UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q



(Mark One)
x☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended ~~September~~		June 30, ~~2017~~2020
Or
o☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period fromto.

Commission file number 001-10716

TRIMAS CORPORATION

(Exact name of registrant as specified in its charter)



Delaware		38-2687639
~~Delaware~~ (State or other jurisdiction of incorporation or organization)		~~38-2687639~~ (IRS Employer Identification No.)

38505 Woodward Avenue, Suite 200

Bloomfield Hills, Michigan48304

(Address of principal executive offices, including zip code)

~~(248)~~ (248) 631-5450

(Registrant's telephone number, including area code)



Title of each class	Trading symbol(s)	Name of exchange on which registered
Common stock, $0.01 par value	TRS	The NASDAQ Global Market LLC

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

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

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



Large accelerated filer	x☒		Accelerated filer	o☐

Non-accelerated filer	o	~~(Do not check if a smaller reporting company)~~

	☐		Smaller reporting company	o☐

			Emerging growth company	o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

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

As of ~~October 19, 2017,~~July 22, 2020, the number of outstanding shares of the Registrant's common stock, $0.01 par value, was ~~45,721,160~~45,503,644 shares.

TriMas Corporation

Index



Part I.	Financial Information

		Forward-Looking Statements	2

	Item 1.	Consolidated Financial Statements	3

		Consolidated Balance Sheet as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019	3

		Consolidated Statement of ~~Income~~Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019	4

		Consolidated Statement of Comprehensive Income for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019	5

		Consolidated Statement of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019	6

		Consolidated Statement of Shareholders' Equity for the ~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2017~~2020 and 2019	7

		Notes to Consolidated Financial Statements	8

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2125

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3842

	Item 4.	Controls and Procedures	3842

Part II.	Other Information

	Item 1.	Legal Proceedings	3943

	Item 1A.	Risk Factors	3943

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3944

	Item 3.	Defaults Upon Senior Securities	3944

	Item 4.	Mine Safety Disclosures	3944

	Item 5.	Other Information	3944

	Item 6.	Exhibits	4045

	Signatures		4146

Forward-Looking Statements

This report may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 about our financial condition, results of operations and business. These forward-looking statements can be identified by the use of forward-looking words, such as “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan” or other comparable words, or by discussions of strategy that may involve risks and uncertainties.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties which could materially affect our business, financial condition or future results including, but not limited to: the severity and duration of the ongoing corona virus (“COVID-19”) pandemic on our operations, customers and suppliers, as well as related actions taken by governmental authorities and other third parties in response, each of which is uncertain, rapidly changing and difficult to predict; general economic and currency conditions; material and energy costs; risks and uncertainties associated with intangible assets, including goodwill or other intangible asset impairment charges; competitive factors; future trends; our ability to realize our business strategies; our ability to identify attractive acquisition candidates, successfully integrate acquired operations or realize the intended benefits of such acquisitions; information technology and other cyber-related risks; the performance of our subcontractors and suppliers; supply constraints; market demand; ~~technology factors;~~ intellectual property factors; litigation; government and regulatory ~~actions;~~actions, including, without limitation, the impact of tariffs, quotas and surcharges; our leverage; liabilities imposed by our debt instruments; labor disputes; changes to fiscal and tax policies; contingent liabilities relating to acquisition activities; ~~information technology factors;~~ the disruption of operations from catastrophic or extraordinary events, including natural ~~disasters;~~disasters or public health crises; the potential impact of Brexit; tax considerations relating to the Cequent spin-off; our future prospects; and other risks that are discussed in Part I, Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019 and elsewhere in this report. The risks described in our Annual Report on Form 10-K and elsewhere in this report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deemed to be immaterial also may materially adversely affect our business, financial position and results of operations or cash flows.

The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We caution readers not to place undue reliance on the statements, which speak only as of the date of this report. We do not undertake any obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated ~~events.~~events, except as required by law.

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

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

TriMas Corporation

Consolidated Balance Sheet

(Dollars in thousands)


	September 30, 2017			December 31, 2016			June 30, 2020			December 31, 2019
Assets	(unaudited)						(unaudited)
Current assets:
Cash and cash equivalents	$	24,760		$	20,710		$	65,250		$	172,470
Receivables, net of reserves of approximately $5.2 million and $4.6 million as of September 30, 2017 and December 31, 2016, respectively	125,410			111,570
Receivables, net of reserves of approximately $3.7 million and $2.1 million as of June 30, 2020 and December 31, 2019, respectively							123,320			108,860
Inventories	160,180			160,460			140,890			132,660
Prepaid expenses and other current assets	8,800			16,060			18,900			20,050
Total current assets	319,150			308,800			348,360			434,040
Property and equipment, net	185,800			179,160			210,960			214,330
Operating lease right-of-use assets							35,270			27,850
Goodwill	318,730			315,080			376,320			334,640
Other intangibles, net	199,150			213,920			188,170			161,390
Deferred income taxes							3,630			500
Other assets	30,500			34,690			22,190			19,950
Total assets	$	1,053,330		$	1,051,650		$	1,184,900		$	1,192,700
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities, long-term debt	$	—		$	13,810
Accounts payable	77,720			72,270			$	60,180		$	72,670
Accrued liabilities	41,600			47,190			46,680			42,020
Operating lease liabilities, current portion							6,480			5,100
Total current liabilities	119,320			133,270			113,340			119,790
Long-term debt, net	336,560			360,840			295,260			294,690
Operating lease liabilities							29,330			23,100
Deferred income taxes	5,750			5,910			27,960			16,830
Other long-term liabilities	44,740			51,910			57,910			40,810
Total liabilities	506,370			551,930			523,800			495,220
Preferred stock, $0.01 par: Authorized 100,000,000 shares; Issued and outstanding: None	—			—			—			—
Common stock, $0.01 par: Authorized 400,000,000 shares; Issued and outstanding: 45,721,160 shares at September 30, 2017 and 45,520,598 shares at December 31, 2016	460			460
Common stock, $0.01 par: Authorized 400,000,000 shares; Issued and outstanding: 43,502,103 shares at June 30, 2020 and 44,562,679 shares at December 31, 2019							440			450
Paid-in capital	822,190			817,580			753,430			782,880
Accumulated deficit	(258,950		)	(293,920		)	(82,430		)	(79,850		)
Accumulated other comprehensive loss	(16,740		)	(24,400		)	(10,340		)	(6,000		)
Total shareholders' equity	546,960			499,720			661,100			697,480
Total liabilities and shareholders' equity	$	1,053,330		$	1,051,650		$	1,184,900		$	1,192,700

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

TriMas Corporation

Consolidated Statement of ~~Income~~Operations

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


	Three months ended September 30,						Nine months ended September 30,						Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016			2020			2019			2020			2019
Net sales	$	209,330		$	202,290		$	622,530		$	608,490		$	199,550		$	190,830		$	382,340		$	364,200
Cost of sales	(150,500		)	(144,240		)	(452,530		)	(437,440		)	(162,320		)	(137,040		)	(298,740		)	(263,620		)
Gross profit	58,830			58,050			170,000			171,050			37,230			53,790			83,600			100,580
Selling, general and administrative expenses	(30,710		)	(40,260		)	(99,890		)	(118,150		)	(55,380		)	(26,730		)	(81,920		)	(53,720		)
Operating profit	28,120			17,790			70,110			52,900
Operating profit (loss)													(18,150		)	27,060			1,680			46,860
Other expense, net:
Interest expense	(3,390		)	(3,480		)	(10,360		)	(10,230		)	(4,230		)	(3,490		)	(7,810		)	(6,930		)
Debt financing and related expenses	(6,640		)	—			(6,640		)	—
Other income, net													1,130			1,220			1,050			650
Other expense, net	(200		)	(200		)	(780		)	(130		)	(3,100		)	(2,270		)	(6,760		)	(6,280		)
Other expense, net	(10,230		)	(3,680		)	(17,780		)	(10,360		)
Income before income tax expense	17,890			14,110			52,330			42,540
Income tax expense	(4,760		)	(5,330		)	(17,360		)	(14,980		)
Net income	$	13,130		$	8,780		$	34,970		$	27,560
Basic earnings per share:
Net income per share	$	0.29		$	0.19		$	0.77		$	0.61
Income (loss) before income tax expense													(21,250		)	24,790			(5,080		)	40,580
Income tax benefit (expense)													5,550			(6,070		)	2,500			(7,310		)
Income (loss) from continuing operations													(15,700		)	18,720			(2,580		)	33,270
Income from discontinued operations, net of tax													—			3,300			—			7,840
Net income (loss)													$	(15,700	)	$	22,020		$	(2,580	)	$	41,110
Basic earnings (loss) per share:
Continuing operations													$	(0.36	)	$	0.41		$	(0.06	)	$	0.73
Discontinued operations													—			0.07			—			0.17
Net income (loss) per share													$	(0.36	)	$	0.48		$	(0.06	)	$	0.90
Weighted average common shares—basic	45,721,155			45,435,936			45,669,782			45,381,592			43,463,235			45,592,075			43,832,144			45,585,445
Diluted earnings per share:
Net income per share	$	0.29		$	0.19		$	0.76		$	0.60
Diluted earnings (loss) per share:
Continuing operations													$	(0.36	)	$	0.41		$	(0.06	)	$	0.72
Discontinued operations													—			0.07			—			0.17
Net income (loss) per share													$	(0.36	)	$	0.48		$	(0.06	)	$	0.89
Weighted average common shares—diluted	46,029,361			45,760,455			45,953,578			45,713,873			43,463,235			45,828,315			43,832,144			45,910,249

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

TriMas Corporation

Consolidated Statement of Comprehensive Income

(Unaudited—dollars in thousands)

Three months ended
September 30, Nine months ended
September 30,
2017 2016 2017 2016
Net income $ 13,130
$ 8,780
$ 34,970
$ 27,560
Other comprehensive income (loss):
Defined benefit pension and postretirement plans (Note 13) 170
140
500
440
Foreign currency translation 910
(1,550 ) 4,640
(8,290 )
Derivative instruments (Note 8) 2,540
630
2,520
(3,660 )
Total other comprehensive income (loss) 3,620
(780 ) 7,660
(11,510 )
Total comprehensive income $ 16,750
$ 8,000
$ 42,630
$ 16,050



	Three months ended June 30,						Six months ended June 30,
	2020			2019			2020			2019
Net income (loss)	$	(15,700	)	$	22,020		$	(2,580	)	$	41,110
Other comprehensive income (loss):
Defined benefit plans (Note 18)	160			100			310			200
Foreign currency translation	1,310			(900		)	(6,950		)	(200		)
Derivative instruments (Note 11)	(2,130		)	(730		)	2,300			1,490
Total other comprehensive income (loss)	(660		)	(1,530		)	(4,340		)	1,490
Total comprehensive income (loss)	$	(16,360	)	$	20,490		$	(6,920	)	$	42,600

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

TriMas Corporation

Consolidated Statement of Cash Flows

(Unaudited—dollars in thousands)


	Nine months ended September 30,						Six months ended June 30,
	2017			2016			2020			2019
Cash Flows from Operating Activities:
Net income	$	34,970		$	27,560
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							$	(2,580	)	$	41,110
Income from discontinued operations							—			7,840
Income (loss) from continuing operations							(2,580		)	33,270
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities, net of acquisition impact:
Loss on dispositions of assets	3,210			1,350			1,010			30
Depreciation	18,890			17,710			14,770			11,990
Amortization of intangible assets	14,920			15,330			10,150			9,380
Amortization of debt issue costs	1,030			1,000			570			560
Deferred income taxes	2,420			360			(1,460		)	4,130
Non-cash compensation expense	5,090			5,240			4,680			3,040
Tax effect from stock based compensation	—			(640		)
Debt financing and related expenses	6,640			—
Non-cash change in legacy liability estimate							23,400			—
Increase in receivables	(12,700		)	(9,790		)	(12,300		)	(5,720		)
Increase in inventories	(580		)	(4,560		)
Decrease in inventories							5,260			380
Decrease in prepaid expenses and other assets	7,110			10,780			290			1,430
Decrease in accounts payable and accrued liabilities	(8,590		)	(17,150		)	(14,530		)	(24,410		)
Other operating activities	240			(780		)	1,580			(1,310		)
Net cash provided by operating activities	72,650			46,410
Net cash provided by operating activities of continuing operations							30,840			32,770
Net cash used for operating activities of discontinued operations							—			(3,490		)
Net cash provided by operating activities, net of acquisition impact							30,840			29,280
Cash Flows from Investing Activities:
Capital expenditures	(24,120		)	(22,390		)	(9,250		)	(11,500		)
Net proceeds from disposition of property and equipment	1,800			120
Acquisition of businesses, net of cash acquired							(95,160		)	(67,030		)
Net proceeds from disposition of business, property and equipment							2,110			—
Net cash used for investing activities of continuing operations							(102,300		)	(78,530		)
Net cash used for investing activities of discontinued operations							—			(780		)
Net cash used for investing activities	(22,320		)	(22,270		)	(102,300		)	(79,310		)
Cash Flows from Financing Activities:
Proceeds from issuance of senior notes	300,000			—
Repayments of borrowings on term loan facilities	(257,940		)	(10,380		)
Proceeds from borrowings on revolving credit and accounts receivable facilities	353,710			314,860
Repayments of borrowings on revolving credit and accounts receivable facilities	(435,250		)	(324,780		)
Debt financing fees	(6,070		)	—
Shares surrendered upon options and restricted stock vesting to cover taxes	(480		)	(1,500		)
Other financing activities	(250		)	760
Proceeds from borrowings on revolving credit facilities							245,700			93,220
Repayments of borrowings on revolving credit facilities							(247,320		)	(92,410		)
Shares surrendered upon exercise and vesting of equity awards to cover taxes							(2,570		)	(3,230		)
Payments to purchase common stock							(31,570		)	(15,420		)
Net cash used for financing activities of continuing operations							(35,760		)	(17,840		)
Net cash provided by financing activities of discontinued operations							—			—
Net cash used for financing activities	(46,280		)	(21,040		)	(35,760		)	(17,840		)
Cash and Cash Equivalents:
Net increase for the period	4,050			3,100
Decrease for the period							(107,220		)	(67,870		)
At beginning of period	20,710			19,450			172,470			108,150
At end of period	$	24,760		$	22,550		$	65,250		$	40,280
Supplemental disclosure of cash flow information:
Cash paid for interest	$	9,020		$	8,870		$	7,150		$	6,190
Cash paid for taxes	$	13,140		$	9,130		$	3,410		$	10,160

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

TriMas Corporation

Consolidated Statement of Shareholders' Equity

~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020 and 2019

(Unaudited—dollars in thousands)

Common
Stock

Paid-in
Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
Loss
Total
Balances, December 31, 2016 $ 460
$ 817,580
$ (293,920 ) $ (24,400 ) $ 499,720
Net income —
—
34,970
—
34,970
Other comprehensive income —
—
—
7,660
7,660
Shares surrendered upon options and restricted stock vesting to cover taxes —
(480 ) —
—
(480 )
Non-cash compensation expense —
5,090
—
—
5,090
Balances, September 30, 2017 $ 460
$ 822,190
$ (258,950 ) $ (16,740 ) $ 546,960



	Common Stock			Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total
Balances, December 31, 2019	$	450		$	782,880		$	(79,850	)	$	(6,000	)	$	697,480
Net income	—			—			13,120			—			13,120
Other comprehensive loss	—			—			—			(3,680		)	(3,680		)
Purchase of common stock	(20		)	(31,550		)	—			—			(31,570		)
Shares surrendered upon exercise and vesting of equity awards to cover taxes	—			(1,830		)	—			—			(1,830		)
Non-cash compensation expense	—			1,940			—			—			1,940
Balances, March 31, 2020	$	430		$	751,440		$	(66,730	)	$	(9,680	)	$	675,460
Net loss	—			—			(15,700		)	—			(15,700		)
Other comprehensive loss	—			—			—			(660		)	(660		)
Shares surrendered upon exercise and vesting of equity awards to cover taxes	—			(740		)	—			—			(740		)
Non-cash compensation expense	10			2,730			—			—			2,740
Balances, June 30, 2020	$	440		$	753,430		$	(82,430	)	$	(10,340	)	$	661,100



	Common Stock			Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total
Balances, December 31, 2018	$	460		$	816,500		$	(179,660	)	$	(16,850	)	$	620,450
Net income	—			—			19,090			—			19,090
Other comprehensive income	—			—			—			3,020			3,020
Purchase of common stock	—			(670		)	—			—			(670		)
Shares surrendered upon exercise and vesting of equity awards to cover taxes	—			(2,620		)	—			—			(2,620		)
Non-cash compensation expense	—			1,320			—			—			1,320
Impact of accounting standards adoption	—			—			1,190			(1,270		)	(80		)
Balances, March 31, 2019	$	460		$	814,530		$	(159,380	)	$	(15,100	)	$	640,510
Net income	—			—			22,020			—			22,020
Other comprehensive loss	—			—			—			(1,530		)	(1,530		)
Purchase of common stock	(10		)	(14,740		)	—			—			(14,750		)
Shares surrendered upon exercise and vesting of equity awards to cover taxes	—			(610		)	—			—			(610		)
Non-cash compensation expense	—			1,720			—			—			1,720
Balances, June 30, 2019	$	450		$	800,900		$	(137,360	)	$	(16,630	)	$	647,360

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

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

TriMas Corporation ("TriMas" or the "Company"), and its consolidated subsidiaries, ~~is a diversified industrial manufacturer of~~designs, engineers and manufactures innovative products under leading brand names for customers primarily in the consumer products, aerospace & defense, and industrial ~~petrochemical, refinery~~markets.

In the first quarter of 2020, TriMas began reporting its machined components operations, located in Stanton, California and ~~oil and gas end markets.~~Tolleson, Arizona, as part of its Aerospace segment. The ~~Company is principally engaged~~operations were previously reported in the ~~following reportable segments with diverse products~~Specialty Products segment. The move of these operations into TriMas Aerospace facilitates a more rapid approach to achieving anticipated synergies from the recent RSA Engineered Products ("RSA") acquisition, allowing the Company to better leverage the machining competencies and ~~market channels: Packaging, Aerospace, Energy and Engineered Components.~~resources across its aerospace businesses. See Note 10,15, "Segment Information," for further information on each of the Company's reportable segments.

In addition, on December 20, 2019, the Company completed the sale of its Lamons division (“Lamons”), a transaction entered into with an investment fund sponsored by First Reserve on November 1, 2019. Lamons was sold for approximately $135 million in cash. The financial results of Lamons were previously reported within the Company's Specialty Products segment, and are presented as discontinued operations for all periods presented in the financial statements attached hereto.

In 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. The Company believes this change is preferable, as asbestos-related defense costs represent expenditures related to legacy activities that do not contribute to current or future revenue generating activities, and recording an estimate of the full liability for asbestos-related costs, where estimable with reasonable precision, provides a more complete assessment of the liability associated with resolving asbestos-related claims. This accounting change has been reflected as a change in accounting estimate effected by a change in accounting principle. See Note 14, "Commitments and Contingencies," for further information on this change.

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries and, in the opinion of management, contain all adjustments, including adjustments of a normal and recurring nature, necessary for a fair presentation of financial position and results of operations. The preparation of financial statements also 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 a new strain of the coronavirus (“COVID-19”). While the full impact of COVID-19 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. To the extent there are differences between these estimates and actual results, the Company's consolidated financial statements may be materially affected.

Results of operations for interim periods are not necessarily indicative of results for the full ~~year.~~year, and certain prior year amounts have been reclassified to conform to current year presentation. The accompanying consolidated financial statements and notes thereto should be read in conjunction with the Company's ~~2016~~2019 Annual Report on Form 10-K.

2. New Accounting Pronouncements

Recently Issued Accounting Pronouncements

In ~~August 2017,~~December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2017-12, "Derivatives and Hedging~~2019-12, "Income Taxes (Topic ~~815)~~740): ~~Targeted Improvements to~~Simplifying the Accounting for ~~Hedging Activities"~~Income Taxes" ("ASU ~~2017-12"~~2019-12"), which ~~better aligns an entity's risk management activities~~removes specific exceptions to the general principles in Topic 740, simplifies the accounting for income taxes and ~~financial reporting for hedging relationships, simplifies hedge accounting requirements and creates more transparency around how economic results are presented in the financial statements.~~provides clarification of certain aspects of current guidance. ASU ~~2017-12~~2019-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, ~~2018, with early adoption permitted. The Company is in the process of assessing the impact of adoption on its consolidated financial statements.~~

In March 2017, the FASB issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost" ("ASU 2017-07"). ASU 2017-07 requires that the service cost component of net period pension and postretirement benefit cost be presented in the same line item as other employee compensation costs, while the other components be presented separately as non-operating income (expense). ASU 2017-07 also allows only the service cost component to be eligible for capitalization when applicable. ASU 2017-07 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. The Company is in the process of assessing the impact of adoption on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"), which simplifies the test for goodwill impairment by eliminating the requirement to perform a hypothetical purchase price allocation to measure the amount of goodwill impairment. ASU 2017-04 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. The Company is in the process of assessing the impact of adoption on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business" ("ASU 2017-01"). ASU 2017-01 provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted under certain circumstances. The Company is in the process of assessing the impact of adoption on its consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory" ("ASU 2016-16"), which requires that income tax consequences of an intra-entity transfer of an asset other than inventory are recognized when the transfer occurs. ASU 2016-16 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and is to be applied using a modified retrospective approach2020, with early adoption permitted. The Company is in the process of assessing the impact of adoption on its consolidated financial statements.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

In August ~~2016,~~2018, the FASB issued ASU ~~2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments"~~2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)" ("ASU ~~2016-15"~~2018-14"), which ~~clarifies how certain cash receipts and cash payments are presented and classified in~~modifies the ~~statement of cash flows.~~disclosure requirements for employers who sponsor defined benefit pension or other postretirement plans. ASU ~~2016-15~~2018-14 is effective for fiscal years ~~and interim periods within those years, beginning~~ending after December 15, ~~2017, and~~2020, with early adoption permitted. ASU 2018-14 is to be applied ~~using a retrospective approach with early adoption permitted.~~retrospectively to all periods presented. The Company is in the process of assessing the impact of adoption on its consolidated financial statements.

~~In February 2016,~~

3. Discontinued Operations

On December 20, 2019, the ~~FASB issued ASU 2016-02, "Leases (Topic 842)" ("ASU 2016-02"~~Company completed the sale of 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”), ~~which requires that lessees, at the lease commencement date, recognize~~for a ~~lease liability representing the lessee's obligation~~purchase price of $135 million, subject to ~~make lease payments arising from a lease~~certain adjustments as well as a right-of-use asset, which represents the lessee's right to use, or control the use of a specified asset, for the lease term. The new guidance also aligns lessor accounting to the lessee accounting model and to Topic 606, "Revenue from Contracts with Customers." ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and is to be applied using a modified retrospective approach with early adoption permitted. The Company isset forth in the ~~process of assessing the impact of the adoption on its consolidated financial statements.~~

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09"). ASU 2014-09 requires that an entity recognize revenue to depict the transfer of promised goods or services to customersPurchase Agreement. The transaction was finalized in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Since the issuance of the original standard, the FASB has issued several subsequent updates as disclosed within the Company's 2016 Annual Report on Form 10-K. The Company has evaluated the standard and its customer contracts, and as a result, does not believe the adoption of this standard will have a material impact on the amount or timing of its revenues. The Company expects to adopt this standard on January 1, 2018 utilizing the modified retrospective approach.

3~~. Facility Closures~~

~~Reynosa, Mexico facility~~

In March 2017, the Company announced plans within the Energy reportable segment to cease production at its Reynosa, Mexico facility, and consolidate production into its Houston, Texas facility. During the second quarter of 2017, upon the cease use date of the facility, the Company recorded a pre-tax charge of approximately $1.5 million within cost of sales for estimated future unrecoverable lease obligations, net of estimated sublease recoveries, for the lease that expires in 2025. In addition, in the second quarter of 2017, the Company incurred approximately $1.2 million of pre-tax non-cash charges within cost of sales related to accelerated depreciation expense as a result of shortening the expected lives on certain machinery, equipment and leasehold improvement assets that the Company no longer used following the facility closure.

~~Wolverhampton, United Kingdom facility~~

~~In March 2017, the Company exited its Wolverhampton, United Kingdom facility within the Energy reportable segment. In connection with this action, during~~ the first quarter of ~~2017 the Company recorded pre-tax charges of approximately $3.5~~2020 and resulted in a $1.8 million ~~within selling, general and administrative expenses, of which approximately $3.2 million were non-cash charges related~~payment to the ~~disposal of certain assets.~~Company.

4~~. Goodwill and Other Intangible Assets~~

~~Changes~~The Company's historical results for Lamons are shown in the ~~carrying amount~~accompanying consolidated statement of ~~goodwill for the~~ ~~nine months ended September 30, 2017~~operations as a discontinued operation. Results of discontinued operations are summarized as follows (dollars in thousands):

Packaging Aerospace Energy Engineered Components Total
Balance, December 31, 2016 $ 162,090
$ 146,430
$ —
$ 6,560
$ 315,080
Foreign currency translation and other 3,650
—
—
—
3,650
Balance, September 30, 2017 $ 165,740
$ 146,430
$ —
$ 6,560
$ 318,730



	Three months ended June 30,			Six months ended June 30,
	2019			2019
Net sales	$	48,540		$	96,460
Cost of sales	(36,980		)	(71,870		)
Gross profit	11,560			24,590
Selling, general and administrative expenses	(7,510		)	(14,490		)
Operating profit	4,050			10,100
Other income, net	130			20
Income from discontinued operations, before income taxes	4,180			10,120
Income tax expense	(880		)	(2,280		)
Income from discontinued operations, net of tax	$	3,300		$	7,840

4. Revenue

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



	Three months ended June 30,				Six months ended June 30,
Customer Markets	2020		2019		2020		2019
Consumer Products	$	104,530	$	82,060	$	183,590	$	149,980
Aerospace & Defense	42,610		49,510		91,530		95,090
Industrial	52,410		59,260		107,220		119,130
Total net sales	$	199,550	$	190,830	$	382,340	$	364,200

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

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

5. Realignment Actions

In the three months ended June 30, 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 a non-cash charge of approximately $13.2 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 a non-cash charge of approximately $2.2 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 during second quarter 2020, incurring approximately $3.1 million in severance charges, of which approximately $1.9 million was paid by June 30, 2020. For the three months ended June 30, 2020, approximately $16.0 million and $2.5 million of these charges were included in cost of sales and selling, general and administrative expenses, respectively, in the accompanying consolidated statement of operations.

6. Acquisitions

2020 Acquisitions

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, subject to normal course adjustments. 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, 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, subject to normal course adjustments. The fair value of assets acquired and liabilities assumed included approximately $80.2 million of goodwill and 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.

In connection with the acquisitions, the Company recorded approximately $2.3 million and $2.8 million of non-cash purchase accounting-related expenses during the three and six months ended June 30, 2020, respectively, within cost of sales related to the step-up in value and subsequent sale of inventory.

2019 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, home care, and food and beverage packaging markets, for an aggregate amount of approximately $44.7 million, net of cash acquired. With manufacturing locations in both Italy and Slovakia, Taplast serves 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.

In connection with the acquisitions, the Company recorded approximately $0.2 million and $1.2 million of non-cash purchase accounting-related expenses during the three and six months ended June 30, 2019, respectively. Of these amounts, approximately $0.9 million was recognized during the six months ended June 30, 2019, within selling, general and administrative expenses, primarily related to the write-off of the Plastic Srl trade name acquired that will not be used. In addition, approximately $0.2 million and $0.3 million was recognized during the three and six months ended June 30, 2019, respectively, within cost of sales related to the step-up in value and subsequent sale of inventory.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

7. Goodwill and Other Intangible Assets

The Company assesses goodwill and other intangible assets 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 considered the current and potential future market and economic impacts that may result from the COVID-19 pandemic, including its impact on the Company's reporting units, and also assessed the change in its market capitalization during the first and second quarter of 2020. Based on this review, and after consideration of the historical excess in fair value over carrying value within the Company's reporting units, the Company determined that there was not a triggering event which would require an interim impairment test to be performed.

In the first quarter of 2020, the Company began reporting its machined products 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.

Changes in the carrying amount of goodwill for the six months ended June 30, 2020 are summarized as follows (dollars in thousands):



	Packaging			Aerospace		Specialty Products			Total
Balance, December 31, 2019	$	181,650		$	133,690	$	19,300		$	334,640
Goodwill from acquisitions	—			43,260		—			43,260
Goodwill reassigned in segment realignment	—			12,740		(12,740		)	—
Foreign currency translation and other	(1,580		)	—		—			(1,580		)
Balance, June 30, 2020	$	180,070		$	189,690	$	6,560		$	376,320

The Company amortizes its other intangible assets over periods ranging from one to 30 years. The gross carrying amounts and accumulated amortization of the Company's other intangibles ~~as of September 30, 2017 and December 31, 2016~~ are summarized below (dollars in thousands):



	As of June 30, 2020					As of December 31, 2019
Intangible Category by Useful Life	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Finite-lived intangible assets:
Customer relationships, 5 – 12 years	$	100,160	$	(54,200	)	$	73,860	$	(49,910	)
Customer relationships, 15 – 25 years	122,280		(59,230		)	122,280		(56,010		)
Total customer relationships	222,440		(113,430		)	196,140		(105,920		)
Technology and other, 1 – 15 years	54,100		(31,240		)	52,430		(29,790		)
Technology and other, 17 – 30 years	43,300		(38,620		)	43,300		(37,620		)
Total technology and other	97,400		(69,860		)	95,730		(67,410		)
Indefinite-lived intangible assets:
Trademark/Trade names	51,620		—			42,850		—
Total other intangible assets	$	371,460	$	(183,290	)	$	334,720	$	(173,330	)

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

As of September 30, 2017 As of December 31, 2016
Intangible Category by Useful Life Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization
Finite-lived intangible assets:

   Customer relationships, 5 – 12 years $ 73,790
$ (39,030 ) $ 73,570
$ (33,200 )
   Customer relationships, 15 – 25 years 132,230
(50,150 ) 132,230
(44,970 )
Total customer relationships 206,020
(89,180 ) 205,800
(78,170 )
   Technology and other, 1 – 15 years 57,520
(28,480 ) 57,470
(26,040 )
   Technology and other, 17 – 30 years 43,300
(32,960 ) 43,300
(31,370 )
Total technology and other 100,820
(61,440 ) 100,770
(57,410 )
Indefinite-lived intangible assets:

Trademark/Trade names 42,930
—
42,930
—
Total other intangible assets $ 349,770
$ (150,620 ) $ 349,500
$ (135,580 )

Amortization expense related to intangible assets as included in the accompanying consolidated statement of ~~income~~operations is summarized as follows (dollars in thousands):



	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Technology and other, included in cost of sales	$	1,260	$	1,200	$	2,470	$	2,400
Customer relationships, included in selling, general and administrative expenses	4,040		3,550		7,680		6,980
Total amortization expense	$	5,300	$	4,750	$	10,150	$	9,380

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Technology and other, included in cost of sales $ 1,280
$ 1,460
$ 3,990
$ 4,230
Customer relationships, included in selling, general and administrative expenses 3,650
3,680
10,930
11,100
Total amortization expense $ 4,930
$ 5,140
$ 14,920
$ 15,330

5.8. Inventories

Inventories consist of the following components (dollars in thousands):



	June 30, 2020		December 31, 2019
Finished goods	$	73,320	$	68,350
Work in process	30,670		30,560
Raw materials	36,900		33,750
Total inventories	$	140,890	$	132,660

September 30,
2017 December 31,
2016
Finished goods $ 89,600
$ 95,290
Work in process 24,890
22,930
Raw materials 45,690
42,240
Total inventories $ 160,180
$ 160,460

9. Property and Equipment, Net

Property and equipment consists of the following components (dollars in thousands):



	June 30, 2020		December 31, 2019
Land and land improvements	$	19,560	$	19,110
Buildings	85,820		84,880
Machinery and equipment	329,120		326,990
	434,500		430,980
Less: Accumulated depreciation	223,540		216,650
Property and equipment, net	$	210,960	$	214,330

Depreciation expense as included in the accompanying consolidated statement of operations is as follows (dollars in thousands):



	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Depreciation expense, included in cost of sales	$	7,830	$	6,010	$	14,190	$	11,440
Depreciation expense, included in selling, general and administrative expenses	280		290		580		550
Total depreciation expense	$	8,110	$	6,300	$	14,770	$	11,990

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

6~~. Property and Equipment, Net~~

~~Property and equipment consists of the following components (dollars in thousands):~~

September 30,
2017 December 31,
2016
Land and land improvements $ 15,180
$ 14,910
Buildings 72,770
71,100
Machinery and equipment 295,500
281,180
383,450
367,190
Less: Accumulated depreciation 197,650
188,030
Property and equipment, net $ 185,800
$ 179,160

~~Depreciation expense as included in the accompanying consolidated statement of income is as follows (dollars in thousands):~~

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Depreciation expense, included in cost of sales $ 5,440
$ 5,120
$ 17,380
$ 15,590
Depreciation expense, included in selling, general and administrative expenses 400
610
1,510
2,120
Total depreciation expense $ 5,840
$ 5,730
$ 18,890
$ 17,710

710. Long-term Debt

The Company's long-term debt consists of the following (dollars in thousands):



	June 30, 2020			December 31, 2019
4.875% Senior Notes due October 2025	$	300,000		$	300,000
Debt issuance costs	(4,740		)	(5,310		)
Long-term debt, net	$	295,260		$	294,690

September 30,
2017 December 31,
2016
4.875% Senior Notes due October 2025 $ 300,000
$ —
Credit Agreement 37,510
333,720
Receivables facility and other 7,000
45,650
Debt issuance costs (7,950 ) (4,720 )
336,560
374,650
Less: Current maturities, long-term debt —
13,810
Long-term debt, net $ 336,560
$ 360,840

Senior Notes

In September 2017, the Company issued $300.0 million aggregate principal amount of 4.875% senior notes due October 15, 2025 ("Senior Notes") at par value in a private placement under Rule 144A of the Securities Act of 1933, as amended. The Company used the proceeds from the offering to fully repay the $250.9 million principal, plus $0.4 million related interest, outstanding on its former senior secured term loan A facility due 2020 ("Term Loan A Facility"), repay approximately $41.7 million of outstanding obligations under the Company's accounts receivable facility, pay fees and expenses of $5.0 million related to the Senior Notes offering, pay fees and expenses of $1.1 million related to amending its existing credit agreement, with the remaining amount retained as cash on its consolidated balance sheet. Of the $5.0 million of fees and expenses related to the Senior Notes, approximately $4.9 million was capitalized as debt issuance costs and approximately $0.1 million was recorded as debt financing and related expenses in the accompanying consolidated statement of income.

~~TRIMAS CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

The Senior Notes accrue interest at a rate of 4.875% per annum, payable semi-annually in arrears on April 15 and October 15, commencing on April 15, ~~2018.~~2018. The payment of principal and interest is jointly and severally guaranteed, on a senior unsecured basis, by certain subsidiaries of the Company (each a "Guarantor" and collectively the "Guarantors"). The Senior Notes are pari passu in right of payment with all existing and future senior indebtedness and subordinated to all existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness.

Prior to October 15, 2020, the Company may redeem up to 35% of the principal amount of the Senior Notes at a redemption price of 104.875% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, with the net cash proceeds of one or more equity offerings provided that each such redemption occurs within 90 days of the date of closing of each such equity offering. In addition, the Company may redeem all or part of the Senior Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus a "make whole" premium. On or after October 15, 2020, the Company may redeem all or part of the Senior Notes at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, to the redemption date, if redeemed during the twelve-month period beginning on October 15 of the years indicated below:



Year	Percentage
2020	102.438	%
2021	101.219	%
2022 and thereafter	100.000	%

~~As of September 30, 2017, the Company's Senior Notes traded at approximately 100.3% of par value. This valuation was determined based on Level 2 inputs under the fair value hierarchy, as defined.~~

Credit Agreement

~~In September 2017, the~~The Company ~~amended its existing~~is a party to a credit agreement ("Credit Agreement") ~~in connection with the Senior Notes offering and extended the maturity date, increased the permitted~~consisting of a $300.0 million senior secured revolving credit facility, which permits borrowings denominated in specific foreign currencies, ~~from $75.0 million~~subject to a $125.0 million ~~removed the Term Loan A Facility~~sub limit, matures on September 20, 2022 and ~~resized the revolving credit facility. The Company incurred fees and expenses of approximately $1.1 million related~~is subject to the amendment, all of which was capitalized as debt issuance costs. The Company also recorded approximately $2.0 million non-cash expense related to the write-off of previously capitalized deferred financing fees within debt financing and related expenses in the accompanying consolidated statement of income.

~~Below is a summary of key terms under the Credit Agreement as of September 30, 2017, compared to the key terms prior to the amendment (the Term Loan A Facility shows the face amount of borrowing~~interest at ~~debt issuance, while the revolving credit facilities show gross availability as of each date):~~



~~Instrument~~	~~Amount~~ ~~($ in millions)~~	~~Maturity Date~~	~~Interest Rate~~
~~Credit Agreement (as amended)~~
~~Senior secured revolving credit facility~~	~~$300.0~~	~~9/20/2022~~	~~LIBOR~~^(a) ~~plus 1.625%~~^(b)

~~Credit Agreement (prior to amendment)~~
~~Senior secured revolving credit facility~~	~~$500.0~~	~~6/30/2020~~	~~LIBOR~~^(a) ~~plus 1.625%~~^(b)
~~Senior secured term loan A facility~~	~~$275.0~~	~~6/30/2020~~	~~LIBOR~~^(a) ~~plus 1.625%~~^(b)

~~__________________________~~

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

^(b)~~The initial interest rate spread for the amended Credit Agreement is stated as 1.625%~~ plus 1.50%. The interest rate spread is based upon the leverage ratio, as defined, as of the most recent determination date.

~~TRIMAS CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

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. The terms and conditions of any incremental revolving credit facility commitments must be no more favorable than the existing credit facility.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The Company's revolving credit facility allows for the issuance of letters of credit, not to exceed ~~$40.0~~$40.0 million in aggregate. At ~~September~~June 30, ~~2017~~,2020, the Company had ~~approximately $37.5 million~~0 amounts outstanding under its revolving credit facility and had approximately $248.3 million potentially available after giving effect to approximately $14.2 million of letters of credit issued and outstanding. At December 31, 2016, the Company had approximately $75.9 million outstanding under its revolving credit facility and had approximately $408.2$284.1 million potentially available after giving effect to approximately $15.9 million of letters of credit issued and outstanding. ~~However, including availability~~At December 31, 2019, the Company had 0 amounts outstanding under its ~~accounts receivable~~revolving credit facility and had approximately $283.9 million potentially available after ~~consideration~~giving effect to approximately $16.1 million of letters of credit issued and outstanding. The Company's borrowing capacity was not reduced by leverage restrictions contained in the Credit Agreement ~~the Company had approximately $295.4 million and $126.5 million at September~~as of June 30, ~~2017~~2020 and December 31, ~~2016, respectively,~~2019. 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 ~~borrowing capacity available for general corporate purposes.~~the COVID-19 pandemic, but repaid this amount during second quarter 2020.

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. Borrowings under the $125.0 million (equivalent) foreign currency sub limit of the $300.0 million senior secured revolving credit facility are secured by a cross-guarantee amongst, and a pledge of the assets of, the foreign subsidiary borrowers that are a party to the agreement. The Credit Agreement also contains various negative and affirmative covenants and other requirements affecting the Company and its subsidiaries, including the ability, ~~to,~~ subject to certain exceptions and limitations, to incur debt, liens, mergers, investments, loans, advances, guarantee obligations, acquisitions, assets dispositions, sale-leaseback transactions, hedging agreements, dividends and other restricted payments, transactions with affiliates, restrictive agreements and amendments to charters, bylaws, and other material documents. The terms of the Credit Agreement also require the Company and its restricted subsidiaries to meet certain restrictive financial covenants and ratios computed quarterly, including a maximum total net leverage ratio (total consolidated indebtedness plus outstanding amounts under the accounts receivable securitization facility, less the aggregate amount of certain unrestricted cash and unrestricted permitted investments, as defined, over consolidated EBITDA, as defined), a maximum senior secured net leverage ratio (total consolidated senior secured indebtedness, less the aggregate amount of certain unrestricted cash and unrestricted permitted investments, as defined, over consolidated EBITDA, as defined) and a minimum interest expense coverage ratio (consolidated EBITDA, as defined, over the sum of consolidated cash interest expense, as defined, and preferred dividends, as defined). At ~~September~~June 30, ~~2017,~~2020, the Company was in compliance with its financial covenants contained in the Credit Agreement.

AsFair Value of ~~September 30, 2017~~Debt

The valuations of the Senior Notes and ~~December 31, 2016, the Company's revolving credit facility traded at approximately 99.6% and 99.3% of par value, respectively. These valuations~~other debt were determined based on Level 2 inputs under the fair value hierarchy, as defined.

~~Receivables Facility~~

The Company is party to an accounts receivable facility through TSPC, Inc. ("TSPC"), a wholly-owned subsidiary, to sell trade accounts receivable of substantially all of the Company's domestic business operations. Under this facility, TSPC, from time to time, may sell an undivided fractional ownership interest in the pool of receivables up to $75.0 million to a third-party multi-seller receivables funding company. The net amount financed under the facility is less than the face amount of accounts receivable by an amount that approximates the purchaser's financing costs. The cost of funds under this facility consisted of a 1-month LIBOR-based rate plus a usage fee of 1.00%carrying amounts and ~~a fee on the unused portion of the facility of 0.35% as of September 30, 2017 and 2016.~~

The Company had approximately $7.0 million and $45.5 million outstanding under the facility as of September 30, 2017 and December 31, 2016, respectively, and approximately $53.1 million and $10.1 million available but not utilized as of September 30, 2017 and December 31, 2016, respectively. Aggregate costs incurred under the facilityfair values were approximately $0.3 million and $0.2 million for the three months ended September 30, 2017 and 2016, and $0.9 million and $0.7 million for the nine months ended September 30, 2017 and 2016, respectively, and are included in interest expense in the accompanying consolidated statement of income. The facility expires on June 30, 2020.

~~TRIMAS CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

The cost of funds fees incurred are determined by calculating the estimated present value of the receivables sold compared to their carrying amount. The estimated present value factor is based on historical collection experience and a discount rate based on a 1-month LIBOR-based rate plus the usage fee discussed above and is computed in accordance with the terms of the agreement. As of September 30, 2017, the cost of funds under the facility was based on an average liquidation period of the portfolio of approximately 1.7 months and an average discount rate of 2.0%.

8~~. Derivative Instruments~~

The Company has historically utilized interest rate swap agreements to fix the LIBOR-based variable portion of the interest rate on its long-term debt. Prior to its debt refinancing in September 2017, the Company had interest rate swap agreements in place that hedged a declining notional value of debt ranging from approximately $238.4 million to approximately $192.7 million, amortizing consistent with future scheduled debt principal payments. The interest rate swap agreements required the Company to receive a variable interest rate and pay a fixed interest rate in a range of 0.74% to 2.68% with various expiration terms extending to June 30, 2020. At inception, the interest rate swaps were designated as cash flow hedges.

In September 2017, immediately following the debt refinancing, the Company determined the likelihood of the hedged transactions occurring was less than probable and de-designated the interest rate swaps as cash flow hedges and terminated the interest rate swaps for a cash payment of approximately $4.7 million. There were no interest rate swaps outstanding as of September 30, 2017. The cash flows associated with the cash flow hedges are reported in net cash provided by operating activities on the statement of cash flows. Up to the date of the termination, the Company utilized hedge accounting, which allows for the effective portion of the interest rate swaps to be recorded in accumulated other comprehensive income or loss ("AOCI") in the accompanying consolidated balance sheet. At the date the Company de-designated the swaps as effective hedges, there was approximately $2.9 million (net of tax of $1.8 million) of unrealized losses remaining in AOCI, which were reclassified into debt financing and related expenses in the accompanying consolidated statement of income during the third quarter of 2017.

~~As of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, the fair value carrying amount of the Company's derivative instruments are recorded as follows (dollars in thousands):~~

Asset / (Liability) Derivatives
Balance Sheet Caption September 30,
2017 December 31,
2016
Derivatives designated as hedging instruments
Interest rate swaps Prepaid expenses and other current assets $ —
$ 160
Interest rate swaps Accrued liabilities —
(870 )
Interest rate swaps Other long-term liabilities —
(3,360 )
Total derivatives designated as hedging instruments $ —
$ (4,070 )

~~TRIMAS CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

The following table summarizes the loss recognized in AOCI as of September 30, 2017 and December 31, 2016, and the amounts reclassified from AOCI into earnings for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands):

Amount of Loss Recognized
in AOCI on Derivative
(Effective Portion, net of tax) Amount of Loss Reclassified
from AOCI into Earnings
Three months ended
September 30, Nine months ended
September 30,

As of
September 30,
2017
As of December 31, 2016 Location of Loss Reclassified from AOCI into Earnings (Effective Portion) 2017 2016 2017 2016
Derivatives designated as hedging instruments
Interest rate swaps $ —
$ (2,520 ) Interest expense $ 20
$ (250 ) $ (320 ) $ (470 )
Debt financing and related expenses $ (4,680 ) $ —
$ (4,680 ) $ —

The fair value of the Company's derivatives 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 interest rate swaps use observable inputs such as interest rate yield curves. 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 ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~ ~~are shown below (dollars in thousands):~~

Description Frequency Asset / (Liability) Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3)
September 30, 2017 Interest rate swaps Recurring $ —
$ —
$ —
$ —
December 31, 2016 Interest rate swaps Recurring $ (4,070 ) $ —
$ (4,070 ) $ —

9~~. Commitments and Contingencies~~

~~Asbestos~~

~~As of~~ ~~September 30, 2017~~, the Company was a party to 600 pending cases involving an aggregate of 5,265 claims primarily alleging personal injury from exposure to asbestos containing materials formerly used in gaskets (both encapsulated and otherwise) allegedly manufactured or distributed by certain of its 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, excluding amounts reimbursed under the Company's primary insurance, at the applicable date and for the applicable periods:

Claims
pending at
beginning of
period

Claims filed
during
period

Claims
dismissed
during
period

Claims
settled
during
period

Average
settlement
amount per
claim during
period

Total defense
costs during
period
Nine Months Ended September 30, 2017 5,339
128
180
22
$ 5,375
$ 1,697,400
Fiscal Year Ended December 31, 2016 6,242
140
1,009
34
$ 15,624
$ 2,920,000

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

~~TRIMAS CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

The Company may be subjected to significant additional asbestos-related claims in the future, the cost of settling cases in which product identification can be made may increase, and the Company may be subjected to further claims in respect of the former activities of its acquired gasket distributors. The Company is unable to make a meaningful statement concerning the monetary claims made in the asbestos cases given that, among other things, claims may be initially made in some jurisdictions without specifying the amount sought or by simply stating the requisite or maximum permissible monetary relief, and may be amended to alter the amount sought. The large majority of claims do not specify the amount sought. Of the 5,265 claims pending at September 30, 2017, 54 set forth specific amounts of damages (other than those stating the statutory minimum or maximum). At September 30, 2017, of the 54 claims that set forth specific amounts, there were no claims seeking specific amounts for punitive damages. Below is a breakdown of the amount sought for those claims seeking specific amounts:

Compensatory
Range of damages sought (dollars in millions) $0.0 to $0.6 $0.6 to $5.0 $5.0+
Number of claims — 13 41

~~In addition, relatively few of the claims have reached the discovery stage and even fewer claims have gone past the discovery stage.~~

Total settlement costs (exclusive of defense costs) for all such cases, some of which were filed over 20 years ago, have been approximately $8.4 million. All relief sought in the asbestos cases is monetary in nature. To date, approximately 40% of the Company's costs related to settlement and defense of asbestos litigation have been covered by its primary insurance. Effective February 14, 2006, the Company entered into a coverage-in-place agreement with its first level excess carriers regarding the coverage to be provided to the Company for asbestos-related claims when the primary insurance is exhausted. The coverage-in-place agreement makes asbestos defense costs and indemnity insurance coverage available to the Company that might otherwise be disputed by the carriers and provides a methodology for the administration of such expenses. Nonetheless, the Company believes it is likely there will be a period within the next 12 months, prior to the commencement of coverage under this agreement and following exhaustion of the Company's primary insurance coverage, during which the Company will be solely responsible for defense costs and indemnity payments, the duration of which would be subject to the scope of damage awards and settlements paid.

Based on the settlements made to date and the number of claims dismissed or withdrawn for lack of product identification, the Company believes that the relief sought (when specified) does not bear a reasonable relationship to its potential liability. Based upon the Company's experience to date, including the trend in annual defense and settlement costs incurred to date, and other available information (including the availability of excess insurance), the Company does not believe these cases will have a material adverse effect on its financial position and results of operations or cash flows.

~~Claims and Litigation~~

The Company is subject to other claims and litigation in the ordinary course of business, but does not believe that any such claim or litigation will have a material adverse effect on its financial position and results of operations or cash flows.

10~~. Segment Information~~

TriMas groups its operating segments into reportable segments that provide similar products and services. Each operating segment has discrete financial information evaluated regularly by the Company's chief operating decision maker in determining resource allocation and assessing performance. Within these reportable segments, there are no individual products or product families for which reported net sales accounted for more than 10% of the Company's consolidated net sales. See below for more information regarding the types of products and services provided within each reportable segment:

~~Packaging –~~ ~~Highly engineered closure and dispensing systems for a range of end markets, including steel and plastic within industrial and consumer packaging applications.~~

~~Aerospace –~~ ~~Permanent blind bolts, temporary fasteners, highly engineered specialty fasteners, and other precision machined parts used in the commercial, business and military aerospace industries.~~

~~Energy –~~ ~~Metallic and non-metallic industrial sealant products and fasteners for the petroleum refining, petrochemical and other industrial markets.~~

~~TRIMAS CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~Engineered Components –~~ High-pressure and low-pressure steel cylinders for the transportation, storage and dispensing of compressed gases, and natural gas engines, compressors, gas production equipment and chemical pumps engineered at well sites for the oil and gas industry.

~~Segment activity is~~ as follows (dollars in thousands):



	June 30, 2020				December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Senior Notes	$	300,000	$	300,000	$	300,000	$	309,000

Three months ended
September 30, Nine months ended
September 30,
2017 2016 2017 2016
Net Sales
Packaging $ 89,560
$ 90,330
$ 259,260
$ 258,550
Aerospace 48,550
47,430
141,550
132,020
Energy 40,440
38,230
124,860
122,930
Engineered Components 30,780
26,300
96,860
94,990
Total $ 209,330
$ 202,290
$ 622,530
$ 608,490
Operating Profit (Loss)
Packaging $ 23,090
$ 20,090
$ 61,480
$ 59,340
Aerospace 7,760
6,660
19,690
13,670
Energy 1,240
(1,870 ) (2,550 ) (8,570 )
Engineered Components 3,310
3,180
13,000
12,620
Corporate expenses (7,280 ) (10,270 ) (21,510 ) (24,160 )
Total $ 28,120
$ 17,790
$ 70,110
$ 52,900

11. ~~Equity Awards~~

The Company maintains (or has maintained) the following long-term equity incentive plans or programs: the TriMas Corporation 2017 Equity and Incentive Compensation Plan, the TriMas Corporation Director Retainer Share Election Program, the 2011 TriMas Corporation Omnibus Incentive Compensation Plan and the TriMas Corporation 2006 Long Term Equity Incentive Plan (collectively, the "Plans"). The 2006 Long Term Equity Incentive Plan expired in 2016, such that, while existing grants will remain outstanding until exercised, settled, canceled, forfeited or expired, no new awards may be granted under the plan. See below for details of awards under the Plans by type.

~~Stock Options~~

~~The Company did not grant any stock option awards during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2017. Information related to stock options at~~ ~~September 30, 2017~~ ~~is as follows:~~

Number of
Stock Options Weighted Average Option Price Average Remaining Contractual Life (Years) Aggregate Intrinsic Value
Outstanding at January 1, 2017 206,854
$ 13.19

Granted —
—

  Exercised —
—

  Cancelled —
—

  Expired —
—

Outstanding at September 30, 2017 206,854
$ 13.19
6.8 $ 2,855,664

~~TRIMAS CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

As of September 30, 2017, 106,854 stock options outstanding were exercisable under the Plans. As of September 30, 2017, there was approximately $0.4 million of unrecognized compensation cost related to stock options that is expected to be recorded over a weighted average period of 1.8 years.

The Company recognized approximately $0.1 million of stock-based compensation expense related to stock options during the three months ended September 30, 2017 and 2016, respectively, and approximately $0.5 million and $0.1 million during the nine months ended September 30, 2017 and 2016, respectively. The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statement of income.

~~Restricted Shares~~

~~The Company awarded the following restricted shares during the~~ ~~nine~~ ~~months ended September 30, 2017:~~

~~granted 189,062 restricted shares of common stock to certain employees, which are subject only to a service condition and vest ratably over~~ ~~three years~~ ~~so long as the employee remains with the Company; and~~

~~granted 30,429~~ ~~restricted shares of common stock to its non-employee independent directors, which~~ ~~vest one year from date of grant so long as the director and/or Company does not terminate the director's service prior to the vesting date.~~

In addition, during the nine months ended September 30, 2017, the Company issued 10,389 shares related to director fee deferrals. The Company allows for its non-employee independent directors to make an annual election to defer all or a portion of their directors fees and to receive the deferred amount in cash or equity. Certain of the Company's directors have elected to defer all or a portion of their directors fees and to receive the amount in Company common stock at a future date.

During the nine months ended September 30, 2017, the Company awarded 111,761 performance-based shares of common stock to certain Company key employees which vest three years from the grant date so long as the employee remains with the Company. These awards are earned 50% based upon the Company's achievement of earnings per share compound annual growth rate ("EPS CAGR") metrics over a period beginning January 1, 2017 and ending December 31, 2019. The remaining 50% of the awards are earned based on the Company's total shareholder return ("TSR") relative to the TSR of the common stock of a pre-defined industry peer-group, measured over the performance period. TSR is calculated as the Company's average closing stock price for the 20-trading days at the end of the performance period plus Company dividends, divided by the Company's average closing stock price for the 20-trading days prior to the start of the performance period. The Company estimated the grant-date fair value and term of the awards subject to a market condition using a Monte Carlo simulation model, using the following weighted average assumptions: risk-free interest rate of 1.52% and annualized volatility of 35.6%. Depending on the performance achieved for these two metrics, the amount of shares earned, if any, can vary from 40% of the target award to a maximum of 200% of the target award for the EPS CAGR metric and 0% of the target award to a maximum of 200% of the target award for the TSR metric.

During 2015, the Company awarded performance-based shares of common stock to certain Company key employees which were earned based upon the Company's total TSR relative to the TSR of the common stock of a pre-defined industry peer-group and measured over a period beginning September 10, 2015 and ending on December 31, 2016. The Company attained 121.1% of the target on a weighted average basis, resulting in an increase of 12,718 shares during the nine months ended September 30, 2017.

~~Information related to restricted shares at~~ ~~September 30, 2017~~ ~~is as follows:~~

Number of Unvested Restricted Shares Weighted Average Grant Date Fair Value Average Remaining Contractual Life (Years) Aggregate Intrinsic Value
Outstanding at January 1, 2017 645,660
$ 20.45

  Granted 354,359
24.96

  Vested (236,198 ) 20.41

  Cancelled (18,561 ) 21.06

Outstanding at September 30, 2017 745,260
$ 22.59
1.1 $ 20,122,020

~~As of~~ ~~September 30, 2017, there was approximately $7.5 million of unrecognized compensation cost related to unvested restricted shares that is expected to be recorded over a weighted average period of~~ ~~2.1~~ ~~years.~~

~~TRIMAS CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

The Company recognized approximately $1.6 million and $1.0 million of stock-based compensation expense related to restricted shares during the three months ended September 30, 2017 and 2016, respectively, and approximately $4.6 million and $5.1 million during the nine months ended September 30, 2017 and ~~2016, respectively. The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statement of income.~~

12~~. Earnings per Share~~

Net income is divided by the weighted average number of common shares outstanding during the period to calculate basic earnings per share. Diluted earnings per share is calculated to give effect to stock options and restricted share awards. The following table summarizes the dilutive effect of restricted shares and options to purchase common stock for the three and nine months ended September 30, 2017 and 2016:

Three months ended
September 30, Nine months ended
September 30,
2017 2016 2017 2016
Weighted average common shares—basic 45,721,155
45,435,936
45,669,782
45,381,592
Dilutive effect of restricted share awards 233,859
244,757
226,617
248,942
Dilutive effect of stock options 74,347
79,762
57,179
83,339
Weighted average common shares—diluted 46,029,361
45,760,455
45,953,578
45,713,873

13~~. Defined Benefit Plans~~

Net periodic pension benefit costs for the Company's defined benefit pension plans cover certain foreign employees, union hourly employees and salaried employees. The components of net periodic pension cost for the three and ~~nine months ended September 30, 2017~~ ~~and~~ ~~2016~~ ~~are as follows (dollars in thousands):~~

Pension Plans
Three months ended
September 30, Nine months ended
September 30,
2017 2016 2017 2016
Service costs $ 290
$ 250
$ 840
$ 740
Interest costs 310
390
950
1,180
Expected return on plan assets (370 ) (420 ) (1,100 ) (1,260 )
Amortization of net loss 260
230
760
710
Net periodic benefit cost $ 490
$ 450
$ 1,450
$ 1,370

The Company contributed approximately $1.7 million and $2.8 million to its defined benefit pension plans during the three and nine months ended September 30, 2017, respectively. The Company expects to contribute approximately $3.4 million to its defined benefit pension plans for the full year ~~2017~~.

~~TRIMAS CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

14~~. Other Comprehensive Income (Loss)~~

~~Changes in AOCI by component for the~~ ~~nine months ended September 30, 2017~~ ~~are summarized as follows, net of tax (dollars in thousands):~~

Defined Benefit Plans Derivative Instruments Foreign Currency Translation Total
Balance, December 31, 2016 $ (12,120 ) $ (2,520 ) $ (9,760 ) $ (24,400 )
Net unrealized gains (losses) arising during the period ^(a)
—
(580 ) 4,640
4,060
Less: Net realized losses reclassified to net income ^(b)
(500 ) (3,100 ) —
(3,600 )
Net current-period other comprehensive income 500
2,520
4,640
7,660
Balance, September 30, 2017 $ (11,620 ) $ —
$ (5,120 ) $ (16,740 )

~~__________________________~~

^(a)~~Derivative instruments, net of income tax of approximately $0.4 million. See Note 8, "~~Derivative Instruments~~," for further details.~~

^(b)~~Defined benefit plans, net of income tax of approximately $0.2 million. See Note 13, "Defined Benefit Plans," for further details. Derivative instruments, net of income tax of approximately $1.9 million. See Note 8, "Derivative~~Derivatives Designated as Hedging Instruments~~," for further details.~~

~~Changes in AOCI by component for the nine months ended September 30, 2016 are summarized as follows, net of tax (dollars in thousands):~~

Defined Benefit Plans Derivative Instruments Foreign Currency Translation Total
Balance, December 31, 2015 $ (12,370 ) $ (1,790 ) $ 2,860
$ (11,300 )
Net unrealized losses arising during the period ^(a)
—
(3,950 ) (8,290 ) (12,240 )
Less: Net realized losses reclassified to net income ^(b)
(440 ) (290 ) —
(730 )
Net current-period other comprehensive income (loss) 440
(3,660 ) (8,290 ) (11,510 )
Balance, September 30, 2016 $ (11,930 ) $ (5,450 ) $ (5,430 ) $ (22,810 )

~~__________________________~~

^(a)~~Derivative instruments, net of income tax of approximately $2.4 million. See Note 8, "Derivative Instruments," for further details.~~

^(b)~~Defined benefit plans, net of income tax of approximately $0.2 million. See Note 13, "Defined Benefit Plans," for further details. Derivative instruments, net of income tax of approximately $0.2 million. See Note 8, "Derivative Instruments," for further details.~~

~~15. Subsequent Event~~

In October ~~2017,~~2018, 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. By doing so, the Company synthetically converted a portion of its U.S. dollar-based long-term debt into Euro-denominated long-term debt. The agreements have a five year tenor at notional amounts declining from ~~$150.0~~$125.0 million to $75.0 million over the contract period. Under the terms of the swap agreements, the Company is to receive net interest payments at a fixed rate of approximately ~~2.10%~~2.9% of the notional amount. At inception, the cross-currency swaps were designated as net investment hedges.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

As of June 30, 2020 and December 31, 2019, the fair value carrying amount of the Company's derivative instruments are recorded as follows (dollars in thousands):



		Asset / (Liability) Derivatives
Derivatives designated as hedging instruments	Balance Sheet Caption	June 30, 2020		December 31, 2019
Net Investment Hedges
Cross-currency swaps	Other assets	$	7,580	$	4,460

The following table summarizes the income recognized in accumulated other comprehensive income (loss) ("AOCI") on derivative contracts designated as hedging instruments as of June 30, 2020 and December 31, 2019, and the amounts reclassified from AOCI into earnings for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):



	Amount of Income Recognized in AOCI on Derivative (Effective Portion, net of tax)					Amount of Income (Loss) Reclassified from AOCI into Earnings
						Three months ended June 30,				Six months ended June 30,
	As of June 30, 2020		As of December 31, 2019		Location of Income (Loss) Reclassified from AOCI into Earnings (Effective Portion)	2020		2019		2020		2019
Net Investment Hedges
Cross-currency swaps	$	6,530	$	4,230	Other income, net	$	—	$	—	$	—	$	—

Over the next 12 months, the Company does not expect to reclassify any pre-tax deferred amounts from AOCI into earnings.

Derivatives Not Designated as Hedging Instruments

As of June 30, 2020, the Company was party to foreign currency exchange forward contracts to economically hedge changes in foreign currency rates with notional amounts of approximately $48.8 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, British pound and the Chinese yuan, and have various settlement dates through July 2020. 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.

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



		Amount of Income Recognized in Earnings on Derivatives
		Three months ended June 30,				Six months ended June 30,
	Location of Income Recognized in Earnings on Derivatives	2020		2019		2020		2019
Derivatives not designated as hedging instruments
Foreign exchange contracts	Other income, net	$	550	$	220	$	480	$	220

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Fair Value of Derivatives

The fair value of the Company's derivatives 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 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 June 30, 2020 and December 31, 2019 are shown below (dollars in thousands):



Description	Frequency	Asset / (Liability)			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
June 30, 2020
Cross-currency swaps	Recurring	$	7,580		$	—	$	7,580		$	—
Foreign exchange contracts	Recurring	$	180		$	—	$	180		$	—
December 31, 2019
Cross-currency swaps	Recurring	$	4,460		$	—	$	4,460		$	—
Foreign exchange contracts	Recurring	$	(770	)	$	—	$	(770	)	$	—

12. Leases

The Company leases certain equipment and facilities under non-cancelable operating leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet; expense related to these leases is recognized on a straight-line basis over the lease term.

The components of lease expense are as follows (dollars in thousands):



	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Operating lease cost	$	2,020	$	1,620	$	3,670	$	3,140
Short-term, variable and other lease costs	270		170		580		410
Total lease cost	$	2,290	$	1,790	$	4,250	$	3,550

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

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



Year ended December 31,	Operating Leases^(a)
2020 (excluding the six months ended June 30, 2020)	$	3,880
2021	7,370
2022	6,590
2023	5,630
2024	4,320
Thereafter	13,560
Total lease payments	41,350
Less: Imputed interest	(5,540		)
Present value of lease liabilities	$	35,810

__________________________


^(a)	The maturity table excludes cash flows associated with exited lease facilities. 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 lease term of the Company's operating leases as of June 30, 2020 is approximately 6.6 years. The weighted-average discount rate as of June 30, 2020 is approximately 4.7%.

Cash paid for amounts included in the measurement of operating lease liabilities was approximately $3.0 million and $3.2 million during the six months ended June 30, 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 $10.2 million, primarily due to the acquisitions of RSA and Rapak, and $0.9 million during the six months ended June 30, 2020 and 2019, respectively.

13. Other long-term liabilities

Other long-term liabilities consist of the following components (dollars in thousands):



	June 30, 2020		December 31, 2019
Non-current asbestos-related liabilities	$	27,800	$	6,200
Other long-term liabilities	30,110		34,610
Total other long-term liabilities	$	57,910	$	40,810

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

14. Commitments and Contingencies

Asbestos

As of June 30, 2020, the Company was a party to 352 pending cases involving an aggregate of 4,732 claims 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. 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:



	Claims pending at beginning of period	Claims filed during period	Claims dismissed during period	Claims settled during period	Claims pending at end of period	Average settlement amount per claim during period		Total defense costs during period
Six Months Ended June 30, 2020	4,759	110	129	8	4,732	$	54,375	$	1,090,000
Fiscal Year Ended December 31, 2019	4,820	143	172	32	4,759	$	16,616	$	2,250,000

The Company may be subjected to significant additional asbestos-related claims in the future, and will aggressively defend or reasonably resolve, as appropriate. The cost of settling cases in which product identification can be made may increase, and the Company may be subjected to further claims in respect of the former activities of its acquired gasket distributors. The cost of claims varies as claims may be initially made in some jurisdictions without specifying the amount sought or by simply stating the requisite or maximum permissible monetary relief, and may be amended to alter the amount sought. The large majority of claims do not specify the amount sought. Of the 4,732 claims pending at June 30, 2020, 55 set forth specific amounts of damages (other than those stating the statutory minimum or maximum). At June 30, 2020, of the 55 claims that set forth specific amounts, there were no claims seeking specific amounts for punitive damages. Below is a breakdown of the compensatory damages sought for those claims seeking specific amounts:

Relatively few 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 $9.8 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.

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. In the past 3 years, however, the number of new claim filings, and costs to defend, have become much more consistent, ranging between 143 to 173 new claims per year and total defense costs ranging between $2.2 million and $2.3 million.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

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 believed 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 three months ended June 30, 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. The Company believes this change is preferable, as asbestos-related defense costs represent expenditures related to legacy activities that do not contribute to current or future revenue generating activities, and recording an estimate of the full liability for asbestos-related costs, where estimable with reasonable precision, provides a more complete assessment of the liability associated with resolving asbestos-related claims.

This accounting change has been reflected as a change in accounting estimate effected by a change in accounting principle. In the three months ended June 30, 2020, the Company recorded a non-cash, pre-tax charge for asbestos-related costs of approximately $23.4 million, which is included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

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. The study from the Company’s actuary, based on data as of December 31, 2019, provided for a range of possible future liability from $31.5 million to $43.3 million. The Company does not believe any amount within the range of potential outcomes represents a better estimate than another given the many factors and assumptions inherent in the projections. Therefore, the Company has recorded the liability at the low-end of the range. As of June 30, 2020, the Company’s total asbestos-related liability is $30.3 million, and is included in accrued liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheet.

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. The Company is party to a coverage-in-place agreement (entered into in 2006) with its first level excess carriers regarding the coverage to be provided to the Company for asbestos-related claims. The coverage-in-place agreement makes asbestos defense costs and indemnity insurance coverage available to the Company that might otherwise be disputed by the carriers and provides a methodology for the administration of such expenses. The Company will continue to be solely responsible for defense costs and indemnity payments prior to the commencement of coverage under this agreement, the duration of which would be subject to the scope of damage awards and settlements paid. Based upon the Company’s review of the actuarial study, the Company does not believe it is probable that it will reach the threshold of qualified future settlements required to commence excess carrier insurance coverage under the coverage-in-place agreement.

While the Company recorded a significant non-cash charge in the three months ended June 30, 2020 in connection with its change in accounting policy, based upon the Company's experience to date, including the trend in annual defense and settlement costs incurred to date, and other available information (including the availability of excess insurance), the Company does not believe these cases will have a material adverse effect on its financial position or cash flows.

Claims and Litigation

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

15. Segment Information

TriMas reports its operations in three reportable segments: Packaging, Aerospace, and Specialty Products. Each of these segments has discrete financial information that is regularly evaluated by TriMas' president and chief executive officer (chief operating decision maker) in determining resource, personnel and capital allocation, as well as assessing strategy and performance. The Company utilizes its proprietary TriMas Business Model as a standardized set of processes to manage and drive results and strategy across its multi-industry businesses.

Within each of the Company's reportable segments, there are no individual products or product families for which reported net sales accounted for more than 10% of the Company's consolidated net sales. See below for more information regarding the types of products and services provided within each reportable segment:

Packaging – The Packaging segment, which consists primarily of the Rieke^®, Taplast, Stolz and Rapak® 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, drum and pail closures and flexible spouts), 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, home care, food and beverage, 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^™, 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.

Segment activity is as follows (dollars in thousands):



	Three months ended June 30,						Six months ended June 30,
	2020			2019			2020			2019
Net Sales
Packaging	$	128,830		$	103,990		$	228,880		$	192,830
Aerospace	42,610			49,510			91,530			95,090
Specialty Products	28,110			37,330			61,930			76,280
Total	$	199,550		$	190,830		$	382,340		$	364,200
Operating Profit (Loss)
Packaging	$	24,040		$	22,640		$	42,320		$	40,280
Aerospace	(4,210		)	7,650			870			13,460
Specialty Products	(5,940		)	5,410			(2,510		)	10,110
Corporate	(32,040		)	(8,640		)	(39,000		)	(16,990		)
Total	$	(18,150	)	$	27,060		$	1,680		$	46,860

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

16. Equity Awards

Stock Options

The Company did not grant any stock option awards during the six months ended June 30, 2020. Information related to stock options at June 30, 2020 is as follows:



	Number of Stock Options	Weighted Average Option Price		Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2020	150,000	$	17.87
Granted	—	—
Exercised	—	—
Cancelled	—	—
Expired	—	—
Outstanding at June 30, 2020	150,000	$	17.87	6.1	$	912,000

As of June 30, 2020, 150,000 stock options outstanding were exercisable under the Company's long-term equity incentive plans. As of June 30, 2020, there was 0 unrecognized compensation cost related to stock options remaining.

The Company recognized 0 stock-based compensation expense related to stock options during the three and six months ended June 30, 2020 and approximately $0.1 million of stock-based compensation expense during the three and six months ended June 30, 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 the six months ended June 30, 2020:

granted 178,666 RSUs to certain employees, which are subject only to a service condition and vest ratably over three years so long as the employee remains with the Company;

granted 31,816 RSUs to certain employees, which are subject only to a service condition and fully vest at the end of three years so long as the employee remains with the Company;

granted 2,558 RSUs to certain employees, which are subject only to a service condition and vest one year from the date of grant so long as the employee remains with the Company;

granted 30,590 RSUs to its non-employee independent directors, which vest one year from date of grant so long as the director and/or Company does not terminate the director's service prior to the vesting date; and

issued 2,394 RSUs related to director fee deferrals during the six months ended June 30, 2020 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.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

During 2020, the Company awarded 113,146 performance-based RSUs to certain Company key employees which vest three years from the grant date as long as the employee remains with the Company. These awards are earned 50% based upon the Company's achievement of an earnings per share compound annual growth rate ("EPS CAGR") metric over a period beginning January 1, 2020 and ending December 31, 2022. The remaining 50% of the awards are earned based on the Company's total shareholder return ("TSR") relative to the TSR of the common stock of a pre-defined industry peer-group, measured over the performance period. TSR is calculated as the Company's average closing stock price for the 20 trading days at the end of the performance period plus Company dividends, divided by the Company's average closing stock price for the 20 trading days prior to the start of the performance period. The Company estimates the grant-date fair value subject to a market condition using a Monte Carlo simulation model, using the following weighted average assumptions: risk-free rate of 0.56% and annualized volatility of 26.2%. Depending on the performance achieved for these two metrics, the amount of shares earned, if any, can vary for each metric from 0% of the target award to a maximum of 200% of the target award.

In addition, the Company awarded 87,034 performance-based RSUs to certain Company key divisional employees which vest three years from the grant date as long as the employee remains with the Company. These awards are earned based upon the Company's stock price performance over the period from January 1, 2020 and ending December 31, 2022. The stock price achievement is calculated based on the Company's average closing stock price for each quarter end for the 20 trading days up to and including March 31, June 30, September 30, and December 31, 2022, respectively. The Company estimates the grant-date fair value subject to a market condition using a Monte Carlo simulation model, using the following weighted average assumptions: risk-free rate of 0.85% and annualized volatility of 25.2%. Depending on the performance achieved for this metric, the amount of shares earned if any, can vary from 0% of the target award to a maximum of 160% of the target award, although it automatically is earned at the target award level if the Company's stock price is equal to or greater than a specified stock price for either five consecutive trading days or 20 total trading days during the performance period.

During 2017, the Company awarded performance-based RSUs to certain Company key employees which were earned based upon the Company's TSR relative to the TSR of the common stock of a pre-defined industry peer-group and measured over a period beginning January 1, 2017 and ending on December 31, 2019. Depending on the performance achieved, the amount of shares earned could vary from 0% of the target award to a maximum of 200% of the target award. The Company attained 127.4% of the target, resulting in an increase of 27,567 shares during the six months ended June 30, 2020.

Information related to RSUs at June 30, 2020 is as follows:



	Number of Unvested RSUs		Weighted Average Grant Date Fair Value		Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2020	622,528		$	30.77
Granted	473,771		21.37
Vested	(297,203	)	27.91
Cancelled	(9,583	)	29.59
Outstanding at June 30, 2020	789,513		$	26.51	1.7	$	18,908,836

As of June 30, 2020, there was approximately $12.2 million of unrecognized compensation cost related to unvested RSUs that is expected to be recorded over a weighted average period of 2.3 years.

The Company recognized stock-based compensation expense related to RSUs of approximately $2.7 million and $1.6 million during the three months ended June 30, 2020 and 2019, respectively and approximately $4.7 million and $2.9 million during the six months ended June 30, 2020 and 2019, respectively. The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

17. Earnings per Share

Net income is divided by the weighted average number of common shares outstanding during the period to calculate basic earnings per share. Diluted earnings per share is calculated to give effect to stock options and RSUs. For the three and six months ended June 30, 2020, no restricted shares or options to purchase shares were included in the computation of net income (loss) per share because to do so would be anti-dilutive. The following table summarizes the dilutive effect of RSUs and options to purchase common stock for the three and six months ended June 30, 2020 and 2019:



	Three months ended June 30,		Six months ended June 30,
	2020	2019	2020	2019
Weighted average common shares—basic	43,463,235	45,592,075	43,832,144	45,585,445
Dilutive effect of restricted stock units	—	174,571	—	253,796
Dilutive effect of stock options	—	61,669	—	71,008
Weighted average common shares—diluted	43,463,235	45,828,315	43,832,144	45,910,249

In March 2020, the Company announced its Board of Directors had authorized the Company to increase the purchase of its common stock up to $250 million in the aggregate. The initial authorization, approved in November 2015, authorized up to $50 million in the aggregate of its common stock. The Company purchased 0 shares during the three months ended June 30, 2020 and 1,253,650 shares of its outstanding common stock for approximately $31.6 million during the six months ended June 30, 2020. During the three and six months ended June 30, 2019, the Company purchased 502,500 and 527,400 shares of its outstanding common stock for approximately $14.7 million and $15.4 million, respectively.

18. Defined Benefit Plans



	Pension Plans
	Three months ended June 30,						Six months ended June 30,
	2020			2019			2020			2019
Service costs	$	310		$	260		$	630		$	520
Interest costs	230			270			470			540
Expected return on plan assets	(360		)	(350		)	(730		)	(700		)
Amortization of net loss	230			150			450			290
Net periodic benefit cost	$	410		$	330		$	820		$	650

The service cost component of net periodic benefit cost 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.

The Company contributed approximately $0.3 million and $0.7 million to its defined benefit pension plans during the three and six months ended June 30, 2020. The Company expects to contribute approximately $1.1 million to its defined benefit pension plans for the full year 2020.

TRIMAS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

19. Other Comprehensive Income (Loss)

Changes in AOCI by component for the six months ended June 30, 2020 are summarized as follows, net of tax (dollars in thousands):



	Defined Benefit Plans			Derivative Instruments		Foreign Currency Translation			Total
Balance, December 31, 2019	$	(9,930	)	$	4,230	$	(300	)	$	(6,000	)
Net unrealized gains (losses) arising during the period ^(a)	—			2,300		(6,950		)	(4,650		)
Less: Net realized losses reclassified to net income ^(b)	(310		)	—		—			(310		)
Net current-period other comprehensive income (loss)	310			2,300		(6,950		)	(4,340		)
Balance, June 30, 2020	$	(9,620	)	$	6,530	$	(7,250	)	$	(10,340	)

__________________________


^(a)	Derivative instruments, net of income tax of approximately $0.8 million. See Note 11, "Derivative Instruments," for further details.


^(b)	Defined benefit plans, net of income tax of approximately $0.1 million. See Note 18, "Defined Benefit Plans," for further details.

Changes in AOCI by component for the six months ended June 30, 2019 are summarized as follows, net of tax (dollars in thousands):



	Defined Benefit Plans			Derivative Instruments			Foreign Currency Translation			Total
Balance, December 31, 2018	$	(7,200	)	$	940		$	(10,590	)	$	(16,850	)
Net unrealized gains arising during the period ^(a)	—			1,490			(200		)	1,290
Less: Net realized losses reclassified to net income ^(b)	(200		)	—			—			(200		)
Net current-period other comprehensive income (loss)	200			1,490			(200		)	1,490
Reclassification of stranded tax effects	(1,260		)	(10		)	—			(1,270		)
Balance, June 30, 2019	$	(8,260	)	$	2,420		$	(10,790	)	$	(16,630	)

__________________________


^(a)	Derivative instruments, net of income tax of approximately $0.5 million. See Note 11, "Derivative Instruments," for further details.


^(b)	Defined benefit plans, net of income tax of approximately $0.1 million. See Note 18, "Defined Benefit Plans," for further details.

Item 2.2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition contains forward-looking statements regarding industry outlook and our expectations regarding the performance of our business. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under the heading "Forward-Looking Statements," at the beginning of this report. Our actual results may differ materially from those contained in or implied by any forward-looking statements. You should read the following discussion together with the Company's reports on file with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

Introduction

We are a diversified ~~industrial~~global manufacturer and provider of products for customers primarily in the consumer products, aerospace ~~industrial, petrochemical, refinery~~& defense and ~~oil and gas end~~industrial markets. Our wide range of innovative ~~and quality~~ product solutions are engineered and designed to ~~address~~solve application-specific challenges that our customers face. We believe our businesses share important and distinguishing characteristics, including: well-recognized and leading brand names in the focused markets we serve; ~~established distribution networks;~~ innovative product technologies and features; customer approved processes and qualified products; established distribution networks; relatively low ongoing capital investment requirements; strong cash flow conversion and long-term growth opportunities. WeWhile the majority of our revenue is in the United States, we manufacture and supply products globally to a wide range of companies. We ~~are principally engaged~~report our business activity in ~~four reportable~~three segments: Packaging, Aerospace ~~Energy~~ and ~~Engineered Components.~~Specialty Products.

In December 2019, we completed the sale of our Lamons division ("Lamons"), a manufacturer and distributor of industrial sealing, fastening and specialty products primarily used in the petrochemical and petroleum-refining industries, to two wholly-owned subsidiaries of an investment fund sponsored by First Reserve. The sale of Lamons was an important strategic step for TriMas, in streamlining our portfolio of businesses, as it significantly reduced our exposure to the oil and gas market from over 20% of net sales in 2019 to less than 3% in second quarter 2020, and allowed us to further invest in our Packaging and Aerospace segments. We received net after-tax proceeds from the sale of approximately $110.9 million in 2019, subject to certain adjustments as set forth in the Purchase Agreement which were finalized in the first quarter of 2020, resulting in a $1.8 million payment to us. The financial results of Lamons were previously reported within our Specialty Products segment. The financial position, results of operations and cash flows of Lamons are reported as discontinued operations for all periods presented through the date of disposition.

Key Factors ~~and Risks~~ Affecting Our Reported ~~Results.~~Results

Our businesses and results of operations depend upon general economic ~~conditions and we~~conditions. We serve ~~some~~ customers in ~~cyclical~~ industries that are highly competitive, cyclical and ~~are themselves~~that may be significantly impacted by changes in economic or geopolitical conditions. ~~There has been low overall economic growth, particularly in~~

In March 2020, the President of the United States declared the coronavirus ("COVID-19") outbreak a national emergency, as the World Health Organization determined it was a pandemic. In response to the COVID-19 pandemic, federal, provincial, state, county and ~~global economic conditions~~local governments and public health organizations or authorities around the world have implemented a variety of measures intended to control the spread of the virus, including quarantines, "shelter-in-place" or "stay-at-home" and similar orders, travel restrictions, business curtailments and closures, social distancing, personal hygiene requirements, and other measures.

We have been ~~relatively stable over~~and continue to be focused on making sure the working environments for our employees are safe so our operations have the ability to deliver the products needed to support the COVID-19 pandemic. Nearly all of our manufacturing sites have been deemed essential operations and remained open through the past ~~couple~~four months at varying levels of ~~years.~~

~~During the third quarter~~capacity and efficiency, experiencing only temporary shutdowns due to country-specific government mandates or for thorough cleaning as a result of 2017, there were two main factors impacting our reported results. First, in September 2017, we refinanced our long-term debt, issuing $300 million principal of 4.875% senior unsecured notes due October 2025 ("Senior Notes") at par value in a private placement offering. Proceeds from the Senior Notes offering were used to repay all outstanding obligationssuspected COVID-19 cases. The health of our ~~prior term loan A facility, repay a portion~~employees, and the ability of ~~outstanding obligations under~~ our ~~accounts receivable facility~~facilities to remain operational in the current regulated environment, will be critical to our future results of operations.

Our divisions were impacted in first quarter 2020 at differing levels and ~~pay fees~~times, beginning with our Asian facilities and ~~expenses related~~strategic supply network, both primarily in China, in late January, followed by our European (primarily Italy) and North American facilities in February and March. We implemented new work rules and processes, which promote social distancing and increased hygiene to ensure the ~~refinancing. In connection with the Senior Notes offering, we also amended~~safety of our ~~existing credit agreement ("Credit Agreement") to increase~~employees, particularly at our production facilities. These measures, while not easily quantifiable, have increased the level of ~~permitted foreign currency borrowings, resize~~production inefficiencies related to absenteeism, the resulting inefficient manufacturing scheduling and short-term idling of production. We continue to operate with these protocols in place, which have impacted our ~~revolving loan commitments~~second quarter results.

Overall, our second quarter 2020 net sales increased compared to second quarter 2019, primarily as a result of robust organic sales growth in our Packaging segment, particularly for dispensing and ~~extend~~closure products we supply that are used to fight the ~~maturity to September 2022. We paid fees~~spread of germs, and ~~expenses~~as a result of ~~approximately $10.8 million~~acquisitions. These increases more than offset declines in ~~connection with refinancing-related activities, of which approximately $6.0 million was capitalized as deferred financing fees~~sales in our Aerospace and ~~$4.8 million was expensed, which was~~Specialty Products segments, primarily related to the ~~termination~~effects of ~~interest rate swap agreements.~~ the COVID-19 pandemic.

The most significant drivers of change in results of operations in second quarter 2020 compared with second quarter 2019 were a change in accounting policy for asbestos-related defense costs, realignment expenses we incurred in response to decreased customer demand following the COVID-19 outbreak, and the impact of our recent acquisitions.

In ~~addition,~~second quarter 2020, we elected to change our accounting policy for asbestos-related defense costs from accruing for probable and reasonably estimable defense costs associated with known claims expected to settle to accruing for all future defense costs for both known and unknown claims, which we now believe can be reasonably estimated. This accounting change has been reflected as a change in accounting estimate effected by a change in accounting principle. We recorded a non-cash, pre-tax charge for asbestos-related costs of approximately $23.4 million, which is included in selling, general and administrative expenses.

We undertook certain realignment actions, primarily in our Aerospace and Specialty Products segments, during second quarter 2020 in response to reduced end market demand following the outbreak of COVID-19. We recorded non-cash charges of approximately ~~$2.0~~$13.2 million related to inventory reductions, primarily as a result of a strategic decision in our Arrow Engine division to streamline its product line offering. We also recorded charges of approximately $2.2 million related to certain production equipment removed from service given reduced demand levels. In addition, we reduced our employment levels given lower customer demand, incurring approximately $3.1 million in severance charges.

In April 2020, we acquired the ~~write-off~~Rapak brand, including certain bag-in-box product lines and assets ("Rapak") for an aggregate amount of ~~previously capitalized deferred financing fees.~~

~~The second factor affecting~~approximately $11.4 million. Rapak, which is reported in our ~~third quarter 2017 results was Hurricane Harvey, which primarily impacted our Energy reportable segment. While we sustained limited structural damage, our~~Packaging segment, has three manufacturing ~~facility in Houston, Texas was closed for one week and certain of our branch~~ locations in ~~Texas and Louisiana were closed~~the United States. Rapak contributed approximately $4.5 million of net sales during the second quarter within our Packaging segment, although it is performing near break-even operating profit as demand for ~~up to two weeks following the storm~~its products, particularly those used in quick service restaurant applications, has significantly declined from pre-acquisition levels in 2019 due to flooding in the surrounding region. When we initially resumed operations, our facilities did not operate at full capacity or efficiency. In addition, many of our customers’ facilities were temporarily idled as these companies evaluated the impact of COVID-19.

In February 2020, we completed the ~~storm before resuming operations. In~~acquisition of RSA Engineered Products ("RSA"), a provider of highly-engineered and proprietary components for air management systems used in critical flight applications, for an aggregate amount of approximately $83.7 million, net of cash acquired. RSA is located in Simi Valley, California and designs, engineers and manufactures highly-engineered components, including air ducting products, connectors and flexible joints, predominantly used in aerospace and defense engine bleed air, anti-icing and environmental control system applications. RSA contributed approximately $5.9 million of net sales during the second ~~half of September,~~quarter within our Aerospace segment.

Additional Key Risks that May Affect Our Reported Results

The COVID-19 pandemic impacted our second quarter results, and we ~~increased our staffing levels~~expect it will continue to ~~ensure we could meet our customers' requirements as they assessed~~impact us in the ~~condition of their facilities and product requirements. While we were able to respond to~~future at varying degrees. We expect the ~~immediate~~second quarter robust customer demand we experienced for our Packaging segment's dispensers and ~~achieve expected sales~~closures used in personal care and home care (such as cleaning and laundry applications) to continue. We are actively collaborating with our customers and strategic supply partners to manage production capacity and supply chain availability as efficiently as possible. We believe industrial demand in North America will continue to be lower than in 2019, and we are uncertain how demand will be impacted as many of the shelter-in-place orders are adjusted or lifted, particularly in North America, where orders for our industrial cylinders, for example, are heavily influenced by spring and summer levels ~~we also incurred higher-than-normal operating costs due~~of construction and HVAC activity, which has yet to ~~the inability to efficiently plan and schedule required production. In addition, initial customer demand was for standard products rather than our more highly-engineered products, resulting~~commence in a ~~less favorable product~~meaningful way. We expect the aerospace market to experience the most severe dislocation going forward. With the current travel restrictions and significant drop in passenger miles, aircraft manufacturers have begun to slow or halt production, and we experienced a significant drop in aerospace-related sales ~~mix. As a result~~in late second quarter, and expect demand for our products tied to commercial aircraft build rates to decline significantly compared with first half 2020 as well as 2019 levels for the remainder of ~~lower absorption due to~~ the lost production days, the higher cost of production when we resumed operations, and the less favorable product sales mix, we estimate our operating profit was negatively impacted by approximately $1 millionyear.

We have executed realignment actions in the ~~third~~second quarter of ~~2017.~~

~~In addition~~2020, primarily in our Aerospace and Specialty Products segments, to protect against the ~~third quarter 2017 events, the most significant external factor affecting us recently has been the impact of low oil prices, which began~~uncertain end market demand. We will continue to decline in the fourth quarter of 2014, and since have remained at low levels. This decline has most directly impacted the Arrow Engine business, which serves the upstream oil and natural gas markets at the well site, within our Engineered Components reportable segment. Arrow Engine has experienced a more than 75% decline in net sales from pre-2015 levelsassess further actions if required. However, as a result of the ~~low oil-related~~pandemic's impact on global economic activity, and ~~end-market demand. Net sales were slightly higher~~the continued potential impact to our future results of operations, as well as to TriMas' market capitalization, we may record additional cash and non-cash charges related to incremental realignment actions, as well as for uncollectible customer account balances, excess inventory and idle production equipment. Further, we may be required to conduct an evaluation of triggering events as to whether there is a reduction in the ~~first nine months~~fair value of ~~2017 compared with~~our goodwill and intangible assets, particularly in our Aerospace divisions, if the ~~first nine months of 2016. While oil prices have fluctuated~~sales decline that occurred in ~~recent months, they remain at low levels. We expect net sales to remain at a low level compared with historical levels until~~June 2020 continues, which could result in an impairment charge.

Despite the price of oil increases and remains higher over a sustained period where our customers decide to increase their activity levels and related well-site investments. In response to the reduced demand, Arrow Engine has lowered its cost structure over the past two years to align with currentpotential decline in future demand levels and ~~allowed it to attain approximately break-even operating profit during full year 2016 and the first nine months~~results of ~~2017.~~

Low oil prices have also impacted our Energy reportable segment. Historically, a portion of this business has served the upstream market, in addition to primarily serving petrochemical facilities and oil refineries in the downstream oil and gas markets. There have been minimal upstream sales in our Energy reportable segment over the past 18 to 24 months. In addition to the impact of lower oil prices, there has been a shift over the past few years in our Energy reportable segment from historical demand and activity, both in the United States and internationally. Petrochemical plants and refinery customers deferred shutdown activity, and we experienced decreases in engineering and construction ("E&C") customer activity. Our sales and margin levels over this period have declined significantly due to the mix of product sales and inefficiencies that resulted from the shift in activity levels. The current lower oil prices have continued to place further pressure on the top-line and predictability of customer order patterns. Given these factors, we have been realigning the business and its fixed cost structure with the current business environment, aggressively closing and consolidating facilities and seeking alternate lower-cost sources for input costs, including exits of our Wolverhampton, United Kingdom and Reynosa, Mexico facilities during 2017. We are now realizing the benefit of the cost savings and operational efficiencies associated with leveraging the new lower fixed cost structure and other initiatives, as evidenced by our improvement in year-over-year operating profit in 2017, albeit tempered in third quarter 2017 by the impact of hurricane Harvey. We will continue to evaluate the cost structure and physical footprint of the business.

One other recent factor impacting our businesses was within our Aerospace reportable segment, where in the first nine months of 2016, we experienced a reduction in sales, and significantly lower profit margins compared to the prior year. These reductions wereoperations as a result of ~~production~~the COVID-19 pandemic, at present, we believe our capital structure is in a solid position, and ~~scheduling challenges~~we have ample cash and available liquidity under our revolving credit facility sufficient to meet our debt service obligations, capital expenditure requirements and other short-term and long-term obligations for the foreseeable future.

The extent of the COVID-19 pandemic's effect on our operational and financial performance will depend in ~~one~~large part on future developments, which cannot be predicted with confidence at this time. Future developments include the duration, scope and severity of ~~our Aerospace fastener facilities, significantly lower fixed cost absorption~~the pandemic, the actions taken to contain or mitigate its impact, and inefficiencies as we adjusted to changes in demand levels and customer order patterns, and integration costs associated with our November 2015 machined components facility acquisition. We established plans to address these matters, and have been executing against those plans, as evidenced by improved operating profit margins in the ~~first nine months~~resumption of ~~2017 compared~~widespread economic activity. Due to the ~~first nine months~~inherent uncertainty of ~~2016, as well as~~the unprecedented and rapidly evolving situation, we are unable to predict with any confidence the likely impact of the COVID-19 pandemic on ~~a sequential quarterly basis through~~our future operations.

Beyond the ~~first three quarters of 2017.~~

Each year, our businesses target cost savings from continuous improvement and productivity initiatives in an effort to lower input costs or improve throughput and yield rates with a goal of at least covering inflationary and market cost increases. In addition, we continuously review our costs to ensure alignment between current demand and cost structure.

~~Critical~~unique risks presented by the COVID-19 pandemic, other critical factors affecting our ability to succeed include: our ability to create organic growth through product development, ~~cross selling~~cross-selling and extending product-line offerings, and our ability to quickly and cost-effectively introduce and successfully launch new products; our ability to acquire and integrate companies or products that supplement existing product lines, add new distribution channels or customers, expand our geographic coverage or enable better absorption of overhead costs; our ability to manage our cost structure more efficiently via supply base management, internal sourcing and/or purchasing of materials, selective outsourcing and/or purchasing of support functions, working capital management, and greater leverage of our administrative functions. ~~If we are unable to do any of the foregoing successfully, our financial condition and results of operations could be materially and adversely impacted.~~

Our overall business does not experience significant seasonal fluctuation, other than our fourth quarter, which has tended to be the lowest net sales quarter of the year ~~given~~due to holiday shutdowns inat certain customers or other customers deferring capital spending to the ~~new~~following year. WeGiven the short-cycle nature of most of our businesses, we do not consider sales order backlog to be a material ~~factor in our business.~~factor. A growing ~~portion~~amount of our sales is derived from international sources, which exposes us to certain risks, including currency risks.

We are sensitive to price movements in our raw materials supply base. Our largest raw material purchases are for ~~steel, aluminum, polyethylene~~resins (such as polypropylene and other resins and utility-related inputs. Historically, we have experienced volatility in costs of steel and resin and have worked with our suppliers to manage costs and disruptions in supply. We also utilize pricing programs to pass increasedpolyethylene), steel, aluminum and ~~resin~~other oil and metal-based purchased components. While material cost changes did not have a significant impact in the first half of 2020 compared with first half 2019, there has been some volatility over the past two years as a direct and indirect result of foreign trade policy, where tariffs on certain of our commodity-based products sourced from Asia have been instituted, and certain North American suppliers have opportunistically increased their prices. As needed, we have taken actions, and will continue to take actions, to mitigate such increases, including implementing commercial pricing adjustments, resourcing to alternate suppliers and insourcing of previously sourced products to better leverage our global manufacturing footprint. Although we believe we are generally able to mitigate the impact of higher commodity costs, ~~to customers. Although~~ we may experience ~~delays in our ability to implement price increases, we have been generally able to recover such increased costs. We may experience~~additional material costs and disruptions in supply in the future and may not be able to pass along higher costs ~~associated with such disruptions~~ to our customers in the form of price ~~increases.~~increases or otherwise mitigate the impacts to our operating results.

~~Certain~~Although we have escalator/de-escalator clauses in commercial contracts with certain of our ~~businesses are sensitive~~customers, or can modify prices based on market conditions to ~~oil price movements. As noted earlier, our~~recover higher costs, we cannot be assured of full cost recovery in the open market.

Our Arrow Engine business in our Specialty Products segment is ~~most directly impacted by significant volatility~~sensitive to the demand for natural gas and crude oil in ~~oil prices. Arrow Engine's pumpjack~~North America. For example, demand for engine, pump jack and ~~other engine sales and related parts, which comprise a significant portion of the business,~~compressor products are impacted by active oil and gas ~~drilling levels,~~ rig counts ~~well completion activities~~ and wellhead investment activities. Separately, oil-based commodity pricing. In addition, a portion of our Energy reportable segment serves upstream customers at oil well sites that have been impacted by lower oil prices. The majority of this segment provides parts for refineries and chemical plants, which may or may not decide to incur capital expenditures for preventive maintenance or capacity expansion activities, both of which require use of our gaskets and bolts, in times of fluctuating oil prices. Our Packaging reportable segment may be impacted by oil prices, as it iscosts are a significant driver of ~~resin pricing, although~~raw materials and purchased components used within our Packaging segment.

Each year, as a core tenet of the TBM, our businesses target cost savings from Kaizen and continuous improvement initiatives in an effort to reduce, or otherwise offset, the impact of increased input and conversion costs through increased throughput and yield rates, with a goal of at least covering inflationary and market cost increases. In addition, we ~~generally are able~~continuously review our operating cost structures to ~~maintain profit levels when oil prices change due~~ensure alignment with current market demand.

We continue to ~~escalator/de-escalator clauses~~evaluate alternatives to redeploy the cash generated by our businesses, one of which includes returning capital to our shareholders. In November 2015, our Board of Directors authorized up to $50 million in ~~contracts with many~~share repurchases. During 2019, our Board of Directors increased the authorization to $75 million in February, and later to $150 million in November. In first quarter 2020, our Board of Directors further increased the authorization to $250 million. In the six months ended June 30, 2020, we purchased 1,253,650 shares of our ~~customers.~~outstanding common stock for approximately $31.6 million. During the three and six months ended June 30, 2019, we purchased 527,400 shares of our outstanding common stock for approximately $15.4 million.

Each increase in share repurchase authorization includes the value of shares already purchased under the previous authorization. We will continue to evaluate opportunities to return capital to shareholders through the purchase of our common stock, depending on market conditions and other factors. In March 2020, given the uncertainty surrounding the COVID-19 pandemic, we temporarily suspended our share repurchase program in order to conserve available cash.

Segment Information and Supplemental Analysis

The following table summarizes financial information for our reportable segments for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 (dollars in thousands):


	Three months ended September 30,										Three months ended June 30,
	2017			As a Percentage of Net Sales		2016			As a Percentage of Net Sales		2020			As a Percentage of Net Sales		2019			As a Percentage of Net Sales
Net Sales
Packaging	$	89,560		42.8	%	$	90,330		44.7	%	$	128,830		64.6	%	$	103,990		54.5	%
Aerospace	48,550			23.2	%	47,430			23.4	%	42,610			21.4	%	49,510			25.9	%
Energy	40,440			19.3	%	38,230			18.9	%
Engineered Components	30,780			14.7	%	26,300			13.0	%
Specialty Products											28,110			14.1	%	37,330			19.6	%
Total	$	209,330		100.0	%	$	202,290		100.0	%	$	199,550		100.0	%	$	190,830		100.0	%
Gross Profit
Gross Profit (Loss)
Packaging	$	31,870		35.6	%	$	32,180		35.6	%	$	37,850		29.4	%	$	32,740		31.5	%
Aerospace	13,450			27.7	%	13,080			27.6	%	2,670			6.3	%	13,230			26.7	%
Energy	8,370			20.7	%	7,670			20.1	%
Engineered Components	5,140			16.7	%	5,120			19.5	%
Specialty Products											(3,290		)	(11.7	)%	7,820			20.9	%
Total	$	58,830		28.1	%	$	58,050		28.7	%	$	37,230		18.7	%	$	53,790		28.2	%
Selling, General and Administrative Expenses
Packaging	$	8,780		9.8	%	$	12,090		13.4	%	$	13,810		10.7	%	$	10,100		9.7	%
Aerospace	5,690			11.7	%	6,420			13.5	%	6,880			16.1	%	5,580			11.3	%
Energy	7,130			17.6	%	9,540			25.0	%
Engineered Components	1,830			5.9	%	1,940			7.4	%
Corporate expenses	7,280			N/A		10,270			N/A
Specialty Products											2,650			9.4	%	2,410			6.5	%
Corporate											32,040			N/A		8,640			N/A
Total	$	30,710		14.7	%	$	40,260		19.9	%	$	55,380		27.8	%	$	26,730		14.0	%
Operating Profit (Loss)
Packaging	$	23,090		25.8	%	$	20,090		22.2	%	$	24,040		18.7	%	$	22,640		21.8	%
Aerospace	7,760			16.0	%	6,660			14.0	%	(4,210		)	(9.9	)%	7,650			15.5	%
Energy	1,240			3.1	%	(1,870		)	(4.9	)%
Engineered Components	3,310			10.8	%	3,180			12.1	%
Corporate expenses	(7,280		)	N/A		(10,270		)	N/A
Specialty Products											(5,940		)	(21.1	)%	5,410			14.5	%
Corporate											(32,040		)	N/A		(8,640		)	N/A
Total	$	28,120		13.4	%	$	17,790		8.8	%	$	(18,150	)	(9.1	)%	$	27,060		14.2	%
Depreciation and Amortization
Depreciation
Packaging	$	5,480		6.1	%	$	5,240		5.8	%	$	5,050		3.9	%	$	3,800		3.7	%
Aerospace	3,610			7.4	%	3,560			7.5	%	2,070			4.9	%	1,680			3.4	%
Energy	820			2.0	%	1,000			2.6	%
Engineered Components	840			2.7	%	1,020			3.9	%
Corporate expenses	20			N/A		50			N/A
Specialty Products											960			3.4	%	750			2.0	%
Corporate											30			N/A		70			N/A
Total	$	10,770		5.1	%	$	10,870		5.4	%	$	8,110		4.1	%	$	6,300		3.3	%
Amortization
Packaging											$	2,320		1.8	%	$	2,480		2.4	%
Aerospace											2,860			6.7	%	2,130			4.3	%
Specialty Products											120			0.4	%	140			0.4	%
Corporate											—			N/A		—			N/A
Total											$	5,300		2.7	%	$	4,750		2.5	%

The following table summarizes financial information for our reportable segments for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 (dollars in thousands):

Nine months ended September 30,
2017 As a Percentage
of Net Sales 2016 As a Percentage
of Net Sales
Net Sales
Packaging $ 259,260
41.6 % $ 258,550
42.5 %
Aerospace 141,550
22.7 % 132,020
21.7 %
Energy 124,860
20.1 % 122,930
20.2 %
Engineered Components 96,860
15.6 % 94,990
15.6 %
Total $ 622,530
100.0 % $ 608,490
100.0 %
Gross Profit
Packaging $ 89,760
34.6 % $ 92,300
35.7 %
Aerospace 36,540
25.8 % 32,730
24.8 %
Energy 24,880
19.9 % 26,470
21.5 %
Engineered Components 18,820
19.4 % 19,550
20.6 %
Total $ 170,000
27.3 % $ 171,050
28.1 %
Selling, General and Administrative Expenses
Packaging $ 28,280
10.9 % $ 32,960
12.7 %
Aerospace 16,850
11.9 % 19,060
14.4 %
Energy 27,430
22.0 % 35,040
28.5 %
Engineered Components 5,820
6.0 % 6,930
7.3 %
Corporate expenses 21,510
N/A
24,160
N/A
Total $ 99,890
16.0 % $ 118,150
19.4 %
Operating Profit (Loss)
Packaging $ 61,480
23.7 % $ 59,340
23.0 %
Aerospace 19,690
13.9 % 13,670
10.4 %
Energy (2,550 ) (2.0 )% (8,570 ) (7.0 )%
Engineered Components 13,000
13.4 % 12,620
13.3 %
Corporate expenses (21,510 ) N/A
(24,160 ) N/A
Total $ 70,110
11.3 % $ 52,900
8.7 %
Depreciation and Amortization
Packaging $ 16,350
6.3 % $ 15,850
6.1 %
Aerospace 10,840
7.7 % 10,520
8.0 %
Energy 3,770
3.0 % 3,350
2.7 %
Engineered Components 2,700
2.8 % 3,100
3.3 %
Corporate expenses 150
N/A
220
N/A
Total $ 33,810
5.4 % $ 33,040
5.4 %



	Six months ended June 30,
	2020			As a Percentage of Net Sales		2019			As a Percentage of Net Sales
Net Sales
Packaging	$	228,880		59.9	%	$	192,830		52.9	%
Aerospace	91,530			23.9	%	95,090			26.1	%
Specialty Products	61,930			16.2	%	76,280			20.9	%
Total	$	382,340		100.0	%	$	364,200		100.0	%
Gross Profit (Loss)
Packaging	$	66,530		29.1	%	$	60,710		31.5	%
Aerospace	14,580			15.9	%	25,030			26.3	%
Specialty Products	2,490			4.0	%	14,840			19.5	%
Total	$	83,600		21.9	%	$	100,580		27.6	%
Selling, General and Administrative Expenses
Packaging	$	24,210		10.6	%	$	20,430		10.6	%
Aerospace	13,710			15.0	%	11,570			12.2	%
Specialty Products	5,000			8.1	%	4,730			6.2	%
Corporate	39,000			N/A		16,990			N/A
Total	$	81,920		21.4	%	$	53,720		14.8	%
Operating Profit (Loss)
Packaging	$	42,320		18.5	%	$	40,280		20.9	%
Aerospace	870			1.0	%	13,460			14.2	%
Specialty Products	(2,510		)	(4.1	)%	10,110			13.3	%
Corporate	(39,000		)	N/A		(16,990		)	N/A
Total	$	1,680		0.4	%	$	46,860		12.9	%
Depreciation
Packaging	$	9,140		4.0	%	$	7,060		3.7	%
Aerospace	3,760			4.1	%	3,340			3.5	%
Specialty Products	1,800			2.9	%	1,450			1.9	%
Corporate	70			N/A		140			N/A
Total	$	14,770		3.9	%	$	11,990		3.3	%
Amortization
Packaging	$	4,650		2.0	%	$	4,850		2.5	%
Aerospace	5,260			5.7	%	4,270			4.5	%
Specialty Products	240			0.4	%	260			0.3	%
Corporate	—			N/A		—			N/A
Total	$	10,150		2.7	%	$	9,380		2.6	%

Results of Operations

The principal factors impacting us during the three months ended ~~September~~June 30, ~~2017~~,2020, compared with the three months ended ~~September~~June 30, ~~2016~~,2019, were:

~~the impact of improved throughput and productivity~~a change in our accounting policy for asbestos-related defense costs in second quarter 2020;

realignment expenses, primarily in our Aerospace and Specialty Products segments, in response to reduced end market demand following the outbreak of COVID-19;

increases in our Packaging segment's organic sales and related operating profit as a result of significantly higher demand, primarily for products used to help fight the spread of germs;

reduced sales and related profit within our Specialty Products and Aerospace reportable ~~segment, enabling this segment to achieve higher sales levels in the three months ended September 30, 2017;~~

~~the continued benefits~~segments, primarily as a result of the ~~realigned footprint within our Energy reportable segment, with lower ongoing operating costs following several facility consolidations and closures;~~

~~the impact of Hurricane Harvey, primarily within our Energy reportable segment;~~

~~the impact of continued low oil prices, primarily impacting sales and profit levels in our Engineered Components reportable segment;~~COVID-19 pandemic; and

the impact of ~~fees~~our recent acquisitions, primarily RSA in February 2020, and ~~expenses related to our issuance of Senior Notes and other refinancing activities.~~Rapak in April 2020.

Three Months Ended ~~September~~June 30, ~~2017~~2020 Compared with Three Months Ended ~~September~~June 30, ~~2016~~2019

Overall, net sales increased approximately ~~$7.0~~$8.7 million, or ~~3.5%~~4.6%, to ~~$209.3~~$199.6 million for the three months ended ~~September~~June 30, ~~2017,~~2020, as compared with ~~$202.3~~$190.8 million in the three months ended ~~September~~June 30, ~~2016. Our Energy and Engineered Components reportable segments had a combined~~2019, driven by our recent acquisitions, which contributed approximately $13.0 million of inorganic sales. Organic sales, ~~increase of approximately $6.4 million,~~ excluding the ~~effects~~impact of ~~foreign~~ currency exchange, decreased approximately $1.9 million, as sales increases in our Packaging segment, primarily ~~as a result~~for dispenser products used in applications that help fight the spread of ~~increased market share gains following our improvements~~germs, were offset by lower sales in ~~on-time delivery in the Energy segment, as well as some market stabilization despite continued low oil prices. Sales within~~ our Aerospace ~~reportable segment increased~~and Specialty Products segments. In addition, net sales were lower by approximately ~~$1.2~~$2.4 million ~~primarily~~ due to ~~increases in sales to distribution customers. In addition, sales increased by approximately $0.5 million of net favorable~~unfavorable currency exchange, as our reported results in U.S. dollars were ~~positively~~negatively impacted as a result of the ~~weaker~~stronger U.S. dollar relative to foreign currencies. These increases were partially offset by a sales decrease of approximately $1.1 million, excluding the effects of foreign currency exchange, within our Packaging reportable segment, primarily due to lower sales of health, beauty and home care products in North America.

Gross profit margin (gross profit as a percentage of sales) approximated ~~28.1%~~18.7% and ~~28.7%~~28.2% for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively. Gross profit margin decreased, as the impact of higher sales levels was more than offset by the impact of approximately $16.0 million of realignment expenses, $14.3 million of which were non-cash and $1.7 million were cash expenses, primarily ~~due a less favorable segment sales mix, as~~in our ~~lowest~~Aerospace and Specialty Products segments, of which where we executed actions to lower our cost structure in response to reduced end market demand following the outbreak of the COVID-19 pandemic. In addition, we recorded approximately $2.1 million greater non-cash purchase accounting charges in the three months ended June 30, 2020 than the three months ended June 30, 2019 for the step-up of inventory to fair value and subsequent amortization related to our acquisitions. Our second quarter 2020 gross profit margin ~~reportable segment, Engineered Components, increased as a percentage of total sales, and~~was also ~~experienced higher steel costs and~~impacted by a less favorable product sales mix, ~~within~~as well as lower fixed cost absorption and higher production inefficiencies, both due primarily to the segment. This decline was partially offset by increased gross profit margin within our Energy reportable segment as a result of savings achieved from ongoing footprint realignment initiatives and improvements in manufacturing efficiencies within our Houston, Texas manufacturing facility, which more than offset the impact of hurricane Harvey.COVID-19 pandemic.

Operating profit (loss) margin (operating profit as a percentage of sales) approximated ~~13.4%~~9.1% and ~~8.8%~~14.2% for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively. Operating profit ~~increased~~(loss) decreased approximately ~~$10.3~~$45.2 million ~~or 58.1%,~~ to ~~$28.1~~an operating loss of approximately $18.2 million in the three months ended June 30, 2020, from an operating profit of approximately $27.1 million for the three months ended ~~September~~June 30, ~~2017, from $17.8~~2019. This decrease was primarily as a result of a non-cash, pre-tax charge for asbestos-related costs of approximately $23.4 million in second quarter 2020 due to a change in accounting policy, as well as due to approximately $18.5 million of realignment expenses recorded in second quarter 2020, of which $15.4 million were non-cash and $3.1 million were cash expenses, primarily in our Aerospace and Specialty Products segments, where we executed actions to lower our cost structure in response to reduced end market demand following the outbreak of COVID-19. While higher sales contributed additional operating profit, this increase was more than offset by increased purchase accounting expenses, a less favorable product sales mix, and lower fixed cost absorption and higher production inefficiencies, both due in large part to the COVID-19 pandemic.

Interest expense increased approximately $0.7 million to $4.2 million for the three months ended ~~September~~June 30, 2016. Operating profit and margin increased due to higher sales levels in three of our four reportable segments, due to improved production scheduling and manufacturing efficiencies in our Aerospace reportable segment, footprint realignment activities within our Energy reportable segment and lower overall selling, general and administrative expenses compared to 2016, primarily related to costs associated with the change in our President and Chief Executive Officer in 2016.

~~Interest expense decreased approximately $0.1 million, to $3.4 million for the three months ended September 30, 2017,~~2020, as compared to $3.5 million for the three months ended ~~September~~June 30, ~~2016. Our~~2019, primarily as a result of increased weighted average borrowings ~~decreased to~~from approximately ~~$364.7~~$338.3 million induring the three months ended ~~September~~June 30, ~~2017, from~~2019 to approximately ~~$446.3~~$465.6 million induring the three months ended ~~September~~June 30, ~~2016. The effective weighted average interest rate~~2020. We drew $150 million on our ~~outstanding variable rate borrowings, including our Credit Agreement and accounts receivable facilities, increased~~revolving credit facility in first quarter 2020 to ensure availability of cash on hand, but subsequently repaid this amount late in second quarter 2020.

Other income, net decreased approximately ~~2.6% for three months ended September 30, 2017, from approximately 2.1% for the three months ended September 30, 2016.~~

~~We incurred debt financing and related expenses of approximately $6.6~~$0.1 million, to $1.1 million for the three months ended ~~September~~June 30, ~~2017 related~~2020, as compared to costs associated with the issuance of our Senior Notes, repayment of all outstanding obligations of the Term Loan A Facility, termination of the interest rate swaps and the amendment of our Credit Agreement.

~~Other expense, net was approximately $0.2~~$1.2 million for the three months ended ~~September~~June 30, ~~2017 and 2016, respectively,~~2019, primarily due to ~~losses on transactions denominated~~a decrease in foreign ~~currencies.~~currency gains.

The effective income tax ~~rates~~rate for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016 were 26.6%~~2019 was 26.1% and ~~37.8%~~24.5%, ~~respectively. The decrease in the rate was primarily~~respectively, as we recorded a ~~result of losses at certain foreign subsidiaries in third quarter 2016 where no~~ tax benefit ~~could be recorded that did not repeat in the third quarter~~ of ~~2017, and the year-over-year impact of recognizing certain tax benefits due to a lapse of a statutory limitation.~~

~~Net income increased by~~ approximately ~~$4.3 million, to $13.1~~$5.6 million for the three months ended ~~September~~June 30, ~~2017,~~2020 as compared to ~~$8.8~~tax expense of approximately $6.1 million for the three months ended ~~September~~June 30, ~~2016.~~2019. The ~~increase~~effective tax rate for the quarter ended June 30, 2020 was ~~primarily~~impacted by a decrease in profitability resulting from various one-time charges, including a change in the Company’s accounting policy for asbestos-related defense costs. This change was treated as a discrete item in determining tax expense for the quarter.

Income (loss) from continuing operations decreased approximately $34.4 million, to a net loss of $15.7 million for the three months ended June 30, 2020, as compared to net income of $18.7 million for the three months ended June 30, 2019. The decrease was the result of a ~~$10.3 million increase~~decrease in operating profit (loss) of approximately $45.2 million, an increase in interest expense, a ~~$0.5 million~~ decrease in other income, net, partially offset by an increase in income tax ~~expense and a $0.1 million decrease in interest, partially offset by a $6.6 million increase in debt financing and related expenses.~~benefit (expense) of approximately $11.6 million.

See below for a discussion of operating results by segment.

Packaging. Net sales ~~decreased~~increased approximately $~~0.8~~24.8 million, or ~~0.9%~~23.9%, to $~~89.6~~128.8 million in the three months ended ~~September~~June 30, ~~2017~~2020, as compared to $~~90.3~~104.0 million in the three months ended ~~September~~June 30, ~~2016.~~2019. Acquisition-related growth was approximately $7.1 million, comprised of approximately $4.5 million of sales from our April 2020 acquisition of Rapak as well as $2.6 million of April 2020 sales for Taplast, which was acquired in late April 2019. Sales of ~~our health,~~dispensing products used in beauty and personal care and home care applications increased by approximately $8.6 million, primarily for personal hygiene applications, as demand rose, in part, due to the COVID-19 pandemic. Sales of products ~~decreased~~used in food and beverage markets increased by approximately ~~$2.1~~$5.7 million, asprimarily due to higher sales ~~in Asia were more than offset by lower demand~~of beverage dispensers, including pumps and related products, in North America. Sales of products used in industrial markets increased by approximately $3.0 million, primarily due to higher demand within North America, ~~and Europe. Additionally,~~some of which we believe is attributable to higher sales of ~~our~~products used in the transportation of bulk sanitizer and industrial ~~closures decreased approximately $0.5 million due to soft demand.~~cleaning solutions. These ~~decreases~~increases were partially offset by ~~an increase in sales of our food and beverage products in North America of~~ approximately ~~$1.5 million, as well as by approximately $0.3~~$2.4 million of ~~favorable~~unfavorable currency exchange, as our reported results in U.S. dollars were ~~favorably~~negatively impacted as a result of the ~~weakening of the~~stronger U.S. dollar relative to foreign currencies.

~~Packaging's gross~~Gross profit ~~decreased~~increased approximately ~~$0.3~~$5.1 million to ~~$31.9~~$37.9 million, or ~~35.6%~~29.4% of sales, in the three months ended ~~September~~June 30, ~~2017,~~2020, as compared to ~~$32.2~~$32.7 million, or ~~35.6%~~31.5% of sales, in the three months ended ~~September~~June 30, ~~2016,~~2019, primarily due to increased sales levels. These increases were partially offset by approximately $0.9 million in non-cash realignment costs during second quarter 2020 primarily related to the disposal of certain equipment removed from service and approximately $0.8 million for a purchase accounting non-cash charge related to the step-up of Rapak's inventory to fair value and subsequent amortization. Gross profit margin was lower than second quarter 2019 due to lower production efficiencies and a less favorable product sales mix, including the impact of Rapak generating low gross profit, excluding the inventory step-up amortization, at current demand levels. Gross profit and margin were also impacted by approximately $0.7 million of unfavorable currency exchange, as our reported results in U.S. dollars were negatively impacted as a result of the ~~lower sales levels.~~stronger U.S. dollar relative to foreign currencies.

~~Packaging's selling,~~Selling, general and administrative expenses ~~decreased~~increased approximately ~~$3.3~~$3.7 million to ~~$8.8~~$13.8 million, or ~~9.8%~~10.7% of sales, in the three months ended ~~September~~June 30, ~~2017,~~2020, as compared to ~~$12.1~~$10.1 million, or ~~13.4%~~9.7% of sales, in the three months ended ~~September~~June 30, ~~2016. The decrease is~~2019, as we incurred approximately $1.4 million in charges associated with second quarter 2020 realignment actions, primarily ~~due to~~for severance. In addition, our acquisitions added approximately ~~$1.2~~$0.9 million of ~~lower third party professional fees~~higher ongoing selling, general and ~~approximately $1.1 million of severance and other costs~~administrative costs. The remaining increase was primarily related to ~~the closure of~~higher personnel-related expenses to support our former Mexico facility during the three months ended September 30, 2016 that did not repeat in the three months ended September 30, 2017. The remaining $1.0 million decrease was primarily due to lower employee and administrative related costs.sales growth initiatives.

~~Packaging's operating~~Operating profit increased approximately ~~$3.0~~$1.4 million to ~~$23.1~~$24.0 million, or ~~25.8%~~18.7% of sales, in the three months ended ~~September~~June 30, ~~2017,~~2020, as compared to ~~$20.1~~$22.6 million, or ~~22.2%~~21.8% of sales, in the three months ended ~~September~~June 30, ~~2016. Although~~2019, as the impact of increased sales ~~decreased, operating profit and~~was mostly offset by realignment charges taken during the ~~related margin improved primarily~~quarter, purchase accounting adjustments, a less favorable product sales mix, production inefficiencies as a result of the ~~decrease in Packaging's~~COVID-19 pandemic and higher selling, general and administrative expenses.

Aerospace. Net sales for the three months ended ~~September~~June 30, ~~2017increased~~2020decreased approximately ~~$1.2~~$6.9 million, or ~~2.4%~~13.9%, to $~~48.6~~42.6 million, as compared to $~~47.4~~49.5 million in the three months ended ~~September~~June 30, ~~2016. As we have moved thorough 2017, we continue~~2019. RSA, acquired in February 2020, contributed approximately $5.9 million of sales. Sales of our fastener and machined components products declined by approximately $8.7 million and $4.1 million, respectively, both due to ~~improve~~lower demand resulting from reduced aircraft production ~~scheduling and manufacturing efficiencies, which enabled us~~following the onset of the COVID-19 pandemic, with fastener sales also lower than second quarter 2019, as expected, due to increase daily production rates and ship higher levels of net sales in 2017 as compared to 2016. Sales to our distribution customers increased approximately $2.3 million, while sales to OE customers decreased approximately $1.1 million.the 737 Max grounding.

Gross profit ~~within Aerospace increased~~decreased approximately ~~$0.4~~$10.6 million to ~~$13.5~~$2.7 million, or ~~27.7%~~6.3% of sales, in the three months ended ~~September~~June 30, ~~2017,~~2020, from ~~$13.1~~$13.2 million, or ~~27.6%~~26.7% of sales, in the three months ended ~~September~~June 30, ~~2016, primarily as a result of higher~~2019, due in part to the decrease in sales levels and related ~~improved~~lower fixed cost ~~absorption.~~absorption and production inefficiencies due to the impact of the COVID-19 pandemic. During the second quarter of 2020, we executed certain realignment actions to protect against uncertain end market demand and other adverse effects following the outbreak of the COVID-19 pandemic, resulting in charges of approximately $4.2 million related to inventory reductions, approximately $1.7 million related to severance as we reduced our manufacturing employment levels and approximately $0.3 million related to production equipment removed from service. In addition, we recorded an approximate $1.5 million purchase accounting non-cash charge related to the step-up of RSA's inventory to fair value and subsequent amortization.

Selling, general and administrative expenses increased approximately $1.3 million to approximately $6.9 million, or 16.1% of sales, in the three months ended June 30, 2020, as compared to $5.6 million, or 11.3% of sales, in the three months ended June 30, 2019, primarily due to ongoing costs of RSA as well as approximately $0.4 million of realignment expenses.

Operating profit (loss) decreased approximately $11.9 million to an operating loss of $4.2 million, or 9.9% of sales, in the three months ended June 30, 2020, as compared to an operating profit of $7.7 million, or 15.5% of sales in the three months ended June 30, 2019, primarily due to the impact of realignment charges taken during the second quarter of 2020, as well as the impact of lower sales levels which resulted in lower fixed cost absorption and higher production inefficiencies as a result of the COVID-19 pandemic, and the recognition of the purchase accounting adjustment related to RSA's inventory step-up to fair value and subsequent amortization.

Specialty Products. Net sales for the three months ended June 30, 2020 decreased approximately $9.2 million, or 24.7%, to $28.1 million, as compared to $37.3 million in the three months ended June 30, 2019. Sales of our cylinder products decreased approximately $8.2 million, as lower demand for steel cylinders used in construction and HVAC end markets in North America more than offset a modest increase in the sale of cylinders used for oxygen and other medical applications. Sales of engines, compressors and related parts used in upstream oil and gas applications decreased by approximately $1.0 million, primarily as a result low oil-field activity in North America given further reductions in rig counts, and included approximately $0.7 million of sales in second quarter 2020 related to ~~$5.7~~the liquidation of non-core inventory following our strategic decision to streamline Arrow Engine's product line offering.

Gross profit (loss) decreased approximately $11.1 million to a gross loss of $3.3 million, or 11.7% of sales, in the three months ended ~~September~~June 30, ~~2017,~~2020, as compared to ~~$6.4~~gross profit of $7.8 million,, or ~~13.5%~~20.9% of sales, in the three months ended ~~September~~June 30, ~~2016,~~2019, due in part to the decrease in sales levels and related lower fixed cost absorption and production inefficiencies, primarily ~~due~~from the impact of the COVID-19 pandemic. During the second quarter of 2020, we executed certain realignment actions in response to reduced end market demand, resulting in approximately ~~$0.3~~$9.0 million non-cash charges in the second quarter of ~~lower estimated uncollectable accounts receivable~~2020, primarily related to Arrow Engine streamlining its product line offering and liquidating the non-core inventory.

Selling, general and administrative expenses ~~as a result of collection of previously reserved customer balances, as well as decreased spending in certain administrative support costs.~~

~~Operating profit within Aerospace~~ increased approximately ~~$1.1~~$0.2 million to ~~$7.8~~$2.7 million, or ~~16.0%~~9.4% of sales, in the three months ended ~~September~~June 30, ~~2017,~~2020, as compared to ~~$6.7~~$2.4 million, or ~~14.0%~~6.5% of sales, in the three months ended ~~September~~June 30, ~~2016. Operating profit improved primarily~~2019. During second quarter 2020, we incurred selling, general and administrative realignment expenses of approximately $0.7 million related to severance as we reduced our employment levels, which was partially offset by reduced spending levels as a result of ~~higher sales levels and continued improvement in production scheduling and manufacturing efficiencies, as well as~~ lower ~~selling, general and administrative expenses.~~activity levels.

~~Energy.~~ ~~Net sales for the three months ended~~ ~~September 30, 2017increased~~Operating profit (loss) decreased approximately ~~$2.2 million, or~~ ~~5.8%, to~~ ~~$40.4 million, as compared to~~ ~~$38.2 million~~ ~~in the three months ended~~ ~~September 30, 2016~~. Sales increased by approximately $3.2 million in North America, primarily due to increased customer demand resulting from improved on time delivery, as well as increasing production rates in September 2017 to meet customers' immediate needs following Hurricane Harvey. The increase was partially offset by a decrease in net sales of approximately $0.8 million in Europe, primarily due to exiting our facility in Wolverhampton, United Kingdom.

~~Gross profit within Energy increased approximately $0.7~~$11.4 million to ~~$8.4~~an operating loss of $5.9 million, or ~~20.7%~~21.1% of sales, in the three months ended ~~September~~June 30, ~~2017,~~2020, as compared to ~~$7.7~~an operating profit of $5.4 million, or ~~20.1%~~14.5% of sales, in the three months ended ~~September~~June 30, ~~2016. Gross profit increased approximately $1.1 million~~2019, primarily as a result of the second quarter 2020 realignment actions, as well as due to the impact of lower ~~costs in the third quarter of 2017 following the closure of our facilities in Reynosa, Mexico~~sales and ~~Wolverhampton, United Kingdom, and by approximately $0.4 million~~ related ~~to higher sales levels. These increases were partially offset by higher labor costs,~~ lower fixed cost absorption and ~~a less favorable product sales mix in the United States following the August 2017 hurricane.~~

Selling, general and administrative expenses within Energy decreased approximately $2.4 million to $7.1 million, or 17.6% of sales, in the three months ended September 30, 2017, as compared to $9.5 million, or 25.0% of sales, in the three months ended September 30, 2016. The decrease in selling, general and administrative expenses is due to this segment's reduced cost structure and footprint, with approximately $1.3 million of the reduction due to eliminating costs specific to facilities that have been closed in the last twelve months, and the remaining $1.1 million due to lower ongoing spending levels in the remaining locations.

Operating profit within Energy increased approximately $3.1 million to approximately $1.2 million of profit, or 3.1% of sales, in the three months ended September 30, 2017, as compared to a loss of $1.9 million, or 4.9% of sales, in the three months ended September 30, 2016, as a result of lower selling, general and administrative expenses related to prior footprint realignment activities and higher sales levels, which were partially offset by higher costs and a less favorable product sales mix impacted by the August 2017 hurricane.

~~Engineered Components.~~ ~~Net sales for the~~ ~~three months ended September 30, 2017increased~~ ~~approximately $4.5 million, or~~ ~~17.0%, to~~ ~~$30.8 million, as compared to~~ ~~$26.3 million~~ ~~in the~~ ~~three months ended September 30, 2016~~. Sales of our industrial cylinders increased by approximately $3.0 million, primarily due to higher sales of acetylene cylinders used in industrial applications. Sales of our engines and compression-related products increased by approximately $1.5 million, as we experienced improved demand levels compared with prior year consistent with drilling activity in the United States and Canada and continued stabilization of oil prices.

~~Gross profit within Engineered Components remained flat at $5.1 million, or 16.7% of sales, in the~~ ~~three months ended September 30, 2017, as compared to 19.5% of sales in the~~ ~~three months ended September 30, 2016~~. Gross profit and related margin on our engines and compression-related products increased primarily as a result of higher sales levels and fixed cost leverage, while gross profit and related margin on sales of our industrial cylinders decreased primarily due to higher steel costs and a less favorable product mix, with a greater percentage of sales of lower-margin small high pressure and acetylene cylinder products.

Selling, general and administrative expenses decreased approximately $0.1 million to $1.8 million, or 5.9% of sales, in the three months ended September 30, 2017, as compared to $1.9 million, or 7.4% of sales, in the three months ended September 30, 2016, as we have continued to align our ongoing operating costs consistent with current demand levels.

~~Operating profit within Engineered Components increased approximately $0.1 million to $3.3 million, or 10.8% of sales, in the~~ ~~three months ended September 30, 2017, as compared to $3.2 million, or~~ ~~12.1%~~ ~~of sales in the~~ ~~three months ended September 30, 2016~~. Operating profit increased due to higher sales levels and continued cost reduction actions to align our cost structure with demand levels, while operating profit margin decreased as a result of higher steel costs and a less favorable product mix on sales of our industrial cylinders.production inefficiencies.

~~Corporate Expenses.~~Corporate. Corporate expenses consist of the following (dollars in millions):


	Three months ended September 30,				Three months ended June 30,
	2017		2016		2020		2019
Corporate operating expenses	$	2.7	$	6.0	$	5.6	$	5.9
Employee costs and related benefits	4.6		4.3
Non-cash stock compensation					2.8		1.6
Legacy expenses					23.6		1.1
Corporate expenses	$	7.3	$	10.3	$	32.0	$	8.6

Corporate expenses ~~decreased~~increased approximately ~~$3.0~~$23.4 million to $~~7.3~~32.0 million for the three months ended ~~September~~June 30, ~~2017~~2020, from $~~10.3~~8.6 million for the three months ended ~~September~~June 30, ~~2016. Corporate operating expenses decreased approximately $3.3~~2019, primarily as a result of the $23.4 million ~~primarily~~non-cash charge in second quarter 2020 due to ~~approximately $3.5 million~~the change of ~~costs related to the July 2016 change in~~ our ~~President and Chief Executive Officer. Employee costs and related benefits~~accounting policy for asbestos-related defense costs. Non-cash stock compensation expense increased ~~by approximately $0.3 million, primarily~~ due ~~to an increase in expense related~~ to the timing and ~~estimated attainment~~nature of ~~our incentive compensation plans.~~equity awards in 2020 compared with 2019, the impact of which was offset by lower corporate operating expenses and reduced non-asbestos-related legacy expenses.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020 Compared with ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2019

Overall, net sales increased approximately ~~$14.0~~$18.1 million, or ~~2.3%~~5.0%, to ~~$622.5~~$382.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, as compared with ~~$608.5~~$364.2 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016. Sales within our Aerospace reportable segment increased~~2019. Acquisitions contributed approximately ~~$9.5~~$23.5 million ~~with increases in~~of inorganic sales ~~to distribution and OE customers, as a result of improved manufacturing throughput. Our Energy and Engineered Components reportable segments had a combined~~growth. Organic sales, increase of approximately $3.8 million, primarily as a result of increased market share gains following our improvements in on-time delivery in the Energy segment, as well as some market stabilization despite continued low oil prices. In addition, excluding the ~~effects~~impact of ~~foreign~~ currency exchange, ~~sales within our Packaging reportable segment increased~~decreased by approximately ~~$3.7~~$2.0 million, ~~primarily due to increased demand for our industrial closures in North America and Europe and for our health, beauty and home care products in Europe and Asia. These~~as sales increases ~~were partially offset by approximately $3.0 million of net unfavorable currency exchange, primarily~~ in our Packaging ~~reportable~~ segment, primarily for products used in applications that help fight the spread of germs, were offset by lower sales in our Aerospace and Specialty Products segments. In addition, net sales were lower by approximately $3.3 million due to unfavorable currency exchange, as our reported results in U.S. dollars were negatively impacted as a result of the stronger U.S. dollar relative to foreign currencies.

Gross profit margin (gross profit as a percentage of sales) approximated ~~27.3%~~21.9% and ~~28.1%~~27.6% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively. Gross profit margin decreased, as the impact of higher sales levels was more than offset by the impact of approximately $16.0 million of realignment expenses, $14.3 million of which were non-cash and $1.7 million were cash expenses, primarily ~~due~~in our Aerospace and Specialty Products segments, where we executed actions to ~~costs associated with~~lower our cost structure in response to reduced end market demand following the ~~consolidation~~outbreak of manufacturing facilities in India and to finalize the move to a new Mexico facility, both within our Packaging reportable segment, as well as costs associated with the closure of the Reynosa, Mexico facility within our Energy reportable segment.COVID-19 pandemic. In addition, we recorded approximately $2.8 million of purchase accounting non-cash charges in the six months ended June 30, 2020 for the step-up of inventory to fair value and subsequent amortization related to our RSA and Rapak acquisitions as compared to approximately $0.3 million of such charges for our 2019 acquisitions in the six months ended June 30, 2019. Our gross profit ~~decreased compared~~margin in the first six months of 2020 was also impacted by a less favorable product sales mix, lower fixed cost absorption and higher production inefficiencies due primarily to the prior year period by approximately $1.6 million as a result of unfavorable currency exchange, as our reported results in U.S. dollars were negatively impacted as a result of the stronger U.S. dollar relative to foreign currencies. These decreases were partially offset by improved manufacturing efficiency levels and reduced manufacturing spend, primarily within our Aerospace reportable segment.COVID-19 pandemic.

Operating profit margin (operating profit as a percentage of sales) approximated ~~11.3%~~0.4% and ~~8.7%~~12.9% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively. Operating profit ~~increased~~decreased approximately ~~$17.2~~$45.2 million, or ~~32.5%~~96.4%, to ~~$70.1~~$1.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, compared to ~~$52.9~~$46.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016. Operating profit and margin increased~~2019. This decrease was primarily as a result of a non-cash, pre-tax charge for asbestos-related costs of approximately $23.4 million in the first half of 2020 due to a change in accounting policy, as well as due to approximately $18.5 million of realignment expenses recorded in the first half of 2020, of which $15.4 million were non-cash and $3.1 million were cash expenses, primarily in our Aerospace and Specialty Products segments, where we executed actions to lower our cost structure in response to reduced end market demand following the outbreak of COVID-19. While higher operating profit was generated from higher sales levels, ~~and productivity initiatives to improve scheduling and throughput, particularly in our Aerospace reportable segment, and the~~this impact ~~of our completed 2016 footprint realignment activities within our Energy reportable segment. These factors were partially~~was more than offset by a less favorable product sales mix, lower fixed cost absorption and higher production inefficiencies due in large part to the ~~costs incurred in the first nine months~~COVID-19 pandemic. Operating profit (loss) also decreased as a result of ~~2017 associated with footprint consolidation~~increased purchase accounting expenses and ~~relocation projects within our Packaging and Energy reportable segments.~~as a result of unfavorable currency exchange.

Interest expense increased approximately ~~$0.2~~$0.9 million, to ~~$10.4~~$7.8 million, for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, as compared to ~~$10.2~~$6.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016. The increase~~2019, primarily as a result of increased weighted average borrowings from approximately $329.5 million during the six months ended June 30, 2019 to approximately $413.6 million during the six months ended June 30, 2020. We drew $150 million on our revolving credit facility in ~~interest~~first quarter 2020 to ensure availability of cash on hand, but subsequently repaid this amount late in second quarter 2020.

Other income, net increased approximately $0.4 million, to $1.1 million for the six months ended June 30, 2020, from $0.7 million of other expense, ~~was~~net for the six months ended June 30, 2019, primarily due to an increase in our interest rates, which more than offset lower average borrowings. Our weighted average borrowings decreased to approximately $390.9 million in the nine months ended September 30, 2017, from approximately $461.6 million in the nine months ended September 30, 2016. The effective weighted average interest rate on our outstanding variable rate borrowings, including our Credit Agreement and accounts receivable facilities, increased to approximately 2.6% for the nine months ended September 30, 2017, from approximately 2.1% for the nine months ended September 30, 2016.

We incurred debt financing and related expenses of approximately $6.6 million for the nine months ended September 30, 2017 related to costs associated with the issuance of our Senior Notes, repayment of all outstanding obligations of the Term Loan A Facility, termination of the interest rate swaps and the amendment of our Credit Agreement.

Other expense, net increased approximately $0.7 million, to $0.8 million for the nine months ended September 30, 2017, from $0.1 million for the nine months ended September 30, 2016, primarily due to an increasea year over year decrease in losses on transactions denominated in foreign currencies.

The effective income tax ~~rates~~rate for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016 were 33.2%~~2019 was 49.2% and ~~35.2%~~18.0%, ~~respectively.~~respectively, as we recorded a tax benefit of approximately $2.5 million for the six months ended June 30, 2020 as compared to tax expense of approximately $7.3 million for the six months ended June 30, 2019. The effective tax rate for the six months ended June 30, 2020 was impacted by a decrease in the rate was primarily a result of losses at certain foreign subsidiaries in 2016 where no tax benefit could be recorded, the year-over-year impact of recognizing certain tax benefits due to a lapse of a statutory limitation, andprofitability resulting from various one-time charges, including a change in the ~~Company's indefinite reinvestment assertion in undistributed foreign earnings in two of its foreign subsidiaries. These increases were partially offset by~~Company’s accounting policy for asbestos-related defense costs. This change was treated as a discrete item in determining tax ~~benefit~~expense for the six months ended June 30, 2020. In addition, we recognized discrete items that occurred during the first six months of 2019 as compared to first six months of 2020, including the reversal of uncertain tax benefits for which the statute of limitations expired, excess tax benefits related to ~~stock~~share based compensation ~~recognized~~that vested in 2019, and a reduction in deferred tax liabilities resulting from the ~~nine months ended September 30, 2017.~~implementation of state tax planning initiatives.

~~Net income increased~~Income (loss) from continuing operations decreased by approximately ~~$7.4~~$35.9 million, to ~~$35.0~~a loss of $2.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, compared to ~~$27.6~~income of $33.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~.2019. The ~~increase~~decrease was primarily the result of a ~~$17.2~~decrease in operating profit of approximately $45.2 million and an increase in ~~operating profit,~~interest expense, partially offset by an increase in ~~debt financing and related expenses of $6.6 million, a $2.4 million increase in~~ income tax ~~expense, a $0.7~~benefit (expense) of approximately $9.8 million and an increase in other ~~expense, net and a $0.2 million increase in interest expense.~~income, net.

See below for a discussion of operating results by segment.

Packaging. Net sales increased approximately ~~$0.7~~$36.1 million, or ~~0.3%~~18.7%, to ~~$259.3~~$228.9 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, as compared to ~~$258.6~~$192.8 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2019. Acquisition-related growth was approximately $14.6 million, comprised of approximately $4.5 million of sales from our April 2020 acquisition of Rapak as well as $10.1 million of January through April 2020 sales for Taplast, which was acquired in late April 2019. Sales of ~~our~~dispensing products used in beauty and personal care and home care applications increased by approximately $12.1 million, primarily as demand increased for personal hygiene applications due to heightened awareness of reducing the spread of germs following the COVID-19 pandemic. Sales of products used in food and beverage ~~products~~markets increased by approximately ~~$2.3~~$7.2 million, primarily due to ~~increased demand~~higher sales of beverage dispensers, including pumps and related products, in North America. Sales of ~~our~~products used in industrial ~~closures~~markets increased by approximately ~~$1.0 million due to higher demand in Europe. Additionally, sales of our health, beauty and home care products increased approximately $0.4~~$3.4 million, primarily due to higher demand within North America, some of which we believe is attributable to higher sales of products used in ~~Asia~~the transportation of bulk sanitizer and ~~Europe, which offset lower demand in North America.~~industrial cleaning solutions. These increases were partially offset by approximately ~~$3.0~~$3.3 million of unfavorable currency exchange, as our reported results in U.S. dollars were negatively impacted as a result of the stronger U.S. dollar relative to foreign currencies.

Packaging's gross profit ~~decreased~~increased approximately ~~$2.5~~$5.8 million to ~~$89.8~~$66.5 million, or ~~34.6%~~29.1% of sales, in the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, as compared to ~~$92.3~~$60.7 million, or ~~35.7%~~31.5% of sales, in the ~~nine~~six months ended ~~September~~June 30, ~~2016. Although~~2019, primarily due to increased sales levels, ~~increased, gross~~which was partially offset by approximately $0.9 million in non-cash realignment costs during second quarter 2020 primarily related to the disposal of certain equipment which was taken out of service and approximately $0.8 million for a purchase accounting non-cash charge related to the step-up of Rapak's inventory to fair value and subsequent amortization. Gross profit ~~decreased~~margin was lower than second quarter 2019 due to ~~approximately $1.4 million of costs to consolidate manufacturing facilities in India and to finalize the move to~~ a ~~new facility in Mexico in the first quarter of 2017.~~less favorable product sales mix. In addition, gross profit ~~declined~~margin was further reduced due to generally lower production efficiencies, as well as Rapak currently generating low gross profit at current demand levels, both as a result of the impacts of the COVID-19 pandemic. Gross profit and margin were also impacted by approximately ~~$1.7~~$1.0 million ~~due to~~of unfavorable currency exchange, as our reported results in U.S. dollars were negatively impacted as a result of the stronger U.S. dollar relative to foreign currencies.

Packaging's selling, general and administrative expenses ~~decreased~~increased approximately ~~$4.7~~$3.8 million to ~~$28.3~~$24.2 million, or ~~10.9%~~10.6% of sales, in the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, as compared to ~~$33.0~~$20.4 million, or ~~12.7%~~10.6% of sales, in the ~~nine~~six months ended ~~September~~June 30, ~~2016. The decrease was~~2019, as we incurred approximately $1.4 million in charges associated with our realignment actions, primarily ~~due to~~for severance. We also incurred approximately $1.6 million of higher ongoing selling, general and administrative costs ~~incurred in the first quarter of 2016 in connection~~associated with ~~re-organizing~~ our ~~go-to-market strategy based on global product categories,~~acquisitions, as well as ~~generally lower go-forward spending levels resulting from this reorganization. Additionally, we recognized approximately $1.1 million of severance and other costs related to the closure of~~recorded higher personnel-related expenses given higher demand for our former Mexico facility and the establishment and move to the new manufacturing facility in Mexico during the three months ended September 30, 2016 that did not repeat in the three months ended September 30, 2017. The decreaseproducts. This increase was partially offset by an approximate ~~$1.1~~$0.8 million non-cash charge ~~recorded~~during the three months ended March 31, 2019 related to the write-off of the trade name acquired in the ~~second quarter of 2017 to reserve an outstanding accounts receivable amount for a European customer who filed for bankruptcy.~~Plastic Srl acquisition that was not used.

Packaging's operating profit increased approximately ~~$2.1~~$2.0 million to ~~$61.5~~$42.3 million, or ~~23.7%~~18.5% of sales, in the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, as compared to ~~$59.3~~$40.3 million, or ~~23.0%~~20.9% of sales, in the ~~nine~~six months ended ~~September~~June 30, ~~2016. Operating profit improved primarily due to lower ongoing selling, general and administrative expenses associated with our re-organization efforts,~~2019, as a result of increased sales, which was partially offset ~~costs incurred in 2017 to consolidate facilities in India and finalize the move to a new manufacturing facility in Mexico, the charge recorded in~~by realignment charges taken during the second quarter of ~~2017~~2020, the recognition of the purchase accounting adjustment related to ~~reserve an outstanding accounts receivable amount~~Rapak's inventory step-up to fair value and ~~approximately $1.1 million of unfavorable currency exchange.~~

~~Aerospace.~~ ~~Net~~subsequent amortization, a less favorable product sales ~~for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2017increased~~ ~~approximately $9.5 million, or~~ ~~7.2%, to~~ ~~$141.6 million, as compared to~~ ~~$132.0 million~~ ~~in the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2016. We continued to improve~~mix, production scheduling and manufacturing efficiencies, which enabled us to increase daily production rates and ship higher levels of net sales in 2017 as compared to 2016. Sales to our distribution customers increased approximately $9.0 million, as order patterns from our customers continued to stabilize and increase in 2017 as compared to the lower and more volatile levels throughout 2016. Sales to our OE customers increased approximately $0.5 million.

~~Gross profit within Aerospace increased approximately $3.8 million to $36.5 million, or 25.8% of sales, in the~~ ~~nine~~ ~~months ended September 30, 2017, from $32.7 million, or 24.8% of sales, in the nine months ended September 30, 2016, primarily~~inefficiencies as a result of ~~higher sales levels. In addition, during the first nine months of 2016, we incurred additional costs~~COVID-19 and experienced lower fixed cost absorption associated with production scheduling and manufacturing inefficiencies, primarily in our Commerce, California facility. We have improved the efficiency levels during the first nine months of 2017 and reduced manufacturing spend levels despite higher ~~demand level in this facility. These improvements were partially offset by higher costs due to manufacturing costs and inefficiencies at our standard fastener facility in Ottawa, Kansas.~~

~~Selling, general and administrative expenses decreased approximately $2.2 million to $16.9 million, or 11.9% of sales, in the~~ ~~nine~~ months ended September 30, 2017, as compared to $19.1 million, or 14.4% of sales, in the nine months ended September 30, 2016, primarily due to approximately $1.1 million of lower estimated uncollectable accounts receivable expenses as a result of collection of previously reserved customer balances and approximately $1.1 million of reduced professional fees and certain administrative support costs.

Operating profit within Aerospace increased approximately $6.0 million to $19.7 million, or 13.9% of sales, in the nine months ended September 30, 2017, as compared to $13.7 million, or 10.4% of sales, in the nine months ended September 30, 2016. Operating profit improved primarily as a result of higher sales levels, continued improvement in production scheduling and manufacturing efficiencies and lower selling, general and administrative expenses.

~~Energy.~~Aerospace. Net sales for the ~~nine~~six months ended ~~September~~June 30, ~~2017 increased~~2020 decreased approximately ~~$1.9~~$3.6 million, or ~~1.6%~~3.7%, to ~~$124.9~~$91.5 million, as compared to ~~$122.9~~$95.1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2019. The February 2020 acquisition of RSA contributed approximately $8.9 million of sales. Sales ~~increased approximately $5.5 million in North America~~of our fastener and machined components products declined by approximately ~~$0.2~~$7.8 million ~~in Asia primarily~~and $4.7 million, respectively, both due to ~~increased customer~~lower demand ~~following improvements in our on-time delivery~~resulting from current and ~~increasing our share of turnaround activity. These increases were more than offset by a decrease in net sales of approximately $3.8 million in Europe, primarily~~expected future reduced air travel due to ~~exiting our facility in Wolverhampton, United Kingdom.~~the COVID-19 pandemic, with fastener sales also lower than the first half of 2019, as expected, due to the 737 Max grounding.

Gross profit within ~~Energy~~Aerospace decreased approximately ~~$1.6~~$10.5 million to ~~$24.9~~$14.6 million, or ~~19.9%~~15.9% of sales, in the ~~nine~~six months ended ~~September~~June 30, ~~2017, as compared to $26.5~~2020, from $25.0 million, or ~~21.5%~~26.3% of sales, in the ~~nine~~six months ended ~~September~~June 30, ~~2016. Gross profit decreased approximately $2.3 million as a result~~2019, due in part to the decrease in sales levels and related lower fixed cost absorption and production inefficiencies due to the impact of ~~higher costs~~the COVID-19 pandemic. During the second quarter of 2020, we undertook certain realignment actions to protect against uncertain end market demand related to the ~~exit~~COVID-19 pandemic, resulting in charges of approximately $4.2 million related to inventory reductions, $1.7 million related to severance as we reduced our ~~facility~~manufacturing employment levels and $0.3 million related to production equipment removed from service given current demand levels. In addition, we recorded an approximate $2.0 million purchase accounting non-cash charge related to the step-up of RSA's inventory to fair value and subsequent amortization during the first half of 2020.

Selling, general and administrative expenses increased approximately $2.1 million to $13.7 million, or 15.0% of sales, in ~~Reynosa, Mexico~~the six months ended June 30, 2020, as compared to $11.6 million, or 12.2% of sales, in the six months ended June 30, 2019, primarily due to ongoing costs of RSA, as well as approximately $0.4 million of realignment expenses incurred in the first half of ~~2017. While~~2020.

Operating profit within Aerospace decreased approximately $12.6 million to $0.9 million, or 1.0% of sales, ~~increased~~ in the ~~United States, gross profit decreased~~six months ended June 30, 2020, as compared to $13.5 million, or 14.2% of sales, in the six months ended June 30, 2019, primarily due to ~~a less favorable product sales mix,~~the impact of realignment charges in second quarter 2020, as well as the impact of lower sales levels which resulted in lower fixed cost absorption and higher ~~costs associated with~~production inefficiencies as a result of the COVID-19 pandemic, the recognition of the purchase accounting adjustment related to RSA's inventory step-up to fair value and subsequent amortization and higher selling, general and administrative expenses.

Specialty Products. Net sales for the six months ended June 30, 2020 decreased approximately $14.4 million, or 18.8%, to $61.9 million, as compared to $76.3 million in the six months ended June 30, 2019. Sales of our cylinder products decreased by approximately $11.9 million, as lower demand for steel cylinders used in construction and HVAC activity in North America more than offset a modest increase in the sale of cylinders used for oxygen and other medical applications. Sales of engines, compressors and related parts used in upstream oil and gas applications decreased by approximately $2.5 million, primarily as a result of low oil-field activity in North America given the low price of oil and included approximately $0.7 million of sales related to the liquidation of non-core inventory following our strategic decision to streamline Arrow Engine's product line offering.

Gross profit within Specialty Products decreased approximately $12.4 million to $2.5 million, or 4.0% of sales, in the ~~August 2017 hurricane.~~

six months ended June 30, 2020, as compared to $14.8 million, or 19.5% of sales, in the six months ended June 30, 2019, due in part to the decrease in sales levels and related lower fixed cost absorption and production inefficiencies due primarily to the impact of the COVID-19 pandemic. During the second quarter of 2020, we undertook certain realignment actions in response to reduced end market demand as a result of the COVID-19 pandemic, resulting in approximately $9.0 million of non-cash charges in the second quarter of 2020, primarily related to Arrow Engine streamlining its product line offering and liquidating its non-core inventory.

Selling, general and administrative expenses within ~~Energy decreased~~Specialty Products increased approximately ~~$7.6~~$0.3 million to ~~$27.4~~$5.0 million, or ~~22.0%~~8.1% of sales, in the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, as compared to ~~$35.0~~$4.7 million, or ~~28.5%~~6.2% of sales, in the ~~nine~~six months ended ~~September~~June 30, ~~2016. Selling,~~2019. During the first half of 2020, we incurred selling, general and administrative realignment expenses ~~decreased by~~of approximately ~~$3.2~~$0.7 million ~~as a result of elimination of costs~~ related to ~~closed facilities,~~severance as we reduced our employment levels, which was partially offset by approximately $1.0 million as a result of an increase in reserves for past due accounts receivable in the first nine months of 2016 that did not repeat in the first nine months of 2017, and by approximately $0.8 millionreduced spending levels as a result of lower ~~third-party professional fees. The remaining $2.6~~activity levels.

Operating profit (loss) within Specialty Products decreased approximately $12.6 million ~~decrease was primarily due~~ to ~~lower ongoing costs associated with the Company's current operating footprint following completion of significant realignment activities.~~

~~Overall,~~an operating loss ~~within Energy decreased approximately $6.0~~of $2.5 million, ~~to a $2.6 million loss,~~ or ~~2.0%~~4.1% of sales, in the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, as compared to ~~a $8.6~~$10.1 million ~~loss, or 7.0%~~ of sales, in the nine months ended September 30, 2016, as a result of lower selling, general and administrative expenses related to prior footprint realignment activities, lower bad debt expense, which more than offset the costs incurred in 2017 associated with the closure of our Reynosa, Mexico facility.

~~Engineered Components.~~ ~~Net sales for the~~ ~~nine months ended September 30, 2017increased~~ ~~approximately $1.9 million, or~~ ~~2.0%, to~~ ~~$96.9 million, as compared to~~ ~~$95.0 million~~ ~~in the~~ ~~nine months ended September 30, 2016~~. Sales of our oil-field engines and compression-related products increased by approximately $2.7 million primarily due to increases in drilling activity in the United States and Canada and the continued stabilization of oil prices. Sales of our industrial cylinders decreased by approximately $0.8 million, primarily due to the impact of certain of our large customers consolidating operations and lowering their current cylinder purchases.

~~Gross profit within Engineered Components decreased approximately $0.8 million to $18.8 million, or 19.4% of sales, in the~~ ~~nine months ended September 30, 2017, from $19.6 million, or 20.6% of sales, in the~~ ~~nine months ended September 30, 2016~~. Gross profit and related margin from sales of our industrial cylinders decreased approximately $2.1 million as a result of higher steel costs, lower sales in the U.S. industrial packaged gas market and a less favorable product mix. Gross profit from sales of our engines and compression-related products increased approximately $1.3 million due to higher sales levels and leveraging our lower fixed cost structure.

~~Selling, general and administrative expenses~~ ~~decreased~~ ~~approximately $1.1 million to~~ ~~$5.8 million, or~~ ~~6.0%~~ ~~of sales, in the~~ ~~nine months ended September 30, 2017, as compared to~~ ~~$6.9 million, or~~ ~~7.3%~~ ~~of sales, in the~~ ~~nine months ended September 30, 2016~~ ~~primarily due to lowering our ongoing operating costs consistent with current demand levels.~~

~~Operating profit within Engineered Components increased approximately $0.4 million to $13.0 million, or 13.4% of sales, in the nine months ended September 30, 2017, as compared to~~ operating profit, ~~of $12.6 million,~~ or 13.3% of sales, in the ~~nine~~six months ended ~~September~~June 30, ~~2016. Operating profit improved~~2019, primarily as a result of the second quarter 2020 realignment actions, as well as due to ~~increased~~the impact of lower sales ~~levels of our oil-field engines~~ and ~~compression-related products and better leveraging of our~~related lower fixed cost ~~structure, while operating profit margin as a percentage of sales remained flat primarily due to lower sales in the U.S. industrial packaged gas market, higher steel costs~~absorption and ~~a less favorable product mix.~~production inefficiencies.

~~Corporate Expenses.~~Corporate. Corporate expenses, net consist of the following (dollars in millions):


	Nine months ended September 30,				Six months ended June 30,
	2017		2016		2020		2019
Corporate operating expenses	$	7.4	$	10.4	$	10.9	$	11.8
Employee costs and related benefits	14.1		13.8
Non-cash stock compensation					4.7		2.9
Legacy expenses					23.4		2.3
Corporate expenses	$	21.5	$	24.2	$	39.0	$	17.0

Corporate expenses ~~decreased~~increased approximately ~~$2.7~~$22.0 million to $~~21.5~~39.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020, from $~~24.2~~17.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016. Corporate operating expenses decreased approximately $3.0~~2019, primarily as a result of the $23.4 million ~~primarily~~non-cash charge in second quarter 2020 due to ~~approximately $3.5 million~~the change of our accounting policy for asbestos-related defense costs ~~related~~from accruing for probable and reasonably estimable defense costs associated with known claims expected to ~~the July 2016 change in our President~~settle to accrue for all future defense costs for both known and Chief Executive Officer that did not repeat in 2017, partially offset by a favorable property tax assessment settlement of approximately $0.4 million for a former business unit that did not repeat in 2017. Employee costs and related benefitsunknown claims, which we now believe can be reasonably estimated. Non-cash stock compensation expense increased ~~by approximately $0.3 million, primarily~~ due ~~to an increase in expense related~~ to the timing and ~~estimated attainment~~nature of ~~our incentive compensation plans.~~equity awards in 2020 compared with 2019, the impact of which was more than offset by lower corporate operating expenses and the favorable resolution of a legacy matter during the first half of 2020.

Liquidity and Capital Resources

Cash Flows

Cash flows provided by operating activities were approximately ~~$72.7~~$30.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, as compared to approximately ~~$46.4~~$32.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2019. Significant changes in cash flows provided by operating activities and the reasons for such changes were as follows:

For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, the Company generated approximately ~~$87.4~~$52.1 million of cash, based on the reported net ~~income~~loss of approximately ~~$35.0~~$2.6 million and after considering the effects of non-cash items related to ~~losses~~depreciation, amortization, loss on dispositions of assets, ~~depreciation, amortization,~~ changes in deferred income taxes, ~~debt financing and related expenses,~~ stock-based compensation, asbestos-related change in liability estimate and other operating activities. For the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2019, the Company generated approximately ~~$67.1~~$61.1 million in cash flows based on the reported net income from continuing operations of approximately ~~$27.6~~$33.3 million and after considering the effects of similar non-cash items.

Increases in accounts receivable resulted in a use of cash of approximately ~~$12.7~~$12.3 million and ~~$9.8~~$5.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively. The increased use of cash for each of the ~~nine~~six month periods is due primarily to the timing of sales and collection of cash related thereto within the periods. Days sales outstanding of receivables ~~decreased by four days as of September 30, 2017 as~~remained relatively flat compared to ~~September 30, 2016, primarily as a result of our increased focus on collections activity.~~the comparable 2019 period.

~~For the nine months ended September 30, 2017, we increased~~We decreased our investment in inventory by approximately ~~$0.6 million. For~~$5.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016, we increased our investment~~2020, and by approximately $0.4 million for the six months ended June 30, 2019. Our days sales in inventory decreased by approximately ~~$4.6 million, primarily~~ten days in 2020 compared with the comparable 2019 period as a result of ~~lower than expected~~second quarter 2020 realignment actions to reduce inventory, primarily related to our strategic decision in our Arrow Engine division to streamline its product line offering. We continue to moderate inventory levels in line with sales ~~as we operated at higher production levels earlier in 2016 in anticipation of higher customer demand.~~levels.

Decreases in prepaid expenses and other assets resulted in a ~~cash~~ source of cash of approximately ~~$7.1 million and $10.8~~$0.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016, respectively,~~of approximately $1.4 million for the six months ended June 30, 2019. These changes were primarily as a result of the timing of payments made for income taxes and certain operating expenses.

Decreases in accounts payable and accrued liabilities resulted in a ~~cash~~ use of cash of approximately ~~$8.6~~$14.5 million and $24.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017, primarily related to our cash payment of approximately $4.7 million to terminate our interest rate swap agreements. Decreases in accounts payable~~2020 and ~~accrued liabilities resulted in a cash use of approximately $17.2 million for the nine months ended September 30, 2016~~2019, respectively, primarily as a result of the timing of payments made to suppliers and the mix of vendors and related terms. ~~There was no significant change in our days~~Days accounts payable on hand decreased by approximately nine days in 2020 compared with the comparable 2019 period, primarily as ~~of September 30, 2017 as compared~~we paid certain key Packaging vendors more quickly in 2020 to ~~September 30, 2016.~~ensure our orders remained a top priority for them given our robust demand levels and minimal available capacity in the marketplace.

Net cash used for investing activities of continuing operations for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 was approximately ~~$22.3~~$102.3 million and ~~$22.3~~$78.5 million, respectively. During the first ~~nine~~six months of ~~2017,~~2020, we paid approximately $95.2 million, net of cash acquired, to acquire RSA and Rapak. We incurred approximately ~~$24.1~~$9.3 million in capital expenditures, as we ~~have~~ continued our investment in growth, capacity and productivity-related capital projects. ~~Cash~~We also received proceeds from ~~the~~ disposition of business, property and equipment ~~was~~of approximately ~~$1.8~~$2.1 million. During the first ~~nine~~six months of ~~2016,~~2019, we incurred approximately ~~$22.4~~$11.5 million in capital expenditures and ~~received~~paid approximately $67.0 million, net of cash ~~from the disposition of property~~acquired, to acquire Plastic Srl and ~~equipment of approximately $0.1 million.~~Taplast.

Net cash used for financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016~~2020 was approximately ~~$46.3~~$35.8 million, ~~and $21.0~~while net cash used for financing activities was $17.8 million ~~respectively. In~~for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019. During the ~~Company issued $300.0 million principal Senior Notes, repaid approximately $257.9 million on our former Term Loan A Facility and~~first six months of 2020, we made net repayments of approximately ~~$81.5~~$1.6 million on our revolving credit ~~and accounts receivable~~ facilities. ~~In connection with refinancing our long-term debt in the third quarter of 2017, we paid~~We also purchased approximately ~~$6.1~~$31.6 million of ~~debt financing fees. We also~~outstanding common stock and used a net cash amount of approximately ~~$0.5~~$2.6 million related to our stock compensation arrangements. During the first ~~nine~~six months of ~~2016,~~2019, we ~~made~~borrowed approximately $0.8 million, net ~~repayments~~ of ~~approximately $9.9 million~~repayments, on our revolving credit ~~and accounts receivable facilities, and repaid~~facilities. We also purchased approximately ~~$10.4~~$15.4 million ~~on our former Term Loan A Facility. We also~~of outstanding common stock and used a net cash amount of approximately ~~$1.5~~$3.2 million related to our stock compensation arrangements.

Our Debt and Other Commitments

~~In September 2017, we issued~~The $300.0 million aggregate principal amount of ~~4.875%~~ senior ~~unsecured~~ notes due October 15, 2025 at par value in a private placement under Rule 144A of the Securities Act of 1933, as amended. We used the proceeds from the offering to fully repay the $250.9 million principal, plus $0.4 million related interest, outstanding on our former senior secured term loan A facility due 2020 ("Term Loan A Facility"), repay approximately $41.7 million of outstanding obligations under the our accounts receivable facility, pay fees and expenses of $5.0 million related to the Senior Notes offering, pay fees and expenses of $1.1 million related to amending our Credit Agreement, with the remaining amount retained as cash on our consolidated balance sheet. Of the $5.0 million of fees and expenses related to the Senior Notes, approximately $4.9 million was capitalized as debt issuance costs and approximately $0.1 million was recorded as debt financing and extinguishment expense in the consolidated statement of income.

~~The Senior Notes~~ accrue interest at a rate of 4.875% per annum, payable semi-annually in arrears on April 15 and October 15, commencing on April 15, ~~2018.~~2018 ("Senior Notes"). The payment of principal and interest is jointly and severally guaranteed, on a senior unsecured basis by certain named subsidiaries of the Company (each a "Guarantor" and collectively the "Guarantors"). The Senior Notes are pari passu in right of payment with all existing and future senior indebtedness and subordinated to all existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness. For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, our consolidated subsidiaries that do not guarantee the Senior Notes represented approximately ~~14%~~21% of the total of guarantor and non-guarantor net sales, treating each as a consolidated group and excluding intercompany transactions between guarantor and non-guarantor subsidiaries. In addition, our non-guarantor subsidiaries represented approximately ~~33%~~31% and ~~52%~~15% of the total guarantor and non-guarantor assets and liabilities, respectively, as of ~~September~~June 30, ~~2017,~~2020, treating the guarantor and non-guarantor subsidiaries each as a consolidated group and excluding intercompany transactions between such groups.

Prior to October 15, 2020, we may redeem up to 35% of the principal amount of the Senior Notes at a redemption price of 104.875% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, with the net cash proceeds of one or more equity offerings provided that each such redemption occurs within 90 days of the date of closing of each such equity offering. In addition, we may redeem all or part of the Senior Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus a "make whole" premium.

~~In September 2017, we also amended our~~ We are party to a credit agreement ("Credit ~~Agreement, pursuant to~~Agreement") consisting of a $300.0 million senior secured revolving credit facility, which ~~we were able to extend the maturity date, increase the permitted~~permits borrowings denominated in specific foreign currencies, ~~from $75.0 million~~subject to a $125.0 million remove the Term Loan A Facility and resize the revolving credit facility. We incurred fees and expenses of approximately $1.1 million related to the amendment, all of which was capitalized as debt issuance costs. We also recorded non-cash debt financing and extinguishment expense of $2.0 million related to the write-off of previously capitalized deferred financing fees.

~~Below is a summary of key terms under the~~sub limit. The Credit Agreement ~~as of September 30, 2017, and the key terms of the previous credit agreement in place immediately prior to entering into the amended Credit Agreement~~matures on September 20, ~~2017 (the Term Loan A Facility shows the face amount of borrowing~~2022 and is subject to interest at ~~debt issuance, while the revolving credit facilities show gross availability as of each date):~~



~~Instrument~~	~~Amount~~ ~~($ in millions)~~	~~Maturity Date~~	~~Interest Rate~~
~~Credit Agreement~~
~~Senior secured revolving credit facility~~	~~$300.0~~	~~9/20/2022~~	~~LIBOR~~^(a) ~~plus 1.625%~~^(b)

~~Previous Credit Agreement~~
~~Senior secured revolving credit facility~~	~~$500.0~~	~~6/30/2020~~	~~LIBOR~~^(a) ~~plus 1.625%~~^(b)
~~Senior secured term loan A facility~~	~~$275.0~~	~~6/30/2020~~	~~LIBOR~~^(a) ~~plus 1.625%~~^(b)

~~__________________________~~

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

~~At September 30, 2017, approximately $37.5 million was outstanding on the revolving credit facility.~~ The Credit Agreement allows issuance of letters of credit, not to exceed $40.0 million in aggregate, against revolving credit facility ~~commitments, of which approximately $14.2 million was outstanding at September 30, 2017.~~

commitments.

The Credit Agreement also provides for incremental revolving credit 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 in the Credit Agreement, is no greater than 3.00 to 1.00. The terms and conditions of any incremental revolving credit facility commitments must be no more favorable than the existing credit facility.

Amounts drawn under our revolving credit facility fluctuate daily based upon our working capital and other ordinary course needs. Availability under our revolving credit facility depends upon, among other things, compliance with our Credit Agreement's financial covenants. Our Credit Agreement contains various negative and affirmative covenants and other requirements affecting us and our subsidiaries, including the ability to, subject to certain exceptions and limitations, incur debt, liens, mergers, investments, loans, advances, guarantee obligations, acquisitions, ~~assets~~asset dispositions, sale-leaseback transactions, hedging agreements, dividends and other restricted payments, transactions with affiliates, restrictive agreements and amendments to charters, bylaws, and other material documents. The terms of our Credit Agreement require us and our subsidiaries to meet certain restrictive financial covenants and ratios computed quarterly, including a maximum total net leverage ratio (total consolidated indebtedness plus outstanding amounts under the accounts receivable securitization facility, less the aggregate amount of certain unrestricted cash and unrestricted permitted investments, as defined, over consolidated EBITDA, as defined), a maximum senior secured net leverage ratio (total consolidated senior secured indebtedness, less the aggregate amount of certain unrestricted cash and unrestricted permitted investments, as defined, over consolidated EBITDA, as defined) and a minimum interest expense coverage ratio (consolidated EBITDA, as defined, over the sum of consolidated cash interest expense, as defined, and preferred dividends, as defined). Our permitted total net leverage ratio under the Credit Agreement is 4.00 to 1.00 as of ~~September~~June 30, ~~2017.~~2020. If we were to complete an acquisition which qualifies for a Covenant Holiday Period, as defined in our Credit Agreement, then our permitted total net leverage ratio cannot exceed 4.50 to 1.00 during that period. Our actual total net leverage ratio was ~~2.14~~1.60 to 1.00 at ~~September~~June 30, ~~2017.~~2020. Our permitted senior secured net leverage ratio under the Credit Agreement is 3.50 to 1.00 as of ~~September~~June 30, ~~2017.~~2020. If we were to complete an acquisition which qualifies for a Covenant Holiday Period, as defined in our Credit Agreement, then our permitted senior secured net leverage ratio cannot exceed 4.00 to 1.00 during that period. Our actual senior secured net leverage ratio was ~~0.23 to 1.00~~not meaningful at ~~September~~June 30, ~~2017.~~2020. Our permitted interest expense coverage ratio under the Credit Agreement is 3.00 to 1.00 as of ~~September~~June 30, ~~2017.~~2020. Our actual interest expense coverage ratio was ~~12.79~~12.71 to 1.00 at ~~September~~June 30, ~~2017.~~2020. At ~~September~~June 30, ~~2017,~~2020, we were in compliance with our financial covenants.

The following is a reconciliation of net income, as reported, which is a GAAP measure of our operating results, to Consolidated Bank EBITDA, as defined in our Credit Agreement, for the twelve months ended ~~September~~June 30, ~~2017~~2020 (dollars in thousands). We present Consolidated Bank EBITDA to show our performance under our financial covenants.


				Twelve Months Ended June 30, 2020
	Twelve Months Ended September 30, 2017
Net loss	$	(32,390	)
Net income				$	54,930
Bank stipulated adjustments:
Interest expense	13,850			14,830
Income tax expense				26,250
Depreciation and amortization	45,630			48,770
Impairment charges and asset write-offs	104,610
Non-cash compensation expense⁽¹⁾	7,770			8,090
Other non-cash expenses or losses	2,080			16,920
Non-recurring expenses or costs⁽²⁾	7,320			7,310
Extraordinary, non-recurring or unusual gains or losses				20,990
Effects of purchase accounting adjustments				2,110
Business and asset dispositions	3,590			870
Debt financing and extinguishment costs	6,640
Permitted acquisitions				5,030
Permitted dispositions⁽³⁾				(46,430		)
Consolidated Bank EBITDA, as defined	$	159,100		$	159,670


	September 30, 2017			June 30, 2020
Total Indebtedness, as defined⁽³⁾	$	341,030		$	254,890
Consolidated Bank EBITDA, as defined	159,100			159,670
Total net leverage ratio	2.14		x	1.60		x
Covenant requirement	4.00		x	4.00		x



	June 30, 2020
Total Senior Secured Indebtedness⁽⁴⁾	$	(45,110	)
Consolidated Bank EBITDA, as defined	159,670
Senior secured net leverage ratio	n/m			x
Covenant requirement	3.50			x



	Twelve Months Ended June 30, 2020
Interest expense	$	14,830
Bank stipulated adjustments:
Interest income	(900		)
Non-cash amounts attributable to amortization of financing costs	(1,370		)
Total Consolidated Cash Interest Expense, as defined	$	12,560

September 30, 2017
Total Senior Secured Indebtedness $ 37,080

Consolidated Bank EBITDA, as defined 159,100

Senior secured net leverage ratio 0.23
x
Covenant requirement 3.50
x

Twelve Months Ended September 30, 2017
Interest expense $ 13,850
Bank stipulated adjustments:
Non-cash amounts attributable to amortization of financing costs (1,410 )
Total Consolidated Cash Interest Expense, as defined $ 12,440


	September 30, 2017			June 30, 2020
Consolidated Bank EBITDA, as defined	$	159,100		$	159,670
Total Consolidated Cash Interest Expense, as defined	12,440			12,560
Actual interest expense coverage ratio	12.79		x	12.71		x
Covenant requirement	3.00		x	3.00		x

_____________________________


⁽¹⁾	Non-cash compensation expenses resulting from the grant of ~~restricted shares and units of common stock and common stock options.~~equity awards.


⁽²⁾	Non-recurring costs and expenses relating to diligence and transaction costs, purchase accounting costs, severance, relocation, restructuring and curtailment expenses.


⁽³⁾	~~Includes $4.0 million~~EBITDA from permitted dispositions, as defined.


⁽⁴⁾	Senior secured indebtedness is negative at June 30, 2020 due to the deduction of ~~acquisition deferred purchase price.~~certain unrestricted cash and unrestricted permitted investments as allowed under the Credit Agreement.

Another important source of liquidity is our $75.0 million accounts receivable facility, under which we have the ability to sell eligible accounts receivable to a third-party multi-seller receivables funding company. Our available liquidity under our accounts receivable facility has ranged from approximately $49 million to $65 million, depending on the level of our receivables outstanding at a given point in time during the year. We had approximately $7.0 million and ~~$45.5 million~~ ~~outstanding under the facility as of~~ ~~September~~At June 30, ~~2017~~ and December 31, 2016, respectively, and approximately $53.1 million and $10.1 million available but not utilized as of September 30, 2017 and December 31, 2016, respectively. At September 30, 2017,2020, we had ~~approximately $37.5 million~~no amounts outstanding under our revolving credit facility and had approximately ~~$248.3~~$284.1 million potentially available after giving effect to approximately ~~$14.2~~$15.9 million of letters of credit issued and outstanding. At December 31, ~~2016,~~2019, we had ~~approximately $75.9 million~~no amounts outstanding under our revolving credit ~~facility~~facility and had approximately~~$408.2~~ $283.9 million potentially available after giving effect to approximately ~~$15.9~~$16.1 million of letters of credit issued and outstanding. The letters of credit are used for a variety of purposes, including support of certain operating lease agreements, vendor payment terms and other subsidiary operating activities, and to meet various states' requirements to self-insure workers' compensation claims, including incurred but not reported claims. ~~Including availability under our accounts receivable facility and after consideration of~~Our borrowing capacity was not reduced by leverage restrictions contained in the Credit Agreement as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016, we had approximately $295.4 million and $126.5 million, respectively, of borrowing capacity available for general corporate purposes.~~2019.

We rely upon our cash flow from operations and available liquidity under our revolving credit ~~and accounts receivable facilities~~facility to fund our debt service obligations and other contractual commitments, working capital and capital expenditure requirements. At the end of each quarter, we typically use cash on hand from our domestic and foreign subsidiaries to pay down amounts outstanding under our revolving credit ~~and accounts receivable facilities.~~facility, as applicable.

~~The combined~~Our weighted average ~~monthly amounts outstanding on our Credit Agreement and accounts receivable facilities~~borrowings during the first ~~nine~~six months of ~~2017~~2020 approximated ~~$380.0~~$413.6 million, compared to ~~the weighted average monthly amounts outstanding~~approximately $329.5 million during the first ~~nine~~six months of ~~2016 of approximately $461.6 million. The overall decrease is primarily~~2019, due to ~~the use of proceeds from the Senior Notes offering to fully repay amounts outstanding~~our March 2020 proactive $150 million draw on our ~~former Term Loan A Facility and repay~~revolving credit facility to ensure availability of cash on hand given the potential uncertainty surrounding the financial markets as a ~~portion~~result of the ~~outstanding obligations under our accounts receivable facility.~~COVID-19 pandemic. We repaid the $150 million during second quarter 2020.

Cash management related to our revolving credit ~~and accounts receivable facilities~~facility is centralized. We monitor our cash position and available liquidity on a daily basis and forecast our cash needs on a weekly basis within the current quarter and on a monthly basis outside the current quarter over the remainder of the year. Our business and related cash forecasts are updated monthly.

In considering the economic uncertainty surrounding the potential business impacts from the COVID-19 pandemic with respect to our operations, supply chains, distribution channels, and end-market customers, we have taken certain defensive actions as we monitor our cash position and available liquidity. These actions have included suspending our repurchase of our common stock during second quarter 2020, borrowing on our revolving credit facility, tightening our capital expenditures, advanced monitoring of our accounts receivable balances and flexing cost structures of operations expected to be most impacted by COVID-19.

While ~~the majority~~more than half of our cash on hand as of ~~September~~June 30, ~~2017~~2020 is located ~~in jurisdictions~~ outside of the U.S., given ~~aggregate~~ available funding under our revolving credit ~~and accounts receivable facilities~~facility of ~~$295.4~~$284.1 million at ~~September~~June 30, ~~2017~~2020 (after consideration of the aforementioned leverage restrictions) and based on forecasted cash sources and requirements inherent in our business plans, we believe that our liquidity and capital resources, including anticipated cash flows from operations, will be sufficient to meet our debt service, capital expenditure and other short-term and long-term obligations for the foreseeable future.

We are subject to variable interest rates on our revolving credit ~~and accounts receivable facilities.~~facility. At ~~September~~June 30, ~~2017,~~2020, 1-Month LIBOR approximated ~~1.23%~~0.16%. ~~Based~~At June 30, 2020, we had no amounts outstanding on our revolving credit facility and, therefore, no variable rate-based borrowings ~~outstanding at September 30, 2017, a 1% increase in the per annum interest rate would increase our interest expense by approximately $0.5 million annually.~~outstanding.

In addition to our long-term debt, we have other cash commitments related to leases. We account for these lease transactions as operating leases, and annual rent expense for continuing operations related thereto approximated ~~$17.4~~$7.5 million in ~~2016.~~2019. We expect toleasing will continue to ~~utilize leasing as a~~be an available financing ~~strategy~~option to fund future capital expenditure requirements.

In March 2020, we announced our Board of Directors had authorized us to increase the purchase of our common stock up to $250 million in the ~~future~~aggregate, an increase of $100 million from the prior authorization. In addition in March 2020, given the uncertainty surrounding the COVID-19 pandemic, we temporarily suspended our share repurchase program; therefore, we did not purchase any common stock during the three months ended June 30, 2020. In the six months ended June 30, 2020, we purchased 1,253,650 shares of our outstanding common stock for an aggregate purchase price of approximately $31.6 million. Since the initial authorization through June 30, 2020 we have purchased 2,926,332 shares of our outstanding common stock for an aggregate purchase price of approximately $80.5 million. We will continue to ~~meet~~evaluate opportunities to return capital ~~expenditure needs~~to shareholders through the purchase of our common stock, depending on market conditions, including the potential impact of the COVID-19 pandemic and ~~to reduce debt levels.~~other factors.

Market Risk

We conduct business in various locations throughout the world and are subject to market risk due to changes in the value of foreign currencies. The functional currencies of our foreign subsidiaries are primarily the local currency in the country of domicile. We manage these operating activities at the local level and revenues and costs are generally denominated in local currencies; however, results of operations and assets and liabilities reported in U.S. dollars will fluctuate with changes in exchange rates between such local currencies and the U.S. dollar.

We ~~have historically used~~use derivative financial instruments to manage currency risks ~~albeit in immaterial notional contracts, as we explored the predictability of~~associated with our procurement activities denominated in currencies other than the functional currency of our subsidiaries and the impact of currency rate volatility on our earnings. As of June 30, 2020, we were party to foreign exchange forward and swap contracts to hedge changes in foreign currency exchange rates with notional amounts of approximately $48.8 million. We also use cross-currency swap agreements to mitigate currency risks associated with the net investment in certain of our foreign subsidiaries. See Note 11, "Derivative Instruments," included in Part 1, Item 1, "Notes to Unaudited Consolidated Financial Statements," within this quarterly report on Form 10-Q for additional information.

We are also subject to interest risk as it relates to our long-term debt. We have historically used interest rate swap agreements to fix the variable portion of our debt to manage this risk. See Note 8,10, "~~Derivative Instruments~~Long-term Debt," included in Part 1, Item 1, "Notes to Unaudited Consolidated Financial Statements," within this quarterly report on Form 10-Q for additional information.

Common Stock

TriMas is listed in the NASDAQ Global Select Market^SM. Our stock trades under the symbol "TRS."

Credit Rating

We and certain of our outstanding debt obligations are rated by Standard & Poor's and Moody's. On ~~September 13, 2017,~~June 12, 2020, Moody's ~~assigned~~affirmed a B1Ba3 rating to our Senior Notes, ~~and affirmed a rating of Ba3 to our Credit Agreement,~~ as presented in Note 710, "Long-term Debt" included in Part I, Item 1, "Notes to Unaudited Consolidated Financial Statements" within this quarterly report on Form 10-Q. Moody's also affirmed a ~~Ba3 to our~~Ba2 Corporate Family Rating and maintained its outlook as stable. On ~~September 11, 2017,~~February 12, 2020, Standard & Poor's ~~assigned~~affirmed a B+BB- rating to our senior unsecured ~~notes,~~debt, affirmed a ~~BB-~~BB corporate credit rating ~~to our credit facilities~~ and maintained its outlook as stable. If our credit ratings were to decline, our ability to access certain financial markets may become limited, our cost of borrowings may increase, the perception of us in the view of our customers, suppliers and security holders may worsen and as a result, we may be adversely affected.

Outlook

~~The past few years have been a period~~Through the first half of ~~significant change for TriMas, with portfolio reshaping as part of spinning-off our former Cequent business~~2020, we experienced year-over-year overall growth in ~~2015, various acquisitions within~~sales, driven by robust organic growth in our Packaging segment and ~~Aerospace businesses and significant reductions~~from acquisitions, which were partially offset by organic sales decreases in our ~~fixed cost structure~~Aerospace and Specialty Products segments. We expect these general segment trends for sales to continue in the back half of 2020 compared with back half 2019, with Packaging likely to continue to experience robust demand, particularly for dispensing and closure products that help fight the spread of germs, while Specialty Products sales are expected to be lower than back half 2019 unless industrial activity begins to recover. However, we expect our Aerospace segment to experience a further sales decline in the second half of 2020, as compared to the second half of 2019, as customer orders have reduced significantly as aircraft manufacturers slow or halt production in response to ~~challenging macroeconomic conditions. In addition,~~low demand for new planes following the onset of the COVID-19 pandemic. Although we ~~underwent~~have taken realignment actions to somewhat mitigate the impact of the lower demand levels, a ~~CEO leadership transition in July 2016,~~clear picture for our business has yet to emerge, and we are unable to predict the full extent or duration of these impacts at this time.

We are managing production capacity to prevailing demand conditions where practical and have taken steps to reduce controllable costs. As we continue to navigate through this uncertain period, our goal will be to continue to mitigate the impact of lower volumes and execute strategic manufacturing footprint actions for our businesses experiencing decreased end-market demand, so we are positioned to gain operating leverage when certain end markets begin to recover. For those end markets where demand may increase, such as for our Packaging segment's dispensers and closures used in applications that help fight the spread of germs, improve personal hygiene, and advance home and industrial cleaning, we will continue to collaborate with our customers and strategic supply partners to ensure availability of capacity to fulfill requisite orders, while also investing in localizing supply where necessary.

As a ~~renewed focus on optimizing~~result of continued uncertainties resulting from the ~~financial performance~~COVID-19 pandemic, their potential impact to our future results of operations, as well as to TriMas' market capitalization, we may record additional cash and non-cash charges related to further realignment actions, as well for uncollectible customer account balances, excess inventory and idle production equipment. Further, we may be required to conduct an evaluation of triggering events as to whether there is a reduction in the fair value of our ~~current portfolio of businesses. We have also implemented a redefined TriMas Business Model that establishes the major tenants of how we now operate in 2017~~goodwill and ~~will in future years.~~

~~We remain cautiously optimistic about the possibility for growth in 2017,~~intangible assets, particularly ~~focused on growth programs~~ in our ~~Packaging~~Aerospace divisions where the impact of COVID-19 has resulted in decreased end-market demand for our fastener and ~~Aerospace reportable segments, and have realized year-over-year growth~~machined component product, which we believe could result in ~~both of these segments through~~an impairment charge if the ~~first nine months of 2017. In addition, while uncertainty still exists with respect to the broader macroeconomic environment, there are signs of stabilization~~significant decline in ~~certain of our key end markets, most notably within the Aerospace distribution channel, where year-over-year~~ sales ~~continue to increase~~that began in 2017 compared to 2016, and increased quoting activity for upstream oil and gas-related business. There remains the potential that the new U.S. presidential administration might initiate legislative or regulatory actions that accelerate the U.S. industrial economy, which would benefit us given a majority of our sales and production is in the U.S. While these additional factors would be positive for TriMas,June 2020 continues. At this time, we are not ~~counting on significant market improvement. In addition, given~~able to practically estimate the ~~natural disasters related~~extent or amount of such potential cash and non-cash charges.

Despite the expected pressure to ~~hurricanes~~future demand levels and results of operations, at present, we believe our capital structure is in solid position. We believe we have sufficient headroom under our financial covenants, and ample cash and available liquidity under our revolving credit facility, to meet our debt service, capital expenditure and other short-term and long-term obligations for the Gulf Coast region, there is uncertainty around the level and timing of potential turn-around activity in the petrochemical and refining industries, as they may be delayed into 2018, further impacting our Energy reportable segment's current year sales and profit levels. While we striveforeseeable future.

We expect to ~~mitigate the risk of external factors, we~~ continue to ~~concentrate on managing internal projects that we control, including continued application~~leverage the tenets of the TriMas Business Model ~~within Energy~~to address the ongoing challenges presented by the COVID-19 pandemic, and ~~Aerospace~~on a longer-term basis, achieve our growth plans, execute continuous improvement initiatives to ~~improve our manufacturing processes~~offset inflationary pressures, and ~~product delivery, pruning our product portfolios to de-emphasize or no longer sell certain lower-margin products within certain regions, and seeking~~seek lower-cost sources for input costs, all while continuously assessing the appropriateness of our manufacturing footprint and ~~fixed cost~~fixed-cost structure.

Impact of New Accounting Standards

See Note 2, "New Accounting Pronouncements," included in Part 1, Item 1, "Notes to Unaudited Consolidated Financial Statements," within this quarterly report on Form 10-Q.

Critical Accounting Policies

Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions ~~for~~used in calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, our evaluation of business and macroeconomic trends, and information from other outside sources, as appropriate.

During the quarter ended ~~September~~June 30, ~~2017~~2020, the Company changed its accounting policy for asbestos-related matters, for which the new policy is described below.

Asbestos-related Matters

We accrue loss reserves for asbestos-related matters based upon an estimate of the ultimate liability for claims incurred, whether reported or not, including an estimate of future settlement costs and costs to defend. We utilize known facts and historical trends for Company-specific and general market asbestos-related activity, as well as an actuarial valuation in determining estimated required reserves which we believe are probable and reasonably estimable. Asbestos-related accruals are assessed at each balance sheet date to determine if the liability remains reasonably stated. Accruals for asbestos-related matters are included in the consolidated balance sheet in “Accrued liabilities” and “Other long-term liabilities.”

Other than for the accounting policy for asbestos-related matters, there were no material changes to the items that we disclosed as our critical accounting policies in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019.

In completing our 2016 assessment of goodwill and indefinite-lived intangible assets, the fair value of the Aerospace reporting unit equaled carrying value following our recognition of goodwill and intangible asset impairment charges in the fourth quarter of 2016. All other reporting units with goodwill had an implied fair value greater than carrying value by more than 89% in our last quantitative assessment. The amount of remaining goodwill attributable to the Aerospace reporting unit was approximately $146.4 million as of each of September 30, 2017 and December 31, 2016. We have not identified any events or changes in circumstances that could reasonably be expected to have an other than temporary effect on the significant assumptions used in estimating the fair value of our Aerospace or other reporting units with goodwill.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, we are exposed to market risk associated with fluctuations in foreign currency exchange rates. We are also subject to interest risk as it relates to long-term debt. See Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," for details about our primary market risks, and the objectives and strategies used to manage these risks. Also see Note 710, "Long-term Debt," and Note 811, "Derivative Instruments," in Part I, Item 1, "Notes to Unaudited Consolidated Financial Statements," included within this quarterly report on Form 10-Q for additional information.

Item 4. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Evaluation of disclosure controls and procedures

As of ~~September~~June 30, ~~2017~~2020, an evaluation was carried out by management, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) pursuant to Rule 13a-15 of the Exchange Act. The Company's disclosure controls and procedures are designed only to provide reasonable assurance that they will meet their objectives. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of ~~September~~June 30, ~~2017~~2020, the Company's disclosure controls and procedures are effective to provide reasonable assurance that they would meet their objectives.

Changes in internal control over financial reporting

~~There~~In response to the COVID-19 pandemic, we have required certain employees, some of whom are involved in the operation of our internal controls over financial reporting, to work from home. Despite this change, there have been no changes in the Company's internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2017~~2020 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. We are continually monitoring and assessing the COVID-19 pandemic on our internal controls to minimize any impact it may have on their design and operating effectiveness.

PART II. OTHER INFORMATION

TRIMAS CORPORATION

Item 1. Legal Proceedings

See Note 914, "Commitments and Contingencies," included in Part I, Item 1, "Notes to Unaudited Consolidated Financial Statements," within this quarterly report on Form 10-Q.

Item 1A. Risk Factors

~~In addition to the other~~The information set forth in this report, ~~you~~including without limitation, the risk factor presented below, updates and should ~~carefully consider~~be read in conjunction with, the risk factors ~~discussed~~and information disclosed in Part 1, Item 1A., "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2019.

The novel coronavirus (COVID-19) pandemic has had, and is expected to continue to have, a significant impact on the Company's operations and results.

Since late January 2020, we have been managing matters related to the global COVID-19 pandemic, including impacts to our operations and strategic supplier-partners in Asia, and, more recently, our manufacturing operations in Europe and North America. As a result of COVID-19, we have experienced temporary disruptions in the operation and workforce staffing of certain of our manufacturing facilities, as we were early adopters of many of the workplace guidelines recently published by the U.S. Centers for Disease Control and Prevention ("CDC") and took precautionary measures when necessary. COVID-19 has also affected our customers and suppliers, and we are collaborating with them to minimize supply chain disruptions. In response to the pandemic and related mitigation measures, we also implemented pandemic and business continuity plans, as well as other precautionary measures on behalf of our customers and employees, including supporting remote work opportunities for certain of our employees. While we believe that all these measures have been necessary or appropriate, they have resulted in additional costs and may adversely impact our business and financial performance in the future or expose us to additional unknown risks.

The COVID-19 pandemic has impacted our results of operations, and we expect it will continue to impact us in the future at varying levels. For example, due in part to the impact of the COVID-19 pandemic, sales for our dispensing and closure products increased, while sales in our Aerospace and Specialty Products segments decreased, in the second quarter of 2020. Although it is not possible to predict the ultimate impact of COVID-19, including on our business, results of operations, financial position or cash flows, such impacts that may be material include, but are not limited to: (i) shifting customer demand for many of our products, including those used in cosmetic, personal care, pharmaceutical, household product, food and beverage, and industrial markets, as well as aerospace markets; (ii) increased credit risk, including increased failure by customers experiencing business disruptions to make timely payments; (iii) reduced availability and productivity of employees, as well as increased costs associated with our high-deductible medical insurance plan if our employees become ill; (iv) increased operational risks as a result of manufacturing facility disruptions or remote work arrangements, including the potential effects on internal controls and procedures, as well as cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events; (v) delays and disruptions in the availability of and timely delivery of materials and components used in our operations, as well as increased costs for such materials and components; (vi) customer requirements to accelerate the relocation of certain of our production lines to North America, which may increase our capital investment needs and launch costs; (vii) a negative impact on liquidity position; (viii) any impairment in value of tangible or intangible assets which could ~~materially affect~~be recorded as a result of weaker economic conditions; and (ix) increased costs and less ability to access funds under our ~~business,~~existing credit facility and the capital markets.

The extent of the COVID-19 pandemic's effect on our operational and financial ~~condition~~performance will depend in large part on future developments, which cannot be predicted with confidence at this time. Future developments include the duration, scope and severity of the pandemic, the actions taken to contain or ~~future results. There~~mitigate its impact, and the resumption of widespread economic activity. In addition, because we cannot predict the impact that COVID-19 will ultimately have, ~~been no significant changes~~the actual impact may also exacerbate other risks discussed in Item 1A. “Risk Factors” in our ~~risk factors as disclosed in our 2016~~Annual Report on Form ~~10-K.~~10-K for the fiscal year ended December 31, 2019, any of which could have a material effect on us.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~None.~~The following table provides information about purchases made by the Company, or on behalf of the Company by an affiliated purchaser, of shares of the Company's common stock during the three months ended June 30, 2020.



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program ⁽¹⁾
April 1, 2020 to April 30, 2020	—	$	—	—	$	169,543,834
May 1, 2020 to May 31, 2020	—	$	—	—	$	169,543,834
June 1, 2020 to June 30, 2020	—	$	—	—	$	169,543,834
Total	—	$	—	—	$	169,543,834

__________________________

⁽¹⁾

In March 2020, the Company announced its Board of Directors had authorized the Company to increase the purchase of its common stock up to $250 million in the aggregate from its previous authorization of $150 million. The increased authorization includes the value of shares already purchased under the previous authorization. Pursuant to this share repurchase program, during the three months ended June 30, 2020, the Company did not repurchase any shares of its common stock. The share repurchase program is effective and has no expiration date.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

Exhibits Index:



~~3.1(a)~~3.1	Fourth Amended and Restated Certificate of Incorporation of TriMas ~~Corporation.~~Corporation (Incorporated by reference to the Exhibits filed with TriMas Corporation's Quarterly Report on Form 10-Q filed on August 3, 2007 (File No. 001-10716)).
~~3.2(b)~~3.2	Third Amended and Restated By-laws of TriMas ~~Corporation.~~
~~4.1(c)~~	~~Indenture, dated as of September 20, 2017, among~~Corporation (Incorporated by reference to the Exhibits filed with TriMas ~~Corporation, the Guarantors named therein and Wells Fargo Bank, National Association, as Trustee (including the~~Corporation's Current Report on Form ~~of Note)~~
~~10.1(c)~~	Replacement Facility Amendment, dated as September 20, 2017, among TriMas Company LLC, the other Loan Parties party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the Lenders party thereto.8-K filed on December 18, 2015 (File No. 001-10716)).
31.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
31.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.
~~101.INS~~101	~~XBRL Instance Document.~~
~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document.~~
~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document.~~
~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document.~~
~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document.~~
~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document.~~



~~(a)~~		~~Incorporated by reference to the Exhibits filed with our~~The following materials from TriMas Corporation's Quarterly Report on Form 10-Q ~~filed on August 3, 2007 (File No. 001-10716).~~for the quarter ended June 30, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheet, (ii) the Consolidated Statement of Operations, (iii) the Consolidated Statement of Comprehensive Income, (iv) the Consolidated Statement of Cash Flows, (v) the Consolidated Statement of Shareholders' Equity, (vi) Notes to Consolidated Financial Statements, and (vii) document and entity information.
~~(b)~~104		~~Incorporated by reference to~~Cover Page Interactive Data File (embedded within the ~~Exhibits filed with our Current Report on Form 8-K filed on December 18, 2015 (File No. 001-10716).~~
~~(c)~~		~~Incorporated by reference to the Exhibits filed with our Current Report on Form 8-K filed on September 20, 2017 (File No. 001-10716).~~Inline XBRL document)

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		TRIMAS CORPORATION (Registrant)

			/s/ ROBERT J. ZALUPSKI

Date:	~~October 26, 2017~~July 30, 2020	By:	Robert J. Zalupski Chief Financial Officer

4146



	As of September 30, 2017					As of December 31, 2016
Intangible Category by Useful Life	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Finite-lived intangible assets:
Customer relationships, 5 – 12 years	$	73,790	$	(39,030	)	$	73,570	$	(33,200	)
Customer relationships, 15 – 25 years	132,230		(50,150		)	132,230		(44,970		)
Total customer relationships	206,020		(89,180		)	205,800		(78,170		)
Technology and other, 1 – 15 years	57,520		(28,480		)	57,470		(26,040		)
Technology and other, 17 – 30 years	43,300		(32,960		)	43,300		(31,370		)
Total technology and other	100,820		(61,440		)	100,770		(57,410		)
Indefinite-lived intangible assets:
Trademark/Trade names	42,930		—			42,930		—
Total other intangible assets	$	349,770	$	(150,620	)	$	349,500	$	(135,580	)



	Amount of Loss Recognized in AOCI on Derivative (Effective Portion, net of tax)						Amount of Loss Reclassified from AOCI into Earnings
							Three months ended September 30,						Nine months ended September 30,
	As of September 30, 2017		As of December 31, 2016			Location of Loss Reclassified from AOCI into Earnings (Effective Portion)	2017			2016			2017			2016
Derivatives designated as hedging instruments
Interest rate swaps	$	—	$	(2,520	)	Interest expense	$	20		$	(250	)	$	(320	)	$	(470	)
						Debt financing and related expenses	$	(4,680	)	$	—		$	(4,680	)	$	—



	Number of Unvested Restricted Shares		Weighted Average Grant Date Fair Value		Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2017	645,660		$	20.45
Granted	354,359		24.96
Vested	(236,198	)	20.41
Cancelled	(18,561	)	21.06
Outstanding at September 30, 2017	745,260		$	22.59	1.1	$	20,122,020



	September 30, 2017
Total Senior Secured Indebtedness	$	37,080
Consolidated Bank EBITDA, as defined	159,100
Senior secured net leverage ratio	0.23		x
Covenant requirement	3.50		x

Compensatory

Range of damages sought (dollars in millions)

$0.0 to $0.6

$0.6 to $5.0

Number of claims