Hillman Solutions Corp. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Supplemental Consolidating Guarantor And Non-Guarantor Financial Information

Supplemental Consolidating Guarantor And Non-Guarantor Financial Information

12 Months Ended

Dec. 31, 2011

Supplemental Consolidating Guarantor And Non-Guarantor Financial Information [Abstract]

Supplemental Consolidating Guarantor And Non-Guarantor Financial Information

24.

Supplemental Consolidating Guarantor and Non-Guarantor Financial Information:

The 10.875% Senior Notes were issued by The Hillman Group, Inc. and are fully and unconditionally guaranteed on a joint and several basis by Hillman Companies, Hillman Investment and each of Hillman Group's domestic subsidiaries. The non-guarantor information presented represents our Australian, Canadian and Mexican subsidiaries.

The following financial information presents consolidating statements of operations, balance sheets, and cash flows for The Hillman Group, Inc., all guarantor subsidiaries, all non-guarantor subsidiaries and the eliminations necessary to provide the consolidated results for The Hillman Companies, Inc. and subsidiaries. For purposes of this presentation, investments in subsidiaries have been accounted for using the equity method of accounting. The principal consolidating adjustments eliminate investment in subsidiary and intercompany balances and transactions.

Consolidating Statements of Operations

For the year ended December 31, 2011

(Amounts in thousands)


	Successor
	Guarantors The Hillman Companies, Inc.			Issuer The Hillman Group, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	465,033		$	23,634		$	17,859		$	—		$	506,526
Cost of sales		—			227,719			14,627			10,223			(78	)		252,491
Selling, general and administrative expenses		19			155,891			7,026			6,830			—			169,766
Acquisition and integration expense		—			2,642			—			163			—			2,805
Depreciation		—			21,139			121			73			—			21,333
Amortization		18,433			2,077			207			—			—			20,717
Intercompany administrative (income) expense		—			(240	)		—			238			2			—
Management and transaction fees to related party		—			110			—			—			—			110
Other (income) expense, net		(19	)		447			(16	)		441			(2	)		851
Income from operations		(18,433	)		55,248			1,669			(109	)		78			38,453
Intercompany interest (income) expense		(12,231	)		12,231			—			—			—			—
Interest expense, net		(426	)		41,105			—			—			—			40,679
Interest expense on junior subordinated debentures		12,610			—			—			—			—			12,610
Investment income on trust common securities		(378	)		—			—			—			—			(378	)

Income (loss) before equity in subsidiaries' income		(18,008	)		1,912			1,669			(109	)		78			(14,458	)
Equity in subsidiaries' income (loss)		2,599			836			—			—			(3,435	)		—

Income (loss) before income taxes		(15,409	)		2,748			1,669			(109	)		(3,357	)		(14,458	)
Income tax provision (benefit)		(5,552	)		149			608			116			—			(4,679	)

Net income (loss)	$	(9,857	)	$	2,599		$	1,061		$	(225	)	$	(3,357	)	$	(9,779	)


Other comprehensive income (loss):
Foreign currency translation adjustments		—			—			—			(179	)		—			(179	)
Change in derivative security value		—			624			—			—			—			624

Total comprehensive income (loss)	$	(9,857	)	$	3,223		$	1,061		$	(404	)	$	(3,357	)	$	(9,334	)

Consolidating Statements of Operations

For the seven months ended December 31, 2010

(Amounts in thousands)


	Successor
	Guarantors The Hillman Companies, Inc.			Issuer The Hillman Group, Inc.			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	258,391		$	10,087	$	8,202		$	—		$	276,680
Cost of sales		—			124,556			7,709		4,241			48			136,554
Selling, general and administrative expenses		283			84,773			1,964		3,740			—			90,760
Acquisition and integration expense		—			11,145			—		5			—			11,150
Depreciation		—			10,924			50		33			—			11,007
Amortization		10,669			—			—		—			—			10,669
Intercompany administrative (income) expense		—			(140	)		—		140			—			—
Management and transaction fees to related party		—			—			—		—			—			—
Other (income) expense, net		(283	)		450			2		(314	)		—			(145	)

Income from operations		(10,669	)		26,683			362		357			(48	)		16,685
Intercompany interest (income) expense		(7,135	)		7,136			—		—			(1	)		—
Interest expense, net		(248	)		20,959			—		—			1			20,712
Interest on mandatorily redeemable preferred stock and management purchased options		—			—			—		—			—			—
Interest expense on junior subordinated debentures		7,356			—			—		—			—			7,356
Investment income on trust common securities		(220	)		—			—		—			—			(220	)

Income (loss) before equity in subsidiaries' income		(10,422	)		(1,412	)		362		357			(48	)		(11,163	)
Equity in subsidiaries' income (loss)		(977	)		435			—		—			542			—

Income (loss) before income taxes		(11,399	)		(977	)		362		357			494			(11,163	)
Income tax provision (benefit)		(3,409	)		—			138		146			—			(3,125	)

Net income (loss)	$	(7,990	)	$	(977	)	$	224	$	211		$	494		$	(8,038	)


Other comprehensive income (loss):
Foreign currency translation adjustments		—			—			—		(1	)		—			(1	)
Change in derivative security value		—			(624	)		—		—			—			(624	)

Total comprehensive income (loss)	$	(7,990	)	$	(1,601	)	$	224	$	210		$	494		$	(8,663	)

Consolidating Statements of Operations

For the five months ended May 28, 2010

(Amounts in thousands)


	Predecessor
	Guarantors The Hillman Companies, Inc.			Issuer The Hillman Group, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	175,470		$	6,244		$	4,002		$	—		$	185,716
Cost of sales		—			83,169			4,679			1,925			—			89,773
Selling, general and administrative expenses		19,069			60,784			1,396			1,601			—			82,850
Acquisition and integration		—			11,342			—			—			—			11,342
Depreciation		—			7,192			32			59			—			7,283
Amortization		2,663			—			15			—			—			2,678
Intercompany administrative (income) expense		—			(100	)		—			100			—			—
Management and transaction fees to related party		438			—			—			—			—			438
Other (income) expense, net		(16	)		(11	)		217			(76	)		—			114

Income (loss) from operations		(22,154	)		13,094			(95	)		393			—			(8,762	)
Intercompany interest (income) expense		(5,097	)		5,096			—			—			1			—
Interest expense, net		(154	)		8,480			—			2			(1	)		8,327
Interest on mandatorily redeemable preferred stock and management purchased options		5,488			—			—			—			—			5,488
Interest expense on junior subordinated debentures		5,254			—			—			—			—			5,254
Investment income on trust common securities		(158	)		—			—			—			—			(158	)

Income (loss) before equity in subsidiaries' income		(27,487	)		(482	)		(95	)		391			—			(27,673	)
Equity in subsidiaries' income (loss)		(398	)		84			—			—			314			—

Income (loss) before income taxes		(27,885	)		(398	)		(95	)		391			314			(27,673	)
Income tax provision (benefit)		(2,677	)		—			48			164			—			(2,465	)

Net income (loss)	$	(25,208	)	$	(398	)	$	(143	)	$	227		$	314		$	(25,208	)


Other comprehensive income (loss):
Foreign currency translation adjustments		—			—			—			17			—			17
Change in derivative security value		—			1,161			—			—			—			1,161

Total comprehensive income (loss)	$	(25,208	)	$	763		$	(143	)	$	244		$	314		$	(24,030	)

Consolidating Statements of Operations

For the year ended December 31, 2009

(Amounts in thousands)


	Predecessor
	Guarantors The Hillman Companies, Inc.			Issuer The Hillman Group, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	433,646		$	15,056		$	9,459		$	—		$	458,161
Cost of sales		—			208,231			11,232			5,081			98			224,642
Selling, general and administrative expenses		8,991			142,888			3,545			3,726			—			159,150
Depreciation		—			16,761			86			146			—			16,993
Amortization		6,875			—			37			—			—			6,912
Intercompany administrative (income) expense		—			(240	)		—			238			2			—
Management and transaction fees to related party		1,010			—			—			—			—			1,010
Other (income) expense, net		(286	)		921			10			(523	)		(2	)		120
Income (loss) from operations		(16,590	)		65,085			146			791			(98	)		49,334
Intercompany interest (income) expense		(12,232	)		12,232			—			—			—			—
Interest expense, net		(358	)		15,883			(4	)		—			—			15,521
Interest on mandatorily redeemable preferred stock and management purchased options		12,312			—			—			—			—			12,312
Interest expense on junior subordinated debentures		12,820			—			—			—			—			12,820
Investment income on trust common securities		(378	)		—			—			—			—			(378	)

Income (loss) before equity in subsidiaries' income		(28,754	)		36,970			150			791			(98	)		9,059
Equity in subsidiaries' income (loss)		37,562			592			—			—			(38,154	)		—

Income (loss) before income taxes		8,808			37,562			150			791			(38,252	)		9,059
Income tax provision		9,940			—			51			298			—			10,289

Net income (loss)	$	(1,132	)	$	37,562		$	99		$	493		$	(38,252	)	$	(1,230	)


Other comprehensive income (loss):
Foreign currency translation adjustments		—			—			—			(197	)		—			(197	)
Change in derivative security value		—			297			—			—			—			297

Total comprehensive income (loss)	$	(1,132	)	$	37,859		$	99		$	296		$	(38,252	)	$	(1,130	)

Consolidating Balance Sheet

As of December 31, 2011

(Amounts in thousands)


	Successor
	Guarantors The Hillman Companies, Inc.			Issuer The Hillman Group, Inc.		Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

ASSETS
Current assets
Cash and cash equivalents	$	1		$	8,852	$	547		$	2,627		$	—		$	12,027
Restricted investments		364			—		—			—			—			364
Accounts receivable		—			59,429		1,273			2,863			—			63,565
Inventories		—			95,757		5,117			3,361			(260	)		103,975
Deferred income taxes		8,176			1,676		587			211			(742	)		9,908
Other current assets		—			10,620		3,976			(8,950	)		—			5,646

Total current assets		8,541			176,334		11,500			112			(1,002	)		195,485
Intercompany notes receivable		105,446			—		—			—			(105,446	)		—
Investments in subsidiaries		(628,481	)		91,378		—			—			537,103			—
Property and equipment		—			65,897		174			271			—			66,342
Goodwill		419,752			26,409		58			10,944			280			457,443
Other intangibles		329,891			47,655		250			8,406			—			386,202
Restricted investments		3,390			—		—			—			—			3,390
Deferred income taxes		28,200			321		(108	)		561			(28,974	)		—
Deferred financing fees		—			13,055		—			—			—			13,055
Investment in trust common securities		3,261			—		—			—			—			3,261
Other assets		—			1,676		25			972			—			2,673

Total assets	$	270,000		$	422,725	$	11,899		$	21,266		$	401,961		$	1,127,851


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	—		$	29,997	$	655		$	621		$	—		$	31,273
Current portion of senior term loans		—			3,200		—			—			—			3,200
Current portion of capitalized lease obligations		—			31		—			—			—			31
Additional acquisition consideration		—			12,387		—			—			—			12,387
Accrued expenses:
Salaries and wages		—			5,303		110			215			—			5,628
Pricing allowances		—			5,291		—			437			—			5,728
Income and other taxes		(549	)		2,342		15			445			—			2,253
Interest		—			2,203		—			—			—			2,203
Deferred compensation		364			—		—			—			—			364
Other accrued expenses		—			8,762		39			406			—			9,207

Total current liabilities		(185	)		69,516		819			2,124			—			72,274

Consolidating Balance Sheet

As of December 31, 2011

(Amounts in thousands)


	Successor
	Guarantors The Hillman Companies, Inc.			Issuer The Hillman Group, Inc.			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

LIABILITIES AND STOCKHOLDERS' EQUITY (CONTINUED)
Intercompany debt payable		—			105,446			—		—			(105,446	)		—
Long term senior term loans		—			310,550			—		—			—			310,550
Bank revolving credit		—			—			—		—			—			—
Long term portion of capitalized lease obligations		—			103			—		—			—			103
Long term senior notes		—			204,248			—		—			—			204,248
Junior subordinated debentures		115,411			—			—		—			—			115,411
Deferred compensation		3,390			—			—		—			—			3,390
Deferred income taxes, net		149,704			448			199		3,253			(29,716	)		123,888
Other non-current liabilities		—			7,193			—		—			—			7,193

Total liabilities		268,320			697,504			1,018		5,377			(135,162	)		837,057

Common stock with put options:
Common stock, $.01 par, 5,000 shares authorized, 198.4 issued and outstanding at December 31, 2011.		12,247			—			—		—			—			12,247

Commitments and Contingencies

Stockholders' Equity:
Preferred Stock:
Preferred stock, $.01 par, 5,000 shares authorized, none issued and outstanding at December 31, 2011.		—			—			—		—			—			—
Common Stock:
Common stock, $.01 par, 5,000 shares authorized, 4,801.6 issued and outstanding at December 31, 2011.		—			—			50		—			(50	)		—
Additional paid-in capital		117,221			(68,624	)		10,306		16,437			221,204			296,544
Accumulated deficit		(127,788	)		(206,155	)		525		113			315,488			(17,817	)
Accumulated other comprehensive loss		—			—			—		(661	)		481			(180	)

Total stockholders' equity		(10,567	)		(274,779	)		10,881		15,889			537,123			278,547

Total liabilities and stockholders' equity	$	270,000		$	422,725		$	11,899	$	21,266		$	401,961		$	1,127,851

Consolidating Balance Sheet

As of December 31, 2010

(Amounts in thousands)


	Successor
	Guarantors The Hillman Companies, Inc.			Issuer The Hillman Group, Inc.		Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

ASSETS
Current assets
Cash and cash equivalents	$	1		$	5,166	$	1,119		$	1,299		$	—		$	7,585
Restricted investments		227			—		—			—			—			227
Accounts receivable		—			50,142		3,435			2,933			—			56,510
Inventories		—			84,011		10,644			3,384			(338	)		97,701
Deferred income taxes		7,267			—		1,885			225			—			9,377
Other current assets		—			6,625		4,068			(7,292	)		—			3,401

Total current assets		7,495			145,944		21,151			549			(338	)		174,801
Intercompany notes receivable		105,446			—		—			—			(105,446	)		—
Investments in subsidiaries		(615,609	)		48,267		—			—			567,342			—
Property and equipment		—			52,005		276			231			—			52,512
Goodwill		419,562			1,561		7,242			10,944			280			439,589
Other intangibles		347,950			—		6,345			8,781			—			363,076
Restricted investments		3,251			—		—			—			—			3,251
Deferred income taxes		25,423			392		(201	)		379			(25,614	)		379
Deferred financing fees		—			14,322		—			—			—			14,322
Investment in trust common securities		3,261			—		—			—			—			3,261
Other assets		—			900		25			662			—			1,587

Total assets	$	296,779		$	263,391	$	34,838		$	21,546		$	436,224		$	1,052,778


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	—		$	27,433	$	659		$	332		$	—		$	28,424
Current portion of senior term loans		—			2,900		—			—			—			2,900
Current portion of capitalized lease and other obligations		—			30		—			—			—			30
Accrued expenses:
Salaries and wages		—			5,395		505			178			—			6,078
Pricing allowances		—			4,862		13			480			—			5,355
Income and other taxes		(283	)		1,749		153			420			—			2,039
Interest		—			1,409		—			—			—			1,409
Deferred compensation		227			—		—			—			—			227
Other accrued expenses		—			6,484		1,201			214			—			7,899

Total current liabilities		(56	)		50,262		2,531			1,624			—			54,361

Consolidating Balance Sheet

As of December 31, 2010

(Amounts in thousands)


	Successor
	Guarantors The Hillman Companies, Inc.			Issuer The Hillman Group, Inc.			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

LIABILITIES AND STOCKHOLDERS' EQUITY(CONTINUED)
Intercompany debt payable		—			105,446			—		—			(105,446	)		—
Long term senior term loans		—			285,650			—		—			—			285,650
Bank revolving credit		—			12,000			—		—			—			12,000
Long term portion of capitalized leases		—			134			—		—			—			134
Long term senior notes		—			150,000			—		—			—			150,000
Junior subordinated debentures		115,837			—			—		—			—			115,837
Deferred compensation		3,251			—			—		—			—			3,251
Deferred income taxes, net		151,358			—			151		3,389			(25,614	)		129,284
Other non-current liabilities		—			2,283			—		—			—			2,283

Total liabilities		270,390			605,775			2,682		5,013			(131,060	)		752,800

Common stock with put options:
Common stock, $.01 par, 5,000 shares authorized, 198.4 issued and outstanding at December 31, 2010.		12,247			—			—		—			—			12,247

Commitments and Contingencies

Stockholders' Equity:
Preferred Stock:
Preferred stock, $.01 par, 5,000 shares authorized, none issued and outstanding at December 31, 2010.		—			—			—		—			—			—
Common Stock:
Common stock, $.01 par, 5,000 shares authorized, 4,801.6 issued and outstanding at December 31, 2010.		—			—			65		—			(65	)		—
Additional paid-in capital		116,591			(133,371	)		31,867		16,677			264,630			296,394
Accumulated deficit		(102,449	)		(208,389	)		224		338			302,238			(8,038	)
Accumulated other comprehensive loss		—			(624	)		—		(482	)		481			(625	)

Total stockholders' equity		14,142			(342,384	)		32,156		16,533			567,284			287,731

Total liabilities and stockholders' equity	$	296,779		$	263,391		$	34,838	$	21,546		$	436,224		$	1,052,778

Consolidating Statement of Cash Flows

For the year ended December 31, 2011

(Amounts in thousands)


	Successor
	Guarantors The Hillman Companies, Inc.			Issuer The Hillman Group, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

Cash flows from operating activities:
Net income (loss)	$	(12,456	)	$	1,763		$	1,061		$	(225	)	$	78		$	(9,779	)
Adjustments to reconcile net loss to net cash (used for) provided by operating activities:
Depreciation and amortization		18,433			23,216			328			73			—			42,050
Dispositions of property and equipment		—			42			11			—			—			53
Deferred income tax provision (benefit)		(8,866	)		(203	)		1,350			3,085			—			(4,634	)
Deferred financing and original issue discount amortization		(803	)		2,814			—			—			—			2,011
Other non-cash interest and change in value of interest rate swap		—			1,250			—			—			—			1,250
Changes in operating items:
Accounts receivable		—			(6,673	)		2,162			70			—			(4,441	)
Inventories		—			(7,647	)		5,527			23			(78	)		(2,175	)
Other assets		—			(4,691	)		92			1,348			—			(3,251	)
Accounts payable		—			387			(4	)		289			—			672
Other accrued liabilities		(265	)		4,053			(1,708	)		211			—			2,291
Other items, net		3,957			8,989			(9,361	)		(3,419	)		—			166

Net cash provided by (used for) operating activities		—			23,300			(542	)		1,455			—			24,213


Cash flows from investing activities:
Payment for TagWorks acquisition		—			(40,271	)		—			—			—			(40,271	)
Payment for Ook acquisition		—			(15,323	)		—			—			—			(15,323	)
Capital expenditures		—			(17,778	)		(30	)		(127	)		—			(17,935	)
Other, net		—			—			—			—			—			—

Net cash used for investing activities		—			(73,372	)		(30	)		(127	)		—			(73,529	)


Cash flows from financing activities:
Borrowings of senior term loans		—			30,000			—			—			—			30,000
Repayments of senior term loans		—			(2,975	)		—			—			—			(2,975	)
Discount on senior senior term loans		—			(2,000	)		—			—			—			(2,000	)
Borrowings of revolving credit loans		—			9,444			—			—			—			9,444
Repayments of revolving credit loans		—			(21,444	)		—			—			—			(21,444	)
Payment of additional acquisition consideration		—			(12,490	)		—			—			—			(12,490	)
Principal payments under capitalized lease obligations		—			(30	)		—			—			—			(30	)
Borrowings of senior notes		—			50,000			—			—			—			50,000
Premium on senior notes		—			4,625			—			—			—			4,625
Financing fees, net		—			(1,372	)		—			—			—			(1,372	)

Net cash (used for) provided by financing activities		—			53,758			—			—			—			53,758


Net (decrease) increase in cash and cash equivalents		—			3,686			(572	)		1,328			—			4,442
Cash and cash equivalents at beginning of period		1			5,166			1,119			1,299			—			7,585

Cash and cash equivalents at end of period	$	1		$	8,852		$	547		$	2,627		$	—		$	12,027

Consolidating Statement of Cash Flows

For the seven months ended December 31, 2010

(Amounts in thousands)


	Successor
	Guarantors The Hillman Companies, Inc.			Issuer The Hillman Group, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

Cash flows from operating activities:
Net income (loss)	$	(7,013	)	$	(1,401	)	$	224		$	211		$	(59	)	$	(8,038	)
Adjustments to reconcile net loss to net cash (used for) provided by operating activities:
Depreciation and amortization		10,669			10,924			50			33			—			21,676
Dispositions of property and equipment		—			60			—			—			—			60
Deferred income tax provision (benefit)		(8,031	)		(1,125	)		176			3,320			—			(5,660	)
Deferred financing and original issue discount amortization		2,590			(1,296	)		—			—			—			1,294
Other non-cash interest and change in value of interest rate swap		—			392			—			—			—			392
Changes in operating items:
Accounts receivable		—			14,195			727			(236	)		—			14,686
Inventories		—			(11,030	)		(100	)		(590	)		59			(11,661	)
Other assets		—			(2,626	)		38			1,444			(12	)		(1,156	)
Accounts payable		—			7,229			(374	)		196			—			7,051
Other accrued liabilities		(69	)		(11,228	)		4			417			5,096			(5,780	)
Other items, net		199,620			(214,228	)		21,567			(3,540	)		(5,084	)		(1,665	)

Net cash provided by (used for) operating activities		197,766			(210,134	)		22,312			1,255			—			11,199


Cash flows from investing activities:
Payments for Quick Tag and Laser Key licenses		—			(12,750	)		—			—			—			(12,750	)
Payment for Servalite acquisition		—			—			(21,335	)								(21,335	)
Capital expenditures		—			(9,518	)		(64	)		(93	)		—			(9,675	)
Other, net		—			—			—			—			—			—

Net cash used for investing activities		—			(22,268	)		(21,399	)		(93	)		—			(43,760	)


Cash flows from financing activities:
Borrowings of senior term loans		—			290,000			—			—			—			290,000
Repayments of senior term loans		—			(149,756	)		—			—			—			(149,756	)
Borrowings of revolving credit loans		—			12,600			—			—			—			12,600
Repayments of revolving credit loans		—			(600	)		—			—			—			(600	)
Principal payments under capitalized lease obligations		—			(50	)		—			—			—			(50	)
Repayments of unsecured subordinated notes		—			(49,820	)		—			—			—			(49,820	)
Borrowings of senior notes		—			150,000			—			—			—			150,000
Financing fees, net		—			(15,729	)		—			—			—			(15,729	)
Purchase predecessor equity securities		(506,407	)		—			—			—			—			(506,407	)
Proceeds from sale of successor equity securities		308,641			—			—			—			—			308,641

Net cash (used for) provided by financing activities		(197,766	)		236,645			—			—			—			38,879


Net (decrease) increase in cash and cash equivalents		—			4,243			913			1,162			—			6,318
Cash and cash equivalents at beginning of period		1			923			206			137			—			1,267

Cash and cash equivalents at end of period	$	1		$	5,166		$	1,119		$	1,299		$	—		$	7,585

Consolidating Statement of Cash Flows

For the five months ended May 28, 2010

(Amounts in thousands)


	Predecessor
	Guarantors The Hillman Companies, Inc.			Issuer The Hillman Group, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

Cash flows from operating activities:
Net loss	$	(24,810	)	$	(493	)	$	(143	)	$	227		$	11		$	(25,208	)
Adjustments to reconcile net loss to net cash (used for) provided by operating activities:
Depreciation and amortization		2,663			7,192			47			59			—			9,961
Dispositions of property and equipment		—			74			—			—			—			74
Deferred income tax provision (benefit)		(2,757	)		733			45			58			—			(1,921	)
Deferred financing and original issue discount amortization		(155	)		670			—			—			—			515
Interest on mandatorily redeemable preferred stock and management purchased options		5,488			—			—			—			—			5,488
Stock-based compensation expense		19,053			—			—			—			—			19,053
Changes in operating items:
Accounts receivable		—			(15,724	)		(658	)		(434	)		—			(16,816	)
Inventories		—			2,383			477			110			(11	)		2,959
Other assets		—			597			(178	)		(307	)		12			124
Accounts payable		—			1,890			(71	)		11			—			1,830
Other accrued liabilities		(332	)		9,561			176			43			(5,096	)		4,352
Other items, net		850			(6,843	)		—			15			5,084			(894	)

Net cash provided by (used for) operating activities		—			40			(305	)		(218	)		—			(483	)


Cash flows from investing activities:
Capital expenditures		—			(5,396	)		(7	)		(8	)		—			(5,411	)
Other, net		—			—			—			—			—			—

Net cash used for investing activities		—			(5,396	)		(7	)		(8	)		—			(5,411	)


Cash flows from financing activities:
Repayments of senior term loans		—			(9,544	)		—			—			—			(9,544	)
Principal payments under capitalized lease obligations		—			(459	)		—			—			—			(459	)

Net cash used for financing activities		—			(10,003	)		—			—			—			(10,003	)


Net decrease in cash and cash equivalents		—			(15,359	)		(312	)		(226	)		—			(15,897	)
Cash and cash equivalents at beginning of period		1			16,282			518			363			—			17,164

Cash and cash equivalents at end of period	$	1		$	923		$	206		$	137		$	—		$	1,267

Consolidating Statement of Cash Flows

For the year ended December 31, 2009

(Amounts in thousands)


	Predecessor
	Guarantors The Hillman Companies, Inc.			Issuer The Hillman Group, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

Cash flows from operating activities:
Net loss	$	(38,694	)	$	36,970		$	99		$	493		$	(98	)	$	(1,230	)
Adjustments to reconcile net loss to net cash (used for) provided by operating activities:
Depreciation and amortization		6,875			16,761			123			146			—			23,905
Dispositions of property and equipment		—			243			—			—			—			243
Deferred income tax provision (benefit)		8,771			179			(270	)		(7	)		—			8,673
Deferred financing and original issue discount amortization		(358	)		1,633			—			—			—			1,275
Interest on mandatorily redeemable preferred stock and management purchased options		12,312			—			—			—			—			12,312
Stock-based compensation expense		8,737			—			—			—			—			8,737
Changes in operating items:
Accounts receivable		—			1,898			287			(552	)		—			1,633
Inventories		—			18,465			705			(986	)		98			18,282
Other assets		—			866			(1,272	)		1,355			—			949
Accounts payable		—			(6,186	)		29			(62	)		—			(6,219	)
Other accrued liabilities		40			3,697			77			(187	)		—			3,627
Other items, net		2,317			(2,370	)		58			(195	)		—			(190	)

Net cash (used for) provided by operating activities		—			72,156			(164	)		5			—			71,997


Cash flows from investing activities:
Capital expenditures		—			(12,958	)		(13	)		—			—			(12,971	)
Other, net		—			—			—			—			—			—

Net cash provided by (used for) investing activities		—			(12,958	)		(13	)		—			—			(12,971	)


Cash flows from financing activities:
Repayments of senior term loans		—			(45,000	)		—			—			—			(45,000	)
Principal payments under capitalized lease obligations		—			(394	)		—			—			—			(394	)
Refinancing fees		—			(2,921	)		—			—			—			(2,921	)
Redemption of securities		—			(1,141	)		—			—			—			(1,141	)
Borrowings under other credit obligations		—			461			—			—			—			461

Net cash used for financing activities		—			(48,995	)		—			—			—			(48,995	)


Net (decrease) increase in cash and cash equivalents		—			10,203			(177	)		5			—			10,031
Cash and cash equivalents at beginning of period		1			6,079			695			358			—			7,133

Cash and cash equivalents at end of period	$	1		$	16,282		$	518		$	363		$	—		$	17,164