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TRIMAS CORPORATION INDEX

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

Form 10-K

(Mark One)  

ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007.

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)

Securities registered pursuant to Section 12(b) of the Act: Common stock, $0.01 par value
Securities registered pursuant to Section 12(g) of the Act: None

        Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No ý

        Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 and Section 15(d) of the Act. Yes o    No ý

        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 ý    No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

        Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o   Accelerated Filer o   Non-accelerated Filer ý
 (Do not check if a smaller reporting company)		   Smaller Reporting Company o

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ý

        The aggregate market value of the voting common equity held by non-affiliates of the Registrant as of June 30, 2007 was approximately $221.3 million, based upon the closing sales price of the Registrant's common stock, $0.01 par value, reported for such date on the New York Stock Exchange. For purposes of this calculation only, directors, executive officers and the principal controlling shareholder or entities controlled by such controlling shareholder are deemed to be affiliates of the Registrant.

        As of March 13, 2008, the number of outstanding shares of the Registrant's common stock, $.01 par value, was 33,409,500 shares.

        Portions of the Registrant's Proxy Statement for the 2008 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein.


TRIMAS CORPORATION INDEX

 
    
   Page No.
Forward-Looking Statements   3

PART I.
 
 
  Item 1.   Business   5
  Item 1A.   Risk Factors   27
  Item 1B.   Unresolved Staff Comments   34
  Item 2.   Properties   34
  Item 3.   Legal Proceedings   35
  Item 4.   Submission of Matters to a Vote of Security Holders   36
  Item 4A.   Executive Officers of the Registrant   36

PART II.
 
 
  Item 5.   Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities   39
  Item 6.   Selected Financial Data   39
  Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations   41
  Item 7A.   Quantitative and Qualitative Disclosures About Market Risk   69
  Item 8.   Financial Statements and Supplementary Data   70
  Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   119
  Item 9A.   Controls and Procedures   119
  Item 9B.   Other Information   120

PART III.
 
 
  Item 10.   Directors, Executive Officers and Corporate Governance   121
  Item 11.   Executive Compensation   121
  Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   121
  Item 13.   Certain Relationships and Related Transactions and Director Independence   121
  Item 14.   Principal Accounting Fees and Services   121

PART IV.
 
 
  Item 15.   Exhibits and Financial Statement Schedules   121
  Signatures   122
  Exhibit Index   II-1

2

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.

        Risks and uncertainties that could cause actual results to vary materially from those anticipated in the forward-looking statements included in this report include general economic conditions in the markets in which we operate and industry-related and other factors such as:

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        We disclose important factors that could cause our actual results to differ materially from our expectations under Item 1A, "Risk Factors," and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this report. These cautionary statements qualify all forward-looking statements attributed to us or persons acting on our behalf. When we indicate that an event, condition or circumstance could or would have an adverse effect on us, we mean to include effects upon our business, financial and other condition, results of operations, prospects and ability to service our debt.

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PART I

Item 1.    Business

        We are a manufacturer of highly engineered products serving niche markets in a diverse range of commercial, industrial and consumer applications. Most of our businesses share important characteristics, including leading market shares, strong brand names, broad product offerings, established distribution networks, relatively high operating margins, relatively low capital investment requirements, product growth opportunities and strategic acquisition opportunities. We believe that a majority of our 2007 net sales were in markets in which our products enjoy the number one or number two market position within their respective product categories. In addition, we believe that in many of our businesses, we are one of only a few manufacturers in the geographic markets where we currently compete.

Our Business Segments

        We operate through five business segments, which had net sales and operating profit (loss) in 2007 as follows: Packaging Systems (net sales: $211.8 million; operating profit: $29.8 million), Energy Products (net sales: $163.5 million; operating profit: $22.9 million), Industrial Specialties (net sales: $204.6 million; operating profit: $41.8 million), RV & Trailer Products (net sales: $198.8 million; operating loss: $81.2 million), and Recreational Accessories (net sales: $289.6 million; operating loss: $64.2 million).

        In the fourth quarter of 2007, we recorded pre-tax, non-cash goodwill and indefinite-lived intangible asset impairment charges of $100.8 million and $70.4 million in our RV & Trailer Products and Recreational Accessories segments, respectively. In the fourth quarter of 2006, we recorded a pre-tax, non-cash goodwill impairment charges of $97.5 million and $19.0 million, respectively, in our RV& Trailer Products and Recreational Accessories segments. The impairment charges in 2007, were primarily the result of continued weak end markets in these businesses, an uncertain economic outlook, declining consumer confidence and declines in our stock price during late 2007. The 2006 impairment charges resulted from declining sales and/or profitability as compared to sales and profitability levels in prior years and our operating plan and changes in their estimated market values. The goodwill impairment charges are more fully described in Note 8, "Goodwill and Other Intangible Assets," of the financial statements attached hereto.

        In the fourth quarter of 2007, we reached a decision to sell the N.I. Industries rocket launcher and property management businesses within our Industrial Specialties segment. We sold the rocket launcher business in December 2007. The information presented herein (information, amounts and description) excludes the businesses we decided to exit and these operations are presented as discontinued operations and assets held for sale.

        In the fourth quarter of 2005, we reached a decision to sell our industrial fastening business. The industrial fastening business consisted of operating locations in Wood Dale, Illinois, Frankfort, Indiana and Lakewood, Ohio. During the fourth quarter of 2006, we sold our Wood Dale, Illinois and Lakewood, Ohio operating locations of the industrial fastening business. We sold the remaining Frankfort, Indiana operating location of the industrial fastening business in February 2007. The information presented herein (information, amounts and description) excludes the business we decided to exit and these operations are presented as discontinued operations and assets held for sale.

        Each segment has distinctive products, distribution channels, strengths and strategies, which are described below.

Packaging Systems

        We believe Packaging Systems is a leading designer, manufacturer and distributor of specialty, highly engineered closure and dispensing systems for a range of niche end markets, including steel and plastic industrial and consumer packaging applications. We also manufacture specialty laminates, jacketings and

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insulation tapes used with fiberglass insulation as vapor retarders in commercial and industrial construction applications. We believe that Packaging Systems is one of the largest manufacturers of steel and plastic industrial container closures and dispensing products in North America and also has a significant presence in Europe and other international markets. Packaging Systems manufactures high performance, value-added products that are designed to enhance its customers' ability to store, ship, process and dispense various products in the industrial, agricultural, consumer and pharmaceutical markets. Similarly, Packaging Systems' vapor retarder products enable us to offer customers a complete systems approach to insulation installation. Packaging Systems' products include steel and plastic closure caps, drum enclosures, rings and levers, dispensing systems, such as pumps and specialty sprayers, and flame retardant facings, insulation jacketings, and pressure-sensitive specialty tape products.

        Our Packaging Systems brands, which include Rieke®, Englass®, Stolz® and Compac™, are well established and recognized in their respective markets.

Competitive Strengths

        We believe Packaging Systems benefits from the following competitive strengths:

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Strategies

        We believe Packaging Systems has significant opportunities to grow, including:

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Marketing, Customers and Distribution

        As of December 31, 2007, Packaging Systems employed approximately 36 salespeople throughout the world. Approximately 33 of these employees are located in the NAFTA and European regions. Packaging Systems also uses third-party agents and distributors in key geographic markets, including Europe, South America and Asia. Approximately 90% of Packaging Systems' net sales are originated by its employee sales force.

        Rieke's agents and distributors primarily sell directly to container manufacturers and to users or fillers of containers. While the point of sale may be to a container manufacturer, Rieke, via a "pull through" strategy, calls on the container user or filler and suggests that it specify that a Rieke product be used on its container.

        To support its "pull-through" strategy, Rieke offers more attractive pricing on Rieke products purchased directly from Rieke and Rieke products that the container users or fillers specify that the container manufacturer apply to the container. Users or fillers that use or specify Rieke's products include industrial chemical, agricultural chemical, petroleum, paint, personal care, pharmaceutical and sanitary supply chemical companies such as BASF, Bayer, Chevron, Dupont, General Electric, ICI Paints, Lucas Oil, Sherwin-Williams, and Warren Oil, among others.

        Packaging Systems' primary customers include Berlin Packaging, Boots, Certainteed, Diversey, Ecolab, Knauf, Lyons Magnus, Manson Insulation, Owens-Corning, Pepsi, Pharmacia, Schering Plough, Shell Oil and Wings Foods as well as major container manufacturers around the world. Packaging Systems maintains a customer service center that provides technical support as well as other technical assistance to customers to reduce overall production costs.

Manufacturing

        Rieke's manufacturing facilities are located in Auburn, Indiana; Hamilton, Indiana; Mexico City, Mexico; Leicester, England; Neunkirchen, Germany; Valmadrera, Italy; and Hangzhou, China. Compac's manufacturing facility is located in Hackettstown, New Jersey. Rieke's steel closure and dispensing production takes place at the Auburn, Indiana and Valmadrera, Italy sites, while the remaining Rieke production sites are plastic injection molding and assembly locations only. At Auburn, Indiana, there is also plastic molding machinery, while Compac's Hackettstown, New Jersey location focuses on the manufacture of vapor retarders and pressure-sensitive tapes. Our technology centers' equipment and product design, research and automation equipment is located in Auburn, Indiana and Hackettstown, New Jersey.

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        Rieke's steel closure and dispensing facilities include medium tonnage stamping machines using progressive dies. Ancillary production equipment includes high-speed internally designed automation equipment, paint and coating equipment and plating facilities.

        Rieke's injection-molded plastic manufacturing sites use a variety of resins including polyethylene, polypropylene and nylon raw materials. There is high-speed equipment at all locations except our China facility. This equipment is used to assemble multiple components into a finished product. Components of a finished product can range from two components to in excess of ten components.

        Rieke also has equipment for pad printing on injection-molded products. Printing is desired by customers who want their company logos or other design work displayed on the closure or dispenser.

        We maintain warehouse locations in Australia and France to facilitate the sale and distribution of products. The manufacturing facilities ship directly to the warehouses where inventory is held for distribution. In Canada, Singapore and Eastern Europe, we use distributors to deliver products to customers.

Competition

        Since Rieke has a broad range of products in both closures and dispensing products, there are competitors in each of our product offerings. We do not believe that there is a single competitor that matches our entire product offering.

        In the industrial steel closure product line, our competitors within the NAFTA market include Greif Closure Systems and Technocraft. In the industrial plastic 55-gallon drum closure line, our primary competitor is Greif Closure Systems. In the 5-gallon container closure market, our primary competitors are Greif Closure Systems, Bericap and APC. Our primary competitors in the ring and lever product line are Self Industries and Technocraft. In the dispensing product lines, our major competitors are Calmar, Aptar, Airspray and Indesco.

        In the European market, our industrial steel closure product lines compete with Greif Closure Systems and Technocraft. The industrial plastic 55-gallon drum closure lines compete with Greif Closure Systems and Mauser. The Rieke® 5-gallon container closure products compete with those of Greif Closure Systems and Bericap. Rieke's ring and lever products compete with those of Berger and Technocraft. Rieke's dispensing products compete with those of Jaycare, Calmar, WIKO and Airspray.

        In the market for pressure-sensitive specialty tapes, Compac competes with 3M, MACtac, Venture and Scapa, while our principal competitor in vapor retarders is Lamtec.

Energy Products

        We believe Energy Products is a leading designer, manufacturer and distributor of a variety of engines and engine replacement parts and accessory products for the oil and gas industry as well as metallic and non-metallic industrial sealant products and fasteners for the petroleum refining, petrochemical and other industrial markets. Our companies and brands which comprise this segment include Lamons® Gasket and Arrow® Engine.

        Lamons manufactures and distributes metallic and nonmetallic industrial gaskets and complementary fasteners for refining, petrochemical and other industrial applications principally in the United States and Canada. Gaskets and complementary fasteners are supplied both for industrial original equipment manufacturers and maintenance repair operations.

        Arrow Engine manufactures specialty engines, chemical pumps, compressors, gas production equipment and engine replacement parts for the oil and natural gas extraction and other industrial engine markets, which are distributed through a worldwide distribution network with a particularly strong presence in the U.S. and Canada.

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Competitive Strengths

        We believe Energy Products benefits from the following competitive strengths:

Strategies

        We believe Energy Products has significant opportunities to grow through the introduction of new products, entry into new markets, and the development of new customer opportunities, as well as through strategic acquisitions.

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Marketing, Customers and Distribution

        Given the niche nature of many of our products, Energy Products relies upon a combination of direct sales forces and established networks of independent distributors with familiarity of the end users. The narrow end-user base of many of these products makes it possible for Energy Products to respond to customer-specific engineered applications and provide a high degree of customer service. Gasket sales are made directly from the factory to major customers through eleven sales and service facilities in major regional markets, or through a large network of independent distributors. Lamons' overseas sales are either through Lamons' licensees or through its many distributors. Arrow Engine markets product through a network of distributors, many with strong ties to larger energy companies that offer a wide range of products and services in the global oil and gas industry. In many of the markets this segment serves, its companies' brand names are virtually synonymous with product applications. Significant Energy Products' customers include BPAmoco, C.E. Franklin, Chevron, Dow, ExxonMobil, McJunkin Corporation, National Oilwell, Shearer, Weatherford Artificial Lift and Wilson Supply.

Manufacturing

        Within Energy Products, Lamons utilizes a complete assortment of advanced gasket fabricating technologies, including laser cutting for metal products and CNC knife and water jet cutting for certain non-metallic gaskets. In addition, Lamons has a full range of CNC machining capabilities to fabricate API ring joint gaskets to a maximum diameter of 70 inches, while its new Kammpro gasket production equipment gives Lamons the unique ability to manufacture gaskets in more complex, non-circular shapes. Lamons also owns and continues to develop proprietary equipment to manufacture spiral wound, Kammpro and heat exchanger gaskets.

        In 2006, Lamons established a manufacturing facility in Hangzhou, China. Within six months, this facility reached expected productivity targets on their initial product line, and provides a lower cost manufacturing alternative for specific product lines. The facility has been approved as a source for major Lamons customers. In 2007, the CMG gasket product line was added to the Hangzhou facility. Market acceptance has reached a stage where Lamons is in the process of establishing its first branch in China, expected to open in 2008.

        Arrow Engine has its distribution and assembly processes at its principal facility in Tulsa, Oklahoma. In 2007, two satellite facilities were opened to handle the expected growth in the compressor and gas production equipment product lines, and to handle the upfit of engine bases sourced from overseas. A

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highly specialized network of machine shops and manufacturers located globally serves as the supplier base with many engine components purchased as raw castings. Approximately, 35% of materials are purchased in a ready for shipment state, while 65% are assembled into marketable products such as engines, engine kits or chemical pumps.

Competition

        Energy Products' primary competitors include Garlock (EnPro) and Flexitallic in gaskets, Waukesha Engine, CAT and Cummins in engines and engine replacement parts, and Texsteam and Williams Pumps in the chemical pump line. Energy Products' companies supply highly engineered, non-commodity, customer-specific products and most have large shares of small markets supplied by a limited number of competitors. In a significant number of areas, value-added design, finishing, warehousing, packaging, distribution and after-sales service have generated strong customer loyalty. This supplements lower cost manufacturing and relevant industry experience in promoting each of our business' competitiveness.

Industrial Specialties

        We believe Industrial Specialties is a leading designer, manufacturer and distributor of a diverse range of industrial products for use in niche markets within the aerospace, industrial, defense and medical equipment markets. This segment's products include aerospace fasteners, medical implants for spinal and trauma applications, high-pressure and low-pressure cylinders for the transportation, storage and dispensing of compressed gases, precision tools, tube nuts and fittings, military ordnance components and steel cartridge cases. In general, these products are highly-engineered, customer-specific items that are sold into niche markets with few competitors.

        Industrial Specialties' brands, including Monogram Aerospace Fasteners, Norris Cylinder, Hi-Vol Products, Keo® Cutters and Richards Micro-Tool, are well established and recognized in their respective markets.

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Strategies

        Industrial Specialties' businesses have opportunities to grow through the introduction of new products, entry into new markets, and the development of new customer opportunities, as well as through strategic acquisitions.

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Marketing, Customers and Distribution

        Industrial Specialties' customers operate primarily in the aerospace, industrial, commercial, defense, transportation, and medical equipment and device industries. Given the niche nature of many of our products, the Industrial Specialties segment relies upon a combination of direct sales forces and established networks of independent distributors with familiarity of the end-users. For example, Monogram's aerospace fasteners and Hi-Vol's automotive fasteners are sold through internal sales personnel and independent sales representatives. Although the overall market for fasteners and metallurgical services is highly competitive, these businesses provide products and services primarily for specialized markets, and compete principally as quality and service-oriented suppliers in their respective markets. Monogram's products are sold to manufacturers and distributors within the commercial and military aerospace industry, both domestic and foreign. Monogram works directly with aircraft manufacturers to develop and test new products and improve existing products. This close working relationship is a necessity given the critical safety nature and regulatory environment of its customers' products. Hi-Vol sells its products to distributors and manufacturers in automotive markets. In many of the markets this segment serves, its companies' brand names are virtually synonymous with product applications. The narrow end-user base of many of these products makes it possible for this segment to respond to customer-specific engineered applications and provide a high degree of customer service. Industrial Specialties' OEM and aftermarket customers include Airbus, Air Liquide, Boeing, Cooper-Standard Automotive, Honeywell, Kaplan Industries, Martinrea, Medtronic, MSC Industrial, Peerless, TI Automotive, Wesco, Western International, Worthington Cylinders and Nuvasive.

Manufacturing

        Industrial Specialties employs various manufacturing processes including CNC machining and stamping, fluting, forging, coating, and cold heading and forming. Monogram manufactures and assembles highly-engineered specialty fasteners for the domestic and international aerospace industry in its Commerce, California facility. Hi-Vol manufactures tube nuts and fittings for the automotive industry in its

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Livonia, Michigan facility. Norris uses a hot billet pierce process to produce a seamless steel cylinder with integral bottom and sides for high-pressure applications in accordance with DOT 3AA, ISO and other international specifications in its Longview, Texas facility. In addition, Norris Cylinder provides service in massing operations of acetylene cylinders where we produce monolithic porous filler for use per DOT 8/TC 8WM or DOT 8AL/TC 8WAM specifications. Precision Tool Company manufactures millions of precision tools every year in its Warren, Michigan and Plymouth, Massachusetts facilities. The process includes CNC high-speed, high-precision grinding, turning and milling. Dew Technologies conducts precision machining, turning and assembly of orthopedic devices in its Fairborn, Ohio facility.

Competition

        This segment's primary competitors include Cherry (PCC) and Fairchild Fasteners (Alcoa) in aerospace fasteners and H&L (Chicago Rivet) and Nagano in tube nuts and fittings. We believe that Monogram is a leader in the blind bolt market with significant market share in all blind fastener product categories in which they compete. Other competitors include Harsco and Worthington in cylinders; Lavalin and Chamberlain in shell casings; and Niagara Moon Cutters, Whitney Tool and Magafor in precision tools. Dew Technologies competes in a fragmented market of contract manufacturers serving the orthopedic device industry, although they represent a significant source of supply for the customers they serve. Industrial Specialties' companies supply highly engineered, non-commodity, customer-specific products and most have large shares of small markets supplied by a limited number of competitors.

RV & Trailer Products

        We believe RV & Trailer Products is a leading designer, manufacturer and distributor of a wide variety of high-quality, custom-engineered trailer products, lighting accessories and roof racks for the trailer original equipment manufacturer, recreational vehicle, agricultural/utility, marine and industrial trailer markets. We believe that RV & Trailer Products' brand names and product lines are among the most recognized and extensive in the industry.

        RV & Trailer Products' brands and main product categories are sold through a wide range of distribution channels and are described below:

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Competitive Strengths

        We believe RV & Trailer Products benefits from the following competitive strengths, including:

Strategies

        We believe that RV & Trailer Products has opportunities to grow through new product introductions, cross-selling products across channels, niche acquisitions, providing complete product solutions and international expansion into Thailand.

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Marketing, Customers and Distribution

        As of December 31, 2007, the RV & Trailer Products group employs 37 professionals in sales, marketing and product management activities to support all customer channels. Of these professionals, there are 24 strategic market representatives, with focused sales and account management responsibilities with specific customer relationships. RV & Trailer Products' product offerings are distributed through a variety of channels. The segment employs a dedicated sales force in each of the primary channels, including the national accounts, automotive and recreational vehicle OEMs, installer/distributor, trailer OEM and trailer aftermarket/distributor channels.

        RV & Trailer Products' product offerings are distributed through a variety of channels. These channels include installer/distributor (automotive, recreational vehicle and trailer) and OEMs (automotive, recreational vehicle, and trailer). RV & Trailer Products' Fulton®, Bulldog® and Wesbar®-branded trailer and related accessory products are sold directly to major trailer OEMs and recreational vehicle distributors. In general, the trailer OEM industry is highly fragmented and specialized, and is generally a low value-added assembly industry. RV & Trailer Products relies upon strong historical relationships, significant brand heritage and its broad product offerings to bolster its trailer and accessory products sales through the OEM channel and in various aftermarket segments. End-users include owners of personal watercraft and large commercial-industrial trailer users, as well as horse and livestock trailering customers.

        In 2005, RV & Trailer Products re-focused its electrical products business unit and trailer products business unit into a newly formed "center of excellence" to provide service and value into the marine, agricultural, industrial, horse/livestock trailer and recreational vehicle markets. We believe this reorganization has improved RV & Trailer Products' deployment of sales, marketing, brand management, product management and distribution functions that currently serve the broad-based trailer aftermarket and OEM market segments. The combination of these businesses advances RV & Trailer Products towards a single customer interface and provides an integrated solution to better synchronize the breadth and depth of its product offerings and outstanding service performance for its customers, while also capitalizing on additional economies of scale. Moreover, this reorganization will enable further refinement of business processes to increase organizational flexibility and better enable RV & Trailer Products to meet the dynamic business needs of its customers and the evolving demands of the diverse market segments which it serves.

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Manufacturing

        In 2007, RV & Trailer Products completed a major restructuring of our Australian operations, shifting additional manufacturing into our facilities in Melbourne and Thailand, allowing the closure of facilities in both Brisbane and Sydney.

        In 2006, RV& Trailer Products continued to source certain finished products via our partners in China and Taiwan. Additionally, we began manufacturing activities in our new Thailand facility. We believe that both of these initiatives will further improve our cost structure and support our growth expectations within regions we currently serve and further our expansion into Asia.

        In 2005, RV & Trailer Products concluded the remaining significant integration projects across its North American manufacturing base. These projects included relocation of our Albion, Indiana wiring operation to Reynosa, Mexico, and the announced construction of our new Thailand manufacturing facility that began operation in late 2006 and manufactures towing and trailering products and related accessories in support of the local Thailand market and our existing Australian business.

        Prior to 2005, RV & Trailer Products actively integrated several acquired manufacturing facilities. In conjunction with the HammerBlow and Highland acquisitions in early 2003, we continued to streamline our manufacturing and warehousing processes to exploit beneficial economies of scale. The acquisition of HammerBlow's Juarez, Mexico facility provided RV & Trailer Products with a modern, lower cost facility, enabling optimization of the segment's entire manufacturing system. Juarez is a key component in the post-acquisition consolidation of the manufacturing system, enabling the migration of higher labor content products currently produced in Mosinee, Wisconsin to the lower cost labor environment in Juarez, Mexico.

        RV & Trailer Products' Mosinee, Wisconsin facility contains a wide range of manufacturing, distribution and research and development capabilities. Major processes at this facility include metal stamping, a steel tube mill, thread rolling and riveting, high-volume welding and assembly, significant in-house mechanical and electrical engineering capabilities and in-house tool, die and equipment maintenance capabilities. We believe these capabilities provide RV & Trailer Products with strategic cost advantages relative to our competition. During the first half of 2004, RV & Trailer Products also completed the consolidation of the Wausau, Wisconsin trailering products manufacturing facility, acquired in the HammerBlow transaction, into the Mosinee, Wisconsin facility.

        The Tekonsha, Michigan electrical products facility contains world-class manufacturing of proprietary electrical brake-control and accessory products, as well as broad engineering capacity to support all of RV & Trailer Products' electrical and brake control product categories.

        As of December 31, 2007, RV & Trailer Products employs 66 professionals in their engineering function and invests approximately 1.8% of its revenue in engineering resources and product development. RV & Trailer Products conducts extensive testing of its products in an effort to assure high quality and reliable product performance. Engineering, product design and fatigue testing are performed utilizing computer-aided design and finite element analysis. Product testing programs are intended to maintain and improve product reliability, and to reduce manufacturing costs.

        RV & Trailer Products' Australian facilities in Melbourne, contain manufacturing, engineering, design and research and development capabilities. These facilities manufacture, market and distribute products throughout the Australian region as Hayman Reese™ -branded trailering and towing products and accessories, and ROLA™-branded roof racks and roof rack accessories to the aftermarket and automotive OEM channels. In the fourth quarter 2004, in order to improve customer support and execution in the OE and aftermarket segments, the Australian operation initiated a reorganization effort to consolidate three operating units into two separate customer focused business units: aftermarket and TriMotive. Each unit has dedicated sales, engineering, manufacturing and logistic functions. The aftermarket segment includes installers, distributors and retailers. The TriMotive automotive OE segment includes a wide array of global automotive customers, including Ford, Toyota and GM Holden. We believe the creation of these two

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distinct businesses better focuses resources to improve service and delivery to the customer and will enhance organizational flexibility to meet the dynamic, yet distinct, business requirements of the aftermarket and OE segments. This new organization also provides a platform for the pursuit of future business and additional economies of scale.

        RV & Trailer Products' raw material costs represent approximately 47% of its net sales. Steel is this segment's single largest commodity, is used in the majority of its products and is delivered to its plants on a just-in-time basis from service centers. See "Materials and Supply Arrangements" below for further discussion of the impact of commodity price increases on our businesses.

Competition

        The competitive environment for trailer products is highly fragmented and is characterized by numerous smaller suppliers, even the largest of which tends to focus in narrow product categories. For instance, we believe that, across the various product categories that RV & Trailer Products offers, only a few competitors provide a similar array of products and services in multiple product categories. By comparison, RV & Trailer Products competes on the basis of its broader range of products, the strength of its brands and distribution channels, as well as quality and price. This segment's trailer products competitors include Dutton-Lainson, Peterson, Atwood and Shelby, each of whom competes within one or at most a few categories of RV & Trailer Products' broad trailer products portfolio. RV & Trailer Products' competitors for electrical products include Hopkins Manufacturing, Peterson Industries, Optronics, Grote and Hayes-Lemmerz, though each is positioned in a niche product line, as opposed to the group's broad product array in the electrical products category.

Recreational Accessories

        We believe Recreational Accessories is a leading designer, manufacturer and distributor of a wide range of aftermarket cargo management products, towing and hitch systems and accessories and vehicle protection products used to outfit and accessorize light trucks, sport utility vehicles and passenger cars. Recreational Accessories' products offer customers the widest possible range of solutions to efficiently "Get Their Gear on the Road™." We believe that Recreational Accessories' product lines and brand names are among the most recognized and extensive in the transportation/recreational accessories industry.

        Recreational Accessories' brands, which include Draw-Tite®, Reese®, Hidden Hitch®, Highland "The Pro's Brand®" and ROLA™, and main product categories are sold through a wide range of channels as described below:

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Competitive Strengths

        We believe Recreational Accessories benefits from several important competitive strengths, including:

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Strategies

        We believe that Recreational Accessories has significant opportunities to grow through new product introductions, niche acquisitions, cross-selling products across channels, and providing complete product solutions.

Marketing, Customers and Distribution

        As of December 31, 2007, Recreational Accessories employs 51 professionals in sales, marketing and product management activities to support all customer channels. Of these professionals, this segment has 41 strategic market representatives, with focused sales and account management responsibilities with specific customer relationships. Recreational Accessories' products are distributed through a variety of channels and has a dedicated sales force in each of the primary channels, including the retail, national accounts, automotive OEMs and installer/distributor channels.

        Recreational Accessories' products are distributed through a variety of channels. These channels include installer/distributor (automotive and recreational vehicle), OEMs and retail channels (i.e., mass merchants, auto specialty, marine specialty, hardware/home centers, and catalogs). As of December 31,

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2007, the towing products business principally distributes to approximately 240 independent distributors and 3,200 independent installers under the Draw-Tite®, Hidden Hitch® and Reese® brands. In addition, 380 of the towing products business' customers position Draw-Tite® and Reese® branded traditional towing products as an exclusive or preferred line, while the Reese® branded heavy-duty towing products are positioned to the heavy-duty professional towing segment. Recreational Accessories is well represented in retail stores through mass merchants, such as Wal-Mart, hardware home centers, such as Lowe's and Home Depot, and specialty auto retailers, such as Pep Boys, AutoZone, Advanced Auto and CSK Auto.

Manufacturing

        In 2007, the segment's towing operation successfully integrated all North American hitch manufacturing into its Goshen, Indiana plant allowing the closure of its Huntsville, Ontario facility. In addition, Recreational Accessories further consolidated its distribution from eight locations to seven.

        In 2006, Recreational Accessories continued its sourcing initiatives with our supplier partners in China and Taiwan. We believe that the timely execution of these sourcing projects, both now and in the future, will continue to drive market expansion and enhance operating margins.

        In 2005, Recreational Accessories concluded the remaining significant integration projects across its North American industrial base. These projects included the integration of our Elkhart, Indiana plastics operation into our Goshen, Indiana facility, and integration of our Sheffield, Pennsylvania distribution and manufacturing facility into our South Bend, Indiana distribution center while certain manufacturing was outsourced. In addition, within its towing products business, Recreational Accessories consolidated its distribution facilities from eleven locations to eight.

        Prior to 2005, Recreational Accessories actively integrated several manufacturing facilities and distribution-related activities. These included: combining towing products' Canton, Michigan and Elkhart, Indiana manufacturing facilities and a southeast Michigan warehouse into a single, approximately 350,000 square foot, efficient flow manufacturing and master warehouse center in Goshen, Indiana. The consolidation of these facilities was completed in the first quarter of 2003. In conjunction with the HammerBlow and Highland acquisitions in early 2003, Recreational Accessories continued to streamline its manufacturing and warehousing processes to exploit beneficial economies of scale. In the third quarter of 2003, Recreational Accessories completed the consolidation of its Sheridan, Arkansas towing products manufacturing facility, acquired in the HammerBlow transaction, into its Goshen, Indiana facility. In 2004, actions were initiated to close the Concord, Ontario 22,000 square-foot distribution and customer service center and consolidate the Oakville, Ontario 73,000 square-foot manufacturing facility into the Goshen, Indiana and Huntsville, Ontario facilities. Coincident with these moves, Oakville became Recreational Accessories' Canadian distribution center. The manufacturing facility consolidation was completed in the fourth quarter of 2004. During the second quarter of 2005, the consolidation of distribution and customer- service activities for all Canadian customers was completed.

        As of December 31, 2007, Recreational Accessories employs 36 professionals in the engineering function and invests approximately 0.6% of its revenue in engineering resources and product development. This segment conducts extensive testing of its products in an effort to assure high quality and reliable product performance. Engineering, product design and fatigue testing are performed utilizing computer-aided design and finite element analysis. In addition, on-road performance research is conducted on hitches with instrumentation-equipped trailers and towing vehicles. Product testing programs are intended to maintain and improve product reliability and to reduce manufacturing costs.

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        Recreational Accessories' material costs represent approximately 58% of its net sales. Steel is this segment's single largest commodity, is used in the majority of its products and is delivered to its plants on a just-in-time basis from service centers. See "Materials and Supply Arrangements" below for further discussion of the impact of raw materials cost and availability with respect to our results of operations.

Competition

        We believe that Recreational Accessories is one of the largest North American manufacturers and distributors of towing systems. The competitive environment for towing products is highly fragmented and is characterized by numerous smaller suppliers, even the largest of which tends to focus in narrow product categories. For instance, we believe that, across the various products that Recreational Accessories offers, only a few competitors maintain a significant or number-one market share in more than one specific product category. By comparison, Recreational Accessories competes on the basis of its broader range of products, the strength of its brands and distribution channels, as well as quality and price. Recreational Accessories' most significant competitors in towing products include Thule, Putnam Hitch Products and Curt Manufacturing. The retail channel presents a different set of competitors that are typically not seen in our installer and distributor channels, including Masterlock, Buyers, Allied, Keeper, Bell and Axius. As Recreational Accessories grows in the cargo management product category, it will face a different set of competitors. These competitors include Thule, Yakima and Sportrack.

Materials and Supply Arrangements

        Our largest raw materials purchases are for steel, copper, aluminum, polyethylene and other resins, and energy. Raw materials and other supplies used in our operations are normally available from a variety of competing suppliers.

        Steel is purchased primarily from steel mills and service centers with pricing contracts principally in the three to six month time frame. Changing global dynamics for steel production and supply will continue to present a challenge to our business. We experienced significant increases in steel pricing during 2005, as well as disruptions in supply, although pricing increases and overall price levels abated somewhat at the end of 2005. Polyethylene is generally a commodity resin with multiple suppliers capable of providing product. While both steel and polyethylene are readily available from a variety of competing suppliers, our business has experienced, and we believe will continue to experience, sharp increases in the costs of these raw materials.

Employees and Labor Relations

        As of December 31, 2007, we employed approximately 5,100 people, of which approximately 18% were unionized and approximately 35% were located outside the United States. We currently have Collective Bargaining Agreements covering seven facilities worldwide for our continuing operations, five of which are in the United States. Three of the union contracts are scheduled to be renegotiated during 2008. Employee relations have otherwise generally been satisfactory. We are currently engaged in a dispute with the Steelworkers' Union regarding whether a neutrality agreement that we presently have with the Union, which commits us to remain generally neutral in union organizing drives, applies to most company facilities in the United States and Canada, as the Union believes, or just four facilities (one since closed), as the Company believes. An arbitration is scheduled in April 2008 to determine this issue. We are not aware of any present active union organizing drivers at any if our facilities in any case. We cannot predict the impact of any further unionization of our workplace.

Seasonality; Backlog

        There is some seasonality in our Recreational Accessories and RV & Trailer Products segments. Sales of towing and trailer products within these business segments are generally stronger in the second and

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third quarters as trailer OEMs, distributors and retailers acquire product for the spring and summer selling seasons. No other operating segment experiences significant seasonal fluctuation in its business. We do not consider sales order backlog to be a material factor in our business.

Environmental Matters

        Our operations are subject to federal, state, local and foreign laws and regulations pertaining to pollution and protection of the environment, health and safety, governing among other things, emissions to air, discharge to waters and the generation, handling, storage, treatment and disposal of waste and other materials, and remediation of contaminated sites. We have been named as a potentially responsible party under CERCLA, the federal Superfund law, or similar state laws at several sites requiring clean-up related to the disposal of wastes we generate. These laws generally impose liability for costs to investigate and remediate contamination without regard to fault and under certain circumstances liability may be joint and several resulting in one responsible party being held responsible for the entire obligation. Liability may also include damages to natural resources. We have entered into consent decrees relating to two sites in California along with the many other co-defendants in these matters. We have incurred substantial expenses for these sites over a number of years, a portion of which has been covered by insurance. See "Legal Proceedings" below. In addition to the foregoing, our businesses have incurred and likely will continue to incur expenses to investigate and clean up existing and former company-owned or leased property, including those properties made the subject of sale-leaseback transactions for which we have provided environmental indemnities to the lessors.

        At our currently owned property located in Vernon, California, we expect to incur expenses to investigate the environmental conditions associated with historical operations of N.I. Industries and/or its tenants. Preliminary site assessment information indicates that further investigation will be necessary in order to determine whether remediation or controls will be required beyond those that had been previously approved by the governing regulatory authority, and if so, to develop an estimate of the likely costs thereof.

        In 1992, Rieke Packaging Systems and numerous other companies entered into a consent decree with the United States Environmental Protection Agency (EPA) and the State of Indiana under which Rieke and the other companies agreed to remediate contaminated soil and groundwater at the Wayne Reclamation and Recycling Site near Columbia City, Indiana. Contractors for the group of companies completed construction of the remediation systems required by the consent decree in 1995, and have operated them since then under the oversight of the EPA and the State of Indiana. The remediation systems have successfully removed substantial amounts of contaminants from the soil and the groundwater; however, some contaminants remain at concentrations above the performance standards set by the consent decree, and are still being removed. Consultants to the group of companies expect that some or all of the remediation systems will be required to operate indefinitely. A 2004 report by the EPA concluded that operation of the existing systems is "protective of human health and the environment." The agreement among the companies provides that Rieke's share is approximately 9% of total remediation costs for the site.

        We believe that our business, operations and facilities are being operated in compliance in all material respects with applicable environmental and health and safety laws and regulations, many of which provide for substantial fines and criminal sanctions for violations. Based on information presently known to us and accrued environmental reserves, we do not expect environmental costs or contingencies to have a material adverse effect on us. The operation of manufacturing plants entails risks in these areas, however, and we may incur material costs or liabilities in the future that could adversely affect us. Potentially material expenditures could be required in the future. For example, we may be required to comply with evolving environmental and health and safety laws, regulations or requirements that may be adopted or imposed in the future or to address newly discovered information or conditions that require a response.

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Intangibles and Other Assets

        Our identified intangible assets, consisting of customer relationships, trademarks and trade names and technology, are valued at approximately $214.3 million at December 31, 2007, net of accumulated amortization. We utilized an independent valuation firm to assist us in valuing our intangible assets in connection with the acquisition of such intangible assets. The valuation of each of the identified intangibles was performed using broadly accepted valuation methodologies and techniques. As of December 31, 2007 we had 364 registered patents and 104 patents pending in the U.S., and 154 registered patents and 208 patents pending outside of the U.S. (non-U.S. patents and patents pending relate primarily to the same technology as U.S. patents and patents pending).

        Customer Relationships.    We have developed and maintained stable, long-term selling relationships with customer groups for specific branded products and/or niche market product offerings within each of our operating group segments. Useful lives assigned to customer relationship intangibles range from 6 to 25 years and have been estimated using historic customer retention and turnover data. Other factors considered in evaluating estimated useful lives include the diverse nature of niche markets and products of which we have significant share, how customers in these markets make purchases and these customers' position in the supply chain. We also monitor and evaluate the impact of other evolving risks including the threat of lower cost competitors and evolving technology. Effective January 1, 2006, we reduced estimated useful lives assigned to certain customer relationship intangibles as follows: 40 years to 25 or 20 years, 25 years to 20 years, and 15 years to 12 years. We determined that a reduction in estimated useful lives assigned to certain of our customer relationship intangibles was warranted as of that date to reflect our updated evaluation of the period of expected future benefit derived from these customer relationship intangibles. Customer relationship intangibles are amortized over periods ranging from 6 to 25 years. Future changes in our business or the markets for our products could result in further reductions in estimated remaining useful lives for customer relationship intangible assets and other definite-lived intangible assets that might be required to be recorded in future periods.

        Trademarks and Trade Names.    Each of our operating groups designs and manufactures products for niche markets under various trade names and trademarks including Draw-Tite®, Reese®, Hidden Hitch®, Bulldog®, Tekonsha®, Highland "The Pro's Brand"®, Fulton®, Wesbar®, Visu-Lok®, ViseGrip® and FlexSpout®, among others. Our trademark/trade name intangibles are well-established and considered long-lived assets that require maintenance through advertising and promotion expenditures. Because it is our practice and intent to maintain and to continue to support, develop and market these trademarks/trade names for the foreseeable future, we consider our rights in these trademarks/trade names to have an indefinite life, except as otherwise dictated by applicable law.

Technology

        We hold a number of United States and foreign patents, patent applications, and unpatented or proprietary product and process oriented technologies within all five of our operating segments. We have, and will continue to dedicate, technical resources toward the further development of our products and processes in order to maintain our competitive position in the transportation, industrial and commercial markets that we serve. Estimated useful lives for our technology intangibles range from one to thirty years and are determined in part by any legal, regulatory or contractual provisions that limit useful life. For example, patent rights have a maximum limit of twenty years in the United States. Other factors considered include the expected use of the technology by the operating groups, the expected useful life of the product and/or product programs to which the technology relates, and the rate of technology adoption by the industry.

        Quarterly, or as conditions may warrant, we assess whether the value of our identified intangibles has been impaired. Factors considered in performing this assessment include current operating results, business prospects, customer retention, market trends, potential product obsolescence, competitor

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activities and other economic factors. We continue to invest in maintaining customer relationships, trademarks and trade names, and the design, development and testing of proprietary technologies that we believe will set our products apart from those of our competitors.

International Operations

        Approximately 16.4% of our net sales for the fiscal year ended December 31, 2007 were derived from sales by our subsidiaries located outside of the United States, and we may significantly expand our international operations through acquisitions. In addition, approximately 27.8% of our operating net assets as of December 31, 2007 were located outside of the United States. We operate manufacturing facilities in Australia, Thailand, Canada, China, the United Kingdom (U.K.), Italy, Germany and Mexico. Within Australia, we operate three facilities that manufacture and distribute hitches, towing accessories, roof rack systems and other accessories for the caravan market, with approximately 250 employees. Our new facility in Thailand will support our operations in Asia and currently has approximately 80 employees. We believe this facility will eventually replace one facility in Australia. Our Canadian operations, with approximately 70 employees, include the production and distribution of towing products through Recreational Accessories, distribution of closures and dispensing products through Rieke's U.S. operations and the manufacturing and distribution of gaskets produced in one gasket facility within the Energy Products segment. Rieke's China operations produce consumer dispensing products and has approximately 550 employees. Lamons Gasket manufactures spiral-wound gaskets at its facility in Hangzhou, China, which has approximately 80 contract employees. Within the United Kingdom, Rieke Packaging Systems Ltd. has approximately 60 employees. Englass produces specialty sprayers, pumps and related products in one facility in the U.K. Rieke Italia, a manufacturer of specialty steel industrial container closures, operates in one location in Italy with approximately 100 employees. In Germany, Rieke Germany has one facility that manufactures a wide variety of closures for industrial packaging markets with approximately 40 employees. In Juarez, Mexico, we manufacture electrical products and accessories, as well as metal fabrication, with approximately 220 employees. In Reynosa, Mexico, we manufacture and assemble lighting and wiring components, with approximately 330 employees. Additionally, Rieke's Mexico City operations produce plastic drum closures and dispensing products in one factory, with approximately 110 employees. For information pertaining to the net sales and operating net assets attributed to our international operations, refer to Note 19, "Segment Information," to the audited financial statements for the years ended December 31, 2007, 2006 and 2005 included in this report.

        Sales outside of the United States, particularly sales to emerging markets, are subject to various risks that are not present in sales within U.S. markets, including governmental embargoes or foreign trade restrictions such as antidumping duties, changes in U.S. and foreign governmental regulations, tariffs and other trade barriers, the potential for nationalization of enterprises, foreign exchange risk and other political, economic and social instability. In addition, there are tax inefficiencies in repatriating portions of our cash flow from non-U.S. subsidiaries.

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Item 1A.    Risk Factors

        You should carefully consider each of the risks described below, together with information included elsewhere in this Annual Report on Form 10-K and other documents we file with the SEC. The risks and uncertainties described below are those that we have identified as material, but are not the only risks and uncertainties facing us. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial may also impact our business operations, financial results and liquidity.

We have a history of net losses.

        We incurred net losses of $158.4 million, $128.9 million and $45.9 million for the years ended December 31, 2007, 2006 and 2005, respectively. The losses in 2007 and 2006 principally resulted from pre-tax, non-cash goodwill and indefinite-lived impairment charges of $171.2 million and $116.5 million, respectively. The losses in 2006 and 2005 were also impacted by a loss from discontinued operations of $19.1 million and $45.1 million, respectively. In addition, interest expense associated with our highly leveraged capital structure, non-cash expenses such as depreciation and amortization of intangible assets and other asset impairments also contributed to our net losses. We may continue to experience net losses in the future.

Our businesses depend upon general economic conditions and we serve some customers in highly cyclical industries; as such we are subject to the loss of sales and margins due to an economic downturn or recession.

        Our financial performance depends, in large part, on conditions in the markets that we serve in both the U.S. and global economies. Some of the industries that we serve are highly cyclical, such as the automotive, construction, industrial equipment, energy, aerospace and electrical equipment industries. We may experience a reduction in sales and margins as a result of a downturn in economic conditions or other macroeconomic factors. Lower demand for our products may also negatively affect the capacity utilization of our production facilities, which may further reduce our operating margins.

Many of the markets we serve are highly competitive, which could limit the volume of products that we sell and reduce our operating margins.

        Many of our products are sold in competitive markets. We believe that the principal points of competition in our markets are product quality and price, design and engineering capabilities, product development, conformity to customer specifications, reliability and timeliness of delivery, customer service and effectiveness of distribution. Maintaining and improving our competitive position will require continued investment by us in manufacturing, engineering, quality standards, marketing, customer service and support of our distribution networks. We may have insufficient resources in the future to continue to make such investments and, even if we make such investments, we may not be able to maintain or improve our competitive position. We also face the risk of lower-cost foreign manufacturers located in China, Southeast Asia and other regions competing in the markets for our products and we may be driven as a consequence of this competition to increase our investment overseas. Making overseas investments can be highly complicated and we may not always realize the advantages we anticipate from any such investments. Competitive pressure may limit the volume of products that we sell and reduce our operating margins.

Increases in our raw material or energy costs or the loss of critical suppliers could adversely affect our profitability and other financial results.

        We are sensitive to price movements in our raw materials supply base. Our largest material purchases are for steel, copper, aluminum, polyethylene and other resins and energy. Prices for these products fluctuate with market conditions and we have experienced sporadic increases recently. We may be unable to completely offset the impact with price increases on a timely basis due to outstanding commitments to our customers, competitive considerations or our customers' resistance to accepting such price increases

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and our financial performance may be adversely impacted by further price increases. A failure by our suppliers to continue to supply us with certain raw materials or component parts on commercially reasonable terms, or at all, would have a material adverse effect on us. To the extent there are energy supply disruptions or material fluctuations in energy costs, our margins could be materially adversely impacted.

We may be unable to successfully implement our business strategies. Our ability to realize our business strategies may be limited.

        Our businesses operate in relatively mature industries and it may be difficult to successfully pursue our growth strategies and realize material benefits therefrom. Even if we are successful, other risks attendant to our businesses and the economy generally may substantially or entirely eliminate the benefits. While we have successfully utilized some of these strategies in the past, our growth has principally come through acquisitions.

Our products are typically highly engineered or customer-driven and we are subject to risks associated with changing technology and manufacturing techniques that could place us at a competitive disadvantage.

        We believe that our customers rigorously evaluate their suppliers on the basis of product quality, price competitiveness, technical expertise and development capability, new product innovation, reliability and timeliness of delivery, product design capability, manufacturing expertise, operational flexibility, customer service and overall management. Our success depends on our ability to continue to meet our customers' changing expectations with respect to these criteria. We anticipate that we will remain committed to product research and development, advanced manufacturing techniques and service to remain competitive, which entails significant costs. We may be unable to address technological advances, implement new and more cost-effective manufacturing techniques, or introduce new or improved products, whether in existing or new markets, so as to maintain our businesses' competitive positions or to grow our businesses as desired.

We depend on the services of key individuals and relationships, the loss of which would materially harm us.

        Our success will depend, in part, on the efforts of our senior management, including our Chief Executive Officer. Our future success will also depend on, among other factors, our ability to attract and retain other qualified personnel. The loss of the services of any of our key employees or the failure to attract or retain employees could have a material adverse effect on us.

We have substantial debt and interest payment requirements that may restrict our future operations and impair our ability to meet our obligations.

        We continue to have indebtedness that is substantial in relation to our shareholders' equity. As of December 31, 2007, we have approximately $616.0 million of outstanding debt and approximately $208.5 million of shareholders' equity. Approximately 45% of our debt bears interest at variable rates and we may experience material increases in our interest expense as a result of increases in interest rate levels generally. Our debt service payment obligations in 2007 were approximately $66.3 million and based on amounts outstanding as of December 31, 2007 a 1% increase in the per annum interest rate for our variable rate debt would increase our interest expense by approximately $2.8 million annually. Our degree of leverage and level of interest expense may have important consequences, including:

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        Our ability to service our debt and other obligations will depend on our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond our control. Our business may not generate sufficient cash flow, and future financings may not be available to provide sufficient net proceeds, to meet these obligations or to successfully execute our business strategies. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

Restrictions in our debt instruments and accounts receivable facility limit our ability to take certain actions and breaches thereof could impair our liquidity.

        Our credit facility and the indenture governing our senior subordinated notes contain covenants that restrict our ability to:

        Our credit facility also requires us to comply with financial covenants relating to, among other things, interest coverage and leverage. Our accounts receivable facility contains covenants similar to those in our credit facility and includes additional requirements regarding our receivables. We may not be able to satisfy these covenants in the future or be able to pursue our strategies within the constraints of these covenants. Substantially all of our assets and the assets of our domestic subsidiaries (other than our special purpose receivables subsidiary) are pledged as collateral pursuant to the terms of our credit facility. A breach of a covenant contained in our debt instruments could result in an event of default under one or more of our debt instruments, our accounts receivable facility and our lease financing arrangements. Such breaches would permit the lenders under our credit facility to declare all amounts borrowed thereunder to be due and payable, and the commitments of such lenders to make further extensions of credit could be terminated. In addition, such breach may cause a termination of our accounts receivable facility. Each of these circumstances could materially and adversely impair our liquidity.

We have significant goodwill and intangible assets, and future impairment of our goodwill and intangible assets could have a material negative impact on our financial results.

        We test goodwill and indefinite-lived intangible assets for impairment on an annual basis as required by Statement of Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142), by comparing the estimated fair value of each of our reporting units to their respective carrying values on our balance sheet. More frequent evaluations could become required under SFAS No. 142 if we experience

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changes in our business conditions. In assessing the recoverability of goodwill and indefinite-lived intangible assets, we estimate the fair value of each of our reporting units by calculating the present value of their expected future cash flows and other valuation measures. We then compare the estimates of fair value with the reporting unit's net asset carrying value on our balance sheet. If carrying value exceeds fair value, then a possible impairment of goodwill exists and further evaluation is performed. Goodwill is evaluated for impairment annually as of December 31 using management's operating budget and internal five-year forecast to estimate expected future cash flows. Projecting discounted future cash flows requires us to make significant estimates regarding future revenues and expenses, projected capital expenditures, changes in working capital and the appropriate discount rate. The projections also take into account several factors including current and estimated economic trends and outlook, costs of raw materials, consideration of our market capitalization in comparison to the estimated fair values of our reporting units determined using discounted cash flow analyses and other factors which are beyond our control..

        At December 31, 2007 our goodwill and intangible assets were approximately $591.6 million, and represented approximately 52.4% of our total assets. Our net loss of $158.4 million and $128.9 million in 2007 and 2006, respectively, included charges of $171.2 million and $116.5 million, respectively, for impairment of goodwill and indefinite-lived intangible assets in our RV & Trailer Products and Recreational Accessories segments. If we experience declines in sales and operating profit or do not meet our current and forecasted operating budget in our RV & Trailer Products and Recreational Accessories segments, we may be subject to future goodwill impairments. In addition, while the fair value of our remaining goodwill exceeds its carrying value, significantly different assumptions regarding future performance of our businesses or significant declines in our stock price could result in additional impairment losses. Because of the significance of our goodwill and intangible assets, any future impairment of these assets could have a material adverse effect on our financial results.

We may face liability associated with the use of products for which patent ownership or other intellectual property rights are claimed.

        We may be subject to claims or inquiries regarding alleged unauthorized use of a third party's intellectual property. An adverse outcome in any intellectual property litigation could subject us to significant liabilities to third parties, require us to license technology or other intellectual property rights from others, require us to comply with injunctions to cease marketing or using certain products or brands, or require us to redesign, reengineer, or rebrand certain products or packaging, any of which could affect our business, financial condition and operating results. If we are required to seek licenses under patents or other intellectual property rights of others, we may not be able to acquire these licenses on acceptable terms, if at all. In addition, the cost of responding to an intellectual property infringement claim, in terms of legal fees and expenses and the diversion of management resources, whether or not the claim is valid, could have a material adverse effect on our business, results of operations and financial condition.

We may be unable to adequately protect our intellectual property.

        While we believe that our patents, trademarks and other intellectual property have significant value, it is uncertain that this intellectual property or any intellectual property acquired or developed by us in the future, will provide a meaningful competitive advantage. Our patents or pending applications may be challenged, invalidated or circumvented by competitors or rights granted thereunder may not provide meaningful proprietary protection. Moreover, competitors may infringe on our patents or successfully avoid them through design innovation. Policing unauthorized use of our intellectual property is difficult and expensive, and we may not be able to, or have the resources to, prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights as fully as in the United States. An adverse outcome in any intellectual property litigation could subject us to significant liabilities to third parties, require us to license technology or other intellectual property rights from others, require us to comply with injunctions to cease marketing or using certain products or brands, or require us

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to redesign, reengineer, or re-brand certain products or packaging. Further, we may incur costs in terms of legal fees and expenses, whether or not the claim is valid, to respond to intellectual property infringement claims. These or other liabilities or claims may increase or otherwise have a material adverse effect on our financial condition and future results of operations.

We may incur material losses and costs as a result of product liability, recall and warranty claims that may be brought against us.

        We are subject to a variety of litigation incidental to our businesses, including claims for damages arising out of use of our products, claims relating to intellectual property matters and claims involving employment matters and commercial disputes.

        We currently carry insurance and maintain reserves for potential product liability claims. However, our insurance coverage may be inadequate if such claims do arise and any liability not covered by insurance could have a material adverse effect on our business. Although, we have been able to obtain insurance in amounts we believe to be appropriate to cover such liability to date, our insurance premiums may increase in the future as a consequence of conditions in the insurance business generally or our situation in particular. Any such increase could result in lower net income or cause the need to reduce our insurance coverage. In addition, a future claim may be brought against us that could have a material adverse effect on us. Any product liability claim may also include the imposition of punitive damages, the award of which, pursuant to certain state laws, may not be covered by insurance. Our product liability insurance policies have limits that if exceeded, may result in material costs that would have an adverse effect on our future profitability. In addition, warranty claims are generally not covered by our product liability insurance. Further, any product liability or warranty issues may adversely affect our reputation as a manufacturer of high-quality, safe products, divert management's attention, and could have a material adverse effect on our business.

        In addition, one of our Energy Products segment subsidiaries is a party to lawsuits related to asbestos contained in gaskets formerly manufactured by it or its predecessors. Some of this litigation includes claims for punitive and consequential as well as compensatory damages. We are not able to predict the outcome of these matters given that, among other things, claims may be initially made in jurisdictions without specifying the amount sought or by simply stating the minimum or maximum permissible monetary relief, and may be amended to alter the amount sought. Of the 9,544 claims pending at December 31, 2007, 172 set forth specific amounts of damages (other than those stating the statutory minimum or maximum). 146 of the 172 claims sought between $1.0 million and $5.0 million in total damages (which includes compensatory and punitive damages) and 26 sought between $5.0 million and $10.0 million in total damages (which includes compensatory and punitive damages). Solely with respect to compensatory damages, 151 of the 172 claims sought between $50,000 and $600,000 and 21 sought between $1.0 million and $5.0 million. Solely with respect to punitive damages, 146 of the 172 claims specifying damages sought between $1.0 million and $2.5 million and 26 sought $5.0 million. Total defense costs from January 1, 2003 to December 31, 2007 were approximately $24.1 million and total settlement costs (exclusive of defense costs) for all asbestos cases since inception have been approximately $5.1 million. To date, approximately 50% of our costs related to defense and settlement of asbestos litigation have been covered by our primary insurance. However, in the future we may incur significant litigation costs in defending these matters and we may be required to pay damage awards or settlements or become subject to equitable remedies that could adversely affect our businesses. See "Legal Proceedings" for a discussion of these matters.

Our business may be materially and adversely affected by compliance obligations and liabilities under environmental laws and regulations.

        We are subject to federal, state, local and foreign environmental laws and regulations which impose limitations on the discharge of pollutants into the ground, air and water and establish standards for the generation, treatment, use, storage and disposal of solid and hazardous wastes, and remediation of

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contaminated sites. We may be legally or contractually responsible or alleged to be responsible for the investigation and remediation of contamination at various sites, and for personal injury or property damages, if any, associated with such contamination. We have been named as potentially responsible parties under CERCLA (the federal Superfund law) or similar state laws in several sites requiring clean-up related to disposal of wastes we generated. These laws generally impose liability for costs to investigate and remediate contamination without regard to fault and under certain circumstances liability may be joint and several resulting in one responsible party being held responsible party being held responsible for the entire obligation. Liability may also include damages to natural resources. We have entered into consent decrees relating to two sites in California along with the many other co-defendants in these matters. We have incurred substantial expenses for all these sites over a number of years, a portion of which has been covered by insurance. See "Legal Proceedings" for a discussion of these matters. In addition to the foregoing, our businesses have incurred and likely will continue to incur expenses to investigate and clean up existing and former company-owned or leased property, including those properties made the subject of sale-leaseback transactions for which we have provided environmental indemnities to the lessors. Additional sites may be identified at which we are a potentially responsible party under the federal Superfund law or similar state laws. We must also comply with various health and safety regulations in the U.S. and abroad in connection with our operations.

        We believe that our business, operations and facilities are being operated in compliance in all material respects with applicable environmental and health and safety laws and regulations, many of which provide for substantial fines and criminal sanctions for violations. Based on information presently known to us and accrued environmental reserves, we do not expect environmental costs or contingencies to have a material adverse effect on us. The operation of manufacturing plants entails risks in these areas, however, and we may incur material costs or liabilities in the future that could adversely affect us. There can be no assurance that we have been or will be at all times in substantial compliance with environmental health and safety laws. Failure to comply with any of these laws could result in civil, criminal, monetary and non-monetary penalties and damage to our reputation. In addition, potentially material expenditures could be required in the future. For example, we may be required to comply with evolving environmental and health and safety laws, regulations or requirements that may be adopted or imposed in the future or to address newly discovered information or conditions that require a response.

Historically, we have grown primarily through acquisitions. If we are unable to identify attractive acquisition candidates, successfully integrate acquired operations or realize the intended benefits of our acquisitions, we may be adversely affected.

        One of our principal growth strategies is to pursue strategic acquisition opportunities. A substantial portion of our historical growth has been derived from acquisitions. Since our separation from Metaldyne in June 2002, we have completed nine acquisitions. Each of these acquisitions required integration expense and actions that negatively impacted our results of operations and that could not have been fully anticipated beforehand. In addition, attractive acquisition candidates may not be identified and acquired in the future, financing for acquisitions may be unavailable on satisfactory terms and we may be unable to accomplish our strategic objectives in effecting a particular acquisition. We may encounter various risks in acquiring other companies, including the possible inability to integrate an acquired business into our operations, diversion of management's attention and unanticipated problems or liabilities, some or all of which could materially and adversely affect our business strategy and financial condition and results of operations.

We have significant operating lease obligations and our failure to meet those obligations could adversely affect our financial condition.

        We lease many of our manufacturing facilities and certain capital equipment. Our annualized rental expense under these operating leases approximates $15.4 million. A failure to pay our rental obligations

32


would constitute a default allowing the applicable landlord to pursue any remedy available to it under applicable law, which would include taking possession of our property and, in the case of real property, evicting us. These leases are categorized as operating leases and are not considered indebtedness for purposes of our debt instruments.

We may be subject to further unionization and work stoppages at our facilities or our customers may be subject to work stoppages, which could seriously impact the profitability of our business.

        As of December 31, 2007, approximately 18% of our work force in our continuing operations was unionized under several different unions and bargaining agreements. If our unionized workers or those of our customers or suppliers were to engage in a strike, work stoppage or other slowdown in the future, we could experience a significant disruption of our operations. In addition, if a greater percentage of our work force becomes unionized, our labor costs and risks associated with strikes, work stoppages or other slowdowns may increase. We are currently engaged in a dispute with the Steelworkers' Union regarding whether a neutrality agreement that we presently have with the Union, which commits us to remain generally neutral in union organizing drives, applies to most company facilities in the United States and Canada, as the Union believes, or just four facilities (one since closed), as the Company believes. An arbitration is scheduled in April 2008 to determine this issue. We are not aware of any present active union organizing drivers at any if our facilities in any case. On July 19, 2006, approximately 150 workers at our Monogram Aerospace Fasteners business unit commenced a strike, which lasted until July 27, 2006. Many of our direct or indirect customers have unionized work forces. Strikes, work stoppages or slowdowns experienced by these customers or their suppliers could result in slowdowns or closures of assembly plants where our products are included. In addition, organizations responsible for shipping our customers' products may be impacted by occasional strikes or other activity. Any interruption in the delivery of our customers' products could reduce demand for our products and could have a material adverse effect on us.

Our healthcare costs for active employees and future retirees may exceed our projections and may negatively affect our financial results.

        We maintain a range of healthcare benefits for our active employees and a limited number of retired employees pursuant to labor contracts and otherwise. Healthcare benefits for active employees and certain retirees are provided through comprehensive hospital, surgical and major medical benefit provisions or through health maintenance organizations, all of which are subject to various cost-sharing features. Some of these benefits are provided for in fixed amounts negotiated in labor contracts with the respective unions. If our costs under our benefit programs for active employees and retirees exceed our projections, our business and financial results could be materially adversely affected. Additionally, foreign competitors and many domestic competitors provide fewer benefits to their employees and retirees, and this difference in cost could adversely impact our competitive position.

A growing portion of our sales may be derived from international sources, which exposes us to certain risks which may adversely affect our financial results and impact our ability to service debt.

        Approximately 16.4% of our net sales for the fiscal year ended December 31, 2007 were derived from sales by our subsidiaries located outside of the United States. We may significantly expand our international operations through internal growth and acquisitions. Sales outside of the United States, particularly sales to emerging markets, and foreign manufacturing are subject to various other risks which are not present within U.S. markets, including governmental embargoes or foreign trade restrictions such as antidumping duties, changes in U.S. and foreign governmental regulations, tariffs and other trade barriers, the potential for nationalization of enterprises, foreign exchange risk and other political, economic and social instability. In addition, there are tax inefficiencies in repatriating cash flow from non-U.S. subsidiaries that could affect our financial results and reduce our ability to service debt.

Our stock price may be subject to significant volatility due to our own results or market trends.

        If our revenue, earnings or cash flows in any quarter fail to meet the investment community's expectations, there could be an immediate negative impact on our stock price. Our stock price could also be impacted by broader market trends and world events unrelated to our performance.

33

Item 1B.    Unresolved Staff Comments

        None.

Item 2.    Properties

        Our principal manufacturing facilities range in size from approximately 10,000 square feet to approximately 380,000 square feet. Except as set forth in the table below, all of our manufacturing facilities are owned. The leases for our manufacturing facilities have initial terms that expire from 2009 through 2024 and are all renewable, at our option, for various terms, provided that we are not in default under the lease agreements. Substantially all of our owned U.S. real properties are subject to liens under our amended and restated credit facility. Our executive offices are located in Bloomfield Hills, Michigan under a lease assumed by us from Heartland and subsequently amended in October 2007 extending the term to June 2015. See "Certain Relationships and Related Transactions." Our buildings, machinery and equipment have been generally well maintained, are in good operating condition and are adequate for current production requirements. We may enter into leases for equipment in lieu of making capital expenditures to acquire such equipment or to reduce debt.

        The following list sets forth the location of our principal owned and leased manufacturing and other facilities used in continuing operations and identifies the principal operating segment utilizing such facilities, as of December 31, 2007.

Packaging Systems
   Energy Products
   Industrial Specialties
   RV & Trailer Products
   Recreational Accessories
United States:
Indiana:
    Auburn
    Hamilton(1)
New Jersey:
    Hackettstown(1)

 International:
Germany:
    Neunkirchen
Italy:
    Valmadrera
Mexico:
    Mexico City
United Kingdom:
    Leicester
China:
    Hangzhou(1)		   United States:
Oklahoma:
    Tulsa
Texas:
    Houston(1)

 International:
Canada:
    Sarnia,
Ontario(1)
China:
    Hangzhou(1)		   United States:
California:
    Riverbank(2)
    Commerce(1)
Massachusetts:
    Plymouth(1)
Michigan:
    Warren(1)
    Livonia(1)
Ohio:
    Fairborn(1)
Texas:
    Longview		   United States:
Michigan:
    Tekonsha(1)
Wisconsin:
    Mosinee(1)

 International:
Australia:
    Dandenong,
    Victoria
    Lyndhurst,
    Victoria
    Regents Park,
    New South
    Wales(1)
    Mexico:
    Juarez(1)
    Reynosa
Thailand:
    Chon Buri(1)		   United States:
Indiana:
    Goshen(1)
    South Bend(1)
Michigan:
    Plymouth(1)
Ohio:
    Solon(1)

 International:
Canada:
    Oakville,
Ontario
(1)
Represents a leased facility. All such leases are operating leases.

(2)
Owned by the U.S. Government and operated by our NI Industries business under a facility maintenance contract.

        During 2002, we entered into sale-leaseback transactions with respect to nine real properties in the United States and Canada. During 2003, we entered into additional sale-leaseback transactions with respect to three real properties in the United States. The term of these leases is 15 years, with the right to extend. Rental payments are due monthly. All of the foregoing leases are accounted for as operating leases. During 2004, one sale-leaseback transaction was terminated. In general, pursuant to the terms of each sale-leaseback transaction, we transferred title of the real property to a purchaser and, in turn, entered into separate leases with the purchaser having a 20-year basic lease term plus two separate

34

ten-year renewal options. The renewal option must be exercised with respect to all, and not less than all, of the property locations.

Item 3.    Legal Proceedings

        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 us, 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 us, 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. We estimate that our share of the clean-up costs will not exceed $500,000, for which we have 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 our present knowledge and subject to future legal and factual developments, we do not believe that this matter will have a material adverse effect on our financial position, results of operations or cash flows.

        As of December 31, 2007, we were a party to approximately 1,681 pending cases involving an aggregate of approximately 9,544 claimants alleging personal injury from exposure to asbestos containing materials formerly used in gaskets (both encapsulated and otherwise) manufactured or distributed by certain of our 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 our 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 setttled during period
   Average settlement amount per claim during period
   Total defense costs during period
Fiscal year ended December 31, 2005   18,884   2,596   1,998   66   $ 8,660   $ 5,324,000
Fiscal year ended December 31, 2006   19,416   3,766   12,508   123   $ 5,613   $ 4,895,000
Fiscal year ended December 31, 2007   10,551   619   1,484   142   $ 9,243   $ 4,982,000

        In addition, we acquired various companies to distribute our products that had distributed gaskets of other manufacturers prior to acquisition. We believe that many of our pending cases relate to locations at which none of our gaskets were distributed or used.

        We 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 we may be subjected to further claims in respect of the former activities of our acquired gasket distributors. We note that we are 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 9,544 claims pending at December 31, 2007, 172 set forth specific amounts of damages (other than those stating the statutory minimum or maximum). 146 of the 172 claims sought between $1.0 million and $5.0 million in total damages (which includes compensatory and punitive damages) and 26 sought between $5.0 million and $10.0 million in total damages (which includes compensatory and punitive damages). Solely with respect to compensatory damages, 151 of the 172 claims sought between $50,000 and $600,000 and 21 sought between $1.0 million and $5.0 million. Solely with respect to punitive damages, 146 of the 172 claims sought

35


between $1.0 million and $2.5 million and 26 sought $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 $5.1 million. All relief sought in the asbestos cases is monetary in nature. To date, approximately 50% of our costs related to settlement and defense of asbestos litigation have been covered by our primary insurance. Effective February 14, 2006, we entered into a coverage-in-place agreement with our first level excess carriers regarding the coverage to be provided to us for asbestos-related claims when the primary insurance is exhausted. The coverage-in-place agreement makes coverage available to us that might otherwise be disputed by the carriers and provides a methodology for the administration of asbestos litigation defense and indemnity payments. The coverage in place agreement allocates payment responsibility among the primary carrier, excess carriers and the Company's subsidiary.

        Based on the settlements made to date and the number of claims dismissed or withdrawn for lack of product identification, we believe that the relief sought (when specified) does not bear a reasonable relationship to our potential liability. Based upon our experience to date and other available information (including the availability of excess insurance), we do not believe that these cases will have a material adverse effect on our financial position and results of operations or cash flows.

        We are subject to other claims and litigation in the ordinary course of our business, but do not believe that any such claim or litigation will have a material adverse effect on our financial position and results of operations or cash flows.

Item 4.    Submission of Matters to a Vote of Security Holders

        None.

Item 4A.    Executive Officers of the Registrant

        Set forth below is certain information with respect to our executive officers:

Name
   Age
   Title
Samuel Valenti III   62   Executive Chairman
Grant H. Beard   47   President and Chief Executive Officer
E.R. (Skip) Autry Jr   53   Chief Financial Officer
Lynn A. Brooks   55   President, Packaging Systems Group
Dwayne M. Newcom   47   Vice President, Human Resources
Jeffrey B. Paulsen   47   President, Energy Products and Industrial Specialties Groups
Edward L. Schwartz   46   President, RV & Trailer Products and Recreational Accessories Groups
Joshua A. Sherbin   45   General Counsel and Secretary
Robert J. Zalupski   49   Vice President Finance and Treasurer

        Samuel Valenti III.    Mr. Valenti was elected as Chairman of our Board of Directors in June 2002 and became Executive Chairman of our board in November 2005. Since 1988, Mr. Valenti has been President and a member of the board of Masco Capital Corporation. Mr. Valenti is Chairman of Valenti Capital LLC. Mr. Valenti was formerly Vice President—Investments of Masco Corporation from May 1974 to October 1998. Mr. Valenti has been employed by Masco Corporation since 1968. Until November 2005, Mr. Valenti served as a special advisor to Heartland. Until July 2006, Mr. Valenti served as a director of Metaldyne.

36

        Grant H. Beard.    Mr. Beard was appointed as our President and Chief Executive Officer in March 2001 and was appointed as a director in June 2002. From August 2000 to March 2001, Mr. Beard was President, Chief Executive Officer and Chairman of HealthMedia, Inc. From January 1996 to August 2000, he was President of the Preferred Technical Group of Dana Corporation, a manufacturer of tubular fluid routing products sold to vehicle manufacturers. He served as Vice President of Sales, Marketing and Corporate Development for Echlin, Inc., before the acquisition of Echlin by Dana in late 1998. Mr. Beard has experience at two private equity/merchant banking groups, Anderson Group and Oxford Investment Group, where he was actively involved in corporate development, strategy and operations management.

        E.R. (Skip) Autry, Jr.    Mr. Autry was appointed our Chief Financial Officer in January 2005, prior to which he had been our Corporate Controller since joining us in June 2003. Prior to joining TriMas Corporation, Mr. Autry had been the Vice President, Finance for Freudenberg NOK since September 2001. From May 2000 until joining Freudenberg, Mr. Autry served as the Vice President, Finance for INTERMET Corporation, prior to which he had spent five years with Key Plastics LLC as Vice President, Operations from July 1997 to May 2000 and Vice President, Finance and Chief Financial Officer from June 1994. Key Plastics filed a petition under the federal bankruptcy laws in 2000. Prior to joining Key Plastics, Mr. Autry held a number of financial positions of increasing responsibility at the former Chrysler Corporation, and was senior manager at PricewaterhouseCoopers.

        Lynn A. Brooks.    Mr. Brooks has been President of Packaging Systems since July 1996. He joined Rieke in May 1978. Prior to his current position, his responsibilities at Rieke included Assistant Controller, Corporate Controller, and Vice President-General Manager of Rieke. Before joining Rieke, he served with Ernst & Young in the Toledo, Ohio and Fort Wayne, Indiana offices.

        Dwayne M. Newcom.    Mr. Newcom was appointed our Vice President of Human Resources in June 2002, prior to which he was the Director of Human Resources for the Metaldyne Diversified Industrials Group beginning in April 2001. From May 1998 to April 2001, Mr. Newcom served as the Director of Human Resources for the Preferred Technical Group, later the Coupled Products Group, of Dana Corporation. Prior to that, Mr. Newcom held a number of human resources positions, including division human resources manager, with the Clorox Company, from November 1996 to May 1998, and with Federal Mogul Corporation from May 1985 to November 1996.

        Jeffrey B. Paulsen.    Mr. Paulsen was appointed President of our Energy and Industrial Specialties Groups in January 2007, prior to which he was employed by Stryker Corporation, a leading global medical technology company, from 1996 to 2005. From 2004 to 2006, Mr. Paulsen served as the President of Stryker Corporation's Reconstructive Orthopedic Implant Division, which was responsible for global research, product development and manufacturing, as well as U.S. sales and marketing operations for Stryker Corporation's orthopedic implant business. From 2001 to 2003, Mr. Paulsen was Senior Vice President and Chief Operating Officer of such division, where he led a global, multi-site manufacturing, distribution, quality and R&D organization to deliver high levels of performance.

        Edward L. Schwartz.    Mr. Schwartz was appointed President of our Recreational Accessories Group and RV & Trailer Products Group in April 2005. Previously, he served as President of our Industrial Specialties Group from February 2003 and assumed additional responsibility as President of our Fastening Systems Group from November 2003. Prior to joining us, he was Executive Vice President of Philips Electronic LG Display ("Philips") Americas region from December 2001 until January 2003 where his responsibilities included managing CRT commercial and industrial activities in North/South America. From February 2000 until November 2001, Mr. Schwartz worked for Philips as Vice President in Hasselt, Belgium and Eindhoven, The Netherlands, where he led various projects in support of Philips patent portfolio efforts of CD/DVD technology. From September 1998 until January 2000, Mr. Schwartz was General Manager for Philips in Wetzlar, Germany, where he managed commercial/industrial activities in Europe for automotive components.

37

        Joshua A. Sherbin.    Mr. Sherbin was appointed our General Counsel and Secretary in March 2005, prior to which he was employed as the North American Corporate Counsel and Corporate Secretary for Valeo, a diversified Tier 1 international automotive supplier headquartered in Europe. Prior to joining Valeo in 1997, Mr. Sherbin was Senior Counsel, Assistant Corporate Secretary for Kelly Services, Inc., an employment staffing company, from 1995 to 1997, where he provided support to mergers and acquisitions, international operations and sales. From 1988 until 1995, he was an associate with Butzel Long's general business practice focusing on mergers and acquisitions, federal and state securities compliance, commercial lending and general commercial matters.

        Robert J. Zalupski.    Mr. Zalupski was appointed our Vice President, Finance and Treasurer in January 2003. He joined us as Director of Finance and Treasury in July 2002, prior to which he worked in the Detroit office of Arthur Andersen. From August 1996 through November 2001, Mr. Zalupski was a partner in the audit and business advisory services practice of Arthur Andersen providing audit, business consulting, and risk management services to both public and privately held companies in the manufacturing, defense and automotive industries. Prior to August 1996, Mr. Zalupski held various positions of increasing responsibility within the audit practice of Arthur Andersen serving public and privately held clients in a variety of industries.

38


PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

        In the second quarter of 2007, we completed our initial public offering of common stock ("IPO"), issuing 12,650,000 shares at a price of $11 per share. Prior to our IPO, there was no trading market for our common stock.

        Our common stock, par value $0.01 per share, is listed for trading on the New York Stock Exchange under the symbol "TRS." As of March 12, 2008, there were 575 holders of record of our common stock.

        We did not pay dividends in 2006 or 2007. Our current policy is to retain earnings to repay debt and finance our operations and acquisitions. In addition, our credit facility and the indenture governing our outstanding senior subordinated notes restrict the payment of dividends on common stock. See the discussion under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" and Note 13 to the Company's financial statements captioned "Long-term Debt," included in Item 8 of this report.

        The high and low sales prices per share of our common stock by quarter subsequent to our IPO, as reported on the New York Stock Exchange, for 2007 are shown below:

 
   Price range of common stock
 
   High Price
   Low Price
Year Ended December 31, 2007            
  4th Quarter   $ 16.15   $ 10.22
  3rd Quarter   $ 13.44   $ 11.58
  2nd Quarter   $ 12.85   $ 11.70
  1st Quarter     N/A     N/A

        Please see Item 12, "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" for securities authorized for issuance under equity compensation plans.

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Performance Graph

        The following graph compares the cumulative total stockholder return from the date of our IPO through December 31, 2007 for TriMas' common stock, the Russell 2000 Index and peer group(1) of companies we have selected for purposes of this comparison. We have assumed that dividends have been reinvested and returns have been weighted-averaged based on market capitalization. The graph assumes that $100 was invested in each of TriMas' common stock, the stocks comprising the Russell 2000 Index and the stocks comprising the peer group.

GRAPHIC

(1)
Includes Actuant Corporation, Carlisle Companies Inc., Crane, Co., Dover Corporation, IDEX Corporation, Illinois Tool Works, Inc., Kaydon Corporation, SPX Corporation and Teleflex, Inc.

40

Item 6.    Selected Financial Data

        The following table sets forth our selected historical financial data from continuing operations for the five years ended December 31, 2007. The financial data for each of the five years presented has been audited by KPMG LLP and has been derived from our audited financial statements and notes to those financial statements.

        In 2003, we acquired three significant businesses: (1) HammerBlow Acquisition Corp. on January 30, 2003, (2) Highland Group Corporation on February 21, 2003 and (3) an automotive manufacturing business from Metaldyne Corporation ("Metaldyne"), our former owner, which we refer to as the Hi-Vol acquisition, on May 9, 2003. The historical financial information for 2003 includes the results of the HammerBlow and Highland businesses subsequent to the date of their acquisition. The Hi-Vol acquisition was accounted for as a reorganization of entities under common control because Heartland Industrial Partners' ("Heartland"), our majority shareholder, interest in Metaldyne and us. As a result, historical periods have been revised to include the effects of the Hi-Vol acquisition as if Hi-Vol had been owned by us for all periods presented. The following data should be read in conjunction with Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited financial statements included elsewhere in this report.

 
   Year ended December 31,
  
 
   2007
   2006
   2005
   2004
   2003
  
 
   (dollars and shares in thousands, except per share data)

  
Statement of Operations Data:                                
  Net sales   $ 1,068,270   $ 1,013,910   $ 992,890   $ 924,520   $ 800,910  
  Gross profit     288,890     270,360     243,620     253,950     224,920  
  Impairment of goodwill and indefinte-lived intangible assets     (171,210 )   (116,500 )   —     —     (7,600 )
  Operating profit (loss)     (91,770 )   (16,250 )   82,150     86,510     48,810  
  Income (loss) from continuing operations     (159,320 )   (109,770 )   (340 )   12,680     (18,700 )

Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Basic:                                
    Continuing operations   $ (5.59 ) $ (5.43 ) $ (0.02 ) $ 0.63   $ (0.93 )
    Weighted average shares     28,499     20,230     20,010     20,010     20,047  
  Diluted:                                
    Continuing operations   $ (5.59 ) $ (5.43 ) $ (0.02 ) $ 0.61   $ (0.93 )
    Weighted average shares     28,499     20,230     20,010     20,760     20,047  
 
 
   Year ended December 31,
  
 
   2007
   2006
   2005
   2004
   2003
  
 
   (dollars in thousands)

  
Statement of Cash Flows Data:                                
  Cash flows provided by (used for)                                
    Operating activities   $ 64,970   $ 15,880   $ 29,890   $ 42,620   $ 41,360  
    Investing activities     (68,910 )   (22,160 )   (16,640 )   (46,840 )   (161,280 )
    Financing activities     5,140     6,150     (12,610 )   530     26,260  

Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Total assets   $ 1,127,990   $ 1,286,060   $ 1,428,510   $ 1,522,200   $ 1,500,030  
  Total debt     615,990     734,490     727,680     738,020     735,980  
  Goodwill and other                                
    intangibles     591,630     769,850     900,000     925,280     938,550  

41

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

        The statements in the discussion and analysis regarding industry outlook, our expectations regarding the performance of our business and the other non-historical statements in the discussion and analysis are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under the heading "Forward Looking Statements," at the beginning of this report. Our actual results may differ materially from those contained in or implied by any forward-looking statements. You should read the following discussion together with Item 8, "Financial Statements and Supplementary Data."

Introduction

        We are an industrial manufacturer of highly engineered products serving niche markets in a diverse range of commercial, industrial and consumer applications. We have five operating segments: Packaging Systems, Energy Products, Industrial Specialties, RV & Trailer Products and Recreational Accessories. In reviewing our financial results, consideration should be given to certain critical events, particularly our initial public offering in May 2007 and expenses related thereto, and previous consolidation, integration and restructuring efforts in several of our business operations.

        Key Factors and Risks Affecting our Reported Results.    Critical factors affecting our ability to succeed include: our ability to successfully pursue organic growth through product development, cross-selling and extending product-line offerings, our ability to quickly and cost-effectively introduce new products; our ability to acquire and integrate companies or products that will supplement existing product lines, add new distribution channels, expand our geographic coverage or enable us to better absorb overhead costs; our ability to manage our cost structure more efficiently through improved supply base management, internal sourcing and/or purchasing of materials, selective outsourcing and/or purchasing of support functions, working capital management, and greater leverage of our administrative and overhead functions. If we are unable to do any of the foregoing successfully, our financial condition and results of operations could be materially and adversely impacted.

        Our businesses and results of operations depend upon general economic conditions and we serve some customers in highly cyclical industries that are highly competitive and themselves adversely impacted by unfavorable economic conditions. There is some seasonality in the business of our Recreational Accessories and RV & Trailer Products operating segments as well. Sales of towing and trailering products within these operating segments are generally stronger in the second and third quarters, as trailer original equipment manufacturers (OEMs), distributors and retailers acquire product for the spring and summer selling seasons. No other operating segment experiences significant seasonal fluctuation in its business. We do not consider sales order backlog to be a material factor in our business. A growing portion of our sales may be derived from international sources, which exposes us to certain risks, including currency risks. The demand for some of our products, particularly in the Recreational Accessories and RV & Trailer Products segments, is influenced by consumer sentiment, which could be negatively impacted by increased costs to consumers as a result of an uncertain credit market and interest rate environment and energy costs, among other things.

        We are sensitive to price movements in our raw materials supply base. Our largest material purchases are for steel, copper, aluminum, polyethylene and other resins and energy. Historically, we have experienced increasing costs of steel and resin and have worked with our suppliers to manage cost pressures and disruptions in supply. We have also initiated pricing programs to pass increased steel, copper, aluminum and resin costs to customers. Although we may experience delays in our ability to implement price increases, we generally are able to recover such increased costs. Although there have been no significant disruptions in the supply of steel since 2005, we may experience disruptions in supply in the future and we may not be able to pass along higher costs associated with such disruptions to our customers in the form of price increases. We will continue to take actions as necessary to manage risks associated with

42


increasing steel or other raw material costs. However, such increased costs may adversely impact our earnings.

        We report shipping and handling expenses associated with Recreational Accessories' sales distribution network as an element of selling, general and administrative expenses in our consolidated statement of operations. As such, gross margins for the Recreational Accessories segment may not be comparable to other companies which include all costs related to their distribution network in cost of sales.

        We have substantial debt, interest and lease payment requirements that may restrict our future operations and impair our ability to meet our obligations and, in a rising interest rate environment, our performance may be adversely affected by our degree of leverage.

        Our Prior Acquisitions.    We have completed nine acquisitions since our separation from Metaldyne in June 2002. The most significant of these were the HammerBlow, Highland and Hi-Vol acquisitions.

        On January 30, 2003, within our RV & Trailer Products and Recreational Accessories segments, we acquired all of the capital stock of HammerBlow Acquisition Corp., a manufacturer and distributor of towing, trailer and other vehicle accessories throughout North America, for a purchase price of approximately $145.2 million. Of this amount, $7.2 million of the purchase price was deferred and paid in January 2004.

        On February 21, 2003, within our Recreational Accessories segment, we acquired all of the capital stock of Highland Group Corporation, a manufacturer of cargo management and vehicle protection products, for a purchase price of approximately $73.5 million.

        On May 9, 2003, within our Industrial Specialties segment, we acquired an automotive fasteners manufacturing business from Metaldyne, a related party at that time, for approximately $22.7 million on a debt-free basis (Hi-Vol Acquisition). Because we and Metaldyne were under the common control of Heartland at the time of the acquisition, this transaction was accounted for as a reorganization of entities under common control and, accordingly, we did not establish a new basis of accounting in the assets and liabilities of Hi-Vol.

        Recent Consolidation, Integration and Restructuring Activities.    We have undertaken significant consolidation, integration and other cost-savings programs to enhance our efficiency and achieve cost reduction opportunities arising from our acquisitions. In addition to these major projects, there have also been a series of other smaller initiatives to eliminate duplicative and excess manufacturing and distribution facilities, sales forces, and back office and other support functions in order to continue to optimize our cost structure in response to competitor actions and market conditions. The aggregate costs of these actions for 2007, 2006 and 2005 were approximately $7.4 million, $1.6 million and $2.6 million, respectively.

        The key elements of our completed consolidation, integration and other cost-savings programs in 2005 included the closure of our Sheffield, Pennsylvania distribution/manufacturing facility, the outsourcing of certain manufacturing activities, the integration of our Elkhart, Indiana plastics operation into our Goshen, Indiana facility and the consolidation of distribution activities in our South Bend, Indiana distribution center, all within our Recreational Accessories segment. We also completed the relocation of our Albion, Indiana wiring operation into our facilities in Reynosa, Mexico within our RV & Trailer Products segment, and rationalization of back office engineering, marketing and general administrative support personnel at certain of our locations within our Recreational Accessories and RV & Trailer Products segments.

        The key elements of our completed consolidation, integration and other cost-savings programs in 2006 include the opening of a lower cost manufacturing facility in the Phanthong District of Thailand, initiating the closure of our Wakerley, Australia plant (which was completed in the third quarter of 2007), and the cessation of plating operations at our Schofield, Wisconsin facility, all within our RV & Trailer Products

43


segment. Costs and expenses for the Australia plant closing and Thailand consolidation were incurred through August 2007.

        The key element of our completed consolidation, integration and other cost-savings programs in 2007 included the closure of our manufacturing facility in Huntsville, Ontario, Canada, and consolidation its operations into our Goshen, Indiana manufacturing facility.

        Key Indicators of Performance.    In evaluating our business, our management considers Adjusted EBITDA as a key indicator of financial operating performance and as a measure of cash generating capability. We define Adjusted EBITDA as net income (loss) before cumulative effect of accounting change, interest, taxes, depreciation, amortization, non-cash asset and goodwill impairment charges and write-offs and non-cash losses on sale-leaseback of property and equipment. In evaluating Adjusted EBITDA, our management deems it important to consider the quality of our underlying earnings by separately identifying certain costs undertaken to improve our results, such as costs related to consolidating facilities and businesses in an effort to eliminate duplicative costs or achieve efficiencies, costs related to integrating acquisitions and restructuring costs related to expense reduction efforts. Although we may undertake new consolidation, restructuring and integration efforts in the future as a result of our acquisition activity, our management separately considers these costs in evaluating underlying business performance. Caution must be exercised in considering these items as they include substantially (but not necessarily entirely) cash costs and there can be no assurance that we will ultimately realize the benefits of these efforts. Moreover, even if the anticipated benefits are realized, they may be offset by other business performance or general economic issues.

        Management believes that consideration of Adjusted EBITDA together with a careful review of our results reported under GAAP is the best way to analyze our ability to service and/or incur indebtedness, as we are a highly leveraged company. We use Adjusted EBITDA as a key performance measure because we believe it facilitates operating performance comparisons from period to period and company to company by excluding potential differences caused by variations in capital structures (affecting interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), and the impact of purchase accounting and FASB Statement of Financial Accounting Standards No. 142 (SFAS No. 142), "Goodwill and Other Intangible Assets" (affecting depreciation and amortization expense). Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we also use Adjusted EBITDA for business planning purposes, to incent and compensate our management personnel, in measuring our performance relative to that of our competitors and in evaluating acquisition opportunities.

        In addition, we believe Adjusted EBITDA and similar measures are widely used by investors, securities analysts, ratings agencies and other interested parties as a measure of financial performance and debt-service capabilities. Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

44

        Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our Company. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. We carefully review our operating profit margins (operating profit as a percentage of net sales) at a segment level, which are discussed in detail in our year-to-year comparison of operating results.

        The following is a reconciliation of our Adjusted EBITDA to net loss before effect of cumulative accounting change and cash flows provided by operating activities for the three years ended December 31:

 
   Year ended December 31,
  
 
   2007
   2006
   2005
  
 
   (dollars in thousands)

  
Net loss before effect of cumulative accounting change   $ (158,430 ) $ (128,910 ) $ (45,460 )
  Income tax benefit(1)     (10,410 )   (6,520 )   (30,580 )
  Interest expense     68,310     79,060     75,210  
  Debt extinguishment costs     7,440     8,610     —  
  Change in asset retirement obligation of discontinued operations     —     (550 )   —  
  Impairment of assets(2)     3,370     15,760     73,220  
  Impairment of goodwill(3)     171,210     116,500     —  
  Depreciation and amortization(4)     41,350     38,740     40,750  
   
 
 
 
Adjusted EBITDA   $ 122,840   $ 122,690   $ 113,140  
   
 
 
 
  Interest paid     (63,690 )   (69,880 )   (70,550 )
  Taxes paid     (8,660 )   (14,050 )   (12,630 )
  Gain (loss) on disposition of plant and equipment(5)     (630 )   3,530     300  
  Receivables sales and securitization, net     25,980     (14,120 )   (9,580 )
  Net change in working capital     (10,870 )   (12,290 )   9,210  
   
 
 
 
Cash flows provided by operating activities   $ 64,970   $ 15,880   $ 29,890  
   
 
 
 
(1)
Includes add-back of income tax (benefit) expense related to discontinued operations. See Note 5, "Discontinued Operations and Assets Held for Sale," to the financial statements attached hereto for further information.

(2)
Includes asset impairments related to continuing operations of approximately $3.4 million, $0.5 million and $3.0 million in 2007, 2006 and 2005, respectively. Also includes impairment charges of $15.3 million and $70.2 million in 2006 and 2005, respectively, related to our industrial fastening business which is reported as discontinued operations.

(3)
Goodwill and indefinite-lived intangible asset impairment charges of $171.2 million and $116.5 million in our RV & Trailer Products and Recreational Accessories segments in 2007 and 2006, respectively.

(4)
Includes depreciation and amortization related to discontinued operations in the amounts of $0.2 million, $0.4 million and $3.8 million in 2007, 2006 and 2005, respectively.

(5)
Includes gain (loss) on disposition of plant and equipment related to discontinued operations in the amounts of $2.7 million, $4.0 million and $1.0 million in 2007, 2006 and 2005, respectively.

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        The following details certain items relating to our consolidation, restructuring and integration efforts, the use of proceeds from our initial public offering of common stock and other one-time charges that are included in the determination of net loss under GAAP and are not added back to net loss in determining Adjusted EBITDA, but that we separately consider in evaluating our Adjusted EBITDA:

 
   Year ended December 31,
 
   2007
   2006
   2005
 
   (dollars in thousands)
Facility and business consolidation costs(a)   $ 7,390   $ 200   $ 200
Business unit restructuring costs(b)     —     430     1,130
Acquisition integration costs(c)     —     970     1,290
Advisory services agreement termination fee(d)     10,000     —     —
Costs for early termination of operating leases(e)     4,230     —     —
Settlement of Canadian benefit plan liability(f)     3,870     —     —
   
 
 
    $ 25,490   $ 1,600   $ 2,620
   
 
 

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Segment Information and Supplemental Analysis

        The following table summarizes financial information for our five current operating segments:

 
   Year ended December 31,
  
(dollars in thousands)
   2007
   As a
Percentage
of Net Sales
   2006
   As a
Percentage
of Net Sales
   2005
   As a
Percentage
of Net Sales
  
Net Sales:                                
Packaging Systems   $ 211,820   19.8 % $ 204,230   20.1 % $ 189,910   19.1 %
Energy Products     163,470   15.3 %   156,990   15.5 %   131,020   13.2 %
Industrial Specialties     204,630   19.2 %   175,410   17.3 %   156,730   15.8 %
RV & Trailer Products     198,790   18.6 %   190,700   18.8 %   209,030   21.1 %
Recreational Accessories     289,560   27.1 %   286,580   28.3 %   306,200   30.8 %
   
 
 
 
 
 
 
  Total   $ 1,068,270   100.0 % $ 1,013,910   100.0 % $ 992,890   100.0 %
   
 
 
 
 
 
 

Gross Profit:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Packaging Systems   $ 61,380   29.0 % $ 59,780   29.3 % $ 54,510   28.7 %
Energy Products     47,600   29.1 %   45,690   29.1 %   35,420   27.0 %
Industrial Specialties     60,210   29.4 %   51,650   29.4 %   44,210   28.2 %
RV & Trailer Products     43,480   21.9 %   38,700   20.3 %   48,200   23.1 %
Recreational Accessories     76,220   26.3 %   74,540   26.0 %   61,300   20.0 %
Allocated/Corporate expenses     —   N/A     —   N/A     (20 ) N/A  
   
 
 
 
 
 
 
  Total   $ 288,890   27.0 % $ 270,360   26.7 % $ 243,620   24.5 %
   
 
 
 
 
 
 

Selling, General and Administrative
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Packaging Systems   $ 28,260   13.3 % $ 26,010   12.7 % $ 23,810   12.5 %
Energy Products     24,550   15.0 %   22,720   14.5 %   20,180   15.4 %
Industrial Specialties     18,150   8.9 %   15,130   8.6 %   14,680   9.4 %
RV & Trailer Products     23,420   11.8 %   20,200   10.6 %   20,520   9.8 %
Recreational Accessories     66,310   22.9 %   60,540   21.1 %   56,610   18.5 %
Corporate expenses and management fees     25,220   N/A     24,450   N/A     22,020   N/A  
   
 
 
 
 
 
 
  Total   $ 185,910   17.4 % $ 169,050   16.7 % $ 157,820   15.9 %
   
 
 
 
 
 
 

Impairment of Assets and Goodwill:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RV & Trailer Products   $ 100,780   50.7 % $ 98,010   51.4 % $ 310   0.2 %
Recreational Accessories     73,800   25.5 %   19,000   6.6 %   2,650   0.9 %
   
 
 
 
 
 
 
  Total   $ 174,580   16.3 % $ 117,010   11.5 % $ 2,960   0.3 %
   
 
 
 
 
 
 

Operating Profit (Loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Packaging Systems   $ 29,760   14.0 % $ 33,770   16.5 % $ 30,590   16.1 %
Energy Products     22,860   14.0 %   22,790   14.5 %   15,210   11.6 %
Industrial Specialties     41,770   20.4 %   36,200   20.6 %   29,480   18.8 %
RV & Trailer Products     (81,230 ) (40.9 )%   (79,650 ) (41.8 )%   26,790   12.8 %
Recreational Accessories     (64,200 ) (22.2 )%   (4,910 ) (1.7 )%   2,120   0.7 %
Corporate expenses and management fees     (40,730 ) N/A     (24,450 ) N/A     (22,040 ) N/A  
   
 
 
 
 
 
 
  Total   $ (91,770 ) (8.6 )% $ (16,250 ) (1.6 )% $ 82,150   8.3 %
   
 
 
 
 
 
 

Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Packaging Systems   $ 43,800   20.7 % $ 46,680   22.9 % $ 40,350   21.2 %
Energy Products     25,430   15.6 %   25,070   16.0 %   17,550   13.4 %
Industrial Specialties     46,870   22.9 %   40,690   23.2 %   34,310   21.9 %
RV & Trailer Products     27,620   13.9 %   26,050   13.7 %   34,280   16.4 %
Recreational Accessories     20,340   7.0 %   24,540   8.6 %   14,930   4.9 %
Corporate expenses and management fees     (43,980 ) N/A     (28,110 ) N/A     (25,490 ) N/A  
   
 
 
 
 
 
 
  Subtotal from continuing operations   $ 120,080   11.2 % $ 134,920   13.3 % $ 115,930   11.7 %
Discontinued operations     2,760   N/A     (12,230 ) N/A     (2,790 ) N/A  
   
 
 
 
 
 
 
  Total   $ 122,840   11.5 % $ 122,690   12.1 % $ 113,140   11.4 %
   
 
 
 
 
 
 

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Results of Operations

Year Ended December 31, 2007 Compared with Year Ended December 31, 2006

        The principal factors impacting us during the year ended December 31, 2007 compared with the year ended December 31, 2006 were:

        Overall, net sales increased $54.4 million, or approximately 5.4%, in 2007 as compared with 2006. Of this increase, approximately $13.8 million is due to currency exchange as our reported results in U.S. dollars benefited from stronger foreign currencies. Packaging Systems' net sales increased $7.6 million, or approximately 3.7%, in 2007 as compared with 2006 due to increases in our specialty dispensing products and new product introductions and the favorable effects of currency exchange. Net sales within Energy Products increased $6.5 million, or 4.1%, in 2007 as compared with 2006, due to continued high levels of turnaround activity at petroleum refineries and petrochemical facilities, partially offset by decreased sales of slow speed and compressor engines and related parts. Net sales within our Industrial Specialties segment increased $29.2 million, or 16.7%, in 2007 as compared with 2006, due to improved demand across the majority of the businesses in the segment, most notably in our aerospace fastener, industrial cylinder and defense businesses. RV & Trailer Products' net sales increased $8.1 million, or approximately 4.2%, in 2007 as compared with 2006, due primarily to new product sales in our electrical products business and the favorable effects of currency exchange, partially offset by continued soft demand in certain trailering products end markets and in our Australian business. Recreational Accessories' net sales increased $3.0 million, or approximately 1.0%, in 2007 as compared with 2006, due to sales resulting from new programs in our retail business and the favorable effects of currency exchange, partially offset by reduced sales activity in our towing products business due to continued softness of its end-customer market.

        Gross profit margin (gross profit as a percentage of sales) approximated 27.0% and 26.7% for 2007 and 2006, respectively. Packaging Systems' gross profit margin decreased to approximately 29.0% in 2007, from 29.3% in 2006, primarily due a less favorable product sales mix. Energy Products' gross profit margin remained flat at 29.1% in 2007 and 2006, as increases in sales volumes and improved material margins in our specialty gasket business were offset by decreased sales volumes and a less favorable product sales mix in our engine business. Gross profit margin within our Industrial Specialties segment remained flat at 29.4% in 2007 and 2006, as the higher sales volumes and related margins in our aerospace, industrial cylinder and defense businesses were offset by declines in sales and gross margin within our specialty fitting business. RV & Trailer Products' gross profit margin increased to 21.9% in 2007, from 20.3% in 2006, due

48


primarily to increased sales and a more favorable product sales mix in our electrical business and improved material margins within our Australian business, partially offset by continued pricing pressure in our trailering business and duplicative costs in our Australian operations corresponding with start-up costs of new programs in our Thailand facility. Recreational Accessories' gross profit margin increased to 26.3% in 2007, from 26.0% in 2006. The increase is due primarily to material margin improvements in towing products and retail sales channels, purchasing savings initiatives, additional manufacturing efficiencies and material management improvement initiatives.

        Operating profit margin (operating profit as a percentage of sales) decreased from negative 1.6% in 2006 to negative 8.6% in 2007. Operating profit decreased approximately $75.5 million, to an operating loss of $91.8 million in 2007, compared to an operating loss of $16.3 million in 2006. In 2007, we recorded a non-cash goodwill and indefinite-lived intangible asset impairment charge of $171.2 million in our RV & Trailer Products and Recreational Accessories segments. In 2006, we recorded a non-cash goodwill impairment charge of $116.5 million in these segments. In addition to the increase in impairment charges, during 2007, we utilized proceeds from our IPO to fund a $10.0 million fee to Heartland for agreeing to a contractual settlement of its right to receive a $4.0 million annual fee under its advisory services agreement and $4.2 million of costs and expenses related to the early termination of operating leases. In 2007, we also recorded approximately $9.0 million related to the closure of our Huntsville, Ontario, Canada facility within our Recreational Accessories segment and a non-cash settlement of a benefit plan liability of approximately $3.9 million in our Packaging Systems segment. Packaging Systems' operating profit margin was 14.0% and 16.5% in 2007 and 2006, respectively. Operating profit decreased $4.0 million in 2007 as compared with 2006, due primarily to the aforementioned non-cash charge for settlement of a defined benefit pension plan settlement liability of $3.9 million. Energy Products' operating profit margin was 14.0% and 14.5% in 2007 and 2006, respectively. Operating profit improved $0.1 million in 2007 compared to 2006 as increases in margin earned due to higher sales levels and margin improvement in our specialty gasket business were mostly offset by reductions in operating profit in our engine business due to lower sales volumes and costs incurred to introduce new programs. Industrial Specialties' operating profit margin was 20.4% and 20.6% in 2007 and 2006, respectively. Operating profit increased $5.6 million in 2007 compared to 2006 due to increased sales levels in the majority of the businesses in this segment, partially offset by higher selling, general and administrative expenses as a result of increased investment in sales resources and product development. RV & Trailer Products' operating profit decreased $1.6 million in 2007, from an operating loss of $79.6 million in 2006 to an operating loss of $81.2 million in 2007, principally due to a non-cash goodwill and indefinite-lived intangible asset impairment charge of $100.8 million in 2007, as compared to a goodwill impairment charge of $97.5 million in 2006. Partially offsetting this increase in impairment charge year-over-year was increased operating profit resulting from increased sales volumes. Recreational Accessories' operating profit decreased $59.3 million in 2007, from an operating loss of $4.9 million in 2006 to an operating loss of $64.2 million in 2007, due primarily to a non-cash goodwill and indefinite-lived intangible asset impairment charge of $70.4 million in 2007, as compared to a goodwill impairment charge of $19.0 million in 2006. In addition, we recorded charges of approximately $9.0 million related to the closure of the Huntsville, Ontario, Canada facility in the fourth quarter of 2007. These increases in charges were partially offset by higher sales volumes in our retail business resulting from new program introductions and savings resulting from continued operational improvements and our Asian sourcing initiatives.

        Adjusted EBITDA margin (Adjusted EBITDA as a percentage of sales) approximated 11.2% and 13.3% in 2007 and 2006, respectively. The increase in Adjusted EBITDA margin in our Energy Products segment was consistent with the increase in operating profit margin. The Adjusted EBITDA margin for Packaging Systems and Industrial Specialties decreased to 20.7% and 22.9% in 2007, respectively, from 22.9% and 23.2% in 2006, respectively. In 2007, Packaging Systems and Industrial Specialties recorded increased depreciation expense of approximately $1.4 million and $0.5 million, respectively, primarily as a result of the acquisition of previously leased machinery and equipment assets with IPO proceeds. The remaining change in Adjusted EBITDA margin for both Packaging Systems and Industrial Specialties was

49


consistent with the decrease in operating profit margin. The Adjusted EBITDA margins in our RV & Trailer Products and Recreational Accessories segments were significantly higher than the operating profit margins in 2007 and 2006 due to the add-back of the non-cash goodwill and indefinite-lived intangible asset impairment charges of $100.8 million and $70.4 million, respectively, in 2007, and $97.5 million and $19.0 million, respectively, in 2006. In addition, our Recreational Accessories segment recorded a $3.4 million fixed asset impairment charge in 2007 related to the closure of the Huntsville facility. After consideration of the goodwill, intangible asset and Huntsville charges, the remaining change in Adjusted EBITDA was consistent with the change in operating profit margin for both RV & Trailer Products and Recreational Accessories.

        Packaging Systems.    Net sales increased $7.6 million, or approximately 3.7%, to $211.8 million in 2007, as compared to $204.2 million in 2006. Overall, approximately $5.6 million of the increase in sales is due to favorable currency exchange as our reported results in U.S. dollars were positively impacted as a result of stronger foreign currencies. In addition, approximately $2.6 million of the increase is due to continued strong demand for our specialty dispensing products and new product introductions. These increases in sales were partially offset by decreases in sales of our specialty tapes, laminates and insulation products of approximately $0.6 million. Sales of our industrial closures, rings and levers were essentially flat year-over-year.

        Packaging Systems' gross profit increased approximately $1.6 million to $61.4 million, or 29.0% of sales, in 2007, as compared to $59.8 million, or 29.3% of sales, in 2006. The increase in gross profit between years is primarily attributed to favorable currency exchange, as incremental margin from increased sales levels was substantially offset by a less favorable product sales mix.

        Packaging Systems' selling, general and administrative costs increased approximately $2.3 million to $28.3 million, or 13.3% of sales, in 2007, as compared to $26.0 million, or 12.7% of sales, in 2006. The increase in selling, general and administrative expenses is a result of increased spending related to sales growth initiatives and realigning of certain manufacturing equipment between our facilities.

        Packaging Systems' operating profit decreased $4.0 million to $29.8 million, or 14.0% of sales, in 2007, as compared to $33.8 million, or 16.5% of sales, in 2006. The decrease in operating profit is due primarily recognition of a $3.9 million non-cash charge related to settlement of a defined benefit plan liability resulting from the closure of a distribution facility in 1997, for which the ultimate resolution and related accounting for distribution of surplus assets of the plan was not approved by Canadian authorities until 2007. The other components of the change were an increase in operating profit due to favorable currency exchange, offset by a less favorable product sales mix, increased selling costs in support of our sales growth initiatives and the realignment of certain manufacturing equipment between our facilities.

        Packaging Systems' Adjusted EBITDA decreased $2.9 million to $43.8 million, or 20.7% of sales, in 2007, as compared to $46.7 million, or 22.9% of sales, in 2006. In 2007, Packaging Systems had an increased depreciation expense add-back of approximately $1.4 million, primarily due to the acquisition of previously leased assets with the use of proceeds from our initial public offering in May 2007. The remaining change is consistent with the decrease in operating profit.

        Energy Products.    Net sales for 2007 increased $6.5 million, or 4.1%, to $163.5 million, as compared to $157.0 million in 2006. Sales of specialty gaskets and related fastening hardware increased approximately $14.6 million as compared to 2006 as a result of increased demand from existing customers due to continued high levels of turn-around activity at petrochemical refineries and increased demand for replacement parts as refineries continue to operate at capacity. Sales of slow speed and compressor engines and related products decreased approximately $9.4 million in 2007 as compared to 2006 due to lower gas commodity prices persisting for most of 2007 and the impact of lower rig count activity in the Canadian natural gas market.

50

        Gross profit within Energy Products increased $1.9 million to $47.6 million, or 29.1% of sales in 2007, as compared to $45.7 million, or 29.1% of sales in 2006. Gross profit increased approximately $6.4 million in our specialty gasket business in 2007 as compared to 2006, approximately $4.2 million of which resulted from increased sales volumes. The remainder of the increase in gross profit compared to 2006 was due to improved material margins and a more favorable product sales mix. Gross profit decreased by $4.5 million in our engine business in 2007 as compared to 2006, approximately $2.7 million of which was driven by the decrease in sales volumes year over year. The remainder of the decrease was due to lower margins resulting from a less favorable mix of engine sales, increased labor and overhead spending associated with investments in developing infrastructure for its new compressor products and the loss of operating leverage due to lower sales volumes compared to 2006.

        Selling, general and administrative expenses within Energy Products increased $1.8 million to $24.5 million, or 15.0% of net sales in 2007, as compared to $22.7 million, or 14.5% of net sales in 2006. Of this increase, approximately $1.7 million was due to increased compensation, commission and launch expenses in support of increased sales in our specialty gasket business and new product introduction in our engine business.

        Overall, operating profit within Energy Products increased $0.1 million to $22.9 million, or 14.0% of sales in 2007, as compared to $22.8 million, or 14.5% of sales, in 2006. Overall, increases in operating profit in our specialty gasket business due to higher sales volumes and other operational improvements were mostly offset by reductions in operating profit in our engine business due to lower sales volumes resulting from lower gas commodity prices, lower rig count activity in the Canadian natural gas market and increased spending in support of new product development.

        Energy Products' Adjusted EBITDA increased $0.4 million to $25.4 million, or 15.6% of sales, in 2007, as compared to $25.0 million, or 16.0% of sales, in 2006, consistent with the improvement in operating profit between years.

        Industrial Specialties.    Net sales in 2007 increased $29.2 million, or approximately 16.7%, to $204.6 million, from $175.4 million in 2006. Net sales in 2007 increased 20.8% in our aerospace fastener business as compared to 2006, as we continued to benefit from share gains as well as strong market demand, and 17.3% in our industrial cylinders business, as demand for our new ISO cylinder continued to increase. In addition, net sales increased 23.3% in our defense business as compared to 2006, as our customers built-up their inventory of cartridge cases, and 4.3% in our precision cutting tools business due to increased sales of medical and special products to new customers and markets. Sales within our specialty fittings business declined approximately 11.2% in 2007 as compared to 2006 due to continued softness in domestic automotive market demand. Finally, this segment benefited from the acquisition of a medical device manufacturer in August 2007.

        Gross profit within Industrial Specialties increased $8.6 million to $60.2 million, or 29.4% of sales, in 2007, from $51.6 million, or 29.4% of sales, in 2006. The increase in gross profit is primarily attributed to the sales level increase between years and the acquisition of the medical device manufacturer.

        Selling, general and administrative expenses increased $3.0 million to $18.1 million, or 8.9% of sales, in 2007, as compared to $15.1 million, or 8.6% of sales, in 2006, as this segment increased its investment in sales resources and product development, primarily in its aerospace business.

        Operating profit increased $5.6 million to $41.8 million, or 20.4% of sales, in 2007, as compared to $36.2 million, or 20.6% of sales, in 2006, due primarily to higher sales levels between years, partially offset by our increased investment in sales resources and product development.

        Industrial Specialties' Adjusted EBITDA increased $6.2 million to $46.9 million, or 22.9% of sales, in 2007, as compared to $40.7 million, or 23.2% of sales, in 2006, In 2007, Industrial Specialties had increased depreciation expense of approximately $0.5 million, primarily as the result of the acquisition of previously leased assets with the use of proceeds from our initial public offering in May 2007. The remaining change is consistent with the change in operating profit.

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        RV & Trailer Products.    Net sales increased $8.1 million, or 4.2%, to $198.8 million in 2007, from $190.7 million in 2006. Net sales were favorably impacted by approximately $5.9 million of currency exchange, as our reported results in U.S. dollars were positively impacted as a result of a stronger Australian dollar. In addition, net sales in our electrical products business increased approximately $7.7 million in 2007 as compared to 2006, due mainly to sales of new brake controller products. These increases were partially offset by declines in 2007 in our trailering products business due to continued soft demand in certain end-markets, particularly in the horse/livestock market, and, more generally, pricing pressure across all market channels. Our Australian business' sales declined in 2007 primarily due to slow sales of aftermarket products until the second half of the year. While our trailering products business has experienced declines in sales, we believe that our rate of decline has been at a lesser rate than the overall market due to certain market share gains made during 2007.

        RV & Trailer Products' gross profit increased $4.8 million to $43.5 million, or 21.9% of net sales in 2007, from $38.7 million, or 20.3% of net sales, in 2006. Of the increase in gross profit between years, $1.6 million is attributed to the higher sales volumes, primarily in our electrical products business, and $1.3 million is attributed the aforementioned currency exchange impact. The remaining increase in gross profit is due to the impact of improved operating margins within our Australian business, primarily due to improved material margins. These increases in gross profit were partially offset by continued weak demand and pricing pressures in our trailering products business, and inefficiencies and duplication of labor and overhead costs in our Australian operations associated with the closure of one Australian facility and a corresponding start-up of new programs in our Thailand facility. The closing of our Australian facility was completed in the third quarter of 2007.

        RV & Trailer Products' selling, general and administrative expenses increased $3.2 million to $23.4 million, or 11.8% of sales in 2007, from $20.2 million, or 10.6% of sales in 2006. This increase was due to higher sales-related support activities associated with the start-up of our new Thailand facility, increased promotional expenses in attempts to boost sales volumes and increased litigation defense costs.

        RV & Trailer Products' operating loss was $81.2 million in 2007, compared to an operating loss of $79.6 million in 2006. In 2007, we recognized a non-cash goodwill and indefinite-lived intangible asset impairment charge of $100.8 million due to continued declines in the fair value of this business, compared to a non-cash goodwill impairment charge in 2006 of $97.5 million. Aside from these charges, the change in year-over-year operating loss is due to an increase in sales volumes and improved material margins, mostly offset by higher sales-related support costs, higher promotional expenses, increased litigation defense costs, and costs associated with our Australia and Thailand operations.

        RV & Trailer Products' Adjusted EBITDA increased $1.6 million to $27.6 million, or 13.9% of sales in 2007, from $26.0 million, or 13.7% of sales, in 2006, which, after considering the effect of the goodwill and indefinite-lived intangible asset impairment charges in 2007 and 2006, and consideration of increased depreciation expense of approximately $0.8 million, primarily as the result of the acquisition of previously leased assets with the use of proceeds from our initial public offering in May 2007, is consistent with the increase in operating profit margin between years.

        Recreational Accessories.    Net sales increased $3.0 million, or approximately 1.0%, to $289.6 million in 2007, from $286.6 million in 2006. This segment benefited from an approximate 11% sales increase in our retail channel, primarily driven by new programs with our specialty automotive customers and new customers, and by approximately $1.6 million of favorable currency exchange, as our reported results in U.S. dollars were positively impacted as a result of stronger foreign currencies. These increases were partially offset by an approximate 6% reduction in sales of our towing products business to our installer and original equipment customer groups, as a result of the continued softening of the end-customer market.

        Recreational Accessories' gross profit increased $1.7 million to $76.2 million, or 26.3% of net sales in 2007, from $74.5 million, or 26.0% of net sales in 2006, due primarily to approximately $0.8 million of

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increased profit resulting from higher sales volumes. The remainder of the increase is due to continued operational improvements in our towing products business and continued benefits related to sourcing of products from Asia and the related cost savings associated with such sourcing initiatives in both our towing and retail businesses.

        Recreational Accessories' selling, general and administrative expenses increased approximately $5.8 million to $66.3 million, or 22.9% of sales in 2007, from $60.5 million, or 21.1% of sales in 2006. The increase in selling and administrative expenses between years is due primarily to an approximate $4.8 million of expense related to severance and other costs associated with the aforementioned closure of our Huntsville facility. In addition, we experienced additional selling and promotional spending in our retail channel in connection with the new business awarded during 2007. These increases were partially offset by continued reductions in selling and distribution expenses in our towing products business as a result of further consolidation of warehouses and lower discretionary spending corresponding with the decline in sales to our installer and original equipment customer groups.

        Recreational Accessories' operating loss was $64.2 million in 2007, compared to an operating loss of $4.9 million 2006. In 2007, we recognized a non-cash goodwill and indefinite-lived intangible asset impairment charge of $70.4 million due to continued declines in the fair value of this business, compared to a non-cash goodwill impairment charge in 2006 of $19.0 million. In addition, during 2007, we incurred approximately $9.0 million in charges recorded associated with the closure of our Huntsville, Canada, Ontario facility, of which $4.8 relates primarily to severance and other benefit costs, $3.4 million relates to the impairment of fixed assets and $0.8 million relates to facility and other costs. These decreases in operating loss were partially offset by continued operational improvements and reductions in selling and distribution expenses in our towing products business and continued benefits and savings related to sourcing products from Asia.

        Recreational Accessories' Adjusted EBITDA decreased $4.2 million to $20.3 million, or 7.0% of sales in 2007, from $24.5 million, or 8.6% of sales, in 2006, which is primarily attributed to the severance and other costs associated with the Huntsville facility closure, partially offset by increases in profit due to increases in sales and margins due to continued sourcing initiatives and lower discretionary spending.

        Corporate Expenses and Management Fees.    Corporate expenses and management fees included in operating profit and Adjusted EBITDA consist of the following:

 
   Year ended December 31,
  
 
   2007
   2006
  
 
   (in millions)
  
Corporate operating expenses   $ 14.8   $ 11.4  
Employee costs and related benefits     9.6     8.9  
Costs for early termination of operating leases     4.2     —  
Management fees and expenses     12.1     4.1  
   
 
 
  Corporate expenses and management fees—operating profit   $ 40.7   $ 24.4  
Receivables sales and securitization expenses     4.4     4.6  
Depreciation     (0.1 )   (0.1 )
Other, net     (1.0 )   (0.8 )
   
 
 
  Corporate expenses and management fees—Adjusted EBITDA   $ 44.0   $ 28.1  
   
 
 

        Corporate operating expenses increased by approximately $3.4 million to $14.8 million in 2007, from $11.4 million in 2006, due to increased professional fees expense related to our ongoing efforts to comply with the requirements of Sarbanes-Oxley, increased costs for directors and officers insurance as a result of completing our IPO and higher operating expenses associated with our Asian sourcing office. Employee costs and related benefits increased by approximately $0.7 million to $9.6 million in 2007, from $8.9 million

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in 2006, primarily due to higher incentive compensation costs. The remaining increase between years is attributed to the impact of the use of IPO proceeds, including payment of a $10.0 million termination fee to Heartland for agreeing to a contractual settlement of its right to receive a $4.0 million annual fee under its advisory services agreement and $4.2 million of costs and expenses related to the early termination of operating leases.

        Interest Expense.    Interest expense, including debt extinguishment costs of approximately $7.4 million and $8.6 million in 2007 and 2006, respectively, decreased approximately $11.9 million to $75.8 million in 2007, from $87.7 million in 2006. Of the decrease, approximately $4.9 million is due to lower borrowings in the second half of 2007 as compared to the second half of 2006 resulting from the retirement of $100.0 million senior subordinated notes in June 2007 with our IPO proceeds. The decrease is also a result of a decrease in our weighted-average U.S. variable-rate on U.S. borrowings of 7.8% in 2007, from 8.5% in 2006. Weighted-average borrowings on U.S. variable-rate debt were approximately flat year-over-year.

        Other Expense, Net.    Other expense, net decreased approximately $0.3 million to $3.9 million in 2007, from $4.2 million in 2006. The decrease is principally due to income in 2007 of approximately $0.6 million as a result of investing $100.0 million of IPO proceeds prior to retirement of the senior subordinated notes, partially offset by a change in gains and losses on transactions denominated in foreign currencies, from a gain of $0.1 million in 2006 to a loss of $0.2 million in 2007.

        Income Taxes.    The effective income tax rate for 2007 was 7.0% compared with (1.6)% for 2006. In 2007, we reported foreign pre-tax income of approximately $6.6 million and a domestic pre-tax loss of approximately $178.0 million. The loss in 2007 is primarily the result of a goodwill and indefinite-lived intangible asset impairment charge of $171.2 million, for which we received an income tax benefit of approximately $11.3 million. In 2007, we recorded a $1.4 million tax benefit associated with changes in statutory tax rates and tax law as required by SFAS 109. The Company reduced its net deferred income tax liabilities for the tax law changes that were signed into effect during 2007. In addition, the Company recorded a valuation allowance of $0.9 million against certain state NOL's. The loss in 2006 is primarily the result of a goodwill impairment charge of $116.5 million, for which we received an income tax benefit of only $1.2 million. In 2006, we also recorded a tax benefit of approximately $0.5 million in accordance with SFAS 109 due to the change in Texas tax law signed into effect on May 19, 2006, recorded a valuation allowance of $1.7 million against certain deferred tax assets associated with a dual consolidated tax loss, certain state NOL's and a foreign tax credit carryforward, and recorded a tax benefit of $0.6 million related to extraterritorial income exclusions (ETI). The ETI tax deduction is based on the amount of export sales by domestic entities and has minimal relationship to net income (loss).

        Discontinued Operations.    The results of discontinued operations consist of our industrial fastening business through February 2007, when the sale of the business was completed, our asphalt-coated paper business through June 2006, when the sale of that business was completed and our N.I. Industries rocket launcher and property management lines of business through December 2007, when the sale of the rocket launcher business was completed. The results of operations also include a charge in 2007 related to our Wood Dale leased manufacturing facility, which was part of our industrial fastening business, for the estimated unrecoverable future minimum lease obligations. Income from discontinued operations, net of income tax expense, was $0.9 million in 2007, as compared to a loss from discontinued operations, net of income tax benefit, of $19.1 million in 2006. See Note 5, "Discontinued Operations and Assets Held for Sale," to the financial statements attached herein.

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Year Ended December 31, 2006 Compared with Year Ended December 31, 2005

        The principal factors impacting us during the year ended December 31, 2006 compared with the year ended December 31, 2005 were:

        Overall, net sales increased $21.0 million, or approximately 2.1%, in 2006 as compared with 2005. Of this increase, approximately $17.9 million is attributed to organic growth, and approximately $3.1 million is due to currency exchange as our reported results in U.S. dollars benefited from stronger foreign currencies. Packaging Systems' net sales increased $14.3 million, or approximately 7.5%, in 2006 as compared with 2005 due to increases in core product sales, new product sales and the favorable effects of currency exchange. Net sales within Energy Products increased $26.0 million, or 19.8%, in 2006 as compared with 2005 as businesses in this segment benefited from high levels of oil and gas drilling activity in North America due to elevated oil prices and higher levels of turnaround activity at petroleum refineries and petrochemical facilities. Net sales within our Industrial Specialties segment increased $18.7 million, or 11.9%, in 2006 as compared with 2005 due to improved demand across all businesses in the segment and recovery of steel cost increases, most notably in our industrial cylinder and precision tool businesses. RV & Trailer Products' net sales decreased $18.3 million, or approximately 8.8%, in 2006 as compared with 2005 due to decreased demand across most of its market channels and pricing pressure as a result of increased foreign competition. Recreational Accessories' net sales decreased $19.6 million, or approximately 6.4%, in 2006 as compared with 2005 due to reduced sales activity in our towing products business' early order program and reduced demand across its market channels due to high gasoline prices and a continued uncertain interest rate environment.

        Gross profit margin (gross profit as a percentage of sales) approximated 26.7% and 24.5% for 2006 and 2005, respectively. Packaging Systems' gross profit margin increased to approximately 29.3% in 2006 from 28.7% in 2005 primarily due to higher sales volumes and reduced material costs. Energy Products' gross profit margin increased to 29.1% in 2006 compared to 27.0% in 2005 as this segment's margin benefited primarily from higher sales volumes between years. Gross profit margin within our Industrial Specialties segment increased in 2006 to 29.4%, compared to 28.2% in 2005, due generally to higher sales volumes and proportionately greater sales of higher margin aerospace fasteners between years. RV & Trailer Products' gross profit margin decreased to 20.3% in 2006 from 23.1% in 2005 due primarily to the reduced sales levels, lower material margins, increased competitive pricing pressures and startup costs associated with our new manufacturing facility in Thailand. Recreational Accessories' gross profit margin increased to 26.0% in 2006 from 20.0% in 2005. The increase is due primarily to material margin improvements in our towing and retail sales channels, purchasing savings initiatives, additional manufacturing efficiencies and material management improvement initiatives. These improvements were partially offset by the decline in sales between years.

        Operating profit margin (operating profit as a percentage of sales) decreased from 8.3% in 2005 to (1.6)% in 2006. Operating profit declined approximately $98.4 million, to an operating loss of $16.3 million in 2006, compared to operating profit of $82.1 million in 2005. Of this decline, $116.5 million was due to a

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non-cash goodwill impairment charge related to our RV & Trailer Products and Recreational Accessories segments, which is partially offset by $18.6 million of additional margin earned on increased sales and as a result of other operational improvements. Packaging Systems' operating profit margin was 16.5% and 16.1% in 2006 and 2005, respectively. Operating profit increased $3.2 million in 2006 as compared with 2005 due primarily to higher sales levels, improved material margins as a result of moderating raw material costs and flat selling and administrative costs as a percentage of sales between years. Energy Products' operating profit margin was 14.5% and 11.6% in 2006 and 2005, respectively. Operating profit improved $7.6 million in 2006 compared to 2005 as increases in margin earned due to higher sales levels and margin improvement in our specialty gasket business were partially offset by higher selling, general and administrative expenses, which principally increased due to $0.9 million of higher asbestos litigation defense costs. Industrial Specialties' operating profit margin was 20.6% and 18.8% in 2006 and 2005, respectively. Operating profit increased $6.7 million in 2006 compared to 2005 due to increased sales levels in all of the businesses in this segment and improved material margins, partially offset by higher selling, general and administrative expenses. RV & Trailer Products' operating profit decreased $106.4 million in 2006, from an operating profit of $26.8 million in 2005 to an operating loss of $79.6 million in 2006, principally due to a non-cash goodwill impairment charge of $97.5 million. The remaining decrease in operating profit of approximately $8.9 million is primarily the result of the decline in sales and lower material margins. Recreational Accessories' operating profit decreased $7.0 million in 2006, from an operating profit of $2.1 million to an operating loss of $4.9 million in 2006, principally due to the non-cash goodwill impairment charge of $19.0 million. The effect of the goodwill impairment charge was partially offset by approximately $12.0 million of additional operating profit resulting primarily from increased material margins, improved productivity and purchasing cost savings initiatives, partially offset by increased selling, general and administrative expenses, mainly in our retail advertising and promotional expenses.

        Adjusted EBITDA margin (Adjusted EBITDA as a percentage of sales) approximated 13.3% and 11.7% in 2006 and 2005, respectively. The increase in Adjusted EBITDA margin was consistent with the increase in operating profit margin in our Energy Products and Industrial Specialties segments. The Adjusted EBITDA margin for Packaging Systems improved to 22.9% in 2006 from 21.2% in 2005. In addition to the improvement in operating profit margin, the increase in Packaging Systems' Adjusted EBITDA margin from 2005 to 2006 was partially due to $1.8 million in net losses on transactions denominated in foreign currencies in 2005 that did not recur in 2006. The Adjusted EBITDA margins in our RV & Trailer Products and Recreational Accessories segments were significantly higher than the operating profit margins due to the add-back of the non-cash goodwill impairment charges of $97.5 million and $19.0 million, respectively. Before consideration of these charges, the increase in Adjusted EBITDA margin in our Recreational Accessories segment and the decrease in Adjusted EBITDA margin in our RV & Trailer Products segment was consistent with the related changes in operating profit margin.

        Packaging Systems.    Net sales increased $14.3 million, or approximately 7.5%, to $204.2 million in 2006 compared to $189.9 million in 2005. Overall, the increase in sales is a result of strong demand for our products in the general industrial, commercial construction and metal building markets due to overall economic expansion and the introduction of new products. Of the increase in sales, approximately $4.4 million was due to increased sales of specialty tapes, laminates and insulation products, $5.2 million was due to increased sales of industrial closures, rings and levers and $4.2 million was due to increased sales of new consumer-oriented specialty dispensing products. In addition, the increase in sales included approximately $0.5 million of currency exchange gains.

        Packaging Systems' gross profit increased approximately $5.3 million to $59.8 million, or 29.3% of sales, in 2006 from $54.5 million, or 28.7% of sales, in 2005. Of the increase in gross profit between years, approximately $4.1 million is attributed to the sales level increase between years and approximately $1.4 million is attributed to improved material margins as a result of moderating raw material costs, offset in part by higher period operating costs resulting from the increased sales levels.

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        Packaging Systems' selling, general and administrative costs increased approximately $2.2 million to $26.0 million, or 12.7% of sales, in 2006 as compared to $23.8 million, or 12.5% of sales, in 2005. The increase in selling, general and administrative expenses was consistent with the increase in sales.

        Packaging Systems' operating profit increased $3.2 million to $33.8 million, or 16.5% of sales, in 2006 from $30.6 million, or 16.1% of sales, in 2005. The increase in operating profit is due primarily to higher sales levels, improved material margins as a result of moderating raw material costs and flat selling and administrative costs as a percentage of sales between years.

        Packaging Systems' Adjusted EBITDA increased $6.3 million to $46.7 million, or 22.9% of sales, in 2006 from $40.5 million, or 21.2% of sales, in 2005. Of this amount, approximately $3.2 million is consistent with the improvement in operating profit. Of the remaining change, $1.9 million of the increase resulted from changes in foreign currency gains and losses, as there was a $0.1 million gain on transactions denominated in foreign currencies in 2006 compared to $1.8 million in losses on such similar transactions in 2005. In addition, there was approximately $0.8 million higher amortization of customer intangible assets in 2006 than in 2005.

        Energy Products.    Net sales for 2006 increased $26.0 million, or 19.8%, to $157.0 million compared to $131.0 million in 2005. Of this amount, approximately $11.8 million represents increased demand from existing customers for slow speed and compressor engines and related products, as a result of continued favorable market conditions for oil and gas producers in the United States and Canada, and approximately $3.7 million represents market share gains due to extended product line offerings of existing engine models, principally in Canada, and expanded replacement parts offerings internationally. Sales of specialty gaskets increased $10.2 million as a result of increased demand from existing customers due to continued high levels of turn-around activity at petrochemical refineries, incremental business with existing customers and increased demand for replacement parts as a result of severe weather in the United States Gulf Coast region in the second half of 2005. In addition, $0.3 million is due to increased international sales of specialty gaskets, principally in Latin America, the Far East and Europe.

        Gross profit within Energy Products increased $10.3 million to $45.7 million, or 29.1% of sales in 2006, from $35.4 million, or 27.0% of sales in 2005. Of this amount, approximately $7.0 million is attributed to the sales level increase between years. The remaining improvement is due to improved material margins in both businesses, which in our engine business relates to on-going efforts to source slow speed and compressor engine products to suppliers in lower cost manufacturing countries, and better absorption of fixed overhead costs, given the increased sales volumes in 2006 as compared to 2005.

        Selling, general and administrative expenses within Energy Products increased $2.5 million to $22.7 million, or 14.5% of net sales in 2006, from $20.2 million, or 15.4% of net sales in 2005. Of the increase, approximately $1.2 million relates to increased sales compensation and commission expenses, consistent with the increase in sales and $0.9 million is due to increased asbestos litigation defense costs in our specialty gasket business. Energy Products achieved higher sales levels with only a modest increase in selling and administrative costs due to the relatively fixed cost nature of this segment's existing distribution network, particularly with respect to sales of specialty gaskets.

        Overall, operating profit within Energy Products increased $7.6 million to $22.8 million, or 14.5% of sales in 2006, from $15.2 million, or 11.6% of sales, in 2005 due principally to significantly higher sales levels.

        Energy Products' Adjusted EBITDA increased $7.5 million to $25.1 million or 16.0% of sales for the year ended December 31, 2006 from $17.6 million, or 13.4% of sales, for the year ended December 31, 2005, consistent with the improvement in operating profit between years.

        Industrial Specialties.    Net sales in 2006 increased $18.7 million, or approximately 11.9%, to $175.4 million, from $156.7 million in 2005. The increase in sales is a result of strong demand for our products in the general industrial, aerospace and automotive markets due to market share gains, new

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products, and economic expansion. Notably, our aerospace fastener business continues to experience strong market demand, with a sales increase of approximately 14.2% in 2006 as compared to 2005 due to continued strong commercial and business jet build rates. As compared to 2005, 2006 sales within our industrial cylinders business increased 14.5%, sales of specialty automotive fittings improved 3.2% and sales of precision cutting tools improved 5.7%, while sales within our defense business were slightly above 2005 levels. We estimate that steel cost increases recovered from customers via pricing increases during 2006, principally within our industrial cylinder and precision tool businesses, were comparable to 2005.

        Gross profit within Industrial Specialties increased $7.4 million to $51.6 million, or 29.4% of sales, in 2006 as compared to $44.2 million, or 28.2% of sales, in 2005. Of the increase in gross profit, approximately $5.0 million is attributed to the sales level increase between years. The remainder of the increase is attributed to operational improvements which resulted in reductions in material, labor and overhead costs as a percentage of sales, with increased material margins comprising the majority of the improvement at approximately $1.2 million.

        Selling, general and administrative expenses increased $0.4 million to $15.1 million, or 8.6% of sales, in 2006, as compared to $14.7 million, or 9.4% of sales, in 2005, due primarily to increases in professional fees and certain personnel expenses.

        Operating profit increased $6.7 million to $36.2 million, or 20.6% of sales, in 2006 as compared to $29.5 million, or 18.8% of sales, in 2005, due primarily to increased sales levels in each of the businesses in this segment and improved material margins, which were offset in part by slightly higher selling, general and administrative spending.

        Industrial Specialties' Adjusted EBITDA increased $6.4 million to $40.7 million, or 23.2% of sales, in 2006 from $34.3 million, or 21.9% of sales, in 2005, consistent with the improvement in operating profit between years.

        RV & Trailer Products.    Net sales decreased $18.3 million, or 8.8%, to $190.7 million in 2006, from $209.0 million in 2005. This decrease is due principally to reduced demand across all market channels and market pricing pressures which resulted from increased foreign competition, particularly in the agriculture and industrial markets. In addition, approximately $0.7 million of the decrease in sales is due to currency exchange rates, as our reported results in U.S. dollars were reduced as a result of a weaker Australian dollar.

        RV & Trailer Products' gross profit decreased $9.5 million to $38.7 million, or 20.3% of net sales in 2006, from $48.2 million, or 23.1% of net sales, in 2005. Of the decrease in gross profit, approximately $4.2 million is attributed to the sales level decrease between years and approximately $4.3 million is attributed to lower product margins as a result of competitive pricing pressures, higher commodity costs and a less favorable mix of product sales, primarily in our Australian business. In addition, approximately $1.0 million is attributed to startup costs incurred in 2006 associated with our new manufacturing facility in Thailand.

        RV & Trailer Products' selling, general and administrative expenses decreased $0.3 million to $20.2 million, or 10.6% of sales in 2006, from $20.5 million, or 9.8% of sales in 2005, as selling, general and administrative spending and expenses decreased due to lower sales levels.

        RV & Trailer Products' operating profit decreased $106.4 million in 2006, from an operating profit of $26.8 million in 2005 to an operating loss of $79.6 million in 2006, principally due to the non-cash goodwill impairment charge of $97.5 million. The remaining decrease in operating profit of approximately $8.9 million is primarily related to the decline in sales and lower material margins.

        RV & Trailer Products' Adjusted EBITDA decreased $8.2 million to $26.1 million, or 13.7% of sales in 2006, from $34.3 million, or 16.4% of sales, in 2005, which, after considering the effect of the goodwill impairment charge, is consistent with the decline in operating profit margin between years.

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        Recreational Accessories.    Net sales decreased $19.6 million, or approximately 6.4%, to $286.6 million in 2006, from $306.2 million in 2005. The net decrease in sales between years was principally the result of reduced consumer demand due to high gasoline prices, a continued uncertain interest rate environment and an effort by the installer and distributor customer groups to reduce inventory levels due to the softening of end-consumer markets. These decreases were offset by approximately $2.8 million due to currency exchange as our reported sales in U.S. dollars benefited from stronger foreign currencies during 2006.

        Recreational Accessories' gross profit increased $13.2 million to $74.5 million, or 26.0% of net sales in 2006, from $61.3 million, or 20.0% of net sales in 2005. Of this increase in gross profit, approximately $5.7 million is attributed to material margin improvements in our retail sales channel as a result of sourcing initiatives and $5.2 million is attributed to savings resulting from the decision to purchase certain products that we previously manufactured. An additional $5.0 million is attributed to material margin improvements in our towing products business due to pricing actions and net favorable material usage variances at our Goshen, Indiana manufacturing facility, resulting from manufacturing efficiency and material management improvement initiatives. Gross profit was also favorably impacted by savings associated with cost reduction initiatives implemented at our Goshen, Indiana manufacturing facility in 2006. These improvements were offset by $3.9 million in lower gross profit attributed to the decline in sales between years.

        Recreational Accessories' selling, general and administrative expenses increased approximately $3.9 million to $60.5 million, or 21.1% of sales in 2006, from $56.6 million, or 18.5% of sales in 2005. The increase in selling and administrative expenses between years is due to increased advertising and promotion expenses which were necessary to support our retail channel sales activities, costs associated with the closure of our Sheffield, Pennsylvania operations and increased distribution costs from our South Bend facility associated, in part, with the exit from our Sheffield operations.

        Recreational Accessories' operating profit decreased $7.0 million in 2006, from an operating profit of $2.1 million to an operating loss of $4.9 million in 2006, principally due to the non-cash goodwill impairment charge of $19.0 million. The effect of the goodwill impairment charge is partially offset by approximately $12.0 million of additional operating profit as a result of increased material margins, improved productivity and purchasing cost savings initiatives, which were partially offset by increased promotion costs in our retail channel, increased costs associated with closure of our Sheffield operation and increased distribution costs from our South Bend distribution facility.

        Recreational Accessories' Adjusted EBITDA increased $9.6 million to $24.5 million, or 8.6% of sales in 2006, from $14.9 million, or 4.9% of sales, in 2005, which, after considering the effect of the goodwill impairment charge, is consistent with the increase in operating profit margin between years.

        Corporate Expenses and Management Fees.    Corporate expenses and management fees included in operating profit and Adjusted EBITDA consist of the following:

 
   Year ended December 31,
  
 
   2006
   2005
  
 
   (in millions)
  
Corporate operating expenses   $ 11.4   $ 10.4  
Employee costs and related benefits     8.9     7.4  
Management fees and expenses     4.1     4.2  
   
 
 
  Corporate expenses and management fees—operating profit   $ 24.4   $ 22.0  
Receivables sales and securitization expenses     4.6     4.2  
Depreciation     (0.1 )   (0.2 )
Other, net     (0.8 )   (0.5 )
   
 
 
  Corporate expenses and management fees—Adjusted EBITDA   $ 28.1   $ 25.5  
   
 
 

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        Corporate expenses and management fees approximated $24.4 million and $22.0 million in 2006 and 2005, respectively. The increase in corporate operating expenses is primarily the result of increased professional fees for services utilized in 2006. The increase in employee costs and related benefits is due primarily to increased incentive stock compensation expense as a result of implementation of SFAS No. 123R, "Accounting for Stock-Based Compensation."

        Interest Expense.    Interest expense increased approximately $3.9 million to $79.1 million in 2006 from $75.2 million in 2005. The increase is primarily the result of an increase in our weighted average interest rate on U.S. variable rate borrowings to approximately 8.5% in 2006 from approximately 6.9% in 2005, which was partially offset by a reduction in weighted average variable rate borrowings of approximately $297.6 million during 2006, from approximately $357.6 million during 2005.

        In connection with the refinancing of our credit facilities in August 2006, we incurred debt extinguishment costs of $8.6 million, of which $7.9 million was a non-cash charge due to the write-off of debt issuance costs.

        Other Expense, Net.    Other expense, net decreased approximately $1.9 million to $4.2 million in 2006 from $6.1 million in 2005. The decrease is principally due to a gain in 2006 of approximately $0.1 million on transactions denominated in foreign currencies other than the local currency of the subsidiary that is a party to the transaction as compared to a loss on such transactions in 2005 of approximately $2.3 million.

        Income Taxes.    The effective income tax rate for 2006 was (1.6)% compared with 140% for 2005. The loss in 2006 is primarily the result of a goodwill impairment charge of $116.5 million, for which we received an income tax benefit of only $1.2 million. In 2006, we also recorded a tax benefit of approximately $0.5 million in accordance with SFAS 109 due to the change in Texas tax law signed into effect on May 19, 2006, recorded a valuation allowance of $1.7 million against certain deferred tax assets associated with a dual consolidated tax loss, certain state NOL's and a foreign tax credit carryforward, and recorded a tax benefit of $0.6 million related to extraterritorial income exclusions (ETI). The ETI tax deduction is based on the amount of export sales by domestic entities and has minimal relationship to net income (loss). In 2005, foreign operations reported pre-tax income of approximately $10.6 million compared to a reported domestic pre-tax loss of $9.8 million. In 2005, we recorded a valuation allowance of $2.2 million against certain deferred tax assets associated with a dual consolidated tax loss, certain state NOL's and a foreign tax credit carryforward and recorded a tax benefit of $1.0 million related to ETI exclusions. In addition, in 2005, certain of our foreign subsidiaries made a dividend distribution of approximately $55.8 million from accumulated earnings and profits. The 2005 dividend resulted in our recording additional tax expense of approximately $0.4 million related to federal taxes on foreign accumulated earnings and profits.

        Discontinued Operations.    The results of discontinued operations consist of our industrial fastening business through February 2007, when the sale of the business was completed, our asphalt-coated paper business through June 2006, when the sale of that business was completed and our N.I. Industries rocket launcher and property management lines of business through December 2007, when the sale of the rocket launcher business was completed. The results of operations also include a charge in 2007 related to our Wood Dale leased manufacturing facility, which was part of our industrial fastening business, for the estimated unrecoverable future minimum lease obligations. Income from discontinued operations, net of income tax expense, was $0.9 million in 2007, as compared to a loss from discontinued operations, net of income tax benefit, of $19.1 million in 2006. See Note 5, "Discontinued Operations and Assets Held for Sale," to the financial statements attached herein.

        Cumulative Effect of Change in Accounting Principle.    In the fourth quarter 2005, we adopted FASB Interpretation No. 47 (FIN 47), "Accounting for Conditional Asset Retirement Obligation." We adopted FIN 47 as of December 31, 2005 and recorded a cumulative effect of change in accounting principle of approximately $0.4 million, net of income tax benefit of $0.3 million. Pro forma balance sheet information has not been provided as the impact to the balance sheet is not material.

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Liquidity and Capital Resources

        Cash provided by operating activities in 2007 was approximately $65.0 million, as compared to $15.9 million in 2006. The improvement between years is primarily the result of improved working capital management during 2007 as compared to 2006, principally in higher levels of accounts payable and accrued liabilities and lower levels of accounts receivable and prepaid and other assets. These sources of cash were partially offset by increased investment in inventory in 2007 as compared to 2006, primarily as a result of increased safety stock due to longer lead times in sourcing of production from Asia.

        Net cash used for investing activities in 2007 was approximately $68.9 million, as compared to $22.2 million in 2006. During 2007, capital expenditures were approximately $12.2 million greater than in 2006 to support our growth initiatives. During 2007, using proceeds from our initial public offering, we purchased approximately $17.1 million of machinery and equipment subject to operating leases, and also paid approximately $12.9 million for certain machinery and equipment subject to operating leases in connection with the disposition of our Frankfort, Indiana industrial fastening business, which was sold in February 2007. In addition, during 2007, we paid approximately $13.5 million to acquire certain assets from Quest Technologies, Inc., expanding the Company's fifth-wheel product offerings in our Recreational Accessories segment, and all of the capital stock of DEW Technologies, Inc., a medical device manufacturer, which is reported in our Industrial Specialties segment. We also generated cash proceeds in 2007 of approximately $7.1 million on the disposition of businesses and other assets, $4.0 million associated with the sale of the Frankfort, Indiana industrial fastening business in February 2007, and $3.1 million associated with the sale of our rocket launcher business in December 2007. In 2006, we acquired approximately $7.4 million of machinery and equipment subject to operating leases and generated cash proceeds of approximately $7.7 million, primarily related to the sale of our Lakewood, Ohio, Wood Dale, Illinois and Edison, New Jersey business operations.

        Net cash provided by financing activities in 2007 was approximately $5.1 million, as compared to cash provided by financing activities of approximately $6.2 million in 2006. During 2007, we received net proceeds from the initial public offering of our common stock of approximately $126.5 million, which we used to retire $100.0 million of senior subordinated notes. In addition, we reduced our net borrowings under our credit facilities by approximately $21.4 million. In 2006, we increased our net borrowings under our credit facilities by approximately $13.7 million due to our credit facility refinancing and additional borrowing requirements on our revolving credit facility, partially offset by a reduction in our non-U.S. debt of approximately $7.1 million.

        Our credit facility is comprised of a $90.0 million revolving credit facility, a $60.0 million deposit-linked supplemental revolving credit facility and a $260.0 million term loan facility. At December 31, 2007, approximately $256.7 million was outstanding on the term loan and $0.7 million was outstanding on the revolving credit facility. Under the credit facility, up to $90.0 million in the aggregate of our revolving credit facility is available to be used for one or more permitted acquisitions subject to certain conditions and other outstanding borrowings and issued letters of credit. Our credit facility also provides for an uncommitted $100.0 million incremental term loan facility that, subject to certain conditions, is available to fund one or more permitted acquisitions or to repay a portion of our senior subordinated notes.

        During the third quarter of 2006, the Company amended and restated the Credit Facility, primarily extending the maturity dates and reducing the interest rate margins on both its revolving credit facility and term loan. In conjunction with the refinancing, the Company incurred debt extinguishment costs of approximately $8.6 million, of which $7.9 million was a non-cash charge from the write-off of debt issuance costs.

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        Amounts drawn under our revolving credit facilities fluctuate daily based upon our working capital and other ordinary course needs. Availability under our revolving credit facilities depends upon, among other things, compliance with our credit agreement's financial covenants. Our credit facilities contain negative and affirmative covenants and other requirements affecting us and our subsidiaries, including among others: restrictions on incurrence of debt (except for permitted acquisitions and subordinated indebtedness), liens, mergers, investments, loans, advances, guarantee obligations, acquisitions, asset dispositions, sale-leaseback transactions, hedging agreements, dividends and other restricted junior payments, stock repurchases, transactions with affiliates, restrictive agreements and amendments to charters, by-laws, and other material documents. The terms of our credit agreement require us and our subsidiaries to meet certain restrictive financial covenants and ratios computed quarterly, including a leverage ratio (total consolidated indebtedness plus outstanding amounts under the accounts receivable securitization facility over consolidated EBITDA, as defined), interest expense ratio (consolidated EBITDA, as defined, over cash interest expense, as defined) and a capital expenditures covenant. The most restrictive of these financial covenants and ratios is the leverage ratio. Our permitted leverage ratio under our amended and restated credit agreement is 5.25 to 1.00 for October 1, 2007 to June 30, 2008, 5.00 to 1.00 for July 1, 2008 to June 30, 2009, 4.75 to 1.00 for July 1, 2009 to September 30, 2009, 4.50 to 1.00 for October 1, 2009 to June 30, 2010, 4.25 to 1.00 for July 1, 2010 to September 30, 2011 and 4.00 to 1.00 from October 1, 2011 and thereafter. Our actual leverage ratio was 4.08 to 1.00 at December 31, 2007 and we were in compliance with our covenants as of that date.

        The following is the reconciliation of net income, which is a GAAP measure of our operating results, to Consolidated Bank EBITDA, as defined in our credit agreement as in effect on December 31, 2007, for the year ended December 31, 2007.

 
   Year ended
December 31, 2007
  
 
   (dollars in thousands)
  
Net Loss, as reported   $ (158,430 )
Bank stipulated adjustments:        
  Interest expense, net (as defined)     68,310  
  Income tax benefit(1)     (10,410 )
  Depreciation and amortization     41,350  
  Extraordinary non-cash charges(2)     178,450  
  Monitoring fees(3)     12,000  
  Interest equivalent costs(4)     4,230  
  Non-cash expenses related to equity grants(5)     570  
  Other non-cash expenses or losses     4,450  
  Losses on early termination of operating leases from net proceeds of an IPO     4,230  
  Non-recurring expenses or costs for cost savings projects(6)     6,630  
  Permitted dispositions(7)     240  
  Permitted acquisitions(8)     1,980  
  Debt extinguishment costs(9)     7,440  
   
 
  Consolidated Bank EBITDA, as defined   $ 161,040  
   
 

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   December 31, 2007
  
 
   (dollars in thousands)
  
Total long-term debt   $ 615,990  
Aggregate funding under the receivables securitization facility     41,500  
   
 
Total Consolidated Indebtedness, as defined   $ 657,490  
   
 
Consolidated Bank EBITDA, as defined   $ 161,040  
Actual leverage ratio     4.08 x
   
 
Covenant requirement     5.25 x
   
 
(1)
Amount includes tax benefits associated with discontinued operations and cumulative effect of accounting change.

(2)
Non-cash charges associated with tangible and intangible asset impairments, including goodwill.

(3)
Represents management fees and expenses paid to Heartland pursuant to the former Advisory Agreement and Advisory Agreement termination.

(4)
Interest-equivalent costs associated with the Company's receivables securitization facility.

(5)
Non-cash expenses resulting from the grant of restricted shares of common stock and common stock options.

(6)
Non-recurring costs and expenses relating to cost savings projects, including restructuring and severance expenses, not to exceed $50,000,000 in the aggregate.

(7)
EBITDA from permitted dispositions, as defined.

(8)
EBITDA from permitted acquisitions, as defined.

(9)
Includes approximately $4.9 million call premium, $2.3 million write-off of debt issue costs and $0.3 million accretion of net discount, all incurred in connection with the retirement of $100.0 million face value of our senior subordinated notes in the second quarter of 2007.

        Three of our international businesses are also parties to loan agreements with banks, denominated in their local currencies. In the United Kingdom, we are party to a revolving debt agreement with a bank which is secured by a letter of credit under our credit facilities. At December 31, 2007, there was no balance outstanding under this agreement. In Italy, we are party to a €5.0 million note agreement with a bank (approximately $4.0 million outstanding at December 31, 2007) with a term of seven years, which expires December 12, 2012 and is secured by land and buildings of our local business unit. In Australia, we are party to a debt agreement with a bank in the amount of $20 million Australian dollars (approximately $17.5 million outstanding at December 31, 2007) for a term of five years which expires December 31, 2010. Borrowings under this arrangement are secured by substantially all the assets of the local business which is also subject to financial ratio and reporting covenants. Financial ratio covenants include: capital adequacy ratio (tangible net worth over total tangible assets), interest coverage ratio (EBIT over gross interest cost). In addition to the financial ratio covenants there are other financial restrictions such as: restrictions on dividend payments, U.S. parent loan repayments, negative pledge and undertakings with respect to related entities. As of December 31, 2007, total borrowings in the amount of $21.5 million were outstanding under these arrangements.

        Another important source of liquidity is our $125.0 million accounts receivable securitization facility, under which we have the ability to sell eligible accounts receivable to a third-party multi-seller receivables funding company. At December 31, 2007, we had $41.5 million utilized under our accounts receivable facility and $5.0 million of available funding based on eligible receivables and after consideration of leverage restrictions. At December 31, 2007, we also had $0.7 million outstanding under our revolving credit facility and had an additional $113.8 million potentially available after giving effect to approximately

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$35.5 million of letters of credit issued to support our ordinary course needs and after consideration of leverage restrictions. At December 31, 2007, we had aggregate available funding under our accounts receivable facility and our revolving credit facility of $118.8 million after consideration of the aforementioned leverage restrictions. The letters of credit are used for a variety of purposes, including to support certain operating lease agreements, vendor payment terms and other subsidiary operating activities, and to meet various states' requirements to self-insure workers' compensation claims, including incurred but not reported claims.

        We also have $337.8 million (face value) 97/8% senior subordinated notes, which are due in 2012, following our $100.0 million retirement effective in the second quarter of 2007.

        Principal payments required under our amended and restated credit facility term loan are: $0.7 million due each calendar quarter through June 30, 2013, and $242.5 million due on August 2, 2013 (or February 28, 2012 if the Company's existing senior subordinated notes are still outstanding as of that date).

        Our credit facility is guaranteed on a senior secured basis by us and all of our domestic subsidiaries, other than our special purpose receivables subsidiary, on a joint and several basis. In addition, our obligations and the guarantees thereof are secured by substantially all the assets of us and the guarantors.

        Our exposure to interest rate risk results from the variable rates under our credit facility. Borrowings under the credit facility bear interest, at various rates, as more fully described in Note 13, "Long-term Debt," to the accompanying consolidated financial statements as of December 31, 2007. Based on amounts outstanding at December 31, 2007, a 1% increase or decrease in the per annum interest rate for borrowings under our U.S. and foreign revolving credit facilities would change our interest expense by approximately $2.8 million annually.

        We have other cash commitments related to leases. We account for these lease transactions as operating leases and annual rent expense related thereto approximates $18.4 million. We expect to continue to utilize leasing as a financing strategy in the future to meet capital expenditure needs and to reduce debt levels.

        Annual rent expense for the fiscal year ended December 31, 2007 related to these lease transactions is as follows (in millions):

Operating lease
   Transaction
   Annual
lease cost
Real properties (7 properties)*   2002   $ 2.1
Real properties (2 properties)*   2003     0.9
Personal properties (plant and equipment)*   2002     0.9
Personal properties (plant and equipment)*   2003     2.2
Real properties   various     10.2
Personal properties (plant and equipment)   various     2.1
       
  Total       $ 18.4
       

        In connection with the sales of our industrial fastening and asphalt-coating lines of business during 2006 and February 2007, we purchased approximately $19.8 million of machinery and equipment under operating leases which was included as a part of the sales transactions. In the second quarter of 2007, using proceeds from our initial public offering, we purchased an additional approximate $17.1 million of machinery and equipment subject to operating leases. The buyback of these machinery and equipment assets resulted in an annual reduction in our lease expense of approximately $8.0 million.

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Market Risk

        We conduct business in various locations throughout the world and are subject to market risk due to changes in the value of foreign currencies. We do not currently use derivative financial instruments to manage these risks. The functional currencies of our foreign subsidiaries are the local currency in the country of domicile. We manage these operating activities at the local level and revenues and costs are generally denominated in local currencies; however, results of operations and assets and liabilities reported in U.S. dollars will fluctuate with changes in exchange rates between such local currencies and the U.S. dollar.

        As a result of our credit facility and senior subordinated notes, we are highly leveraged. In addition to normal capital expenditures, we may incur significant amounts of additional debt and further burden cash flow in pursuit of our internal growth and acquisition strategies.

        We believe that our liquidity and capital resources, including anticipated cash flows from operations, will be sufficient to meet our debt service, capital expenditure and other short-term and long-term obligation needs for the foreseeable future, but we are subject to unforeseeable events and risks.

Off-Balance Sheet Arrangements

        During 2007, we were party to an agreement to sell, on an ongoing basis, the trade accounts receivable of certain business operations to a wholly-owned, bankruptcy-remote, special purpose subsidiary, TSPC, Inc. ("TSPC"). TSPC, subject to certain conditions, may from time to time sell an undivided fractional ownership interest in the pool of domestic receivables, up to approximately $125.0 million, to a third party multi-seller receivables funding company, or conduit. The proceeds of the sale are less than the face amount of accounts receivable sold by an amount that approximates the purchaser's financing costs. Upon sale of receivables, our subsidiaries that originated the receivables retain a subordinated interest. Under the terms of the agreement, new receivables can be added to the pool as collections reduce receivables previously sold. The facility is an important source of liquidity. At December 31, 2007, we had $41.5 million utilized and $5.0 million available under this facility based on eligible receivables and after consideration of leverage restrictions.

        The facility is subject to customary termination events, including, but not limited to, breach of representations or warranties, the existence of any event that materially adversely affects the collectibility of receivables or performance by a seller and certain events of bankruptcy or insolvency. On December 31, 2007, the Company and TSPC amended the receivables transfer agreement to extend the expiration date to February 29, 2008 and reduce funding commitments under the facility to $75.0 million. On February 22, 2008, the Company completed the renewal of its receivables securitization facility. Key terms of the renewal include a customary 364-day term, committed funding of up to $90.0 million and a cost of funds under the facility equal to a commercial paper-based rate plus a usage fee of 1.05%. In future periods, if we are unable to renew or replace this facility, it could materially and adversely affect our liquidity.

Commitments and Contingencies

        Under various agreements, we are obligated to make future cash payments in fixed amounts. These include payments under our long-term debt agreements, rent payments required under operating lease agreements for [21] facilities and certain capital equipment, our allocable share of certain compensation and benefit obligations to Metaldyne and interest obligations on our senior secured term loan and senior subordinated notes. Interest on our credit facility term loan is based on LIBOR plus 225 basis points, which equaled 7.2% at December 31, 2007, and this rate was used to estimate our future interest obligations with respect to the term loan included in the table below.

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        The following table summarizes our expected fixed cash obligations over various future periods related to these items as of December 31, 2007.

 
   Payments Due by Periods (dollars in thousands)
 
   Total
   Less than
One Year
   1 - 3 Years
   3 - 5 Years
   More than
5 Years
Contractual cash obligations:                              
Long-term debt   $ 616,800   $ 8,390   $ 19,950   $ 344,710   $ 243,750
Lease obligations     139,660     15,360     27,040     19,880     77,380
Benefit obligations     4,060     350     710     710     2,290
Interest obligations:                              
  Term loan     99,120     18,440     36,330     35,570     8,780
  Subordinated notes     153,020     33,290     66,570     53,160      
   
 
 
 
 
    Total contractual obligations   $ 1,012,660   $ 75,830   $ 150,600   $ 454,030   $ 332,200
   
 
 
 
 

        As of December 31, 2007, we had a $90.0 million revolving credit facility and a $75.0 million accounts receivable facility (subsequently increased to $90.0 million on February 22, 2008). Throughout the year, outstanding balances under these facilities fluctuate and we incur additional interest (or, in the case of the accounts receivable facility, interest-like charges) obligations on such variable outstanding debt.

        As of December 31, 2007, we are contingently liable for standby letters of credit totaling $35.5 million issued on our behalf by financial institutions under our revolving credit facility. These letters of credit are used for a variety of purposes, including to support certain operating lease agreements, vendor payment terms and other subsidiary operating activities, and to meet various states' requirements to self-insure workers' compensation claims, including incurred but not reported claims.

Credit Rating

        We and certain of our outstanding debt obligations are rated by Standard & Poor's and Moody's. As of June 30, 2006, Standard & Poor's assigned our credit facilities, corporate credit and senior subordinated notes ratings of B+, B and CCC+ respectively, each with a stable outlook. As of June 30, 2006, Moody's assigned our credit facilities, corporate credit and senior subordinated notes ratings of B1, B2 and Caa1 respectively, each with a stable outlook. On September 27, 2006, Moody's upgraded the ratings on our credit facilities and senior subordinated notes from B1 to Ba2 and Caa1 to B3, respectively. This upgrade occurred in connection with Moody's changing the ratings on a number of high yield issues in the industrials and aerospace/defense sectors, as a result of the introduction of new rating methodology. In addition, in connection with the consummation of our initial public offering of common stock, as the ratings assigned to our credit facilities by Standard & Poor's remained at B+ (stable) or better and the ratings assigned to our credit facilities by Moody's remained at B1 (stable) or better, the applicable margin on all loans under our amended and restated credit agreement were reduced by 0.5% per annum.

        If our credit ratings were to decline, our ability to access certain financial markets may become limited, the perception of us in the view of our customers, suppliers and security holders may worsen and as a result, we may be adversely affected.

Impact of New Accounting Standards

        In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R) (SFAS No. 141(R)), "Business Combinations," which revises the current accounting practices for business combinations. Significant changes as a result of issuance of SFAS No. 141(R) include a revised definition of a business, expensing of acquisition-related transaction costs, and a change in how acquirers measure consideration, identifiable assets, liabilities assumed and goodwill acquired in a business combination. SFAS No. 141(R) is effective for business combinations occurring in fiscal years beginning after

66


December 15, 2008, and may not be retroactively applied. There is no impact on the Company's current consolidated financial statements.

        In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160 (SFAS No. 160), "Noncontrolling Interests in Consolidated Financial Statements," which establishes requirements for identification, presentation and disclosure of noncontrolling interests, treating them as a separate component of stockholder's equity. SFAS No. 160 is effective prospectively for fiscal years beginning after December 31, 2008. However, the presentation and disclosure requirements are required to be retrospectively applied to comparative financial statements. The Company is currently evaluating the impact of adopting SFAS No. 160 on its consolidated financial statements.

        In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159 (SFAS No. 159), "The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115," which permits entities to choose to measure certain financial instruments and other items at fair value. SFAS No. 159 is required to be adopted for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of adopting SFAS No. 159 on its consolidated financial statements.

        In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (SFAS No. 157), "Fair Value Measurements," which defines fair values, establishes a framework for measuring fair value in GAAP and requires enhanced disclosures about fair value measurements. This Statement applies when other accounting pronouncements require or permit fair value measurements. SFAS No. 157 is required to be adopted for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of adopting SFAS No. 157 on its consolidated financial statements.

Critical Accounting Policies

        The following discussion of accounting policies is intended to supplement the accounting policies presented in our audited financial statements included elsewhere in this prospectus. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, our evaluation of business and macroeconomic trends, and information from other outside sources, as appropriate.

        Accounting Basis for Transactions.    Prior to June 6, 2002, we were owned by Metaldyne. On November 28, 2000, Metaldyne was acquired by an investor group led by Heartland. On June 6, 2002, Metaldyne issued approximately 66% of our fully diluted common stock to an investor group led by Heartland. As a result of the transactions, we did not establish a new basis of accounting as Heartland was the controlling shareholder for both us and Metaldyne at the time and the transactions were accounted for as a reorganization of entities under common control.

        Receivables.    Receivables are presented net of allowances for doubtful accounts of approximately $5.2 million at December 31, 2007. We monitor our exposure for credit losses and maintain adequate allowances for doubtful accounts. We determine these allowances based on historical write-off experience and/or specific customer circumstances and provide such allowances when amounts are reasonably estimable and it is probable a loss has been incurred. We do not have concentrations of accounts receivable with a single customer or group of customers and do not believe that significant credit risk exists due to our diverse customer base. Trade accounts receivable of substantially all domestic business operations may be sold, on an ongoing basis, to TSPC.

        Depreciation and Amortization.    Depreciation is computed principally using the straight-line method over the estimated useful lives of the assets. Annual depreciation rates are as follows: buildings and buildings/land improvements, 10 to 40 years, and machinery and equipment, 3 to 15 years. Capitalized debt issuance costs are amortized over the underlying terms of the related debt securities. Customer

67


relationship intangibles are amortized over periods ranging from 6 to 25 years, while technology and other intangibles are amortized over periods ranging from 1 to 30 years. See further discussion under "Goodwill and Other Intangibles" below.

        Impairment of Long-Lived Assets and Finite-Lived Intangible Assets.    In accordance with Statement of Financial Accounting Standards No. 144, (SFAS No. 144), "Accounting for the Impairment or Disposal of Long-Lived Assets," the Company reviews, on a quarterly basis, the financial performance of each business unit for indicators of impairment. An impairment loss is recognized when the carrying value of an asset group exceeds the future net undiscounted cash flows expected to be generated by that asset group. The impairment loss recognized is the amount by which the carrying value of the asset group exceeds its fair value.

        In connection with our review of other long-lived assets, we review definite-lived intangible assets on a quarterly basis, or more frequently if events or changes in circumstances indicate that their carrying amounts may not be recoverable. The factors considered by management in performing these assessments include current operating results, business prospects, customer retention, market trends, potential product obsolescence, competitive activities and other economic factors. Effective January 1, 2006, we reduced the estimated useful lives assigned to certain customer relationship intangibles as follows: 40 years to 25 or 20 years, 25 years to 20 years, and 15 years to 12 years. We determined that a reduction in estimated useful lives assigned to certain customer relationship intangibles was warranted as of that date to reflect our updated evaluation of the period of expected future benefit derived from these customer relationship intangibles. Customer relationship intangibles are amortized over periods ranging from 6 to 25 years, while technology and other intangibles are amortized over periods ranging from 1 to 30 years. The effect of this change increased amortization expense approximately $2.4 million annually.

        Goodwill and Indefinite-Lived Intangibles.    We test goodwill and indefinite-lived intangible assets for impairment on an annual basis as required by Statement of Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142), by comparing the estimated fair value of each of our reporting units to their respective carrying values on our balance sheet. More frequent evaluations could become required under SFAS No. 142 if we experience changes in our business conditions. In assessing the recoverability of goodwill and indefinite-lived intangible assets, we estimate the fair value of each of our reporting units by calculating the present value of their expected future cash flows and other valuation measures. We then compare the estimates of fair value with the reporting unit's net asset carrying value on our balance sheet. If carrying value exceeds fair value, then a possible impairment of goodwill exists and further evaluation is performed. Goodwill is evaluated for impairment annually as of December 31 using management's operating budget and internal five-year forecast to estimate expected future cash flows. Discounting future cash flows requires us to make significant estimates regarding future revenues and expenses, projected capital expenditures, changes in working capital and the appropriate discount rate. The projections also take into account several factors including current and estimated economic trends and outlook, costs of raw materials, consideration of our market capitalization in comparison to the estimated fair values of our reporting units determined using discounted cash flow analyses and other factors which are beyond our control. At December 31, 2007, fair values of our reporting units were determined based upon the expected future cash flows discounted at weighted average costs of capital ranging from 11% - 17% and estimated residual growth rates ranging from 1% to 4%.

        Future declines in sales and/or operating profit, declines in the Company's stock price, or other changes in our business or the markets for our products could result in further reductions in remaining useful lives for customer relationship intangibles or in impairments of goodwill and other intangible assets.

        Pension and Postretirement Benefits Other than Pensions.    We account for pension benefits and postretirement benefits other than pensions in accordance with the requirements of FASB Statement of Financial Accounting Standards No. 87 (SFAS No. 87), "Employer's Accounting for Pensions," No. 88 (SFAS No. 88), "Employer's Accounting for Settlements and Curtailments of Defined Benefit Plans and for

68


Terminated Benefits," No. 106 (SFAS No. 106), "Employer's Accounting for Postretirement Benefits Other Than Pension," No. 132 (SFAS No. 132), "Employer's Disclosures about Pensions and Other Postretirement Benefits—an amendment of FASB Statements Nos. 87, 88, and 106" and No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans—An Amendment of FASB Statements No. 87, 88, 106 and 132(R)." Annual net periodic expense and accrued benefit obligations recorded with respect to our defined benefit plans are determined on an actuarial basis. We, together with our third-party actuaries, determine assumptions used in the actuarial calculations which impact reported plan obligations and expense. Annually, we and our actuaries review the actual experience compared to the most significant assumptions used and make adjustments to the assumptions, if warranted. The healthcare trend rates are reviewed with the actuaries based upon the results of their review of claims experience. Discount rates are based upon an expected benefit payments duration analysis and the equivalent average yield rate for high-quality fixed-income investments. Pension benefits are funded through deposits with trustees and the expected long-term rate of return on fund assets is based upon actual historical returns modified for known changes in the market and any expected change in investment policy. Postretirement benefits are not funded and our policy is to pay these benefits as they become due. Certain accounting guidance, including the guidance applicable to pensions, does not require immediate recognition of the effects of a deviation between actual and assumed experience or the revision of an estimate. This approach allows the favorable and unfavorable effects that fall within an acceptable range to be netted.

        Income Taxes.    Income taxes are accounted for using the provisions of FASB Statement of Financial Accounting Standards No. 109, (SFAS No. 109), "Accounting for Income Taxes," and FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes." Deferred income taxes are provided at currently enacted income tax rates for the difference between the financial statement and income tax basis of assets and liabilities and carry-forward items. The effective tax rate and the tax bases of assets and liabilities reflect management's estimates based on then-current facts. On an ongoing basis, we review the need for and adequacy of valuation allowances if it is more likely than not that the benefit from a deferred tax asset will not be realized. We believe the current assumptions and other considerations used to estimate the current year effective tax rate and deferred tax positions are appropriate. However, actual outcomes may differ from our current estimates and assumptions.

        Other Loss Reserves.    We have other loss exposures related to environmental claims, asbestos claims and litigation. Establishing loss reserves for these matters requires the use of estimates and judgment in regard to risk exposure and ultimate liability. We are generally self-insured for losses and liabilities related principally to workers' compensation, health and welfare claims and comprehensive general, product and vehicle liability. Generally, we are responsible for up to $0.5 million per occurrence under our retention program for workers' compensation, between $0.3 million and $2.0 million per occurrence under our retention programs for comprehensive general, product and vehicle liability, and have a $0.3 million per occurrence stop-loss limit with respect to our self-insured group medical plan. We accrue loss reserves up to our retention amounts based upon our estimates of the ultimate liability for claims incurred, including an estimate of related litigation defense costs, and an estimate of claims incurred but not reported using actuarial assumptions about future events. We accrue for such items in accordance with FASB Statement of Financial Accounting Standards No. 5, (SFAS No. 5), "Accounting for Contingencies" when such amounts are reasonably estimable and probable. We utilize known facts and historical trends, as well as actuarial valuations in determining estimated required reserves. Changes in assumptions for factors such as medical costs and actual experience could cause these estimates to change significantly.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

        In the normal course of business, we are exposed to market risk associated with fluctuations in foreign currency exchange rates. We are also subject to interest risk as it relates to long-term debt. See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" for details about our primary market risks, and the objectives and strategies used to manage these risks. Also see Note 13, "Long-term Debt," in the notes to the financial statements for additional information.

69

Item 8.    Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
TriMas Corporation:

        We have audited the accompanying consolidated balance sheets of TriMas Corporation and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of operations, cash flows, and shareholders' equity for each of the years in the three-year period ended December 31, 2007. In connection with our audits of the consolidated financial statements, we also have audited financial statement schedule in the 2007 Annual Report on Form 10-K. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TriMas Corporation and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

        Effective in 2007 the Company changed its method of accounting for pension and postretirement benefits pursuant to Statement of Financial Accounting Standards No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans an amendment of FASB Statements No. 87, 88, 106, and 132(R)". Effective January 1, 2007, the Company changed its method of accounting for income taxes pursuant to FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes an Interpretation of FASB Statement No. 109". Effective January 1, 2006, the Company changed its method of accounting for share-based payments pursuant to Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment". In 2005, the Company changed its method of accounting for conditional asset retirement obligations pursuant to FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations, an interpretation of Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations".

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), TriMas Corporation's internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 12, 2008 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

(signed) KPMG LLP


Detroit, Michigan
March 12, 2008

70


TriMas Corporation

Consolidated Balance Sheet

(Dollars in thousands)

 
   December 31,
  
 
   2007
   2006
  
Assets
  
Current assets:              
  Cash and cash equivalents   $ 4,800   $ 3,600  
  Receivables, net     89,370     98,800  
  Inventories, net     190,590     164,660  
  Deferred income taxes     18,860     24,310  
  Prepaid expenses and other current assets     7,010     7,320  
  Assets of discontinued operations held for sale     3,330     15,440  
   
 
 
    Total current assets     313,960     314,130  
Property and equipment, net     195,120     162,670  
Goodwill     377,340     529,730  
Other intangibles, net     214,290     240,120  
Other assets     27,280     39,410  
   
 
 
    Total assets   $ 1,127,990   $ 1,286,060  
   
 
 

Liabilities and Shareholders' Equity
 
Current liabilities:              
  Current maturities, long-term debt   $ 8,390   $ 9,700  
  Accounts payable     121,860     100,570  
  Accrued liabilities     71,830     70,450  
  Liabilities of discontinued operations     1,450     24,940  
   
 
 
    Total current liabilities     203,530     205,660  
Long-term debt     607,600     724,790  
Deferred income taxes     73,280     89,940  
Other long-term liabilities     35,090     32,890  
   
 
 
    Total liabilities     919,500     1,053,280  
   
 
 
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: 33,409,500 and 20,759,500 shares at December 31, 2007 and 2006, respectively     330     210  
Paid-in capital     525,960     399,070  
Accumulated deficit     (373,970 )   (215,220 )
Accumulated other comprehensive income     56,170     48,720  
   
 
 
    Total shareholders' equity     208,490     232,780  
   
 
 
    Total liabilities and shareholders' equity   $ 1,127,990   $ 1,286,060  
   
 
 

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

71


TriMas Corporation

Consolidated Statement of Operations

(Dollars in thousands, except per share amounts)

 
   Year ended December 31,
  
 
   2007
   2006
   2005
  
Net sales   $ 1,068,270   $ 1,013,910   $ 992,890  
Cost of sales     (779,380 )   (743,550 )   (749,270 )
   
 
 
 
  Gross profit     288,890     270,360     243,620  
Selling, general and administrative expenses     (185,910 )   (169,050 )   (157,820 )
Advisory services agreement termination fee     (10,000 )   —     —  
Costs for early termination of operating leases     (4,230 )   —     —  
Settlement of Canadian benefit plan liability     (3,870 )   —     —  
Net loss on dispositions of property and equipment     (2,070 )   (550 )   (690 )
Impairment of assets     (3,370 )   (510 )   (2,960 )
Impairment of goodwill and indefinite-lived intangible assets     (171,210 )   (116,500 )   —  
   
 
 
 
  Operating profit (loss)     (91,770 )   (16,250 )   82,150  
   
 
 
 
Other expense, net:                    
  Interest expense     (68,310 )   (79,060 )   (75,210 )
  Debt extinguishment costs     (7,440 )   (8,610 )   —  
  Other expense, net     (3,880 )   (4,150 )   (6,090 )
   
 
 
 
    Other expense, net     (79,630 )   (91,820 )   (81,300 )
   
 
 
 
Income (loss) from continuing operations before income tax benefit (expense)     (171,400 )   (108,070 )   850  
Income tax benefit (expense)     12,080     (1,700 )   (1,190 )
   
 
 
 
Loss from continuing operations     (159,320 )   (109,770 )   (340 )
Income (loss) from discontinued operations, net of income tax benefit (expense)     890     (19,140 )   (45,120 )
   
 
 
 
Loss before cumulative effect of change in accounting principle     (158,430 )   (128,910 )   (45,460 )
Cumulative effect of change in accounting principle     —     —     (420 )
   
 
 
 
Net loss   $ (158,430 ) $ (128,910 ) $ (45,880 )
   
 
 
 

Earnings (loss) per share—basic:
 
 
 
 
 
 
 
 
 
 
Continuing operations     (5.59 ) $ (5.43 ) $ (0.02 )
Discontinued operations, net of income tax benefit     0.03     (0.94 )   (2.25 )
Cumulative effect of change in accounting principle     —     —     (0.02 )
   
 
 
 
Net loss per share   $ (5.56 ) $ (6.37 ) $ (2.29 )
   
 
 
 
Weighted average common shares—basic     28,498,678     20,229,716     20,010,000  
   
 
 
 

Earnings (loss) per share—diluted:
 
 
 
 
 
 
 
 
 
 
Continuing operations   $ (5.59 ) $ (5.43 ) $ (0.02 )
Discontinued operations, net of income tax benefit     0.03     (0.94 )   (2.25 )
Cumulative effect of change in accounting principle     —     —     (0.02 )
   
 
 
 
Net loss per share   $ (5.56 ) $ (6.37 ) $ (2.29 )
   
 
 
 
Weighted average common shares—diluted     28,498,678     20,229,716     20,010,000  
   
 
 
 

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

72


TriMas Corporation

Consolidated Statement of Cash Flows

(Dollars in thousands)

 
   Year ended December 31,
  
 
   2007
   2006
   2005
  
Cash Flows from Operating Activities:                    
Net loss   $ (158,430 ) $ (128,910 ) $ (45,880 )
Adjustments to reconcile net loss to net cash provided by operating activities, net of acquisition impact:                    
  Impairment of goodwill and indefinite-lived intangible assets     171,210     116,500     —  
  Impairment of assets     3,370     15,760     73,220  
  (Gain) loss on dispositions of property and equipment     (630 )   3,530     300  
  Depreciation     25,870     22,250     24,160  
  Amortization of intangible assets     15,480     16,490     16,590  
  Amortization of debt issue costs     2,700     4,330     5,050  
  Deferred income taxes     (9,480 )   (11,280 )   (37,580 )
  Non-cash debt extinguishment costs     2,500     7,920     —  
  Non-cash compensation expense     550     1,350     310  
  Net proceeds from (reductions in) sale of receivables and receivables securitization     25,980     (14,120 )   (9,580 )
  (Increase) decrease in receivables     (15,670 )   9,760     (1,490 )
  (Increase) decrease in inventories     (25,080 )   (11,310 )   8,900  
  (Increase) decrease in prepaid expenses and other assets     12,540     (1,390 )   (230 )
  Increase (decrease) in accounts payable and accrued liabilities     13,690     (15,260 )   (5,900 )
  Other, net     370     260     1,600  
  Cumulative effect of change in accounting principle     —     —     420  
   
 
 
 
    Net cash provided by operating activities, net of acquisition impact     64,970     15,880     29,890  
   
 
 
 

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
  Capital expenditures     (34,730 )   (22,480 )   (21,670 )
  Acquisition of leased assets     (29,960 )   (7,360 )   —  
  Acquisition of businesses, net of cash acquired     (13,540 )   —     —  
  Net proceeds from disposition of businesses and other assets     9,320     7,680     5,030  
   
 
 
 
    Net cash used for investing activities     (68,910 )   (22,160 )   (16,640 )
   
 
 
 

Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
  Proceeds from sale of common stock in connection with the Company's initial public offering, net of issuance costs     126,460     —     —  
  Repayments of borrowings on senior credit facilities     (4,940 )   (257,410 )   (2,890 )
  Proceeds from borrowings on term loan facilities     —     260,000     24,250  
  Proceeds from borrowings on revolving credit facilities     508,540     688,870     884,450  
  Repayments of borrowings on revolving credit facilities     (524,920 )   (683,150 )   (916,300 )
  Debt issuance costs     —     (2,160 )   (2,120 )
  Retirement of senior subordinated notes     (100,000 )   —     —  
   
 
 
 
    Net cash provided by (used for) financing activities     5,140     6,150     (12,610 )
   
 
 
 

Cash and Cash Equivalents:
 
 
 
 
 
 
 
 
 
 
  Increase (decrease) for the year     1,200     (130 )   640  
  At beginning of year     3,600     3,730     3,090  
   
 
 
 
    At end of year   $ 4,800   $ 3,600   $ 3,730  
   
 
 
 
  Supplemental disclosure of cash flow information:                    
    Cash paid for interest   $ 63,690   $ 69,880   $ 70,550  
   
 
 
 
    Cash paid for taxes   $ 8,660   $ 14,050   $ 12,630  
   
 
 
 

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

73


TriMas Corporation
Consolidated Statement of Shareholders' Equity
Years Ended December 31, 2007, 2006 and 2005
(Dollars in thousands)

 
   Common
Stock
   Paid-In
Capital
   Accumulated
Deficit
   Accumulated
Other
Comprehensive
Income (Loss)
   Total
  
Balances, December 31, 2004   $ 200   $ 399,450   $ (40,430 ) $ 45,940   $ 405,160  
Comprehensive income (loss):                                
  Net loss     —     —     (45,880 )   —     (45,880 )
  Foreign currency translation     —     —     —     (7,470 )   (7,470 )
  Minimum pension liability (net of tax of $150)     —     —     —     (40 )   (40 )
                           
 
Total comprehensive loss                             (53,390 )
                           
 
Non-cash compensation expense (net of tax of $100)     —     210     —     —     210  
Net adjustments to reflect settlement of contractual obligations     —     (2,680 )   —     —     (2,680 )
   
 
 
 
 
 
Balances, December 31, 2005   $ 200   $ 396,980   $ (86,310 ) $ 38,430   $ 349,300  
                           
 
Comprehensive income (loss):                                
  Net loss     —     —     (128,910 )   —     (128,910 )
  Foreign currency translation                       9,720     9,720  
  Minimum pension liability (net of tax of $190)     —     —     —     570     570  
                           
 
Total comprehensive loss     —     —     —     —     (118,620 )
                           
 
Issuance of common stock     10     (10 )   —     —     —  
Non-cash compensation expense     —     1,350     —     —     1,350  
Net adjustments to reflect settlement of contractual obligations     —     750     —     —     750  
   
 
 
 
 
 
Balances at December 31, 2006   $ 210   $ 399,070   $ (215,220 ) $ 48,720   $ 232,780  
Comprehensive income (loss):                                
  Net loss     —     —     (158,430 )   —     (158,430 )
  Foreign currency translation                       8,900     8,900  
  Defined pension and postretirement pension plan amortization of actuarial losses (net of tax of $0.6 million)     —     —     —     1,020     1,020  
                           
 
Total comprehensive loss     —     —     —     —     (148,510 )
                           
 
Net proceeds from the Company's initial public offering of common stock (Note 2)     120     126,340     —     —     126,460  
Non-cash compensation expense     —     550     —     —     550  
Effects of accounting change regarding pension and post-retirement plan measurement dates pursuant to SFAS No. 158 (net of tax of $0.1 million) (Note 17)     —     —     (200 )   —     (200 )
Cumulative impact of change in accounting for benefit plans (net of tax of $1.2 million) (Note 17)     —     —     —     (2,470 )   (2,470 )
Cumulative impact of change in accounting for                             —  
  uncertainties in income taxes (Note 20)     —     —     (120 )         (120 )
   
 
 
 
 
 
Balances at December 31, 2007   $ 330   $ 525,960   $ (373,970 ) $ 56,170   $ 208,490  
   
 
 
 
 
 

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

74


TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

1. Basis of Presentation

        TriMas Corporation ("TriMas" or the "Company"), and its consolidated subsidiaries, is a global manufacturer of products for commercial, industrial and consumer markets. The Company is principally engaged in five business segments with diverse products and market channels. Packaging Systems is a manufacturer and distributor of steel and plastic closure caps, drum enclosures, rings and levers, dispensing systems for industrial and consumer markets, as well as specialty laminates, jacketings and insulation tapes used with fiberglass insulation as vapor barriers in commercial and industrial construction applications. Energy Products is a manufacturer and distributor of a variety of engines and engine replacement parts for the oil and gas industry as well as metallic and non-metallic industrial gaskets and fasteners for the petroleum refining, petrochemical and other industrial markets. Industrial Specialties designs and manufactures a diverse range of industrial products for use in niche markets within the aerospace, industrial, automotive, defense, and medical equipment markets. These products include highly engineered specialty fasteners for the aerospace industry, high-pressure and low-pressure cylinders for the transportation, storage and dispensing of compressed gases, spinal and trauma implant products for the medical industry, specialty fasteners for the automotive industry, specialty precision tools such as center drills, cutters, end mills, reamers, master gears, punches, and specialty ordnance components. RV & Trailer Products is a manufacturer and distributor of custom-engineered trailer products, brake control solutions, lighting accessories and roof racks for the recreational vehicle, agricultural/industrial, marine, automotive and commercial trailer markets. Recreational Accessories manufactures towing products, 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 which are distributed through independent installers and retail outlets.

        During the fourth quarter of 2007, the Company committed to a plan to sell its rocket launcher and property management lines of business, both of which were part of the Industrial Specialties operating segment. The Company sold the rocket launcher business in December 2007. During the fourth quarter of 2005, the Company committed to a plan to sell its industrial fastening business. The industrial fastening business consisted of three locations: Wood Dale, Illinois, Frankfort, Indiana and Lakewood, Ohio. The Company sold the Wood Dale and Lakewood operating locations in December 2006 and the Frankfort operating location in February 2007. In addition, during the second quarter of 2006, the Company committed to a plan and sold its asphalt-coated paper line of business, which was part of the Packaging Systems operating segment. The results of operations for all of the aforementioned discontinued businesses are reported as discontinued operations for all periods presented and as assets held for sale in the accompanying consolidated balance sheet. See Note 5, "Discontinued Operations and Assets Held for Sale."

2. Initial Public Offering

        During the second quarter of 2007, the Company completed the sale of 12,650,000 shares of common stock to the public pursuant to an effective registration statement at a price of $11.00 per share. Gross proceeds from the common stock offering were $139.2 million. Net proceeds from the offering, after deducting underwriting discounts and commissions of $9.7 million and offering expenses of $3.0 million,

75

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

2. Initial Public Offering (Continued)


totaled approximately $126.5 million. The net proceeds of $126.5 million, together with approximately $10.1 million of cash on hand and revolving credit borrowings, were utilized as follows (in thousands):

Retirement of senior subordinated notes   $ 100,000
Call premium associated with retirement of senior subordinated notes     4,940
Advisory services agreement termination fee     10,000
Early termination of operating leases and acquisition of underlying machinery and equipment     21,680
   
    $ 136,620
   

        In connection with the common stock offering and the use of proceeds therefrom, the Company incurred the following costs and expenses which are included in the Company's statement of operations for the year ended December 31, 2007 (in thousands):

Advisory services agreement termination fee   $ 10,000
Call premium associated with retirement of senior subordinated notes     4,940
Costs for early termination of operating leases     4,230
Non-cash write-off of deferred financing fees and accretion of unamortized discount and premium associated with retirement of senior subordinated notes     2,500
   
    $ 21,670
   

3. Summary of Significant Accounting Policies

        Principles of Consolidation.    The accompanying financial statements include the accounts and transactions of TriMas and its wholly-owned subsidiaries. Significant intercompany transactions have been eliminated.

        Use of Estimates.    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill and other intangibles, valuation allowances for receivables, inventories and deferred income tax assets, reserves for legal and product liability matters and assets and obligations related to employee benefits. Actual results may differ from such estimates and assumptions.

        Revenue Recognition.    Revenues from product sales, except products shipped on a consignment basis, are recognized when products are shipped or services are provided to customers, the customer takes ownership and assumes risk of loss, the sales price is fixed and determinable and collectability is reasonably assured. Net sales is comprised of gross revenues less estimates of expected returns, trade discounts and customer allowances, which include incentives such as cooperative advertising agreements, volume discounts and other supply agreements in connection with various programs. Such deductions are recorded

76

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

3. Summary of Significant Accounting Policies (Continued)


during the period the related revenue is recognized. For products shipped on a consignment basis, revenue is recognized when the customer provides notice of end product use or sale.

        Cost of Sales.    Cost of sales includes material, labor and overhead costs incurred in the manufacture of products sold in the period. Material costs include raw material, purchased components, outside processing and inbound freight costs. Overhead costs consist of variable and fixed manufacturing costs, wages and fringe benefits, and purchasing, receiving and inspection costs.

        Selling, General and Administrative Expenses.    Selling, general and administrative expenses include the following: costs related to the advertising, sale, marketing and distribution of our products, shipping and handling costs, amortization of customer intangible assets, costs of finance, human resources, and legal functions, executive management costs, and other administrative expenses.

        Cash and Cash Equivalents.    The Company considers cash on hand and on deposit and investments in all highly liquid debt instruments with initial maturities of three months or less to be cash and cash equivalents.

        Receivables.    Receivables are presented net of allowances for doubtful accounts of approximately $5.2 million and $5.6 million at December 31, 2007 and 2006, respectively. The Company monitors its exposure for credit losses and maintains allowances for doubtful accounts based upon the Company's best estimate of probable losses inherent in the accounts receivable balances. The Company does not believe that significant credit risk exists due to its diverse customer base.

        Inventories.    Inventories are stated at the lower of cost or net realizable value, with cost determined using the first-in, first-out method. Direct materials, direct labor and allocations of variable and fixed manufacturing-related overhead are included in inventory cost.

        Property and Equipment.    Property and equipment additions, including significant improvements, are recorded at cost. Upon retirement or disposal of property and equipment, the cost and accumulated depreciation are removed from the accounts, and any gain or loss is included in the accompanying statement of operations. Repair and maintenance costs are charged to expense as incurred.

        Depreciation and Amortization.    Depreciation is computed principally using the straight-line method over the estimated useful lives of the assets. Annual depreciation rates are as follows: buildings and buildings/land improvements, 10 to 40 years, and machinery and equipment, 3 to 15 years. Capitalized debt issuance costs are amortized over the underlying terms of the related debt securities. Customer relationship intangibles are amortized over periods ranging from 6 to 25 years, while technology and other intangibles are amortized over periods ranging from 1 to 30 years.

        Impairment of Long-Lived Assets and Finite-Lived Intangible Assets.    In accordance with Statement of Financial Accounting Standards No. 144 (SFAS No. 144), "Accounting for the Impairment or Disposal of Long-Lived Assets," the Company reviews, on a quarterly basis, the financial performance of each business unit for indicators of impairment. An impairment loss is recognized when the carrying value of an asset group exceeds the future net undiscounted cash flows expected to be generated by that asset group. The impairment loss recognized is the amount by which the carrying value of the asset group exceeds its fair value. The Company tests finite-lived intangibles for impairment on an annual basis, or more frequently, if events or changes in circumstances indicate that their carrying amount may not be recoverable. The factors considered by management in performing this assessment include current operating results, business

77

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

3. Summary of Significant Accounting Policies (Continued)


prospects, market trends, potential product obsolescence, competitor activities customer retention and other economic factors.

        Goodwill and Indefinite-Lived Intangibles.    The Company tests goodwill and indefinite-lived intangible assets for impairment on an annual basis as required by Statement of Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142), by comparing the estimated fair value of each of the Company's reporting units to their respective carrying values. More frequent evaluations could become required under SFAS No. 142 if the Company experiences changes in its business conditions. In assessing the recoverability of goodwill and indefinite-lived intangible assets, the Company estimates the fair value of each of its reporting units by calculating the present value of its expected future cash flows and other valuation measures. The Company then compares the estimates of fair value with the reporting unit's net asset carrying value. If carrying value exceeds fair value, then a possible impairment of goodwill exists and further evaluation is performed. Goodwill is evaluated for impairment annually as of December 31 using management's operating budget and internal five-year forecast to estimate expected future cash flows. Projecting discounted future cash flows requires the Company to make significant estimates regarding future revenues and expenses, projected capital expenditures, changes in working capital and the appropriate discount rate. The projections also take into account several factors including current and estimated economic trends and outlook, costs of raw materials, consideration of our market capitalization in comparison to the estimated fair values of the Company's reporting units determined using discounted cash flow analyses and other factors which are beyond the Company's control.. At December 31, 2007, fair values of the Company's reporting units were determined based upon the expected future cash flows discounted at weighted average costs of capital ranging from 11%—17% and estimated residual growth rates ranging from 1% to 4%.

        Fair Value of Financial Instruments.    Statement of Financial Accounting Standards No. 107 (SFAS No. 107), "Disclosures about Fair Value of Financial Instruments," requires disclosures about the fair value of all financial instruments, whether or not recognized in the balance sheet. The carrying value of financial instruments reported in the balance sheet for current assets and current liabilities approximates fair value. Management believes the carrying value of the term loan debt approximates fair value, based on market comparisons to debt instruments of like kind and quality, while the senior subordinated notes traded at an approximate 2.0% discount below par value as of December 31, 2007.

        Foreign Currency Translation.    The financial statements of subsidiaries located outside of the United States are measured using the currency of the primary economic environment in which they operate as the functional currency. Net foreign currency transaction gains (losses) were approximately $(0.2) million, $0.1 million and $(2.3) million for the years ended December 31, 2007, 2006 and 2005, respectively, and are included in other expense, net in the accompanying statement of operations. When translating into U.S. dollars, income and expense items are translated at average monthly exchange rates and assets and liabilities are translated at exchange rates in effect at the balance sheet date. Translation adjustments resulting from translating the functional currency into U.S. dollars are deferred as a component of accumulated other comprehensive income (loss) in the statement of shareholders' equity.

        Self-insurance.    The Company is generally self-insured for losses and liabilities related to workers' compensation, health and welfare claims and comprehensive general, product and vehicle liability. The Company is generally responsible for up to $0.5 million per occurrence under its retention program for workers' compensation, between $0.3 million and $2.0 million per occurrence under its retention programs

78

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

3. Summary of Significant Accounting Policies (Continued)


for comprehensive general, product and vehicle liability, and has a $0.3 million per occurrence stop-loss limit with respect to its self-insured group medical plan. Total insurance limits under these retention programs vary by year for comprehensive general, product and vehicle liability and extend to the applicable statutory limits for workers' compensation. Reserves for claims losses, including an estimate of related litigation defense costs, are recorded based upon the Company's estimates of the aggregate liability for claims incurred using actuarial assumptions about future events. Changes in assumptions for factors such as medical costs and actual experience could cause these estimates to change.

        Pension Plans and Postretirement Benefits Other Than Pensions.    Annual net periodic pension expense and benefit liabilities under defined benefit pension plans are determined on an actuarial basis. Assumptions used in the actuarial calculations have a significant impact on plan obligations and expense. Annually, the Company reviews the actual experience compared to the more significant assumptions used and makes adjustments to the assumptions, if warranted. The healthcare trend rates are reviewed with the actuaries based upon the results of their review of claims experience. Discount rates are based upon an expected benefit payments duration analysis and the equivalent average yield rate for high-quality fixed-income investments. Pension benefits are funded through deposits with trustees and the expected long-term rate of return on fund assets is based upon actual historical returns modified for known changes in the market and any expected change in investment policy. Postretirement benefits are not funded and it is the Company's policy to pay these benefits as they become due.

        Shipping and Handling Expenses.    Freight costs are included in cost of sales and shipping and handling expenses, including those of Recreational Accessories' distribution network, are included in selling, general and administrative expenses in the accompanying statement of operations. Shipping and handling costs were $4.7 million, $4.7 million and $4.4 million for the years ended December 31, 2007, 2006 and 2005, respectively.

        Advertising and Sales Promotion Costs.    Advertising and sales promotion costs are expensed as incurred. Advertising costs were $12.9 million, $11.4 million and $10.0 million for the years ended December 31, 2007, 2006 and 2005, respectively.

        Research and Development Costs.    Research and development ("R&D") costs are expensed as incurred and approximated $1.7 million, $1.3 million and $0.9 million for the years ended December 31, 2007, 2006 and 2005, respectively.

        Earnings Per Share.    Basic and diluted earnings per share amounts are determined in accordance with Statement of Financial Accounting Standards No. 128 (SFAS No. 128), "Earnings per Share." The diluted earnings per share for the year ended December 31, 2005 does not consider a warrant to purchase 750,000 shares of common stock at par value of $0.01 per share, because to do so would have been anti-dilutive for the period then ended. The warrant was exercised on September 15, 2006. As of December 31, 2007, 138,541 restricted shares of common stock were outstanding but were excluded from the computation of net income (loss) per share because to do so would have been anti-dilutive for the period presented. Options to purchase 2,000,481, 2,008,201 and 1,946,123 shares of common stock were outstanding at December 31, 2007, 2006 and 2005, respectively, but were excluded from the computation of net income (loss) per share because to do so would have been anti-dilutive for the periods presented.

        Stock-based Compensation.    The Company adopted Statement of Financial Accounting Standards No. 123R (SFAS No. 123R), "Share-Based Payment," effective January 1, 2006, using the Modified

79

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

3. Summary of Significant Accounting Policies (Continued)


Prospective Application (MPA) method. The MPA method requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The MPA method requires the Company to record expense for unvested stock options that were previously valued at fair value for purposes of the historical pro forma requirements under Statement of Financial Accounting Standards No. 123, "Stock-Based Compensation" (SFAS No. 123), and awarded prior to January 1, 2006, but does not require restatement of prior year information. Prior to adopting SFAS No. 123R, the Company accounted for stock-based employee compensation using the intrinsic value method under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."

        The following tables illustrate the pro forma effect on the per share and total amounts of income from continuing operations and net loss for the year ended December 31, 2005 if the Company had adopted the fair value recognition provisions of SFAS No. 123R related to stock-based employee compensation (dollars in thousands, except for per share amounts):

Continuing operations income (loss), as reported   $ (340 )
  Add: Stock-based employee compensation expense included in reported net income, net of related tax effects     210  
  Deduct: Stock-based employee compensation expense determined under fair-value based method for all awards, net of related tax effects     (1,110 )
   
 
Pro forma net income from continuing operations attributed to common stock   $ (1,240 )
   
 
Earnings per share—basic and diluted:        
Continuing operations, as reported   $ (0.02 )
   
 
Continuing operations, pro forma for stock-based compensation   $ (0.06 )
   
 

Net loss, as reported
 
$
(45,880
)
  Add: Stock-based employee compensation expense included in reported net income, net of related tax effects     210  
  Deduct: Stock-based employee compensation expense determined under fair-value based method for all awards, net of related tax effects     (1,110 )
   
 
Pro forma net loss attributed to common stock   $ (46,780 )
   
 
Earnings (loss) per share—basic and diluted:        
Net loss per share, as reported   $ (2.29 )
   
 
Net loss per share, pro forma for stock-based compensation   $ (2.34 )
   
 

        Income Taxes.    The Company computes income taxes using the asset and liability method, whereby deferred income taxes using current enacted tax rates are provided for the temporary differences between the financial reporting basis and the tax basis of TriMas' assets and liabilities. The Company records interest and penalties related to unrecognized tax benefits in income tax expense.

        Other Comprehensive Income.    The Company refers to other comprehensive income as revenues, expenses, gains and losses that under accounting principles generally accepted in the United States are

80

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

3. Summary of Significant Accounting Policies (Continued)


included in comprehensive income but are excluded from net earnings as these amounts are recorded directly as an adjustment to stockholders' equity. Other comprehensive income is comprised of foreign currency translation adjustments and amortization of prior service costs and unrecognized gains and losses in actuarial assumptions.

        The components of accumulated other comprehensive income are as follows:

 
   Balance,
December 31, 2007
   Balance,
December 31, 2006
  
 
   (dollars in thousands)

  
Foreign currency translation   $ 61,530   $ 52,630  
Unrecognized prior service cost and unrecognized loss in actuarial assumptions (net of tax of $2.7 million and $2.4 million in 2007 and 2006, respectively)     (5,360 )   (3,910 )
   
 
 
Accumulated other comprehensive income   $ 56,170   $ 48,720  
   
 
 

        Asset Retirement Obligations.    In the fourth quarter 2005, the Company adopted FASB Interpretation No. 47 (FIN 47), "Accounting for Conditional Asset Retirement Obligations," which clarifies the term conditional asset retirement obligation as used in FASB Statement of Financial Accounting Standards No. 143 (SFAS No. 143), "Accounting for Asset Retirement Obligations." The Company adopted FIN 47 as of December 31, 2005 and recorded a cumulative effect of a change in accounting principle of approximately $0.4 million, net of income tax benefit of $0.3 million. Pro forma balance sheet information has not been provided as the impact to the balance sheet is not material.

4. New Accounting Pronouncements

        In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R) (SFAS No. 141(R)), "Business Combinations," which revises the current accounting practices for business combinations. Significant changes as a result of issuance of SFAS No. 141(R) include a revised definition of a business, expensing of acquisition-related transaction costs, and a change in how acquirers measure consideration, identifiable assets, liabilities assumed and goodwill acquired in a business combination. SFAS No. 141(R) is effective for business combinations occurring in fiscal years beginning after December 15, 2008, and may not be retroactively applied. There is no impact on the Company's current consolidated financial statements.

        In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160 (SFAS No. 160), "Noncontrolling Interests in Consolidated Financial Statements," which establishes requirements for identification, presentation and disclosure of noncontrolling interests, treating them as a separate component of stockholder's equity. SFAS No. 160 is effective prospectively for fiscal years beginning after December 31, 2008. However, the presentation and disclosure requirements are required to be retrospectively applied to comparative financial statements. The Company is currently evaluating the impact of adopting SFAS No. 160 on its consolidated financial statements.

        In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159 (SFAS No. 159), "The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115," which permits entities to choose to measure certain financial instruments and other items at fair value. SFAS No. 159 is required to be adopted for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of adopting SFAS No. 159 on its consolidated financial statements.

81

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

4. New Accounting Pronouncements (Continued)

        In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (SFAS No. 157), "Fair Value Measurements," which defines fair values, establishes a framework for measuring fair value in GAAP and requires enhanced disclosures about fair value measurements. This Statement applies when other accounting pronouncements require or permit fair value measurements. SFAS No. 157 is required to be adopted for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of adopting SFAS No. 157 on its consolidated financial statements.

5. Discontinued Operations and Assets Held for Sale

        During the fourth quarter of 2007, the Company committed to a plan to sell its rocket launcher and property management lines of business, both of which were part of the Industrial Specialties operating segment. The Company sold the assets of the rocket launcher business in December 2007 for cash proceeds of approximately $3.1 million, and recognized a gain on sale of approximately $2.3 million.

        During the second quarter of 2006, the Company sold its asphalt-coated paper line of business, which was part of the Packaging Systems operating segment, for approximately $1.1 million, and recognized a loss on sale of approximately $3.6 million.

        During the fourth quarter of 2005, the Company committed to a plan to sell its industrial fastening business. The industrial fastening business consisted of three locations: Wood Dale, Illinois, Frankfort, Indiana and Lakewood, Ohio. The Company recognized impairment charges of approximately $15.3 million and $70.3 million in 2006 and 2005, respectively, related to the industrial fastening business to write-down the value of tangible and intangible assets to fair value. The Company sold the Wood Dale and Lakewood operating locations in December 2006 for gross cash proceeds of approximately $5.6 million and a short-term note receivable of approximately $0.2 million, and recognized a loss on sale of approximately $0.5 million. In February 2007, the Company sold the Frankfort operating location for gross cash proceeds of approximately $4.0 million and a note receivable of $2.5 million.

        The Wood Dale manufacturing facility is subject to a lease agreement expiring in 2022 which was not assumed by the purchaser of this business. Prior to the sale, the Company conducted a market study on the property and concluded that it would likely be able to recover substantially all of its future obligations under the lease through future sublease arrangements. In the fourth quarter of 2007, the Company had its prior market study updated. Based on changes in the economy and an increase in available properties in the area, which were being offered at rates below the Company's existing lease contract, the Company concluded it would not be able to recover substantially all of its future obligations, and recorded a charge of $3.6 million, which represents the Company's best estimate of unrecoverable future obligations under its lease contract.

        The results of the industrial fastening business, the asphalt-coated paper business, the rocket launcher business and the property management business are reported as discontinued operations for all periods presented.

82

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

5. Discontinued Operations and Assets Held for Sale (Continued)

        Results of discontinued operations are summarized as follows:

 
   Year ended December 31,
  
 
   2007
   2006
   2005
  
 
   (dollars in thousands)

  
Net sales   $ 18,780   $ 100,280   $ 116,110  
   
 
 
 
Income (loss) from discontinued operations, before income tax (expense) benefit   $ 2,560   $ (27,360 ) $ (76,890 )
Income tax (expense) benefit     (1,670 )   8,220     31,770  
   
 
 
 
Income (loss) from discontinued operations, net of income tax (expense) benefit   $ 890   $ (19,140 ) $ (45,120 )
   
 
 
 

        Assets and liabilities of the discontinued operations are summarized as follows:

 
   2007
   2006
 
   (dollars in thousands)
Receivables, net   $ 940   $ 8,190
Inventories     60   $ 4,720
Property and equipment, net     2,330     2,530
   
 
  Total assets   $ 3,330   $ 15,440
   
 
Accounts payable   $ 60   $ 8,540
Accrued liabilities and other     1,390     16,400
   
 
  Total liabilities   $ 1,450   $ 24,940
   
 

6. Huntsville Plant Closure

        In October 2007, the Company announced plans to close its manufacturing facility in Huntsville, Ontario, Canada during the fourth quarter of 2007, and consolidate its operations into the Company's Goshen, Indiana manufacturing facility. These actions were substantially complete as of December 31, 2007. As a result of these actions, the Company recorded a pre-tax charge within its Recreational Accessories segment of approximately $9.0 million, of which approximately $5.6 million relates to cash costs incurred as a part of the closure as determined under the provisions of Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," primarily relating to severance benefits to approximately 160 employees terminated as a part of the closure. As of December 31, 2007, the Company has paid approximately $2.5 million of the cash costs of the facility closure, with the remaining $3.1 million to be paid during 2008. The remaining $3.4 million of the pre-tax charge relates to impairment of assets recorded in accordance with SFAS No. 144 to reduce the book value of the building and building improvements and certain machinery and equipment assets that the Company will no longer utilize to management's estimate of net realizable value (see Note 11). The Company expects to incur approximately $0.7 million in estimated costs and expenses in 2008 resulting from completion of the consolidation into the Goshen facility and recording severance and other benefits for approximately 10 key employees remaining with the Company until the closure is finalized.

83

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

7. Acquisitions

        During the third quarter of 2007, the Company completed two acquisitions. On July 12, 2007, the Company acquired certain assets from Quest Technologies LLC, expanding the Company's fifth-wheel product offerings in its Recreational Accessories segment. In addition, on August 1, 2007, the Company acquired all of the capital stock of DEW Technologies, Inc., a manufacturer of specialty, high-precision spinal and trauma implant products serving the orthopedic device industry. DEW Technologies is included in the Company's Industrial Specialties segment and broadens the Company's product offerings in the medical device industry.

        The allocation of the purchase price for these acquisitions is subject to refinement of management estimates and finalization of working capital adjustments. The purchase price of each of these acquisitions is also subject to adjustments resulting from earn-out clauses based on future operating results, which extend up to five years.

        The results of operations of the aforementioned acquisitions are not significant compared to the overall results of operations of the Company.

8. Goodwill and Other Intangible Assets

        The Company tests goodwill for impairment on an annual basis using a measurement date of December 31, unless a change in business conditions occurs which requires a more frequent evaluation. In assessing the recoverability of goodwill and indefinite-lived intangible assets, the Company estimates the fair value of each reporting unit and compares it to the net asset carrying values. Similarly, the Company also reviews definite-lived intangible assets on an annual basis, or more frequently if events or changes in circumstances indicate that their carrying values may not be recoverable.

        In completing its annual test of goodwill and indefinite-lived intangible asset impairment as of December 31, 2007, the Company's Step I testing indicated that the carrying values of its Recreational Accessories and RV & Trailer Products reporting units exceeded their estimated fair values. The Company estimates the fair value of its reporting units using the present value of estimated future cash flows and other market valuation measures. The estimated future cash flows used in performing these valuations are derived from management's operating budget and five-year long-range forecast, and requires the Company to make significant estimates regarding future revenues and expenses, projected capital expenditures, changes in working capital amounts and the weighted average cost of capital for purposes of deriving appropriate discount rates by reporting unit. In addition, the Company also considers other factors when determining the estimated fair value of its reporting units, including its current market capitalization, the uncertain economic outlook and credit markets, the Company's credit risk due to its leverage, elevated fuel prices, declining consumer confidence and flat or declining end-markets in certain of the Company's businesses. Upon completion of the valuation of the Company's reporting units, the estimated fair values of the Company's Recreational Accessories and RV & Trailer Products reporting units were below their carrying values, resulting in a Step I impairment. Based on the results of Step II testing required under SFAS No. 142, the Company recorded pre-tax goodwill and indefinite-lived intangible asset impairment charges in the fourth quarter of 2007 of $61.2 million and $9.2 million, respectively, in its Recreational Accessories reporting unit and $98.4 million and $2.4 million, respectively, in the Company's RV & Trailer Products reporting unit.

        In completing its annual test of goodwill impairment as of December 31, 2006, the Company's Step I testing indicated that the carrying values of its Recreational Accessories and RV & Trailer Products reporting units exceeded their estimated fair values. The estimated fair values of the Company's

84

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

8. Goodwill and Other Intangible Assets (Continued)


Recreational Accessories and RV & Trailer Products reporting units decreased as a result of declining sales and/or profitability in 2006 compared to sales and profitability levels in prior years and the Company's operating plan and a decline in the estimated market value of these reporting units. Based on the results of Step II testing required under SFAS No. 142, the Company recorded a pre-tax goodwill impairment charge of $19.0 million in its Recreational Accessories reporting unit and a $97.5 million pre-tax goodwill impairment charge in the Company's RV & Trailer Products reporting unit.

        Future declines in sales and operating profit or declines in the Company's stock price may result in additional goodwill and indefinite-lived intangible asset impairments.

        Changes in the carrying amount of goodwill for the years ended December 31, 2007 and 2006 are as follows:

 
   Packaging
Systems
   Energy
Products
   Industrial
Specialties
   RV & Trailer
Products
   Recreational
Accessories
   Total
  
 
   (dollars in thousands)

  
Balance, December 31, 2005   $ 179,350   $ 45,200   $ 62,720   $ 242,720   $ 114,790   $ 644,780  
  Reversal of restructuring reserves established in purchase accounting, net of of tax     —     —     —     (40 )   —     (40 )
  Adjustment to tax contingencies established in purchase accounting     —     —     —     (4,470 )   (1,400 )   (5,870 )
  Impairment charge     —     —     —     (97,500 )   (19,000 )   (116,500 )
  Foreign currency translation and
other		     7,330     (10 )   —     120     (80 )   7,360  
   
 
 
 
 
 
 
Balance, December 31, 2006     186,680     45,190     62,720     140,830     94,310     529,730  
   
 
 
 
 
 
 
  Goodwill from acquisitions     —     —     2,230     —     2,320     4,550  
  Adjustment to tax contingencies established in purchase accounting     —     —     —     (450 )   310     (140 )
  Impairment charge     —     —     —     (98,380 )   (61,210 )   (159,590 )
  Foreign currency translation and
other		     4,010     860     —     190     (2,270 )   2,790  
   
 
 
 
 
 
 
Balance, December 31, 2007   $ 190,690   $ 46,050   $ 64,950   $ 42,190   $ 33,460   $ 377,340  
   
 
 
 
 
 
 

        Effective January 1, 2006, the Company reduced estimated useful lives assigned to certain customer relationship intangibles as follows: 40 years to 25 or 20 years, 25 years to 20 years and 15 years to 12 years. The Company determined that a reduction in estimated useful lives assigned to certain customer relationship intangibles was warranted as of that date to reflect its updated evaluation of the period of expected future benefit related to these customer relationship intangibles. This reduction in estimated useful lives increased the Company's 2007 and 2006 amortization expense related to customer relationship intangibles by approximately $2.4 million.

85

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

8. Goodwill and Other Intangible Assets (Continued)

        The gross carrying amounts and accumulated amortization for the Company's other intangibles as of December 31, 2007 and 2006 are summarized below. The Company amortizes these assets over periods ranging from 1 to 30 years.

 
   As of December 31, 2007
   As of December 31, 2006
  
Intangible Category by Useful Life
   Gross Carrying
Amount
   Accumulated
Amortization
   Gross Carrying
Amount
   Accumulated
Amortization
  
 
   (dollars in thousands)

  
Customer relationships:                          
  6 - 12 years   $ 27,980   $ (17,910 ) $ 26,500   $ (15,900 )
  15 - 25 years     169,190     (49,190 )   171,920     (40,730 )
   
 
 
 
 
Total customer relationships     197,170     (67,100 )   198,420     (56,630 )
   
 
 
 
 
Technology and other:                          
  1 - 15 years     26,630     (18,190 )   26,010     (16,170 )
  17 - 30 years     40,830     (12,690 )   40,180     (10,780 )
   
 
 
 
 
Total technology and other     67,460     (30,880 )   66,190     (26,950 )
   
 
 
 
 
Trademark/Trade names (indefinite life)     51,990     (4,350 )   63,400     (4,310 )
   
 
 
 
 
    $ 316,620   $ (102,330 ) $ 328,010   $ (87,890 )
   
 
 
 
 

        Amortization expense related to technology and other intangibles was approximately $4.1 million, $4.1 million and $4.8 million for the years ended December 31, 2007, 2006 and 2005, respectively, and is included in cost of sales in the accompanying statement of operations. Amortization expense related to customer intangibles was approximately $11.3 million, $12.0 million and $10.4 million for the years ended December 31, 2007, 2006 and 2005, respectively, and is included in selling, general and administrative expense in the accompanying statement of operations.

        Estimated amortization expense for the next five fiscal years beginning after December 31, 2007 is as follows: 2008—$15.0 million, 2009—$15.0 million, 2010—$14.3 million, 2011—$13.4 million and 2012—$13.2 million.

9. Accounts Receivable Securitization

        TriMas is party to a receivable securitization facility through TSPC, Inc. ("TSPC"), a wholly-owned subsidiary, to sell trade accounts receivable of substantially all of the Company's domestic business operations.

        TSPC from time to time may sell an undivided fractional ownership interest in the pool of receivables up to approximately $125.0 million to a third party multi-seller receivables funding company. The net proceeds of sales are less than the face amount of accounts receivable sold by an amount that approximates the purchaser's financing costs, which amounted to a total of $3.9 million, $4.0 million and $3.5 million for the years ended December 31, 2007, 2006 and 2005, respectively. Such amounts are included in other expense, net in the accompanying consolidated statement of operations. As of December 31, 2007 and 2006, the Company's funding under the facility was approximately $41.5 million and $19.6 million, respectively, with an additional $5.0 million and $29.0 million, respectively, available but not utilized. When the Company sells receivables under this arrangement, the Company retains a

86

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

9. Accounts Receivable Securitization (Continued)


subordinated interest in the receivables sold. The retained interest in receivables sold is included in receivables in the accompanying consolidated balance sheet and approximated $34.1 million and $71.6 million at December 31, 2007 and 2006, respectively. The usage fee under the facility was 1.35%. The Company also paid a fee of 0.5% on the unused portion of the facility. On December 31, 2007, the Company and TSPC amended the receivables transfer agreement to extend the expiration date to February 29, 2008 and reduce funding commitments under the facility to $75.0 million. Subsequent to year end, the Company completed the renewal of the facility. See Note 22, "Subsequent Events."

        The financing costs 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 representing a spread over a commercial paper-based rate as prescribed under the terms of the securitization agreement. As of December 31, 2007 and 2006, the financing costs were based on an average liquidation period of the portfolio of approximately 1.2 months and 1.3 months, respectively, and an average discount rate of 3.0% and 3.1%, at December 31, 2007 and 2006, respectively.

        The Company sold an undivided interest in approximately $15.9 million and $12.7 million of accounts receivable under a factoring arrangement at three of its European subsidiaries for the years ended December 31, 2007 and 2006, respectively, and the Company sold an undivided interest in approximately $17.0 million of accounts receivable of one of its businesses not a party to the receivables securitization facility to a third party in 2005. These transactions were accounted for as a sale and the receivables were sold at a discount from face value of approximately 2.0%, 1.9% and 1.25%, respectively. Costs associated with these transactions were approximately $0.3 million, $0.2 million and $0.3 million in 2007, 2006 and 2005, respectively, and are included in other expense, net in the accompanying consolidated statement of operations.

10. Inventories

        Inventories consist of the following components:

 
   December 31, 2007
   December 31, 2006
 
   (dollars in thousands)
Finished goods   $ 117,680   $ 100,500
Work in process     28,310     22,780
Raw materials     44,600     41,380
   
 
  Total inventories   $ 190,590   $ 164,660
   
 

11. Property and Equipment, Net

        Property and equipment consists of the following components:

 
   December 31, 2007
   December 31, 2006
 
   (dollars in thousands)
Land and land improvements   $ 5,430   $ 5,310
Buildings     45,430     41,620
Machinery and equipment     273,410     226,890
   
 
      324,270     273,820
Less: Accumulated depreciation     129,150     111,150
   
 
  Property and equipment, net   $ 195,120   $ 162,670
   
 

87

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

11. Property and Equipment, Net (Continued)

        Depreciation expense was approximately $25.6 million, $22.1 million and $21.7 million for the years ended December 31, 2007, 2006 and 2005, respectively.

        In 2007, in connection with the closure of the Huntsville facility (see Note 6), the Company recorded an impairment charge of approximately $3.4 million in accordance with the provisions of SFAS No. 144. This charge relates to the write-down of the net book value of building and building improvements and certain machinery and equipment within the Recreational Accessories segment to net realizable value.

        In 2006, the Company recorded an impairment charge of approximately $0.5 million in accordance with the provisions of SFAS No. 144. This charge relates to the write-down of the net book value of building improvements and certain machinery and equipment within the RV & Trailer Products segment to net realizable value related to its zinc plating operation located in Schofield, Wisconsin.

        In 2005, the Company recorded an impairment charge of approximately $3.0 million in accordance with the provisions of SFAS No. 144. This charge related to the write-down of the net book value of land, building and certain equipment within the RV & Trailer Products and Recreational Accessories segments in connection with the closing of the Bargman ($0.3 million) and Sheffield and Elkhart ($2.7 million) facilities, respectively.

12. Accrued Liabilities

 
   December 31, 2007
   December 31, 2006
 
   (dollars in thousands)
Self-insurance   $ 13,500   $ 14,300
Vacation, holiday and bonus     18,900     17,600
Other     39,430     38,550
   
 
  Total accrued liabilities   $ 71,830   $ 70,450
   
 

13. Long-term Debt

        The Company's long-term debt consists of the following at December 31, 2007 and 2006:

 
   December 31, 2007
   December 31, 2006
 
   (dollars in thousands)
U.S. bank debt   $ 257,410   $ 274,060
Non-U.S. bank debt and other     21,610     23,890
97/8% senior subordinated notes, due June 2012     336,970     436,540
   
 
      615,990     734,490
Less: Current maturities, long-term debt     8,390     9,700
   
 
  Long-term debt   $ 607,600   $ 724,790
   
 

        The Company is party to a credit facility consisting of a $90.0 million revolving credit facility, a $60.0 million deposit-linked supplemental revolving credit facility and a $260.0 million term loan facility

88

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

13. Long-term Debt (Continued)

(collectively, the "Credit Facility"). The revolving credit facility matures on August 2, 2011, while the term loan matures on August 2, 2013 (or February 28, 2012 if the Company's existing senior subordinated notes are still outstanding as of that date). 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 December 31, 2007 and December 31, 2006, the Company had letters of credit of approximately $35.5 million and $45.0 million, respectively, issued and outstanding. The weighted average interest rate on borrowings under the Credit Facility was 7.84% and 8.47% at December 31, 2007 and December 31, 2006, respectively.

        At December 31, 2007, the Company had $0.7 million outstanding under its revolving credit facility and had an additional $113.8 million potentially available after giving effect to approximately $35.5 million 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 $118.8 million of capacity available to it under its revolving credit facility and receivables securitization for general corporate purposes.

        During the third quarter of 2006, the Company amended and restated the Credit Facility, primarily extending the maturity dates and reducing the interest rate margins on both its revolving credit facility and term loan. In conjunction with the refinancing, the Company incurred debt extinguishment costs of approximately $8.6 million, of which $7.9 million was a non-cash charge from the write-off of debt issuance costs.

        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 97/8% senior subordinated notes, it does contain certain other limitations on the distribution of funds from TriMas Company LLC, the principal subsidiary, to the Company. The Credit Facility also contains various negative and affirmative covenants and other requirements affecting the Company and its subsidiaries, including: restrictions on incurrence of debt, except for permitted acquisitions and subordinated indebtedness, liens, mergers, investments, loans, advances, guarantee obligations, acquisitions, asset dispositions, sale-leaseback transactions greater than $90.0 million if sold at fair market value, hedging agreements, dividends and other restricted junior payments, stock repurchases, transactions with affiliates, restrictive agreements and amendments to charters, by-laws, and other material documents. The Credit Facility also requires the Company and its subsidiaries to meet certain restrictive financial covenants and ratios computed quarterly, including a leverage ratio (total consolidated indebtedness plus outstanding amounts under the accounts receivable securitization facility over consolidated EBITDA, as defined), interest expense ratio (consolidated EBITDA, as defined, over cash interest expense, as defined) and a capital expenditures covenant. The Company was in compliance with its covenants at December 31, 2007.

        Principal payments required on the Credit Facility term loan are: $0.7 million due each calendar quarter through June 30, 2013, with $242.5 million due on August 2, 2013 (which will be otherwise due on February 28, 2012 if the Company's existing senior subordinated notes are still outstanding at that time).

        In the United Kingdom, the Company's subsidiary is party to a revolving debt agreement which is secured by a letter of credit under the Credit Facility. At December 31, 2007, there was no balance outstanding under this agreement. At December 31, 2006, the balance outstanding under this agreement was approximately $1.7 million at an interest rate of 6.2%.

89

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

13. Long-term Debt (Continued)

        In Italy, the Company's subsidiary is party to a loan agreement for a term of seven years, at a rate 0.75% above EURIBOR (Euro Interbank Offered Rate), and is secured by land and buildings of the subsidiary. At December 31, 2007, the balance outstanding under this agreement was approximately $4.0 million at an interest rate of 5.5%. At December 31, 2006, the balance outstanding under this agreement was approximately $5.8 million at an interest rate of 3.7%.

        In Australia, the Company's subsidiary is party to a debt agreement which matures December 31, 2010 and is secured by substantially all the assets of the subsidiary. At December 31, 2007, the balance outstanding under this agreement was approximately $17.5 million at an interest rate of approximately 7.1%. At December 31, 2006, the balance outstanding under this agreement was approximately $16.4 million at an interest rate of 6.8%.

        The Company issued two tranches of its 97/8% senior subordinated notes due 2012 pursuant to its bond indenture dated June 6, 2002 ("Notes"). In June 2002, the Company issued $352.8 million face value of Notes at a discount of $2.7 million. In December 2002, the Company issued an additional $85.0 million face value of Notes at a premium of $0.9 million. In each instance, the Notes were issued in a private placement under Rule 144A of the Securities Act of 1933, as amended. These Notes were subsequently registered pursuant to registration statements that were declared effective in February 2003 and July 2003, respectively. The Notes are general unsecured obligations of the Company and are subordinated in right of payment to all existing and future senior debt, including amounts outstanding under the Credit Facility. The Notes are pari passu in right of payment with all existing and future unsecured senior subordinated indebtedness and are unconditionally guaranteed by all of the Company's domestic subsidiaries that are direct borrowers under the Credit Facility. The restricted net assets of the guarantor subsidiaries of approximately $528.4 million and $645.3 million at December 31, 2007 and December 31, 2006, respectively, are presented in the financial information in Note 23, "Supplemental Guarantor Condensed Combining and Consolidating Financial Statements." Interest on the Notes accrues at the rate of 97/8% per annum and is payable semi-annually in arrears on June 15 and December 15. At December 31, 2007, the unamortized discount was $1.2 million and the unamortized premium was $0.4 million.

        The Notes were not redeemable prior to June 15, 2007. After June 15, 2007, the Company may redeem all or a part of the Notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest on the Notes redeemed to the applicable redemption date, if redeemed during the twelve-month period beginning on June 15 of the years indicated below:

Year
   Percentage
  
2007   104.938 %
2008   103.292 %
2009   101.646 %
2010 and thereafter   100.000 %

        During the second quarter of 2007, the Company utilized approximately $104.9 million of the proceeds from its initial public offering of common stock to retire $100.0 million of face value 97/8% senior subordinated notes due 2012 (Notes), paying a $4.9 million call premium to effect the retirement.

90

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

13. Long-term Debt (Continued)

        The Notes indenture contains negative and affirmative covenants and other requirements that are comparable to those contained in the Credit Facility. At December 31, 2007, the Company was in compliance with all such covenant requirements.

        The Company's unamortized debt issuance costs approximated $9.8 million and $14.6 million at December 31, 2007 and 2006, respectively, and are included in other assets in the accompanying balance sheet. These amounts consist primarily of legal, accounting and other transaction advisory fees as well as facility fees paid to the lenders. Debt issuance costs and discount on the Notes are amortized using the interest method over the terms of the underlying debt instruments to which these amounts relate and are included in interest expense in the accompanying statement of operations.

        Future maturities of the face value of long-term debt at December 31, 2007 are as follows:

Year Ending December 31:
   (dollars
in thousands)
2008   $ 8,390
2009     3,390
2010     16,560
2011     3,450
2012     341,260
Thereafter     243,750
   
  Total   $ 616,800
   

14. Leases

        TriMas leases certain equipment and plant facilities under non-cancelable operating leases. Rental expense for TriMas totaled approximately $18.4 million in 2007, $20.4 million in 2006 and $19.6 million in 2005.

        Minimum payments for operating leases having initial or remaining non-cancelable lease terms in excess of one year at December 31, 2007, including approximately $1.0 million annually related to discontinued operations, are summarized below:

Year Ending December 31:
   (dollars
in thousands)
2008   $ 15,360
2009     14,570
2010     12,470
2011     10,510
2012     9,370
Thereafter     77,380
   
  Total   $ 139,660
   

91

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

15. Commitments and Contingencies

        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.

        As of December 31, 2007, the Company was a party to approximately 1,681 pending cases involving an aggregate of approximately 9,544 claimants alleging personal injury from exposure to asbestos containing materials formerly used in gaskets (both encapsulated and otherwise) manufactured or distributed by certain of our 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, 2005   18,884   2,596   1,998   66   $ 8,660   $ 5,324,000
Fiscal year ended December 31, 2006   19,416   3,766   12,508   123   $ 5,613   $ 4,895,000
Fiscal year ended December 31, 2007   10,551   619   1,484   142   $ 9,243   $ 4,982,000

        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 our 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 9,544 claims pending at December 31, 2007, 172 set forth specific amounts of damages (other than

92

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

15. Commitments and Contingencies (Continued)


those stating the statutory minimum or maximum). 146 of the 172 claims sought between $1.0 million and $5.0 million in total damages (which includes compensatory and punitive damages) and 26 sought between $5.0 million and $10.0 million in total damages (which includes compensatory and punitive damages). Solely with respect to compensatory damages, 151 of the 172 claims sought between $50,000 and $600,000 and 21 sought between $1.0 million and $5.0 million. Solely with respect to punitive damages, 146 of the 172 claims sought between $1.0 million and $2.5 million and 26 sought $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 $5.1 million. All relief sought in the asbestos cases is monetary in nature. To date, approximately 50% of the Company's costs related to settlement and defense of asbestos litigation have been covered by its primary insurance. Effective February 14, 2006, the Company entered into a coverage-in-place agreement with its first level excess carriers regarding the coverage to be provided to the Company for asbestos-related claims when the primary insurance is exhausted. The coverage-in-place agreement makes coverage available to the Company that might otherwise be disputed by the carriers and provides a methodology for the administration of asbestos litigation defense and indemnity payments. The coverage in place agreement allocates payment responsibility among the primary carrier, excess carriers and the Company's subsidiary.

        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 and other available information (including the availability of excess insurance), the Company does not believe that these cases will have a material adverse effect on its financial position and results of operations or cash flows.

        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.

16. Related Parties

        In connection with the Company's reorganization in June 2002, TriMas assumed approximately $37.0 million of liabilities and obligations of Metaldyne Corporation ("Metaldyne"), mainly comprised of contractual obligations to former TriMas employees, tax related matters, benefit plan liabilities and reimbursements to Metaldyne for normal course payments made on TriMas' behalf. The remaining contractual obligations to Metaldyne of approximately $6.0 million at December 31, 2007 are classified as accrued liabilities in the accompanying consolidated balance sheet.

        On January 11, 2007, Metaldyne merged into a subsidiary of Asahi Tec Corporation ("Asahi") whereby Metaldyne became a wholly-owned subsidiary of Asahi. In connection with the consummation of the merger, Metaldyne dividended the 4,825,587 shares of the Company's common stock that it owned on a pro rata basis to the holders of Metaldyne's common stock at the time of such dividend. As a result of the merger, Metaldyne and the Company are no longer related parties. In addition, as a result of the merger, it has been asserted that Metaldyne may be obligated to accelerate funding and payment of actuarially

93

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

16. Related Parties (Continued)


determined amounts owing to seven former Metaldyne executives under a supplemental executive retirement plan ("SERP"). Under the stock purchase agreement between Metaldyne and Heartland Industrial Partners ("Heartland"), TriMas is required to reimburse Metaldyne, when billed, for its allocated portion of the amounts due to certain Metaldyne SERP participants, as defined. At December 31, 2007, TriMas has accrued an estimated liability to Metaldyne on its reported balance sheet of approximately $4.9 million (included in the remaining $6.0 million of contractual obligations above), However, if Metaldyne is required to accelerate funding of the SERP liability, TriMas may be obligated to reimburse Metaldyne up to approximately $7.3 million, which could result in future charges to the Company's statement of operations of up to $2.4 million. The Company is currently reviewing the validity of these assertions.

        Under the terms of the stock purchase agreement between Metaldyne and Heartland to purchase TriMas, Metaldyne received a warrant to purchase 750,000 shares of common stock at par value $0.01 per share. Metaldyne exercised the warrant on September 15, 2006.

        Subject to certain limited exceptions, Metaldyne and TriMas retained separate liabilities associated with the respective businesses. Accordingly, the Company will indemnify and hold Metaldyne harmless from all liabilities associated with TriMas and its subsidiaries and the respective operations and assets, whenever conducted, and Metaldyne will indemnify and hold harmless Heartland and TriMas harmless from all liabilities associated with Metaldyne and its subsidiaries (excluding TriMas and its subsidiaries) and their respective operations and assets, whenever conducted. In addition, TriMas agreed with Metaldyne to indemnify one another for its allocated share (42.01%) of liabilities not readily associated with either business, or otherwise addressed including certain costs related to other matters intended to effectuate other provisions of the agreement. These indemnification provisions survive indefinitely and are subject to a $50,000 deductible.

        In connection with the Company's initial public offering of common stock in the second quarter of 2007, the Company paid Heartland $10.0 million to terminate its existing advisory services agreement, under which Heartland had provided services such as monitoring of business plans, strategic direction, development of projections, financial review, management and other restructuring and reorganization efforts, assistance with investor relations and other matters. The advisory services had been provided for an annual fee of $4.0 million plus expenses. During 2007, 2006 and 2005, Heartland was paid $2.1 million, $4.1 million and $4.2 million, respectively, for fees and expenses under this agreement. Such amounts are included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

        The Company sold fastener products to Metaldyne in the amount of approximately $0.1 million, $0.4 million and $0.4 million for the years ended December 31, 2007, 2006 and 2005, respectively. The Company also sold fastener products to affiliates of a shareholder in the amount of approximately $6.1 million and $8.2 million for the years ended December 31, 2006 and 2005, respectively. These amounts are included in results of discontinued operations. See Note 5, "Discontinued Operations and Assets Held for Sale."

94

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

17. Employee Benefit Plans

        The Company provides a defined contribution profit sharing plan for the benefit of substantially all the Company's domestic salaried and non-union hourly employees. The plan contains both contributory and noncontributory profit sharing arrangements, as defined. Aggregate charges included in the accompanying statement of operations under this plan for both continuing and discontinued operations were approximately $3.5 million, $3.8 million and $4.6 million in 2007, 2006 and 2005, respectively. The Company's foreign and union hourly employees participate in defined benefit pension plans.

        The Company provides postretirement medical and life insurance benefits, none of which are pre-funded, for certain of its active and retired employees. During 2006, the amount of post-retirement benefit obligations decreased approximately $1.2 million due to the termination of three retiree medical plans. During 2007, the Company settled its obligation outstanding under one of its postretirement benefit plans, resulting in the recognition of a previously deferred gain of approximately $0.2 million.

        In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158 (SFAS No. 158), "Employers' Accounting for Defined Benefit Pension and Other Post-retirement Plans—an amendment of FASB Statements 87, 88, 106 and 132(R)," which requires an employer to recognize in its balance sheet the overfunded or underfunded status of defined benefit post-retirement benefit plans, measured as the difference between the fair value of the plan assets and the benefit obligation, resulting in recognition of actuarial and experience gains and losses and prior service costs and credits as a component of other comprehensive income, net of tax. Under SFAS No. 158, employers are also required to measure the fair value of plan assets and benefit obligations as of the date of the plan sponsor's fiscal year-end.

        The Company adopted the recognition provisions of SFAS No. 158 effective March 31, 2007. The required date of adoption of the recognition and disclosure provisions of SFAS No. 158 is different for an employer that is an issuer of publicly traded equity securities (as defined) and an employer that is not. An employer with publicly traded equity securities was required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. Because the Company had an S-1 Registration Statement pending with the Securities and Exchange Commission for the sale of common equity securities, the Company was required to adopt the requirement to recognize the funded status of its benefit plans and the disclosure requirements of SFAS 158 in its financial statements for the year ended December 31, 2006, but failed to do so. However, the Company concluded that the impact of not recognizing the funded status of its benefit plans in its balance sheet as of December 31, 2006 was immaterial as the impact was to understate reported liabilities by approximately $3.6 million, or 0.3% of total liabilities, and to overstate accumulated other comprehensive income by approximately $2.2 million, or 0.9% of total shareholders' equity.

95

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

17. Employee Benefit Plans (Continued)

        The effect of adopting SFAS No. 158 on the Company's financial condition as of March 31 is summarized below:

 
   Before Adoption
of SFAS No. 158
   Adjustment
   After Adoption
of SFAS No. 158
  
 
   (dollars in thousands)
  
Intangible asset   $ 30   $ (30 ) $ —  
Net accrued pension liability     (4,050 )   (1,880 )   (5,930 )
Accrued postretirement liability     (6,070 )   (1,800 )   (7,870 )
Deferred income taxes     (66,200 )   1,240     (64,960 )
Accumulated other comprehensive income     (50,730 )   2,470     (48,260 )

        The Company adopted the measurement date provisions of SFAS No. 158 in 2007, changing its previous measurement date of September 30 to match its fiscal year of December 31. As a result of the adoption of the measurement date provision, the Company recorded an additional three months of net periodic pension and postretirement cost of approximately $0.2 million, net of tax, which was recorded as a reduction to the Company's beginning accumulated deficit.

        Plan assets, expenses and obligations for pension and postretirement benefit plans disclosed herein include both continuing and discontinued operations.

        Net periodic pension and postretirement benefit costs recorded in the Company's statement of operations for defined benefit pension plans and postretirement benefit plans include the following components:

 
   Pension Benefit
   Postretirement Benefit
 
   2007
   2006
   2005
   2007
   2006
   2005
 
   (dollars in thousands)
Service cost   $ 570   $ 640   $ 580   $ 90   $ 90   $ 110
Interest cost     1,660     1,630     1,640     420     430     400
Expected return on plan assets     (2,060 )   (1,890 )   (1,810 )   —     —     —
Amortization of prior-service cost     —     10     10     —     —     —
Settlement loss     3,870     820     670     —     —     —
Amortization of net loss     470     530     350     100     80     70
   
 
 
 
 
 
  Net periodic benefit cost   $ 4,510   $ 1,740   $ 1,440   $ 610   $ 600   $ 580
   
 
 
 
 
 

        In 2007, the Company's Packaging Systems segment recognized a non-cash defined benefit pension settlement loss of approximately $3.9 million related to a plan for certain employees previously located at a distribution facility in Canada that was closed in 1997. The closure of the facility resulted in a partial windup of the plan. However, Canadian law did not specify how to distribute surplus assets related to partial windups of benefit plans. This issue was recently resolved in the Canadian court system and, the Company's plan was approved by the Canadian regulatory authorities in November 2007, at which time the Company recorded the settlement loss.

96

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

17. Employee Benefit Plans (Continued)

        The estimated net actuarial loss and prior service cost for the defined benefit pension and postretirement benefit plans that is expected to be amortized from accumulated other comprehensive income into net periodic benefit cost in 2008 is $0.4 million.

        Actuarial valuations of the Company's defined benefit pension and postretirement plans were prepared as of December 31, 2007 and September 30, 2006 and 2005. Weighted-average assumptions used in accounting for the U.S. defined benefit pension plans and postretirement benefit plans are as follows:

 
   Pension Benefit
   Postretirement Benefit
  
 
   2007
   2006
   2005
   2007
   2006
   2005
  
Discount rate for obligations   6.75 % 6.00 % 5.75 % 6.375 % 5.75 % 5.75 %
Discount rate for benefit costs   6.00 % 5.75 % 6.00 % 5.75 % 5.75 % 6.00 %
Rate of increase in compensation levels   N/A   N/A   N/A   N/A   N/A   N/A  
Expected long-term rate of return on plan assets   8.50 % 8.50 % 9.00 % N/A   N/A   N/A  

        Actuarial valuations of the Company's non-U.S. defined benefit pension plans were prepared as of December 31, 2007 and September 30, 2006 and 2005. Weighted-average assumptions used in accounting for the non-U. S. defined benefit pension plans are as follows:

 
   Pension Benefit
  
 
   2007
   2006
   2005
  
Discount rate for obligations   5.80 % 5.30 % 5.35 %
Discount rate for benefit costs   5.30 % 5.35 % 6.15 %
Rate of increase in compensation levels   3.65 % 3.75 % 3.75 %
Expected long-term rate of return on plan assets   8.55 % 8.55 % 8.50 %

        The following provides a reconciliation of the changes in the Company's defined benefit pension and postretirement benefit plans' projected benefit obligations and fair value of assets for each of the years ended December 31, 2007 and 2006 and the funded status as of December 31, 2007 and 2006:

 
   Pension Benefit
   Postretirement Benefit
  
 
   2007
   2006
   2007
   2006
  
 
   (dollars in thousands)
  
Changes in Projected Benefit Obligations                          
Benefit obligations at January 1   $ (29,700 ) $ (29,430 ) $ (7,750 ) $ (9,300 )
Service cost     (710 )   (640 )   (110 )   (90 )
Interest cost     (2,070 )   (1,630 )   (520 )   (430 )
Participant contributions     (110 )   (80 )   (120 )   (100 )
Actuarial gain (loss)     (2,460 )   (230 )   930     240  
Benefit payments     2,290     3,830     600     790  
Curtailment/terminations     —     —     —     1,140  
Settlement payments     5,630     —     90     —  
Change in foreign currency     (650 )   (1,520 )   —     —  
   
 
 
 
 
Projected benefit obligations at December 31   $ (27,780 ) $ (29,700 ) $ (6,880 ) $ (7,750 )
   
 
 
 
 
  Accumulated benefit obligations at December 31   $ (26,800 ) $ (28,740 ) $ (6,880 ) $ (7,750 )
   
 
 
 
 

97

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

17. Employee Benefit Plans (Continued)

 
   Pension Benefit
   Postretirement Benefit
  
 
   2007
   2006
   2007
   2006
  
 
   (dollars in thousands)
  
Changes in Plan Assets                          
Fair value of plan assets at January 1   $ 23,650   $ 22,230   $ —   $ —  
Actual return on plan assets     1,700     1,520     —     —  
Employer contributions     2,270     2,270     480     690  
Participant contributions     110     80     120     100  
Benefit payments     (2,290 )   (3,830 )   (600 )   (790 )
Settlement payment     (5,630 )   —     —     —  
Change in foreign currency     1,200     1,380     —     —  
   
 
 
 
 
  Fair value of plan assets at December 31   $ 21,010   $ 23,650   $ —   $ —  
   
 
 
 
 
 
 
   Pension Benefit
   Postretirement Benefit
  
 
   2007
   2006
   2007
   2006
  
 
   (dollars in thousands)
  
Funded Status                          
Plan assets less than projected benefits at December 31   $ (6,760 ) $ (6,040 ) $ (6,880 ) $ (7,750 )
Unrecognized prior-service cost     20     30     —     —  
Unrecognized net loss     7,090     8,020     930     1,800  
   
 
 
 
 
  Net asset (liability) recognized at December 31   $ 350   $ 2,010   $ (5,950 ) $ (5,950 )
   
 
 
 
 
 
 
   Pension Benefit
   Postretirement Benefit
  
 
   2007
   2006
   2007
   2006
  
 
   (dollars in thousands)
  
Components of the Net Asset Recognized                          
Prepaid benefit cost   $ 1,450   $ 5,160   $ —   $ —  
Current liabilities     (400 )   (400 )   (670 )   (670 )
Noncurrent liabilities     (7,820 )   (9,060 )   (6,210 )   (5,280 )
Intangible asset     —     30     —     —  
Accumulated other comprehensive loss     7,120     6,280     930     —  
   
 
 
 
 
  Net asset (liability) recognized at December 31   $ 350   $ 2,010   $ (5,950 ) $ (5,950 )
   
 
 
 
 
 
 
   Pension Benefit
   Postretirement Benefit
 
   2007
   2006
   2007
   2006
 
   (dollars in thousands)
Plans with Benefit Obligation Exceeding Plan Assets                        
Benefit obligation   $ 25,850   $ 26,440   $ 6,880   $ 7,750
Plan assets     17,640     16,180     —     —
   
 
 
 
  Benefit obligation in excess of plan assets   $ 8,210   $ 10,260   $ 6,880   $ 7,750
   
 
 
 

        The Company expects to make contributions of approximately $1.9 million to fund its pension plans and $0.7 million to fund its postretirement benefit payments during 2008.

98

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

17. Employee Benefit Plans (Continued)

        The weighted average asset allocation of the Company's pension plans and postretirement benefit plans assets at December 31, 2007 and September 30, 2006 were as follows:

 
   Pension Benefit
   Postretirement Benefit
 
   2007
   2006
   2007
   2006
Equity securities   55 % 59 % N/A   N/A
Debt securities   41 % 39 % N/A   N/A
Real estate   0 % 0 % N/A   N/A
Cash   4 % 2 % N/A   N/A
   
 
 
 
  Total   100 % 100 % N/A   N/A
   
 
 
 

        The Company's investment goal is to provide for capital growth with a moderate level of volatility by investing assets per the above target allocations. The Company invests the plan assets in a balanced portfolio fund of the Northern Trust Company which seeks to provide capital appreciation and current income by investing up to 75% of the plan assets in equity securities and at least 25% in fixed income securities. The portfolio invests primarily in common stocks of U.S. companies with market capitalizations generally in excess of $1.0 billion. The expected long-term rate of return for the plan's total assets is based on the expected return of each of the above categories, weighted based on the target allocation for each class. The equity securities comprise the largest percentage of the asset allocation as they are projected to have the greatest rate of return on a long-term basis.

        The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

 
   Pension Benefit
   Postretirement Benefit
 
   2007
   2007
 
   (dollars in thousands)
2008   $ 1,620   $ 670
2009     1,660     670
2010     1,710     610
2011     1,790     580
2012     1,850     520
Years 2013-2017     10,230     2,910

        The discount rate used in determining the accumulated postretirement benefit obligation was 6.375% and 5.75% in 2007 and 2006, respectively. The measurement dates used were December 31, 2007 and September 30, 2006, respectively. The assumed health care cost trend rate in 2007 was 9.0% for pre-65 plan participants and 11% for post-65 plan participants, decreasing to an ultimate rate in 2017 of 5.00%. If the assumed medical cost trend rates were increased by 1.0%, the accumulated postretirement benefit obligations would increase by approximately $0.5 million and the aggregate of the service and interest cost components of net periodic postretirement benefit cost would increase by approximately $60,000. If the assumed medical cost trend rates were decreased by 1.0%, the accumulated postretirement benefit obligations would decrease by approximately $0.5 million and the aggregate of the service and interest cost

99

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

17. Employee Benefit Plans (Continued)


components of net periodic postretirement benefit cost would decrease by approximately $50,000. The Company expects to receive employee contributions of approximately $0.1 million and to make contributions of approximately $0.7 million to fund its post-retirement benefit obligations in 2008.

18. Stock Options and Awards

        The Company accounts for its stock-based compensation under Statement of Financial Accounting Standards No. 123R (SFAS No. 123R), "Share-Based Payment," using the Modified Prospective Application ("MPA") method, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Stock-based compensation expense is included in selling, general and administrative expenses in the accompanying statement of operations.

        The TriMas Corporation 2006 Long Term Equity Incentive Plan (the "2006 Plan") provides for the issuance of equity-based incentives in various forms for up to an aggregate of 1,200,000 shares of the Company's common stock, of which up to 500,000 shares may be granted as incentive stock options. In general, stock options and stock appreciation rights have a fungible ratio of one-to-one (one granted option/appreciation right counts as one share against the aggregate available to issue), while other forms of equity grants, including restricted shares of common stock, have a fungible ratio of two-to-one. No shares issued under the 2006 Plan were exercisable as of December 31, 2007.

        In September 2007, the Company granted 390,610 restricted shares of its common stock to certain employees, which vest ratably over three years from date of grant, but were contingent upon certain service and performance conditions. Of the 390,610 shares granted, 145,750 shares were subject to a service provision, where the only condition to the share vesting was that the employee remained with the Company for the vesting period. The remaining 244,860 shares granted were subject to both a service provision (same as above) and a performance provision, where these shares would vest in the same manner as the service provision-only grants if the Company attained and/or exceeded a certain EBITDA target for the year ended December 31, 2007, or would otherwise be cancelled. The Company did not meet or exceed this EBITDA target, resulting in the cancelation of 244,860 restricted shares of its common stock. The Company recognized approximately $0.3 million of stock-based compensation expense related to the 2006 Plan during the year ended December 31, 2007.

        Information related to restricted shares at December 31, 2007 is as follows:

 
   Number of
Unvested
Restricted
Shares
   Weighted
Average Grant
Date Fair Value
   Average
Remaining
Vesting Period
(Years)
   Aggregate
Intrinsic Value
Outstanding at January 1, 2007   —   $ —          
  Granted   390,610     12.26          
  Vested   —     —          
  Cancelled   (252,069 )   12.26          
   
 
 
 
Outstanding at December 31, 2007   138,541   $ 12.26   1.7   $ 1,467,149
   
 
 
 

100

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

18. Stock Options and Awards (Continued)

        As of December 31, 2007, there was approximately $1.4 million of unrecognized compensation cost related to unvested restricted shares.

        The TriMas Corporation 2002 Long Term Equity Incentive Plan (the "2002 Plan") provides for the issuance of equity-based incentives in various forms, of which a total of 2,022,000 stock options have been approved for issuance under the 2002 Plan. As of December 31, 2007, the Company has 2,000,481 stock options outstanding, each of which may be used to purchase one share of the Company's common stock. The options have a 10-year life and the exercise prices range from $20 to $23. Eighty percent of the options vest ratably over three years from the date of grant, while the remaining twenty percent vest after seven years from the date of grant or on an accelerated basis over three years based upon achievement of specified performance targets, as defined in the 2002 Plan. The options become exercisable upon the later of: (1) the normal vesting schedule as described above, or (2) upon the occurrence of a qualified public equity offering as defined in the 2002 Plan, one half of the vested options became exercisable 180 days following such public equity offering (November 14, 2007), and the other one half of vested options become exercisable on the first anniversary following consummation of the public offering (May 14, 2008). As of December 31, 2007, 1,073,198 stock options were exercisable under the 2002 Plan.

        The fair values of options granted in 2007 and 2006 under the Plan were estimated using the Black-Scholes option pricing model using the following weighted average assumptions: expected life of 6 years, risk-free interest rate of 4.7%, and expected volatility of 30%. During 2007, 5,018 options were issued by the Company. The weighted average fair value of stock options at the date of grant was $3.34 for options granted in both 2007 and 2006.

        The fair value of options which vested during the years ended December 31, 2007, 2006 and 2005 was $0.7 million, $0.6 million, and $0 million, respectively. As of December 31, 2007, 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 1.5 years.

        The Company recognized approximately $0.2 million, $1.3 million and $0.3 million of stock-based compensation expense related to the 2002 Plan during the years ended December 31, 2007, 2006 and 2005, respectively. Stock-based compensation expense for 2007 and 2006 represents amounts calculated in accordance with the MPA method of SFAS No. 123R. Stock-based compensation expense for 2005 represents non-cash compensation expense related to stock options issued during the first quarter of 2004 with exercise prices below the Company's estimate of fair value of the underlying stock.

101

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

18. Stock Options and Awards (Continued)

        A summary of the status of the Company's stock options as of December 31, 2007, and changes during the year then ended, is presented below:

 
   Number of
Options
   Weighted
Average
Option Price
   Average
Remaining
Contractual
Life (Years)
   Aggregate
Intrinsic Value
Outstanding at January 1, 2007   2,008,201   $ 20.89          
  Granted   5,018     23.00          
  Exercised   —     —          
  Cancelled   (12,738 )   21.82          
   
 
 
 
Outstanding at December 31, 2007   2,000,481   $ 20.89   5.6   $ —
   
 
 
 

19. Segment Information

        TriMas' reportable operating segments are business units that provide unique products and services. Each operating segment is independently managed, requires different technology and marketing strategies and has separate financial information evaluated regularly by the Company's chief operating decision maker in determining resource allocation and assessing performance. During the first quarter of 2006, the Company re-aligned its operating segments and management structure to better focus its various businesses' product line offerings by industry, end customer markets, and related channels of distribution. Segment information has been revised to conform to this current structure and presentation. TriMas has five operating segments involved in the manufacture and sale of products described below. Within these operating segments, there are no individual products or product families for which reported revenues accounted for more than 10% of the Company's consolidated revenues.

        Packaging Systems—Steel and plastic closure caps, drum enclosures, rings and levers, and dispensing systems for industrial and consumer markets, as well as flame-retardant facings, jacketing and insulation tapes used with fiberglass insulation as vapor barriers in commercial and industrial construction applications.

        Energy Products—Engines and engine replacement parts for the oil and gas industry as well as metallic and non-metallic industrial gaskets and fasteners for the petroleum refining, petrochemical and other industrial markets.

        Industrial Specialties—A diverse range of industrial products for use in niche markets within the aerospace, industrial, automotive, defense, and medical equipment markets. Its products include highly engineered specialty fasteners for the aerospace industry, high-pressure and low-pressure cylinders for the transportation, storage and dispensing of compressed gases, specialty fasteners for the automotive industry, spinal and trauma implant products for the medical industry, specialty precision tools such as center drills, cutters, end mills, reamers, master gears, punches, and specialty ordnance components and steel cartridge cases.

        RV & Trailer Products—Custom-engineered trailer 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.

102

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

19. Segment Information (Continued)

        Recreational Accessories—Towing products, 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, non-cash asset and goodwill impairment charges and write-offs and non-cash losses on sale-leaseback of property and equipment. For purposes of this Note, the Company defines operating net assets as total assets less current liabilities.

        Segment activity is as follows:

 
   Year ended December 31,
  
 
   2007
   2006
   2005
  
 
   (dollars in thousands)
  
Net Sales                    
Packaging Systems   $ 211,820   $ 204,230   $ 189,910  
Energy Products     163,470     156,990     131,020  
Industrial Specialties     204,630     175,410     156,730  
RV & Trailer Products     198,790     190,700     209,030  
Recreational Accessories     289,560     286,580     306,200  
   
 
 
 
  Total   $ 1,068,270   $ 1,013,910   $ 992,890  
   
 
 
 
Impairment Charges                    
RV & Trailer Products   $ 100,780   $ 98,010   $ 310  
Recreational Accessories     73,800     19,000     2,650  
   
 
 
 
  Total   $ 174,580   $ 117,010   $ 2,960  
   
 
 
 
Operating Profit (Loss)                    
Packaging Systems   $ 29,760   $ 33,770   $ 30,590  
Energy Products     22,860     22,790     15,210  
Industrial Specialties     41,770     36,200     29,480  
RV & Trailer Products     (81,230 )   (79,650 )   26,790  
Recreational Accessories     (64,200 )   (4,910 )   2,120  
Corporate expenses and management fees     (40,730 )   (24,450 )   (22,040 )
   
 
 
 
  Total   $ (91,770 ) $ (16,250 ) $ 82,150  
   
 
 
 
Capital Expenditures                    
Packaging Systems   $ 18,470   $ 11,450   $ 8,680  
Energy Products     5,590     3,380     1,720  
Industrial Specialties     16,110     4,170     2,380  
RV & Trailer Products     7,150     4,820     4,690  
Recreational Accessories     4,300     1,700     2,700  
Corporate     120     80     70  
   
 
 
 
  Total   $ 51,740   $ 25,600   $ 20,240  
   
 
 
 

103

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

19. Segment Information (Continued)

 
   Year ended December 31,
  
 
   2007
   2006
   2005
  
 
   (dollars in thousands)
  
Depreciation and Amortization                    
Packaging Systems   $ 13,930   $ 13,150   $ 11,580  
Energy Products     2,470     2,290     2,310  
Industrial Specialties     5,050     4,470     4,800  
RV & Trailer Products     8,120     7,340     7,430  
Recreational Accessories     11,410     10,750     10,590  
Corporate     170     330     200  
   
 
 
 
  Total   $ 41,150   $ 38,330   $ 36,910  
   
 
 
 
Operating Net Assets                    
Packaging Systems   $ 393,580   $ 395,310   $ 371,990  
Energy Products     100,880     90,340     85,360  
Industrial Specialties     141,490     114,110     111,930  
RV & Trailer Products     152,610     244,920     335,830  
Recreational Accessories     176,500     260,120     297,790  
Corporate     (42,480 )   (14,900 )   (18,300 )
   
 
 
 
  Subtotal from continuing operations     922,580     1,089,900     1,184,600  
Discountinued operations     1,880     (9,500 )   10,270  
   
 
 
 
    Total operating net assets     924,460     1,080,400     1,194,870  
   
 
 
 
    Current liabilities     203,530     205,660     233,640  
   
 
 
 
    Consolidated assets   $ 1,127,990   $ 1,286,060   $ 1,428,510  
   
 
 
 
Adjusted EBITDA                    
Packaging Systems   $ 43,800   $ 46,680   $ 40,350  
Energy Products     25,430     25,070     17,550  
Industrial Specialties     46,870     40,690     34,310  
RV & Trailer Products     27,620     26,050     34,280  
Recreational Accessories     20,340     24,540     14,930  
Corporate expenses and management fees     (43,980 )   (28,110 )   (25,490 )
   
 
 
 
  Subtotal from continuing operations     120,080     134,920     115,930  
Discountinued operations     2,760     (12,230 )   (2,790 )
   
 
 
 
    Total   $ 122,840   $ 122,690   $ 113,140  
   
 
 
 

104

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

19. Segment Information (Continued)

        The following is a reconciliation of the Company's Adjusted EBITDA to net loss before cumulative effect of accounting change:

 
   Year ended December 31,
  
 
   2007
   2006
   2005
  
 
   (dollars in thousands)

  
Net loss before effect of cumulative accounting change   $ (158,430 ) $ (128,910 ) $ (45,460 )
Income tax expense (benefit)(a)     (10,410 )   (6,520 )   (30,580 )
Interest expense     68,310     79,060     75,210  
Debt extinguishment costs     7,440     8,610     —  
Change in asset retirement obligation of discontinued operations     —     (550 )   —  
Impairment of assets     3,370     15,760     73,220  
Impairment of goodwill     171,210     116,500     —  
Depreciation and amortization     41,350     38,740     40,750  
   
 
 
 
Adjusted EBITDA   $ 122,840   $ 122,690   $ 113,140  
   
 
 
 
(a)
Includes addback of income tax benefit (expense) of approximately $(1.7) million, $8.2 million and $31.8 million recorded in 2007, 2006 and 2005, respectively, related to discontinued operations. See Note 5, "Discontinued Operations and Assets Held for Sale."

        The following table presents the Company's revenues for each of the years ended December 31 and operating net assets at each year ended December 31, attributed to each subsidiary's continent of domicile. There was no single non-U.S. country for which revenue and net assets were material to the combined revenues and net assets of the Company taken as a whole.

 
   As of December 31,
  
 
   2007
   2006
   2005
  
 
   Sales
   Operating Net
Assets
   Sales
   Operating Net
Assets
   Sales
   Operating Net
Assets
  
 
   (dollars in thousands)

  
Non-U.S.                                      
  Europe   $ 61,080   $ 95,100   $ 53,670   $ 90,920   $ 48,770   $ 85,530  
  Australia     59,150     114,050     55,140     110,970     56,960     98,700  
  Asia     9,430     12,290     4,850     8,020     3,780     6,980  
  South America     —     (120 )   —     170     50     (270 )
  Other North America     45,580     35,260     42,570     65,830     44,180     63,670  
   
 
 
 
 
 
 
Total non-U.S     175,240     256,580     156,230     275,910     153,740     254,610  
U.S.                                      
  Continuing operations     893,030     666,000     857,680     813,990     839,150     929,990  
  Discontinued operations(a)     —     1,880     —     (9,500 )   —     10,270  
   
 
 
 
 
 
 
Total U.S.      893,030     667,880     857,680     804,490     839,150     940,260  
   
 
 
 
 
 
 
Total Company   $ 1,068,270   $ 924,460   $ 1,013,910   $ 1,080,400   $ 992,890   $ 1,194,870  
   
 
 
 
 
 
 
(a)
See Note 5, "Discontinued Operations and Assets Held for Sale."

        The Company's export sales approximated $127.1 million, $114.9 million and $103.9 million in 2007, 2006 and 2005, respectively.

105

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

20. Income Taxes

 
   Year ended December 31,
  
 
   2007
   2006
   2005
  
 
   (dollars in thousands)

  
Income (loss) from continuing operations before income tax expense:                    
Domestic   $ (178,040 ) $ (124,310 ) $ (9,750 )
Foreign     6,640     16,240     10,600  
   
 
 
 
  Income (loss) from continuing operations before income tax expense   $ (171,400 ) $ (108,070 ) $ 850  
   
 
 
 
Current income tax expense (benefit):                    
Federal   $ (40 ) $ (680 ) $ 1,350  
State and local     (1,120 )   1,200     1,460  
Foreign     4,270     4,360     4,050  
Deferred benefit:                    
Federal     (12,690 )   (3,330 )   (6,830 )
Foreign     (2,500 )   150     1,160  
   
 
 
 
  Income tax expense (benefit)   $ (12,080 ) $ 1,700   $ 1,190  
   
 
 
 

        The components of deferred taxes at December 31, 2007 and 2006 are as follows:

 
   2007
   2006
  
 
   (dollars in thousands)

  
Deferred tax assets:              
Inventories   $ 5,750   $ 6,070  
Accounts receivable     1,450     2,090  
Accrued liabilities and other long-term liabilities     27,610     34,050  
Net operating loss carryforward     42,340     38,000  
   
 
 
Gross deferred tax asset     77,150     80,210  
Valuation allowances     (7,580 )   (6,710 )
   
 
 
  Net deferred tax asset     69,570     73,500  
   
 
 
Deferred tax liabilities:              
Property and equipment     (15,780 )   (26,920 )
Intangible assets     (107,220 )   (110,460 )
Other, principally prepaid expenses     (990 )   (1,750 )
   
 
 
  Gross deferred tax liability     (123,990 )   (139,130 )
   
 
 
  Net deferred tax liability   $ (54,420 ) $ (65,630 )
   
 
 

        As of December 31, 2007 and 2006, net deferred taxes are classified in the accompanying balance sheet as follows:

 
   2007
   2006
  
 
   Current
   Long-term
   Total
   Current
   Long-term
   Total
  
 
   (dollars in thousands)

  
Deferred tax assets   $ 19,020   $ 50,550   $ 69,570   $ 24,780   $ 48,720   $ 73,500  
Deferred tax liabilities     (160 )   (123,830 )   (123,990 )   (470 )   (138,660 )   (139,130 )
   
 
 
 
 
 
 
Net deferred taxes   $ 18,860   $ (73,280 ) $ (54,420 ) $ 24,310   $ (89,940 ) $ (65,630 )
   
 
 
 
 
 
 

106

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

20. Income Taxes (Continued)

        The following is a reconciliation of tax computed at the U.S. federal statutory rate to income tax expense (benefit) allocated to income (loss) from continuing operations before income taxes:

 
   2007
   2006
   2005
  
U.S. federal statutory rate     35 %   35 %   35 %
Tax at U.S. federal statutory rate   $ (59,990 ) $ (37,820 ) $ 300  
State and local taxes, net of federal tax benefit     (530 )   (450 )   240  
Differences in effective foreign tax rates     (780 )   (1,460 )   (1,500 )
Change in tax rate/law     (1,370 )   —     —  
Extraterritorial income exclusion     —     (540 )   (970 )
Goodwill impairment     49,630     39,690     —  
U.S. tax on undistributed foreign earnings     —     —     370  
Non-deductible expenses     460     290     200  
Valuation allowance     870     1,740     2,190  
Other, net     (370 )   250     360  
   
 
 
 
Income tax expense (benefit)   $ (12,080 ) $ 1,700   $ 1,190  
   
 
 
 

        As of December 31, 2007, the Company has unused U.S. net operating loss (NOL) carryforwards and a capital loss carryforward of approximately $102.5 million and $5.9 million, respectively. The NOL carryforwards will expire between the years of 2022 and 2027. The capital loss carryforward will expire in the year 2011. In addition, the Company has recorded a deferred tax asset of $8.8 million in relation to various state operating loss carryforwards that expire over a variety of dates through 2027.

        The Company has recorded net valuation allowances against certain deferred tax assets of $7.6 and $6.7 million as of December 31, 2007 and 2006, respectively. The valuation allowances were determined in accordance with the provisions of FASB Statement of Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting for Income Taxes," which requires an assessment of positive and negative evidence when measuring the need for a valuation allowance, on a jurisdiction-by-jurisdiction basis.

        During the current year, several tax jurisdictions in which the Company does business reduced its tax rate and/or changed its tax law. Accordingly, the Company reduced its net deferred income tax liabilities in these jurisdictions to reflect the lower tax rates, resulting in a decrease to consolidated income tax expense. In addition, the Company recorded a tax benefit associated with the findings of a Texas tax court in which throwback sales were deemed unconstitutional. The Company's tax benefit associated with the change in tax rates and/or tax law during 2007 is approximately $1.4 million.

        The American Jobs Creation Act of 2004, enacted on October 22, 2004, provided for a temporary 85% dividends received deduction on certain non-U.S. earnings repatriated in 2005. The Company made a dividend distribution of approximately $55.8 million from accumulated earnings & profits. Prior to 2005, the Company had provided for applicable federal taxes of approximately $3.1 million on the anticipated repatriation of foreign earnings. The 2005 dividend resulted in the Company recording an additional tax expense of approximately $0.4 million in 2005 related to federal taxes on foreign accumulated earnings and profits.

        In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. As of December 31, 2007, the Company has not made a provision for U.S. or additional foreign withholding taxes on approximately $131.3 million of the excess of the amount for

107

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

20. Income Taxes (Continued)


financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration. Generally, such amounts become subject to U.S. taxation upon remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries.

        Cash taxes paid with respect to federal, state, and foreign jurisdictions were $8.7 million, $14.1 million and $12.6 million in 2007, 2006, and 2005, respectively.

        The Company adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, ("FIN 48") on January 1, 2007. As a result of implementation of FIN 48, the Company recorded a net increase of $0.1 million to reserves for unrecognized tax benefits, which was accounted for as a cumulative effect adjustment to the January 1, 2007 balance of accumulated deficit. The Company recognizes accrued interest and penalties, as appropriate, related to Unrecognized Tax Benefits ("UTB's") within the effective tax rate.

        The Company had approximately $8.1 million and $7.7 million of gross UTB's as of December 31, 2007 and January 1, 2007, respectively. After reductions for federal and state income tax benefits, the Company had net UTB's of $7.0 million and $6.7 million, respectively. The Company has approximately $4.1 million of UTB's that, if recognized, would not impact the effective tax rate.

        A reconciliation of the change in the UTB balance from January 1, 2007 to December 31, 2007 is as follows (in thousands):

 
   Federal,
State, and
Foreign
   Accrued
Interest &
Penalties
   Unrecognized
Gross Income
Tax Benefits
   Deferred
Federal
and State
Income Tax
Benefits
   Unrecognized
Income Tax
Benefits, Net of
Deferred Federal
and State Benefits
  
Balance at January 1, 2007   $ 6,610   $ 1,080   $ 7,690   $ (970 ) $ 6,720  
Tax positions related to current year:                                
  Additions     310     50     360     (60 )   300  
Tax positions related to prior years:                                
  Additions     80     340     420     (160 )   260  
  Reductions     (140 )   (40 )   (180 )   60     (120 )
Settlements     —     —     —     —     —  
Lapses in the statutes of limitations     (120 )   (30 )   (150 )   10     (140 )
   
 
 
 
 
 
Balance at December 31, 2007   $ 6,740   $ 1,400   $ 8,140   $ (1,120 ) $ 7,020  

Less: Tax attributable to timing items included above
 
 
—
 
 
—
 
 
—
 
 
—
 
 
—
 
Less: UTB's included above that would impact goodwill if recognized     (4,110 )   —     (4,110 )   —     (4,110 )
   
 
 
 
 
 
  Total UTB's that, if recognized, would impact the effective income tax rate as of December 31, 2007   $ 2,630   $ 1,400   $ 4,030   $ (1,120 ) $ 2,910  
   
 
 
 
 
 

108

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

20. Income Taxes (Continued)

        The Company can be subject to U.S. Federal income tax examinations for tax years 2002 through 2007, and non-U.S. income tax examinations for years 2001 through 2007. In addition, the Company is subject to state and local income tax examinations for the tax years 2002 through 2007. There are currently one state and two foreign income tax examinations in process. The Company does not believe that the results of these examinations will have a significant impact on the Company's tax position or its effective tax rate.

        Management monitors changes in tax statutes and regulations and the issuance of judicial decisions to determine the potential impact to uncertain income tax positions. As of December 31, 2007, management of the Company is not aware of and does not anticipate any material subsequent events that could have a significant impact on the UTB balance during the next twelve months.

21. Summary Quarterly Financial Data

 
   As of December 31, 2007
  
 
   First Quarter
   Second Quarter
   Third Quarter
   Fourth Quarter
  
 
   (unaudited, dollars in thousands)

  
Net Sales   $ 284,440   $ 287,670   $ 258,650   $ 237,510  
Gross Profit     78,000     79,650     69,920     61,320  
Income (loss) from continuing operations     7,750     (4,060 )   5,420     (168,430 )
Income (loss) from discontinued operations, net of income taxes     (700 )   870     1,160     (440 )
Net income (loss)     7,050     (3,190 )   6,580     (168,870 )
Earnings (loss) per share—basic:                          
  Continuing operations   $ 0.37   $ (0.15 ) $ 0.16   $ (5.04 )
  Discontinued operations, net of income tax benefit     (0.03 )   0.03     0.04     (0.01 )
   
 
 
 
 
    Net income (loss) per share   $ 0.34   $ (0.12 ) $ 0.20   $ (5.05 )
   
 
 
 
 
Weighted average shares—basic     20,759,500     26,223,236     33,409,500     33,409,500  
   
 
 
 
 
Earnings (loss) per share—diluted:                          
  Continuing operations   $ 0.37   $ (0.15 ) $ 0.16   $ (5.05 )
  Discontinued operations, net of income tax benefit     (0.03 )   0.03     0.04     (0.01 )
   
 
 
 
 
    Net income (loss) per share   $ 0.34   $ (0.12 ) $ 0.20   $ (5.06 )
   
 
 
 
 
Weighted average shares—diluted     20,759,500     26,223,236     33,457,027     33,409,500  
   
 
 
 
 

109

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

21. Summary Quarterly Financial Data (Continued)

 
 
   As of December 31, 2006
  
 
   First Quarter
   Second Quarter
   Third Quarter
   Fourth Quarter
  
 
   (unaudited, dollars in thousands)

  
Net Sales   $ 271,510   $ 277,630   $ 242,920   $ 221,850  
Gross Profit     72,750     74,190     66,050     57,370  
Income (loss) from continuing operations     4,730     6,160     (2,940 )   (117,720 )
Income (loss) from discontinued operations, net of income taxes     (1,130 )   (3,650 )   (10,190 )   (4,170 )
Net income (loss)     3,600     2,510     (13,130 )   (121,890 )
Earnings (loss) per share—basic:                          
  Continuing operations   $ 0.24   $ 0.31   $ (0.14 ) $ (5.67 )
  Discontinued operations, net of income tax benefit     (0.06 )   (0.19 )   (0.51 )   (0.20 )
   
 
 
 
 
    Net income (loss) per share   $ 0.18   $ 0.12   $ (0.65 ) $ (5.87 )
   
 
 
 
 
Weighted average shares—basic     20,010,000     20,010,000     20,132,201     20,759,500  
   
 
 
 
 
Earnings (loss) per share—diluted:                          
  Continuing operations   $ 0.22   $ 0.30   $ (0.14 ) $ (5.67 )
  Discontinued operations, net of income tax benefit     (0.05 )   (0.18 )   (0.51 )   (0.20 )
   
 
 
 
 
    Net income (loss) per share   $ 0.17   $ 0.12   $ (0.65 ) $ (5.87 )
   
 
 
 
 
Weighted average shares—diluted     20,760,000     20,760,000     20,132,201     20,759,500  
   
 
 
 
 

22. Subsequent Events

        On January 31, 2008, the Company acquired Parkside Towbars, Pty. Ltd. ("Parkside"), located in Western Australia, strengthening the Company's position in international markets and expanding the Company's towing and truck accessory product offering. Parkside will be included in the Company's RV & Trailer segment. The results of operations of Parkside are not significant compared to the overall results of operations of the Company.

        On February 22, 2008, the Company completed the renewal of its receivables securitization facility. Key terms of the renewal include a customary 364-day term, committed funding of up to $90.0 million and a cost of funds under the facility equal to a commercial paper-based rate plus a usage fee of 1.05%.

23. Supplemental Guarantor Condensed Combining and Consolidating Financial Statements

        Under an indenture dated June 6, 2002, TriMas Corporation, the parent company (Parent), issued 97/8% senior subordinated notes due 2012 in a total principal amount of $437.8 million (face value). These 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 guarantees are full, unconditional, joint and several. The Company's non-domestic subsidiaries and TSPC, Inc. have not guaranteed the Notes (Non-Guarantor Subsidiaries). The Guarantor Subsidiaries have also guaranteed amounts outstanding under the Company's Credit Facility.

        The accompanying supplemental guarantor condensed, combining or consolidating financial information is presented on 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.

110

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENT (Continued)

23. Supplemental Guarantor Condensed Combining and Consolidating Financial Statements (Continued)

Supplemental Guarantor
Condensed Financial Statements
Consolidated Balance Sheet
(Dollars in thousands)

 
   December 31, 2007
 
   Parent
   Guarantor
   Non-Guarantor
   Eliminations
   Consolidated
Total
Assets                              
Current assets:                              
  Cash and cash equivalents   $ —   $ 550   $ 4,250   $ —   $ 4,800
  Trade receivables, net     —     69,760     19,610     —     89,370
  Receivables, intercompany     —     —     1,700     (1,700 )   —
  Inventories     —     162,800     27,790     —     190,590
  Deferred income taxes     —     17,960     900     —     18,860
  Prepaid expenses and other current assets     —     5,870     1,140     —     7,010
  Assets of discontinued operations held for sale     —     3,330     —     —     3,330
   
 
 
 
 
    Total current assets     —     260,270     55,390     (1,700 )   313,960
Investments in subsidiaries     528,420     139,880     —     (668,300 )   —
Property and equipment, net     —     139,580     55,540     —     195,120
Goodwill     —     291,990     85,350     —     377,340
Intangibles and other assets     18,430     230,430     4,430     (11,720 )   241,570
   
 
 
 
 
    Total assets   $ 546,850   $ 1,062,150   $ 200,710   $ (681,720 ) $ 1,127,990
   
 
 
 
 

Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:                              
  Current maturities, long-term debt   $ —   $ 3,300   $ 5,090   $ —   $ 8,390
  Accounts payable, trade     —     102,920     18,940     —     121,860
  Accounts payable, intercompany     —     1,700     —     (1,700 )   —
  Accrued liabilities     1,390     58,820     11,620     —     71,830
  Liabilities of discontinued operations     —     1,450     —     —     1,450
   
 
 
 
 
    Total current liabilities     1,390     168,190     35,650     (1,700 )   203,530
Long-term debt     336,970     254,210     16,420     —     607,600
Deferred income taxes     —     77,890     7,110     (11,720 )   73,280
Other long-term liabilities     —     33,440     1,650     —     35,090
   
 
 
 
 
    Total liabilities     338,360     533,730     60,830     (13,420 )   919,500
   
 
 
 
 
    Total shareholders' equity     208,490     528,420     139,880     (668,300 )   208,490
   
 
 
 
 
    Total liabilities and shareholders' equity   $ 546,850   $ 1,062,150   $ 200,710   $ (681,720 ) $ 1,127,990
   
 
 
 
 

111

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

23. Supplemental Guarantor Condensed Combining and Consolidating Financial Statements (Continued)

Supplemental Guarantor
Condensed Financial Statements
Consolidated Balance Sheet
(Dollars in thousands)

 
   December 31, 2006
 
   Parent
   Guarantor
   Non-Guarantor
   Eliminations
   Consolidated
Total
Assets                              
Current assets:                              
  Cash and cash equivalents   $ —   $ 460   $ 3,140   $ —   $ 3,600
  Trade receivables, net     —     80,050     18,750     —     98,800
  Receivables, intercompany     —     320     —     (320 )   —
  Inventories     —     144,440     20,220     —     164,660
  Deferred income taxes     —     23,750     560     —     24,310
  Prepaid expenses and other current assets     —     6,050     1,270     —     7,320
  Assets of discontinued operations held for sale     —     15,440     —     —     15,440
   
 
 
 
 
    Total current assets     —     270,510     43,940     (320 )   314,130
Investments in subsidiaries     645,290     164,040     —     (809,330 )   —
Property and equipment, net     —     107,250     55,420     —     162,670
Goodwill     —     417,150     112,580     —     529,730
Intangibles and other assets     25,950     249,230     19,600     (15,250 )   279,530
   
 
 
 
 
    Total assets   $ 671,240   $ 1,208,180   $ 231,540   $ (824,900 ) $ 1,286,060
   
 
 
 
 

Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:                              
  Current maturities, long-term debt   $ —   $ 3,620   $ 6,080   $ —   $ 9,700
  Accounts payable, trade     —     82,360     18,210     —     100,570
  Accounts payable, intercompany     —     —     320     (320 )   —
  Accrued liabilities     1,920     59,550     8,980           70,450
  Liabilities of discontinued operations     —     24,940     —     —     24,940
   
 
 
 
 
    Total current liabilities     1,920     170,470     33,590     (320 )   205,660
Long-term debt     436,540     270,500     17,750     —     724,790
Deferred income taxes     —     89,030     16,160     (15,250 )   89,940
Other long-term liabilities     —     32,890     —     —     32,890
   
 
 
 
 
    Total liabilities     438,460     562,890     67,500     (15,570 )   1,053,280
   
 
 
 
 
    Total shareholders' equity     232,780     645,290     164,040     (809,330 )   232,780
   
 
 
 
 
    Total liabilities and shareholders' equity   $ 671,240   $ 1,208,180   $ 231,540   $ (824,900 ) $ 1,286,060
   
 
 
 
 

112

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

23. Supplemental Guarantor Condensed Combining and Consolidating Financial Statements (Continued)


Supplemental Guarantor
Condensed Financial Statements
Consolidated Statement of Operations
(Dollars in thousands)

 
   Year ended December 31, 2007
  
 
   Parent
   Guarantor
   Non-Guarantor
   Eliminations
   Total
  
Net sales   $ —   $ 883,520   $ 237,760   $ (53,010 ) $ 1,068,270  
Cost of sales     —     (639,590 )   (192,800 )   53,010     (779,380 )
   
 
 
 
 
 
  Gross profit     —     243,930     44,960     —     288,890  
Selling, general and administrative expenses     —     (157,910 )   (28,000 )   —     (185,910 )
Advisory services agreement termination fee     —     (10,000 )   —     —     (10,000 )
Costs for early termination of operating leases     —     (4,230 )   —     —     (4,230 )
Settlement of Canadian benefit plan liability     —     —     (3,870 )   —     (3,870 )
  Gain (loss) on dispositions of property and equipment     —     (3,500 )   1,430     —     (2,070 )
Impairment of assets     —     —     (3,370 )   —     (3,370 )
Impairment of goodwill and indefinite-lived intangible assets     —     (154,840 )   (16,370 )   —     (171,210 )
   
 
 
 
 
 
  Operating loss     —     (86,550 )   (5,220 )   —     (91,770 )
Other expense, net:                                
  Interest expense     (38,710 )   (26,740 )   (2,860 )   —     (68,310 )
  Debt extinguishment costs     (7,440 )   —     —     —     (7,440 )
  Other, net     3,530     (5,990 )   (1,420 )   —     (3,880 )
   
 
 
 
 
 
  Loss before income tax (expense) benefit and equity in net loss of subsidiaries     (42,620 )   (119,280 )   (9,500 )   —     (171,400 )
Income tax (expense) benefit     11,710     1,370     (1,000 )   —     12,080  
Equity in net loss of subsidiaries     (127,520 )   (10,500 )   —     138,020     —  
   
 
 
 
 
 
Income (loss) from continuing operations     (158,430 )   (128,410 )   (10,500 )   138,020     (159,320 )
Income from discontinued operations     —     890     —     —     890  
   
 
 
 
 
 
Net income (loss)   $ (158,430 ) $ (127,520 ) $ (10,500 ) $ 138,020   $ (158,430 )
   
 
 
 
 
 

113

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

23. Supplemental Guarantor Condensed Combining and Consolidating Financial Statements (Continued)

Supplemental Guarantor
Condensed Financial Statements
Consolidated Statement of Operations
(Dollars in thousands)

 
   Year ended December 31, 2006
  
 
   Parent
   Guarantor
   Non-Guarantor
   Eliminations
   Total
  
Net sales   $ —   $ 876,380   $ 185,240   $ (47,710 ) $ 1,013,910  
Cost of sales     —     (644,070 )   (147,190 )   47,710     (743,550 )
   
 
 
 
 
 
  Gross profit     —     232,310     38,050     —     270,360  
Selling, general and administrative expenses     —     (148,230 )   (20,820 )   —     (169,050 )
Loss on dispositions of property and equipment     —     (490 )   (60 )   —     (550 )
Impairment of assets     —     (510 )   —     —     (510 )
Impairment of goodwill     —     (116,500 )   —     —     (116,500 )
   
 
 
 
 
 
  Operating profit (loss)     —     (33,420 )   17,170     —     (16,250 )
Other income (expense), net:                                
  Interest expense     (43,010 )   (31,990 )   (4,060 )   —     (79,060 )
  Debt extinguishment costs     —     (8,610 )   —     —     (8,610 )
  Other, net     30     (4,010 )   (170 )   —     (4,150 )
   
 
 
 
 
 
Income (loss) before income tax (expense) benefit and equity in net income (loss) of subsidiaries     (42,980 )   (78,030 )   12,940     —     (108,070 )
Income tax (expense) benefit     15,250     (13,610 )   (3,340 )   —     (1,700 )
Equity in net income (loss) of subsidiaries     (101,180 )   9,600     —     91,580     —  
   
 
 
 
 
 
Income (loss) from continuing operations     (128,910 )   (82,040 )   9,600     91,580     (109,770 )
Loss from discontinued operations     —     (19,140 )   —     —     (19,140 )
   
 
 
 
 
 
Net income (loss)   $ (128,910 ) $ (101,180 ) $ 9,600   $ 91,580   $ (128,910 )
   
 
 
 
 
 

114

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

23. Supplemental Guarantor Condensed Combining and Consolidating Financial Statements (Continued)


Supplemental Guarantor
Condensed Financial Statements
Consolidated Statement of Operations
(Dollars in thousands)

 
   Year ended December 31, 2005
  
 
   Parent
   Guarantor
   Non-Guarantor
   Eliminations
   Total
  
Net sales   $ —   $ 857,520   $ 185,140   $ (49,770 ) $ 992,890  
Cost of sales     —     (655,540 )   (143,500 )   49,770     (749,270 )
   
 
 
 
 
 
  Gross profit     —     201,980     41,640     —     243,620  
Selling, general and administrative expenses     —     (133,880 )   (23,940 )   —     (157,820 )
Loss on dispositions of property and equipment     —     (640 )   (50 )   —     (690 )
Impairment of assets     —     (2,960 )   —     —     (2,960 )
   
 
 
 
 
 
  Operating profit     —     64,500     17,650     —     82,150  
Other income (expense), net:                                
  Interest expense     (42,660 )   (29,820 )   (2,830 )   100     (75,210 )
  Other, net     (1,080 )   (1,900 )   (3,010 )   (100 )   (6,090 )
   
 
 
 
 
 
Income (loss) before income tax (expense) benefit and equity in net income (loss) of subsidiaries     (43,740 )   32,780     11,810     —     850  
Income tax (expense) benefit     17,460     (12,390 )   (6,260 )   —     (1,190 )
Equity in net income (loss) of subsidiaries     (19,600 )   5,550     —     14,050     —  
   
 
 
 
 
 
Income (loss) from continuing operations     (45,880 )   25,940     5,550     14,050     (340 )
Loss from discontinued operations     —     (45,120 )   —     —     (45,120 )
Cumulative effect of change in accounting principle     —     (420 )   —     —     (420 )
   
 
 
 
 
 
Net income (loss)   $ (45,880 ) $ (19,600 ) $ 5,550   $ 14,050   $ (45,880 )
   
 
 
 
 
 

115

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

23. Supplemental Guarantor Condensed Combining and Consolidating Financial Statements (Continued)

Supplemental Guarantor
Condensed Financial Statements
Consolidated Statement of Cash Flows
(Dollars in thousands)

 
   For the Year Ended December 31, 2007
  
 
   Parent
   Guarantor
   Non-Guarantor
   Eliminations
   Total
  
Cash Flows from Operating Activities:                                
  Net cash provided by (used for) operating activities   $ (38,570 ) $ 82,730   $ 20,810   $ —   $ 64,970  
   
 
 
 
 
 

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Capital expenditures     —     (26,610 )   (8,120 )   —     (34,730 )
  Acquisition of leased assets     —     (29,960 )   —     —     (29,960 )
  Acquisition of businesses, net of cash acquired     —     (13,540 )   —     —     (13,540 )
  Net proceeds from disposition of businesses and other assets     —     9,320     —     —     9,320  
   
 
 
 
 
 
      Net cash used for investing activities     —     (60,790 )   (8,120 )   —     (68,910 )
   
 
 
 
 
 

Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Proceeds from sale of common stock in connection with the Company's initial public offering, net of issuance costs     126,460     —     —     —     126,460  
  Repayments of borrowings on senior credit facilities     —     (2,600 )   (2,340 )   —     (4,940 )
  Proceeds from borrowings on revolving credit facilities     —     498,590     9,950     —     508,540  
  Repayments of borrowings on revolving credit facilities     —     (512,630 )   (12,290 )   —     (524,920 )
  Retirement of senior subordinated notes     (100,000 )   —     —     —     (100,000 )
  Intercompany transfers (to) from subsidiaries     12,110     (5,210 )   (6,900 )   —     —  
   
 
 
 
 
 
      Net cash provided by (used for) financing activities     38,570     (21,850 )   (11,580 )   —     5,140  
   
 
 
 
 
 

Cash and Cash Equivalents:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Increase for the period           90     1,110     —     1,200  
    At beginning of period     —     460     3,140     —     3,600  
   
 
 
 
 
 
    At end of period   $ —   $ 550   $ 4,250   $ —   $ 4,800  
   
 
 
 
 
 

116

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

23. Supplemental Guarantor Condensed Combining and Consolidating Financial Statements (Continued)


Supplemental Guarantor
Condensed Financial Statements
Consolidated Statement of Cash Flows
(Dollars in thousands)

 
   For the Year Ended December 31, 2006
  
 
   Parent
   Guarantor
   Non-Guarantor
   Eliminations
   Total
  

Cash Flows from Operating Activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net cash provided by (used for) operating activities   $ (43,230 ) $ 37,880   $ 21,230   $ —   $ 15,880  
   
 
 
 
 
 

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Capital expenditures     —     (15,180 )   (7,300 )   —     (22,480 )
  Acquisition of leased assets     —     (7,360 )   —     —     (7,360 )
  Net proceeds from disposition of businesses and other assets     —     7,680     —     —     7,680  
   
 
 
 
 
 
      Net cash used for investing activities     —     (14,860 )   (7,300 )   —     (22,160 )
   
 
 
 
 
 

Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Repayments of borrowings on senior credit facilities     —     (256,900 )   (510 )   —     (257,410 )
  Proceeds from borrowings on term loan facilities     —     260,000     —     —     260,000  
  Proceeds from borrowings on revolving credit facilities     —     683,270     5,600     —     688,870  
  Repayments of borrowings on revolving credit facilities     —     (672,600 )   (10,550 )   —     (683,150 )
  Debt issuance costs     —     (2,160 )   —     —     (2,160 )
  Intercompany transfers (to) from subsidiaries     43,230     (34,420 )   (8,810 )   —     —  
   
 
 
 
 
 
      Net cash provided by (used for) financing activities     43,230     (22,810 )   (14,270 )   —     6,150  
   
 
 
 
 
 

Cash and Cash Equivalents:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Increase (decrease) for the period     —     210     (340 )   —     (130 )
    At beginning of period     —     250     3,480     —     3,730  
   
 
 
 
 
 
    At end of period   $ —   $ 460   $ 3,140   $ —   $ 3,600  
   
 
 
 
 
 

117

TRIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

23. Supplemental Guarantor Condensed Combining and Consolidating Financial Statements (Continued)

Supplemental Guarantor
Condensed Financial Statements
Consolidated Statement of Cash Flows
(Dollars in thousands)

 
   For the Year Ended December 31, 2005
  
 
   Parent
   Guarantor
   Non-Guarantor
   Eliminations
   Total
  
Cash Flows from Operating Activities:                                
  Net cash provided by (used for) operating activities   $ (43,230 ) $ 44,040   $ 29,080   $ —   $ 29,890  
   
 
 
 
 
 
Cash Flows from Investing Activities:                                
  Capital expenditures     —     (13,640 )   (8,030 )   —     (21,670 )
  Net proceeds from disposition of businesses and other assets     —     5,030     —     —     5,030  
   
 
 
 
 
 
      Net cash used for investing activities     —     (8,610 )   (8,030 )   —     (16,640 )
   
 
 
 
 
 
Cash Flows from Financing Activities:                                
  Repayments of borrowings on senior credit facilities     —     (2,890 )   —     —     (2,890 )
    Proceeds from borrowings on term loan facilities     —     —     24,250     —     24,250  
    Proceeds from borrowings on revolving credit facilities     —     884,450     —     —     884,450  
    Repayments of borrowings on revolving credit facilities     —     (916,300 )   —     —     (916,300 )
  Debt issuance costs     —     (2,120 )   —     —     (2,120 )
  Intercompany transfers (to) from subsidiaries     43,230     1,160     (44,390 )   —     —  
   
 
 
 
 
 
      Net cash provided by (used for) financing activities     43,230     (35,700 )   (20,140 )   —     (12,610 )
   
 
 
 
 
 
Cash and Cash Equivalents:                                
  Increase (decrease) for the period     —     (270 )   910     —     640  
    At beginning of period     —     520     2,570     —     3,090  
   
 
 
 
 
 
    At end of period   $ —   $ 250   $ 3,480   $ —   $ 3,730  
   
 
 
 
 
 

118

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

        Not applicable.

Item 9A. Controls and Procedures

        As of December 31, 2007, an evaluation was carried out by management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, (the "Exchange Act")) pursuant to Rule 13a-15 of the Exchange Act. Our disclosure controls and procedures are designed only to provide reasonable assurance that they will meet their objectives. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2007, the Company's disclosure controls and procedures are effective to provide reasonable assurance that they would meet their objectives.

        Management is responsible for the preparation and fair presentation of the consolidated financial statements included in this annual report. The consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles and reflect management's judgments and estimates concerning events and transactions that are accounted for or disclosed.

        Management is also responsible for establishing and maintaining effective internal control over financial reporting. The Company's internal control over financial reporting includes those policies and procedures that pertain to the Company's ability to record, process, summarize, and report reliable financial data. Management recognizes that there are inherent limitations in the effectiveness of any internal control and effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Additionally, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.

        In order to ensure that the Company's internal control over financial reporting is effective, management regularly assesses such controls and did so most recently for its financial reporting as of December 31, 2007. Management's assessment was based on criteria for effective internal control over financial reporting described in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management asserts that the Company has maintained effective internal control over financial reporting as of December 31, 2007.

The Board of Directors and Shareholders
TriMas Corporation:

        We have audited TriMas Corporation's internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). TriMas Corporation's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain

119


reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, TriMas Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of TriMas Corporation as of December 31, 2007 and 2006, and the related consolidated statements of operations, cash flows, and shareholders' equity for each of the years in the three-year period ended December 31, 2007, and our report dated March 12, 2008 expressed an unqualified opinion on those consolidated financial statements.

(signed) KPMG LLP

Detroit, Michigan
March 12, 2008

        There have been no changes in the Company's internal control over financial reporting during the quarter ended December 31, 2007 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Item 9B.    Other Information

        Not applicable.

120

PART III

Item 10.    Directors, Executive Officers and Corporate Governance

        The information required by this item is incorporated by reference to our definitive proxy statement to be filed with the SEC within 120 days after the Company's fiscal year end of December 31, 2007.

        The Company has adopted a Code of Ethics and Business Conduct applicable to its directors, officers and employees. The Code of Business Conduct and Ethics is available on the Investor Relations portion of the Company's website under the "Corporate Governance" link. The Company's website address is www.trimascorp.com.

Item 11.    Executive Compensation

        The information required by this item is incorporated by reference to our definitive proxy statement to be filed with the SEC within 120 days after the Company's fiscal year end of December 31, 2007.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

        The information required by this item is incorporated by reference to our definitive proxy statement to be filed with the SEC within 120 days after the Company's fiscal year end of December 31, 2007.

Item 13.    Certain Relationships and Related Transactions and Director Independence

        The information required by this item is incorporated by reference to our definitive proxy statement to be filed with the SEC within 120 days after the Company's fiscal year end of December 31, 2007.

Item 14.    Principal Accountant Fees and Services

A. Audit Fees

        The information required by this item is incorporated by reference to our definitive proxy statement to be filed with the SEC within 120 days after the Company's fiscal year end of December 31, 2007.


PART IV

Item 15.    Exhibits and Financial Statement Schedules

(a) Listing of Documents

(1)   Financial Statements

        The Company's Financial Statements included in Item 8 hereof, as required at December 31, 2007 and December 31, 2006, and for the periods ended December 31, 2007, December 31, 2006 and December 31, 2005, consist of the following:

Balance Sheet
Statement of Operations
Statement of Cash Flows
Statement of Shareholders' Equity
Notes to Financial Statements

(2)   Financial Statement Schedules

        Financial Statement Schedule of the Company appended hereto, as required for the periods ended December 31, 2007, December 31, 2006 and December 31, 2005, consists of the following:

Valuation and Qualifying Accounts

(3)   Exhibits

        See Exhibit Table at the end of this Report.

121

SIGNATURE

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

    TRIMAS CORPORATION
 (Registrant)

DATE: March 13, 2008
 
BY:
/s/  GRANT H. BEARD      
Name: Grant H. Beard
Title: President and Chief Executive Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name
   Title
   Date

 
 
 
 
 
/s/  GRANT H. BEARD      
Grant H. Beard		   President and Chief Executive Officer
(Principal Executive Officer) and Director		   March 13, 2008

/s/  E.R. AUTRY      
E.R. Autry
 
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
 
March 13, 2008

/s/  SAMUEL VALENTI III      
Samuel Valenti III
 
Chairman of the Board of Directors
 
March 13, 2008

/s/  CHARLES E. BECKER      
Charles E. Becker
 
Director
 
March 13, 2008

/s/  BRIAN P. CAMPBELL      
Brian P. Campbell
 
Director
 
March 13, 2008

/s/  MARSHALL A. COHEN      
Marshall A. Cohen
 
Director
 
March 13, 2008

/s/  RICHARD M. GABRYS      
Richard M. Gabrys
 
Director
 
March 13, 2008

122


/s/  EUGENE A. MILLER      
Eugene A. Miller
 
Director
 
March 13, 2008

/s/  DANIEL P. TREDWELL      
Daniel P. Tredwell
 
Director
 
March 13, 2008

123


SCHEDULE II
PURSUANT TO ITEM 15(a)(2)
OF FORM 10-K VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED
DECEMBER 31, 2007, 2006 AND 2005

 
    
   ADDITIONS
    
    
DESCRIPTION
   BALANCE
AT
BEGINNING
OF PERIOD
   CHARGED
TO
COSTS AND
EXPENSES
   CHARGED
(CREDITED)
TO OTHER
ACCOUNTS(A)
   DEDUCTIONS(B)
   BALANCE
AT END
OF PERIOD
Allowance for doubtful accounts deducted from accounts receivable in the balance sheet                              
Year Ended December 31, 2007   $ 5,610,000   $ 100,000   $ (240,000 ) $ 300,000   $ 5,170,000
   
 
 
 
 
Year Ended December 31, 2006   $ 5,430,000   $ 1,170,000   $ 20,000   $ 1,010,000   $ 5,610,000
   
 
 
 
 
Year Ended December 31, 2005   $ 5,290,000   $ 720,000   $ 20,000   $ 600,000   $ 5,430,000
   
 
 
 
 
(A)
Allowance of companies acquired, and other adjustments, net.

(B)
Deductions, representing uncollectible accounts written-off, less recoveries of amounts written-off in prior years.

124

Exhibit Index

Exhibit No.
   Description
3.1 (b)*** Fourth Amended and Restated Certificate of Incorporation of TriMas Corporation.

3.2
(b)***
Second Amended and Restated By-laws of TriMas Corporation.

4.1
(b)
Indenture relating to the 97/8% senior subordinated notes, dated as of June 6, 2002, by and among TriMas Corporation, each of the Guarantors named therein and The Bank of New York as trustee.

4.2
(b)
Form of note (included in Exhibit 4.1(b)).

4.3
(b)
Registration Rights Agreement relating to the 97/8% senior subordinated notes issued June 6, 2002 dated as of June 6, 2002 by and among TriMas Corporation and the parties named therein.

4.4
(b)*
Registration Rights Agreement relating to the 97/8% senior subordinated notes issued December 10, 2002 dated as of December 10, 2002 by and among TriMas Corporation and the parties named therein.

4.5
(d)
Supplemental Indenture dated as of March 4, 2003.

4.6
(e)
Supplemental Indenture No. 2 dated as of May 9, 2003.

4.7
(f)
Supplemental Indenture No. 3 dated as of August 6, 2003.

4.8
 
Supplemental Indenture No. 4 dated as of February 28, 2008.

10.1
(b)
Stock Purchase Agreement dated as of May 17, 2002 by and among Heartland Industrial Partners, L.P., TriMas Corporation and Metaldyne Corporation.

10.2
(b)
Amended and Restated Shareholders Agreement, dated as of July 19, 2002 by and among TriMas Corporation and Metaldyne Corporation.

10.3
(o)
Amendment No. 1 to Amended and Restated Shareholders Agreement dated as of August 31, 2006.

10.4
(m)
Credit Agreement dated as of June 6, 2002, as amended and restated as of August 2, 2006 among TriMas Company LLC, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, and Comerica Bank, as Syndication Agent.

10.5
(b)
Receivables Purchase Agreement, dated as of June 6, 2002, by and among TriMas Corporation, the Sellers party thereto and TSPC, Inc., as Purchaser.

10.6
(b)
Receivables Transfer Agreement, dated as of June 6, 2002, by and among TSPC, Inc., as Transferor, TriMas Corporation, individually, as Collection Agent, TriMas Company LLC, individually as Guarantor, the CP Conduit Purchasers, Committed Purchasers and Funding Agents party thereto, and JPMorgan Chase Bank as Administrative Agent.

10.7
(p)
Amendment dated as of June 3, 2005, to Receivables Transfer Agreement.

10.8
(j)
Amendment dated as of July 5, 2005, to Receivables Transfer Agreement.

10.9
(r)
Amendment dated as of December 31, 2007, to Receivables Transfer Agreement.

10.10
(s)
Amendment dated as of February 22, 2008, to Receivables Transfer Agreement.

10.11
(j)
TriMas Receivables Facility Amended and Restated Fee Letter dated July 1, 2005.

10.12
 
TriMas Receivables Facility Amended and Restated Fee Letter dated February 22, 2008.

II-1


10.13
(b)
Lease Assignment and Assumption Agreement, dated as of June 21, 2002, by and among Heartland Industrial Group, L.L.C., TriMas Company LLC and the Guarantors named therein.

10.14
(b)
TriMas Corporation 2002 Long Term Equity Incentive Plan.

10.15
(b)**
Stock Purchase Agreement by and among 2000 Riverside Capital Appreciation Fund, L.P., the other Stockholders of HammerBlow Acquisition Corp. listed on Exhibit A thereto and TriMas Company LLC dated as of January 27, 2003.

10.16
(c)
Stock Purchase Agreement by and Among TriMas Company LLC and The Shareholders and Option Holders of Highland Group Corporation and FNL Management Corporation dated February 21, 2003.

10.17
(e)
Asset Purchase Agreement among TriMas Corporation, Metaldyne Corporation and Metaldyne Company LLC dated May 9, 2003.

10.18
(e)
Form of Sublease Agreement (included as Exhibit A in Exhibit 10.14).

10.19
(g)
Form of Stock Option Agreement.

10.20
(l)*
Annual Value Creation Program.

10.21
(l)*
Form of Indemnification Agreement.

10.22
(n)
Separation and Consulting Agreement dated as of May 20, 2005.

10.23
(o)
Amendment No. 1 to Stock Purchase Agreement, dated as of August 31, 2006 by and among Heartland Industrial Partners, L.P., TriMas Corporation and Metaldyne Corporation.

10.24
(o)
Advisory Agreement, dated June 6, 2002 between Heartland Industrial Partners, L.P. and TriMas Corporation.

10.25
(p)
First Amendment to Advisory Agreement, dated as of November 1, 2006 between Heartland Industrial Group, LLC and TriMas Corporation.

10.26
(p)
Second Amendment to Advisory Agreement, dated as of November 1, 2006 between Heartland Industrial Group, LLC and TriMas Corporation.

10.27
(p)
Management Rights Agreement.

10.28
(k)
Executive Severance/Change of Control Policy.

10.29
(q)
TriMas Corporation 2006 Long Term Equity Incentive Plan.

10.30
(q)
First Amendment to TriMas Corporation 2006 Long Term Equity Incentive Plan.

10.31
(q)
Second Amendment to TriMas Corporation 2006 Long Term Equity Incentive Plan.

12
 
Computation of Ratio of Earnings to Fixed Charges.

21.1
 
TriMas Corporation Subsidiary List.

31.1
 
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2
 
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

II-2


32.1
 
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2
 
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(a)
Incorporated by reference to the Exhibits filed with our Form 10-Q Quarterly Report, filed on May 14, 2003.

(b)
Incorporated by reference to the Exhibits filed with our Registration Statement on Form S-4, filed on October 4, 2002 (File No. 333-100351).

(b)
*      Incorporated by reference to the Exhibits filed with Amendment No. 2 to our Registration Statement on Form S-4, filed on January 28, 2003 (File No. 333-100351).

(b)
**    Incorporated by reference to the Exhibits filed with Amendment No. 3 to our Registration Statement or Form S-4, filed on January 29, 2003 (File No. 333-100351).

(b)
***  Incorporated by reference to the Exhibits filed with our Form 10-Q Quarterly Report, filed on August 3, 2007 (File No. 333-100351).

(c)
Incorporated by reference to the Exhibits filed with our Form 8-K filed on February 25, 2003 (File No. 333-100351).

(d)
Incorporated by reference to the Exhibits filed with our Annual Report on Form 10-K filed March 31, 2003 (File No. 333-100351).

(e)
Incorporated by reference to the Exhibits filed with our Registration Statement on Form S-4, filed June 9, 2003 (File No. 333-105950).

(f)
Incorporated by reference to the Exhibits filed with our Form 10-Q filed on August 14, 2003 (File No. 333-100351).

(g)
Incorporated by reference to the Exhibits filed with our Form 10-Q filed on November 12, 2003 (File No. 333-100351).

(h)
Incorporated by reference to the Exhibits filed with our Form 8-K filed on December 27, 2004 (File No. 333-100351).

(i)
Incorporated by reference to the Exhibits filed with our Form 8-K filed on October 3, 2005 (File No. 333-100351).

(j)
Incorporated by reference to the Exhibits filed with our Form 8-K filed on July 6, 2005 (File No. 333-100351).

(k)
Incorporated by reference to the Exhibits filed with our Form 8-K filed on November 22, 2006 (File No. 333-100351).

(l)
Incorporated by reference to the Exhibits filed with our Registration Statement on Form S-1, filed on March 24, 2004 (File No. 333-113917).

(l)
*       Incorporated by reference to the Exhibits filed with Amendment No. 3 to our Registration Statement on Form S-1, filed on June 29, 2004 (File No. 333-113917).

(m)
Incorporated by reference to the Exhibits filed with our Form 8-K filed on August 3, 2006 (File No. 333-100351).

(n)
Incorporated by reference to the Exhibits filed with our Form 10-Q filed on August 15, 2005 (File No. 333-100351).

II-3

(o)
Incorporated by reference to the Exhibits filed with Amendment No. 1 to our Registration Statement on Form S-1, filed on September 19, 2006 (File No. 333-136263).

(p)
Incorporated by reference to the Exhibits filed with Amendment No. 3 to our Registration Statement on Form S-1, filed on January 18, 2007 (File No. 333-136263).

(q)
Incorporated by reference to the Exhibits filed with the Registration Statement on Form S-8, filed on August 31, 2007 (File No. 333-145815).

(r)
Incorporated by reference to the Exhibits filed with our Form 8-K filed on January 4, 2008 (File No. 001-10716).

(s)
Incorporated by reference to the Exhibits filed with our Form 8-K filed on February 26, 2008 (File No. 001-10716).

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