TriMas Corporation
TRIMAS CORP (Form: 10-Q, Received: 04/28/2011 14:37:17)
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 March 31, 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  o     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 April 28, 2011 , the number of outstanding shares of the Registrant's common stock, $.01 par value, was 34,257,379 shares.

Table of Contents  

TriMas Corporation
Index
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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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.
 

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Table of Contents  

PART I. FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
TriMas Corporation
Consolidated Balance Sheet
(Unaudited—dollars in thousands)
 
 
 
March 31,
2011
 
December 31,
2010
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
14,910
 
 
$
46,370
 
Receivables, net of reserves of approximately $4.8 million and $4.6 million as of March 31, 2011 and December 31, 2010, respectively
 
159,850
 
 
117,050
 
Inventories
 
164,640
 
 
161,300
 
Deferred income taxes
 
28,240
 
 
34,500
 
Prepaid expenses and other current assets
 
9,350
 
 
7,550
 
Total current assets
 
376,990
 
 
366,770
 
Property and equipment, net
 
168,950
 
 
167,510
 
Goodwill
 
207,910
 
 
205,890
 
Other intangibles, net
 
156,570
 
 
159,930
 
Other assets
 
24,900
 
 
24,060
 
Total assets
 
$
935,320
 
 
$
924,160
 
Liabilities and Shareholders' Equity
 
 
 
 
Current liabilities:
 
 
 
 
Current maturities, long-term debt
 
$
19,270
 
 
$
17,730
 
Accounts payable
 
123,930
 
 
128,300
 
Accrued liabilities
 
64,160
 
 
68,400
 
Total current liabilities
 
207,360
 
 
214,430
 
Long-term debt
 
476,370
 
 
476,920
 
Deferred income taxes
 
65,770
 
 
63,880
 
Other long-term liabilities
 
54,880
 
 
56,610
 
Total liabilities
 
804,380
 
 
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: 34,257,348 shares at March 31, 2011 and 34,065,856 shares at December 31, 2010
 
340
 
 
340
 
Paid-in capital
 
532,860
 
 
531,030
 
Accumulated deficit
 
(453,360
)
 
(465,110
)
Accumulated other comprehensive income
 
51,100
 
 
46,060
 
Total shareholders' equity
 
130,940
 
 
112,320
 
Total liabilities and shareholders' equity
 
$
935,320
 
 
$
924,160
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.

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TriMas Corporation
Consolidated Statement of Operations
(Unaudited—dollars in thousands, except for share amounts)
 
 
Three Months ended
March 31,
 
 
 
2011
 
2010
 
Net sales
 
$
269,670
 
 
$
220,060
 
 
Cost of sales
 
(194,990
)
 
(157,000
)
 
Gross profit
 
74,680
 
 
63,060
 
 
Selling, general and administrative expenses
 
(44,710
)
 
(37,700
)
 
Gain (loss) on dispositions of property and equipment
 
60
 
 
(310
)
 
Operating profit
 
30,030
 
 
25,050
 
 
Other income (expense), net:
 
 
 
 
 
Interest expense
 
(12,020
)
 
(14,140
)
 
Other, net
 
(1,160
)
 
(510
)
 
Other income (expense), net
 
(13,180
)
 
(14,650
)
 
Income from continuing operations before income tax expense
 
16,850
 
 
10,400
 
 
Income tax expense
 
(5,100
)
 
(4,650
)
 
Income from continuing operations
 
11,750
 
 
5,750
 
 
Loss from discontinued operations, net of income taxes
 
 
 
(320
)
 
Net income
 
$
11,750
 
 
$
5,430
 
 
Earnings per share—basic:
 
 
 
 
 
Continuing operations
 
$
0.35
 
 
$
0.17
 
 
Discontinued operations, net of income taxes
 
 
 
(0.01
)
 
Net income per share
 
$
0.35
 
 
$
0.16
 
 
Weighted average common shares—basic
 
33,913,610
 
 
33,569,677
 
 
Earnings per share—diluted:
 
 
 
 
 
Continuing operations
 
$
0.34
 
 
$
0.17
 
 
Discontinued operations, net of income taxes
 
 
 
(0.01
)
 
Net income per share
 
$
0.34
 
 
$
0.16
 
 
Weighted average common shares—diluted
 
34,599,076
 
 
34,314,020
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.

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TriMas Corporation
Consolidated Statement of Cash Flows
(Unaudited—dollars in thousands)
 
 
Three Months ended
March 31,
 
 
2011
 
2010
Cash Flows from Operating Activities:
 
 
 
 
Net income
 
$
11,750
 
 
$
5,430
 
Adjustments to reconcile net income to net cash used for operating activities, net of acquisition impact:
 
 
 
 
(Gain) loss on dispositions of property and equipment
 
(60
)
 
310
 
Depreciation
 
6,230
 
 
6,020
 
Amortization of intangible assets
 
3,500
 
 
3,590
 
Amortization of debt issue costs
 
760
 
 
730
 
Deferred income taxes
 
8,020
 
 
(380
)
Non-cash compensation expense
 
860
 
 
480
 
Net proceeds from sale of receivables
 
1,570
 
 
3,830
 
Increase in receivables
 
(43,280
)
 
(38,960
)
(Increase) decrease in inventories
 
(2,760
)
 
6,060
 
(Increase) decrease in prepaid expenses and other assets
 
(3,240
)
 
270
 
Increase (decrease) in accounts payable and accrued liabilities
 
(11,550
)
 
7,910
 
Other, net
 
1,200
 
 
620
 
Net cash used for operating activities, net of acquisition impact
 
(27,000
)
 
(4,090
)
Cash Flows from Investing Activities:
 
 
 
 
Capital expenditures
 
(6,810
)
 
(2,590
)
Net proceeds from disposition of assets
 
500
 
 
30
 
Net cash used for investing activities
 
(6,310
)
 
(2,560
)
Cash Flows from Financing Activities:
 
 
 
 
Proceeds from borrowings on term loan facilities
 
1,530
 
 
 
Repayments of borrowings on term loan facilities
 
(650
)
 
(4,320
)
Proceeds from borrowings on revolving credit facilities
 
135,700
 
 
134,940
 
Repayments of borrowings on revolving credit facilities
 
(135,700
)
 
(127,000
)
Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations
 
(720
)
 
(160
)
Proceeds from exercise of stock options
 
180
 
 
60
 
Excess tax benefits from stock based compensation
 
1,510
 
 
280
 
Net cash provided by financing activities
 
1,850
 
 
3,800
 
Cash and Cash Equivalents:
 
 
 
 
Decrease for the period
 
(31,460
)
 
(2,850
)
At beginning of period
 
46,370
 
 
9,480
 
At end of period
 
$
14,910
 
 
$
6,630
 
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest
 
$
4,730
 
 
$
5,250
 
Cash paid for taxes
 
$
2,600
 
 
$
1,250
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.

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TriMas Corporation
Consolidated Statement of Shareholders' Equity
Three Months Ended March 31, 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
 
 
 
 
 
11,750
 
 
 
 
11,750
 
Amortization of defined benefit plan deferred losses (net of tax of $30 thousand) (Note 13)
 
 
 
 
 
 
 
50
 
 
50
 
Foreign currency translation
 
 
 
 
 
 
 
4,840
 
 
4,840
 
Amortization of unrealized loss on interest rate swaps (net of tax of $0.1 million) (Note 8)
 
 
 
 
 
 
 
150
 
 
150
 
Total comprehensive income
 
 
 
 
 
 
 
 
 
16,790
 
Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations
 
 
 
(720
)
 
 
 
 
 
(720
)
Stock option exercises and restricted stock vestings
 
 
 
180
 
 
 
 
 
 
180
 
Excess tax benefits from stock based compensation
 
 
 
1,510
 
 
 
 
 
 
1,510
 
Non-cash compensation expense
 
 
 
860
 
 
 
 
 
 
860
 
Balances, March 31, 2011
 
$
340
 
 
$
532,860
 
 
$
(453,360
)
 
$
51,100
 
 
$
130,940
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 

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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 first 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 March 31,
 
 
2011
 
2010
 
 
(dollars in thousands)
Net sales
 
$
 
 
$
530
 
Loss from discontinued operations before income tax benefit
 
$
 
 
$
(500
)
Income tax benefit
 
 
 
180
 
Loss from discontinued operations, net of income tax benefit
 
$
 
 
$
(320
)
 
There are no discontinued operations or assets held for sale as of March 31, 2011 or December 31, 2010.

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TRIMAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
(unaudited)
 

 
 
3. Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill for the three months ended March 31, 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
1,850
 
 
170
 
 
 
 
 
 
 
 
 
 
2,020
 
Balance, March 31, 2011
$
115,170
 
 
$
48,430
 
 
$
41,130
 
 
$
3,180
 
 
$
 
 
$
 
 
$
207,910
 
 
The gross carrying amounts and accumulated amortization of the Company's other intangibles as of March 31, 2011 and December 31, 2010 are summarized below. The Company amortizes these assets over periods ranging from 1 to 30 years.
 
As of March 31, 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
$
32,230
 
 
$
(21,280
)
 
$
32,220
 
 
$
(20,650
)
   15 – 25 years
154,610
 
 
(71,540
)
 
154,610
 
 
(69,480
)
Total customer relationships
186,840
 
 
(92,820
)
 
186,830
 
 
(90,130
)
Technology and other:
 
 
 
 
 
 
 
   1 – 15 years
26,920
 
 
(23,140
)
 
26,910
 
 
(22,870
)
   17 – 30 years
42,550
 
 
(19,210
)
 
42,460
 
 
(18,690
)
Total technology and other
69,470
 
 
(42,350
)
 
69,370
 
 
(41,560
)
Trademark/Trade names (indefinite life)
35,430
 
 
 
 
35,420
 
 
 
 
$
291,740
 
 
$
(135,170
)
 
$
291,620
 
 
$
(131,690
)
 
Amortization expense related to technology and other intangibles was approximately $0.8 million and $1.0 million for the three months ended March 31, 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 March 31, 2011 and 2010 , respectively. These amounts are included in selling, general and administrative expenses in the accompanying consolidated statement of operations.
4. 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 March 31, 2011 or December 31, 2010 , but had $62.1 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

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Table of Contents
 
TRIMAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
(unaudited)
 

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 3.00% and 3.25% as of March 31, 2011 and 2010 , respectively, and a fee on the unused portion of the facility of 0.75% for each of the three months ended March 31, 2011 and 2010 . Aggregate costs incurred under this facility were $0.4 million and $0.3 million for the three months ended March 31, 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 March 31, 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 1.5% .
In addition, the Company from time to time may sell an undivided interest in accounts receivable under factoring arrangements at three of its European subsidiaries. As of March 31, 2011 and December 31, 2010 , the Company's funding under these arrangements was approximately $1.6 million and $2.1 million , respectively. Sales of the European subsidiaries' accounts receivable were sold at a discount from face value of approximately 0.9% and 1.5% , at March 31, 2011 and 2010 , respectively. Costs associated with these transactions were approximately $0.1 million for each of the three months ended March 31, 2011 and 2010 , and are included in other expense, net in the accompanying consolidated statement of operations.
 
5. Inventories
Inventories consist of the following components:
 
 
March 31,
2011
 
December 31,
2010
 
 
(dollars in thousands)
Finished goods
 
$
108,710
 
 
$
106,630
 
Work in process
 
21,590
 
 
20,680
 
Raw materials
 
34,340
 
 
33,990
 
Total inventories
 
$
164,640
 
 
$
161,300
 
 
6. Property and Equipment, Net
 Property and equipment consists of the following components:
 
 
March 31,
2011
 
December 31,
2010
 
 
(dollars in thousands)
Land and land improvements
 
$
3,110
 
 
$
2,970
 
Buildings
 
51,710
 
 
50,490
 
Machinery and equipment
 
303,090
 
 
294,940
 
 
 
357,910
 
 
348,400
 
Less: Accumulated depreciation
 
188,960
 
 
180,890
 
Property and equipment, net
 
$
168,950
 
 
$
167,510
 
 
Depreciation expense was approximately $6.2 million and $6.0 million for the three months ended March 31, 2011 and 2010 , respectively, of which $5.4 million and $5.3 million , respectively, is included in cost of sales in the accompanying statement of operations, and $0.8 million and $0.7 million , respectively, is included in selling, general and administrative expenses in the accompanying statement of operations.
        
 

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TRIMAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
(unaudited)
 

7. Long-term Debt
The Company's long-term debt consists of the following:
 
 
March 31,
2011
 
December 31,
2010
 
 
(dollars in thousands)
U.S. bank debt
 
$
248,300
 
 
$
248,950
 
Non-U.S. bank debt and other
 
1,810
 
 
290
 
9 3/4% senior secured notes, due December 2017
 
245,530
 
 
245,410
 
 
 
495,640
 
 
494,650
 
Less: Current maturities, long-term debt
 
19,270
 
 
17,730
 
Long-term debt
 
$
476,370
 
 
$
476,920
 
 
U.S. Bank Debt
The Company is a party to a credit facility consisting of a $83.0 million revolving credit facility, a $20.0 million deposit-linked supplemental revolving credit facility and a $252.2 million term loan facility (collectively, the "Credit Facility"). Under the Credit Facility, the Company is also able to issue letters of credit, not to exceed $65.0 million in aggregate, against its revolving credit facility commitments. At March 31, 2011 and December 31, 2010 , the Company had letters of credit of approximately $23.6 million and $23.7 million , respectively, issued and outstanding.
At March 31, 2011 and December 31, 2010 , the Company had no amounts outstanding under its revolving credit facilities and had an additional $79.4 million and $79.3 million , respectively, potentially available after giving effect to approximately $23.6 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 $141.5 million and $120.7 million , respectively of capacity available to it for general corporate purposes under its revolving credit and accounts receivable facilities.
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 $368.9 million and $336.9 million at March 31, 2011 and December 31, 2010 , respectively, are presented in the financial information 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 March 31, 2011 .
The Company's term loan facility traded at approximately 100.25% of par value as of both March 31, 2011 and December 31, 2010 , 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 March 31, 2011 , the balance outstanding under this agreement was approximately $1.6 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 March 31, 2011 , the Company was in compliance with all such covenant requirements.
The Company's Notes traded at approximately 110.0% and 108.5% of par value as of March 31, 2011 and December 31, 2010 , respectively, and was valued based on Level 2 inputs as defined in the fair value hierarchy.
 

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TRIMAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
(unaudited)
 

8. Derivative Instruments
In January 2009, the Company entered into two interest rate swap agreements to fix the LIBOR-based variable portion of the interest rate on a total of $200.0 million notional amount of its term loan facility. The first of these swaps fixed the LIBOR-based variable portion of the interest rate on $75.0 million notional amount at 1.39% and expired in January 2011. The second of these swaps fixed the LIBOR-based variable portion of the interest rate on $125.0 million notional amount at 1.91% and expires in July 2011. At inception, the interest rate swaps were designated as cash flow hedges; however, upon the Company's amendment and restatement of its credit facilities in the fourth quarter of 2009, the Company determined that these interest rate swaps were no longer effective due to the imposition of a LIBOR floor in the determination of the variable interest rate on the term loan facility. In the first quarter for 2010, the Company amended the interest rate swaps to include a LIBOR floor similar to the term loan facility; however, the amended interest rate swaps were not designated as hedging instruments.
For the three months ended March 31, 2011 and 2010, approximately $0.2 million and $0.4 million, respectively, of unrealized loss from accumulated other comprehensive income incurred while the interest rate swaps were effective was amortized into earnings as interest expense. Over the next 12 months, the Company expects approximately $0.1 million of unrealized loss in accumulated other comprehensive income incurred while the interest rate swaps were effective to be amortized into earnings as interest expense.
In addition, the Company held two foreign exchange forward contracts that expired in the first quarter of 2010 with notional values of 55.5 million Mexican pesos and £6.5 million. These foreign exchange forward contracts were not designated as hedging instruments.
As of March 31, 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
 
March 31,
2011
 
December 31,
2010
 
March 31,
2011
 
December 31,
2010
 
 
 
 
(dollars in thousands)
Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
 
Accrued liabilities
 
$
 
 
$
 
 
$
620
 
 
$
1,130
 
 
The effect of derivative instruments on the consolidated statement of operations for the three months ended March 31, 2011 and 2010 is summarized as follows:
 
 
Amount of Loss Recognized in AOCI on Derivatives (Effective Portion, net of tax)
 
 
 
Amount of Loss Reclassifed from
AOCI into Earnings
 
 
 
 
Three Months Ended March 31,
 
As of March 31, 2011
 
As of December 31, 2010
 
Location of Loss Reclassified from AOCI into Earnings (Effective Portion)
 
2011
 
2010
 
(dollars in thousands)
 
 
 
(dollars in thousands)
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
 
Interest rate swaps
$
(80
)
 
$
(230
)
 
Interest expense
 
$
(240
)
 
$
(410
)
 

11

Table of Contents
 
TRIMAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
(unaudited)
 

 
 
Amount of Gain (Loss)
Recognized in Earnings on
Derivatives
 
 
 
 
Three Months Ended March 31,
 
Location of Gain (Loss)
Recognized in Earnings on
Derivatives
 
 
2011
 
2010
 
 
 
(dollars in thousands)
 
 
Derivatives not designated as hedging instruments
 
 
 
 
 
 
Interest rate swaps
 
$
(10
)
 
$
(1,450
)
 
Interest expense
Foreign currency forward contracts
 
$
 
 
$
50
 
 
Other expense, net
 
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 March 31, 2011 and December 31, 2010 are shown below:
 
 
 
 
March 31, 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
 
$
(620
)
 
$
 
 
$
(620
)
 
$
 
 
 
 
 
 
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
Environmental
A civil suit was filed in the United States District Court for the Central District of California in December 1988 by the United States of America and the State of California against more than 180 defendants, including TriMas, for alleged release into the environment of hazardous substances disposed of at the Operating Industries, Inc. site in California. This site served for many years as a depository for municipal and industrial waste. The plaintiffs have requested, among other things, that the defendants clean up the contamination at that site. Consent decrees have been entered into by the plaintiffs and a group of the defendants, including TriMas, providing that the consenting parties perform certain remedial work at the site and reimburse the plaintiffs for certain past costs incurred by the plaintiffs at the site. The Company estimates that its share of the clean-up costs will not exceed $500,000, for which the Company has insurance proceeds. Plaintiffs had sought other relief such as damages arising out of claims for negligence, trespass, public and private nuisance, and other causes of action, but the consent decree governs the remedy. Based upon the Company's present knowledge and subject to future legal and factual developments, the Company does not believe that this matter will have a material adverse effect on its financial position, results of operations or cash flows.
 

12

Table of Contents
 
TRIMAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
(unaudited)
 

Asbestos
As of March 31, 2011 , the Company was a party to approximately 1,095 pending cases involving an aggregate of approximately 8,194 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
 
Three months ended March 31, 2011
 
8,200
 
 
140
 
 
143
 
 
3
 
 
$
36,667
 
 
$
610,000
 
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 8,194 claims pending at March 31, 2011 , 47 set forth specific amounts of damages (other than those stating the statutory minimum or maximum), 31 of the 47 claims sought between $1.0 million and $5.0 million in total damages (which includes compensatory and punitive damages), 13 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, 32 of the 47 claims sought between $50,000 and $700,000, 12 sought between $700,000 and $5.0 million and 3 sought over $5.0 million. Solely with respect to punitive damages, 31 of the 47 claims sought between $1.0 million and $2.5 million, 13 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 $5.9 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.

13

Table of Contents
 
TRIMAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
(unaudited)
 

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, 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.
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

Table of Contents
 
TRIMAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
(unaudited)
 

Segment activity is as follows:
 
 
Three Months Ended March 31,
 
 
2011
 
2010
 
 
(dollars in thousands)
Net Sales
 
 
 
 
Packaging
 
$
43,900
 
 
$
43,600
 
Energy
 
40,950
 
 
32,320
 
Aerospace & Defense
 
18,500
 
 
17,080
 
Engineered Components
 
48,110
 
 
30,480
 
Cequent Asia Pacific
 
19,810
 
 
20,300
 
Cequent North America
 
98,400
 
 
76,280
 
Total
 
$
269,670
 
 
$
220,060
 
Operating Profit (Loss)
 
 
 
 
Packaging
 
$
11,830
 
 
$
11,860
 
Energy
 
5,340
 
 
4,190
 
Aerospace & Defense
 
3,720
 
 
3,860
 
Engineered Components
 
6,340
 
 
2,800
 
Cequent Asia Pacific
 
2,530
 
 
3,660
 
Cequent North America
 
6,670
 
 
4,460
 
Corporate expenses
 
(6,400
)
 
(5,780
)
Total
 
$
30,030
 
 
$
25,050
 
Adjusted EBITDA
 
 
 
 
Packaging
 
$
14,830
 
 
$
14,920
 
Energy
 
5,160
 
 
4,650
 
Aerospace & Defense
 
4,360
 
 
4,520
 
Engineered Components
 
7,690
 
 
3,820
 
Cequent Asia Pacific
 
3,270
 
 
4,360
 
Cequent North America
 
9,570
 
 
7,760
 
Corporate expenses
 
(6,280
)
 
(5,900
)
Subtotal from continuing operations
 
38,600
 
 
34,130
 
Discontinued operations
 
$
 
 
$
(330
)
Total company
 
38,600
 
 
33,800
 
 
        

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 March 31,
 
 
2011
 
2010
 
 
(dollars in thousands)
Net income
 
$
11,750
 
 
$
5,430
 
Income tax expense
 
5,100
 
 
4,470
 
Interest expense
 
12,020
 
 
14,290
 
Depreciation and amortization
 
9,730
 
 
9,610
 
Adjusted EBITDA, total company
 
$
38,600
 
 
$
33,800
 
Adjusted EBITDA, discontinued operations
 
 
 
(330
)
Adjusted EBITDA, continuing operations
 
$
38,600
 
 
$
34,130
 
 
11. Equity Awards
The Company maintains two long-term equity incentive plans, 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 by type.
Stock Options
During the first quarter of 2011, the Company granted 17,030 stock options to certain key employees, each of which may be used to purchase one share of the Company's common stock. These stock options have a ten year life, vest ratably over three years from date of grant, have an exercise price of $21.55 and had a weighted-average fair value at grant date of $9.17. The fair value of these options at the grant date was estimated using the Black-Scholes option pricing model using the following weighted-average assumptions: expected life of 6 years, risk-free interest rate of 2.6% and expected volatility of 40%.
Information related to stock options at March 31, 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
 
(117,658
)
 
1.56
 
 
 
 
 
  Cancelled
 
 
 
 
 
 
 
 
Outstanding at March 31, 2011
 
1,641,458
 
 
$
10.98
 
 
5.8
 
 
$
17,910,120
 
 
As of March 31, 2011 , 1,197,016 stock options were exercisable under the Plans. In addition, the fair value of options which vested during the three month periods ended March 31, 2011 and 2010 was $0.3 million and $0.2 million, respectively. As of March 31, 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 0.9 years.
The Company recognized approximately $0.1 million of stock based compensation expense related to options during each of the three month periods ended March 31, 2011 and 2010 . The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying statement of operations.
Restricted Shares
During the first quarter of 2011, the Company awarded three different restricted stock grants. First, the Company granted 49,360 restricted shares of common stock to certain employees which are subject only to a service condition and vest ratably over three years so long as the employee remains with the Company.

16

Table of Contents
 
TRIMAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
(unaudited)
 

Secondly, the Company awarded 81,851 restricted shares of common stock to certain employees which are also subject only to a service condition and vest on the first anniversary date of the award. These awards were made to participants in the Company's short-term Incentive Compensation Plan ("ICP"), where, beginning in the 2010 plan year, all ICP participants whose target ICP annual award exceeds $20 thousand receive 80% of the value earned in cash and 20% in the form of a restricted stock award upon finalization of the award amount in the first quarter each year.
Lastly, the Company awarded 81,680 restricted shares to certain Company officers during the first quarter of 2011. Half of the shares are subject to a performance condition and are earned based upon the Company achieving at least $2.00 of cumulative earnings per share for any consecutive four financial quarters beginning April 1, 2011 through September 30, 2013, where 50% of the restricted shares vest on the business day immediately following the release of earnings for the quarter in which the EPS performance measure is met (the "EPS Vesting Date") and the remaining 50% vest in two equal parts on the first and second anniversary of the EPS Vesting Date, all subject to continued employment as of each vesting date. The other half of the shares are subject to market conditions and are earned based upon the Company's stock price closing at or above each of $30 and $35 per share for 30 consecutive trading days (20,420 shares subject to each target stock price), with the last such trading day occurring on or prior to September 30, 2013. Once the target stock price is met, 50% of the restricted shares immediately vest and the remaining 50% vest in two equal parts on the first and second anniversary of the date on which the respective trading threshold is met, all subject to continued employment as of each vesting date. The Company estimated the grant-date fair value and estimated term of the awards subject to a market condition using a Monte Carlo simulation model, using the following weighted-average assumptions: risk-free interest rate of 1.0% and expected volatility of 70%.
Information related to restricted shares at March 31, 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
 
 
18.17
 
 
 
 
 
  Exercised
 
(135,973
)
 
5.48
 
 
 
 
 
  Cancelled
 
 
 
 
 
 
 
 
Outstanding at March 31, 2011
 
326,136
 
 
$
14.77
 
 
2.5
 
 
$
7,011,924
 
 
As of March 31, 2011 , there was approximately $4.4 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 $0.8 million and $0.4 million of stock based compensation expense related to restricted shares during the three month periods ended March 31, 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 132,706 and 217,083 restricted shares for the three months ended March 31, 2011 and 2010 , respectively. The calculation of diluted earnings per share also included 552,760 and 527,260 options to purchase shares of common stock for the three months ended March 31, 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 months ended March 31, 2011 and 2010 are as follows:
 
 
Pension Plans
 
Other Postretirement Benefits
 
 
Three Months Ended March 31,
 
Three Months Ended March 31,
 
 
2011
 
2010
 
2011
 
2010
 
 
(dollars in thousands)
Service costs
 
$
160
 
 
$
150
 
 
$
 
 
$
 
Interest costs
 
400
 
 
400
 
 
10
 
 
20
 
Expected return on plan assets
 
(400
)
 
(400
)
 
 
 
 
Amortization of prior service cost
 
 
 
 
 
(70
)
 
(70
)
Amortization of net loss (gain)
 
180
 
 
110
 
 
(20
)
 
(10
)
Net periodic benefit cost
 
$
340
 
 
$
260
 
 
$
(80
)
 
$
(60
)
 
The Company contributed approximately $0.5 million to its defined benefit pension plans during the three ended March 31, 2011 . The Company expects to contribute approximately $2.3 million to its defined benefit pension plans for the full year 2011.
 
14. New Accounting Pronouncements
As of March 31, 2011 , there are no recently issued accounting pronouncements not yet adopted by the Company that would have a material impact on the Company's results of operations or financial position.
 
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 net proceeds of the offering were used, together with other available cash, to repurchase the Company's outstanding 9 7 / 8 % senior subordinated notes due 2012 pursuant to a cash tender offer. The outstanding Senior 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)
 
 
March 31, 2011
 
 
Parent
 
Guarantor
 
Non-
Guarantor
 
Eliminations
 
Consolidated Total
Assets
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
 
 
$
3,540
 
 
$
11,370
 
 
$
 
 
$
14,910
 
Trade receivables, net
 
 
 
131,700
 
 
28,150
 
 
 
 
159,850
 
Receivables, intercompany
 
 
 
950
 
 
 
 
(950
)
 
 
Inventories
 
 
 
138,780
 
 
25,860
 
 
 
 
164,640
 
Deferred income taxes
 
6,950
 
 
19,730
 
 
1,560
 
 
 
 
28,240
 
Prepaid expenses and other current assets
 
10
 
 
6,960
 
 
2,380
 
 
 
 
9,350
 
Total current assets
 
6,960
 
 
301,660
 
 
69,320
 
 
(950
)
 
376,990
 
Investments in subsidiaries
 
368,900
 
 
123,730
 
 
 
 
(492,630
)
 
 
Property and equipment, net
 
 
 
117,760
 
 
51,190
 
 
 
 
168,950
 
Goodwill
 
 
 
159,630
 
 
48,280
 
 
 
 
207,910
 
Intangibles and other assets
 
7,790
 
 
169,550
 
 
6,400
 
 
(2,270
)
 
181,470
 
Total assets
 
$
383,650
 
 
$
872,330
 
 
$
175,190
 
 
$
(495,850
)
 
$
935,320
 
Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Current maturities, long-term debt
 
$
 
 
$
17,720
 
 
$
1,550
 
 
$
 
 
$
19,270
 
Accounts payable, trade
 
 
 
96,070
 
 
27,860
 
 
 
 
123,930
 
Accounts payable, intercompany
 
 
 
 
 
950
 
 
(950
)
 
 
Accrued liabilities
 
7,180
 
 
46,610
 
 
10,370
 
 
 
 
64,160
 
Total current liabilities
 
7,180
 
 
160,400
 
 
40,730
 
 
(950
)
 
207,360
 
Long-term debt
 
245,530
 
 
230,840
 
 
 
 
 
 
476,370
 
Deferred income taxes
 
 
 
63,030
 
 
5,010
 
 
(2,270
)
 
65,770
 
Other long-term liabilities
 
 
 
49,160
 
 
5,720
 
 
 
 
54,880
 
Total liabilities
 
252,710
 
 
503,430
 
 
51,460
 
 
(3,220
)
 
804,380
 
Total shareholders' equity
 
130,940
 
 
368,900
 
 
123,730
 
 
(492,630
)
 
130,940
 
Total liabilities and shareholders' equity
 
$
383,650
 
 
$
872,330
 
 
$
175,190
 
 
$
(495,850
)
 
$
935,320
 
 
 
 
 
 
 
 

19

Table of Contents  

 
Supplemental Guarantor
Condensed Financial Statements
Consolidating Balance Sheet
(dollars in thousands)
 
 
December 31, 2010
 
 
Parent
 
Guarantor
 
Non-
Guarantor
 
Eliminations
 
Consolidated Total
Assets
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
 
 
$
15,070
 
 
$
31,300
 
 
$
 
 
$
46,370
 
Trade receivables, net
 
 
 
95,780
 
 
21,270
 
 
 
 
117,050
 
Receivables, intercompany
 
 
 
 
 
480
 
 
(480
)
 
 
Inventories
 
 
 
137,110
 
 
24,190
 
 
 
 
161,300
 
Deferred income taxes
 
13,210
 
 
19,740
 
 
1,550
 
 
 
 
34,500
 
Prepaid expenses and other current assets
 
10
 
 
6,180
 
 
1,360
 
 
 
 
7,550
 
Total current assets
 
13,220
 
 
273,880
 
 
80,150
 
 
(480
)
 
366,770
 
Investments in subsidiaries
 
336,930
 
 
136,480
 
 
 
 
(473,410
)
 
 
Property and equipment, net
 
 
 
118,030
 
 
49,480
 
 
 
 
167,510
 
Goodwill
 
 
 
159,620
 
 
46,270
 
 
 
 
205,890
 
Intangibles and other assets
 
8,670
 
 
171,820
 
 
6,440
 
 
(2,940
)
 
183,990
 
Total assets
 
$
358,820
 
 
$
859,830
 
 
$
182,340
 
 
$
(476,830
)
 
$
924,160
 
Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Current maturities, long-term debt
 
$
 
 
$
17,730
 
 
$
 
 
$
 
 
$
17,730
 
Accounts payable, trade
 
 
 
101,440
 
 
26,860
 
 
 
 
128,300
 
Accounts payable, intercompany
 
 
 
480
 
 
 
 
(480
)
 
 
Accrued liabilities
 
1,080
 
 
57,120
 
 
10,200
 
 
 
 
68,400
 
Total current liabilities
 
1,080
 
 
176,770
 
 
37,060
 
 
(480
)
 
214,430
 
Long-term debt
 
245,420
 
 
231,500
 
 
 
 
 
 
476,920
 
Deferred income taxes
 
 
 
62,810
 
 
4,010
 
 
(2,940
)
 
63,880
 
Other long-term liabilities
 
 
 
51,820
 
 
4,790
 
 
 
 
56,610
 
Total liabilities
 
246,500
 
 
522,900
 
 
45,860
 
 
(3,420
)
 
811,840
 
Total shareholders' equity
 
112,320
 
 
336,930
 
 
136,480
 
 
(473,410
)
 
112,320
 
Total liabilities and shareholders' equity
 
$
358,820
 
 
$
859,830
 
 
$
182,340
 
 
$
(476,830
)
 
$
924,160
 
 

20

Table of Contents  

Supplemental Guarantor
Condensed Financial Statements
Consolidating Statement of Operations
(dollars in thousands)
 
 
Three Months Ended March 31, 2011
 
 
Parent
 
Guarantor
 
Non-Guarantor
 
Eliminations
 
Total
Net sales
 
$
 
 
$
228,060
 
 
$
51,680
 
 
$
(10,070
)
 
$
269,670
 
Cost of sales
 
 
 
(166,150
)
 
(38,910
)
 
10,070
 
 
(194,990
)
Gross profit
 
 
 
61,910
 
 
12,770
 
 
 
 
74,680
 
Selling, general and administrative expenses
 
 
 
(37,190
)
 
(7,520
)
 
 
 
(44,710
)
Gain on dispositions of property and equipment
 
 
 
60
 
 
 
 
 
 
60
 
Operating profit
 
 
 
24,780
 
 
5,250
 
 
 
 
30,030
 
Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(6,420
)
 
(5,060
)
 
(540
)
 
 
 
(12,020
)
Other, net
 
 
 
(2,570
)
 
1,410
 
 
 
 
(1,160
)
Income (loss) before income tax (expense) benefit and equity in net income of subsidiaries
 
(6,420
)
 
17,150
 
 
6,120
 
 
 
 
16,850
 
Income tax (expense) benefit
 
2,250
 
 
(4,260
)
 
(3,090
)
 
 
 
(5,100
)
Equity in net income of subsidiaries
 
15,920
 
 
3,030
 
 
 
 
(18,950
)
 
 
Income from continuing operations
 
11,750
 
 
15,920
 
 
3,030
 
 
(18,950
)
 
11,750