Hillman Solutions Corp. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

9 Months Ended

Sep. 29, 2018

Summary of Significant Accounting Policies

The significant accounting policies should be read in conjunction with the significant accounting policies included in the Form 10-K for the year ended December 30, 2017.

Use of Estimates in the Preparation of Financial Statements:

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses for the reporting periods. Actual results may differ from these estimates.

Revenue Recognition:

Revenue is recognized when control of goods or services is transferred to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue.

The Company offers a variety of sales incentives to its customers primarily in the form of discounts, rebates, and slotting fees. Discounts are recognized in the consolidated financial statements at the date of the related sale. Rebates are based on the revenue to date and the contractual rebate percentage to be paid. A portion of the cost of the rebate is allocated to each underlying sales transaction. Discounts, rebates, and slotting fees are included in the determination of net sales.

The Company also establishes reserves for customer returns and allowances. The reserve is established based on historical rates of returns and allowances. The reserve is adjusted quarterly based on actual experience. Returns and allowances are included in the determination of net sales.

The following table disaggregates our revenue by product category.



	Thirteen Weeks Ended September 29, 2018
	United States	Canada	Other	Consolidated
Fastening Solutions	114,285	28,018	1,717	144,020
Custom Solutions	62,384	1,826	21	64,231
Home Solutions	27,781	7,578	229	35,588
Total Revenue	204,450	37,422	1,967	243,839

	Thirteen Weeks Ended September 30, 2017
	United States	Canada	Other	Consolidated
Fastening Solutions	97,514	28,442	1,599	127,555
Custom Solutions	55,323	1,821	15	57,159
Home Solutions	26,868	7,167	206	34,241
Total Revenue	179,705	37,430	1,820	218,955



	Thirty-nine weeks ended September 29, 2018
	United States	Canada	Other	Consolidated
Fastening Solutions	334,231	85,997	5,064	425,292
Custom Solutions	168,828	4,641	47	173,516
Home Solutions	78,179	19,936	665	98,780
Total Revenue	581,238	110,574	5,776	697,588

	Thirty-nine weeks ended September 30, 2017
	United States	Canada	Other	Consolidated
Fastening Solutions	284,657	82,908	4,519	372,084
Custom Solutions	158,011	5,074	36	163,121
Home Solutions	77,889	18,310	590	96,789
Total Revenue	520,557	106,292	5,145	631,994

Fastening solutions revenues consist primarily of the delivery of fasteners, anchors, and specialty products as well as in-store merchandising services for the related product category.

Custom solutions revenues consist primarily of the delivery of keys and key accessories, pet tags, and letters, numbers, and signs (“LNS”) as well as in-store merchandising services for the related product categories and access to our proprietary key duplicating and engraving equipment.

Home solutions revenues consist primarily of the delivery of builders’ hardware, wall hanging, and threaded rod products as well as in-store merchandising services for the related product category.

The Company’s performance obligations under its arrangements with customers are providing products, in-store merchandising services, and access to key duplicating and engraving equipment. Generally, the price of the merchandising services and the access to the key duplicating and engraving equipment is included in the price of the related products. Control of products is transferred at the point in time when the customer accepts the goods. Judgment was required in applying the new revenue standard in determining the time at which to recognize revenue for the in-store services and the access to key duplicating and engraving equipment. The Company’s obligation to provide in-store service and access to key duplicating and engraving equipment is satisfied when control of the related products is transferred. Therefore, consistent with the practice prior to the adoption of ASC 606, the entire amount of consideration related to the sale of products, in-store merchandising services, and access to key duplicating and engraving equipment is recognized upon the customer’s acceptance of the products. The revenues for all performance obligations are recognized upon the customer's acceptance of the products.

The costs to obtain a contract are insignificant, and generally contract terms do not extend beyond one year. Therefore, these costs are expensed as incurred. Freight and shipping costs and the cost of our in-store merchandising services teams are recognized in selling, general, and administrative expense when control over products is transferred to the customer.

The Company used the practical expedient regarding the existence of a significant financing component as payments are due in less than one year after delivery of the products.