Quarterly Report

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

FORM 10-Q


(Mark One)
ý		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 2009
Or
o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period from to .

Commission file number 001-10716

TRIMAS CORPORATION
(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		38-2687639 (IRS Employer Identification No.)
39400 Woodward Avenue, Suite 130 Bloomfield Hills, Michigan 48304 (Address of principal executive offices, including zip code)
(248) 631-5450 (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer ý		Non-accelerated filer o (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 Exchange Act). Yes o No ý

As of August 5, 2009, the number of outstanding shares of the Registrant's common stock, $.01 par value, was 33,578,660 shares.

TriMas Corporation
Index


Part I.	Financial Information
		Forward-Looking Statements	2
	Item 1.	Consolidated Financial Statements	3
		Consolidated Balance Sheet—June 30, 2009 and December 31, 2008	3
		Consolidated Statement of Operations for the Three and Six Months Ended June 30, 2009 and 2008	4
		Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2009 and 2008	5
		Consolidated Statement of Shareholders' Equity for the Six Months Ended June 30, 2009	6
		Notes to Unaudited Consolidated Financial Statements	7
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
	Item 3.	Quantitative and Qualitative Disclosure about Market Risk	56
	Item 4.	Controls and Procedures	56
Part II.	Other Information and Signatures
	Item 1.	Legal Proceedings	57
	Item 1A.	Risk Factors	57
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
	Item 3.	Defaults Upon Senior Securities	57
	Item 4.	Submission of Matters to a Vote of Security Holders	57
	Item 5.	Other Information	57
	Item 6.	Exhibits	58
	Signature		62

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Forward-Looking Statements

This report contains forward-looking statements (as that term is defined by the federal securities laws) about our financial condition, results of operations and business. You can find many of these statements by looking for words such as "may," "will," "expect," "anticipate," "believe," "estimate" and similar words used in this report.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. We caution readers not to place undue reliance on the statements, which speak only as of the date of this report.

The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We do not undertake any obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

You should carefully consider the factors discussed in Part I, Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2008, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deemed to be immaterial also may materially adversely affect our business, financial position and results of operations or cash flows.

We disclose important factors that could cause our actual results to differ materially from our expectations under Part I, Item 2., " Management's Discussion and Analysis of Financial Condition and Results of Operations, " and elsewhere in this report. These cautionary statements qualify all forward-looking statements attributed to us or persons acting on our behalf. When we indicate that an event, condition or circumstance could or would have an adverse effect on us, we mean to include effects upon our business, financial and other condition, results of operations, prospects and ability to service our debt.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TriMas Corporation

Consolidated Balance Sheet

(Unaudited—dollars in thousands)

				June 30, 2009			December 31, 2008

			Assets
Current assets:
	Cash and cash equivalents			$	5,360		$	3,910
	Receivables, net of reserves of approximately $6.4 million and $5.7 million as of June 30, 2009 and December 31, 2008, respectively				111,880			104,760
	Inventories				151,080			188,950
	Deferred income taxes				16,970			16,970
	Prepaid expenses and other current assets				5,280			7,430
	Assets of discontinued operations held for sale				2,840			26,200

		Total current assets			293,410			348,220
Property and equipment, net					172,070			181,570
Goodwill					195,610			202,280
Other intangibles, net					172,030			178,880
Other assets					15,690			19,270

		Total assets		$	848,810		$	930,220

Liabilities and Shareholders' Equity
Current liabilities:
	Current maturities, long-term debt			$	8,880		$	10,360
	Accounts payable				90,520			111,810
	Accrued liabilities				67,000			66,340
	Liabilities of discontinued operations				880			1,340

		Total current liabilities			167,280			189,850
Long-term debt					528,470			599,580
Deferred income taxes					43,200			51,650
Other long-term liabilities					44,970			34,240

		Total liabilities			783,920			875,320

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: 33,580,272 shares at June 30, 2009 and 33,620,410 shares at December 31, 2008					330			330
Paid-in capital					527,190			527,000
Accumulated deficit					(504,850	)		(510,160	)
Accumulated other comprehensive income					42,220			37,730

		Total shareholders' equity			64,890			54,900

		Total liabilities and shareholders' equity		$	848,810		$	930,220

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

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TriMas Corporation

Consolidated Statement of Operations

(Unaudited—dollars in thousands, except for share amounts)

			Three months ended June 30,						Six months ended June 30,

			2009			2008			2009			2008
Net sales			$	208,650		$	282,840		$	411,360		$	547,430
Cost of sales				(159,040	)		(206,820	)		(315,910	)		(401,480	)

	Gross profit			49,610			76,020			95,450			145,950
Selling, general and administrative expenses				(34,110	)		(45,580	)		(75,650	)		(87,580	)
Gain (loss) on dispositions of property and equipment				120			(120	)		160			(210	)

	Operating profit			15,620			30,320			19,960			58,160

Other income (expense), net:
	Interest expense			(11,310	)		(13,880	)		(23,800	)		(28,590	)
	Gain on extinguishment of debt			11,760			—			27,070			—
	Other, net			(820	)		(1,340	)		(1,520	)		(2,530	)

		Other income (expense), net		(370	)		(15,220	)		1,750			(31,120	)

Income from continuing operations before income tax expense				15,250			15,100			21,710			27,040
Income tax expense				(5,940	)		(5,410	)		(8,340	)		(9,740	)

Income from continuing operations				9,310			9,690			13,370			17,300
Income (loss) from discontinued operations, net of income tax benefit (expense)				(320	)		(240	)		(8,060	)		20

Net income			$	8,990		$	9,450		$	5,310		$	17,320

Earnings per share—basic:
	Continuing operations		$	0.28		$	0.29		$	0.40		$	0.51
	Discontinued operations, net of income tax benefit (expense)			(0.01	)		(0.01	)		(0.24	)		—

	Net income per share		$	0.27		$	0.28		$	0.16		$	0.51

Weighted average common shares—basic				33,485,317			33,409,500			33,472,481			33,409,500

Earnings per share—diluted:
	Continuing operations		$	0.28		$	0.29		$	0.40		$	0.51
	Discontinued operations, net of income tax benefit (expense)			(0.01	)		(0.01	)		(0.24	)		—

	Net income per share		$	0.27		$	0.28		$	0.16		$	0.51

Weighted average common shares—diluted				33,656,242			33,445,067			33,532,477			33,448,155

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

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TriMas Corporation

Consolidated Statement of Cash Flows

(Unaudited—dollars in thousands)

			Six months ended June 30,

			2009			2008
Net income			$	5,310		$	17,320
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact:
	(Gain) loss on dispositions of property and equipment			(160	)		90
	Depreciation			15,510			13,900
	Amortization of intangible assets			7,320			7,800
	Amortization of debt issue costs			1,160			1,220
	Deferred income taxes			1,080			—
	Gain on extinguishment of debt			(27,070	)		—
	Non-cash compensation expense			190			880
	Reductions in sale of receivables and receivables securitization			(5,950	)		(3,630	)
	(Increase) decrease in receivables			1,050			(33,290	)
	Decrease in inventories			41,290			4,950
	Decrease in prepaid expenses and other assets			3,940			1,910
	Increase (decrease) in accounts payable and accrued liabilities			(12,480	)		10,090
	Other, net			980			2,020

		Net cash provided by operating activities, net of acquisition impact		32,170			23,260

Cash Flows from Investing Activities:
	Capital expenditures			(6,420	)		(13,530	)
	Acquisition of businesses, net of cash acquired			—			(6,190	)
	Net proceeds from disposition of businesses and other assets			22,420			340

		Net cash provided by (used for) investing activities		16,000			(19,380	)

Cash Flows from Financing Activities:
	Repayments of borrowings on term loan facilities			(1,580	)		(2,930	)
	Proceeds from term loan facilities			—			490
	Proceeds from borrowings on revolving credit facilities			508,360			269,200
	Repayments of borrowings on revolving credit facilities			(518,330	)		(268,580	)
	Retirement of senior subordinated notes			(35,170	)		—

		Net cash used for financing activities		(46,720	)		(1,820	)

Cash and Cash Equivalents:
	Increase for the period			1,450			2,060
		At beginning of period		3,910			4,800

		At end of period	$	5,360		$	6,860

	Supplemental disclosure of cash flow information:
		Cash paid for interest	$	21,830		$	27,100

		Cash paid for taxes	$	4,310		$	5,330

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

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TriMas Corporation

Consolidated Statement of Shareholders' Equity

Six Months Ended June 30, 2009

(Unaudited—dollars in thousands)

			Common Stock		Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income			Total

Balances, December 31, 2008			$	330	$	527,000	$	(510,160	)	$	37,730		$	54,900
Comprehensive income:
	Net income			—		—		5,310			—			5,310
	Foreign currency translation			—		—		—			4,910			4,910
	Net losses on derivative instruments (net of tax of $0.2 million) (Note 9)			—		—		—			(420	)		(420	)

		Total comprehensive income												9,800
Non-cash compensation expense				—		190		—			—			190

Balances, June 30, 2009			$	330	$	527,190	$	(504,850	)	$	42,220		$	64,890

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

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

TriMas Corporation ("TriMas" or the "Company"), and its consolidated subsidiaries, is a global manufacturer and distributor of products for commercial, industrial and consumer markets. The Company is principally engaged in five reportable segments with diverse products and market channels: Packaging, Energy, Aerospace & Defense, Engineered Components and Cequent. See Note 11, "Segment Information," for further information on each of the Company's reportable segments.

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries and in the opinion of management, contain all adjustments, including adjustments of a normal and recurring nature, necessary for a fair presentation of financial position and results of operations. Results of operations for interim periods are not necessarily indicative of results for the full year. Certain prior year amounts have been reclassified to conform with the current year presentation. The accompanying consolidated financial statements and notes thereto should be read in conjunction with the Company's 2008 Annual Report on Form 10-K.

2. Discontinued Operations and Assets Held for Sale

During the fourth quarter of 2008, the Company entered into a binding agreement to sell certain assets within its specialty laminates, jacketings and insulation tapes line of business, which was part of the Packaging segment. The sale was completed in February 2009 for proceeds of approximately $21.0 million. The Company's manufacturing facility is subject to a lease agreement expiring in 2024 that was not assumed by the purchaser of the business. During first quarter 2009, upon the cease use date of the facility, the Company recorded a pre-tax charge of approximately $10.7 million for future lease obligations on the facility, net of estimated sublease recoveries, determined in accordance with the provisions of Statement of Financial Accounting Standards ("SFAS") No. 146, "Accounting for Costs Associated with Exit or Disposal Activities."

During the fourth quarter of 2007, the Company committed to a plan to sell its property management line of business. Although the business has not yet been sold, the Company continues to actively market the business and has adjusted its sales price expectations, consistent with the changes in the current economic conditions. As such, the Company continues to report the property management business as discontinued operations and assets held for sale for all periods presented.

The results of the aforementioned businesses are reported as discontinued operations for all periods presented.

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

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

Results of discontinued operations are summarized as follows:

		Three months ended June 30,						Six months ended June 30,

		2009			2008			2009			2008
		(dollars in thousands)						(dollars in thousands)
Net sales		$	670		$	13,620		$	8,800		$	28,080

Income (loss) from discontinued operations before income tax expense		$	(540	)	$	(380	)	$	(13,170	)	$	30
Income tax (expense) benefit			220			140			5,110			(10	)

	Income (loss) from discontinued operations, net of income tax expense	$	(320	)	$	(240	)	$	(8,060	)	$	20

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

		June 30, 2009		December 31, 2008

		(dollars in thousands)
Receivables, net		$	350	$	680
Inventories, net			—		7,750
Prepaid expenses and other assets			—		7,650
Property and equipment, net			2,490		10,120

	Total assets	$	2,840	$	26,200

Accounts payable		$	40	$	90
Accrued liabilities and other			840		1,250

	Total liabilities	$	880	$	1,340

3. Mosinee Plant Closure

In March 2009, the Company announced plans to close its manufacturing facility in Mosinee, Wisconsin by the third quarter of 2009, moving production and distribution functions currently in Mosinee to lower-cost manufacturing facilities or to third-party sourcing partners. In connection with this action, the Company recorded a pre-tax charge within its Cequent segment of approximately $1.6 million in the first quarter of 2009, determined in accordance with the provisions of SFAS No. 112, "Employers' Accounting for Postemployment Benefits." The charge primarily related to cash costs for severance benefits for approximately 160 employees to be involuntarily terminated as part of the closure. As of June 30, 2009, the Company had paid approximately $0.3 million of severance benefits, with the remaining $1.3 million expected to be paid by mid 2010.

The Company also expects to incur a pre-tax non-cash charge of approximately $3.0 million during the first three quarters of 2009 as determined under the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," related to accelerated depreciation expense as a

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

3. Mosinee Plant Closure (Continued)

result of shortening the expected useful lives on certain machinery and equipment assets that the Company will no longer utilize following the closure. The Company recorded approximately $1.2 million and $1.7 million, respectively, of accelerated depreciation expense for the machinery and equipment during the three and six months ended June 30, 2009.

The Company's manufacturing facility in Mosinee is subject to a lease agreement expiring in 2022. The Company is currently assessing the potential recoverability of its future lease obligations for this facility, and will record an estimate of any future unrecoverable lease obligations upon the cease use date of the facility.

4. Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the six months ended June 30, 2009 are summarized as follows:

		Packaging			Energy			Aerospace & Defense			Engineered Components		Cequent		Total

		(dollars in thousands)
Balance, December 31, 2008		$	113,760		$	44,980		$	43,540		$	—	$	—	$	202,280
	Purchase accounting adjustments		(740	)		(5,990	)		(2,410	)		—		—		(9,140	)
	Foreign currency translation and other		2,250			220			—			—		—		2,470

Balance, June 30, 2009		$	115,270		$	39,210		$	41,130		$	—	$	—	$	195,610

During the second quarter of 2009, the Company identified a balance sheet gross-up of goodwill and deferred tax liabilities in the amount of $9.1 million and $8.5 million, respectively, which were incorrectly established in purchase accounting for business combinations occurring prior to 2004. Management corrected the affected accounts in the second quarter of 2009, which resulted in a non-cash charge to income tax expense of $0.6 million.

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

4. Goodwill and Other Intangible Assets (Continued)

The gross carrying amounts and accumulated amortization of the Company's other intangibles as of June 30, 2009 and December 31, 2008 are summarized below. The Company amortizes these assets over periods ranging from 1 to 30 years.

		As of June 30, 2009					As of December 31, 2008

Intangible Category by Useful Life		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
		(dollars in thousands)
Customer relationships:
	5 – 12 years	$	25,770	$	(17,350	)	$	25,600	$	(16,140	)
	15 – 25 years		154,610		(57,130	)		154,610		(53,010	)

Total customer relationships			180,380		(74,480	)		180,210		(69,150	)

Technology and other:
	1 – 15 years		25,670		(20,980	)		25,570		(19,890	)
	17 – 30 years		42,210		(15,710	)		42,000		(14,700	)

Total technology and other			67,880		(36,690	)		67,570		(34,590	)

Trademark/Trade names (indefinite life)			34,940		—			34,840		—

		$	283,200	$	(111,170	)	$	282,620	$	(103,740	)

Amortization expense related to technology and other intangibles was approximately $1.0 million for each of the three months ended June 30, 2009 and 2008, respectively, and $2.0 million and $1.9 million for the six months ended June 30, 2009 and 2008, respectively. These amounts are included in cost of sales in the accompanying consolidated statement of operations. Amortization expense related to customer intangibles was approximately $2.7 million for each of the three months ended June 30, 2009 and 2008, respectively, and $5.3 million for each of the six months ended June 30, 2009 and 2008, respectively. These amounts are included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

5. Accounts Receivable Securitization

TriMas is party to a 364-day 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. The Company completed its annual renewal of the facility in February 2009, and reduced the committed funding from $90.0 million to $55.0 million. Renewal costs in 2009 approximated $0.4 million.

TSPC from time to time may sell an undivided fractional ownership interest in the pool of receivables up to approximately $55.0 million to a third party multi-seller receivables funding company. As of June 30, 2009 and December 31, 2008, the Company's funding under the facility was approximately $10.0 million and $20.0 million, respectively, with an additional $28.2 million and $30.9 million, respectively, available but not utilized. The Company had pledged receivables of approximately $66.3 million and $79.5 million under the program as of June 30, 2009 and December 31, 2008, respectively, which are included in receivables in the accompanying consolidated balance sheet. The net proceeds of sales are less than the face amount of accounts receivable sold by

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

5. Accounts Receivable Securitization (Continued)

an amount that approximates the purchaser's financing costs, including a usage fee (4.50% and 1.05% as of June 30, 2009 and 2008, respectively), a fee on the unused portion of the facility (2.25% and 0.50% as of June 30, 2009 and 2008, respectively), and cost of funds fees (see below), which amounted to a total of $0.3 million and $0.6 million for the three months ended June 30, 2009 and 2008, respectively, and $0.6 million and $1.3 million for the six months ended June 30, 2009 and 2008, respectively. Such amounts are included in other expense, net in the accompanying consolidated statement of operations. This facility expires on February 12, 2010.

The cost of funds fees 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 June 30, 2009 and 2008, the costs of funds fees were based on an average liquidation period of the portfolio of approximately 1.3 months, and an average discount rate of 2.7% and 2.3%, at June 30, 2009 and 2008, respectively.

In addition, the Company from time to time may sell an undivided interest in accounts receivable under factoring arrangements at three of its European subsidiaries. As of June 30, 2009 and December 31, 2008, the Company's funding under these arrangements was approximately $4.1 million and $3.2 million, respectively. Sales of the European subsidiaries' accounts receivable were sold at a discount from face value of approximately 1.4% and 2.1%, at June 30, 2009 and 2008, respectively. Costs associated with these transactions were approximately $0.05 million and $0.1 million for the three months ended June 30, 2009 and 2008, respectively, and $0.1 million and $0.2 million for the six months ended June 30, 2009 and 2008, respectively, and are included in other expense, net in the accompanying consolidated statement of operations.

6. Inventories

Inventories consist of the following:

		June 30, 2009		December 31, 2008

		(dollars in thousands)
Finished goods		$	100,530	$	119,980
Work in process			17,630		23,250
Raw materials			32,920		45,720

	Total inventories	$	151,080	$	188,950

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

7. Property and Equipment, Net

Property and equipment, net, consists of the following:

		June 30, 2009		December 31, 2008

		(dollars in thousands)
Land and land improvements		$	2,430	$	4,920
Buildings			45,680		44,470
Machinery and equipment			285,220		279,580

			333,330		328,970
Less: Accumulated depreciation			161,260		147,400

	Property and equipment, net	$	172,070	$	181,570

Depreciation expense was approximately $7.4 million and $6.7 million, and $14.2 million and $13.2 million for the three and six months ended June 30, 2009 and 2008, respectively, of which $6.6 million and $5.6 million, and $12.6 million and $11.1 million, respectively, is included in cost of sales in the accompanying statement of operations, and $0.8 million and $1.1 million, and $1.6 million and $2.1 million, respectively, is included in selling, general and administrative expenses in the accompanying statement of operations.

8. Long-term Debt

The Company's long-term debt consists of the following:

		June 30, 2009		December 31, 2008

		(dollars in thousands)
U.S. bank debt		$	252,850	$	262,580
Non-U.S. bank debt and other			18,410		18,220
9 ⁷ / 8 % senior subordinated notes, due June 2012			266,090		329,140

			537,350		609,940
Less: Current maturities, long-term debt			8,880		10,360

	Long-term debt	$	528,470	$	599,580

U.S. Bank Debt

The Company is a 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 (collectively, the "Credit Facility"). Under the Credit Facility, the Company is also able to issue letters of credit, not to exceed $65.0 million in aggregate, against its revolving credit facility commitments.

At June 30, 2009 and December 31, 2008, the Company had $0 and $8.5 million, respectively, outstanding under its revolving credit facility and had an additional $118.9 million and $107.4 million, respectively, of capacity potentially available after giving effect to the $31.1 million and $34.1 million, respectively, 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

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

8. Long-term Debt (Continued)

Company had approximately $147.1 million and $127.9 million of capacity available to it under its revolving credit facility and receivables securitization for general corporate purposes as of June 30, 2009 and December 31, 2008, respectively.

The weighted average interest rate on borrowings under the Credit Facility was 3.3% and 5.4% at June 30, 2009 and December 31, 2008, respectively.

The bank debt is an obligation of the Company and its subsidiaries. Although the terms of the Credit Facility do not restrict the Company's subsidiaries from making distributions to it in respect of its 9 ⁷ / 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 restricted net assets of the guarantor subsidiaries, of approximately $332.6 million and $369.4 million at June 30, 2009 and December 31, 2008, respectively, are presented in the financial information in Note 17, " Supplemental Guarantor Condensed Consolidating Financial Information ." The Credit Facility also contains various negative and affirmative covenants and other requirements affecting the Company and its subsidiaries. The Company was in compliance with its covenants at June 30, 2009.

The Company's term loan facility traded at approximately 89.0% and 58.0% of par value as of June 30, 2009 and December 31, 2008, respectively.

Non-U.S. Bank Debt

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 June 30, 2009, the balance outstanding under this arrangement was $0.4 million at an interest rate of 2.0%. At December 31, 2008, the balance outstanding under this agreement was approximately $0.3 million at an interest rate of 3.5%.

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 June 30, 2009, the balance outstanding under this agreement was $1.9 million at an interest rate of 1.9%. At December 31, 2008, the balance outstanding under this agreement was approximately $2.2 million at an interest rate of 3.6%.

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 June 30, 2009, the balance outstanding under this agreement was $15.7 million at a weighted average interest rate of 5.8%. At December 31, 2008, the balance outstanding under this agreement was approximately $15.3 million at an interest rate of approximately 5.9%.

Notes

During the three and six months ended June 30, 2009, the Company utilized approximately $19.1 million and $35.1 million, respectively, of cash on hand to retire $31.4 million and $63.2 million, respectively, of face value 9 ⁷ / 8 % senior subordinated notes due in 2012 (Notes). In connection with these transactions, the Company recorded a net gain in the three and six months ended June 30, 2009 of approximately $11.8 million and $27.1 million, respectively, after considering non-cash debt extinguishment costs of $0.5 million and $1.0 million, respectively.

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

8. 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 June 30, 2009, the Company was in compliance with all such covenant requirements.

The Company's senior subordinated notes traded at approximately 86.0% and 51.5% of par value as of June 30, 2009 and December 31, 2008, respectively.

9. Derivative Instruments

The Company is exposed to interest rate risk associated with fluctuations in the interest rate on its variable rate debt. Derivatives used to manage interest rate risk are accounted for under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended. The Company formally documents qualifying hedged transactions and hedging instruments, and assesses, both at inception of the contract and on an ongoing basis, whether the hedging instruments are effective in offsetting changes in cash flows of the hedged transaction. The Company does not enter into derivative instrument agreements for speculative purposes.

In February 2008, the Company entered into an interest rate swap agreement effective April 2008 to fix the LIBOR-based variable portion of the interest rate on $125.0 million notional amount of its term loan facility at 2.73% through October 2009. In January 2009, the Company entered into two additional interest rate swap agreements. The first of these swaps was effective in January 2009 and fixes the LIBOR-based variable portion of the interest rate on $75.0 million notional amount of its term loan facility at 1.39% through January 2011. The second of these swaps is effective in October 2009 and fixes the LIBOR-based variable portion of the interest rate on $125.0 million notional amount of its term loan facility at 1.91% through July 2011. The Company has formally designated these swap agreements as cash flow hedges and expects the hedges to be highly effective in offsetting fluctuations in the designated interest payments resulting from changes in the benchmark interest rate.

As of June 30, 2009 and December 31, 2008, the fair value carrying amounts of the Company's derivative instruments are recorded as follows:

			Asset Derivatives				Liability Derivatives

		Balance Sheet Caption	June 30, 2009		December 31, 2008		June 30, 2009		December 31, 2008
			(dollars in thousands)
Derivatives designated as hedging instruments under SFAS No. 133
	Interest rate contracts	Accrued liabilities	$	—	$	—	$	1,330	$	1,160
	Interest rate contracts	Other long-term liabilities		—		—		500		—

Total derivatives designated as hedging instruments under SFAS No. 133			$	—	$	—	$	1,830	$	1,160

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

9. Derivative Instruments (Continued)

Activity related to derivative instruments within accumulated other comprehensive income for the three and six months ended June 30, 2009 is summarized as follows:

											Six months ended June 30, 2009

		Three months ended June 30, 2009									Six months ended June 30, 2009
		Three months ended June 30, 2009												Tax Effect
		Pre-tax			Tax Effect			After-tax			Pre-tax			Tax Effect			After-tax
		(dollars in thousands)									(dollars in thousands)
Beginning Balance		$	(2,790	)	$	1,050		$	(1,740	)	$	(1,160	)	$	440		$	(720	)
	(Gain) loss reclassified from accumulated other comprehensive income into interest expense		620			(230	)		390			1,010			(380	)		630
	Gain (loss) on changes in the fair value of derivative instruments		340			(130	)		210			(1,680	)		630			(1,050	)

Ending Balance		$	(1,830	)	$	690		$	(1,140	)	$	(1,830	)	$	690		$	(1,140	)

Over the next 12 months, the Company expects to reclassify approximately $1.3 million of pre-tax deferred losses from accumulated other comprehensive income to interest expense as the related interest payments for the designated interest rate swaps are recognized.

The Company accounts for the fair value of financial instruments in accordance with SFAS No. 157, "Fair Value Measurements." The following table provides a summary of the fair values of assets and liabilities as of June 30, 2009:

Description	Frequency	Asset/ (Liability)			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)

		(dollars in thousands)
Interest rate swap	Recurring	$	(1,830	)	$	—	$	(1,830	)	$	—

10. 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.

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

10. Commitments and Contingencies (Continued)

As of June 30, 2009, the Company was a party to approximately 805 pending cases involving an aggregate of approximately 7,528 claimants alleging personal injury from exposure to asbestos containing materials formerly used in gaskets (both encapsulated and otherwise) manufactured or distributed by certain of the Company's subsidiaries for use primarily in the petrochemical refining and exploration industries.

The following chart summarizes the number of claimants, number of claims filed, number of claims dismissed, number of claims settled, the average settlement amount per claim and the total defense costs, exclusive of amounts reimbursed under the Company's primary insurance, at the applicable date and for the applicable periods:

					Average settlement amount per claim during period		Total defense costs during period

Fiscal year ended December 31, 2008	9,544	723	2,668	75	$	1,813	$	3,448,000
Six months ended June 30, 2009	7,524	158	150	4	$	36,688	$	1,346,500

In addition, the Company acquired various companies to distribute its products that had distributed gaskets of other manufacturers prior to acquisition. The Company believes that many of its pending cases relate to locations at which none of its gaskets were distributed or used.

The Company may be subjected to significant additional asbestos-related claims in the future, the cost of settling cases in which product identification can be made may increase, and the Company may be subjected to further claims in respect of the former activities of its acquired gasket distributors. The Company is unable to make a meaningful statement concerning the monetary claims made in the asbestos cases given that, among other things, claims may be initially made in some jurisdictions without specifying the amount sought or by simply stating the requisite or maximum permissible monetary relief, and may be amended to alter the amount sought. The large majority of claims do not specify the amount sought. Of the 7,528 claims pending at June 30, 2009, 120 set forth specific amounts of damages (other than those stating the statutory minimum or maximum). 88 of the 120 claims sought between $1.0 million and $5.0 million in total damages (which includes compensatory and punitive damages), 26 sought between $5.0 million and $10.0 million in total damages (which includes compensatory and punitive damages) and 6 sought over $10.0 million (which includes compensatory and punitive damages). Solely with respect to compensatory damages, 91 of the 120 claims sought between $50,000 and $600,000, 23 sought between $1.0 million and $5.0 million and 6 sought over $5.0 million. Solely with respect to punitive damages, 90 of the 120 claims sought between $0 million and $2.5 million, 25 sought between $2.5 million and $5.0 million and 5 sought over $5.0 million. In addition, relatively few of the claims have reached the discovery stage and even fewer claims have gone past the discovery stage.

Total settlement costs (exclusive of defense costs) for all such cases, some of which were filed over 20 years ago, have been approximately $5.4 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

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

10. Commitments and Contingencies (Continued)

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.

11. Segment Information

Effective April 1, 2009, the Company realigned its reportable segments as a result of its recent management reporting and business consolidation changes. The Company previously reported under five segments: Packaging Systems, Energy Products, Industrial Specialties, RV & Trailer Products and Recreational Accessories. Following the realignment, the Company reports the following five segments: Packaging, Energy, Aerospace & Defense, Engineered Components and Cequent. All prior period information has been recast to reflect this realignment.

TriMas groups its operating segments into five reportable segments, as described below. Within these reportable 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 —Steel and plastic closure caps, drum enclosures, rings and levers, and dispensing systems for industrial and consumer markets.

Energy —Engines, engine replacement parts and other well site products 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.

Aerospace & Defense —Highly engineered specialty fasteners and screws for the commercial and military aerospace industries and specialty ordnance components for the defense industry.

Engineered Components —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, and specialty precision tools such as center drills, cutters, end mills, reamers and punches.

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

11. Segment Information (Continued)

Cequent —Custom-engineered towing, trailering and electrical products including trailer couplers, winches, jacks, trailer brakes and brake control solutions, lighting accessories and roof racks for the recreational vehicle, agricultural/utility, marine, automotive and commercial trailer markets, functional vehicle accessories and cargo management solutions including vehicle hitches and receivers, sway controls, weight distribution and fifth-wheel hitches, hitch-mounted accessories, and other accessory components.

The Company's management uses Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") as a primary indicator of financial operating performance and as a measure of cash generating capability. Adjusted EBITDA is defined as net income (loss) before cumulative effect of accounting change and before interest, taxes, depreciation, amortization, non-cash asset and goodwill impairment charges and write-offs and non-cash losses on sale-leaseback of property and equipment.

Segment activity is as follows:

		Three months ended June 30,						Six months ended June 30,

		2009			2008			2009			2008
		(dollars in thousands)
Net Sales
Packaging		$	36,150		$	44,520		$	66,400		$	85,560
Energy			34,990			53,160			75,260			101,960
Aerospace & Defense			18,270			21,640			40,470			41,220
Engineered Components			15,700			34,580			35,240			68,470
Cequent			103,540			128,940			193,990			250,220

	Total	$	208,650		$	282,840		$	411,360		$	547,430

Operating Profit
Packaging		$	8,830		$	9,620		$	14,230		$	18,230
Energy			2,660			8,590			6,180			16,500
Aerospace & Defense			6,410			7,050			13,220			13,590
Engineered Components			(470	)		4,430			(950	)		9,050
Cequent			2,890			8,550			(460	)		13,930
Corporate expenses			(4,700	)		(7,920	)		(12,260	)		(13,140	)

	Total	$	15,620		$	30,320		$	19,960		$	58,160

Adjusted EBITDA
Packaging		$	11,580		$	12,730		$	20,220		$	24,780
Energy			3,500			9,190			7,780			17,820
Aerospace & Defense			7,010			7,500			14,420			14,480
Engineered Components			600			5,460			1,170			11,120
Cequent			8,160			12,800			9,500			22,380
Corporate (expenses) income			7,250			(8,320	)		14,880			(14,440	)

	Subtotal from continuing operations		38,100			39,360			67,970			76,140
Discontinued operations			(250	)		240			(11,490	)		1,320

	Total company	$	37,850		$	39,600		$	56,480		$	77,460

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

11. Segment Information (Continued)

The following is a reconciliation of the Company's net income to Adjusted EBITDA:

		Three months ended June 30,					Six months ended June 30,

		2009			2008		2009			2008
		(dollars in thousands)
Net income		$	8,990		$	9,450	$	5,310		$	17,320
	Income tax expense		5,720			5,270		3,230			9,750
	Interest expense		11,590			13,930		24,120			28,690
	Debt extinguishment costs		480			—		990			—
	Depreciation and amortization		11,070			10,950		22,830			21,700

Adjusted EBITDA, total company		$	37,850		$	39,600	$	56,480		$	77,460
	Adjusted EBITDA, discontinued operations		(250	)		240		(11,490	)		1,320

Adjusted EBITDA, continuing operations		$	38,100		$	39,360	$	67,970		$	76,140

12. Equity Awards

2006 Plan

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 1,435,877 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.

During the first quarter of 2009, the Company granted 578,000 stock options to certain key employees and non-employee directors, each of which may be used to purchase one share of the Company's common stock. These stock options have a ten year life, vest ratably over three years from date of grant, have exercise prices ranging from $1.01 to $1.38 and had a weighted-average fair value at grant date of $0.47. The fair value of these options at the grant date was estimated using the Black-Scholes option pricing model using the following weighted-average assumptions: expected life of 6 years, risk-free interest rate of 2.01% and expected volatility of 40%.

Information related to stock options at June 30, 2009 is as follows:

				Weighted Average Option Price			Aggregate Intrinsic Value

Outstanding at January 1, 2009		—		$	—
	Granted	578,000			1.14
	Exercised	—			—
	Cancelled	(24,000	)		1.01

Outstanding at June 30, 2009		554,000		$	1.14	9.6	$	1,233,440

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

12. Equity Awards (Continued)

Prior to 2009, the Company had granted restricted shares of its common stock to certain employees. All of these restricted shares were subject to a service restriction, vesting ratably over three years so long as the employee remained with the Company. Certain of these restricted shares also contained a performance provision, where the shares would vest only if the Company attained and/or exceeded a certain EBITDA target for the years ended December 31, 2007 and 2008. All restricted shares with performance restrictions were cancelled as the Company did not meet or exceed the EBITDA targets.

Information related to restricted shares at June 30, 2009 is as follows:

				Weighted Average Grant Date Fair Value			Aggregate Intrinsic Value

Outstanding at January 1, 2009		160,908		$	8.89
	Granted	—			—
	Vested	(31,101	)		6.36
	Cancelled	(37,717	)		9.31

Outstanding at June 30, 2009		92,090		$	9.58	1.5	$	310,343

The Company recognized approximately $0.1 million of stock-based compensation expense related to the 2006 Plan during the three and six months ended June 30, 2009, respectively, and $0.6 million and $0.8 million for the three and six months ended June 30, 2008, respectively. The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying statement of operations.

As of June 30, 2009 and December 31, 2008, there was approximately $0.3 million and $0.7 million, respectively, of unrecognized compensation cost related to unvested restricted shares that is expected to be recorded over a weighted-average period of 1.2 years and 1.4 years, respectively. As of June 30, 2009, 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 1.7 years.

2002 Plan

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 1,786,123 stock options have been approved for issuance under the Plan. As of June 30, 2009, the Company has 1,341,538 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 $1.01 to $23.00. As of June 30, 2009, 715,731 stock options were exercisable under the 2002 Plan.

During the first quarter of 2009, the Company granted 552,500 stock options to certain employees, each of which may be used to purchase one share of the Company's common stock. These stock options have a ten year life, vest ratably over three years from date of grant, have exercise prices ranging from $1.01 to $1.61 and had a weighted-average fair value at grant date of $0.43. The fair value of these options at the grant date was estimated using the Black-Scholes option pricing model using the

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

12. Equity Awards (Continued)

following weighted-average assumptions: expected life of 6 years, risk-free interest rate of 2.22% and expected volatility of 40%.

Prior to 2009, the Company had granted stock options to certain employees, with the options having a ten year life and at exercise prices ranging from $20 to $23. Of these options, eighty percent 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 Plan, one half of the vested options become 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 such public offering (May 14, 2008).

Information related to stock options at June 30, 2009, is as follows:

				Weighted Average Option Price			Aggregate Intrinsic Value

Outstanding at January 1, 2009		1,596,213		$	20.92
	Granted	552,500			1.02
	Exercised	—			—
	Cancelled	(807,175	)		20.20

Outstanding at June 30, 2009		1,341,538		$	13.16	6.9	$	1,298,500

The Company recognized approximately $40 thousand and $60 thousand of stock-based compensation expense related to the 2002 Plan during the three and six months ended June 30, 2009, respectively, and $20 thousand and $50 thousand during the three and six months ended June 30, 2008, respectively. The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying statement of operations.

As of June 30, 2009 and December 31, 2008, there was approximately $0.2 million and $0.07 million, respectively, of unrecognized compensation cost related to stock options that is expected to be recorded over a weighted-average period of 1.6 years and 1.4 years, respectively.

The fair value of options which vested during the three months ended June 30, 2009 and 2008, was $0.03 million and $0.07 million, respectively, and $0.1 million and $0.4 million during the six months ended June 30, 2009 and 2008, respectively.

13. Earnings per Share

The Company reports earnings (loss) per share in accordance with SFAS No. 128, " Earnings per Share ." Basic and diluted earnings (loss) per share amounts were computed using weighted average shares outstanding for the three and six months ended June 30, 2009 and 2008, respectively. The calculation of diluted earnings (loss) per share included 6,580 and 35,567 restricted shares for the three months ended June 30, 2009 and 2008, respectively, and 16,995 and 38,655 restricted shares for the six

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

13. Earnings per Share (Continued)

months ended June 30, 2009 and 2008, respectively. The calculation of diluted earnings (loss) per share also included 164,345 and 43,001 options to purchase shares of common stock for the three and six months ended June 30, 2009, respectively. Options to purchase 1,728,706 shares of common stock were outstanding at June 30, 2008, but were not included in the calculation of diluted earnings (loss) per share for the three and six months ended June 30, 2008, because to do so would have been anti-dilutive.

14. Defined Benefit Plans

Net periodic pension and postretirement benefit costs for the Company's defined benefit pension plans and postretirement benefit plans cover foreign employees, union hourly employees and certain salaried employees. The components of net periodic pension and postretirement benefit costs for the three and six months ended June 30, 2009 and 2008 are as follows:

	Pension Plans												Other Postretirement Benefits

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,					Six Months Ended June 30,
	2009			2008			2009			2008			2009			2008		2009			2008
	(dollars in thousands)												(dollars in thousands)
Service costs	$	130		$	140		$	260		$	270		$	—		$	20	$	—		$	40
Interest costs		390			420			780			840			20			100		50			210
Expected return on plan assets		(390	)		(460	)		(770	)		(920	)		—			—		—			—
Amortization of prior service cost		10			—			10			—			(60	)		—		(130	)		—
Amortization of net loss		70			80			150			160			—			10		(10	)		20

Net periodic benefit cost	$	210		$	180		$	430		$	350		$	(40	)	$	130	$	(90	)	$	270

The Company contributed approximately $0.4 million and $0.8 million to its defined benefit pension plans during the three and six months ended June 30, 2009, respectively. The Company expects to contribute approximately $1.9 million to its defined benefit pension plans for the full year 2009.

15. New Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board ("FASB") issued SFAS No. 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162." The FASB Accounting Standards Codification ("Codification") will become the single official source of authoritative U.S. generally accepted accounting principles ("GAAP") (other than guidance issued by the SEC), superseding existing FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force, and other literature. The Codification is not intended to change U.S. GAAP, instead simplifying it into one level of authoritative literature in a user-friendly research system, categorized by topic. The Codification is effective for interim and annual periods ending after September 15, 2009. The Company does not anticipate a significant impact on its current consolidated financial statements as a result of this pronouncement.

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

15. New Accounting Pronouncements (Continued)

In May 2009, the FASB issued SFAS No. 165, "Subsequent Events." SFAS No. 165 clarifies the period after the balance sheet date during which the Company should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which the Company should recognize these events or transactions in its financial statements and the required disclosures for such events, including the date through with the Company has evaluated subsequent events. The Company adopted SFAS No. 165 in the second quarter of 2009, evaluating events and transactions after the balance sheet date as disclosed in Note 16 herein.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, "Interim Disclosures about Fair Value of Financial Instruments." FSP FAS 107-1 and APB 28-1 requires fair value disclosures in both interim as well as annual financial statements in order to provide more timely information about the effects of current market conditions on financial instruments. The Company adopted FSP FAS 107-1 and APB 28-1 in the second quarter of 2009. There is no impact on the Company's current consolidated financial statements as a result of this pronouncement.

In December 2008, the FASB issued FSP FAS 132(R)-1, "Employers' Disclosure about Postretirement Benefit Plan Assets," which amends FASB Statement 132(R) to require more detailed disclosures about employers' pension plan assets. New disclosures will include additional information on investment strategies, major categories of plan assets, concentrations of risk within plan assets and valuation techniques used to measure the fair value of plan assets. This new standard will only affect disclosures and will have no impact on the Company's consolidated financial statements. This statement is effective for fiscal years ending after December 15, 2009.

16. Subsequent Events

During the third quarter of 2009, the Company acquired approximately $10.0 million face value of its Notes in open market purchase transactions for approximately $8.7 million.

The Company has evaluated all subsequent events through August 5, 2009, the date on which the financial statements were issued.

17. Supplemental Guarantor Condensed Consolidating Financial Information

Under an indenture dated September 6, 2002, TriMas Corporation ("Parent"), issued 9 ⁷ / 8 % Senior Subordinated Notes due 2012 in a total principal amount of $437.8 million (face value), of which approximately $171.2 million has subsequently been retired through June 30, 2009. 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 guarantee is 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, consolidating financial information is presented using the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for the Company's share in the subsidiaries' cumulative results of operations, capital contributions and distributions and other changes in equity. Elimination entries relate primarily to the elimination of investments in subsidiaries and associated intercompany balances and transactions.

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

17. Supplemental Guarantor Condensed Consolidating Financial Information (Continued)

Supplemental Guarantor

Condensed Financial Statements

Consolidating Balance Sheet

(dollars in thousands)

			June 30, 2009

			Parent		Guarantor		Non- Guarantor		Eliminations			Consolidated Total
Assets
Current assets:
	Cash and cash equivalents		$	—	$	1,640	$	3,720	$	—		$	5,360
	Trade receivables, net			—		94,940		16,940		—			111,880
	Receivables, intercompany			—		—		2,040		(2,040	)		—
	Inventories			—		129,650		21,430		—			151,080
	Deferred income taxes			—		16,150		820		—			16,970
	Prepaid expenses and other current assets			—		4,390		890		—			5,280
	Assets of discontinued operations held for sale			—		2,840		—		—			2,840

		Total current assets		—		249,610		45,840		(2,040	)		293,410
Investments in subsidiaries				332,600		98,180		—		(430,780	)		—
Property and equipment, net				—		124,410		47,660		—			172,070
Goodwill				—		148,220		47,390		—			195,610
Intangibles and other assets				3,500		180,020		4,200		—			187,720

		Total assets	$	336,100	$	800,440	$	145,090	$	(432,820	)	$	848,810

Liabilities and Shareholders' Equity
Current liabilities:
	Current maturities, long-term debt		$	—	$	2,740	$	6,140	$	—		$	8,880
	Accounts payable, trade			—		75,900		14,620		—			90,520
	Accounts payable, intercompany			—		2,040		—		(2,040	)		—
	Accrued liabilities			1,130		57,850		8,020		—			67,000
	Liabilities of discontinued operations			—		880		—		—			880

		Total current liabilities		1,130		139,410		28,780		(2,040	)		167,280
Long-term debt				266,090		250,500		11,880		—			528,470
Deferred income taxes				3,990		34,570		4,640		—			43,200
Other long-term liabilities				—		43,360		1,610		—			44,970

		Total liabilities		271,210		467,840		46,910		(2,040	)		783,920

		Total shareholders' equity		64,890		332,600		98,180		(430,780	)		64,890

		Total liabilities and shareholders' equity	$	336,100	$	800,440	$	145,090	$	(432,820	)	$	848,810

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

17. Supplemental Guarantor Condensed Consolidating Financial Information (Continued)

Supplemental Guarantor

Condensed Financial Statements

Consolidating Balance Sheet

(dollars in thousands)

			December 31, 2008

			Parent		Guarantor		Non- Guarantor		Eliminations			Consolidated Total
Assets
Current assets:
	Cash and cash equivalents		$	—	$	340	$	3,570	$	—		$	3,910
	Trade receivables, net			—		91,300		13,460		—			104,760
	Receivables, intercompany			—		—		4,090		(4,090	)		—
	Inventories			—		165,590		23,360		—			188,950
	Deferred income taxes			—		16,250		720		—			16,970
	Prepaid expenses and other current assets			—		6,280		1,150		—			7,430
	Assets of discontinued operations held for sale			—		26,200		—		—			26,200

		Total current assets		—		305,960		46,350		(4,090	)		348,220
Investments in subsidiaries				369,410		96,240		—		(465,650	)		—
Property and equipment, net				—		133,150		48,420		—			181,570
Goodwill				—		157,360		44,920		—			202,280
Intangibles and other assets				16,020		189,140		3,930		(10,940	)		198,150

		Total assets	$	385,430	$	881,850	$	143,620	$	(480,680	)	$	930,220

Liabilities and Shareholders' Equity
Current liabilities:
	Current maturities, long-term debt		$	—	$	4,960	$	5,400	$	—		$	10,360
	Accounts payable, trade			—		95,240		16,570		—			111,810
	Accounts payable, intercompany			—		4,090		—		(4,090	)		—
	Accrued liabilities			1,390		57,320		7,630		—			66,340
	Liabilities of discontinued operations			—		1,340		—		—			1,340

		Total current liabilities		1,390		162,950		29,600		(4,090	)		189,850
Long-term debt				329,140		258,070		12,370		—			599,580
Deferred income taxes				—		58,610		3,980		(10,940	)		51,650
Other long-term liabilities				—		32,810		1,430		—			34,240

		Total liabilities		330,530		512,440		47,380		(15,030	)		875,320

		Total shareholders' equity		54,900		369,410		96,240		(465,650	)		54,900

		Total liabilities and shareholders' equity	$	385,430	$	881,850	$	143,620	$	(480,680	)	$	930,220

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

17. Supplemental Guarantor Condensed Consolidating Financial Information (Continued)

Supplemental Guarantor

Condensed Financial Statements

Consolidating Statement of Operations

(dollars in thousands)

			Three Months Ended June 30, 2009

			Parent			Guarantor			Non- Guarantor			Eliminations			Total
Net sales			$	—		$	166,510		$	51,740		$	(9,600	)	$	208,650
Cost of sales				—			(126,620	)		(42,020	)		9,600			(159,040	)

	Gross profit			—			39,890			9,720			—			49,610
Selling, general and administrative expenses				(160	)		(28,880	)		(5,070	)		—			(34,110	)
Gain on dispositions of property and equipment				—			110			10			—			120

		Operating profit (loss)		(160	)		11,120			4,660			—			15,620
Other income (expense), net:
	Interest expense			(7,130	)		(3,950	)		(230	)		—			(11,310	)
	Gain on extinguishment of debt			11,760			—			—			—			11,760
	Other, net			—			620			(1,440	)		—			(820	)

Income before income tax expense and equity in net income (loss) of subsidiaries				4,470			7,790			2,990			—			15,250
Income tax expense				(1,390	)		(3,520	)		(1,030	)		—			(5,940	)
Equity in net income (loss) of subsidiaries				5,910			1,960			—			(7,870	)		—

Income (loss) from continuing operations				8,990			6,230			1,960			(7,870	)		9,310
Loss from discontinued operations				—			(320	)		—			—			(320	)

Net income (loss)			$	8,990		$	5,910		$	1,960		$	(7,870	)	$	8,990

			Three Months Ended June 30, 2008

			Parent			Guarantor			Non- Guarantor			Eliminations			Total
Net sales			$	—		$	225,490		$	71,330		$	(13,980	)	$	282,840
Cost of sales				—			(163,620	)		(57,180	)		13,980			(206,820	)

	Gross profit			—			61,870			14,150			—			76,020
Selling, general and administrative expenses				—			(39,680	)		(5,900	)		—			(45,580	)
Gain (loss) on dispositions of property and equipment				—			(150	)		30			—			(120	)

		Operating profit		—			22,040			8,280			—			30,320
Other income (expense), net:
	Interest expense			(8,780	)		(4,650	)		(450	)		—			(13,880	)
	Other, net			—			1,000			(2,340	)		—			(1,340	)

Income (loss) before income tax (expense) benefit and equity in net income (loss) of subsidiaries				(8,780	)		18,390			5,490			—			15,100
Income tax (expense) benefit				3,060			(6,780	)		(1,690	)		—			(5,410	)
Equity in net income (loss) of subsidiaries				15,170			3,800			—			(18,970	)		—

Income (loss) from continuing operations				9,450			15,410			3,800			(18,970	)		9,690
Loss from discontinued operations				—			(240	)		—			—			(240	)

Net income (loss)			$	9,450		$	15,170		$	3,800		$	(18,970	)	$	9,450

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

17. Supplemental Guarantor Condensed Consolidating Financial Information (Continued)

Supplemental Guarantor

Condensed Financial Statements

Consolidating Statement of Operations

(dollars in thousands)

			Six Months Ended June 30, 2009

			Parent			Guarantor			Non- Guarantor			Eliminations			Total
Net sales			$	—		$	335,020		$	91,290		$	(14,950	)	$	411,360
Cost of sales				—			(256,560	)		(74,300	)		14,950			(315,910	)

	Gross profit			—			78,460			16,990			—			95,450
Selling, general and administrative expenses				(190	)		(65,630	)		(9,830	)		—			(75,650	)
Gain on dispositions of property and equipment				—			140			20			—			160

		Operating profit (loss)		(190	)		12,970			7,180			—			19,960
Other income (expense), net:
	Interest expense			(15,470	)		(7,860	)		(470	)		—			(23,800	)
	Gain on extinguishment of debt			27,070			—			—			—			27,070
	Other, net			—			470			(1,990	)		—			(1,520	)

Income before income tax expense and equity in net income (loss) of subsidiaries				11,410			5,580			4,720			—			21,710
Income tax expense				(3,990	)		(2,690	)		(1,660	)		—			(8,340	)
Equity in net income (loss) of subsidiaries				(2,110	)		3,060			—			(950	)		—

Income (loss) from continuing operations				5,310			5,950			3,060			(950	)		13,370
Loss from discontinued operations				—			(8,060	)		—			—			(8,060	)

Net income (loss)			$	5,310		$	(2,110	)	$	3,060		$	(950	)	$	5,310

			Six Months Ended June 30, 2008

			Parent			Guarantor			Non- Guarantor			Eliminations			Total
Net sales			$	—		$	442,210		$	131,220		$	(26,000	)	$	547,430
Cost of sales				—			(324,080	)		(103,400	)		26,000			(401,480	)

	Gross profit			—			118,130			27,820			—			145,950
Selling, general and administrative expenses				—			(75,590	)		(11,990	)		—			(87,580	)
Gain (loss) on dispositions of property and equipment				—			(300	)		90			—			(210	)

		Operating profit		—			42,240			15,920			—			58,160
Other income (expense), net:
	Interest expense			(17,530	)		(10,170	)		(890	)		—			(28,590	)
	Other, net						1,630			(4,160	)		—			(2,530	)

Income (loss) before income tax (expense) benefit and equity in net income (loss) of subsidiaries				(17,530	)		33,700			10,870			—			27,040
Income tax (expense) benefit				6,130			(12,460	)		(3,410	)		—			(9,740	)
Equity in net income (loss) of subsidiaries				28,720			7,460			—			(36,180	)		—

Income (loss) from continuing operations				17,320			28,700			7,460			(36,180	)		17,300
Income from discontinued operations				—			20			—			—			20

Net income (loss)			$	17,320		$	28,720		$	7,460		$	(36,180	)	$	17,320

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

17. Supplemental Guarantor Condensed Consolidating Financial Information (Continued)

Supplemental Guarantor

Condensed Financial Statements

Consolidating Statement of Cash Flows

(dollars in thousands)

			Six Months Ended June 30, 2009

			Parent			Guarantor			Non-Guarantor			Eliminations		Total
Cash Flows from Operating Activities:
		Net cash provided by (used for) operating activities	$	(14,320	)	$	34,230		$	12,260		$	—	$	32,170

Cash Flows from Investing Activities:
	Capital expenditures			—			(5,390	)		(1,030	)		—		(6,420	)
	Net proceeds from disposition of businesses and other assets			—			22,380			40			—		22,420

		Net cash provided by (used for) investing activities		—			16,990			(990	)		—		16,000

Cash Flows from Financing Activities:
	Repayments of borrowings on term loan facilities			—			(1,300	)		(280	)		—		(1,580	)
	Proceeds from borrowings on revolving credit facilities			—			506,720			1,640			—		508,360
	Repayments of borrowings on revolving credit facilities			—			(515,200	)		(3,130	)		—		(518,330	)
	Retirement of senior subordinated notes			(35,170	)		—			—			—		(35,170	)
	Intercompany transfers (to) from subsidiaries			49,490			(40,140	)		(9,350	)		—		—

		Net cash provided by (used for) financing activities		14,320			(49,920	)		(11,120	)		—		(46,720	)

Cash and Cash Equivalents:
	Increase for the period			—			1,300			150			—		1,450
		At beginning of period		—			340			3,570			—		3,910

		At end of period	$	—		$	1,640		$	3,720		$	—	$	5,360

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TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

17. Supplemental Guarantor Condensed Consolidating Financial Information (Continued)

Supplemental Guarantor

Condensed Financial Statements

Consolidating Statement of Cash Flows

(dollars in thousands)

			Six Months Ended June 30, 2008

			Parent			Guarantor			Non-Guarantor			Eliminations		Total
Cash Flows from Operating Activities:
	Net cash provided by (used for) operating activities		$	(16,680	)	$	32,200		$	7,740		$	—	$	23,260

Cash Flows from Investing Activities:
	Capital expenditures			—			(10,600	)		(2,930	)		—		(13,530	)
	Acquisition of businesses, net of cash acquired			—			(3,460	)		(2,730	)		—		(6,190	)
	Net proceeds from disposition of businesses and other assets			—			200			140			—		340

		Net cash used for investing activities		—			(13,860	)		(5,520	)		—		(19,380	)

Cash Flows from Financing Activities:
	Repayments of borrowings on senior credit facilities			—			(1,300	)		(1,630	)		—		(2,930	)
	Proceeds from term loan facilities			—			—			490			—		490
	Proceeds from borrowings on revolving credit facilities			—			263,110			6,090			—		269,200
	Repayments of borrowings on revolving credit facilities			—			(263,800	)		(4,780	)		—		(268,580	)
	Retirement of senior subordinated notes						—			—			—		—
	Intercompany transfers (to) from subsidiaries			16,680			(14,980	)		(1,700	)		—		—

		Net cash provided by (used for) financing activities		16,680			(16,970	)		(1,530	)		—		(1,820	)

Cash and Cash Equivalents:
	Increase for the period			—			1,370			690			—		2,060
		At beginning of period		—			550			4,250			—		4,800

		At end of period	$	—		$	1,920		$	4,940		$	—	$	6,860

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition contains forward-looking statements regarding industry outlook and our expectations regarding the performance of our business. 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 the Company's reports on file with the Securities and Exchange Commission.

Introduction

We are an industrial manufacturer and distributor of highly engineered products serving focused markets in a diverse range of commercial, industrial and consumer applications. We have five reportable segments: Packaging, Energy, Aerospace & Defense, Engineered Components and Cequent. In reviewing our financial results, consideration should be given to certain critical events, particularly our acquisitions and consolidation, integration and restructuring efforts in several of our business operations.

Key Factors and Risks Affecting our Reported Results. Our businesses and results of operations depend upon general economic conditions and we serve some customers in cyclical industries that are highly competitive and themselves adversely impacted by unfavorable economic conditions. During the fourth quarter of 2008, worldwide credit markets and global economic conditions deteriorated significantly, resulting in declines in demand for the Company's products and services. These conditions have persisted during the first six months of 2009, resulting in reductions in sales and earnings from comparable prior periods across all of the Company's reportable segments. We expect that revenue and earnings will continue to trend below historical levels until the current unfavorable economic conditions improve.

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, and 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.

There is some seasonality in the businesses within our Cequent reportable segment, where sales of towing and trailering products 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 reportable segment experiences significant seasonal fluctuation in its businesses. 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 Cequent segment, is heavily influenced by consumer sentiment. We experienced decreases in sales and earnings in 2008 as a result of an uncertain credit market and interest rate environment and rising energy costs, among other things. Sales and earnings have declined further as a result of the worsening of the global economic conditions in the first half of 2009. We expect the current end market conditions in the Cequent segment will continue to remain weak and/or decline until the U.S. economy recovers from existing recessionary

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forces, employment levels increase and consumer credit availability improves, thereby increasing consumer discretionary spending.

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

We report shipping and handling expenses, associated with certain businesses within our Cequent segment, for its sales distribution network, as an element of selling, general and administrative expenses in our consolidated statement of operations. As such, gross margins for the Cequent 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.

Recent Consolidation, Integration and Restructuring Activities. During the past several years, we have undertaken significant consolidation, integration and other cost-savings programs to enhance our efficiency and achieve cost reduction opportunities which exist in our businesses. In addition to major consolidation projects, there have also been a series of ongoing 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.

In the fourth quarter of 2008, in response to the deteriorating recent economic conditions, we accelerated our Profit Improvement Plan, which included further consolidation of distribution and manufacturing activities, continued integration of certain business activities, movement of production to lower-cost environments and expansion of strategic sourcing initiatives. We have also implemented reductions in salaried headcount and in fixed and variable spending to better align the fixed cost structure of these operating segments with the reality of our current market environment and to maintain or improve operating margins. We have implemented commercial actions to protect and gain market share through continued introduction of new and innovative products and by providing superior delivery and service to our customers. Further, we also have pricing initiatives in place to recover inflationary cost increases and we are continuing actions to leverage our businesses' strong brand names.

The key element of our Profit Improvement Plan implemented during the first six months of 2009 is the restructuring of our legacy towing, trailering and electrical businesses within our Cequent reportable segment into one business, rationalizing facilities and the management team. This restructuring plan includes the previously announced closure of the Mosinee, WI manufacturing facility by September 30, 2009, with the production and distribution functions currently in Mosinee being relocated to lower-cost manufacturing facilities or to third-party sourcing partners.

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During the second quarter of 2008, we incurred approximately $2.3 million of severance and other costs in connection with our restructuring efforts, primarily within our corporate office and included in selling, general and administrative expenses.

The aggregate costs of our consolidation, integration and restructuring actions for the three months ended June 30, 2009 and 2008 were $2.2 million and $2.3 million, respectively, and $6.0 million and $3.0 million for the six months ended June 30, 2009 and 2008 respectively.

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, 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:

•: it does not reflect our cash expenditures for capital equipment or other contractual commitments;
•: although depreciation, amortization and asset impairment charges and write-offs are non-cash charges, the assets being depreciated, amortized or written off may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements;
•: it does not reflect changes in, or cash requirements for, our working capital needs;
•: it does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;

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•: it does not reflect certain tax payments that may represent a reduction in cash available to us;
•: it includes amounts resulting from matters we consider not to be indicative of underlying performance of our fundamental business operations, as discussed in " Management's Discussion and Analysis of Financial Condition and Results of Operations ;" and
•: other companies, including companies in our industry, may calculate these measures differently and as the number of differences in the way two different companies calculate these measures increases, the degree of their usefulness as a comparative measure correspondingly decreases.

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 net income to Adjusted EBITDA and cash flows from operating activities for the three and six months ended June 30, 2009 and 2008:

		Three months ended June 30,						Six months ended June 30,

		2009			2008			2009			2008
		(dollars in thousands)
Net income		$	8,990		$	9,450		$	5,310		$	17,320
	Income tax expense		5,720			5,270			3,230			9,750
	Interest expense		11,590			13,930			24,120			28,690
	Debt extinguishment costs		480			—			990			—
	Depreciation and amortization		11,070			10,950			22,830			21,700

Adjusted EBITDA, total company		$	37,850		$	39,600		$	56,480		$	77,460
	Interest paid		(17,060	)		(21,170	)		(21,830	)		(27,100	)
	Taxes paid		(1,870	)		(2,940	)		(4,310	)		(5,330	)
	(Gain) loss on dispositions of property and equipment		(110	)		(20	)		(160	)		90
	Gain on extinguishment of debt		(12,240	)		—			(28,060	)		—
	Receivables sales and securitization, net		180			(22,460	)		(5,950	)		(3,630	)
	Net change in working capital		23,620			20,560			36,000			(18,230	)

Cash flows provided by operating activities		$	30,370		$	13,570		$	32,170		$	23,260

The following details certain items relating to our consolidation, restructuring and integration efforts that are included in the determination of net income (loss) under GAAP and are not added back to net income in determining Adjusted EBITDA, but that we would consider in evaluating the quality of our Adjusted EBITDA:

	Three months ended June 30,				Six months ended June 30,

	2009		2008		2009		2008
	(dollars in thousands)				(dollars in thousands)
Facility and business consolidation costs(a)	$	20	$	—	$	60	$	720
Business unit restructuring costs(b)		2,140		2,260		5,960		2,260

	$	2,160	$	2,260	$	6,020	$	2,980

(a): Includes employee training, severance and relocation costs, equipment move and plant rearrangement costs associated with facility and business consolidations.
(b): Principally employee severance costs associated with business unit restructuring and other cost reduction activities.

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Segment Information and Supplemental Analysis

The following table summarizes financial information for our five current reportable segments for the three months ended June 30, 2009 and 2008:

		Three Months Ended June 30,

		2009			As a Percentage of Net Sales			2008			As a Percentage of Net Sales
		(dollars in thousands)
Net Sales:
Packaging		$	36,150			17.3	%	$	44,520			15.7	%
Energy			34,990			16.8	%		53,160			18.8	%
Aerospace & Defense			18,270			8.8	%		21,640			7.7	%
Engineered Components			15,700			7.5	%		34,580			12.2	%
Cequent			103,540			49.6	%		128,940			45.6	%

	Total	$	208,650			100.0	%	$	282,840			100.0	%

Gross Profit:
Packaging		$	13,260			36.7	%	$	15,530			34.9	%
Energy			8,090			23.1	%		15,500			29.2	%
Aerospace & Defense			8,580			47.0	%		9,570			44.2	%
Engineered Components			980			6.2	%		6,950			20.1	%
Cequent			18,700			18.1	%		28,470			22.1	%

	Total	$	49,610			23.8	%	$	76,020			26.9	%

Selling, General and Administrative:
Packaging		$	4,590			12.7	%	$	5,940			13.3	%
Energy			5,430			15.5	%		6,920			13.0	%
Aerospace & Defense			2,170			11.9	%		2,500			11.6	%
Engineered Components			1,430			9.1	%		2,460			7.1	%
Cequent			15,790			15.3	%		19,840			15.4	%
Corporate expenses			4,700			N/A			7,920			N/A

	Total	$	34,110			16.3	%	$	45,580			16.1	%

Operating Profit:
Packaging		$	8,830			24.4	%	$	9,620			21.6	%
Energy			2,660			7.6	%		8,590			16.2	%
Aerospace & Defense			6,410			35.1	%		7,050			32.6	%
Engineered Components			(470	)		-3.0	%		4,430			12.8	%
Cequent			2,890			2.8	%		8,550			6.6	%
Corporate expenses			(4,700	)		N/A			(7,920	)		N/A

	Total	$	15,620			7.5	%	$	30,320			10.7	%

Adjusted EBITDA:
Packaging		$	11,580			32.0	%	$	12,730			28.6	%
Energy			3,500			10.0	%		9,190			17.3	%
Aerospace & Defense			7,010			38.4	%		7,500			34.7	%
Engineered Components			600			3.8	%		5,460			15.8	%
Cequent			8,160			7.9	%		12,800			9.9	%
Corporate (expenses) income			7,250			N/A			(8,320	)		N/A

	Subtotal from continuing operations		38,100			18.3	%		39,360			13.9	%

Discontinued operations			(250	)		N/A			240			N/A

	Total company	$	37,850			18.1	%	$	39,600			14.0	%

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The following table summarizes financial information for our five current reportable segments for the six months ended June 30, 2009 and 2008:

		Six Months Ended June 30,

		2009			As a Percentage of Net Sales			2008			As a Percentage of Net Sales
		(dollars in thousands)
Net Sales:
Packaging		$	66,400			16.1	%	$	85,560			15.6	%
Energy			75,260			18.3	%		101,960			18.6	%
Aerospace & Defense			40,470			9.8	%		41,220			7.5	%
Engineered Components			35,240			8.6	%		68,470			12.5	%
Cequent			193,990			47.2	%		250,220			45.7	%

	Total	$	411,360			100.0	%	$	547,430			100.0	%

Gross Profit:
Packaging		$	23,350			35.2	%	$	29,490			34.5	%
Energy			18,060			24.0	%		30,030			29.5	%
Aerospace & Defense			17,680			43.7	%		18,480			44.8	%
Engineered Components			2,560			7.3	%		13,880			20.3	%
Cequent			33,800			17.4	%		54,070			21.6	%

	Total	$	95,450			23.2	%	$	145,950			26.7	%

Selling, General and Administrative:
Packaging		$	9,340			14.1	%	$	11,340			13.3	%
Energy			11,870			15.8	%		13,530			13.3	%
Aerospace & Defense			4,450			11.0	%		4,870			11.8	%
Engineered Components			3,490			9.9	%		4,760			7.0	%
Cequent			34,240			17.7	%		39,940			16.0	%
Corporate expenses			12,260			N/A			13,140			N/A

	Total	$	75,650			18.4	%	$	87,580			16.0	%

Operating Profit:
Packaging		$	14,230			21.4	%	$	18,230			21.3	%
Energy			6,180			8.2	%		16,500			16.2	%
Aerospace & Defense			13,220			32.7	%		13,590			33.0	%
Engineered Components			(950	)		-2.7	%		9,050			13.2	%
Cequent			(460	)		-0.2	%		13,930			5.6	%
Corporate expenses			(12,260	)		N/A			(13,140	)		N/A

	Total	$	19,960			4.9	%	$	58,160			10.6	%

Adjusted EBITDA:
Packaging		$	20,220			30.5	%	$	24,780			29.0	%
Energy			7,780			10.3	%		17,820			17.5	%
Aerospace & Defense			14,420			35.6	%		14,480			35.1	%
Engineered Components			1,170			3.3	%		11,120			16.2	%
Cequent			9,500			4.9	%		22,380			8.9	%
Corporate expenses			14,880			N/A			(14,440	)		N/A

	Subtotal from continuing operations		67,970			16.5	%		76,140			13.9	%

Discontinued operations			(11,490	)		N/A			1,320			N/A

	Total company	$	56,480			13.7	%	$	77,460			14.1	%

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Results of Operations

The principal factors impacting us during the three and six months ended June 30, 2009 compared with the three and six months ended June 30, 2008, were:

•: the continued impact of the current global economic recession, resulting in lower sales volumes and reduced earnings across all of our reportable segments;
•: costs incurred and savings realized related to our Profit Improvement Plan, primarily in our Cequent segment;
•: compression of gross profit margins in certain of our segments due to lower absorption of fixed costs and, during the first quarter of 2009, sales of higher-cost inventory;
•: increases in the value of the U.S. dollar as compared to the currencies in other countries where we operate;

Three Months Ended June 30, 2009 Compared with Three Months Ended June 30, 2008

Overall, net sales decreased approximately $74.2 million, or approximately 26.2%, for the three months ended June 30, 2009, as compared with the three months ended June 30, 2008. Although a few of our businesses benefitted from new product introductions during the second quarter of 2009, net sales declined in each of our five reportable segments, generally due to lower sales volumes resulting from the current global economic recession. In addition, net sales were unfavorably impacted by approximately $6.7 million as a result of currency exchange, as our reported results in U.S. dollars were negatively impacted by weaker foreign currencies.

Gross profit margin (gross profit as a percentage of sales) approximated 23.8% and 26.9% for the three months ended June 30, 2009 and 2008, respectively, declining primarily as a result of the lower sales volumes and lower absorption of fixed costs associated with lower production and/or sales levels. In addition, gross profit was negatively impact by approximately $1.8 million as a result of currency exchange, as our reported results in U.S. dollars were negatively impacted by weaker foreign currencies.

Operating profit margin (operating profit as a percentage of sales) approximated 7.5% and 10.7% for the three months ended June 30, 2009 and 2008, respectively. Operating profit decreased approximately $14.7 million, or 48.5%, to $15.6 million for the three months ended June 30, 2009, from $30.3 million for the three months ended June 30, 2008. Consistent with the decrease in gross profit, operating profit also declined primarily as a result of the lower sales volumes and lower absorption of fixed costs associated with lower production and/or sales levels. However, we did reduce our selling, general and administrative expenses by approximately $11.5 million in the second quarter of 2009 compared to the second quarter of 2008, primarily as a result of realization of savings associated with our Profit Improvement Plan and concerted efforts to reduce discretionary spending in response to the current economic conditions.

Adjusted EBITDA margin from continuing operations (Adjusted EBITDA as a percentage of sales) approximated 18.3% and 13.9% for the three months ended June 30, 2009 and 2008, respectively. Adjusted EBITDA decreased approximately $1.3 million for the three months ended June 30, 2009, as compared to the three months ended June 30, 2008. After consideration of the $12.3 million gross gain on extinguishment of debt, an increase in depreciation expense of approximately $0.7 million and approximately $0.2 million fewer losses on transactions denominated in foreign currencies, the change in Adjusted EBITDA is consistent with the change in operating profit between years.

See below for a discussion of operating results by segment.

Packaging. Net sales decreased approximately $8.4 million, or 18.8%, to $36.1 million in the three months ended June 30, 2009, as compared to $44.5 million in the three months ended June 30, 2008.

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Overall, sales decreased approximately $3.1 million due to currency exchange, as our reported results in U.S. dollars were negatively impacted as a result of the stronger U.S. dollar relative to foreign currencies. Sales of our specialty dispensing products and new product introductions increased by approximately $2.9 million in the three months ended June 30, 2009 compared to the three months ended June 30, 2008, due primarily to increased sales into the personal care markets, pharmaceuticals, and the food industries. Sales of our industrial closures, rings and levers decreased by approximately $8.2 million in the three months ended June 30, 2009 compared to the three months ended June 30, 2008, primarily as a result of the continued general economic slowdown.

Packaging's gross profit decreased approximately $2.3 million to $13.2 million, or 36.7% of sales, in the three months ended June 30, 2009, as compared to $15.5 million, or 34.9% of sales, in the three months ended June 30, 2008. The decrease in gross profit between years is primarily attributed to lower sales volumes of our industrial products and unfavorable currency exchange. Gross profit, as a percentage of net sales, increased in the three months ended June 30, 2009 compared to the three months ended June 30, 2008 due to lower costs for certain commodities due to alternate sourcing or improved internal processing.

Packaging's selling, general and administrative expenses decreased approximately $1.3 million to $4.6 million, or 12.7% of sales, in the three months ended June 30, 2009, as compared to $5.9 million, or 13.3% of sales, in the three months ended June 30, 2008. Discretionary spending has been reduced from second quarter 2008 levels, and additional selling, and general and administrative cost reduction plans have been implemented to better align our fixed cost structure with current business requirements resulting from the general economic decline.

Packaging's operating profit decreased approximately $0.8 million to $8.8 million, or 24.4% of sales, in the three months ended June 30, 2009, as compared to $9.6 million, or 21.6% of sales, in three months ended June 30, 2008. The decrease in operating profit between years is primarily attributed to lower sales volumes of our industrial products and unfavorable currency exchange, which were partially offset by lower steel and resin costs in the second quarter of 2009 as compared to the second quarter of 2008 and reduced selling, general and administrative costs as a result of our cost reduction plans.

Packaging's Adjusted EBITDA decreased approximately $1.1 million to $11.6 million, or 32.0% of sales, in the three months ended June 30, 2009, as compared to $12.7 million, or 28.6% of sales, in the three months ended June 30, 2008, consistent with the change in operating profit between years.

Energy. Net sales for the three months ended June 30, 2009 decreased approximately $18.2 million, or 34.2%, to $35.0 million, as compared to $53.2 million in the three months ended June 30, 2008. Sales of specialty gaskets and related fastening hardware decreased approximately $6.6 million as a result of reduced levels of turn-around activity at petrochemical refineries and decreased sales demand from the chemical industry, as customers are deferring maintenance and new programs that require our replacement and specialty gaskets and hardware. Sales within our engine business decreased by approximately $11.6 million, due to reductions of drilling activity in North America and customers deferring completion of previously drilled wells. In addition, engine sales were very strong in the second quarter of 2008 as compared to historical levels, as single-cylinder engine demand peaked in advance of new emissions law changes, which became effective on July 1, 2008. Sales of compressor products increased slightly, as the Company continues to develop new products to add to its well-site content.

Gross profit within Energy decreased approximately $7.4 million to $8.1 million, or 23.1% of sales, in the three months ended June 30, 2009, as compared to $15.5 million, or 29.2% of sales, in the three months ended June 30, 2008. Gross profit decreased approximately $5.3 million as a result of the reduction in sales levels between years. The remaining decrease in gross profit is primarily attributable to lower absorption of fixed costs resulting from the decline in sales volumes.

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Selling, general and administrative expenses within Energy decreased approximately $1.5 million to $5.4 million, or 15.5% of net sales, in the three months ended June 30, 2009, as compared to $6.9 million or 13.0% of net sales, in the three months ended June 30, 2008. This decrease was primarily due to reduced sales commissions, reductions in compensation and spending in an effort to keep fixed costs and discretionary spending in line with the reduced sales volumes and due to the impact of the severance charge in the second quarter of 2008 for the separation of the former President of this segment. These decreases were partially offset by the opening of two new branches within our specialty gasket business, one in Salt Lake City, Utah, and one in Rotterdam, Netherlands, in 2009, which increased selling, general and administrative expenses in the second quarter of 2009 by approximately $0.2 million.

Overall, operating profit within Energy decreased approximately $5.9 million to $2.7 million, or 7.6% of sales, in the three months ended June 30, 2009, as compared to $8.6 million, or 16.2% of sales, in the three months ended June 30, 2008, due principally to lower sales volumes and lower absorption of fixed costs, which were partially offset by reductions in salaries and discretionary spending in light of the lower sales volumes and the impact of the severance charge in the second quarter of 2008 for the separation of the former President of this segment.

Energy's Adjusted EBITDA decreased $5.7 million to $3.5 million, or 10.0% of sales, in the three months ended June 30, 2009, as compared to $9.2 million, or 17.3% of sales, in the three months ended June 30, 2008, consistent with the decrease in operating profit between years.

Aerospace & Defense. Net sales for the three months ended June 30, 2009 decreased approximately $3.4 million, or 15.6%, to $18.2 million, as compared to $21.6 million in the three months ended June 30, 2008. Sales in our aerospace business decreased approximately $2.1 million, primarily due to lower blind-bolt fastener sales resulting from program delays at two commercial airframe manufacturers and inventory reductions by our distribution customers, who are adjusting inventory levels in response to the delayed programs and the current economic uncertainty. This decrease was partially offset by sales of new products of approximately $2.5 million during the second quarter of 2009, which increase our content on certain aircraft. Sales in our defense business decreased approximately $1.3 million. Cartridge case sales declined approximately $2.4 million in the second quarter of 2009 compared to the second quarter of 2008 as our customer had been building its inventory throughout 2008 in advance of the relocation of the facility, which began in late second quarter 2009. The decrease in cartridge case sales was partially offset by an increase of approximately $1.1 million in revenue associated with managing the relocation and closure of the defense facility.

Gross profit within Aerospace & Defense decreased approximately $1.0 million to $8.6 million, or 47.0% of sales, in the three months ended June 30, 2009, from $9.6 million, or 44.2% of sales, in the three months ended June 30, 2008, due primarily to the decline in sales levels between years. Gross profit, as a percentage of sales, improved during the three months ended June 30, 2009 as compared to the three months ended June 30, 2008, due to a more favorable product sales mix.

Selling, general and administrative expenses decreased approximately $0.3 million to $2.2 million, or 11.9% of sales, in the three months ended June 30, 2009, as compared to $2.5 million, or 11.6% of sales, in the three months ended June 30, 2008 due primarily to reduced discretionary spending in light of the decrease in sales levels between years.

Operating profit within Aerospace & Defense decreased approximately $0.6 million to $6.4 million, or 35.1% of sales, in the three months ended June 30, 2009, as compared to $7.0 million, or 32.6% of sales, in the three months ended June 30, 2008, primarily due lower sales volumes, which were partially offset by new product sales in our aerospace business, a more favorable product sales mix and reduced discretionary spending in our selling, general and administrative expenses.

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Aerospace & Defense's Adjusted EBITDA decreased approximately $0.5 million to $7.0 million, or 38.4% of sales, in the three months ended June 30, 2009, as compared to $7.5 million, or 34.7% of sales, in the three months ended June 30, 2008, consistent with the decrease in operating profit between years.

Engineered Components. Net sales for the three months ended June 30, 2009 decreased approximately $18.9 million, or 54.6%, to $15.7 million, as compared to $34.6 million in the three months ended June 30, 2008. Sales in our industrial cylinder business decreased $14.7 million, as both our domestic DOT cylinder and international ISO cylinder sales have significantly decreased due to the global economic recession. Sales in our precision cutting tools businesses decreased by $1.5 million due primarily to the current economic downturn. Sales within our specialty fittings business declined $1.4 million due to further weak domestic automotive market demand. Finally, sales in our medical device business decreased $1.3 million due to certain contract manufacturing awards that did not recur in the second quarter of 2009.

Gross profit within Engineered Components decreased approximately $6.0 million to $1.0 million, or 6.2% of sales, in the three months ended June 30, 2009, from $7.0 million, or 20.1% of sales, in the three months ended June 30, 2008. Gross profit decreased approximately $3.8 million as a result of the decline in sales levels between years. The remaining decrease in gross profit was primarily due to lower absorption of fixed costs as a result of lower production and/or sales levels.

Selling, general and administrative expenses decreased approximately $1.0 million to $1.4 million, or 9.1% of sales, in the three months ended June 30, 2009, as compared to $2.4 million, or 7.1% of sales, in the three months ended June 30, 2008 due primarily to reduced sales commissions and discretionary spending in light of the decrease in sales levels between years.

Operating profit within Engineered Components decreased $4.9 million to a loss of $0.5 million, or (3.0)% of sales, in the three months ended June 30, 2009, as compared to operating profit of $4.4 million, or 12.8% of sales, in the three months ended June 30, 2008, primarily due to lower sales volumes and lower absorption of fixed costs, which were partially offset by reduced sales commissions and discretionary spending in selling, general and administrative expenses.

Engineered Components' Adjusted EBITDA decreased $4.9 million to $0.6 million, or 3.8% of sales, in the three months ended June 30, 2009, as compared to $5.5 million, or 15.8% of sales, in the three months ended June 30, 2008, consistent with the decrease in operating profit between years.

Cequent. Net sales decreased approximately $25.4 million to $103.5 million in the three months ended June 30, 2009, as compared to $128.9 million in the three months ended June 30, 2008. Net sales were unfavorably impacted by approximately $3.3 million of currency exchange, as our reported results in U.S. dollars were negatively impacted as a result of the stronger U.S. dollar relative to foreign currencies. Sales in our retail business increased $0.9 million, primarily a as a result of considerable additional business with one large customer and the addition of several new customers during 2009. These gains were partially offset by reduced sales volumes to other existing retail customers due to the economic uncertainty. Sales within our performance products business (includes the legacy towing, trailering and electrical businesses) decreased by $20.8 million, due to the continued soft demand in the majority of the end markets we serve due to the current uncertain economic conditions. Sales in our Australia/Asia Pacific business decreased approximately $2.2 million, due primarily to decreases in certain original equipment manufacturer revenue and the overall global economic recession.

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Cequent's gross profit decreased approximately $9.8 million to $18.7 million, or 18.1% of sales, in the three months ended June 30, 2009, from approximately $28.5 million, or 22.1% of sales, in the three months ended June 30, 2008. Of the decline in gross profit between years, approximately $5.6 million is attributed to the decline in sales between periods and $0.6 million is attributed to unfavorable currency exchange. The remaining decrease in gross profit was due to lower absorption of fixed costs as a result of lower production and/or sales levels and accelerated depreciation expense related to machinery and equipment in our Mosinee, WI manufacturing facility that will no longer be utilized following the closure of the facility in September 2009.

Selling, general and administrative expenses decreased approximately $4.0 million to $15.8 million, or 15.3% of sales, in the three months ended June 30, 2009, as compared to $19.8 million, or 15.4% of sales, in the three months ended June 30, 2008. The decrease is primarily due to reductions in salaries, sales promotions, sales commissions and other discretionary spending, all as a part of our Profit Improvement Plan, as the company reduces its fixed cost structure and minimizes its spending levels in response to the current economic downturn.

Cequent's operating profit decreased approximately $5.7 million, to approximately $2.9 million, or 2.8% of sales, in the three months ended June 30, 2009, from $8.6 million, or 6.6% of net sales, in the three months ended June 30, 2008. The decline in operating profit between years was primarily due to lower sales volumes, unfavorable foreign currency exchange, lower absorption of fixed costs and accelerated depreciation expense associated with the closure of the Mosinee, WI manufacturing facility, which were partially offset by cost reductions as part of the Profit Improvement Plan.

Cequent's Adjusted EBITDA decreased approximately $4.6 million to $8.2 million, or 7.9% of sales, for the three months ended June 30, 2009, from $12.8 million, or 9.9% of sales, for the three months ended June 30, 2008. In the three months ended June 30, 2009, Cequent recognized approximately $0.3 million fewer losses on transactions denominated in foreign currencies as compared to the second quarter of 2008. In addition, depreciation expense was approximately $0.6 million higher in the three months ended June 30, 2009 compared to the three months ended June 30, 2008, primarily as a result of accelerated depreciation incurred in the second quarter of 2009 in connection with certain machinery and equipment that will no longer be utilized following the closure of the Mosinee facility. After consideration of these two items, the change in Adjusted EBITDA is consistent with the decline in operating profit between years.

Corporate Expenses (Income). Corporate expenses (income) included in operating profit and Adjusted EBITDA consist of the following:

		Three months ended June 30,

		2009			2008
		(in millions)
Corporate operating expenses		$	2.6		$	3.3
Employee costs and related benefits			2.1			4.6

	Corporate expenses—operating profit	$	4.7		$	7.9
Receivables sales and securitization expenses			0.4			0.6
Gain on extinguishment of debt			(12.3	)		—
Depreciation			(0.1	)		—
Other, net			—			(0.2	)

	Corporate expenses (income)—Adjusted EBITDA	$	(7.3	)	$	8.3

Corporate expenses included in operating profit decreased approximately $3.2 million to $4.7 million for the three months ended June 30, 2009, from $7.9 million for the three months ended June 30, 2008. The decrease between years is primarily attributed to approximately $1.6 million of

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severance and other costs incurred in connection with our corporate office restructuring in the second quarter of 2008, approximately $0.4 million of lower non-cash equity compensation expense in the three months ended June 30, 2009 compared to the three months ended June 30, 2008, reduced corporate operating expenses due to lower discretionary spending and reduced employee and related benefit costs in 2009 resulting from the 2008 corporate office restructuring. In addition, during the second quarter of 2009, we retired approximately $31.4 million face value of our senior subordinated notes, resulting in a net gain of approximately $11.8 million after considering non-cash debt extinguishment costs of $0.5 million.

Interest Expense. Interest expense decreased approximately $2.6 million, to $11.3 million, for the three months ended June 30, 2009, as compared to $13.9 million for the three months ended June 30, 2008. The decrease is primarily attributable to approximately $1.7 million of lower interest expense incurred on our senior subordinated notes, as we have retired approximately $71.2 million of these notes between December 2008 and June 30, 2009. The remainder of the decrease in interest expense resulted from a decrease in our effective weighted-average interest rate on variable rate U.S. borrowings to approximately 3.9% during the second quarter of 2009, from approximately 5.2% during the second quarter of 2008. These declines were partially offset by an increase in our weighted-average U.S. borrowings from approximately $298.5 million in the three months ended June 30, 2008 to approximately $328.9 million in the three months ended June 30, 2009, as we utilized our revolving credit facility in 2009 as our primary source to fund operations and note retirements (as it was our lowest cost source of borrowings), as compared to utilizing our receivables securitization facility as the primary source of operational funding in the second quarter of 2008, when it was the lowest cost alternative.

Other Expense, Net. Other expense, net decreased approximately $0.5 million, to $0.8 million for the three months ended June 30, 2009, as compared to $1.3 million for the three months ended June 30, 2008. In the second quarter of 2009, we incurred approximately $0.4 million of expenses in connection with the use of our receivables securitization facility and sales of receivables to fund working capital needs and experienced approximately $0.4 million of losses on transactions denominated in foreign currencies. In the second quarter of 2008, we incurred approximately $0.6 million of expenses in connection with the use of our receivables securitization facility and sales of receivables to fund working capital needs and experienced approximately $0.6 million of losses on transactions denominated in foreign currencies. There were no other individually significant amounts incurred or changes in amounts incurred in either of the three month periods ended June 30, 2009 and 2008.

Income Taxes. The effective income tax rates for the three months ended June 30, 2009 and 2008 were 39% and 36%, respectively.

Discontinued Operations. The results of discontinued operations consist of our N.I. Industries property management line of business, which is currently held for sale, and our specialty tapes and laminates business, which was sold in February 2009. Loss from discontinued operations, net of income tax benefit, was $0.3 million for the three months ended June 30, 2009, as compared to loss from discontinued operations, net of income tax expense, of $0.2 million for the three months ended June 30, 2008. See Note 2, " Discontinued Operations and Assets Held for Sale ," to our consolidated financial statements included in Part I, Item 1 of this report on Form 10-Q.

Six Months Ended June 30, 2009 Compared with Six Months Ended June 30, 2008

Overall, net sales decreased approximately $136.1 million, or approximately 24.9%, for the six months ended June 30, 2009, as compared with the six months ended June 30, 2008. Although a few of our businesses benefitted from new product introductions during the first half of 2009, net sales declined in each of our five reportable segments, generally due to lower sales volumes resulting from

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the continued global economic recession. In addition, net sales were unfavorably impacted by approximately $13.8 million as a result of currency exchange, as our reported results in U.S. dollars were negatively impacted by weaker foreign currencies.

Gross profit margin (gross profit as a percentage of sales) approximated 23.2% and 26.7% for the six months ended June 30, 2009 and 2008, respectively, declining primarily as a result of the lower sales volumes and lower absorption of fixed costs associated with lower production and/or sales levels. In addition, gross profit was negatively impact by approximately $3.8 million as a result of currency exchange, as our reported results in U.S. dollars were negatively impacted by weaker foreign currencies.

Operating profit margin (operating profit as a percentage of sales) approximated 4.9% and 10.6% for the six months ended June 30, 2009 and 2008, respectively. Operating profit decreased approximately $38.2 million, or 65.7%, to $20.0 million for the six months ended June 30, 2009, from $58.2 million for the six months ended June 30, 2008. Consistent with the decrease in gross profit, operating profit also declined primarily as a result of the lower sales volumes and lower absorption of fixed costs associated with lower production and/or sales levels. However, we did reduce our selling, general and administrative expenses by approximately $12.0 million in the first half of 2009 compared to the first half of 2008, primarily as a result of realization of savings associated with our Profit Improvement Plan in the second quarter of 2009 and concerted efforts to reduce discretionary spending in response to the current economic conditions.

Adjusted EBITDA margin from continuing operations (Adjusted EBITDA as a percentage of sales) approximated 16.5% and 13.9% for the six months ended June 30, 2009 and 2008, respectively. Adjusted EBITDA decreased approximately $8.2 million for the six months ended June 30, 2009, as compared to the six months ended June 30, 2008. After consideration of the $28.1 million gross gain on extinguishment of debt, an increase in depreciation expense of approximately $1.0 million and approximately $0.4 million fewer losses on transactions denominated in foreign currencies, the change in Adjusted EBITDA is consistent with the change in operating profit between years.

See below for a discussion of operating results by segment.

Packaging. Net sales decreased approximately $19.2 million, or 22.4%, to $66.4 million in the six months ended June 30, 2009, as compared to $85.6 million in the six months ended June 30, 2008. Overall, sales decreased approximately $6.0 million due to currency exchange, as our reported results in U.S. dollars were negatively impacted as a result of the stronger U.S. dollar relative to foreign currencies. Sales of our specialty dispensing products and new product introductions increased by approximately $4.9 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008, due primarily to increased sales into the personal care markets, pharmaceuticals, and the food industries. Sales of our industrial closures, rings and levers decreased by approximately $18.1 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008, primarily as a result of the continued general economic slowdown.

Packaging' gross profit decreased approximately $6.1 million to $23.4 million, or 35.2% of sales, in the six months ended June 30, 2009, as compared to $29.5 million, or 34.5% of sales, in the six months ended June 30, 2008. The decrease in gross profit between years is primarily attributed to lower sales volumes of our industrial products and unfavorable currency exchange, the impact of which was partially offset by lower steel and resin costs year-over-year.

Packaging' selling, general and administrative expenses decreased approximately $2.0 million to $9.3 million, or 14.1% of sales, in the six months ended June 30, 2009, as compared to $11.3 million, or 13.3% of sales, in the six months ended June 30, 2008. Discretionary spending has been reduced from 2008 levels, and additional selling, and general and administrative cost reduction plans have been implemented to better align our fixed cost structure with current business requirements resulting from the general economic decline.

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Packaging' operating profit decreased approximately $4.0 million to $14.2 million, or 21.4% of sales, in the six months ended June 30, 2009, as compared to $18.2 million, or 21.3% of sales, in six months ended June 30, 2008. The decrease in operating profit between years is primarily attributed to lower sales volumes of our industrial products and unfavorable currency exchange, which were partially offset by lower steel and resin costs, primarily in the second quarter of 2009 as compared to the second quarter of 2008, and reduced selling, general and administrative costs as a result of our cost reduction plans.

Packaging' Adjusted EBITDA decreased approximately $4.6 million to $20.2 million, or 30.5% of sales, in the six months ended June 30, 2009, as compared to $24.8 million, or 29.0% of sales, in the six months ended June 30, 2008, consistent with the change in operating profit between years after consideration of increased foreign currency transaction losses of approximately $0.2 million during the six months ended June 30, 2009 as compared to the six months ended June 30, 2008 and $0.4 million reduced depreciation expense in the six months ended June 30, 2009 as compared to the six months ended June 30, 2008.

Energy. Net sales for the six months ended June 30, 2009 decreased approximately $26.7 million, or 26.2%, to $75.3 million, as compared to $102.0 million in the six months ended June 30, 2008. Sales of specialty gaskets and related fastening hardware decreased approximately $11.3 million as a result of reduced levels of turn-around activity at petrochemical refineries and decreased sales demand from the chemical industry, as customers are deferring maintenance and new programs that require our replacement and specialty gaskets and hardware. Sales of slow speed and compressor engines and related products decreased by approximately $15.4 million, due to a reduction of drilling activity in North America and customers deferring completion of previously drilled wells. In addition, engine sales were strong in the second quarter of 2008, as compared to historical levels, as single-cylinder engine demand peaked in advance of new emissions law changes, which became effective on July 1, 2008. Sales of compressor products increased slightly, as the Company continues to develop new products to add to its well-site content.

Gross profit within Energy decreased approximately $12.0 million to $18.0 million, or 24.0% of sales, in the six months ended June 30, 2009, as compared to $30.0 million, or 29.5% of sales, in the six months ended June 30, 2008. Gross profit decreased approximately $7.9 million as a result of the reduction in sales levels between years. In addition, gross profit decreased as a result of sales of higher-cost inventory in 2009 than in 2008, a less favorable sales mix in 2009 than in 2008, particularly in our specialty gasket business, and lower absorption of fixed costs as a result of the lower sales volumes.

Selling, general and administrative expenses within Energy decreased approximately $1.7 million to $11.8 million, or 15.8% of net sales, in the six months ended June 30, 2009, as compared to $13.5 million or 13.3% of net sales, in the six months ended June 30, 2008. This decrease was primarily due to reduced sales commissions, reductions in compensation and spending in an effort to keep fixed costs and discretionary spending in line with the reduced sales volumes and due to the impact of the severance charge in the second quarter of 2008 for the separation of the former President of this segment. These decreases were partially offset by the opening of two new branches within our specialty gasket business, one in Salt Lake City, Utah, and one in Rotterdam, Netherlands, in 2009, which has increased selling, general and administrative expenses in the first half of 2009 by approximately $0.4 million.

Overall, operating profit within Energy decreased approximately $10.3 million to $6.2 million, or 8.2% of sales, in the six months ended June 30, 2009, as compared to $16.5 million, or 16.2% of sales, in the six months ended June 30, 2008, due principally to lower sales volumes, sales of higher-cost inventory and lower absorption of fixed costs, which were partially offset by reductions in selling, general and administrative expenses resulting from lower compensation costs, lower discretionary

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spending and the impact of the 2008 severance charge for the separation of the former President of this segment.

Energy' Adjusted EBITDA decreased $10.0 million to $7.8 million, or 10.3% of sales, in the six months ended June 30, 2009, as compared to $17.8 million, or 17.5% of sales, in the six months ended June 30, 2008, consistent with the decrease in operating profit between years.

Aerospace & Defense. Net sales for the six months ended June 30, 2009 decreased approximately $0.7 million, or 1.8%, to $40.5 million, as compared to $41.2 million in the six months ended June 30, 2008. Sales in our aerospace business decreased approximately $2.1 million, primarily due to lower blind-bolt fastener sales resulting from program delays beginning in the first quarter of 2009 at two commercial airframe manufacturers and inventory reductions by our distribution customers, who are adjusting inventory levels in response to the delayed programs and the current economic uncertainty. This decrease was partially offset by sales of new products of approximately $3.9 million during the first half of 2009, which increased our content on certain aircraft. Sales in our defense business increased approximately $1.4 million. Revenue associated with managing the relocation and closure of the defense facility increased $2.4 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008. This increase in revenue was partially offset by $1.0 million decreased sales of cartridge cases in the first half of 2009 compared to the first half of 2008, as our customer had been building its inventory throughout 2008 in advance of the relocation of the facility, which began in late second quarter 2009.

Gross profit within Aerospace & Defense decreased approximately $0.8 million to $17.7 million, or 43.7% of sales, in the six months ended June 30, 2009, from $18.5 million, or 44.8% of sales, in the six months ended June 30, 2008. Gross profit decreased approximately $0.3 million as a result of the decline in sales levels between years. This decrease in gross profit was also impacted by lower absorption of fixed costs as a result of lower production and/or sales levels, primarily within our aerospace business, and a less favorable product sales mix.

Selling, general and administrative expenses decreased approximately $0.4 million to $4.5 million, or 11.0% of sales, in the six months ended June 30, 2009, as compared to $4.9 million, or 11.8% of sales, in the six months ended June 30, 2008 due primarily to reduced discretionary spending in light of the decrease in sales levels between years.

Operating profit within Aerospace & Defense decreased approximately $0.4 million to $13.2 million, or 32.7% of sales, in the six months ended June 30, 2009, as compared to $13.6 million, or 33.0% of sales, in the six months ended June 30, 2008, primarily due to lower sales volumes and lower absorption of fixed costs, which were partially offset by reduced discretionary spending within our selling, general and administrative expenses.

Aerospace & Defense' Adjusted EBITDA decreased $0.1 million to $14.4 million, or 35.6% of sales, in the six months ended June 30, 2009, as compared to $14.5 million, or 35.1% of sales, in the six months ended June 30, 2008, consistent with the decrease in operating profit between years after consideration of approximately $0.2 million of increased depreciation expense in the first half of 2009 compared to the first half of 2008 resulting from the full-run-rate impact of procurement of additional machinery and equipment in our aerospace business during mid-2008.

Engineered Components. Net sales for the six months ended June 30, 2009 decreased approximately $33.2 million, or 48.5%, to $35.2 million, as compared to $68.4 million in the six months ended June 30, 2008. Sales in our industrial cylinder business decreased $23.9 million, as both our domestic DOT cylinder and international ISO cylinder sales have significantly decreased due to the global economic recession. Sales in our precision cutting tools businesses decreased by $2.8 million due primarily to the current economic downturn. Sales within our specialty fittings business declined $3.3 million due to further weak domestic automotive market demand. Finally, sales in our medical

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device business decreased $3.2 million due to certain contract manufacturing awards that did not recur in the first half of 2009.

Gross profit within Engineered Components decreased approximately $11.3 million to $2.6 million, or 7.3% of sales, in the six months ended June 30, 2009, from $13.9 million, or 20.3% of sales, in the six months ended June 30, 2008. Gross profit decreased approximately $6.7 million as a result of the decline in sales levels between years. This decrease in gross profit was also impacted by sales of higher-cost inventory, primarily related to steel, in excess of the businesses' ability to secure price increases and lower absorption of fixed costs as a result of lower production and/or sales levels.

Selling, general and administrative expenses decreased approximately $1.3 million to $3.5 million, or 9.9% of sales, in the six months ended June 30, 2009, as compared to $4.8 million, or 7.0% of sales, in the six months ended June 30, 2008 due primarily to lower sales commissions and reduced discretionary spending in light of the decrease in sales levels between years.

Operating profit within Engineered Components decreased approximately $10.0 million to a loss of $1.0 million, or (2.7)% of sales, in the six months ended June 30, 2009, as compared to $9.0 million, or 13.2% of sales, in the six months ended June 30, 2008, primarily due to lower sales volumes, sales of higher-cost inventory and lower absorption of fixed costs, which were partially offset by reduced sales commissions and discretionary spending within selling, general and administrative expenses.

Engineered Components' Adjusted EBITDA decreased approximately $9.9 million to $1.2 million, or 3.3% of sales, in the six months ended June 30, 2009, as compared to $11.1 million, or 16.2% of sales, in the six months ended June 30, 2008, consistent with the decrease in operating profit between years.

Cequent. Net sales decreased approximately $56.2 million to $194.0 million in the six months ended June 30, 2009, as compared to $250.2 million in the six months ended June 30, 2008. Net sales were unfavorably impacted by approximately $7.1 million of currency exchange, as our reported results in U.S. dollars were negatively impacted as a result of the stronger U.S. dollar relative to foreign currencies. Sales in our retail business increased $1.2 million, primarily as a result of additional business with a significant customer and the addition of several new customers during the first half of 2009. These gains were partially offset by reduced sales volumes to other existing retail customers due to the economic uncertainty. Sales within our performance products business (includes the legacy towing, trailering and electrical businesses) decreased by $45.4 million, due to the continued