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Item 8. Financial Statements and Supplementary Data

2023-02-23 compared with 2022-03-01 · 178 added, 228 removed, 994 unchanged (29% of the section changed)

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of TriMas Corporation and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity, for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

We have audited the accompanying consolidated balance sheets of TriMas Corporation and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 01, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2023 expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) related to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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Critical Audit Matter Description

The Company assesses goodwill for impairment on an annual basis as of October 1, and more frequently if there are changes in the business climate or as a result of a triggering event taking place.

The Company’s evaluation of goodwill impairment involves a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

The qualitative assessment involves significant use of management’s judgment and assumptions related to macroeconomic conditions, industry and market considerations, overall financial performance, entity and reporting unit specific events, and capital markets pricing.

The Company also considered recent valuations of its reporting units, including the difference between the most recent fair value estimate and the carrying amount.

The qualitative assessment involves significant use of management's judgment and assumptions related to macroeconomic conditions, industry and market considerations, overall financial performance, entity and reporting unit specific events, capital markets pricing, as well as legal, regulatory, and contractual factors.

The Company also considers recent valuations of its reporting units, including the difference between the most recent fair value estimate and the carrying amount.

Changes in these assumptions could have a significant effect on management’s conclusion about whether a quantitative goodwill impairment test is necessary to estimate the fair value of its reporting units.

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Our audit procedures related to management’s qualitative evaluation of goodwill impairment for Aerospace Fasteners included the following, among others:

• We tested the effectiveness of controls over goodwill, including those over management's judgments and assumptions related to macroeconomic conditions, industry and market considerations, overall financial performance, entity and reporting unit specific events, capital markets pricing, recent fair value estimates and carrying amounts.

• We evaluated management’s ability to accurately forecast future revenues and EBITDA margins by comparing actual results to management’s historical forecasts.

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Detroit, Michigan

March 1, 2022

February 23, 2023

We have served as the Company's auditor since 2013.

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Accumulated deficit ( 36,130 ) ( 102,300 )

Accumulated other comprehensive loss 230 ( 5,620 )

Accumulated other comprehensive income (loss) ( 8,620 ) 230

Total shareholders' equity 651,830 630,850

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Selling, general and administrative expenses ( 131,190 ) ( 121,970 ) ( 134,480 )

Net loss on dispositions of assets ( 130 ) ( 1,290 ) ( 150 )

Net gain (loss) on dispositions of assets 21,950 ( 130 ) ( 1,290 )

Impairment of goodwill and indefinite-lived intangible assets — — ( 134,600 )

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Income tax benefit (expense) ( 21,500 ) ( 11,800 ) 22,950

Income (loss) from continuing operations 57,310 ( 79,760 ) 61,940

Income from discontinued operations, net of income taxes — — 36,680

Net income (loss) $ 66,170 $ 57,310 $ ( 79,760 )

Basic earnings (loss) per share:

Continuing operations $ 1.33 $ ( 1.83 ) $ 1.37

Discontinued operations — — 0.81

Net income (loss) per share $ 1.57 $ 1.33 $ ( 1.83 )

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Diluted earnings (loss) per share:

Continuing operations $ 1.32 $ ( 1.83 ) $ 1.36

Discontinued operations — — 0.80

Net income (loss) per share $ 1.56 $ 1.32 $ ( 1.83 )

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Derivative instruments (Note 13) 9,410 9,490 ( 7,810 )

Total other comprehensive income 5,850 380 12,120

Total other comprehensive income (loss) ( 8,850 ) 5,850 380

Total comprehensive income (loss) $ 57,320 $ 63,160 $ ( 79,380 )

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Net income (loss) $ 66,170 $ 57,310 $ ( 79,760 )

Income from discontinued operations — — 36,680

Income (loss) from continuing operations 57,310 ( 79,760 ) 61,940

Adjustments to reconcile income from continuing operations to net cash provided by operating activities, net of acquisition impact:

Adjustments to reconcile net income (loss) to net cash provided by operating activities, net of acquisition impact:

Impairment of goodwill and indefinite-lived intangible assets — — 134,600

Loss on dispositions of assets 130 1,290 150

(Gain) loss on dispositions of assets ( 21,950 ) 130 1,290

Depreciation 34,120 31,890 29,020

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(Increase) decrease in inventories ( 6,970 ) ( 960 ) 3,980

(Increase) decrease in prepaid expenses and other assets 5,030 4,400 ( 6,930 )

Decrease in prepaid expenses and other assets 6,120 5,030 4,400

Increase (decrease) in accounts payable and accrued liabilities ( 29,130 ) 2,120 4,490

Other operating activities ( 3,180 ) 4,210 50

Net cash provided by operating activities of continuing operations 134,220 127,410 95,710

Net cash provided by (used for) operating activities of discontinued operations — — ( 20,110 )

Net cash provided by operating activities 72,570 134,220 127,410

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Acquisition of businesses, net of cash acquired ( 64,100 ) ( 34,340 ) ( 193,540 )

Net proceeds from dispositions of businesses, property and equipment 220 1,950 128,080

Net cash provided by (used for) investing activities of continuing operations ( 79,180 ) ( 232,070 ) 31,320

Net cash used for investing activities of discontinued operations — — ( 2,240 )

Net cash provided by (used for) investing activities ( 79,180 ) ( 232,070 ) 29,080

Cross-currency swap terminations 26,230 — —

Net proceeds from dispositions of property and equipment 28,790 220 1,950

Net cash used for investing activities ( 55,040 ) ( 79,180 ) ( 232,070 )

Cash Flows from Financing Activities:

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Dividends paid ( 6,880 ) ( 1,740 ) —

Net cash provided by (used for) financing activities of continuing operations 11,750 6,140 ( 40,360 )

Net cash provided by financing activities of discontinued operations — — —

Net cash provided by (used for) financing activities ( 46,180 ) 11,750 6,140

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Balances at December 31, 2019 $ 450 $ 782,880 $ ( 79,850 ) $ ( 6,000 ) $ 697,480

Net income — — 98,620 — 98,620

Net loss — — ( 79,760 ) — ( 79,760 )

Other comprehensive income — — — 380 380

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Non-cash compensation expense 10 8,160 — — 8,170

Impact of accounting standards adoption — — 1,190 ( 1,270 ) ( 80 )

Balances at December 31, 2020 $ 430 $ 749,050 $ ( 159,610 ) $ ( 5,620 ) $ 584,250

Net loss — — ( 79,760 ) — ( 79,760 )

Net income — — 57,310 — 57,310

Other comprehensive income — — — 5,850 5,850

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Non-cash compensation expense — 9,500 — — 9,500

Dividends declared — ( 1,740 ) — — ( 1,740 )

Balances at December 31, 2021 $ 430 $ 732,490 $ ( 102,300 ) $ 230 $ 630,850

Net income — — 66,170 — 66,170

Other comprehensive income — — — 5,850 5,850

Other comprehensive loss — — — ( 8,850 ) ( 8,850 )

Purchase of common stock ( 10 ) ( 36,910 ) — — ( 36,920 )

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The preparation of financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities.

Actual results may differ from such estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to the ongoing outbreak of the coronavirus and related variants (“COVID-19”).

While the full impact of the COVID-19 pandemic is unknown and cannot be reasonably estimated at this time, the Company has made appropriate accounting estimates based on the facts and circumstances available as of the reporting date.

Actual results may differ from such estimates and assumptions due to risks and uncertainties, including uncertainty and volatility in the current economic environment due to input cost inflation, supply chain disruptions, and shortages in global markets for commodities, logistics and labor, all of which have followed outbreak of the coronavirus and related variants (“COVID-19”) since early 2020.

To the extent there are differences between these estimates and actual results, the Company's consolidated financial statements may be materially affected.

New Accounting Pronouncements

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-10, "Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance" ("ASU 2021-10"), which requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy.

ASU 2021-10 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted.

The Company is in the process of assessing the impact of adoption on its consolidated financial statements.

Disclosures by Business Entities about Government Assistance" ("ASU 2021-10"), which requires annual disclosures to increase transparency around government assistance received by companies.

ASU 2021-10 is effective for fiscal years beginning after December 15, 2021.

The Company adopted ASU 2021-10 in the fourth quarter of 2022.

Certain country, state and local governments in which the Company operates offer or have offered various business incentives related to investment and/or job creation.

The Company's participation in these government incentive programs is accounted for by applying a grant or contribution model by analogy;

however, the Company determined that the adoption of ASU 2021-10 did not have a material impact on its consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" ("ASU 2021-08"), which requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, "Revenue from Contracts with Customers." ASU 2021-08 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2022, with early adoption permitted.

The Company is in the process of assessing the impact of adoption on its consolidated financial statements.

The Company adopted ASU 2021-08 in the fourth quarter of 2022, which did not have a significant impact on its consolidated financial statements.

Summary of Significant Accounting Policies

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Such estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting periods.

Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill and other intangibles, valuation allowances for receivables, inventories and deferred income tax assets, valuation of derivatives, estimated future unrecoverable lease costs, reserves for asbestos and ordinary course litigation, assets and obligations related to employee benefits and estimated unrecognized tax benefits.

Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill and other intangibles, valuation allowances for receivables, inventories and deferred income tax assets, valuation of derivatives, estimated fair value of contingent consideration resulting from business combinations, estimated future unrecoverable lease costs, reserves for asbestos and ordinary course litigation, assets and obligations related to employee benefits and estimated unrecognized tax benefits.

Actual results may differ from such estimates and assumptions.

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

Cash and cash equivalents also includes restricted cash held on deposit with a financial institution as cash collateral for the Company's outstanding letters of credit.

Cash and cash equivalents also includes restricted cash, if any, held on deposit with a financial institution as cash collateral for the Company's outstanding letters of credit.

See Note 7, " Cash and Cash Equivalents ," for further details regarding the Company's cash and cash equivalents.

Receivables are presented net of allowances for doubtful accounts of approximately $ 1.6 million and $ 2.1 million at December 31, 2021 and 2020, respectively.

Receivables are presented net of allowances for doubtful accounts of $ 1.7 million and $ 1.6 million at December 31, 2022 and 2021, respectively.

The Company monitors its exposure for credit losses and maintains allowances for doubtful accounts based upon the Company's best estimate of probable losses inherent in the accounts receivable balances.

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The Company determines its reporting units at the individual operating segment level, or one level below, when there is discrete financial information available that is regularly reviewed by segment management to evaluate operating results.

For purposes of the Company's 2021 goodwill impairment test, the Company had five reporting units, three of which had goodwill, within its three reportable segments.

For purposes of the Company's 2022 goodwill impairment test, the Company had six reporting units, four of which had goodwill, within its three reportable segments.

The Company begins its goodwill reviews by conducting a qualitative assessment, considering relevant events and circumstances that affect the fair value or carrying amount of a reporting unit.

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The Company considers positive and mitigating events and circumstances that may affect its determination of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The Company also considers recent valuations of its reporting units, including the difference between the most recent fair value estimate and the carrying amount.

The Company also considers its most recent valuations of its reporting units, including the difference between the most recent fair value estimate and the carrying amount.

Each of these factors is considered by management in reaching its conclusion about whether a quantitative goodwill impairment test is necessary to estimate the fair value of its reporting units.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

If the Company concludes that conducting a quantitative assessment is required, it performs a quantitative goodwill impairment test.

When conducting a quantitative goodwill impairment test, the Company determines the fair value of the reporting unit being evaluated utilizing a combination of three valuation techniques:

If the Company concludes that conducting a quantitative assessment is required, the Company determines the fair value of the reporting unit being evaluated utilizing a combination of three valuation techniques:

discounted cash flow (income approach), market comparable method (market approach) and market capitalization (direct market data method).

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In addition to the events and circumstances that the Company considers above in its qualitative analysis for potential goodwill impairment, the Company also considers legal, regulatory and contractual factors that could affect the fair value or carrying amount of the Company's indefinite-lived intangible assets.

The Company also considers recent valuations of its indefinite-lived intangible assets, including the difference between the most recent fair value estimates and the carrying amounts.

The Company also considers its most recent valuations of its indefinite-lived intangible assets, including the difference between the most recent fair value estimates and the carrying amounts.

These factors are all considered by management in reaching its conclusion about whether it is more likely than not that the fair values of the indefinite-lived intangible assets are less than the carrying values.

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dollars are deferred as a component of accumulated other comprehensive income (loss) ("AOCI") in the consolidated statement of shareholders' equity.

The impact of net foreign currency transactions was an approximate loss of $ 0.9 million for the year ended December 31, 2021, and approximate gains of $ 0.6 million and $ 0.3 million for the years ended December 31, 2020 and 2019, respectively, and are included in other expense, net in the accompanying consolidated statement of operations.

The impact of net foreign currency transactions was a gain of $ 0.7 million for the year ended December 31, 2022, a loss of $ 0.9 million for the year ended December 31, 2021 and a gain of $ 0.6 million for the year ended 2020, and are included in other expense, net in the accompanying consolidated statement of operations.

Derivative Financial Instruments.

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• Level 3 inputs are unobservable inputs for the asset or liability.

Valuation of the Company's interest rate swaps and cross-currency swaps are based on the income approach, which uses observable inputs such as interest rate yield curves and forward currency exchange rates, as applicable.

Valuation of the Company's cross-currency swaps are based on the income approach, which uses observable inputs such as interest rate yield curves and forward currency exchange rates, as applicable.

The carrying value of financial instruments reported in the balance sheet for current assets and current liabilities approximates fair value due to the short maturity of these instruments.

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Other comprehensive income (loss) is comprised of foreign currency translation adjustments, amortization of prior service costs and unrecognized gains and losses in actuarial assumptions for pension and postretirement plans and changes in unrealized gains and losses on derivative instruments.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2022 Acquisitions

On December 17, 2021, the Company acquired Omega Plastics ("Omega"), which specializes in manufacturing custom components and devices for drug delivery, diagnostic and orthopedic medical applications, as well as components for industrial applications, for an aggregate amount of approximately $ 22.5 million, net of cash acquired.

Omega, which is reported in the Company's Packaging segment, is located in Clinton Township, Michigan and historically generated approximately $ 18 million in annual revenue.

On December 5, 2021, the Company acquired TFI Aerospace ("TFI"), a manufacturer and supplier of specialty fasteners used in a variety of applications, predominately for the aerospace end market, for an aggregate amount of approximately $ 11.8 million, with additional contingent consideration ranging from zero to approximately $ 12.0 million to be paid based on 2023 and 2024 earnings per the purchase agreement.

The Company recorded $ 3.7 million as its best estimate of the additional contingent consideration, with such estimate based on Level 3 inputs under the fair value hierarchy, as defined.

TFI, which is reported in the Company's Aerospace segment, is located near Toronto, Canada and historically generated approximately $ 6 million in annual revenue.

2020 Acquisitions

On December 15, 2020, the Company acquired Affaba & Ferrari Srl ("Affaba & Ferrari"), which specializes in the design, development and manufacture of precision caps and closures for food & beverage and industrial product applications, for an aggregate amount of approximately $ 98.4 million, net of cash acquired.

The fair value of assets acquired and liabilities assumed included approximately $ 49.1 million of goodwill, $ 35.1 million of intangible assets, $ 9.4 million of net working capital, $ 17.4 million of property and equipment, and $ 12.6 million of net deferred tax liabilities.

Affaba & Ferrari, which is reported in the Company's Packaging segment, operates out of a highly automated manufacturing facility and support office located in Borgo San Giovanni, Italy and historically generated approximately $ 34 million in annual revenue.

On April 17, 2020, the Company acquired the Rapak® brand, including certain bag-in-box product lines and assets ("Rapak") for an aggregate amount of approximately $ 11.4 million.

Rapak, which is reported in the Company's Packaging segment, has manufacturing locations in Indiana, California and Illinois, and historically generated approximately $ 30 million in annual revenue.

On February 27, 2020, the Company acquired RSA Engineered Products ("RSA"), a manufacturer of complex, highly-engineered and proprietary ducting, connectors and related products for air management systems used in aerospace and defense applications, for an aggregate amount of approximately $ 83.7 million, net of cash acquired.

The fair value of assets acquired and liabilities assumed included approximately $ 43.3 million of goodwill, $ 36.9 million of intangible assets, $ 10.1 million of net working capital, $ 2.1 million of property and equipment, and $ 8.7 million of net deferred tax liabilities.

RSA, which is reported in the Company's Aerospace segment, is located in Simi Valley, California and historically generated approximately $ 30 million in annual revenue.

On February 28, 2022, the Company acquired Intertech Plastics LLC and related companies (collectively, "Intertech") for a purchase price of $ 64.1 million, net of cash acquired.

Intertech is a manufacturer of custom injection molded products used in medical applications, as well as products and assemblies for consumer and industrial applications.

The fair value of assets acquired and liabilities assumed included $ 32.4 million of goodwill, $ 13.5 million of intangible assets, $ 12.2 million of property and equipment and $ 6.0 million of net working capital.

Intertech, which is reported in the Company's Packaging segment, has two manufacturing facilities located in the Denver, Colorado, area and historically generated $ 32 million in annual revenue.

2021 Acquisitions

In April 2019, the Company acquired Taplast S.p.A.

("Taplast"), a designer and manufacturer of dispensers, closures and containers for the beauty and personal care, household, and food and beverage packaging end markets, for an aggregate amount of approximately $ 44.7 million, net of cash acquired.

With manufacturing locations in both Italy and Slovakia, Taplast serves end markets in Europe and North America and historically generated approximately $ 32 million in annual revenue.

Taplast is reported in the Company's Packaging segment.

In January 2019, the Company acquired Plastic Srl, a manufacturer of single-bodied and assembled polymeric caps and closures for use in home care products, for an aggregate amount of approximately $ 22.4 million, net of cash acquired.

Located in Italy, Plastic Srl serves the home care market throughout Italy and other European countries and historically generated approximately $ 12 million in annual revenue.

Plastic Srl is reported in the Company's Packaging segment.

Discontinued Operations

On December 20, 2019, the Company completed the sale of its Lamons division ("Lamons") to two wholly-owned subsidiaries of an investment fund sponsored by First Reserve, pursuant to an Asset and Stock Purchase Agreement dated as of November 1, 2019 (the “Purchase Agreement”), for a purchase price of $ 136.8 million.

Omega, which is reported in the Company's Packaging segment, is located in Clinton Township, Michigan, and historically generated $ 18 million in annual revenue.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company recognized net cash proceeds of approximately $ 112.7 million, which represented the purchase price, less estimated tax payments of approximately $ 20.9 million, transaction costs of approximately $ 3.2 million.

The Company recorded a pre-tax gain on sale of approximately $ 38.9 million, which includes the recognition of previously deferred non-cash foreign currency translation losses of approximately $ 12.4 million.

The Company determined that Lamons met the criteria to be classified as a discontinued operation.

As a result, the historical results for Lamons are reported in the accompanying consolidated statement of operations as a discontinued operation.

Results of discontinued operations are summarized as follows (dollars in thousands):

Year ended December 31,

Net sales $ 182,590

Cost of sales ( 138,100 )

Gross profit 44,490

Selling, general and administrative expenses ( 32,920 )

Net gain on dispositions of assets 38,900

Operating profit 50,470

Other income (expense), net ( 30 )

Other expense, net ( 30 )

Income from discontinued operations, before income taxes 50,440

Income tax expense ( 13,760 )

Income from discontinued operations, net of tax $ 36,680

On December 5, 2021, the Company acquired TFI Aerospace ("TFI"), a manufacturer and supplier of specialty fasteners used in a variety of applications, predominately for the aerospace end market, for an aggregate amount of $ 11.8 million, with additional contingent consideration ranging from zero to $ 12.0 million to be paid based future earnings as defined in the purchase agreement.

On the acquisition date, the Company recorded $ 3.7 million as its best estimate of fair value of the additional contingent consideration, with such estimate based on Level 3 inputs under the fair value hierarchy, as defined.

TFI, which is reported in the Company's Aerospace segment, is located near Toronto, Canada and historically generated $ 6 million in annual revenue.

Based on a detailed fourth quarter 2022 review of TFI's updated forecasted operating results, the Company determined the likelihood of the contingent consideration being paid was remote, and therefore reversed the liability, with such adjustment being included in other income (expense), net, in the accompanying consolidated statement of operations

2020 Acquisitions

The fair value of assets acquired and liabilities assumed included $ 49.1 million of goodwill, $ 35.1 million of intangible assets, $ 9.4 million of net working capital, $ 17.4 million of property and equipment, and $ 12.6 million of net deferred tax liabilities.

On April 17, 2020, the Company acquired the Rapak® brand, including certain bag-in-box product lines and assets ("Rapak") for an aggregate amount of $ 11.4 million.

Rapak, which is reported in the Company's Packaging segment, has manufacturing locations in Indiana, California and Illinois, and historically generated $ 30 million in annual revenue.

The fair value of assets acquired and liabilities assumed included $ 43.3 million of goodwill, $ 36.9 million of intangible assets, $ 10.1 million of net working capital, $ 2.1 million of property and equipment, and $ 8.7 million of net deferred tax liabilities.

RSA, which is reported in the Company's Aerospace segment, is located in Simi Valley, California and historically generated $ 30 million in annual revenue.

Realignment Actions

2022 Realignment Actions

During 2022, the Company incurred realignment charges in its Packaging segment related to adjusting its labor force in facilities with lower demand, finalizing its Indianapolis, Indiana, facility consolidation, costs incurred to reorganize its benefit plans in the United Kingdom, and for costs incurred as part of the Company's start-up and relocation to a new, larger facility in New Albany, Ohio.

The Company also completed the Aerospace segment footprint realignment which began in 2021.

In connection with these actions, the Company recorded pre-tax realignment charges of $ 5.0 million, of which $ 2.7 million related to facility move and consolidation costs and $ 2.3 million was for employee-related costs.

During 2022, $ 2.8 million of these charges were included in cost of sales, $ 2.0 million of these charges were included in selling, general and administrative expenses and $ 0.2 million of these charges were included in net gain (loss) on dispositions of assets in the accompanying consolidated statement of income.

2021 Realignment Actions

During 2021, the Company executed certain realignment actions in response to reductions in current and expected future end market demand.

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In addition, the Company also reorganized its corporate office legal and finance groups.

The Company recorded pre-tax realignment charges of approximately $ 9.7 million, of which approximately $ 3.5 million related to facility consolidations and approximately $ 6.2 million were for employee separation costs.

As of December 31, 2021, approximately $ 2.4 million of the employee separation costs had been paid.

During 2021, approximately $ 4.1 million of these charges were included in cost of sales and approximately $ 5.6 million were included in selling, general and administrative expenses, respectively, in the accompanying consolidated statement of operations.

2020 Realignment Actions

During 2020, the Company executed certain realignment actions, primarily in its Aerospace and Specialty Products segments, in response to reductions in current and expected future end-market demand.

The Company recorded non-cash charges of approximately $ 13.8 million related to inventory reductions, primarily as a result of a strategic decision in its Arrow Engine division to narrow its product line focus.

The Company also recorded non-cash charges of approximately $ 2.3 million related to certain production equipment removed from service given reduced demand levels.

In addition, the Company reduced its employment levels given lower customer demand, incurring approximately $ 3.8 million in severance charges, of which approximately $ 3.7 million was paid by December 31, 2020.

During 2020, approximately $ 17.1 million of these charges were included in cost of sales and approximately $ 2.8 million were included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

The Company recorded pre-tax realignment charges of $ 9.7 million, of which $ 3.5 million related to facility consolidations and $ 6.2 million were for employee separation costs.

As of December 31, 2021, $ 2.4 million of the employee separation costs had been paid.

During 2021, $ 4.1 million of these charges were included in cost of sales and $ 5.6 million were included in selling, general and administrative expenses, respectively, in the accompanying consolidated statement of operations.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2020 Realignment Actions

During 2020, the Company executed certain realignment actions, primarily in its Aerospace and Specialty Products segments, in response to reductions in current and expected future end-market demand.

The Company recorded non-cash charges of $ 13.8 million related to inventory reductions, primarily as a result of a strategic decision in its Arrow Engine division to narrow its product line focus.

The Company also recorded non-cash charges of $ 2.3 million related to certain production equipment removed from service given reduced demand levels.

In addition, the Company reduced its employment levels given lower customer demand, incurring $ 3.8 million in severance charges, of which $ 3.7 million was paid by December 31, 2020.

During 2020, $ 17.1 million of these charges were included in cost of sales and $ 2.8 million were included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

The following table presents the Company’s disaggregated net sales by primary market served (dollars in thousands):

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Total net sales $ 883,830 $ 857,110 $ 769,970

The Company’s Packaging segment earns revenues from the consumer products (comprised of the beauty and personal care, home care, food and beverage, pharmaceutical and nutraceutical submarkets) and industrial markets.

The Company’s Packaging segment earns revenues from the consumer products (comprised of the beauty and personal care, food and beverage, home care, pharmaceutical, nutraceutical and medical submarkets) and industrial markets.

The Aerospace segment earns revenues from the aerospace & defense market (comprised of commercial, regional and business jet and military submarkets).

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Cash - restricted (a)

10,950 11,160

Total cash and cash equivalents $ 112,090 $ 140,740

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Aerospace Fasteners and Aerospace Engineered Products.

Upon completion of the quantitative goodwill impairment tests, the Company determined that the carrying values of the Aerospace Fasteners and Aerospace Engineered Products reporting units exceeded their fair values, resulting in goodwill impairment charges of approximately $ 70.8 million in its Aerospace Fasteners reporting unit and approximately $ 56.0 million in its Aerospace Engineered Products reporting unit.

In the first quarter of 2020, the Company began reporting its machined components operations within the Aerospace segment.

These operations were previously reported in the Company's Specialty Products segment.

As a result of the reporting structure change, goodwill of approximately $ 12.7 million was reassigned from the Specialty Products segment to the Aerospace segment.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Upon completion of the quantitative goodwill impairment tests, the Company determined that the carrying values of the Aerospace Fasteners and Aerospace Engineered Products reporting units exceeded their fair values, resulting in goodwill impairment charges of $ 70.8 million in its Aerospace Fasteners reporting unit and $ 56.0 million in its Aerospace Engineered Products reporting unit.

Changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021 are as follows (dollars in thousands):

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Goodwill from acquisitions 10,550 7,220 — 17,770

Goodwill reassigned in segment realignment — 12,740 ( 12,740 ) —

Impairment charge — ( 126,840 ) — ( 126,840 )

Foreign currency translation and other ( 6,370 ) 120 — ( 6,250 )

9 unchanged sentences

Significant management assumptions used under the relief-from-royalty method reflected the Company's current assessment of the risks and uncertainties associated with the aerospace industry.

Upon completion of the quantitative impairment test, the Company determined that certain of the Company's aerospace-related trade names had carrying values that exceeded their fair values, and therefore recorded impairment charges of approximately $ 7.8 million.

Upon completion of the quantitative impairment test, the Company determined that certain of its aerospace-related trade names had carrying values that exceeded their fair values, and therefore recorded impairment charges of $ 7.8 million.

TRIMAS CORPORATION

65 unchanged sentences

4.125% Senior Notes due April 2029 $ 400,000 $ 400,000

4.875% Senior Notes due October 2025 — 300,000

Credit Agreement — 50,450

Debt issuance costs ( 5,270 ) ( 6,180 )

2 unchanged sentences

In March 2021, the Company issued $ 400.0 million aggregate principal amount of 4.125 % senior notes outstanding due April 15, 2029 ("2029 Senior Notes") at par value in a private placement under Rule 144A of the Securities Act of 1933, as amended ("Securities Act").

The Company used the proceeds from the 2029 Senior Notes offering to pay fees and expenses of approximately $ 5.1 million related to the offering and pay fees and expenses of $ 1.1 million related to amending its existing credit agreement.

The Company used the proceeds from the 2029 Senior Notes offering to pay fees and expenses of $ 5.1 million related to the offering and pay fees and expenses of $ 1.1 million related to amending its existing credit agreement.

In connection with the issuance, the Company completed the redemption of its outstanding 4.875 % senior notes due October 15, 2025 ("2025 Senior Notes"), paying $ 300.0 million to retire the outstanding principal amount plus $ 7.3 million as a redemption premium.

The remaining cash proceeds from the 2029 Senior Notes were used for general corporate purposes, including repaying all outstanding revolving credit facility borrowings.

The $ 5.1 million of fees and expenses related to the 2029 Senior Notes were capitalized as debt issuance costs, while the $ 7.3 million redemption premium, as well as approximately $ 3.0 million of unamortized debt issuance costs associated with the 2025 Senior Notes, were included in debt financing and related expenses in the accompanying consolidated statement of operations.

The 2029 Senior Notes accrue interest at a rate of 4.125 % per annum, payable semi-annually in arrears on April 15 and October 15, commencing on October 15, 2021.

The $ 5.1 million of fees and expenses related to the 2029 Senior Notes were capitalized as debt issuance costs, while the $ 7.3 million redemption premium, as well as $ 3.0 million of unamortized debt issuance costs associated with the 2025 Senior Notes, were included in debt financing and related expenses in the accompanying consolidated statement of operations.

The 2029 Senior Notes accrue interest at a rate of 4.125 % per annum, payable semi-annually in arrears on April 15 and October 15.

The payment of principal and interest is jointly and severally guaranteed, on a senior unsecured basis, by certain subsidiaries of the Company.

14 unchanged sentences

In March 2021, the Company amended its existing credit agreement ("Credit Agreement") in connection with the issuance of the 2029 Senior Notes to extend the maturity date.

The Company incurred fees and expenses of approximately $ 1.1 million related to the amendment, all of which was capitalized as debt issuance costs.

The Company also recorded approximately $ 0.2 million of non-cash expense related to the write-off of previously capitalized deferred financing fees.

Below is a summary of key terms under the Credit Agreement as of December 31, 2021, compared to the key terms prior to the amendment (showing gross availability):

Instrument Amount

($ in millions) Maturity

Date Interest Rate

Credit Agreement (as amended)

Senior secured revolving credit facility $ 300.0 3/29/2026 LIBOR (a) plus 1.500 % (b)

Credit Agreement (prior to amending)

Senior secured revolving credit facility $ 300.0 9/20/2022 LIBOR (a) plus 1.500 % (b)

__________________________

(a) London Interbank Offered Rate ("LIBOR")

(b) The interest rate spread is based upon the leverage ratio, as defined, as of the most recent determination date.

The Company incurred fees and expenses of $ 1.1 million related to the amendment, all of which was capitalized as debt issuance costs.

The Company also recorded $ 0.2 million of non-cash expense related to the write-off of previously capitalized deferred financing fees.

The Credit Agreement consists of a $ 300.0 million senior secured revolving credit facility, which permits borrowings denominated in specific foreign currencies, subject to a $ 125.0 million sub limit, maturing on March 29, 2026 .

In November 2021, the Company amended the Credit Agreement to replace LIBOR with a benchmark interest rate determined based on the currency denomination of borrowings.

Effective January 1, 2022, the amendment replaced the reference rate terms for U.S.

dollar LIBOR borrowings to the Secured Overnight Financing Rate ("SOFR"), British pound sterling LIBOR borrowings to the Sterling Overnight Index Average ("SONIA") and Euro LIBOR borrowings to the Euro Short Term Rate ("ESTR"), all plus a spread of 1.50 %.

The interest rate spread is based upon the leverage ratio, as defined, as of the most recent determination date.

The Credit Agreement also provides incremental revolving credit facility commitments in an amount not to exceed the greater of $ 200.0 million and an amount such that, after giving effect to such incremental commitments and the incurrence of any other indebtedness substantially simultaneously with the making of such commitments, the senior secured net leverage ratio, as defined, is no greater than 3.00 to 1.00.

1 unchanged sentence

The Company's revolving credit facility allows for the issuance of letters of credit, not to exceed $ 40.0 million in aggregate.

The Company places cash on deposit with a financial institution to be held as cash collateral for the Company's outstanding letters of credit;

therefore, as of December 31, 2021 and December 31, 2020, the Company had no letters of credit issued against its revolving credit facility.

As of December 31, 2021 the Company placed cash on deposit with a financial institution to be held as cash collateral for the Company's outstanding letters of credit;

effectively, as of December 31, 2021, the Company had no letters of credit issued against its revolving credit facility.

See Note 7, " Cash and Cash Equivalents ," for further information on its cash deposits.

At December 31, 2022, the Company had no amounts outstanding under its revolving credit facility and had $ 293.9 million potentially available after giving effect to $ 6.1 million of letters of credit issued and outstanding.

At December 31, 2021, the Company had no amounts outstanding under its revolving credit facility and had $ 300.0 million potentially available.

At December 31, 2020, the Company had $ 50.5 million amounts outstanding under its revolving credit facility and had $ 249.5 million potentially available.

The Company's borrowing capacity was not reduced by leverage restrictions contained in the Credit Agreement as of December 31, 2022 and December 31, 2021.

The Company previously drew $ 150 million on its revolving credit facility in March 2020 to defend against potential uncertainty or liquidity issues in the financial markets as a result of the COVID-19 pandemic, but repaid this amount during second quarter 2020.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The debt under the Credit Agreement is an obligation of the Company and certain of its domestic subsidiaries and is secured by substantially all of the assets of such parties.

3 unchanged sentences

At December 31, 2022, the Company was in compliance with the financial covenants contained in the Credit Agreement.

In November 2021, the Company amended the Credit Agreement to replace LIBOR with a benchmark interest rate determined based on the currency denomination of borrowings, effective January 1, 2022.

Other Revolving Loan Facility

2 unchanged sentences

The facility is guaranteed by TriMas Corporation.

There are no borrowings outstanding on this loan facility as of December 31, 2021.

There were no borrowings outstanding on this loan facility as of December 31, 2022 or 2021.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Long-term Debt Maturities

10 unchanged sentences

4.125% Senior Notes due April 2029 $ 400,000 $ 344,000 $ 400,000 $ 399,000

4.875% Senior Notes due October 2025 — — 300,000 305,630

Revolving credit facility — — 50,450 50,450

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Debt Issuance Costs

1 unchanged sentence

These amounts consisted primarily of legal, accounting and other transaction advisory fees as well as facility fees paid to the lenders.

Amortization expense for these items was approximately $ 1.0 million, $ 1.2 million and $ 1.1 million in 2021, 2020 and 2019, respectively, and is included in interest expense in the accompanying consolidated statement of operations.

Amortization expense for these items was $ 0.9 million, $ 1.0 million and $ 1.2 million in 2022, 2021 and 2020, respectively, and is included in interest expense in the accompanying consolidated statement of operations.

Derivative Instruments

Derivatives Designated as Hedging Instruments

The Company uses cross-currency swap contracts to hedge its net investment in Euro-denominated assets against future volatility in the exchange rate between the U.S.

In July 2022, the Company entered into cross-currency swap agreements to hedge its net investment in Euro-denominated assets against future volatility in the exchange rate between the U.S.

dollar and the Euro.

1 unchanged sentence

dollar-based long-term debt into Euro-denominated long-term debt.

At inception, the Company designates its cross-currency swaps as net investment hedges.

As of December 31, 2021, the Company had cross-currency swap agreements at notional amounts totaling $ 250.0 million, which declines to $ 25.0 million over various contract periods ending between April 15, 2022 and April 15, 2027.

Under the terms of the agreements, the Company is to receive net interest payments at a fixed rate ranging from approximately 0.8 % to 2.9 % of the notional amounts.

The agreements have notional amounts totaling $ 150.0 million, which decline to $ 75.0 million over contract periods ending on October 15, 2023 and April 15, 2024.

Under the terms of the agreements, the Company is to receive net interest payments at fixed rates of approximately 2.4 % to 2.6 % of the notional amounts.

At inception, the cross-currency swaps were designated as net investment hedges.

In July 2022, immediately prior to entering into the new cross-currency swap agreements, the Company terminated its existing cross-currency swap agreements, de-designating the swaps as net investment hedges and receiving $ 26.2 million of cash.

The cross-currency swap agreements had notional amounts totaling $ 250.0 million, which declined to $ 25.0 million over various contract periods ending between October 15, 2023 and October 15, 2027.

Under the terms of the agreements, the Company was to receive net interest payments at fixed rates ranging from approximately 0.8 % to 2.9 % of the notional amounts.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2022 and 2021, the fair value carrying amount of the Company's derivatives designated as hedging instruments are recorded as follows (dollars in thousands):

4 unchanged sentences

Cross-currency swaps Other long-term liabilities ( 7,090 ) —

The following table summarizes the income (loss) recognized in AOCI on derivative contracts designated as hedging instruments as of December 31, 2021 and 2020, and the amounts reclassified from AOCI into earnings for the years ended December 31, 2021, 2020 and 2019 (dollars in thousands):

The following table summarizes the income recognized in AOCI on derivative contracts designated as hedging instruments as of December 31, 2022 and 2021, and the amounts reclassified from AOCI into earnings for the years ended December 31, 2022, 2021 and 2020 (dollars in thousands):

Amount of Income (Loss) Recognized

9 unchanged sentences

Derivatives Not Designated as Hedging Instruments

As of December 31, 2021, the Company was party to foreign currency exchange forward contracts to economically hedge changes in foreign currency rates with notional amounts of approximately $ 131.8 million.

As of December 31, 2022, the Company was party to foreign currency exchange forward contracts to economically hedge changes in foreign currency rates with notional amounts of $ 127.2 million.

The Company uses foreign exchange contracts to mitigate the risk associated with fluctuations in currency rates impacting cash flows related to certain of its receivables, payables and intercompany transactions denominated in foreign currencies.

The foreign exchange contracts primarily mitigate currency exposures between the U.S.

dollar and the Euro, Canadian dollar, Chinese yuan, and the Mexican peso, as well as between the Euro and British pound, and have various settlement dates through December 2022.

These contracts are not designated as hedging instruments;

dollar and the Euro, Canadian dollar, Chinese yuan, and the Mexican peso, as well as between the Euro and British pound, and have various settlement dates through June 2023.

These contracts are not designated as hedge instruments;

therefore, gains and losses on these contracts are recognized each period directly into the consolidated statement of operations.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the effects of derivatives not designated as hedging instruments on the Company's consolidated statement of operations (dollars in thousands):

6 unchanged sentences

Foreign exchange contracts Other income (expense), net $ 1,540 $ 7,130 $ ( 470 )

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value of Derivatives

The fair value of the Company's derivative instruments are estimated using an income approach based on valuation techniques to convert future amounts to a single, discounted amount.

Estimates of the fair value of the Company's cross-currency swaps use observable inputs such as interest rate yield curves and forward currency exchange rates.

Estimates of the fair value of the Company's cross-currency swaps and foreign exchange contracts use observable inputs such as interest rate yield curves and forward currency exchange rates.

Fair value measurements and the fair value hierarchy level for the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021 are as follows (dollars in thousands):

17 unchanged sentences

Total lease cost $ 13,910 $ 10,970 $ 9,410

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Maturities of lease liabilities are as follows (dollars in thousands):

7 unchanged sentences

Liabilities for exited lease facilities are included in accrued liabilities and other long-term liabilities in the accompanying consolidated balance sheet.

The weighted-average remaining term of the Company's operating leases as of December 31, 2021 is approximately 7.5 years.

The weighted-average discount rate as of December 31, 2021 is approximately 3.8 %.

Cash paid for amounts included in the measurement of operating lease liabilities was approximately $ 7.9 million, $ 7.9 million and $ 6.4 million during 2021, 2020 and 2019 respectively, and is included in cash flows provided by operating activities in the consolidated statement of cash flows.

Right-of-use assets obtained in exchange for lease liabilities were approximately $ 19.6 million and $ 14.0 million during 2021 and 2020, respectively.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The weighted-average remaining term of the Company's operating leases as of December 31, 2022 is 6.7 years.

The weighted-average discount rate as of December 31, 2022 is 3.7 %.

Cash paid for amounts included in the measurement of operating lease liabilities was $ 9.9 million, $ 7.9 million and $ 7.9 million during 2022, 2021 and 2020 respectively, and is included in cash flows provided by operating activities in the consolidated statement of cash flows.

Right-of-use assets obtained in exchange for lease liabilities were $ 5.8 million and $ 19.6 million during 2022 and 2021, respectively.

Other Long-term Liabilities

13 unchanged sentences

Future events, including those relating to climate change or greenhouse gas regulation, could require the Company to incur expenses related to the modification or curtailment of operations, installation of pollution control equipment or investigation and cleanup of contaminated sites.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2021, the Company was a party to 389 pending cases involving an aggregate of 4,754 claimants primarily alleging personal injury from exposure to asbestos containing materials formerly used in gaskets (both encapsulated and otherwise) manufactured or distributed by Lamons and certain other related subsidiaries for use primarily in the petrochemical refining and exploration industries.

As of December 31, 2022, the Company was a party to 426 pending cases involving an aggregate of 4,798 claimants primarily alleging personal injury from exposure to asbestos containing materials formerly used in gaskets (both encapsulated and otherwise) manufactured or distributed by its former Lamons division and certain other related subsidiaries for use primarily in the petrochemical refining and exploration industries.

The following chart summarizes the number of claims, number of claims filed, number of claims dismissed, number of claims settled, the average settlement amount per claim and the total defense costs, at the applicable date and for the applicable periods:

8 unchanged sentences

Fiscal year ended December 31, 2020 4,759 219 287 36 4,655 $ 18,314 $ 2,130,000

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In addition, the Company acquired various companies to distribute its products that had distributed gaskets of other manufacturers prior to acquisition.

5 unchanged sentences

Of the 4,798 claims pending at December 31, 2022, 45 set forth specific amounts of damages (other than those stating the statutory minimum or maximum).

At December 31, 2021, of the 27 claims that set forth specific amounts, there was one claim seeking more than $5 million for punitive damages.

At December 31, 2022, of the 45 claims that set forth specific amounts, there was no claim seeking more than $5 million for punitive damages.

Below is a breakdown of the compensatory damages sought for those claims seeking specific amounts:

2 unchanged sentences

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 25 years ago, have been approximately $ 10.6 million.

Total settlement costs (exclusive of defense costs) for all such cases, some of which were filed over 25 years ago, have been $ 12.5 million.

All relief sought in the asbestos cases is monetary in nature.

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.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

There has been significant volatility in the historical number of claim filings and costs to defend, with previous claim counts and spend levels much higher than current levels.

Management believes this volatility was associated more with tort reform, plaintiff practices and state-specific legal dockets than the Company’s underlying asbestos-related exposures.

From 2017 to 2019, however, the number of new claim filings, and costs to defend, had become much more consistent.

The higher degree of consistency in census data and spend levels, as well as lower claim activity levels and an evolving defense strategy, has allowed the Company to more effectively and efficiently manage claims, making process or local counsel arrangement improvements where possible.

Given the consistency of activity over a multi-year period, the Company believes a trend may have formed where it could be possible to reasonably estimate its future cash exposure for all asbestos-related activity with an adequate level of precision.

As such, the Company commissioned an actuary to help evaluate the nature and predictability of its asbestos-related costs, and provide an actuarial range of estimates of future exposures.

Based upon its review of the actuarial study, which was completed in June 2020 using data as of December 31, 2019 and which projected spend levels through a terminal year of 2064, the Company affirmed its belief that it now has the ability to reasonably estimate its future asbestos-related exposures for pending as well as unknown future claims.

During the second quarter of 2020, the Company elected to change its method of accounting for asbestos-related defense costs from accruing for probable and reasonably estimable defense costs associated with known claims expected to settle to accrue for all future defense costs for both known and unknown claims, which the Company now believes are reasonably estimable.

2 unchanged sentences

Following the change in accounting estimate, the Company’s liability for asbestos-related claims will be based on a study from the Company’s third-party actuary, the Company's review of the study, as well as the Company’s own review of asbestos claims and claim resolution activity.

After completing its study in the second quarter of 2020, the Company recorded a non-cash, pre-tax charge of $ 23.4 million, which is included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

After completing its study in the second quarter of 2020, the Company recorded a non-cash, pre-tax charge of $ 23.4 million.

In 2021, the Company commissioned its actuary to update the asbestos study based on data as of September 30, 2021.

The Company recorded a non-cash, pre-tax charge of $ 1.5 million to increase the liability estimate to $ 28.2 million, at the low-end of the range of the 2021 study.

These pre-tax charges for 2020 and 2021 are included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

In 2022, the Company commissioned its actuary to update the asbestos study based on data as of September 30, 2022, which yielded a range of possible future liability of $ 29.6 million to $ 39.5 million.

2 unchanged sentences

As of December 31, 2022, the Company’s total asbestos-related liability is $ 29.1 million, and is included in accrued liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheet.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s primary insurance, which covered approximately 40 % of historical costs related to settlement and defense of asbestos litigation, expired in November 2018, upon which the Company became solely responsible for defense costs and indemnity payments.

6 unchanged sentences

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.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Employee Benefit Plans

2 unchanged sentences

The plan contains both contributory and noncontributory profit sharing arrangements, as defined.

Aggregate charges included in the accompanying consolidated statement of operations under this plan for both continuing and discontinued operations were approximately $ 3.4 million in both 2021 and 2020 and $ 4.6 million in 2019.

Aggregate charges included in the accompanying consolidated statement of operations under this plan were $ 3.7 million in 2022 and $ 3.4 million in each of 2021 and 2020, respectively.

Certain of the Company's non-U.S.

7 unchanged sentences

Expected return on plan assets ( 1,590 ) ( 1,530 ) ( 1,450 )

Settlements and curtailments 150 — —

Amortization of net loss 570 910 890

Net periodic benefit expense $ 710 $ 1,460 $ 1,600

The service cost component of net periodic benefit expense is recorded in cost of goods sold and selling, general and administrative expenses, while non-service cost components are recorded in other expense, net in the accompanying consolidated statement of operations.

The service cost component of net periodic benefit expense is recorded in cost of goods sold and selling, general and administrative expenses, while non-service cost components are recorded in other income (expense), net in the accompanying consolidated statement of operations.

During the 2022, the Company recorded a non-cash curtailment expense of $ 0.2 million, as it transitioned certain active employees previously participating in a defined benefit plan in the United Kingdom to a defined contribution plan, thereby eliminating future service cost accruals for all employees under this defined benefit plan.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Actuarial valuations of the Company's defined benefit pension plans were prepared as of December 31, 2022, 2021 and 2020.

26 unchanged sentences

Participant contributions ( 10 ) ( 50 )

Actuarial gain (loss) (a)

3,290 ( 2,420 )

Actuarial gain (a)

Benefit payments 1,310 1,840

11 unchanged sentences

__________________________

(a) The actuarial gain for the year ended December 31, 2021 was primarily due to an increase in the discount rate utilized in measuring the projected benefit obligations as well as other assumptions and experience gains.

The actuarial loss for the year ended December 31, 2020 was primarily due to a decrease in the discount rate utilized in measuring the projected benefit obligations, partially offset by other assumptions and experience gains.

(a) The actuarial gain for the year ended December 31, 2022 was primarily due to an increase in the discount rate utilized in measuring the projected benefit obligations, partially offset by experience losses.

The actuarial gain for the year ended December 31, 2021 was primarily due to an increase in the discount rate utilized in measuring the projected benefit obligations as well as other assumptions and experience gains.

Pension Benefit

29 unchanged sentences

50 basis point decrease N/A $ 160

The Company expects to make contributions of approximately $ 1.6 million to fund its pension plans during 2022.

The Company expects to make contributions of $ 1.2 million to fund its pension plans during 2023.

The Company's overall investment goal is to provide for capital growth with a moderate level of volatility by investing assets in targeted allocation ranges.

47 unchanged sentences

TriMas Corporation Director Retainer Share Election Program

Stock Options

The Company did no t grant any stock options during 2021, 2020 and 2019.

Information related to stock options as of and for the year ended December 31, 2021 is as follows:

Stock Options Weighted Average

Option Price Average

Contractual Life (Years) Aggregate

Intrinsic Value

Outstanding at January 1, 2021 150,000 $ 17.87

Exercised ( 150,000 ) 17.87

Cancelled — —

Outstanding at December 31, 2021 — $ — — $ —

As of December 31, 2021, there were no stock options outstanding under the Company's long-term equity incentive plans.

No stock options vested during each of 2021 and 2020, and 50,000 stock options vested during 2019.

The Company recognized no stock-based compensation expense related to stock options during each of 2021 and 2020, and approximately $ 0.1 million of stock-based compensation expense related to stock options during 2019.

The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

Restricted Stock Units

The Company awarded the following restricted stock units ("RSUs") during 2022, 2021, and 2020:

2 unchanged sentences

• issued 337 , 1,792 and 3,673 RSUs, respectively, related to director fee deferrals as certain of the Company's directors elected to defer all or a portion of their directors fees and to receive the amount in Company common stock at a future date.

The Company awarded the following RSUs during 2021:

• issued 49 RSUs to certain employees related to dividend equivalent rights on existing equity awards.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company awarded the following RSUs during 2022 and 2021:

• issued 260 and 49 RSUs, respectively, to certain employees related to dividend equivalent rights on existing equity awards.

The Company awarded the following RSUs during 2020:

9 unchanged sentences

The Company awarded 72,962 and 113,146 of similar performance-based RSUs in 2021 and 2020, respectively.

For similar performance-based RSUs awarded in 2018, the Company attained 126.2 % of the target on a weighted average basis, resulting in an increase of 25,993 shares during 2021.

For similar performance-based RSUs awarded in 2019, the Company attained 65.4 % of the target on a weighted average basis, resulting in a decrease of 24,975 shares during 2022.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During 2020, the Company awarded 87,034 performance-based RSUs to certain key divisional employees which vest three years from the grant date as long as the employee remains with the Company.

14 unchanged sentences

Outstanding at December 31, 2022 719,449 $ 28.40 0.9 $ 19,957,515

As of December 31, 2021, there was approximately $ 6.3 million of unrecognized compensation cost related to unvested restricted shares that is expected to be recorded over a weighted average period of 1.8 years.

The Company recognized stock-based compensation expense related to restricted shares of approximately $ 9.5 million, $ 8.2 million and $ 5.7 million in 2021, 2020 and 2019, respectively.

As of December 31, 2022, there was $ 6.2 million of unrecognized compensation cost related to unvested restricted shares that is expected to be recorded over a weighted average period of 1.6 years.

The Company recognized stock-based compensation expense related to restricted shares of $ 9.8 million, $ 9.5 million and $ 8.2 million in 2022, 2021 and 2020, respectively.

The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying statement of operations.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Earnings per Share

10 unchanged sentences

The initial authorization, approved in November 2015, authorized up to $ 50 million of purchases in the aggregate of its common stock.

During 2021, 2020 and 2019, the Company purchased 596,084 , 1,582,049 and 1,230,050 shares of its outstanding common stock for approximately $ 19.1 million, $ 39.4 million and $ 36.7 million, respectively.

As of December 31, 2021, the Company has approximately $ 142.6 million remaining under the repurchase authorization.

During 2022, 2021 and 2020, the Company purchased 1,264,088 , 596,084 and 1,582,049 shares of its outstanding common stock for $ 36.9 million, $ 19.1 million and $ 39.4 million, respectively.

As of December 31, 2022, the Company has $ 105.7 million remaining under the repurchase authorization.

Holders of common stock are entitled to dividends at the discretion of the Company's Board of Directors.

In 2021, the Company's Board of Directors declared the first dividend since the Company's initial public offering in 2007.

The Company's dividends declared were $ 0.04 per share of common stock and total dividends paid in cash were $ 1.7 million for the year ended December 31, 2021.

Since the fourth quarter of 2021, we have declared dividends of $ 0.04 per share of common stock in each quarter, and total dividends declared and paid on common shares during 2022 and 2021 were $ 6.9 million and $ 1.7 million, respectively.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other Comprehensive Income

15 unchanged sentences

See Note 17, " Employee Benefit Plans ," for additional details .

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Changes in AOCI by component for the year ended December 31, 2021 are summarized as follows, net of tax (dollars in thousands):

21 unchanged sentences

See below for more information regarding the types of products and services provided within each reportable segment:

Packaging – The Packaging segment, which consists primarily of the Rieke ® , Taplast, Affaba & Ferrari, Stolz, Rapak ® and Omega Plastics brands, develops and manufactures a broad array of dispensing products (such as foaming pumps, lotion and hand soap pumps, sanitizer pumps, beverage dispensers, perfume sprayers, nasal sprayers and trigger sprayers), polymeric and steel caps and closures (such as food lids, flip-top closures, child resistance caps, beverage closures, drum and pail closures, flexible spouts, and agricultural closures), polymeric jar products, and fully integrated dispensers for fill-ready bag-in-box applications, all for a variety of consumer products submarkets including, but not limited to, beauty and personal care, food and beverage, home care, and pharmaceutical and nutraceutical, as well as the industrial market.

Aerospace – The Aerospace segment, which includes the Monogram Aerospace Fasteners ™ , Allfast Fastening Systems ® , Mac Fasteners ™ , TFI Aerospace, RSA Engineered Products and Martinic Engineering brands, develops, qualifies and manufactures highly-engineered, precision fasteners, tubular products and assemblies for fluid conveyance, and machined products and assemblies to serve the aerospace and defense market.

Specialty Products – The Specialty Products segment, which includes the Norris Cylinder ™ and Arrow ® Engine brands, designs, manufactures and distributes highly-engineered steel cylinders, wellhead engines and compression systems for use within industrial markets.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Packaging – TriMas' Packaging segment consists primarily of the Rieke ® brand, as well as more recently acquired brands which include the Affaba & Ferrari ™ , Taplast ™ , Rapak ® , Plastic Srl, Intertech and Omega brands.

TriMas Packaging develops and manufactures a broad array of dispensing products (such as foaming pumps, lotion and hand soaps and sanitizer pumps, beverage dispensers, perfume sprayers, nasal sprayers and trigger sprayers), polymeric and steel caps and closures (such as food lids, flip-top closures, child resistance caps, beverage closures, drum and pail closures, and flexible spouts), polymeric jar products, fully integrated dispensers for fill-ready bag-in-box applications, and consumable vascular delivery and diagnostic test components, all for a variety of consumer products submarkets including, but not limited to, beauty and personal care, food and beverage, home care, and life sciences, including, but not limited to, pharmaceutical, nutraceutical and medical, as well as industrial markets (including agricultural).

Aerospace – TriMas' Aerospace segment, which includes the Monogram Aerospace Fasteners ™ , Allfast Fastening Systems ® , Mac Fasteners ™ , TFI Aerospace, RSA Engineered Products and Martinic Engineering brands, develops, qualifies and manufactures highly-engineered, precision fasteners, tubular products and assemblies for fluid conveyance, and machined products and assemblies to serve the aerospace and defense market.

Specialty Products – TriMas' Specialty Products segment, which includes the Norris Cylinder ™ and Arrow ® Engine brands, designs, manufactures and distributes highly-engineered steel cylinders, wellhead engines and compression systems for use within industrial markets.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Segment activity is as follows (dollars in thousands):

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Packaging $ 81,000 $ 96,490 $ 93,990

Aerospace 13,270 ( 133,440 ) 28,950

Aerospace (a)

8,060 13,270 ( 133,440 )

Specialty Products 30,250 22,550 4,350

Corporate ( 37,220 ) ( 53,190 ) ( 34,500 )

Corporate (b)

( 20,250 ) ( 37,220 ) ( 53,190 )

Total $ 99,060 $ 95,090 $ ( 88,290 )

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Total $ 1,305,000 $ 1,303,640 $ 1,193,880

__________________________

(a) In 2022, the Company completed the sale of vacant land adjacent to the Company's Tolleson, Arizona, manufacturing facility for net proceeds of $5.0 million, and recognized a $ 4.8 million gain on the sale, which is included within the Aerospace segment.

(b) In 2022, the Company sold a non-core facility in City of Industry, California, for net proceeds of $ 23.3 million, and recognized a $ 17.6 million gain on the sale, which is included in Corporate operating loss for 2022 and included within net gain (loss) on disposition of assets in the accompanying consolidated statement of operations.

TRIMAS CORPORATION

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Operating lease liability 12,670 13,440

Research and experimentation costs (a)

Tax loss and credit carryforwards 27,310 30,690

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Net deferred tax liability $ ( 11,540 ) $ ( 11,520 )

__________________________

(a) Effective for tax years beginning after December 31, 2021, research and experimentation expenditures are to be capitalized and amortized for tax-purposes as part of the Tax Cuts and Jobs Act of 2017.

The following is a reconciliation of income tax expense (benefit) computed at the U.S.

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During 2020, the Company undertook certain tax-planning actions with respect to intercompany debt restructuring within the group.

These actions resulted in the recognition of an approximate $ 6.4 million deferred tax benefit related to an interest limitation carryforward.

The Company has recorded deferred tax assets on approximately $ 34.0 million of various state operating loss carryforwards and $ 57.6 million of various foreign operating loss carryforwards.

These actions resulted in the recognition of a $ 6.4 million deferred tax benefit related to an interest limitation carryforward.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has recorded deferred tax assets on $ 21.3 million of various state operating loss carryforwards and $ 54.3 million of various foreign operating loss carryforwards.

The majority of the state tax loss carryforwards expire between 2026 and 2032 and the majority of the foreign losses have indefinite carryforward periods.

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or additional foreign withholding taxes related to investments in foreign subsidiaries that are indefinitely reinvested since any excess of the amount for financial reporting over the tax basis in these investments is not significant as of December 31, 2022.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unrecognized Tax Benefits

The Company had approximately $ 1.3 million and $ 1.6 million of unrecognized tax benefits ("UTBs") as of December 31, 2021 and 2020, respectively.

If the UTBs were recognized, the impact to the Company's effective tax rate would be to reduce reported income tax expense for the years ended December 31, 2021 and 2020 by approximately $ 1.1 million and $ 1.4 million, respectively.

The Company had $ 1.1 million and $ 1.3 million of unrecognized tax benefits ("UTBs") as of December 31, 2022 and 2021, respectively.

If the UTBs were recognized, the impact to the Company's effective tax rate would be to reduce reported income tax expense for the years ended December 31, 2022 and 2021 by $ 1.1 million and $ 1.1 million, respectively.

A reconciliation of the change in the UTBs for the years ended December 31, 2022 and 2021 is as follows (dollars in thousands):

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Tax positions related to prior years:

Reductions ( 50 )

Settlements —

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Balance at December 31, 2022 $ 1,110

In addition to the UTBs summarized above, the Company has recorded approximately $ 0.8 million and $ 0.8 million in potential interest and penalties associated with uncertain tax positions as of December 31, 2021 and 2020, respectively.

In addition to the UTBs summarized above, the Company has recorded $ 0.8 million and $ 0.8 million in potential interest and penalties associated with uncertain tax positions as of December 31, 2022 and 2021, respectively.

The Company is subject to U.S.

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Management monitors changes in tax statutes and regulations and the issuance of judicial decisions to determine the potential impact to UTBs and is not aware of, nor does it anticipate, any subsequent events that could have a significant impact on the Company's financial position during the next twelve months.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Subsequent Events

On February 28, 2022 , the Company announced that it has acquired Intertech Plastics LLC and related companies (collectively, "Intertech") for a purchase price of approximately $ 65 million, subject to customary closing conditions.

Intertech is a manufacturer of custom injection molded products used in medical applications, as well as products and assemblies for consumer and industrial applications, and has annual net sales of approximately $ 32 million.

Intertech will become part of the Packaging reportable segment.

On February 1, 2023 , the Company acquired Aarts Packaging B.V.

("Aarts") for a purchase price of approximately € 35 million, subject to customary closing conditions.

Aarts is a luxury packaging solutions provider for beauty and lifestyle brands, as well as for customers in the food and life sciences end markets, and has annual net sales of approximately € 23 million.

Aarts will become part of the Packaging reportable segment.

On February 16, 2023 , the Company announced that its Board of Directors had declared a cash dividend of $ 0.04 per share of TriMas Corporation common stock, which will be payable on March 9, 2023 to shareholders of record as of the close of business on March 2, 2023 .

On February 23, 2023 , the Company announced it has signed an agreement to acquire the operating net assets of Weldmac Manufacturing Company (“Weldmac”), a leading designer and manufacturer of high-performance, complex metal fabricated components and assemblies for the aerospace, defense and space launch end markets with annual net sales of approximately $ 33 million.

Weldmac will become part of the Aerospace reportable segment upon closing, which the Company expects to be during second quarter 2022.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data