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----------------------------------------- OMB APPROVAL ----------------------------------------- OMB Number: 3235-0060 Expires: March 31, 2006 Estimated average burden hours per response ..................28.0 ----------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) August 9, 2005 TRIMAS CORPORATION (Exact name of registrant as specified in its charter) Delaware 333-100351 38-2687639 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 39400 Woodward Avenue, Suite 130, Bloomfield Hills, Michigan 48304 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (248) 631-5400 Not Applicable (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The Company's only public security holders are holders of its 9 7/8% senior subordinated notes due 2012. The Company issued a press release and held a teleconference on August 9, 2005 reporting its financial results for the quarter ending June 30, 2005. Audio replay of the teleconference will be accessible for at least five business days from the date of the teleconference, and a copy of the visual presentation that was used for the teleconference is available at www.trimascorp.com. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. The following exhibits are filed herewith: Exhibit No. Description - ----------- ----------- 99.1 Press Release 99.2 TriMas Corporation (the "Company") visual presentation titled "2005 Second Quarter Review Public Earnings Call" is available at http://www.trimascorp.com. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TRIMAS CORPORATION Date: August 9, 2005 By: /s/ Grant H. Beard ------------------------------- Name: Grant H. Beard Title: Chief Executive Officer 2
[TRIMAS CORPORATION LOGO] FOR MORE INFORMATION, CONTACT: E.R. "Skip" Autry Chief Financial Officer TriMas Corporation (248) 631-5496 MEDIA RELEASE TRIMAS CORPORATION REPORTS SECOND QUARTER RESULTS BLOOMFIELD HILLS, MICH. - AUGUST 9, 2005 - TriMas Corporation today announced its financial results for the three months ended June 30, 2005. Compared to the prior year second quarter period, sales increased 3.7% to $294.6 million from $284.2 million. Second quarter 2005 operating profit declined to $27.8 million from $30.9 million in second quarter 2004 and net income decreased from $9.0 million in second quarter 2004 to $4.1 million in second quarter 2005. For the quarter ended June 30, 2005 diluted earnings per share were $0.20 versus $0.44 in the year ago period. SECOND QUARTER HIGHLIGHTS o The Company's second quarter 2005 net sales increased 3.7% to $294.6 million from $284.2 million for the three months ended June 30, 2004. Excluding the impact of steel price increases recovered from customers, we estimate net sales increased 1% compared to the prior year's second quarter. Net sales at Cequent Transportation Accessories decreased 5.5% compared to the prior year, from $150.6 million in second quarter 2004 to $142.4 million in second quarter 2005. Excluding the impact of steel price recoveries from customers and favorable impacts of currency exchange, Cequent Transportation Accessories' sales declined 9.9% from the year ago period. With the exception of Cequent Transportation Accessories, each of the Company's business segments maintained positive year-over-year sales momentum. In second quarter 2005, net sales increased at Rieke Packaging Systems 1.5%, at Fastening Systems 5.8%, and at Industrial Specialties 25.8%, when compared to the year ago period. o Overall, operating profit for the three months ended June 30, 2005 declined 10.0% from $30.9 million in the year ago period to $27.8 million. The impact of reduced sales volumes, increasing material costs, and pricing compression, principally in our Cequent Towing Products and Consumer Products business units more than offset the continued strong earnings performance in Page 1 of 1 our Industrial Specialties and Fastening Systems business segments. Further, operating profit within our Rieke Packaging Systems business segment declined approximately 8.6% compared to second quarter 2004 due primarily to material cost increases not able to be immediately recovered from customers. Operating profit as a percent of sales was 9.4% for the second quarter 2005 compared to 10.9% for the same period a year ago. o Expenses related to plant consolidation, business integration and restructuring activities were $1.4 million, a reduction of $3.0 million compared to $4.4 million in the second quarter of 2004. Additionally, labor, variable and fixed costs were reduced approximately $8.8 million in the quarter as compared to second quarter 2004. However, these reductions in cost were more than offset by material margin erosion, primarily in our Cequent Transportation Accessories segment. o The Company reported net income of $4.1 million or $0.20 diluted earnings per share in the quarter ended June 30, 2005, compared to net income of $9.0 million or $0.44 diluted earnings per share in the year ago period. In addition to lower operating income, the decline in net income compared to second quarter 2004 resulted from higher borrowing costs and currency exchange losses on inter-company loans denominated in foreign currencies, which were not considered in operating income. Grant Beard, TriMas' President and Chief Executive Officer commented, "In the second quarter, we encountered some difficult challenges within Cequent Transportation Accessories which negatively impacted our anticipated earnings performance. While market demand overall for Cequent Transportation Accessories' businesses remained relatively consistent with the first quarter, this demand level was down compared to the first half of 2004. This has translated into performance challenges, principally within two Cequent Transportation Accessories' businesses: Towing Products and Consumer Products. In response to these challenges, we have initiated a combination of actions within Cequent Transportation Accessories to: (1) reduce its fixed cost base, through the elimination of redundant SG&A personnel and shrinking of its manufacturing and distribution footprint; (2) lower variable cost through off-shore purchasing initiatives and reduction in SKU complexity; and (3) drive customer performance through improved order fill. Each of these actions is focused on making this business segment not only more profitable, but also more flexible in responding to changes in market forces or competitor actions. Notwithstanding the results of Cequent Transportation Accessories, we continued strong year-over-year earnings growth within our Industrial Specialties and Fastening Systems business segments, with Rieke Packaging Systems being down somewhat due to temporary material cost recovery issues. The overall fundamentals within TriMas' other business segments remain strong: our restructuring initiatives are behind us, steel prices are stabilizing and we have aligned our cost structure consistent with expected customer demand levels. We expect to drive earnings growth and debt reduction for TriMas as we work through the remainder of 2005." Page 2 of 2 SECOND QUARTER FINANCIAL SUMMARY <TABLE> (unaudited - dollars in millions, except per share amounts) FOR THE QUARTER ENDED JUNE 30 ----------------------------- 2005 2004 % CHANGE ------ ------ -------- Sales $294.6 $284.2 3.7% ------ ------ ----- OPERATING INCOME $ 27.8 $ 30.9 (10.0%) ------ ------ ----- NET INCOME $ 4.1 $ 9.0 (54.8%) ------ ------ ----- DILUTED EARNINGS PER SHARE $ 0.20 $ 0.44 (54.5%) ------ ------ ----- OTHER DATA: - Depreciation and amortization $ 10.5 $ 10.3 2.2% ------ ------ ----- - Interest expense $ 18.7 $ 16.3 14.9% ------ ------ ----- - Other expense, net $ 2.8 $ 0.4 N/A ------ ------ ----- - Income tax expense $ 2.3 $ 5.3 (56.7%) ------ ------ ----- - Restructuring, consolidation and integration expenses $ 1.4 $ 4.4 N/A ------ ------ ----- - Cash provided by (used for) operating activities $ 25.6 $(14.2) N/A ------ ------ ----- </TABLE> SEGMENT RESULTS RIEKE PACKAGING SYSTEMS Rieke's second quarter 2005 sales of $35.2 million increased 1.5% compared to the year ago period as sales momentum established in the second half of 2004 continued in Rieke's core industrial closure products and consumer product dispensing applications. Operating profit declined 8.6% to $8.5 million, or 24.2% of sales, during the second quarter 2005 from $9.3 million, or 26.8% of sales, in second quarter 2004, due to steel cost recovery issues for certain products in Europe and resin and other material cost increases not able to be fully recovered from customers during the quarter via pricing. Sales of new pump dispensing products increased $2.3 million to $6.7 million in second quarter 2005 from $4.4 million during second quarter 2004 and Rieke expects to realize increasing sales from both recent and anticipated additional new product launches during the remainder of 2005. CEQUENT TRANSPORTATION ACCESSORIES Cequent's second quarter 2005 sales of $142.4 million represented a decrease of 5.5% compared to net sales of $150.6 million in the second quarter 2004. Excluding the impact of steel price increases recovered from customers and favorable effects of currency exchange, we estimate net sales decreased 9.9% compared to the prior year's second quarter. The decline in sales is due to lower demand compared to the year ago period and the impact of customer inventory adjustments, primarily within our towing and trailer products business units. Additionally, sales during second quarter 2004 had been unusually strong as customers bought ahead of steel-related price increases, thus making the comparison between 2005 and 2004 less favorable. Operating profit declined $12.4 million to $10.5 million, or 7.4% of sales in the three months ended June 30, 2005 from $22.9 million, or 15.2% of sales in the same period a year ago. The decrease in operating profit between years is a result of a decline in volume due to lower demand, continued severe competitor pricing pressure in the retail Page 3 of 3 channel, inability to fully recover steel and other material cost increases via pricing, and excess administrative costs which recently have been meaningfully reduced. INDUSTRIAL SPECIALTIES In the second quarter 2005, sales within Industrial Specialties increased 25.8% to $77.9 million from $61.9 million during the second quarter 2004, as four of the group's six businesses continued to experience strong demand driven by new products, market share gains and economic expansion. After adjusting for the impact of steel price increases recovered from customers, we estimate sales increased approximately 24.3% as compared to the second quarter 2004. Notably, sales in our specialty engine and replacement parts business increased 61.5% compared to second quarter 2004 as a result of high levels of drilling activity in the U.S. and Canada. Sales in our industrial cylinder business increased 50.2% compared to the second quarter 2004 due to market share gains attributed to enhanced customer service and shorter manufacturing lead-times. Sales within our specialty gasket business increased 10.9% compared to second quarter 2004 as a result of significant oil refinery "turnaround" activity at several major customers. Operating profit in the second quarter 2005 increased 48.1% to $10.0 million, or 12.9% of sales, from $6.8 million, or 10.9% of sales, in the year ago period as the group benefited from higher sales volumes during the quarter. FASTENING SYSTEMS In second quarter 2005, sales within Fastening Systems increased 5.8% to $39.1 million from $37.0 million in second quarter 2004. After adjusting for steel price increases recovered from customers, we estimate sales were approximately flat compared to the year ago period. Sales within our aerospace fasteners business during the quarter improved 32.2% compared to second quarter 2004 due to an overall increase in the commercial and business jet build rates in 2005, as manufacturers and distributors continue to replenish inventory stocks. Excluding the recovery of steel price increase, we estimate sales of industrial fasteners in the quarter declined approximately 10.7% or $2.9 million compared to the second quarter 2004, due primarily to reduced demand for industrial fasteners used in agriculture, heavy equipment and heavy truck as a result of customer inventory adjustments. Operating profit improved $5.8 million to $3.0 million, or 7.7% of sales, from an operating loss of $2.8 million in second quarter 2004 as a result of operational improvements related to integration activities completed in 2004. In addition, the year ago period includes approximately $1.8 million of increased costs related to the consolidation of its Lakewood, Ohio manufacturing facility into our Frankfort, Indiana facility, which was largely completed by the fourth quarter 2004. FINANCIAL POSITION TriMas ended the second quarter with total assets of $1,509.5 million, debt of $731.7 million and $52.2 million outstanding under its receivables securitization facility. Net cash provided by operating activities for the quarter ended June 30, 2005 was $25.6 million, as the Company focused on inventory Page 4 of 4 reduction and collection of receivables. Improved cash flow during the quarter was used to pay down amounts outstanding under the Company's receivables securitization facility and bank revolver. The Company's capital expenditures for the three months ended June 30, 2005 and 2004, were $4.9 million and $12.0 million, respectively. CONFERENCE CALL TriMas will broadcast its second quarter earnings conference call on Tuesday, August 9, 2005 at 10:00 a.m. EDT. President and Chief Executive Officer Grant Beard and Chief Financial Officer E.R. "Skip" Autry will discuss the Company's recent financial performance and respond to questions from the investment community. To participate by phone, please dial: (888) 568-1969. Callers should ask to be connected to the TriMas second quarter conference call (reservation number 21257221). If you are unable to participate during the live teleconference, a replay of the conference call will be available beginning August 9th at 12:30 pm. EDT through August 17th at 12:30 p.m. EDT. To access the replay, please dial: (800) 633-8284 and use reservation number 21257221. CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS This release contains "forward-looking" statements, as that term is defined by the federal securities laws, about our financial condition, results of operations and business. Forward-looking statements include: certain anticipated, believed, planned, forecasted, expected, targeted and estimated results along with TriMas' outlook concerning future results. When used in this release, the words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "forecasts," or future or conditional verbs, such as "will," "should," "could," or "may," and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including without limitation, management's examination of historical operating trends and data, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for these views. However, there can be no assurance that management's expectations, beliefs and projections will be achieved. These forward-looking statements are subject to numerous assumptions, risks and uncertainties and accordingly, 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 to conditions only as of the date of this release. 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 statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Risks and uncertainties that could cause actual results to vary materially from those anticipated in the forward-looking statements included in this release include general economic Page 5 of 5 conditions in the markets in which we operate and industry-based factors such as: technological developments that could competitively disadvantage us, increases in our raw material, energy, and healthcare costs, our dependence on key individuals and relationships, exposure to product liability, recall and warranty claims, compliance with environmental and other regulations, and competition within our industries. In addition, factors more specific to us could cause actual results to vary materially from those anticipated in the forward-looking statements included in this release such as our substantial leverage, limitations imposed by our debt instruments, our ability to successfully pursue our stated growth strategies and opportunities, as well as our ability to identify attractive and other strategic acquisition opportunities and to successfully integrate acquired businesses and complete actions we have identified as providing cost-saving opportunities. Page 6 of 6 TRIMAS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED -- DOLLARS IN THOUSANDS) <TABLE> JUNE 30, DECEMBER 31, 2005 2004 ---------- ------------ ASSETS Current assets: Cash and cash equivalents ................................ $ 3,860 $ 3,090 Receivables, net ......................................... 115,990 93,390 Inventories, net ......................................... 171,230 180,040 Deferred income taxes and other current assets ........... 24,540 25,980 ---------- ---------- Total current assets .................................. 315,620 302,500 Property and equipment, net ................................. 189,630 198,610 Goodwill .................................................... 651,160 657,980 Other intangibles, net ...................................... 296,850 304,910 Other assets ................................................ 56,260 58,200 ---------- ---------- Total assets .......................................... $1,509,520 $1,522,200 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities, long-term debt ....................... $ 2,890 $ 2,990 Accounts payable ......................................... 138,730 135,230 Accrued liabilities ...................................... 64,660 70,830 ---------- ---------- Total current liabilities ............................. 206,280 209,050 Long-term debt .............................................. 728,850 735,030 Deferred income taxes ....................................... 133,120 133,540 Other long-term liabilities ................................. 37,920 39,420 ---------- ---------- Total liabilities ..................................... 1,106,170 1,117,040 ---------- ---------- Total shareholders' equity ............................ 403,350 405,160 ---------- ---------- Total liabilities and shareholders' equity ............ $1,509,520 $1,522,200 ========== ========== </TABLE> TRIMAS CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED -- DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS) <TABLE> THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------- ------------------------- 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Net sales...................................... $ 294,630 $ 284,210 $ 587,380 $ 545,110 Cost of sales.................................. (225,460) (208,960) (452,670) (405,760) ----------- ----------- ----------- ----------- Gross profit................................ 69,170 75,250 134,710 139,350 Selling, general and administrative expenses... (41,380) (44,370) (83,670) (88,330) ----------- ----------- ----------- ----------- Operating profit............................ 27,790 30,880 51,040 51,020 ----------- ----------- ----------- ----------- Other expense, net: Interest expense............................ (18,710) (16,280) (36,950) (32,590) Other, net.................................. (2,750) (380) (3,840) (680) ----------- ----------- ----------- ----------- Other expense, net....................... (21,460) (16,660) (40,790) (33,270) ----------- ----------- ----------- ----------- Income before income tax expense............... 6,330 14,220 10,250 17,750 Income tax expense............................. (2,280) (5,260) (3,690) (6,570) ----------- ----------- ----------- ----------- Net income..................................... $ 4,050 $ 8,960 $ 6,560 $ 11,180 =========== =========== =========== =========== Basic earnings per share....................... $ 0.20 $ 0.45 $ 0.33 $ 0.56 =========== =========== =========== =========== Diluted earnings per share..................... $ 0.20 $ 0.44 $ 0.33 $ 0.55 =========== =========== =========== =========== Weighted average common shares - basic......... 20,010,000 20,010,000 20,010,000 20,010,000 =========== =========== =========== =========== Weighted average common shares - diluted....... 20,010,000 20,443,610 20,010,000 20,436,880 =========== =========== =========== =========== </TABLE> TRIMAS CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED -- DOLLARS IN THOUSANDS) <TABLE> SIX MONTHS ENDED JUNE 30, ------------------------- 2005 2004 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income..................................................... $ 6,560 $ 11,180 Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact: Loss on dispositions of property and equipment.............. 130 180 Depreciation and amortization............................... 21,020 20,510 Amortization of debt issue costs............................ 2,470 2,320 Non-cash compensation expense............................... 160 250 Net proceeds from sale of receivables and receivables securitization........................................... 24,440 48,280 Payment to Metaldyne to fund contractual liabilities........ (330) (4,610) Increase in receivables..................................... (47,040) (59,710) Decrease (increase) in inventories.......................... 8,810 (21,840) Decrease (increase) in prepaid expenses and other assets.... 990 (1,460) (Decrease) increase in accounts payable and accrued liabilities.............................................. (2,530) 16,640 Other, net.................................................. (460) (4,270) --------- --------- Net cash provided by operating activities, net of acquisition impact.................................... 14,220 7,470 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures........................................ (9,410) (26,850) Proceeds from sales of fixed assets......................... 2,320 200 Acquisition of businesses, net of cash acquired............. -- (5,500) --------- --------- Net cash used for investing activities................... (7,090) (32,150) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of borrowings on senior credit facility.......... (1,440) (1,440) Proceeds from borrowings on revolving credit facility....... 516,280 330,100 Repayments of borrowings on revolving credit facility....... (521,100) (297,100) Payments on notes payable................................... (100) (7,850) --------- --------- Net cash (used for) provided by financing activities..... (6,360) 23,710 --------- --------- CASH AND CASH EQUIVALENTS: Increase (decrease) for the period.......................... 770 (970) At beginning of period...................................... 3,090 6,780 --------- --------- At end of period......................................... $ 3,860 $ 5,810 ========= ========= Supplemental disclosure of cash flow information: Cash paid for interest................................... $ 33,760 $ 31,070 ========= ========= Cash paid for taxes...................................... $ 5,750 $ 6,470 ========= ========= </TABLE> TRIMAS CORPORATION CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED -- DOLLARS IN THOUSANDS) <TABLE> ACCUMULATED OTHER COMMON PAID-IN RETAINED COMPREHENSIVE STOCK CAPITAL DEFICIT INCOME (LOSS) TOTAL ------ -------- -------- ------------- -------- Balances, December 31, 2004 ............... $200 $399,450 $(40,430) $45,940 $405,160 Comprehensive income (loss): Net income ............................. -- -- 6,560 -- 6,560 Foreign currency translation ........... -- -- -- (8,530) (8,530) ---- -------- -------- ------- -------- Total comprehensive income (loss) ... -- -- 6,560 (8,530) (1,970) Non-cash compensation expense ............. -- 160 -- -- 160 ---- -------- -------- ------- -------- Balances, June 30, 2005 ................... $200 $399,610 $(33,870) $37,410 $403,350 ==== ======== ======== ======= ======== </TABLE> TRIMAS CORPORATION COMPANY AND BUSINESS SEGMENT FINANCIAL INFORMATION <TABLE> THREE MONTHS ENDED SIX MONTHS ENDED (UNAUDITED - IN THOUSANDS) JUNE 30, JUNE 30, ------------------- ------------------- 2005 2004 2005 2004 -------- -------- -------- -------- RIEKE PACKAGING SYSTEMS Net sales $ 35,240 $ 34,720 $ 69,310 $ 65,090 Operating profit $ 8,520 $ 9,320 $ 15,790 $ 15,270 CEQUENT TRANSPORTATION ACCESSORIES Net sales $142,370 $150,610 $283,020 $280,090 Operating profit $ 10,480 $ 22,910 $ 22,760 $ 36,730 INDUSTRIAL SPECIALTIES Net sales $ 77,920 $ 61,920 $151,760 $124,280 Operating profit $ 10,040 $ 6,780 $ 18,550 $ 14,470 FASTENING SYSTEMS Net sales $ 39,100 $ 36,960 $ 83,290 $ 75,650 Operating profit (loss) $ 3,000 $ (2,800) $ 3,820 $ (4,350) TOTAL COMPANY Net sales $294,630 $284,210 $587,380 $545,110 Operating profit $ 27,790 $ 30,880 $ 51,040 $ 51,020 Corporate expenses and management fee $ (4,250) $ (5,330) $ (9,880) $(11,100) Other Data: - Depreciation and amortization $ 10,510 $ 10,280 $ 21,020 $ 20,510 -------- -------- -------- -------- - Interest expense $ 18,710 $ 16,280 $ 36,950 $ 32,590 -------- -------- -------- -------- - Other expense, net $ 2,750 $ 380 $ 3,840 $ 680 -------- -------- -------- -------- - Income tax expense $ 2,280 $ 5,260 $ 3,690 $ 6,570 -------- -------- -------- -------- - Restructuring, consolidation and integration expenses $ 1,450 $ 4,360 $ 2,960 $ 9,780 -------- -------- -------- -------- - Asbestos litigation defense costs $ 500 $ -- $ 900 $ -- -------- -------- -------- -------- </TABLE> ABOUT TRIMAS Headquartered in Bloomfield Hills, Mich., TriMas is a diversified growth company of high-end, specialty niche businesses manufacturing a variety of products for commercial, industrial and consumer markets worldwide. TriMas is organized into four strategic business groups: Cequent Transportation Accessories, Rieke Packaging Systems, Fastening Systems and Industrial Specialties. TriMas has nearly 5,000 employees at 80 different facilities in 10 countries. For more information, visit www.trimascorp.com.
[TRIMAS CORPORATION LOGO] A Heartland Industrial Partners' Company 2005 SECOND QUARTER REVIEW EARNINGS CALL AUGUST 9, 2005 - -------------------------------------------------------------------------------- Innovation o Industry o Growth SAFE HARBOR STATEMENT - -------------------------------------------------------------------------------- This document contains "forward-looking" statements, as that term is defined by the federal securities laws, about our financial condition, results of operations and business. Forward-looking statements include certain anticipated, believed, planned, forecasted, expected, targeted and estimated results along with TriMas' outlook concerning future results. The words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "forecasts," or future or conditional verbs, such as "will," "should," "could," or "may," and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, management's examination of historical operating trends and data are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs and projections will be achieved. These forward-looking statements are subject to numerous assumptions, risks and uncertainties and accordingly, 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 document. 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 statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Risks and uncertainties that could cause actual results to vary materially from those anticipated in the forward-looking statements included in this document include general economic conditions in the markets in which we operate and industry-based factors such as: technological developments that could competitively disadvantage us, increases in our raw material, energy, and healthcare costs, our dependence on key individuals and relationships, exposure to product liability, recall and warranty claims, compliance with environmental and other regulations, and competition within our industries. In addition, factors more specific to us could cause actual results to vary materially from those anticipated in the forward-looking statements included in this document such as our substantial leverage, limitations imposed by our debt instruments, our ability to successfully pursue our stated growth strategies and opportunities, including our ability to identify attractive and other strategic acquisition opportunities and to successfully integrate acquired businesses and complete actions we have identified as providing cost-saving opportunities. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 2 AGENDA - -------------------------------------------------------------------------------- o 2005 Second Quarter Financial Highlights o 2005 Second Quarter Operating Highlights o 2005 Second Quarter Financial Performance o TriMas Capitalization o TriMas Corporation - 2005 Focus and Priorities o Q&A o Appendix - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 3 2005 SECOND QUARTER FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- o TriMas had sales of $294.6 million in the quarter, representing an increase of $10.4 million or 3.7% over Q2 2004. Excluding steel surcharges recovered from customers, we estimate sales increased 1% over second quarter 2004. o Net sales at Cequent Transportation Accessories decreased 5.5% compared to the prior year, from $150.6 million in second quarter 2004 to $142.4 million in second quarter 2005. o With the exception of Cequent Transportation Accessories, each of our other business segments had year-over-year revenue growth in the quarter reflecting the benefit of new product introductions, market share gains and overall economic expansion. o Sales levels at Rieke, Industrial Specialties and Fastening Systems increased 1.5%, 25.8% and 5.8%, respectively. o Adjusted EBITDA within the quarter was $35.6 million, representing a decrease of $5.2 million or 12.8% compared to Q2 2004. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 4 2005 SECOND QUARTER FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- o The Company reported Q2 2005 operating income of $27.8 million, a decrease of $3.1 million compared to operating income of $30.9 million in Q2 2004. o The impact of reduced sales volumes and increasing material costs, principally in Cequent's Towing and Consumer Products business units more than offset the continued strong earnings performance in our Industrial Specialties and Fastening Systems business segments. o Labor, variable and fixed costs during the quarter were reduced approximately $8.8 million versus second quarter 2004. o Expenses related to plant consolidation and restructuring activities decreased $3.0 million to $1.4 million in second quarter 2005 compared to $4.4 million in the same period a year ago. o Second quarter 2005 net income was $4.1 million or $0.20 per share versus net income of $9.0 million or $0.44 per share in the year ago period. o Increased borrowing costs ($2.6 million) and currency exchange losses ($1.7 million) on inter-company loans denominated in foreign currencies, net of related tax effects, contributed to the decline in net income between years. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 5 2005 SECOND QUARTER FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- o Total debt and securitization at June 30, 2005 was $783.9 million, a decrease of approximately $30 million and $24 million, respectively, compared to March 31, 2005 and June 30, 2004. o Due principally to aggressive collection of receivables and deferral of payables payments to the trades during the quarter. o TriMas finished the quarter with $182.6 million net operating working capital or 15.5% of sales. Although improvements were achieved during the quarter, we continue to believe working capital can be improved via better inventory management, principally within Cequent. o The Company's Bank LTM EBITDA was $145.1 million which supported our lending ratios: o Leverage ratio was 5.40x vs. leverage covenant of 5.50x. o Interest coverage ratio was 2.10x vs. interest coverage covenant of 2.00x. o TriMas had $3.9 million in cash at quarter end and $18.3 million in available liquidity under our revolving credit agreement. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 6 2005 SECOND QUARTER OPERATING HIGHLIGHTS - -------------------------------------------------------------------------------- CEQUENT TRANSPORTATION ACCESSORIES o Second quarter 2005 sales decreased $8.2 million to $142.4 million, or 5.5%, from $150.6 million reported in the prior year. Excluding the impacts of steel and the favorable effects of currency, sales in the quarter decreased 9.9%. o Cequent experienced lower demand for towing products in the wholesale distributor and installer markets due to high inventory levels in the channels. o Significant competitive pricing pressures impacted margins across all our channels, but especially retail. o Earnings deterioration is a result of volume decline, pricing pressures, insufficient recovery of steel and other material cost increases via pricing, and excessive overhead costs. o Adjusted EBITDA in Q2 2005 decreased $13.1 million to $14.8 million from $27.8 million in Q2 2004. o Quarterly operating profit was $10.5 million (7.4% of sales) compared to $22.9 million (15.2% of sales) in the year ago period. o Continued pricing pressure is expected as market demand remains flat and increased competition from Southeast Asia continues in many of our product categories. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 7 2005 SECOND QUARTER OPERATING HIGHLIGHTS - -------------------------------------------------------------------------------- CEQUENT TRANSPORTATION ACCESSORIES o The volatility within Cequent's business has: o Compressed TriMas' available liquidity o Masked the positive earnings growth within our other businesses o Driven us to take decisive action o Within the second quarter, TriMas initiated the following actions which will drive both improved performance and reduce volatility within Cequent: o Removed a layer of management o Eliminated 87 salaried positions o Initiated closure of two plants o Initiated simplification of distribution systems o Initiated SKU reduction program o Began customer and product line profitability reviews o Initiated customer performance feedback via senior management o We believe the Cequent businesses, via these initiatives will positively work through the convergence of material price increases and unit volume reductions and regain earnings momentum. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 8 2005 SECOND QUARTER OPERATING HIGHLIGHTS - -------------------------------------------------------------------------------- RIEKE PACKAGING SYSTEMS o Net sales for the quarter were $35.2 million, up 1.5% compared to second quarter 2004. o In the second quarter 2005, core product sales decreased 5.9%, while sales of new specialty dispensing products increased $2.3 million in second quarter 2005 to $6.7 million compared to $4.4 million in Q2 2004. o Adjusted EBITDA in Q2 2005 decreased $2.2 million to $9.4 million from $11.6 million in Q2 2004. o Operating income for second quarter 2005 declined 8.6%, or $0.8 million, to $8.5 million (24.2% of sales) from $9.3 million (26.8% of sales) in second quarter 2004. o The decrease in operating profits and EBITDA between years is due to steel cost recovery issues for certain products in Europe and a non-recurring tooling related investment for a strategic product line. o Rieke expects positive earnings momentum for the remainder of 2005. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 9 2005 SECOND QUARTER OPERATING HIGHLIGHTS - -------------------------------------------------------------------------------- FASTENING SYSTEMS o Q2 2005 sales increased 5.8% or $2.1 million to $39.1 million from $37.0 million in Q2 2004. Excluding steel price increases recovered from customers, sales were approximately flat compared to the year ago period. o Sales within our aerospace fasteners business during the quarter improved 32.2% compared to second quarter 2004 due to an overall increase in the commercial and business jet build rates in 2005, and as a result of manufacturers and distributors buying to replenish inventory levels. o Our order backlog for aerospace fasteners at quarter end approximated $18.0 million compared to $12 million at the end of 2004 and 2003. o Excluding steel price increases recovered from customers, sales of industrial fasteners in the quarter declined approximately 10.7% or $2.9 million compared to the second quarter 2004. o Manufacturing activity levels declined in Q2 2005 as major customers adjust inventory levels, partially in response to the high volume of units shipped during the first quarter. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 10 2005 SECOND QUARTER OPERATING HIGHLIGHTS - -------------------------------------------------------------------------------- FASTENING SYSTEMS o Adjusted EBITDA in the quarter was $4.5 million compared to a negative $1.2 million in Q2 2004. o Overall, the group expects to recover approximately 90% of increased steel costs via pricing and surcharges over the remainder of 2005. o Operating profit improved $5.8 million to $3.0 million from an operating loss of $2.8 million in second quarter 2004. o Costs associated with Lake Erie Products' restructuring activities decreased $1.8 million between years as the consolidation of our Lakewood facility into our Frankfort facility was essentially completed in Q4 2004. o These companies expect continued earnings momentum across 2005. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 11 2005 SECOND QUARTER OPERATING HIGHLIGHTS - -------------------------------------------------------------------------------- INDUSTRIAL SPECIALTIES o Net sales for Q2 2005 were $77.9 million, an increase of 25.8% compared to the same period a year ago driven by new product introductions, market share gains and economic expansion. o Sales of Arrow's engines and replacement parts increased 61.5% versus the year ago period as it benefited from high levels of drilling activity in the U.S. and Canada due to high oil and natural gas prices. o Norris Cylinder sales increased 31.9% as adjusted for steel over Q2 2004 with a strong backlog. o Sales within our Lamons specialty gasket business increased 10.9% compared to second quarter 2004 as a result of significant oil refinery "turnaround" activity at several major customers. o Compac's sales in the quarter increased 9% compared to Q2 2004 due to the strength in residential building and improved recovery from customers of material cost increases. o Precision Tool is beginning to see real growth in its strategic initiative of selling into the specialty medical equipment market. This is partially offset by weaker demand for standard products, particularly in the automotive segment. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 12 2005 SECOND QUARTER OPERATING HIGHLIGHTS - -------------------------------------------------------------------------------- INDUSTRIAL SPECIALTIES o Adjusted EBITDA for the quarter was $11.9 million compared to $8.6 in the period a year ago. o Operating income for the quarter increased 48.1% to $10.0 million or 12.9% of sales, from $6.8 million or 10.9% of sales in the year ago period as the group benefited from higher sales volumes during the quarter. o This group of companies expects continued earnings momentum across 2005. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 13 2005 SECOND QUARTER FINANCIAL PERFORMANCE - -------------------------------------------------------------------------------- <TABLE> ($ in millions) THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, --------------------------- --------------------------- 2005 2004(1) Variance 2005 2004(1) Variance ------ ------- -------- ------ ------- -------- NET SALES Cequent Transportation Accessories ............ $142.4 $150.6 (5.4%) $283.0 $280.1 1.0% Rieke Packaging Systems ....................... 35.2 34.7 1.5% 69.3 65.1 6.5% Fastening Systems ............................. 39.1 37.0 5.8% 83.3 75.6 10.2% Industrial Specialties ........................ 77.9 61.9 25.8% 151.8 124.3 22.1% ------ ------ ----- ------ ------ ----- Total Net Sales ............................ $294.6 $284.2 3.7% $587.4 $545.1 7.8% OPERATING PROFIT Cequent Transportation Accessories ............ $ 10.5 $ 22.9 (54.3%) $ 22.8 $ 36.7 (38.0%) Rieke Packaging Systems ....................... 8.5 9.3 (8.6%) 15.8 15.3 3.4% Fastening Systems ............................. 3.0 (2.8) 207.1% 3.8 (4.4) 187.8% Industrial Specialties ........................ 10.0 6.8 48.1% 18.5 14.5 28.2% Corporate ..................................... (4.2) (5.3) 20.3% (9.9) (11.1) 1.0% ------ ------ ----- ------ ------ ----- Total Operating Profit ..................... $ 27.8 $ 30.9 (10.0%) $ 51.0 $ 51.0 0.0% % Margin ................................ 9.4% 10.9% (1.4%) 8.7% 9.4% (0.7%) ADJUSTED EBITDA (2) Cequent Transportation Accessories ............ $ 14.8 $ 27.8 (46.8%) $ 31.6 $ 46.1 31.3% Rieke Packaging Systems ....................... 9.4 11.6 (19.0%) 18.8 20.0 6.3% Fastening Systems ............................. 4.5 (1.2) 486.3% 6.9 (1.1) 718.9% Industrial Specialties ........................ 11.9 8.6 38.4% 22.2 18.1 23.1% ------ ------ ----- ------ ------ ----- SEGMENT ADJUSTED EBITDA .................... $ 40.6 $ 46.8 (13.2%) $ 79.5 $ 83.1 (4.3%) % Margin ................................ 13.8% 16.5% -2.7% 13.5% 15.2% -1.7% Corporate office, management fee and other .... (5.0) (6.0) 16.7% (11.3) (12.2) 7.4% ------ ------ ----- ------ ------ ----- TOTAL COMPANY ADJUSTED EBITDA .............. $ 35.6 $ 40.8 (12.8%) $ 68.2 $ 70.9 (3.8%) ------ ------ ----- ------ ------ ----- % Margin ................................ 12.1% 14.4% -2.3% 11.6% 13.0% -1.4% MEMO ITEMS: Restructuring, consolidation and integration costs (3) .................................. $ (1.4) $ (4.4) $ 3.0 $ (3.0) $ (9.8) $ 6.8 ------ ------ ----- ------ ------ ----- Asbestos litigation defense costs ............. $ (0.5) $ -- $ (0.5) $ (0.9) $ -- $ (0.9) ------ ------ ----- ------ ------ ----- </TABLE> (1) Reflects financial results for the quarter ended June 30, 2004, as restated in November 2004. (2) The Company has established Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") as an indicator of our operating performance and as a measure of our cash generating capabilities. The Company defines "Adjusted EBITDA" as net income before interest, taxes, depreciation, amortization, non-cash asset and goodwill impairment write-offs, non-cash losses on sale-leaseback of property and equipment, legacy restricted stock award expense, and write-off of equity offering costs. (3) Represents certain charges related to our consolidation, restructuring and integration activities intended to eliminate duplicative costs or achieve cost efficiencies related to integrating acquisitions or other restructurings related to expense reduction efforts. These costs and asbestos litigation defense costs are not eliminated in the determination of Company Adjusted EBITDA, however we would exclude these costs to better evaluate our underlying business performance. 14 TRIMAS CAPITALIZATION - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- JUNE 30, DECEMBER 31, ($ in millions) 2005 2004 - -------------------------------------------------------------------------------- Cash and Cash Equivalents ............................ $ 3.9 $ 3.1 - -------------------------------------------------------------------------------- Working Capital Revolver ............................. $ 8.0 $ 12.8 Term Loan B .......................................... 287.4 288.9 Other Debt ........................................... -- 0.1 -------- -------- Subtotal, Senior Secured Debt ..................... 295.4 301.8 9.875% Senior Sub Notes due 2012 ..................... 436.3 436.2 - -------------------------------------------------------------------------------- Total Debt ........................................ $ 731.7 $ 738.0 - -------------------------------------------------------------------------------- Total Shareholders' Equity ........................ $ 403.4 $ 405.2 - -------------------------------------------------------------------------------- Total Capitalization .............................. $1,135.1 $1,143.2 - -------------------------------------------------------------------------------- Memo: A/R Securitization ............................. $ 52.2 $ 48.0 - -------------------------------------------------------------------------------- Total Debt + A/R Securitization ................... $ 783.9 $ 786.0 - -------------------------------------------------------------------------------- KEY RATIOS: Bank LTM EBITDA ...................................... $ 145.1 $ 154.9 Coverage Ratio ....................................... 2.10x 2.41x Leverage Ratio ....................................... 5.40x 5.08x - -------------------------------------------------------------------------------- SECOND QUARTER 2005 UPDATE o TriMas had $3.9 million of cash and cash equivalents at June 30, 2005. o The Credit Agreement leverage ratio was 5.40x at June 30, 2005 compared to 5.45x at March 31, 2005 and 5.08x at December 31, 2004. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 15 TRIMAS CORPORATION - 2005 FOCUS AND PRIORITIES - -------------------------------------------------------------------------------- o TriMas is forecasting solid year-over-year earnings growth in Industrial Specialties, Fastening Systems and Rieke. o We expect 12 of our 14 business units to have positive earnings growth over 2004. o TriMas' earnings issues are within Cequent Transportation Accessories. As a group, Cequent is focused on: o Lowering its fixed cost base o Reducing selling, general and administrative expense o Shrinking the group's manufacturing and distribution footprint o Fully utilizing our low cost Mexican operations o Lowering its variable cost o Reducing SKU complexity o Driving off-shore purchasing initiatives o Reducing labor o Driving customer performance o Focus on order fill o Providing "fighting" brands to the channels that want them o Positioning Cequent to be more flexible and more profitable - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 16 TRIMAS CORPORATION - 2005 FOCUS AND PRIORITIES - -------------------------------------------------------------------------------- o All discretionary spending is on hold. o All capital spending is required to be approved by the CEO & CFO. o Be smart about managing earnings volatility - we have real momentum in 12 of our 14 businesses. Lean vs. Dis-enable. IN SUMMARY......... o Initiatives are being implemented that will drive an estimated $15 million of annual costs from the business and $10 million of additional pricing. o Working capital reductions and free cash flow will drive an expected $35 million of debt reduction by year end. o TriMas businesses in aggregate are in solid shape, but we need to drive better "outlook" capabilities within our Cequent Towing Products and Consumer Products businesses. The response to the current earnings "drag" within Q2 will make the businesses within Cequent leaner but stronger! o TriMas has too much debt. Free cash flow is our focus. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 17 [TRIMAS CORPORATION LOGO] - -------------------------------------------------------------------------------- Q & A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] - -------------------------------------------------------------------------------- APPENDIX - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Innovation o Industry o Growth CONDENSED BALANCE SHEET - -------------------------------------------------------------------------------- (unaudited - in millions) JUNE 30, DEC. 31, 2005 2004 -------- -------- ASSETS Current Assets Cash & Cash Equivalents................................ $ 3.9 $ 3.1 Receivables, Net....................................... 116.0 93.4 Inventories, Net....................................... 171.2 180.0 Deferred Income Taxes.................................. 17.5 17.5 Prepaid Expenses and Other Current Assets.............. 7.0 8.5 -------- -------- Total Current Assets................................ 315.6 302.5 Property & Equipment, Net.............................. 189.6 198.6 Goodwill............................................... 651.1 658.0 Other Intangibles, Net................................. 296.9 304.9 Other Assets........................................... 56.3 58.2 -------- -------- Total Assets........................................... $1,509.5 $1,522.2 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current Maturities, Long-Term Debt..................... $ 2.9 $ 3.0 Accounts Payable....................................... 138.7 135.2 Accrued Liabilities.................................... 62.0 68.2 Due to Metaldyne....................................... 2.6 2.6 -------- -------- Total Current Liabilities........................... 206.2 209.0 Long-Term Debt......................................... 728.9 735.0 Deferred Income Taxes.................................. 133.1 133.5 Other Long-Term Liabilities............................ 33.6 35.2 Due to Metaldyne....................................... 4.3 4.3 -------- -------- Total Liabilities................................... 1,106.1 1,117.0 Total Shareholders' Equity............................. 403.4 405.2 -------- -------- Total Liabilities and Shareholders' Equity............. $1,509.5 $1,522.2 ======== ======== - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 20 CONDENSED STATEMENT OF OPERATIONS - -------------------------------------------------------------------------------- (Unaudited - In millions, except share amounts) <TABLE> FOR THE THREE MONTHS ENDED June 30, -------------------------- 2005 2004 ------- ------- Net sales................................................. $ 294.6 $ 284.2 Cost of sales............................................. (225.4) (208.9) ------- ------- Gross profit........................................... 69.2 75.3 Selling, general and administrative expenses.............. (41.4) (44.4) ------- ------- Operating profit....................................... 27.8 30.9 Other expense, net........................................ (21.5) (16.7) ------- ------- Income before income taxes................................ 6.3 14.2 Income tax expense........................................ (2.2) (5.2) ------- ------- Net income................................................ $ 4.1 $ 9.0 ======= ======= Basic earnings per share.................................. $ 0.20 $ 0.45 ======= ======= Diluted earnings per share................................ $ 0.20 $ 0.44 ======= ======= Weighted average common shares - basic.................... 20.0 20.0 ======= ======= Weighted average common shares - diluted.................. 20.0 20.4 ======= ======= </TABLE> - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 21 CASH FLOW HIGHLIGHTS - -------------------------------------------------------------------------------- (Unaudited - $ in millions) FOR THE SIX MONTHS ENDED JUNE 30, 2005 2004 ----- ------ Cash provided by operating activities....................... $14.2 $ 7.5 ----- ------ Capital expenditures..................................... (9.4) (26.9) Proceeds from sales of fixed assets...................... 2.3 0.2 Acquisition of businesses, net of cash acquired.......... -- (5.5) ----- ------ Cash used for investing activities.......................... (7.1) (32.2) ----- ------ Payments on senior credit facility, net.................. (1.4) (1.4) Payments on notes payable and other...................... (4.9) 25.1 ----- ------ Cash provided by (used for) financing activites............. (6.3) 23.7 ----- ------ Net increase (decrease) in cash and cash equivalents........ $ 0.8 $ (1.0) ===== ====== - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 22 RECONCILIATION OF NON-GAAP MEASURE ADJUSTED EBITDA(1) - -------------------------------------------------------------------------------- (Unaudited - $ in millions) <TABLE> Three Months Ended Six Months Ended June 30, June 30, ------------------ ---------------- 2005 2004 2005 2004 ------ ------ ------ ------ Net income .............................................. $ 4.1 $ 9.0 $ 6.5 $ 11.2 Income tax expense ................................... 2.3 5.2 3.7 6.6 Interest expense ..................................... 18.7 16.3 37.0 32.6 Depreciation and amortization ........................ 10.5 10.3 21.0 20.5 ------ ------ ------ ------ Adjusted EBITDA ......................................... 35.6 40.8 68.2 70.9 Interest paid ........................................ (28.0) (26.0) (33.8) (31.0) Taxes paid ........................................... (2.2) (4.5) (5.8) (6.5) Legacy stock award expense paid ...................... -- -- -- (5.4) (Gain) loss on dispositions of plant and equipment ... 0.4 (0.1) 0.1 0.2 Payments to Metaldyne to fund contractual liabilities. (0.3) (2.6) (0.3) (4.6) Receivables sales and securitization, net ............ (2.1) (8.6) 24.5 48.2 Net change in working capital ........................ 22.2 (13.2) (38.7) (64.3) ------ ------ ------ ------ Cash flows provided by (used for) operating activities... $ 25.6 $(14.2) $ 14.2 $ 7.5 ------ ------ ------ ------ </TABLE> (1) The Company defines Adjusted EBITDA as net income (loss) before interest, taxes, depreciation, amortization, impairment of goodwill, non-cash losses on sale-leaseback of property and equipment and legacy stock award expense. Lease expense and non-recurring charges are included in Adjusted EBITDA and include both cash and non-cash charges related to restructuring and integration expenses. In evaluating our business, management considers and uses Adjusted EBITDA as a key indicator of financial operating performance and as a measure of cash generating capability. Management believes this measure is useful as an analytical indicator of leverage capacity and debt servicing ability, and uses it to measure financial performance as well as for planning purposes. However, Adjusted EBITDA should not be considered as an alternative to net income, cash flow from operating activities or any other measures calculated in accordance with U.S. GAAP, or as an indicator of operating performance. The definition of Adjusted EBITDA used here may differ from that used by other companies. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 23 KEY COVENANT CALCULATIONS - -------------------------------------------------------------------------------- ($ in millions) Leverage Ratio: Total Indebtedness at June 30, 2005 (1)............................... $783.9 LTM EBITDA, as defined (2)............................................ $145.1 Leverage Ratio - Actual............................................ 5.40x Leverage Ratio - Covenant.......................................... 5.50x Coverage Ratio: LTM EBITDA, as defined (2)............................................ $145.1 Cash Interest Expense (2)............................................. $ 69.2 Coverage Ratio - Actual............................................ 2.10x Coverage Ratio - Covenant.......................................... 2.0x Notes: (1) As defined in our Credit Agreement, as amended and restated June 6, 2003 and further amended December 17, 2003 and December 21, 2004. (2) LTM EBITDA and Cash Interest Expense, as defined. - -------------------------------------------------------------------------------- Innovation o Industry o Growth [TRIMAS CORPORATION LOGO] 24 LTM EBITDA AS DEFINED IN CREDIT AGREEMENT - -------------------------------------------------------------------------------- ($ in millions) Reported net loss for the twelve months ended June 30, 2005........... $ (6.8) Interest expense, net (as defined)................................. 72.0 Income tax expense (benefit)....................................... (7.2) Depreciation and amortization...................................... 45.0 Extraordinary non-cash charges - impairment of assets.............. 10.7 Heartland monitoring fee........................................... 4.2 Interest equivalent costs.......................................... 2.7 Non-recurring expenses in connection with acquisition integration..................................................... 4.4 Other non-cash expenses or losses.................................. 15.1 Non-recurring expenses or costs for cost savings projects.......... 5.0 ------ Bank EBITDA - LTM Ended June 30, 2005................................. $145.1 - -------------------------------------------------------------------------------- [TRIMAS CORPORATION LOGO] Innovation o Industry o Growth 25