TriMas Corporation
TRIMAS CORP (Form: 10-Q, Received: 10/27/2011 13:40:58)
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 September 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 October 27, 2011 , the number of outstanding shares of the Registrant's common stock, $.01 par value, was 34,608,263 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)


 
September 30,
2011
 
December 31,
2010
Assets
 

 

Current assets:
 

 

Cash and cash equivalents
 
$
10,540

 
$
46,370

Receivables, net of reserves of approximately $4.1 million and $4.4 million as of September 30, 2011 and December 31, 2010, respectively
 
151,970

 
111,380

Inventories
 
173,770

 
155,980

Deferred income taxes
 
23,590

 
34,500

Prepaid expenses and other current assets
 
6,720

 
6,670

Assets of discontinued operations held for sale
 
32,850

 
30,360

Total current assets
 
399,440

 
385,260

Property and equipment, net
 
157,180

 
149,290

Goodwill
 
215,920

 
205,890

Other intangibles, net
 
158,870

 
159,910

Other assets
 
26,450

 
23,810

Total assets
 
$
957,860

 
$
924,160

Liabilities and Shareholders' Equity
 

 

Current liabilities:
 

 

Current maturities, long-term debt
 
$
2,920

 
$
17,730

Accounts payable
 
119,420

 
124,390

Accrued liabilities
 
72,620

 
66,600

Liabilities of discontinued operations
 
5,470

 
5,710

Total current liabilities
 
200,430

 
214,430

Long-term debt
 
473,040

 
476,920

Deferred income taxes
 
67,790

 
63,880

Other long-term liabilities
 
54,210

 
56,610

Total liabilities
 
795,470

 
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: 34,596,088 shares at September 30, 2011 and 34,065,856 shares at December 31, 2010
 
340

 
340

Paid-in capital
 
537,580

 
531,030

Accumulated deficit
 
(418,000
)
 
(465,110
)
Accumulated other comprehensive income
 
42,470

 
46,060

Total shareholders' equity
 
162,390

 
112,320

Total liabilities and shareholders' equity
 
$
957,860

 
$
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
September 30,
 
Nine months ended
September 30,
 
 
2011
 
2010
 
2011
 
2010
Net sales
 
$
277,660

 
$
237,730

 
$
824,310

 
$
689,950

Cost of sales
 
(195,720
)
 
(165,660
)
 
(582,260
)
 
(481,150
)
Gross profit
 
81,940

 
72,070

 
242,050

 
208,800

Selling, general and administrative expenses
 
(46,170
)
 
(40,130
)
 
(137,180
)
 
(117,170
)
Gain (loss) on dispositions of property and equipment
 
20

 
(210
)
 
50

 
(930
)
Operating profit
 
35,790

 
31,730

 
104,920

 
90,700

Other income (expense), net:
 
 
 
 
 
 
 
 
Interest expense
 
(10,730
)
 
(12,550
)
 
(34,370
)
 
(39,780
)
Debt extinguishment costs
 

 

 
(3,970
)
 

Gain on bargain purchase
 

 

 

 
410

Other, net
 
540

 
(200
)
 
(1,170
)
 
(1,230
)
Other income (expense), net
 
(10,190
)
 
(12,750
)
 
(39,510
)
 
(40,600
)
Income from continuing operations before income tax expense
 
25,600

 
18,980

 
65,410

 
50,100

Income tax expense
 
(8,620
)
 
(7,030
)
 
(21,730
)
 
(18,800
)
Income from continuing operations
 
16,980

 
11,950

 
43,680

 
31,300

Income from discontinued operations, net of income tax expense
 
1,290

 
770

 
3,430

 
8,280

Net income
 
$
18,270

 
$
12,720

 
$
47,110

 
$
39,580

Earnings per share—basic:
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.49

 
$
0.36

 
$
1.28

 
$
0.93

Discontinued operations
 
0.04

 
0.02

 
0.10

 
0.24

Net income per share
 
$
0.53

 
$
0.38

 
$
1.38

 
$
1.17

Weighted average common shares—basic
 
34,417,879

 
33,827,939

 
34,182,592

 
33,730,852

Earnings per share—diluted:
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.49

 
$
0.35

 
$
1.26

 
$
0.91

Discontinued operations
 
0.03

 
0.02

 
0.10

 
0.24

Net income per share
 
$
0.52

 
$
0.37

 
$
1.36

 
$
1.15

Weighted average common shares—diluted
 
34,901,277

 
34,512,820

 
34,736,307

 
34,380,188




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)
 
 
Nine months ended
September 30,
 
 
2011
 
2010
Cash Flows from Operating Activities:
 
 
 
 
Net income
 
$
47,110

 
$
39,580

Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact:
 
 
 
 
Gain on dispositions of property and equipment
 
(30
)
 
(9,080
)
Gain on bargain purchase
 

 
(410
)
Depreciation
 
19,160

 
17,670

Amortization of intangible assets
 
10,780

 
10,600

Amortization of debt issue costs
 
2,230

 
2,200

Deferred income taxes
 
10,580

 
14,480

Debt extinguishment costs
 
3,970

 

Non-cash compensation expense
 
2,580

 
1,050

Increase in receivables
 
(39,080
)
 
(31,370
)
Increase in inventories
 
(13,500
)
 
(3,150
)
Increase in prepaid expenses and other assets
 
(2,320
)
 
(1,770
)
Increase (decrease) in accounts payable and accrued liabilities
 
(4,750
)
 
19,340

Other, net
 
(1,180
)
 
2,460

Net cash provided by operating activities, net of acquisition impact
 
35,550

 
61,600

Cash Flows from Investing Activities:
 
 
 
 
Capital expenditures
 
(23,520
)
 
(11,090
)
Acquisition of businesses, net of cash acquired
 
(28,620
)
 
(12,760
)
Net proceeds from disposition of assets
 
2,240

 
14,720

Net cash used for investing activities
 
(49,900
)
 
(9,130
)
Cash Flows from Financing Activities:
 
 
 
 
Proceeds from borrowings on term loan facilities
 
226,520

 

Repayments of borrowings on term loan facilities
 
(250,170
)
 
(10,040
)
Proceeds from borrowings on revolving credit facilities and accounts receivable facility
 
551,900

 
376,430

Repayments of borrowings on revolving credit facilities and accounts receivable facility
 
(547,020
)
 
(382,130
)
Debt financing fees
 
(6,680
)
 

Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations
 
(830
)
 
(240
)
Proceeds from exercise of stock options
 
960

 
100

Excess tax benefits from stock based compensation
 
3,840

 
440

Net cash used for financing activities
 
(21,480
)
 
(15,440
)
Cash and Cash Equivalents:
 
 
 
 
Increase (decrease) for the period
 
(35,830
)
 
37,030

At beginning of period
 
46,370

 
9,480

At end of period
 
$
10,540

 
$
46,510

Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest
 
$
25,350


$
27,710

Cash paid for taxes
 
$
12,140


$
6,260



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

5

Table of Contents

TriMas Corporation
Consolidated Statement of Shareholders' Equity
Nine Months Ended September 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
 

 

 
47,110

 

 
47,110

Amortization of defined benefit plan deferred losses (net of tax of $0.1 million) (Note 13)
 

 

 

 
170

 
170

Foreign currency translation
 

 

 

 
(3,990
)
 
(3,990
)
Amortization of unrealized loss on interest rate swaps (net of tax of $0.1 million) (Note 8)
 

 

 

 
230

 
230

Total comprehensive income
 
 
 
 
 
 
 
 
 
43,520

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

 
(830
)
 

 

 
(830
)
Stock option exercises and restricted stock vestings
 

 
960

 

 

 
960

Excess tax benefits from stock based compensation
 

 
3,840

 

 

 
3,840

Non-cash compensation expense
 

 
2,580

 

 

 
2,580

Balances, September 30, 2011
 
$
340

 
$
537,580

 
$
(418,000
)
 
$
42,470

 
$
162,390




















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 10, "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 third quarter of 2011, the Company committed to a plan to exit its prec ision tool cutting and specialty fittings lines of business, both of which were part of the Engineered Components reportable segment, marketing each line of business for sale.
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 exit 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 September 30,
 
Nine months ended September 30,
 
 
2011
 
2010
 
2011
 
2010
 
 
(dollars in thousands)
Net sales
 
$
11,930

 
$
10,150

 
$
34,670

 
$
30,710

Income from discontinued operations before income tax expense
 
$
2,050

 
$
1,190

 
$
5,450

 
$
13,060

Income tax expense
 
(760
)
 
(420
)
 
(2,020
)
 
(4,780
)
Income from discontinued operations, net of income tax expense
 
$
1,290

 
$
770

 
$
3,430

 
$
8,280


7

Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


Assets and liabilities of the discontinued operations are summarized as follows:
 
 
September 30, 2011
 
December 31, 2010
 
 
(dollars in thousands)
Receivables, net
 
$
7,470

 
$
5,660

Inventories
 
5,780

 
5,320

Prepaid expenses and other assets
 
1,230

 
1,160

Property and equipment, net
 
18,370

 
18,220

Total assets
 
$
32,850

 
$
30,360

Accounts payable
 
3,990

 
3,910

Accrued liabilities and other
 
1,480

 
1,800

Total liabilities
 
$
5,470

 
$
5,710


3. Acquisitions
On August 1, 2011, the Company acquired the stock of Innovative Molding ("Innovative") for the purchase price of $27.0 million. The purchase price remains subject to the finalization of a net working capital adjustment, which is expected to be completed during the first quarter of 2012. Innovative is in the business of designing, lining and manufacturing specialty plastic closures for bottles and jars for the food and nutrition industries, and had approximately $28.3 million in revenue in the twelve months ended May 31, 2011. Innovative is included in the Company's Packaging reportable segment.
On September 13, 2011, the Company purchased substantially all of the assets of a standard ring type joint gasket manufacturer located in Faridabad, India for the purchase price of approximately $2.1 million, of which approximately $1.6 million has been paid and approximately $0.5 million is scheduled to be paid by the end of the second quarter of 2012. These assets have been integrated into the Company's Lamons business within the Company's Energy reportable segment.
The results of operations of the aforementioned acquisitions are not significant compared to the overall results of operations of the Company.

4. Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill for the nine months ended September 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

 Goodwill due to acquisitions
9,790

 
660

 

 

 

 

 
10,450

 Foreign currency translation
(70
)
 
(350
)
 

 

 

 

 
(420
)
Balance, September 30, 2011
$
123,040

 
$
48,570

 
$
41,130

 
$
3,180

 
$

 
$

 
$
215,920



8

Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


The gross carrying amounts and accumulated amortization of the Company's other intangibles as of September 30, 2011 and December 31, 2010 are summarized below. The Company amortizes these assets over periods ranging from 1 to 30 years.
 
As of September 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
$
37,280

 
$
(22,590
)
 
$
32,220

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

 
(75,670
)
 
154,610

 
(69,480
)
Total customer relationships
191,890

 
(98,260
)
 
186,830

 
(90,130
)
Technology and other:
 
 
 
 
 
 
 
   1 – 15 years
28,970

 
(23,350
)
 
26,480

 
(22,460
)
   17 – 30 years
43,530

 
(20,300
)
 
42,460

 
(18,690
)
Total technology and other
72,500

 
(43,650
)
 
68,940

 
(41,150
)
Trademark/Trade names (indefinite life)
36,390

 

 
35,420

 

 
$
300,780

 
$
(141,910
)
 
$
291,190

 
$
(131,280
)

Amortization expense related to technology and other intangibles was approximately $1.0 million and $0.9 million for the three months ended September 30, 2011 and 2010 , respectively, and $2.6 million and $2.8 million for the nine months ended September 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 $2.8 million and $2.6 million for the three months ended September 30, 2011 and 2010 , respectively, and $8.2 million and $7.8 million for the nine months ended September 30, 2011 and 2010 , respectively. These amounts are included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

5. Inventories
Inventories consist of the following components:
 
 
September 30,
2011
 
December 31,
2010
 
 
(dollars in thousands)
Finished goods
 
$
113,650

 
$
103,560

Work in process
 
21,040

 
19,010

Raw materials
 
39,080

 
33,410

Total inventories
 
$
173,770

 
$
155,980




9

Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


6. Property and Equipment, Net
 Property and equipment consists of the following components:
 
 
September 30,
2011
 
December 31,
2010
 
 
(dollars in thousands)
Land and land improvements
 
$
5,980

 
$
5,800

Buildings
 
50,200

 
49,230

Machinery and equipment
 
284,330

 
264,120

 
 
340,510

 
319,150

Less: Accumulated depreciation
 
183,330

 
169,860

Property and equipment, net
 
$
157,180

 
$
149,290


Depreciation expense was approximately $6.0 million and $5.2 million , and $17.5 million and $16.1 million for the three and nine months ended September 30, 2011 and 2010 , respectively, of which $5.3 million and $4.6 million , and $15.3 million and $14.2 million , respectively, is included in cost of sales in the accompanying consolidated statement of operations, and $0.7 million and $0.6 million , and $2.2 million and $1.9 million , respectively, is included in selling, general and administrative expenses in the accompanying consolidated statement of operations.      

7. Long-term Debt
The Company's long-term debt consists of the following:
 
 
September 30,
2011
 
December 31,
2010
 
 
(dollars in thousands)
U.S. bank debt
 
$
229,440

 
$
248,950

Non-U.S. bank debt and other
 
750

 
290

9 3/4% senior secured notes, due December 2017
 
245,770

 
245,410

 
 
475,960

 
494,650

Less: Current maturities, long-term debt
 
2,920

 
17,730

Long-term debt
 
$
473,040

 
$
476,920


U.S. Bank Debt
The Company is a party to a credit facility consisting of a $110.0 million revolving credit facility, which matures in June 2017 and is subject to interest at London Interbank Offered Rates ("LIBOR") plus 3.25%, and a $225.0 million term loan facility, which matures in June 2016 and is subject to interest at LIBOR plus 3.00% (subject to a 1.25% LIBOR floor) (collectively, the "Credit Facility"). Under the Credit Facility, 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 September 30, 2011 and December 31, 2010 , the Company had letters of credit of approximately $23.1 million and $23.7 million , respectively, issued and outstanding.
At September 30, 2011 and December 31, 2010 , the Company had $5.0 million and $0.0 million , respectively, outstanding under its revolving credit facilities and had an additional $81.9 million and $79.3 million , respectively, potentially available after giving effect to approximately $23.1 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 Facility, the Company had $152.2 million and $120.7 million , respectively, of borrowing capacity available to it for general corporate purposes.

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Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


The bank debt is an obligation of the Company and its subsidiaries. Although the terms of the Credit Facility 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 $407.7 million and $336.9 million at September 30, 2011 and December 31, 2010 , respectively, are presented in Note 15, "Supplemental Guarantor Condensed Consolidating Financial Information." The Credit Facility also contains various negative and affirmative covenants and other requirements affecting the Company and its subsidiaries. The Company was in compliance with its covenants at September 30, 2011 .
The Company's term loan facility traded at approximately 97.3% and 100.3% of par value as of September 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 September 30, 2011 , the balance outstanding under this agreement was approximately $0.6 million at an average interest rate of 6.7% . 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 Facility. At September 30, 2011 , the Company was in compliance with all such covenant requirements.
The Company's Notes traded at approximately 103.0% and 108.5% of par value as of September 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 a 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. The Company amended the facility in September 2011, increasing the committed funding from $75.0 million to $90.0 million , and reducing the margin on amounts outstanding from a range of 2.75%-3.50%, depending on leverage ratio, to a range of 1.50%-1.75% depending on the amount drawn under the facility. The amendment also reduced the cost of the unused portion of the facility from a range of 0.50%-1.00%, depending on usage amount, to 0.45% and extended the maturity date from December 29, 2012 to September 15, 2015. The Company incurred approximately $0.1 million in fees and expenses to complete the amendment.
Under this facility, TSPC, from time to time, may sell an undivided fractional ownership interest in the pool of receivables up to approximately $90.0 million to a third party multi-seller receivables funding company. 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 LIBOR-based rate plus a usage fee of 1.50% and 3.00% as of September 30, 2011 and 2010 , respectively, and a fee on the unused portion of the facility of 0.45% and 1.00% as of September 30, 2011 and 2010 , respectively.
The Company did not have any amounts outstanding under the facility as of September 30, 2011 or December 31, 2010 , but had $70.3 million and $41.4 million , respectively, available but not utilized. Aggregate costs incurred under the facility were $0.5 million and $0.2 million for the three months ended September 30, 2011 and 2010 , respectively, and $1.4 million and $0.8 million for the nine months ended September 30, 2011 and 2010 , respectively, and are included in interest expense in the accompanying consolidated statement of operations.
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 September 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 1.8% .


11

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


8. Derivative Instruments
The Company was party to a $125.0 million notional amount interest rate swap which expired 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 September 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
 
September 30,
2011
 
December 31,
2010
 
September 30,
2011
 
December 31,
2010
 
 
 
 
(dollars in thousands)
Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
 
Accrued liabilities
 
$

 
$

 
$

 
$
1,130


The effect of derivative instruments on the consolidated statement of operations for the three and nine months ended September 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 September 30,
 
Nine months ended September 30,
 
As of September 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
 
$

 
$
(570
)
 
$
(360
)
 
$
(1,860
)

 
 
Amount of Gain (Loss)
Recognized in Earnings on
Derivatives
 
 
 
 
Three months ended September 30,
 
Nine months ended
September 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
 
$

 
$
(40
)
 
$
(10
)
 
$
(1,600
)
 
Interest expense
Foreign currency forward contracts
 
$

 
$

 
$

 
$
50

 
Other expense, net


12

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


Valuations of the interest rate swaps and foreign currency forward contracts were 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 December 31, 2010 are shown below. There were no derivative instruments outstanding as of September 30, 2011 .
 
 
 
 
 
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
)
 
$


9. Commitments and Contingencies
Asbestos
As of September 30, 2011 , the Company was a party to 1,101 pending cases involving an aggregate of 8,081 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

Nine Months Ended September 30, 2011
 
8,200

 
379

 
479

 
19

 
$
15,653

 
$
1,890,000

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 8,081 claims pending at September 30, 2011 , 59 set forth specific amounts of damages (other than those stating the statutory minimum or maximum). 34 of the 59 claims sought between $1.0 million and $5.0 million in total damages (which includes compensatory and punitive damages), 20 sought between $5.0 million and $10.0 million in total damages (which includes compensatory and punitive damages) and 5 sought over $10.0 million (which includes compensatory and punitive damages). Solely with respect to compensatory damages, 36 of the 59 claims sought between $50,000 and $600,000, 20 sought between $600,000 and $5.0 million and 3 sought over $5.0 million. Solely with respect to punitive damages, 34 of the 59 claims sought between $1.0 million and $2.5 million, 20 sought between $2.5 million and $5.0 million and 5 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

13

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


approximately $6.1 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.

10. 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, and natural gas engines, compressors, gas production equipment and chemical pumps engineered at well sites for the oil and gas industry.
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.
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.

14

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


Segment activity is as follows:
 
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
 
2011
 
2010
 
2011
 
2010
 
 
(dollars in thousands)
Net Sales
 
 
 
 
 
 
 
 
Packaging
 
$
46,090

 
$
44,490

 
$
137,890

 
$
133,610

Energy
 
42,690

 
31,710

 
125,810

 
94,400

Aerospace & Defense
 
20,330

 
19,170

 
60,160

 
53,470

Engineered Components
 
46,010

 
30,530

 
126,870

 
77,810

Cequent Asia Pacific
 
26,020

 
18,280

 
67,390

 
57,040

Cequent North America
 
96,520

 
93,550

 
306,190

 
273,620

Total
 
$
277,660

 
$
237,730

 
$
824,310

 
$
689,950

Operating Profit (Loss)
 
 
 
 
 
 
 
 
Packaging
 
$
10,240

 
$
13,140

 
$
37,140

 
$
38,480

Energy
 
4,560

 
3,100

 
14,920

 
11,360

Aerospace & Defense
 
5,420

 
5,350

 
14,000

 
13,020

Engineered Components
 
7,730

 
3,220

 
19,010

 
8,630

Cequent Asia Pacific
 
5,250

 
2,430

 
9,720

 
9,420

Cequent North America
 
9,580

 
11,000

 
30,630

 
28,180

Corporate expenses
 
(6,990
)
 
(6,510
)
 
(20,500
)
 
(18,390
)
Total
 
$
35,790

 
$
31,730

 
$
104,920

 
$
90,700

Adjusted EBITDA
 
 
 
 
 
 
 
 
Packaging
 
$
13,950

 
$
16,010

 
$
47,090

 
$
47,350

Energy
 
5,010

 
3,540

 
15,740

 
12,640

Aerospace & Defense
 
6,140

 
5,770

 
16,000

 
14,780

Engineered Components
 
8,570

 
4,010

 
21,640

 
10,940

Cequent Asia Pacific
 
6,240

 
3,240

 
12,160

 
11,480

Cequent North America
 
12,310

 
14,080

 
39,100

 
37,810

Corporate expenses
 
(6,150
)
 
(6,450
)
 
(19,710
)
 
(18,390
)
Subtotal from continuing operations
 
46,070

 
40,200

 
132,020

 
116,610

Discontinued operations
 
2,590

 
1,870

 
7,120

 
15,020

Total company
 
$
48,660

 
$
42,070

 
$
139,140

 
$
131,630


        

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 September 30,
 
Nine months ended
September 30,
 
 
2011
 
2010
 
2011
 
2010
 
 
(dollars in thousands)
Net income
 
$
18,270

 
$
12,720

 
$
47,110

 
$
39,580

Income tax expense
 
9,380

 
7,450

 
23,750

 
23,580

Interest expense
 
10,730

 
12,680

 
34,370

 
40,200

Depreciation and amortization
 
10,280

 
9,220

 
29,940

 
28,270

Debt extinguishment costs
 

 

 
3,970

 

Adjusted EBITDA, total company
 
$
48,660

 
$
42,070

 
$
139,140

 
$
131,630

Adjusted EBITDA, discontinued operations
 
2,590

 
1,870

 
7,120

 
15,020

Adjusted EBITDA, continuing operations
 
$
46,070

 
$
40,200

 
$
132,020

 
$
116,610


11. 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 TriMas Corporation 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 third quarter of 2011. Information related to stock options at September 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
 
(443,821
)
 
2.17

 

 

  Cancelled
 
(17,277
)
 
16.40

 

 

Outstanding at September 30, 2011
 
1,298,018

 
$
13.09

 
4.9

 
$
7,353,590

As of September 30, 2011 , 854,576 stock options were exercisable under the Plans. In addition, the fair value of options which vested during the nine month periods ended September 30, 2011 and 2010 was $0.3 million and $0.2 million, respectively. No options vested during the three month periods ended September 30, 2011 and 2010. As of September 30, 2011 , there was approximately $0.1 million of unrecognized compensation cost related to stock options that is expected to be recorded over a weighted-average period of 0.4 years.
The Company recognized approximately $0.1 million of stock based compensation expense related to options during each of the three month periods ended September 30, 2011 and 2010 , and approximately $0.2 million during each of the nine month periods ended September 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
During the third quarter of 2011, the Company granted 19,392 restricted shares of its common stock to its non-employee independent directors, which vest one year from date of grant so long as the director and/or Company does not terminate his services prior to the vesting date.
Information related to restricted shares at September 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
 
232,283

 
19.44

 

 

  Vested
 
(155,491
)
 
5.61

 

 

  Cancelled
 
(1,487
)
 
19.86

 

 

Outstanding at September 30, 2011
 
324,523

 
$
16.35

 
2.07

 
$
4,819,163

As of September 30, 2011 , there was approximately $2.9 million of unrecognized compensation cost related to unvested restricted shares that is expected to be recorded over a weighted-average period of 1.5 years.
The Company recognized approximately $0.8 million and $0.2 million of stock based compensation expense related to restricted shares during the three month periods ended September 30, 2011 and 2010 , respectively, and approximately $2.4 million and $0.8 million for nine months ended September 30, 2011 and 2010 , respectively. The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying statement of operations.

12. 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 156,213 and 132,461 restricted shares for the three months ended September 30, 2011 and 2010 , respectively, and 114,911 and 111,187 restricted shares for the nine months ended September 30, 2011 and 2010 , respectively. The calculation of diluted earnings per share also included 327,185 and 552,420 options to purchase shares of common stock for the three months ended September 30, 2011 and 2010 , respectively, and 438,803 and 538,149 for the nine months ended September 30, 2011 and 2010 , respectively.



17

Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


13. 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 nine months ended September 30, 2011 and 2010 are as follows:
 
 
Pension Plans
 
Other Postretirement Benefits
 
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
 
2011
 
2010
 
2011
 
2010
 
2011
 
2010
 
2011
 
2010
 
 
(dollars in thousands)
Service costs
 
$
160

 
$
150

 
$
480

 
$
460

 
$

 
$

 
$

 
$

Interest costs
 
400

 
400

 
1,200

 
1,190

 
10

 
20

 
30

 
50

Expected return on plan assets
 
(400
)
 
(400
)
 
(1,210
)
 
(1,190
)
 

 

 

 

Amortization of prior service cost
 

 

 
10

 
10

 
(70
)
 
(70
)
 
(200
)
 
(200
)
Amortization of net loss (gain)
 
180

 
110

 
530

 
320

 
(20
)
 
(10
)
 
(60
)
 
(40
)
Net periodic benefit cost
 
$
340

 
$
260

 
$
1,010

 
$
790

 
$
(80
)
 
$
(60
)
 
$
(230
)
 
$
(190
)

The Company contributed approximately $0.8 million and $1.8 million to its defined benefit pension plans during the three and nine months ended September 30, 2011 , respectively. The Company expects to contribute approximately $2.3 million to its defined benefit pension plans for the full year 2011.

14. 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.

18

Table of Contents

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


In September 2011, the FASB issued ASU 2011-8, "Intangibles - Goodwill and Other (Topic 350): Testing for Goodwill Impairment." ASU 2011-8 gives companies the option to perform a qualitative assessment to determine whether it is more likely than not (a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount, and in some cases, skip the two-step impairment test. The objective of the revised standard is to simplify how an entity tests goodwill for impairment and to reduce the cost and complexity of the annual goodwill impairment test. ASU 2011-8 will be effective for fiscal years beginning after December 15, 2011, with early adoption permitted. The Company is currently evaluating this guidance and the potential impact of the revised standard on the Company's annual goodwill impairment test.

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.


19

Table of Contents

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

 
$
120

 
$
10,420

 
$

 
$
10,540

Trade receivables, net
 

 
122,330

 
29,640

 

 
151,970

Receivables, intercompany
 

 
740

 

 
(740
)
 

Inventories
 

 
145,270

 
28,500

 

 
173,770

Deferred income taxes
 

 
22,030

 
1,560

 

 
23,590

Prepaid expenses and other current assets
 

 
5,290

 
1,430

 

 
6,720

Assets of discontinued operations held for sale
 

 
32,850

 

 

 
32,850

Total current assets
 

 
328,630

 
71,550

 
(740
)
 
399,440

Investments in subsidiaries
 
407,670

 
129,600

 

 
(537,270
)
 

Property and equipment, net
 

 
105,260

 
51,920

 

 
157,180

Goodwill
 

 
169,270

 
46,650

 

 
215,920

Intangibles and other assets
 
7,670

 
174,320

 
5,880

 
(2,550
)
 
185,320

Total assets
 
$
415,340

 
$
907,080

 
$
176,000

 
$
(540,560
)
 
$
957,860

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

 
$
2,340

 
$
580

 
$

 
$
2,920

Accounts payable, trade
 

 
93,730

 
25,690

 

 
119,420

Accounts payable, intercompany
 

 

 
740

 
(740
)
 

Accrued liabilities
 
7,180

 
55,950

 
9,490

 

 
72,620

Liabilities of discontinued operations
 

 
5,470

 

 

 
5,470

Total current liabilities
 
7,180

 
157,490

 
36,500

 
(740
)
 
200,430

Long-term debt
 
245,770

 
227,270

 

 

 
473,040

Deferred income taxes
 

 
65,320

 
5,020

 
(2,550
)
 
67,790

Other long-term liabilities
 

 
49,330

 
4,880

 

 
54,210

Total liabilities
 
252,950

 
499,410

 
46,400

 
(3,290
)
 
795,470

Total shareholders' equity
 
162,390

 
407,670

 
129,600

 
(537,270
)
 
162,390

Total liabilities and shareholders' equity
 
$
415,340

 
$
907,080

 
$
176,000

 
$
(540,560
)
 
$
957,860









20

Table of Contents


Supplemental Guarantor
Condensed Financial Statements
Consolidating Balance Sheet
(dollars in thousands)
 
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