Attached files
| file | filename |
|---|---|
| EX-31.2 - EX-31.2 - TRIMAS CORP | trs033111exh312.htm |
| EX-32.2 - EX-32.2 - TRIMAS CORP | trs033111exh322.htm |
| EX-32.1 - EX-32.1 - TRIMAS CORP | trs033111exh321.htm |
| EX-31.1 - EX-31.1 - TRIMAS CORP | trs033111exh311.htm |
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.
TriMas Corporation
Index
1
Forward-Looking Statements
This report contains forward-looking statements (as that term is defined by the federal securities laws) about our financial condition, results of operations and business. You can find many of these statements by looking for words such as "may," "will," "expect," "anticipate," "believe," "estimate" and similar words used in this report.
These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. We caution readers not to place undue reliance on the statements, which speak only as of the date of this report.
The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We do not undertake any obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.
You should carefully consider the factors discussed in Part I, Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2010, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deemed to be immaterial also may materially adversely affect our business, financial position and results of operations or cash flows.
We disclose important factors that could cause our actual results to differ materially from our expectations under Part I, Item 2., "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this report. These cautionary statements qualify all forward-looking statements attributed to us or persons acting on our behalf. When we indicate that an event, condition or circumstance could or would have an adverse effect on us, we mean to include effects upon our business, financial and other condition, results of operations, prospects and ability to service our debt.
2
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.
3
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.
4
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.
5
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.
6
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.
7
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
8
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.
9
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 93/4% 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 93/4% 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.
10
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
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
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
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
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
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
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
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 93/4% 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 97/8% 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
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
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
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 | ||||||||||||||
Income from discontinued operations | — | — | — | — | — | |||||||||||||||
Net income | $ | 11,750 | $ | 15,920 | $ | 3,030 | $ | (18,950 | ) | $ | 11,750 | |||||||||
Three Months Ended March 31, 2010 | ||||||||||||||||||||
Parent | Guarantor | Non-Guarantor | Eliminations | Total | ||||||||||||||||
Net sales | $ | — | $ | 179,500 | $ | 50,900 | $ | (10,340 | ) | $ | 220,060 | |||||||||
Cost of sales | — | (131,560 | ) | (35,780 | ) | 10,340 | (157,000 | ) | ||||||||||||
Gross profit | — | 47,940 | 15,120 | — | 63,060 | |||||||||||||||
Selling, general and administrative expenses | — | (32,220 | ) | (5,480 | ) | — | (37,700 | ) | ||||||||||||
Loss on dispositions of property and equipment | — | (70 | ) | (240 | ) | — | (310 | ) | ||||||||||||
Operating profit | — | 15,650 | 9,400 | — | ||||||||||||||||