service our debt.


2

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

TriMas Corporation
Consolidated Balance Sheet
(Unaudited—dollars in thousands)

 
 
June 30,
2011
 
December 31,
2010
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
10,070

 
$
46,370

Receivables, net of reserves of approximately $4.6 million as of June 30, 2011 and December 31, 2010
 
171,070

 
117,050

Inventories
 
175,660

 
161,300

Deferred income taxes
 
25,090

 
34,500

Prepaid expenses and other current assets
 
9,090

 
7,550

Total current assets
 
390,980

 
366,770

Property and equipment, net
 
169,440

 
167,510

Goodwill
 
208,500

 
205,890

Other intangibles, net
 
154,070

 
159,930

Other assets
 
26,890

 
24,060

Total assets
 
$
949,880

 
$
924,160

Liabilities and Shareholders' Equity
 
 
 
 
Current liabilities:
 
 
 
 
Current maturities, long-term debt
 
$
4,900

 
$
17,730

Accounts payable
 
136,570

 
128,300

Accrued liabilities
 
62,900

 
68,400

Total current liabilities
 
204,370

 
214,430

Long-term debt
 
473,500

 
476,920

Deferred income taxes
 
61,650

 
63,880

Other long-term liabilities
 
56,050

 
56,610

Total liabilities
 
795,570

 
811,840

Preferred stock $0.01 par: Authorized 100,000,000 shares;
Issued and outstanding: None
 

 

Common stock, $0.01 par: Authorized 400,000,000 shares;
Issued and outstanding: 34,568,227 shares at June 30, 2011 and 34,065,856 shares at December 31, 2010
 
340

 
340

Paid-in capital
 
536,490

 
531,030

Accumulated deficit
 
(436,270
)
 
(465,110
)
Accumulated other comprehensive income
 
53,750

 
46,060

Total shareholders' equity
 
154,310

 
112,320

Total liabilities and shareholders' equity
 
$
949,880

 
$
924,160






The accompanying notes are an integral part of these financial statements.

3

Table of Contents

TriMas Corporation
Consolidated Statement of Operations
(Unaudited—dollars in thousands, except for share amounts)
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2011
 
2010
 
2011
 
2010
Net sales
 
$
299,720

 
$
252,060

 
$
569,390

 
$
472,120

Cost of sales
 
(208,350
)
 
(173,750
)
 
(403,340
)
 
(330,750
)
Gross profit
 
91,370

 
78,310

 
166,050

 
141,370

Selling, general and administrative expenses
 
(48,830
)
 
(41,370
)
 
(93,540
)
 
(79,070
)
Gain (loss) on dispositions of property and equipment
 
(40
)
 
(420
)
 
20

 
(730
)
Operating profit
 
42,500

 
36,520

 
72,530

 
61,570

Other income (expense), net:
 
 
 
 
 
 
 
 
Interest expense
 
(11,620
)
 
(13,090
)
 
(23,640
)
 
(27,230
)
Debt extinguishment costs
 
(3,970
)
 

 
(3,970
)
 

Gain on bargain purchase
 

 
410

 

 
410

Other, net
 
(550
)
 
(540
)
 
(1,710
)
 
(1,050
)
Other income (expense), net
 
(16,140
)
 
(13,220
)
 
(29,320
)
 
(27,870
)
Income from continuing operations before income tax expense
 
26,360

 
23,300

 
43,210

 
33,700

Income tax expense
 
(9,270
)
 
(8,080
)
 
(14,370
)
 
(12,730
)
Income from continuing operations
 
17,090

 
15,220

 
28,840

 
20,970

Income from discontinued operations, net of income taxes
 

 
6,210

 

 
5,890

Net income
 
$
17,090

 
$
21,430

 
$
28,840

 
$
26,860

Earnings per share—basic:
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.50

 
$
0.45

 
$
0.85

 
$
0.62

Discontinued operations, net of income taxes
 

 
0.18

 

 
0.17

Net income per share
 
$
0.50

 
$
0.63

 
$
0.85

 
$
0.79

Weighted average common shares—basic
 
34,215,734

 
33,794,647

 
34,064,787

 
33,681,516

Earnings per share—diluted:
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.49

 
$
0.44

 
$
0.83

 
$
0.61

Discontinued operations, net of income taxes
 

 
0.18

 

 
0.17

Net income per share
 
$
0.49

 
$
0.62

 
$
0.83

 
$
0.78

Weighted average common shares—diluted
 
34,769,576

 
34,437,418

 
34,667,459

 
34,318,002












The accompanying notes are an integral part of these financial statements.

4

Table of Contents

TriMas Corporation
Consolidated Statement of Cash Flows
(Unaudited—dollars in thousands)
 
 
Six months ended
June 30,
 
 
2011
 
2010
Cash Flows from Operating Activities:
 
 
 
 
Net income
 
$
28,840

 
$
26,860

Adjustments to reconcile net income to net cash provided by (used for) operating activities, net of acquisition impact:
 
 
 
 
Gain on dispositions of property and equipment
 
(20
)
 
(9,310
)
Gain on bargain purchase
 

 
(410
)
Depreciation
 
12,620

 
11,960

Amortization of intangible assets
 
7,040

 
7,090

Amortization of debt issue costs
 
1,510

 
1,450

Deferred income taxes
 
7,130

 
9,610

Debt extinguishment costs
 
3,970

 

Non-cash compensation expense
 
1,660

 
760

Increase in receivables
 
(52,050
)
 
(43,130
)
(Increase) decrease in inventories
 
(13,190
)
 
5,150

(Increase) decrease in prepaid expenses and other assets
 
(3,900
)
 
1,820

Increase (decrease) in accounts payable and accrued liabilities
 
(160
)
 
20,160

Other, net
 
1,890

 
(590
)
Net cash provided by (used for) operating activities, net of acquisition impact
 
(4,660
)
 
31,420

Cash Flows from Investing Activities:
 
 
 
 
Capital expenditures
 
(14,020
)
 
(5,250
)
Acquisition of businesses, net of cash acquired
 

 
(11,660
)
Net proceeds from disposition of assets
 
1,660

 
14,740

Net cash used for investing activities
 
(12,360
)
 
(2,170
)
Cash Flows from Financing Activities:
 
 
 
 
Proceeds from borrowings on term loan facilities
 
226,520

 

Repayments of borrowings on term loan facilities
 
(248,950
)
 
(8,430
)
Proceeds from borrowings on revolving credit facilities and accounts receivable facility
 
303,520

 
264,930

Repayments of borrowings on revolving credit facilities and accounts receivable facility
 
(297,600
)
 
(270,930
)
Debt financing fees
 
(6,570
)
 

Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations
 
(830
)
 
(180
)
Proceeds from exercise of stock options
 
830

 
80

Excess tax benefits from stock based compensation
 
3,800

 
390

Net cash used for financing activities
 
(19,280
)
 
(14,140
)
Cash and Cash Equivalents:
 
 
 
 
Increase (decrease) for the period
 
(36,300
)
 
15,110

At beginning of period
 
46,370

 
9,480

At end of period
 
$
10,070

 
$
24,590

Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest
 
$
22,710

 
$
22,000

Cash paid for taxes
 
$
9,140

 
$
3,270




The accompanying notes are an integral part of these financial statements.

5

Table of Contents

TriMas Corporation
Consolidated Statement of Shareholders' Equity
Six Months Ended June 30, 2011
(Unaudited—dollars in thousands)
 
 
Common
Stock
 
Paid-in
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income
 
Total
Balances, December 31, 2010
 
$
340

 
$
531,030

 
$
(465,110
)
 
$
46,060

 
$
112,320

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
Net income
 

 

 
28,840

 

 
28,840

Amortization of defined benefit plan deferred losses (net of tax of $0.1 million) (Note 12)
 

 

 

 
110

 
110

Foreign currency translation
 

 

 

 
7,350

 
7,350

Amortization of unrealized loss on interest rate swaps (net of tax of $0.1 million) (Note 7)
 

 

 

 
230

 
230

Total comprehensive income
 
 
 
 
 
 
 
 
 
36,530

Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations
 

 
(830
)
 

 

 
(830
)
Stock option exercises and restricted stock vestings
 

 
830

 

 

 
830

Excess tax benefits from stock based compensation
 

 
3,800

 

 

 
3,800

Non-cash compensation expense
 

 
1,660

 

 

 
1,660

Balances, June 30, 2011
 
$
340

 
$
536,490

 
$
(436,270
)
 
$
53,750

 
$
154,310






















The accompanying notes are an integral part of these financial statements.


6

Table of Contents
TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



1. Basis of Presentation
TriMas Corporation ("TriMas" or the "Company"), and its consolidated subsidiaries, is a global manufacturer and distributor of products for commercial, industrial and consumer markets. The Company is principally engaged in six reportable segments with diverse products and market channels: Packaging, Energy, Aerospace & Defense, Engineered Components, Cequent Asia Pacific and Cequent North America. See Note 9, "Segment Information," for further information on each of the Company's reportable segments.
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries and in the opinion of management, contain all adjustments, including adjustments of a normal and recurring nature, necessary for a fair presentation of financial position and results of operations. Results of operations for interim periods are not necessarily indicative of results for the full year. Certain prior year amounts have been reclassified to conform with the current year presentation. The accompanying consolidated financial statements and notes thereto should be read in conjunction with the Company's 2010 Annual Report on Form 10-K.

2. Discontinued Operations and Assets Held for Sale
During the second quarter of 2010, the Company considered two businesses to be discontinued operations as noted below.
During the fourth quarter of 2009, the Company committed to a plan to exit its medical device line of business which was part of the Engineered Components reportable segment. The business was sold in May 2010 for cash proceeds of $2.0 million, which approximated the net book value of the assets and liabilities sold.
During the fourth quarter of 2007, the Company committed to a plan to sell its property management line of business. The sale was completed in April 2010 for cash proceeds of $13.0 million, resulting in a pre-tax gain on sale of approximately $10.1 million during the second quarter of 2010.
The results of the aforementioned businesses are reported as discontinued operations for all periods presented. Results of discontinued operations are summarized as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2011
 
2010
 
2011
 
2010
 
 
(dollars in thousands)
Net sales
 
$

 
$
130

 
$

 
$
660

Income from discontinued operations before income taxes
 
$

 
$
9,790

 
$

 
$
9,290

Income taxes
 

 
(3,580
)
 

 
(3,400
)
Income from discontinued operations, net of income taxes
 
$

 
$
6,210

 
$

 
$
5,890


There are no discontinued operations or assets held for sale as of June 30, 2011 or December 31, 2010.

7

Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)




3. Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill for the six months ended June 30, 2011 are summarized as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Packaging
 
Energy
 
Aerospace & Defense
 
Engineered Components
 
Cequent Asia Pacific
 
Cequent North America
 
Total
 
(dollars in thousands)
Balance, December 31, 2010
$
113,320

 
$
48,260

 
$
41,130

 
$
3,180

 
$

 
$

 
$
205,890

 Foreign currency translation
2,400

 
210

 

 

 

 

 
2,610

Balance, June 30, 2011
$
115,720

 
$
48,470

 
$
41,130

 
$
3,180

 
$

 
$

 
$
208,500


The gross carrying amounts and accumulated amortization of the Company's other intangibles as of June 30, 2011 and December 31, 2010 are summarized below. The Company amortizes these assets over periods ranging from 1 to 30 years.
 
As of June 30, 2011
 
As of December 31, 2010
Intangible Category by Useful Life
Gross Carrying Amount
 
Accumulated Amortization
 
Gross Carrying Amount
 
Accumulated Amortization
 
(dollars in thousands)
Customer relationships:
 
 
 
 
 
 
 
   5 – 12 years
$
32,310

 
$
(21,930
)
 
$
32,220

 
$
(20,650
)
   15 – 25 years
154,610

 
(73,610
)
 
154,610

 
(69,480
)
Total customer relationships
186,920

 
(95,540
)
 
186,830

 
(90,130
)
Technology and other:
 
 
 
 
 
 
 
   1 – 15 years
26,980

 
(23,450
)
 
26,910

 
(22,870
)
   17 – 30 years
43,450

 
(19,760
)
 
42,460

 
(18,690
)
Total technology and other
70,430

 
(43,210
)
 
69,370

 
(41,560
)
Trademark/Trade names (indefinite life)
35,470

 

 
35,420

 

 
$
292,820

 
$
(138,750
)
 
$
291,620

 
$
(131,690
)

Amortization expense related to technology and other intangibles was approximately $0.8 million and $0.9 million for the three months ended June 30, 2011 and 2010 , respectively, and $1.6 million and $1.9 million for the six months ended June 30, 2011 and 2010 , respectively. These amounts are included in cost of sales in the accompanying consolidated statement of operations. Amortization expense related to customer intangibles was approximately $2.7 million and $2.6 million for the three months ended June 30, 2011 and 2010 , respectively, and $5.4 million and $5.2 million for the six months ended June 30, 2011 and 2010 , respectively. These amounts are included in selling, general and administrative expenses in the accompanying consolidated statement of operations.






8

Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)



4. Inventories
Inventories consist of the following components:
 
 
June 30,
2011
 
December 31,
2010
 
 
(dollars in thousands)
Finished goods
 
$
116,000

 
$
106,630

Work in process
 
22,450

 
20,680

Raw materials
 
37,210

 
33,990

Total inventories
 
$
175,660

 
$
161,300


5. Property and Equipment, Net
 Property and equipment consists of the following components:
 
 
June 30,
2011
 
December 31,
2010
 
 
(dollars in thousands)
Land and land improvements
 
$
3,180

 
$
2,970

Buildings
 
52,320

 
50,490

Machinery and equipment
 
308,640

 
294,940

 
 
364,140

 
348,400

Less: Accumulated depreciation
 
194,700

 
180,890

Property and equipment, net
 
$
169,440

 
$
167,510


Depreciation expense was approximately $6.4 million and $5.9 million , and $12.6 million and $11.9 million for the three and six months ended June 30, 2011 and 2010 , respectively, of which $5.7 million and $5.2 million , and $11.1 million and $10.5 million , respectively, is included in cost of sales in the accompanying consolidated statement of operations, and $0.7 million and $0.7 million , and $1.5 million and $1.4 million , respectively, is included in selling, general and administrative expenses in the accompanying consolidated statement of operations.      

6. Long-term Debt
The Company's long-term debt consists of the following:
 
 
June 30,
2011
 
December 31,
2010
 
 
(dollars in thousands)
U.S. bank debt
 
$
230,920

 
$
248,950

Non-U.S. bank debt and other
 
1,830

 
290

9 3/4% senior secured notes, due December 2017
 
245,650

 
245,410

 
 
478,400

 
494,650

Less: Current maturities, long-term debt
 
4,900

 
17,730

Long-term debt
 
$
473,500

 
$
476,920



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Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


U.S. Bank Debt
During the second quarter of 2011, the Company completed the refinance of its U.S. bank debt, entering in to a new credit agreement ("Credit Agreement") whereby the Company was able to reduce interest costs, extend maturities and increase its available liquidity. Below is a summary of the key terms under the Credit Agreement as of June 30, 2011 and the key terms of the previous credit agreement in place immediately prior to completion of the refinance on June 21, 2011, showing term loan with borrowings outstanding at each date and revolving and supplemental revolving credit facilities showing gross availability at each date:
Instrument
 
Amount
($ in millions)
 
Maturity Date
 
Interest Rate
New Credit Facility
 
 
 
 
 
 
Term Loan Facility
 
$225.0
 
6/21/2017
 
LIBOR plus 3.00% with a 1.25% LIBOR floor
Revolving Credit Facility
 
110.0

 
6/21/2016
 
LIBOR plus 3.25%
 
 
 
 
 
 
 
Previous Credit Facility
 
 
 
 
 
 
Term Loan Facility Extended
 
209.4

 
12/15/2015
 
LIBOR plus 4.00% with a 2.00% LIBOR floor
Term Loan Facility Non-Extended
 
23.9

 
8/2/2013
 
LIBOR plus 2.25%
Revolving Credit Facility Extended
 
75.0

 
12/15/2013
 
LIBOR plus 4.00% or Prime plus 3.00%, as defined
Revolving Credit Facility Non-Extended
 
8.0

 
8/2/2011
 
LIBOR plus 1.75%
Supplemental Revolving Credit Facility Extended
 
17.7

 
8/2/2011
 
LIBOR plus 4.00% with a 2.00% LIBOR floor
Supplemental Revolving Credit Facility Non-Extended
 
2.3

 
8/2/2011
 
LIBOR plus 2.25%
The Credit Agreement also provides for incremental revolving credit facility commitments, not to exceed $125.0 million, and incremental term loan facility commitments, not to exceed $200.0 million. Under the Credit Agreement, the Company is also able to issue unsecured indebtedness in connection with permitted acquisitions, as defined, as long as the Company, on a proforma basis, after giving effect to such acquisition, is in compliance with all applicable financial covenants, as defined.
Under the Credit Agreement, if, prior to June 22, 2012, the Company prepays its term loan ( $225.0 million ) using a new term loan facility with lower interest rate margins, then the Company will be required to pay a 1% premium of the aggregate principal amount prepaid. In addition, the Company may be required to prepay a portion of its term loan pursuant to an excess cash flow sweep provision, as defined, with the amount of such prepayment based on the Company's leverage ratio, as defined. In April 2011, the Company prepaid $15.0 million of term loan principal under the excess cash flow sweep provision of the previous credit agreement.
Under the Credit Agreement, the Company is also able to issue letters of credit, not to exceed $50.0 million in aggregate, against its revolving credit facility commitments. At June 30, 2011 , the Company had letters of credit of approximately $23.4 million issued and outstanding. Under the previous credit agreement, the Company was able to issue letters of credit, not to exceed $65.0 million in aggregate, against its revolving credit facility commitments, and at December 31, 2010 , the Company had letters of credit of approximately $23.7 million issued and outstanding.
At June 30, 2011 and December 31, 2010 , the Company had $5.9 million and $0.0 million , respectively, outstanding under its revolving credit facilities and had an additional $80.7 million and $79.3 million , respectively, potentially available after giving effect to approximately $23.4 million and $23.7 million , respectively, of letters of credit issued and outstanding. However, including availability under its accounts receivable facility and after consideration of leverage restrictions contained in the Credit Agreement, the Company had $151.7 million and $120.7 million , respectively, of borrowing capacity available to it for general corporate purposes.
The Company incurred $6.6 million in fees to complete the refinance of its U.S. bank debt, of which $4.2 million was capitalized as deferred financing fees and $2.4 million was recorded as debt extinguishment costs in the accompanying statement of operations. In addition, the Company also recorded debt extinguishment costs of $1.6 million related to deferred financing fees associated with the previous credit agreement.

10

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


Principal payments required under the Credit Agreement term loan are: $0.6 million due each calendar quarter through March 31, 2017, and $212.1 million due on June 21, 2017.
The bank debt is an obligation of the Company and its subsidiaries. Although the terms of the Credit Agreement do not restrict the Company's subsidiaries from making distributions to it in respect of its 9 3 / 4 % senior secured notes, it does contain certain other limitations on the distribution of funds from TriMas Company LLC, the principal subsidiary, to the Company. The restricted net assets of the guarantor subsidiaries of approximately $389.7 million and $336.9 million at June 30, 2011 and December 31, 2010 , respectively, are presented in Note 15, "Supplemental Guarantor Condensed Consolidating Financial Information." The Credit Agreement also contains various negative and affirmative covenants that are comparable to the previous credit agreement. The Credit Agreement also requires the Company and its subsidiaries to meet certain restrictive financial covenants and ratios computed quarterly, including a leverage ratio (total consolidated indebtedness plus outstanding amounts under the accounts receivable facility over consolidated EBITDA, as defined), interest expense ratio (consolidated EBITDA, as defined, over cash interest expense, as defined) and a capital expenditures covenant. Although the financial covenant calculations under the Credit Agreement are essentially the same as the previous credit agreement, the permitted leverage ratio and permitted interest expense coverage ratio thresholds have both been reset. The Company was in compliance with its covenants at June 30, 2011 .
The Company's term loan facility traded at approximately 99.9% and 100.3% of par value as of June 30, 2011 and December 31, 2010 , respectively, and was valued based on Level 2 inputs as defined in the fair value hierarchy.
Non-U.S. Bank Debt
In Australia, the Company's subsidiary is party to a debt agreement which matures on March 31, 2012 and is secured by substantially all the assets of the subsidiary. At June 30, 2011 , the balance outstanding under this agreement was approximately $1.6 million at an average interest rate of 6.8% . At December 31, 2010 , the Company's subsidiary had no amounts outstanding under this debt agreement.
Notes
The Company's 9 3 / 4 % senior secured notes due 2017 ("Notes") indenture contains negative and affirmative covenants and other requirements that are comparable to those contained in the Credit Agreement. At June 30, 2011 , the Company was in compliance with all such covenant requirements.
The Company's Notes traded at approximately 109.0% and 108.5% of par value as of June 30, 2011 and December 31, 2010 , respectively, and was valued based on Level 2 inputs as defined in the fair value hierarchy.
Receivables Facility
The Company is party to an accounts receivable facility through TSPC, Inc. ("TSPC"), a wholly-owned subsidiary, to sell trade accounts receivable of substantially all of the Company's domestic business operations. Under this facility, TSPC, from time to time, may sell an undivided fractional ownership interest in the pool of receivables up to approximately $75.0 million to a third party multi-seller receivables funding company. The Company did not have any amounts outstanding under the facility as of June 30, 2011 or December 31, 2010 , but had $71.0 million and $41.4 million , respectively, available but not utilized. The net amount financed under the facility is less than the face amount of accounts receivable by an amount that approximates the purchaser's financing costs. The cost of funds under this facility consisted of a 3-month London Interbank Offered Rates ("LIBOR")-based rate plus a usage fee of 3.25% as of both June 30, 2011 and 2010 , and a fee on the unused portion of the facility of 0.5% and 1.0% as of June 30, 2011 and 2010 , respectively. Aggregate costs incurred under this facility were $0.5 million and $0.3 million for the three months ended June 30, 2011 and 2010 , respectively, and $0.9 million and $0.6 million for the six months ended June 30, 2011 and 2010 , respectively, and are included in interest expense in the accompanying consolidated statement of operations. The facility expires on December 29, 2012.
The cost of funds fees incurred are determined by calculating the estimated present value of the receivables sold compared to their carrying amount. The estimated present value factor is based on historical collection experience and a discount rate based on a 3 month LIBOR-based rate plus the usage fee discussed above and is computed in accordance with the terms of the securitization agreement. As of June 30, 2011 , the costs of funds under the facility was based on an average liquidation period of the portfolio of approximately 1.6  months and an average discount rate of 1.6% .


11

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


7. Derivative Instruments
The Company is party to a $125.0 million notional amount interest rate swap as of June 30, 2011 which expires in July 2011. The Company was party to a second interest rate swap with a notional amount of $75.0 million which expired in the first quarter of 2011. Both of these swaps were associated with the Company's term loan facility, but during 2011 and 2010 neither was designated as a hedging instrument. In addition, during the first quarter of 2010, the Company was party to two foreign exchange forward contracts which were not designated as hedging instruments.
As of June 30, 2011 and December 31, 2010 , the fair value carrying amounts of the Company's derivative instruments not designated as hedging instruments are recorded as follows:
 
 
 
 
Asset Derivatives
 
Liability Derivatives
 
 
Balance Sheet Caption
 
June 30,
2011
 
December 31,
2010
 
June 30,
2011
 
December 31,
2010
 
 
 
 
(dollars in thousands)
Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
 
Accrued liabilities
 
$

 
$

 
$
140

 
$
1,130


The effect of derivative instruments on the consolidated statement of operations for the three and six months ended June 30, 2011 and 2010 is summarized as follows:
 
Amount of Loss Recognized in AOCI on Derivatives (Effective Portion, net of tax)
 
 
 
Amount of Loss Reclassified from
AOCI into Earnings
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
As of June 30, 2011
 
As of December 31, 2010
 
Location of Loss Reclassified from AOCI into Earnings (Effective Portion)
 
2011
 
2010
 
2011
 
2010
 
(dollars in thousands)
 
 
 
(dollars in thousands)
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
$

 
$
(230
)
 
Interest expense
 
$
(120
)
 
$
(880
)
 
$
(360
)
 
$
(1,290
)

 
 
Amount of Gain (Loss)
Recognized in Earnings on
Derivatives
 
 
 
 
Three months ended June 30,
 
Six months ended
June 30,
 
Location of Gain (Loss)
Recognized in Earnings on
Derivatives
 
 
2011
 
2010
 
2011
 
2010
 
 
 
(dollars in thousands)
 
 
Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
 
$

 
$
(110
)
 
$
(10
)
 
$
(1,560
)
 
Interest expense
Foreign currency forward contracts
 
$

 
$

 
$

 
$
50

 
Other expense, net


12

Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


Valuations of the interest rate swaps and foreign currency forward contracts are based on the income approach which uses observable inputs such as interest rate yield curves and forward currency exchange rates. Fair value measurements and the fair value hierarchy level for the Company's assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 and December 31, 2010 are shown below:
 
 
 
 
June 30, 2011
Description
 
Frequency
 
Asset /
(Liability)
 
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
 
 
 
(dollars in thousands)
Interest rate swaps
 
Recurring
 
$
(140
)
 
$

 
$
(140
)
 
$

 
 
 
 
 
December 31, 2010
Description
 
Frequency
 
Asset /
(Liability)
 
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
 
 
 
(dollars in thousands)
Interest rate swaps
 
Recurring
 
$
(1,130
)
 
$

 
$
(1,130
)
 
$


8. Commitments and Contingencies
Asbestos
As of June 30, 2011 , the Company was a party to approximately 1,102 pending cases involving an aggregate of approximately 8,229 claimants alleging personal injury from exposure to asbestos containing materials formerly used in gaskets (both encapsulated and otherwise) manufactured or distributed by certain of the Company's subsidiaries for use primarily in the petrochemical refining and exploration industries. The following chart summarizes the number of claimants, number of claims filed, number of claims dismissed, number of claims settled, the average settlement amount per claim and the total defense costs, exclusive of amounts reimbursed under the Company's primary insurance, at the applicable date and for the applicable periods:
 
 
Claims
pending at
beginning of
period
 
Claims filed
during
period
 
Claims
dismissed
during
period
 
Claims
settled
during
period
 
Average
settlement
amount per
claim during
period
 
Total defense
costs during
period
Fiscal Year Ended December 31, 2010
 
7,816

 
892

 
456

 
52

 
$
7,029

 
$
2,870,000

Six Months Ended June 30, 2011
 
8,200

 
293

 
256

 
8

 
$
31,250

 
$
1,230,000

In addition, the Company acquired various companies to distribute its products that had distributed gaskets of other manufacturers prior to acquisition. The Company believes that many of its pending cases relate to locations at which none of its gaskets were distributed or used.
The Company may be subjected to significant additional asbestos-related claims in the future, the cost of settling cases in which product identification can be made may increase, and the Company may be subjected to further claims in respect of the former activities of its acquired gasket distributors. The Company is unable to make a meaningful statement concerning the monetary claims made in the asbestos cases given that, among other things, claims may be initially made in some jurisdictions without specifying the amount sought or by simply stating the requisite or maximum permissible monetary relief, and may be amended to alter the amount sought. The large majority of claims do not specify the amount sought. Of the 8,229 claims pending at June 30, 2011 , 50 set forth specific amounts of damages (other than those stating the statutory minimum or maximum), 31 of the 50 claims

13

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


sought between $1.0 million and $5.0 million in total damages (which includes compensatory and punitive damages), 16 sought between $5.0 million and $10.0 million in total damages (which includes compensatory and punitive damages) and 3 sought over $10.0 million (which includes compensatory and punitive damages). Solely with respect to compensatory damages, 33 of the 50 claims sought between $50,000 and $600,000, 14 sought between $600,000 and $5.0 million and 3 sought over $5.0 million. Solely with respect to punitive damages, 31 of the 50 claims sought between $1.0 million and $2.5 million, 16 sought between $2.5 million and $5.0 million and 3 sought over $5.0 million. In addition, relatively few of the claims have reached the discovery stage and even fewer claims have gone past the discovery stage.
Total settlement costs (exclusive of defense costs) for all such cases, some of which were filed over 20 years ago, have been approximately $6.0 million. All relief sought in the asbestos cases is monetary in nature. To date, approximately 50% of the Company's costs related to settlement and defense of asbestos litigation have been covered by its primary insurance. Effective February 14, 2006, the Company entered into a coverage-in-place agreement with its first level excess carriers regarding the coverage to be provided to the Company for asbestos-related claims when the primary insurance is exhausted. The coverage-in-place agreement makes asbestos defense costs and indemnity coverage available to the Company that might otherwise be disputed by the carriers and provides a methodology for the administration of such expenses. Nonetheless, the Company believes it is likely there will be a period within the next three years, prior to the commencement of coverage under this agreement and following exhaustion of the Company's primary insurance coverage, during which the Company will be solely responsible for defense costs and indemnity payments, the duration of which would be subject to the scope of damage awards and settlements paid.
Based on the settlements made to date and the number of claims dismissed or withdrawn for lack of product identification, the Company believes that the relief sought (when specified) does not bear a reasonable relationship to its potential liability. Based upon the Company's experience to date, including the trend in annual defense and settlement costs incurred to date, and other available information (including the availability of excess insurance), the Company does not believe these cases will have a material adverse effect on its financial position and results of operations or cash flows.
Ordinary Course Claims
The Company is subject to other claims and litigation in the ordinary course of business, but does not believe that any such claim or litigation will have a material adverse effect on its financial position and results of operations or cash flows.

9. Segment Information
TriMas groups its operating segments into reportable segments that provide similar products and services. Each operating segment has discrete financial information evaluated regularly by the Company's chief operating decision maker in determining resource allocation and assessing performance. Within these reportable segments, there are no individual products or product families for which reported net sales accounted for more than 10% of the Company's consolidated net sales. See below for more information regarding the types of products and services provided within each reportable segment:
Packaging -Steel and plastic closure caps, drum enclosures, rings and levers and dispensing systems for industrial and consumer markets.
Energy -Metallic and non-metallic industrial sealant products and bolts and fasteners for the petroleum refining, petrochemical and other industrial markets.
Aerospace & Defense -Highly engineered specialty fasteners and screws for the commercial and military aerospace industries and military munitions components for the defense industry.
Engineered Components -High-pressure and low-pressure cylinders for the transportation, storage and dispensing of compressed gases, natural gas engines, compressors, gas production equipment and chemical pumps engineered at well sites for the oil and gas industry, specialty fittings for the automotive industry, precision cutting instruments for the medical industry and specialty precision tools such as center drills, cutters, end mills and countersinks for the industrial metal-working market.
Cequent Asia Pacific & Cequent North America -Custom-engineered towing, trailering and electrical products including trailer couplers, winches, jacks, trailer brakes and brake control solutions, lighting accessories and roof racks for the recreational vehicle, agricultural/utility, marine, automotive and commercial trailer markets, functional vehicle accessories and cargo management solutions including vehicle hitches and receivers, sway controls, weight distribution and fifth-wheel hitches, hitch-mounted accessories and other accessory components.

14

Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


The Company's management uses Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") as a primary indicator of financial operating performance and as a measure of cash generating capability. Adjusted EBITDA is defined as net income (loss) before cumulative effect of accounting change and before interest, taxes, depreciation, amortization, debt extinguishment costs, non-cash asset and goodwill impairment charges and write-offs and non-cash losses on sale-leaseback of property and equipment.
Segment activity is as follows:
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2011
 
2010
 
2011
 
2010
 
 
(dollars in thousands)
Net Sales
 
 
 
 
 
 
 
 
Packaging
 
$
47,900

 
$
45,520

 
$
91,800

 
$
89,120

Energy
 
42,170

 
30,370

 
83,120

 
62,690

Aerospace & Defense
 
21,330

 
17,220

 
39,830

 
34,300

Engineered Components
 
55,490

 
36,700

 
103,600

 
67,180

Cequent Asia Pacific
 
21,560

 
18,460

 
41,370

 
38,760

Cequent North America
 
111,270

 
103,790

 
209,670

 
180,070

Total
 
$
299,720

 
$
252,060

 
$
569,390

 
$
472,120

Operating Profit (Loss)
 
 
 
 
 
 
 
 
Packaging
 
$
15,070

 
$
13,480

 
$
26,900

 
$
25,340

Energy
 
5,020

 
4,070

 
10,360

 
8,260

Aerospace & Defense
 
4,860

 
3,810

 
8,580

 
7,670

Engineered Components
 
8,340

 
5,210

 
14,680

 
8,010

Cequent Asia Pacific
 
1,940

 
3,330

 
4,470

 
6,990

Cequent North America
 
14,380

 
12,720

 
21,050

 
17,180

Corporate expenses
 
(7,110
)
 
(6,100
)
 
(13,510
)
 
(11,880
)
Total
 
$
42,500

 
$
36,520

 
$
72,530

 
$
61,570

Adjusted EBITDA
 
 
 
 
 
 
 
 
Packaging
 
$
18,310

 
$
16,420

 
$
33,140

 
$
31,340

Energy
 
5,570

 
4,450

 
10,730

 
9,100

Aerospace & Defense
 
5,500

 
4,490

 
9,860

 
9,010

Engineered Components
 
9,910

 
6,650

 
17,600

 
10,470

Cequent Asia Pacific
 
2,650

 
3,880

 
5,920

 
8,240

Cequent North America
 
17,220

 
15,970

 
26,790

 
23,730

Corporate expenses
 
(7,280
)
 
(6,040
)
 
(13,560
)
 
(11,940
)
Subtotal from continuing operations
 
51,880

 
45,820

 
90,480

 
79,950

Discontinued operations
 

 
9,940

 

 
9,610

Total company
 
$
51,880

 
$
55,760

 
$
90,480

 
$
89,560


        

15

Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


The following is a reconciliation of the Company's net income to Adjusted EBITDA:
 
 
Three months ended June 30,
 
Six months ended
June 30,
 
 
2011
 
2010
 
2011
 
2010
 
 
(dollars in thousands)
Net income
 
$
17,090

 
$
21,430

 
$
28,840

 
$
26,860

Income tax expense
 
9,270

 
11,660

 
14,370

 
16,130

Interest expense
 
11,620

 
13,230

 
23,640

 
27,520

Depreciation and amortization
 
9,930

 
9,440

 
19,660

 
19,050

Debt extinguishment costs
 
3,970

 

 
3,970

 

Adjusted EBITDA, total company
 
$
51,880

 
$
55,760

 
$
90,480

 
$
89,560

Adjusted EBITDA, discontinued operations
 

 
9,940

 

 
9,610

Adjusted EBITDA, continuing operations
 
$
51,880

 
$
45,820

 
$
90,480

 
$
79,950


10. Equity Awards
The Company maintains three long-term equity incentive plans, the 2011 TriMas Corporation Omnibus Incentive Compensation Plan, the TriMas Corporation 2006 Long Term Equity Incentive Plan and the 2002 Long Term Equity Incentive Plan (collectively the "Plans"). See below for details of awards under the Plans by type.
Stock Options
The Company did not grant any stock options during the second quarter of 2011. Information related to stock options at June 30, 2011 is as follows:
 
 
Number of Options
 
Weighted Average Option Price
 
Average  Remaining Contractual Life (Years)
 
Aggregate Intrinsic Value
Outstanding at January 1, 2011
 
1,742,086

 
$
10.24

 

 

  Granted
 
17,030

 
21.55

 

 

  Exercised
 
(434,614
)
 
2.11

 

 

  Cancelled
 
(13,777
)
 
17.12

 

 

Outstanding at June 30, 2011
 
1,310,725

 
$
13.05

 
5.2

 
$
15,293,200

As of June 30, 2011 , 864,950 stock options were exercisable under the Plans. In addition, the fair value of options which vested during the six month periods ended June 30, 2011 and 2010 was $0.3 million and $0.2 million, respectively. No options vested during the three month periods ended June 30, 2011 and 2010. As of June 30, 2011 , there was approximately $0.2 million of unrecognized compensation cost related to stock options that is expected to be recorded over a weighted-average period of 0.7 years.
The Company recognized approximately $0.1 million of stock based compensation expense related to options during each of the three month periods ended June 30, 2011 and 2010 , and approximately $0.2 million during each of the six month periods ended June 30, 2011 and 2010 . The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying statement of operations.

16

Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


Restricted Shares
The Company did not grant any restricted shares during the second quarter of 2011. Information related to restricted shares at June 30, 2011 is as follows:
 
 
Number of Unvested Restricted Shares
 
Weighted Average Grant Date Fair Value
 
Average Remaining Contractual Life (Years)
 
Aggregate Intrinsic Value
Outstanding at January 1, 2011
 
249,218

 
$
6.80

 

 

  Granted
 
212,891

 
19.33

 

 

  Exercised
 
(155,491
)
 
5.61

 

 

  Cancelled
 
(749
)
 
19.86

 

 

Outstanding at June 30, 2011
 
305,869

 
$
16.09

 
2.4

 
$
7,570,260

As of June 30, 2011 , there was approximately $3.4 million of unrecognized compensation cost related to unvested restricted shares that is expected to be recorded over a weighted-average period of 1.7 years.
The Company recognized approximately $0.7 million and $0.2 million of stock based compensation expense related to restricted shares during the three month periods ended June 30, 2011 and 2010 , respectively, and approximately $1.5 million and $0.6 million for six months ended June 30, 2011 and 2010 , respectively. The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying statement of operations.

11. Earnings per Share
Net earnings are divided by the weighted average number of shares outstanding during the period to calculate basic earnings per share. Diluted earnings per share are calculated to give effect to stock options and other stock-based awards. The calculation of diluted earnings per share included 114,043 and 107,147 restricted shares for the three months ended June 30, 2011 and 2010 , respectively, and 106,536 and 106,353 restricted shares for the six months ended June 30, 2011 and 2010 , respectively. The calculation of diluted earnings per share also included 439,800 and 535,624 options to purchase shares of common stock for the three months ended June 30, 2011 and 2010 , respectively, and 496,136 and 530,133 for the six months ended June 30, 2011 and 2010 , respectively.

12. Defined Benefit Plans
Net periodic pension and postretirement benefit costs for the Company's defined benefit pension plans and postretirement benefit plans cover foreign employees, union hourly employees and certain salaried employees. The components of net periodic pension and postretirement benefit costs for the three and six months ended June 30, 2011 and 2010 are as follows:
 
 
Pension Plans
 
Other Postretirement Benefits
 
 
Three months ended June 30,
 
Six months ended
June 30,
 
Three months ended June 30,
 
Six months ended
June 30,
 
 
2011
 
2010
 
2011
 
2010
 
2011
 
2010
 
2011
 
2010
 
 
(dollars in thousands)
Service costs
 
$
160

 
$
150

 
$
320

 
$
300

 
$

 
$

 
$

 
$

Interest costs
 
400

 
400

 
800

 
790

 
10

 
20

 
20

 
30

Expected return on plan assets
 
(410
)
 
(400
)
 
(810
)
 
(790
)
 

 

 

 

Amortization of prior service cost
 
10

 

 
10

 
10

 
(60
)
 
(70
)
 
(130
)
 
(130
)
Amortization of net loss (gain)
 
170

 
110

 
350

 
220

 
(20
)
 
(10
)
 
(40
)
 
(20
)
Net periodic benefit cost
 
$
330

 
$
260

 
$
670

 
$
530

 
$
(70
)
 
$
(60
)
 
$
(150
)
 
$
(120
)

17

Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)



The Company contributed approximately $0.5 million and $1.0 million to its defined benefit pension plans during the three and six months ended June 30, 2011 , respectively. The Company expects to contribute approximately $2.3 million to its defined benefit pension plans for the full year 2011.

13. New Accounting Pronouncements
In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2011-4, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs." ASU 2011-4 amends guidance listed under Accounting Standards Codification ("ASC") Topic 820, "Fair Value Measurement," and represents the converged guidance of the FASB and the International Accounting Standards Board on fair value measurement. The guidance clarifies how a principal market is determined, addresses the fair value measurement of instruments with offsetting market or counterparty credit risks, addresses the concept of valuation premise and highest and best use, extends the prohibition on blockage factors to all three levels of the fair value hierarchy and requires additional disclosures. ASU 2011-4 will be effective prospectively for interim and annual periods beginning after December 15, 2011. The Company is currently evaluating the requirements of ASU 2011-4 and has not yet determined its impact on the consolidated financial statements.
In June 2011, the FASB issued ASU 2011-5, "Presentation of Comprehensive Income." ASU 2011-5 amends guidance listed under ASC Topic 220, "Comprehensive Income" and eliminates the option to present components of other comprehensive income as part of the statement of shareholders' equity. Under the amendments to ASC Topic 220, an entity has the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments also require an entity to present on the face of the financial statements the reclassification adjustments for items that are reclassified from other comprehensive income to net income. ASU 2011-5 will be effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of ASU 2011-5 will only affect the presentation of the Company's consolidated financial statements.

14. Subsequent Event
On July 27, 2011, the Company signed a stock purchase agreement ("SPA") with Innovative Molding, Inc. ("Innovative") for the purchase price of $27 million, payable in cash at closing, which is expected to occur on August 1, 2011. Innovative will become part of the Company's Packaging reportable segment. The purchase price is subject to a net working capital adjustment, if any, to be d etermined post-closing. The SPA contains customary representations, warranties, covenants and indemnities. Innovative is in the business of designing, lining and manufacturing specialty plastic closures for bottles and jars for the food and nutrition industries. Innovati ve had approximately $28 million in revenue in the twelve months ended May 31, 2011.

15. Supplemental Guarantor Condensed Consolidating Financial Information
Under an indenture dated December 29, 2009, TriMas Corporation, the parent company ("Parent"), issued 9 3 / 4 % senior secured notes due 2017 in a total principal amount of $250.0 million (face value). The outstanding Notes are guaranteed by substantially all of the Company's domestic subsidiaries ("Guarantor Subsidiaries"). All of the Guarantor Subsidiaries are 100% owned by the Parent and their guarantee is full, unconditional, joint and several. The Company's non-domestic subsidiaries and TSPC, Inc. have not guaranteed the Senior Notes ("Non-Guarantor Subsidiaries"). The Guarantor Subsidiaries have also guaranteed amounts outstanding under the Company's Credit Facility.
The accompanying supplemental guarantor condensed, consolidating financial information is presented using the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for the Company's share in the subsidiaries' cumulative results of operations, capital contributions and distributions and other changes in equity. Elimination entries relate primarily to the elimination of investments in subsidiaries and associated intercompany balances and transactions.


18

Table of Contents

Supplemental Guarantor
Condensed Financial Statements
Consolidating Balance Sheet
(dollars in thousands)
 
 
June 30, 2011
 
 
Parent
 
Guarantor
 
Non-
Guarantor
 
Eliminations
 
Consolidated Total
Assets
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$

 
$
210

 
$
9,860

 
$

 
$
10,070

Trade receivables, net
 

 
138,060

 
33,010

 

 
171,070

Receivables, intercompany
 

 
890

 

 
(890
)
 

Inventories
 

 
145,390

 
30,270

 

 
175,660

Deferred income taxes
 
3,790

 
19,570

 
1,730

 

 
25,090

Prepaid expenses and other current assets
 
10

 
7,910

 
1,170

 

 
9,090

Total current assets
 
3,800

 
312,030

 
76,040

 
(890
)
 
390,980

Investments in subsidiaries
 
389,720

 
133,130

 

 
(522,850
)
 

Property and equipment, net
 

 
117,000

 
52,440

 

 
169,440

Goodwill
 

 
159,620

 
48,880

 

 
208,500

Intangibles and other assets
 
7,530

 
169,290

 
6,350

 
(2,210
)
 
180,960

Total assets
 
$
401,050

 
$
891,070

 
$
183,710

 
$
(525,950
)
 
$
949,880

Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Current maturities, long-term debt
 
$

 
$
3,290

 
$
1,610

 
$

 
$
4,900

Accounts payable, trade
 

 
108,650

 
27,920

 

 
136,570

Accounts payable, intercompany
 

 

 
890

 
(890
)
 

Accrued liabilities
 
1,090

 
51,960

 
9,850

 

 
62,900

Total current liabilities
 
1,090

 
163,900

 
40,270

 
(890
)
 
204,370

Long-term debt
 
245,650

 
227,850

 

 

 
473,500

Deferred income taxes
 

 
58,590

 
5,270

 
(2,210
)
 
61,650

Other long-term liabilities
 

 
51,010

 
5,040

 

 
56,050

Total liabilities
 
246,740

 
501,350

 
50,580

 
(3,100
)
 
795,570

Total shareholders' equity
 
154,310

 
389,720

 
133,130

 
(522,850
)
 
154,310