TRIMAS CORP - FORM 8-K/A - EX-99.3 - EXHIBIT 99.3 - December 22, 2014

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EX-23.1 - EXHIBIT 23.1 - TRIMAS CORPex-231.htm
EX-99.1 - EXHIBIT 99.1 - TRIMAS CORPex-991.htm
EX-99.2 - EXHIBIT 99.2 - TRIMAS CORPex-992.htm
Exhibit 99.3

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
On September 19, 2014, TriMas Corporation ("TriMas" or the "Company") and its subsidiary, TriMas UK Aerospace Holdings Limited (the “Buyer”), entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Allfast Fastening Systems, Inc. ("Allfast") and the sole stockholder of Allfast pursuant to which the Buyer agreed to purchase all of the outstanding equity of Allfast for approximately $357 million in cash, on a cash-free, debt-free basis and subject to working capital and tax adjustments, if any. On October 17, 2014, the Buyer consummated the acquisition of Allfast pursuant to the terms of the Stock Purchase Agreement.
The following unaudited pro forma combined financial information is based on the historical consolidated financial information of TriMas, which is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 and Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014, and the financial information of Allfast, which is included in Exhibits 99.1 and 99.2 to this Current Report on Form 8-K/A. The unaudited pro forma combined balance sheet as of June 30, 2014 has been prepared to illustrate the effects of the acquisition of Allfast and the related financing as if they occurred on June 30, 2014. The unaudited pro forma combined income statements for the year ended December 31, 2013 and six months ended June 30, 2014 have prepared to illustrate the effects of the acquisition of Allfast and the related financing as if they occurred on January 1, 2013.
The historical consolidated financial statements of TriMas and Allfast have been adjusted in the unaudited pro forma combined financial statements to give effect to pro forma events and adjustments that are: (1) directly attributable to the Allfast acquisition, including the incremental term loan and revolver borrowings, (2) factually supportable and (3) with respect to the unaudited combined pro forma income statement, expected to have a continuing impact on the combined results. The unaudited pro forma combined financial statements should be read in conjunction with the historical financial statements, including the notes thereto, as well as the accompanying notes to the unaudited pro forma financial statements.
The unaudited pro forma combined financial information is presented for information purposes only and is not necessarily indicative of what the companies' combined financial position or results of operations actually would have been had the acquisition been completed at the dates presented. In addition, the combined information presented herein does not claim to project the future financial position or operating results of the combined company.

1


TriMas Corporation
Pro Forma Combined Balance Sheet
As of June 30, 2014
 
 
(Unaudited, dollars in thousands)
 
 
TriMas Corporation
 
Allfast Fastening Systems
 
Pro Forma Adjustments
 
Pro Forma Combined
Assets
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
38,380

 
$
4,920

 
$
—

 
$
43,300

Receivables, net
 
246,340

 
9,440

 
—

 
255,780

Inventories
 
260,950

 
15,520

 
5,000

(a)
281,470

Deferred income taxes
 
18,340

 
—

 
—

 
18,340

Prepaid expenses and other current assets
 
18,780

 
140

 
110

(b)
19,030

Total current assets
 
582,790

 
30,020

 
5,110

 
617,920

Property and equipment, net
 
212,130

 
8,540

 
4,110

(c)
239,240

 
 
 
 
 
 
14,460

(d)
 
Goodwill
 
312,270

 
420

 
150,500

(e)
463,190

Other intangibles, net
 
209,910

 
—

 
165,000

(f)
374,910

Other assets
 
47,540

 
610

 
350

(b)
48,500

Total assets
 
$
1,364,640

 
$
39,590

 
$
339,530

 
$
1,743,760

Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
Current maturities, long-term debt
 
$
14,570

 
$
—

 
$
—

 
$
14,570

Accounts payable
 
175,300

 
4,810

 
3,820

(g)
183,930

Accrued liabilities
 
79,440

 
—

 
8,900

(h)
88,340

Total current liabilities
 
269,310

 
4,810

 
12,720

 
286,840

Long-term debt
 
353,910

 
—

 
364,950

(i)
718,860

Deferred income taxes
 
54,180

 
—

 
—

 
54,180

Other long-term liabilities
 
100,980

 
—

 
—

 
100,980

Total liabilities
 
778,380

 
4,810

 
377,670

 
1,160,860

Preferred stock
 
—

 
—

 
—

 
—

Common stock
 
450

 
—

 
—

 
450

Paid-in capital
 
803,540

 
260

 
(260
)
(j)
803,540

Accumulated deficit
 
(250,550
)
 
34,520

 
(34,520
)
(j)
(253,910
)
 
 
 
 
 
 
(3,360
)
(k)
 
Accumulated other comprehensive income
 
32,820

 
—

 
—

 
32,820

Total shareholders' equity
 
586,260

 
34,780

 
(38,140
)
 
582,900

Total liabilities and shareholders' equity
 
$
1,364,640

 
$
39,590

 
$
339,530

 
$
1,743,760




See accompanying notes to unaudited pro forma combined financial statements.








2


TriMas Corporation
Pro Forma Combined Income Statement
Twelve Months Ended December 31, 2013

 
 
(Unaudited, dollars in thousands)
 
 
TriMas Corporation
 
Allfast Fastening Systems
 
Pro Forma Adjustments
 
Pro Forma Combined
Net sales
 
$
1,394,860

 
$
53,890

 
$
—

 
$
1,448,750

Cost of sales
 
(1,041,460
)
 
(29,120
)
 
(650
)
(a)
(1,071,050
)
 
 
 
 
 
 
(2,200
)
(b)
 
 
 
 
 
 
 
2,380

(c)
 
Gross profit
 
353,400

 
24,770

 
(470
)
 
377,700

Selling, general and administrative expenses
 
(244,640
)
 
(11,330
)
 
(4,610
)
(d)
(260,580
)
Net gain (loss) on dispositions of property and equipment
 
11,770

 
—

 
—

 
11,770

Operating profit
 
120,530

 
13,440

 
(5,080
)
 
128,890

Other expense, net:
 
 
 
 
 
 
 
 
Interest expense
 
(18,330
)
 
—

 
(110
)
(e)
(25,520
)
 
 
 
 
 
 
(7,080
)
(f)
 
Debt extinguishment costs
 
(2,460
)
 
—

 
—

 
(2,460
)
Other income (expense), net
 
(1,980
)
 
—

 
—

 
(1,980
)
Other expense, net
 
(22,770
)
 
—

 
(7,190
)
 
(29,960
)
Income from continuing operations before income tax expense
 
97,760

 
13,440

 
(12,270
)
 
98,930

Income tax expense
 
(18,390
)
 
(30
)
 
(430
)
(g)
(18,850
)
Income from continuing operations including noncontrolling interest
 
79,370

 
13,410

 
(12,700
)
 
80,080

Less: Net income attributable to noncontrolling interests
 
4,520

 
—

 
—

 
4,520

Net income from continuing operations attributable to TriMas
 
$
74,850

 
$
13,410

 
$
(12,700
)
 
$
75,560

Basic earnings per share:
 
 
 
 
 
 
 
 
Continuing operations attributable to TriMas
 
$
1.83

 
 
 
 
 
$
1.85

Weighted average common shares—basic
 
40,926,257

 
 
 
 
 
40,926,257

Diluted earnings per share:
 
 
 
 
 
 
 
 
Continuing operations attributable to TriMas
 
$
1.81

 
 
 
 
 
$
1.83

Weighted average common shares—diluted
 
41,395,706

 
 
 
 
 
41,395,706




See accompanying notes to unaudited pro forma combined financial statements.












3



TriMas Corporation
Pro Forma Combined Income Statement
Six Months Ended June 30, 2014

 
 
(Unaudited, dollars in thousands)
 
 
TriMas Corporation
 
Allfast Fastening Systems
 
Pro Forma Adjustments
 
Pro Forma Combined
Net sales
 
$
771,720

 
$
30,410

 
$
—

 
$
802,130

Cost of sales
 
(565,380
)
 
(15,720
)
 
(320
)
(a)
(581,400
)
 
 
 
 
 
 
(1,100
)
(b)
 
 
 
 
 
 
 
1,120

(c)
 
Gross profit
 
206,340

 
14,690

 
(300
)
 
220,730

Selling, general and administrative expenses
 
(129,710
)
 
(5,790
)
 
(2,310
)
(d)
(137,810
)
Operating profit
 
76,630

 
8,900

 
(2,610
)
 
82,920

Other expense, net:
 
 

 
 

 
 
 
 
Interest expense
 
(6,910
)
 
—

 
(60
)
(e)
(10,340
)
 
 
 
 
 
 
(3,370
)
(f)
 
Other income (expense), net
 
(2,930
)
 
490

 
—

 
(2,440
)
Other expense, net
 
(9,840
)
 
490

 
(3,430
)
 
(12,780
)
Income from continuing operations before income tax expense
 
66,790

 
9,390

 
(6,040
)
 
70,140

Income tax expense
 
(21,210
)
 
(10
)
 
(1,270
)
(g)
(22,490
)
Income from continuing operations including noncontrolling interest
 
45,580

 
9,380

 
(7,310
)
 
47,650

Less: Net income attributable to noncontrolling interests
 
810

 
—

 
—

 
810

Net income from continuing operations attributable to TriMas
 
$
44,770

 
$
9,380

 
$
(7,310
)
 
$
46,840

Basic earnings per share:
 
 

 
 
 
 
 
 
Continuing operations attributable to TriMas
 
$
1.00

 
 
 
 
 
$
1.04

Weighted average common shares—basic
 
44,834,842

 
 
 
 
 
44,834,842

Diluted earnings per share:
 
 

 
 
 
 
 
 

Continuing operations attributable to TriMas
 
$
0.99

 
 
 
 
 
$
1.04

Weighted average common shares—diluted
 
45,208,488

 
 
 
 
 
45,208,488




See accompanying notes to unaudited pro forma combined financial statements.



4
TRIMAS CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(unaudited)



1. Basis of Presentation
On October 17, 2014, the Company consummated the acquisition of Allfast. The accompanying pro forma combined balance sheet and income statements of the combined company are based upon the historical financial statements of TriMas and Allfast, after giving effect to the acquisition adjustments described in these notes, and are intended to reflect the impact of the acquisition on the Company. Certain amounts in Allfast's historical financial statements have been reclassified to conform to TriMas' presentation.
Additionally, based on the Company's preliminary review of Allfast's accounting policies, the Company is not aware of any differences that would have a material impact on the pro forma combined financial statements. The Company will continue to review Allfast's accounting policies, and as a result of the ongoing review, may identify differences between the accounting policies of the two companies that could have a material impact on the combined financial statements.
The unaudited pro forma combined financial statements have been prepared using the acquisition method of accounting under existing U.S. generally accepted accounting principles, which are subject to change and interpretation. The pro forma adjustments presented are preliminary and have been made solely for the purpose of providing unaudited pro forma combined financial statements and will be revised as additional information becomes available and additional analysis is performed. Differences between these preliminary estimates and the final acquisition accounting may occur and these differences could have a material impact on the accompanying unaudited pro forma combined financial statements and the combined company’s future results of operations and financial position.

The unaudited pro forma combined financial statements do not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the acquisition or costs necessary to achieve these cost savings, operating synergies or revenue enhancements. Acquisition-related transaction costs such as legal, advisory, valuation and other professional fees are not included as a component of consideration transferred but are expensed as incurred.
During the third quarter of 2014, the Company ceased operations of its NI Industries business. NI Industries manufactured cartridge cases for the defense industry and was party to a U.S. Government facility maintenance contract. The results of the aforementioned business were not deemed material for the purposes of this Current Report on Form 8-K/A, and the Company's results giving effect to NI will be disclosed in the normal course of the Company's filings of annual reports on Form 10-K and quarterly reports on Form 10-Q.
The allocation of the purchase price to assets and liabilities assumed in the pro forma financial information is based on management's preliminary valuation estimates and is subject to revisions, which may be material.

5
TRIMAS CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(unaudited)


2. Purchase Price Allocation
The estimated total purchase price of the acquisition was $364.9 million, which included cash of approximately $12.5 million, with an additional $8.9 million of deferred purchase price related to certain tax related reimbursements in accordance with the purchase agreement. The determination of the excess purchase price over the fair value of the assets acquired and liabilities assumed as of June 30, 2014 is as follows:
 
Six months ended June 30, 2014
 
(dollars in thousands)
Consideration
 
Initial cash paid
$
364,950

Deferred purchase price (a)
8,900

Total consideration
$
373,850

Recognized amounts of assets acquired and liabilities assumed
 
Book value of assets acquired
$
39,590

Book value of land and building acquired
14,460

Fair value adjustment to inventory
5,000

Fair value adjustment to fixed assets
4,110

Fair value adjustments of other intangible assets
165,000

Book value of liabilities assumed
(4,810
)
Total identifiable net assets
223,350

Goodwill
150,500

 
$
373,850

___________________________
(a) The deferred purchase price represents the Company's best estimate of the underlying obligations for certain tax reimbursements to the previous owner, which the Company has agreed to as part of the purchase agreement in order to acquire additional tax attributes.
See Note 3, "Pro Forma Adjustments," for additional information regarding the amount of assets and liabilities recognized in conjunction with the acquisition.
3. Pro Forma Adjustments
The pro forma combined financial statements include the following pro forma adjustments to reflect both the additional financing required to complete the acquisition and the allocation of the purchase price, including adjustments to the assets and liabilities to record these items at their fair value at the date of acquisition, with related changes in revenue, costs and expenses.
Combined Balance Sheet Pro Forma Adjustments:
(a)
Represents the pro forma adjustments to step up Allfast's finished goods and work in process inventory to fair market value. The calculation of the step up value requires the use of estimated selling prices less the sum of: (i) costs of disposal and (ii) a reasonable profit allowance for the selling effort. The work in process inventory also includes an estimate of costs to complete the manufacturing process and a reasonable profit allowance for that process. The inventory step-up will be charged to cost of sales as the inventory is sold.
(b)
Represents the pro forma adjustment to record deferred financing costs associated with the incremental borrowing incurred for the acquisition, classified as prepaid expenses and other current assets of $0.1 million and other assets of $0.3 million.
(c)
Represents the pro forma adjustment to reflect Allfast's land, building, property and equipment at fair value based on preliminary appraisal valuations.
(d)
Represents the pro forma adjustment to reflect the addition of the previously leased land and building, which was purchased by Allfast prior to, and in conjunction with, the acquisition and were subsequently adjusted to fair market value as part of the valuation performed. Adjustments to fair market value of the land and building are included in note (c), above.

6
TRIMAS CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(unaudited)


(e)
Reflects the recording of goodwill at the preliminary purchase price consideration over the estimated fair value of the assets acquired and liabilities assumed of $150.5 million.
(f)
Represents the pro forma adjustment to record the preliminary valuation of Allfast's identified intangible assets, which consist of the indefinite-lived intangible asset trademark/tradename of $49.0 million and amortizable intangible assets of customer relationships and technology and other intangible assets of $83.0 million and $33.0 million, respectively.
(g)
Represents the pro forma adjustment for the liability owed for debt refinancing fees of $3.8 million, of which $3.4 million was expensed as part of the acquisition refinancing and adjusted through retained earnings, and an additional $0.4 million was capitalized as deferred financing fees, see note (b) above.
(h)
Reflects the liability to reimburse the former owner for certain tax related liabilities that allow the Company to acquire additional tax attributes.
(i)
Represents the pro forma adjustment to reflect the additional borrowings necessary to complete the acquisition, consisting of a $275.0 million term loan A component and an $90.0 million revolving credit facility component.
(j)
Represents the pro forma adjustment eliminating the historical shareholders' equity in Allfast.
(k)
Represents the net impact to retained earnings of the additional acquisition financing fees.
Combined Income Statement Pro Forma Adjustments:
(a)
Represents the pro forma adjustment for the depreciation of the incremental fair value assigned to acquired fixed assets, plus the additional depreciation expense on the acquired building for both the twelve months ended December 31, 2013 and the six months ended June 30, 2014. The amount of these adjustments is based on the preliminary estimates of fair values and estimated remaining useful lives of the related assets.
(b)
Reflects the pro forma adjustment for amortization expense related to the $33.0 million of ascribed value to technology and other intangible assets. Amortization expense was based on a period of 15 years.
(c)
Reflects the pro forma adjustment to reverse operating lease expense incurred and recorded on Allfast's financial statements during the twelve months ended December 31, 2013 and six months ended June 30, 2014 relating to the lease of the Allfast building, which was purchased as part of the acquisition.
(d)
Reflects the pro forma adjustment for amortization expense related to the $83.0 million of ascribed value to customer relationships. Amortization expense was based on a period of 18 years.
(e)
Represents the pro forma adjustment for amortization of deferred financing costs for the twelve and six months ended December 31, 2013 and June 30, 2014, respectively. These costs are expected to be amortized over the four year remaining life of the agreement.
(f)
Represents the pro forma adjustment to reflect interest expense incurred on the incremental term loan A and revolver borrowings incurred in order to fund the acquisition. Interest rates for the additional financing on the term loan A and revolver were at rates of LIBOR plus 1.875% and LIBOR plus 1.625%, respectively. Actual historical monthly LIBOR rates were used to calculate the pro forma interest expense adjustment.
(g)
Represents the income tax effect for both the previously listed pro forma adjustments to the combined income statements for the twelve months ended December 31, 2013 and six month ended June 30, 2014, and the additional pro forma adjustment for the tax treatment of Allfast's income for the twelve months ended December 31, 2013 and six months ended June 30, 2014 at the TriMas U.S corporate tax rate of approximately 38%.

7

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