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 (Tables)

Supplemental Consolidating Guarantor and Non-Guarantor Financial Information (Tables)

12 Months Ended

Dec. 31, 2013

Text Block [Abstract]

Consolidating Statements of Comprehensive Loss

For the year ended December 31, 2013

(Amounts in thousands)


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

Net sales	$	—		$	529,949		$	31,886		$	139,806		$	—		$	701,641
Cost of sales (exclusive of depreciation and amortization shown separately below)		—			251,491			22,836			84,999			—			359,326
Selling, general and administrative expenses		9,370			168,073			6,589			41,619			—			225,651
Acquisition and integration expense		—			2,931			74			5,633			—			8,638
Depreciation		—			22,381			85			2,330			—			24,796
Amortization		18,058			3,087			—			967			—			22,112
Intercompany administrative (income) expense		—			(348	)		—			348			—			—
Management and transaction fees to related party		—			77			—			—			—			77
Other (income) expense, net		(364	)		3,661			(158	)		1,461			—			4,600

Income from operations		(27,064	)		78,596			2,460			2,449			—			56,441

Intercompany interest (income) expense		(12,232	)		12,259			—			(27	)		—			—
Interest (income) expense, net		(190	)		41,930			—			6,398			—			48,138
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		(26,874	)		24,407			2,460			(3,922	)		—			(3,929	)
Equity in subsidiaries’ income (loss)		21,936			(2,471	)		—			—			(19,465	)		—

Income (loss) before income taxes		(4,938	)		21,936			2,460			(3,922	)		(19,465	)		(3,929	)
Income tax provision (benefit)		(3,790	)		—			867			142			—			(2,781	)

Net income (loss)	$	(1,148	)	$	21,936		$	1,593		$	(4,064	)	$	(19,465	)	$	(1,148	)


Other comprehensive income (loss):
Foreign currency translation adjustments		—			(5,643	)		—			(99	)		—			(5,742	)


Total comprehensive income (loss)	$	(1,148	)	$	16,293		$	1,593		$	(4,163	)	$	(19,465	)	$	(6,890	)

Consolidating Statements of Comprehensive Loss

For the year ended December 31, 2012

(Amounts in thousands)


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

Net sales	$	—		$	517,135		$	18,837		$	19,493		$	—		$	555,465
Cost of sales (exclusive of depreciation and amortization shown separately below)		—			247,976			14,162			12,878			—			275,016
Selling, general and administrative expenses		1,043			174,667			3,717			8,903			—			188,330
Acquisition and integration expense		—			3,031			—			—			—			3,031
Depreciation		—			21,839			88			82			—			22,009
Amortization		18,058			3,298			—			396			—			21,752
Intercompany administrative (income) expense		—			(347	)		—			347			—			—
Management and transaction fees to related party		—			155			—			—			—			155
Other (income) expense, net		(358	)		4,877			(11	)		(304	)		—			4,204

Income from operations		(18,743	)		61,639			881			(2,809	)		—			40,968
Intercompany interest (income) expense		(12,232	)		12,232			—			—			—			—
Interest (income) expense, net		(279	)		41,415			—			2			—			41,138
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		(18,464	)		7,992			881			(2,811	)		—			(12,402	)
Equity in subsidiaries’ income (loss)		4,774			(2,023	)		—			—			(2,751	)		—

Income (loss) before income taxes		(13,690	)		5,969			881			(2,811	)		(2,751	)		(12,402	)
Income tax provision (benefit)		(6,456	)		1,195			333			(240	)		—			(5,168	)

Net income (loss)	$	(7,234	)	$	4,774		$	548		$	(2,571	)	$	(2,751	)	$	(7,234	)


Other comprehensive income (loss):
Foreign currency translation adjustments		—			—			—			1,051			—			1,051


Total comprehensive income (loss)	$	(7,234	)	$	4,774		$	548		$	(1,520	)	$	(2,751	)	$	(6,183	)

Consolidating Statements of Comprehensive Loss

For the year ended December 31, 2011

(Amounts in thousands)


	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 (exclusive of depreciation and amortization shown separately below)		—			227,641			14,627			10,223			—			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	)		55,326			1,669			(109	)		—			38,453
Intercompany interest (income) expense		(12,231	)		12,231			—			—			—			—
Interest (income) 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	)		1,990			1,669			(109	)		—			(14,458	)
Equity in subsidiaries’ income (loss)		2,677			836			—			—			(3,513	)		—

Income (loss) before income taxes		(15,331	)		2,826			1,669			(109	)		(3,513	)		(14,458	)
Income tax provision (benefit)		(5,552	)		149			608			116			—			(4,679	)

Net income (loss)	$	(9,779	)	$	2,677		$	1,061		$	(225	)	$	(3,513	)	$	(9,779	)


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

Total comprehensive income (loss)	$	(9,779	)	$	3,301		$	1,061		$	(404	)	$	(3,513	)	$	(9,334	)

Consolidating Balance Sheet

As of December 31, 2013

(Amounts in thousands)


	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		$	27,553	$	792		$	6,623		$	—		$	34,969
Restricted investments		2,856			—		—			—			—			2,856
Accounts receivable		—			71,173		1,043			15,299			—			87,515
Inventories		—			101,386		10,048			66,450			(304	)		177,580
Deferred income taxes		10,041			—		830			830			(605	)		11,096
Other current assets		—			6,006		322			2,754			—			9,082

Total current assets		12,898			206,118		13,035			91,956			(909	)		323,098
Intercompany notes receivable		105,446			103,422		—			(103,422	)		(105,446	)		—
Intercompany interest receivable		—			1,975		—			—			(1,975	)		—
Investments in subsidiaries		(648,310	)		28,122		507			263,216			356,465			—
Property and equipment		—			81,406		400			14,012			—			95,818
Goodwill		418,947			24,512		2,701			19,787			280			466,227
Other intangibles		293,774			42,959		250			25,382			—			362,365
Restricted investments		1,530			—		—			—			—			1,530
Deferred income taxes		31,349			—		(616	)		2,095			(32,828	)		—
Deferred financing fees		—			9,798		—			—			—			9,798
Investment in trust common securities		3,261			—		—			—			—			3,261
Other assets		—			2,442		25			292			—			2,759

Total assets	$	218,895		$	500,754	$	16,302		$	313,318		$	215,587		$	1,264,856

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	—		$	25,610	$	1,036		$	17,723		$	—		$	44,369
Current portion of senior term loans		—			3,968		—			—			—			3,968
Intercompany interest payable		—			—		—			1,975			(1,975	)
Current portion of capitalized lease and other obligations		—			219		—			—			—			219
Accrued expenses:
Salaries and wages		—			8,462		287			3,115			—			11,864
Pricing allowances		—			3,791		1			2,418			—			6,210
Income and other taxes		(568	)		2,267		30			1,392			—			3,121
Interest		—			2,674		—			—			—			2,674
Deferred compensation		2,856			—		—			—			—			2,856
Other accrued expenses		—			6,191		261			2,579			—			9,031

Total current liabilities		2,288			53,182		1,615			29,202			(1,975	)		84,312

Consolidating Balance Sheet

As of December 31, 2013

(Amounts in thousands)


	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		—			377,641			—		—			—			377,641
Long term portion of capitalized lease and other obligations		—			337			—		—			—			337
Long term senior notes		—			271,750			—		—			—			271,750
Junior subordinated debentures		114,941			—			—		—			—			114,941
Deferred compensation		1,530			—			—		—			—			1,530
Deferred income taxes, net		143,313			—			260		9,920			(33,433	)		120,060
Other non-current liabilities		9,618			5,773			—		—			—			15,391

Total liabilities		271,690			814,129			1,875		39,122			(140,854	)		985,962


Common stock with put options:
Common stock, $.01 par, 5,000 shares authorized, 161.2 issued and outstanding at December 31, 2013.		16,975			—			—		—			—			16,975

Commitments and Contingencies

Stockholders’ Equity:
Preferred Stock:
Preferred stock, $.01 par, 5,000 shares authorized, none issued and outstanding at December 31, 2013.		—			—			—		—			—			—
Common Stock:
Common stock, $.01 par, 5,000 shares authorized, 4,838.8 issued and outstanding at December 31, 2013.		—			—			50		—			(50	)		—
Additional paid-in capital		116,659			(130,559	)		11,711		293,717			1,461			292,989
Accumulated deficit		(186,429	)		(177,173	)		2,666		(6,522	)		341,259			(26,199	)
Accumulated other comprehensive (loss) income		—			(5,643	)		—		(12,999	)		13,771			(4,871	)

Total stockholders’ (deficit) equity		(69,770	)		(313,375	)		14,427		274,196			356,441			261,919


Total liabilities and stockholders’ equity	$	218,895		$	500,754		$	16,302	$	313,318		$	215,587		$	1,264,856

Consolidating Balance Sheet

As of December 31, 2012

(Amounts in thousands)


	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		$	62,917	$	429		$	2,201		$	—		$	65,548
Restricted investments		846			—		—			—			—			846
Accounts receivable		—			65,916		6,473			(10,045	)		—			62,344
Inventories		—			105,028		4,678			4,404			(272	)		113,838
Deferred income taxes		10,359			—		610			221			(726	)		10,464
Other current assets		—			6,526		145			1,835			—			8,506

Total current assets		11,206			240,387		12,335			(1,384	)		(998	)		261,546
Intercompany notes receivable		105,446			—		—			—			(105,446	)		—
Investments in subsidiaries		(637,376	)		27,204		—			—			610,172			—
Property and equipment		—			67,902		191			399			—			68,492
Goodwill		418,946			24,512		58			11,542			280			455,338
Other intangibles		311,832			46,047		250			8,515			—			366,644
Restricted investments		3,399			—		—			—			—			3,399
Deferred income taxes		29,492			—		(411	)		977			(30,058	)		—
Deferred financing fees		—			12,858		—			—			—			12,858
Investment in trust common securities		3,261			—		—			—			—			3,261
Other assets		—			3,521		25			709			—			4,255

Total assets	$	246,206		$	422,431	$	12,448		$	20,758		$	473,950		$	1,175,793

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	—		$	31,873	$	517		$	181		$	—		$	32,571
Current portion of senior term loans		—			3,200		—			—			—			3,200
Current portion of capitalized lease and other obligations		—			819		—			—			—			819
Accrued expenses:
Salaries and wages		—			8,930		217			204			—			9,351
Pricing allowances		—			3,457		3			597			—			4,057
Income and other taxes		(625	)		2,447		25			645			—			2,492
Interest		—			2,868		—			—			—			2,868
Deferred compensation		846			—		—			—			—			846
Other accrued expenses		—			9,822		40			1,535			—			11,397

Total current liabilities		221			63,416		802			3,162			—			67,601

Consolidating Balance Sheet

As of December 31, 2012

(Amounts in thousands)


	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		—			307,727			—		—			—			307,727
Long term portion of capitalized lease and other obligations		—			245			—		—			—			245
Long term senior notes		—			272,942			—		—			—			272,942
Junior subordinated debentures		115,132			—			—		—			—			115,132
Deferred compensation		3,399			—			—		—			—			3,399
Deferred income taxes, net		146,042			—			219		2,472			(30,784	)		117,949
Other non-current liabilities		714			5,473			—		—			—			6,187

Total liabilities		265,508			755,249			1,021		5,634			(136,230	)		891,182


Common stock with put options:
Common stock, $.01 par, 5,000 shares authorized, 198.3 issued and outstanding at December 31, 2012.		14,116			—			—		—			—			14,116

Commitments and Contingencies

Stockholders’ Equity:
Preferred Stock:
Preferred stock, $.01 par, 5,000 shares authorized, none issued and outstanding at December 31, 2012.		—			—			—		—			—			—
Common Stock:
Common stock, $.01 par, 5,000 shares authorized, 4,801.7 issued and outstanding at December 31, 2012.		—			—			50		—			(50	)		—
Additional paid-in capital		117,261			(131,642	)		10,304		17,192			281,560			294,675
Accumulated (deficit) income		(150,679	)		(201,176	)		1,073		(2,458	)		328,189			(25,051	)
Accumulated other comprehensive income		—			—			—		390			481			871

Total stockholders’ (deficit) equity		(33,418	)		(332,818	)		11,427		15,124			610,180			270,495


Total liabilities and stockholders’ equity	$	246,206		$	422,431		$	12,448	$	20,758		$	473,950		$	1,175,793

Consolidating Statement of Cash Flows

For the year ended December 31, 2013

(Amounts in thousands)


	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) income	$	(23,084	)	$	24,407		$	1,593		$	(4,064	)	$	—	$	(1,148	)
Adjustments to reconcile net loss to net cash (used for) provided by operating activities:
Depreciation and amortization		18,058			25,468			85			3,297			—		46,908
Dispositions of property and equipment		—			768			6			3			—		777
Deferred income tax provision (benefit)		(4,268	)		—			816			(172	)		—		(3,624	)
Deferred financing and original issue discount amortization		(190	)		2,682			—			—			—		2,492
Stock-based compensation expense		9,006			—			—			—			—		9,006
Other non-cash interest and change in value of interest rate swap		—			(418	)		—			—			—		(418	)
Changes in operating items:
Accounts receivable		—			(4,066	)		(596	)		(4,436	)		—		(9,098	)
Inventories		—			3,672			(867	)		(14,272	)		—		(11,467	)
Other assets		—			(1,566	)		(620	)		(1,903	)		—		(4,089	)
Accounts payable		—			(6,263	)		304			14,368			—		8,409
Other accrued liabilities		57			(3,723	)		(419	)		6,797			—		2,712
Other items, net		421			(102,480	)		(1	)		103,125			—		1,065

Net cash provided by (used for) operating activities		—			(61,519	)		301			102,743			—		41,525


Cash flows from investing activities:
Payment for Paulin acquisition		—			(918	)		206			(102,704	)		—		(103,416	)
Proceeds from sale of property and equipment		—			792			7			—			—		799
Capital expenditures		—			(37,086	)		(151	)		(801	)		—		(38,038	)

Net cash used for investing activities		—			(37,212	)		62			(103,505	)		—		(140,655	)


Cash flows from financing activities:
Borrowings of senior term loans		—			76,800			—			—			—		76,800
Repayments of senior term loans		—			(3,776	)		—			—			—		(3,776	)
Discount on senior senior term loans		—			(3,152	)		—			—			—		(3,152	)
Principal payments under capitalized lease obligations		—			(503	)		—			—			—		(503	)
Borrowings under other credit obligations		—			324			—			—			—		324
Repayments of other credit obligations		—			(683	)		—			—			—		(683	)

Net cash (used for) provided by financing activities		—			69,010			—			—			—		69,010


Effect on exchange rate changes on cash		—			(5,643	)		—			5,184			—		(459	)

Net (decrease) increase in cash and cash equivalents		—			(35,364	)		363			4,422			—		(30,579	)
Cash and cash equivalents at beginning of period		1			62,917			429			2,201			—		65,548

Cash and cash equivalents at end of period	$	1		$	27,553		$	792		$	6,623		$	—	$	34,969

Consolidating Statement of Cash Flows

For the year ended December 31, 2012

(Amounts in thousands)


	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) income	$	(12,008	)	$	6,797		$	548		$	(2,571	)	$	—	$	(7,234	)
Adjustments to reconcile net loss to net cash (used for) provided by operating activities:
Depreciation and amortization		18,058			25,137			88			478			—		43,761
Dispositions of property and equipment		—			271			21			—			—		292
Deferred income tax provision (benefit)		(6,382	)		1,686			299			(1,216	)		—		(5,613	)
Deferred financing and original issue discount amortization		(279	)		2,459			—			—			—		2,180
Stock-based compensation expense		714			—			—			—			—		714
Other non-cash interest and change in value of interest rate swap		—			(787	)		—			—			—		(787	)
Changes in operating items:
Accounts receivable		—			2,431			(50	)		(922	)		—		1,459
Inventories		—			(9,776	)		439			(902	)		—		(10,239	)
Other assets		—			(6,003	)		(1,319	)		3,213			—		(4,109	)
Accounts payable		—			(568	)		(138	)		(1,478	)		—		(2,184	)
Other accrued liabilities		(76	)		3,623			121			1,300			—		4,968
Other items, net		(27	)		(1,645	)		(2	)		1,746			—		72

Net cash provided by (used for) operating activities		—			23,625			7			(352	)		—		23,280


Cash flows from investing activities:
Proceeds from sale of property and equipment		—			—			3			—			—		3
Capital expenditures		—			(23,973	)		(128	)		(204	)		—		(24,305	)

Net cash used for investing activities		—			(23,973	)		(125	)		(204	)		—		(24,302	)


Cash flows from financing activities:
Repayments of senior term loans		—			(3,200	)		—			—			—		(3,200	)
Borrowings of revolving credit loans		—			19,000			—			—			—		19,000
Repayments of revolving credit loans		—			(19,000	)		—			—			—		(19,000	)
Payment of additional acquisition consideration		—			(12,387	)		—			—			—		(12,387	)
Principal payments under capitalized lease obligations		—			(47	)		—			—			—		(47	)
Borrowings under other credit obligations		—			1,119			—			—			—		1,119
Repayments of other credit obligations		—			(297	)		—			—			—		(297	)
Borrowings of senior notes		—			65,000			—			—			—		65,000
Premium on senior notes		—			4,225			—			—			—		4,225

Net cash (used for) provided by financing activities		—			54,413			—			—			—		54,413


Effect of exchange rate changes on cash		—			—			—			130			—		130

Net (decrease) increase in cash and cash equivalents		—			54,065			(118	)		(426	)		—		53,521
Cash and cash equivalents at beginning of period		1			8,852			547			2,627			—		12,027

Cash and cash equivalents at end of period	$	1		$	62,917		$	429		$	2,201		$	—	$	65,548

Consolidating Statement of Cash Flows

For the year ended December 31, 2011

(Amounts in thousands)


	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) income	$	(12,456	)	$	1,841		$	1,061		$	(225	)	$	—	$	(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			3,492			—		(4,227	)
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			(68	)		—		(4,579	)
Inventories		—			(7,725	)		5,527			(181	)		—		(2,379	)
Other assets		—			(4,691	)		93			551			—		(4,047	)
Accounts payable		—			387			(4	)		217			—		600
Other accrued liabilities		(265	)		4,053			(1,708	)		137			—		2,217
Other items, net		3,957			8,989			(9,362	)		(2,293	)		—		1,291

Net cash provided by (used for) operating activities		—			23,300			(542	)		1,703			—		24,461


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	)		(119	)		—		(17,927	)

Net cash used for investing activities		—			(73,372	)		(30	)		(119	)		—		(73,521	)


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 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


Effect of exchange rate changes on cash		—			—			—			(256	)		—		(256	)

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