Quarterly report pursuant to Section 13 or 15(d)

Summary of Significant Accounting Policies (Policies)

v3.22.2
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 25, 2022
Accounting Policies [Abstract]  
Use of Estimates in the Preparation of Financial Statements
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.
The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors including, but not limited to: the magnitude and duration of COVID-19, the extent to which it will impact worldwide macroeconomic conditions including interest rates, employment rates and health insurance coverage, the speed of the anticipated recovery, and governmental and business reactions to the pandemic. The Company assessed certain accounting
matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts COVID-19 as of June 25, 2022 and through the date of this
report. The accounting matters assessed included, but were not limited to the carrying value of the goodwill and other long-lived assets. While there was not a material impact to the Company’s Condensed Consolidated Financial Statements as of and for the thirteen and twenty-six weeks ended June 25, 2022, the Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s Condensed Consolidated Financial Statements in future reporting periods.
Revenue Recognition
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 and rebates. Discounts are
recognized in the Condensed 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 and rebates 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 displays our disaggregated revenue by product category:

Thirteen weeks ended June 25, 2022
Hardware and Protective Solutions Robotics and Digital Solutions Canada Total Revenue
Fastening and Hardware $ 225,377  $ —  $ 48,473  $ 273,850 
Personal Protective 54,465  —  220  54,685 
Keys and Key Accessories —  49,837  792  50,629 
Engraving and Resharp —  14,939  11  14,950 
Consolidated $ 279,842  $ 64,776  $ 49,496  $ 394,114 
Thirteen weeks ended June 26, 2021
Hardware and Protective Solutions Robotics and Digital Solutions Canada Total Revenue
Fastening and Hardware $ 201,208  $ —  $ 45,826  $ 247,034 
Personal Protective 61,921  —  178  62,099 
Keys and Key Accessories —  50,289  206  50,495 
Engraving and Resharp —  16,062  25  16,087 
Consolidated $ 263,129  $ 66,351  $ 46,235  $ 375,715 
Twenty-six weeks ended June 25, 2022
Hardware and Protective Solutions Robotics and Digital Solutions Canada Total Revenue
Fastening and Hardware $ 414,684  $ —  $ 82,132  $ 496,816 
Personal Protective 131,573  —  662  132,235 
Keys and Key Accessories —  98,213  1,466  99,679 
Engraving and Resharp —  28,371  26  28,397 
Consolidated $ 546,257  $ 126,584  $ 84,286  $ 757,127 

Twenty-six weeks ended June 26, 2021
Hardware and Protective Solutions Robotics and Digital Solutions Canada Total Revenue
Fastening and Hardware $ 367,810  $ —  $ 79,917  $ 447,727 
Personal Protective 146,248  —  191  146,439 
Keys and Key Accessories —  92,383  567  92,950 
Engraving and Resharp —  29,847  33  29,880 
Consolidated $ 514,058  $ 122,230  $ 80,708  $ 716,996 


The following table disaggregates our revenue by geographic location:

Thirteen weeks ended June 25, 2022
Hardware and Protective Solutions Robotics and Digital Solutions Canada Total Revenue
United States $ 274,417  $ 63,716  $ —  $ 338,133 
Canada 2,067  1,060  49,496  52,623 
Mexico 3,358  —  —  3,358 
Consolidated $ 279,842  $ 64,776  $ 49,496  $ 394,114 

Thirteen weeks ended June 26, 2021
Hardware and Protective Solutions Robotics and Digital Solutions Canada Total Revenue
United States $ 257,742  $ 65,739  $ —  $ 323,481 
Canada 2,050  612  46,235  48,897 
Mexico 3,337  —  —  3,337 
Consolidated $ 263,129  $ 66,351  $ 46,235  $ 375,715 
Twenty-six weeks ended June 25, 2022
Hardware and Protective Solutions Robotics and Digital Solutions Canada Total Revenue
United States $ 535,479  $ 124,694  $ —  $ 660,173 
Canada 3,853  1,890  84,286  90,029 
Mexico 6,925  —  —  6,925 
Consolidated $ 546,257  $ 126,584  $ 84,286  $ 757,127 

Twenty-six weeks ended June 26, 2021
Hardware and Protective Solutions Robotics and Digital Solutions Canada Total Revenue
United States $ 504,539  $ 121,039  $ —  $ 625,578 
Canada 3,279  1,191  80,708  85,178 
Mexico 6,240  —  —  6,240 
Consolidated $ 514,058  $ 122,230  $ 80,708  $ 716,996 


Our revenue by geography is allocated based on the location of our sales operations. Our Hardware and Protective Solutions segment contains sales of Big Time Products personal protective equipment into Canada. Our Robotics and Digital Solutions segment contains sales of MinuteKey Canada.
Hardware and Protective Solutions revenues consist primarily of the delivery of fasteners, anchors, specialty fastening products, and personal protective equipment such as gloves and eye-wear, as well as in-store merchandising services for the related product category.

Robotics and Digital Solutions revenues consist primarily of sales of keys and identification tags through self-service key duplication and engraving kiosks. It also includes our associate-assisted key duplication systems and key accessories.

Canada revenues consist primarily of the delivery to Canadian customers of fasteners and related hardware items, threaded rod, keys, key duplicating systems, accessories, personal protective equipment, and identification items 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, which occurs upon delivery of the products. Judgment is required in determining the time at which to recognize revenue for the in-store services and the access to key duplicating and engraving equipment. Revenue is recognized for in-store service and access to key duplicating and engraving equipment as the related products are delivered, which approximates a time-based recognition pattern. Therefore, 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 delivery 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.
Recent Accounting Pronouncements
4. Recent Accounting Pronouncements:

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is currently evaluating its contracts and the optional expedients provided by the new standard.

In January 2021, FASB issued ASU 2021-01, Reference Rate Reform, to expand the scope of ASU 2020-04 by allowing an entity to apply the optional expedients, by stating that a change to the interest rate used for margining, discounting or contract price alignment for a derivative is not considered to be a change to the critical terms of the hedging relationship that requires designation. The entity may apply the contract modification relief provided in ASU 2020-04 and continue to account for the derivative in the same manner that existed prior to the changes resulting from reference rate reform or the discounting transition. The Company is currently evaluating its contracts and the optional expedients provided by the new standard.

On October 28, 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and
Contract Liabilities from Contracts with Customers, which amends Accounting Standards Codification ("ASC") 805 to require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. This update is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to 1) the recognition of an acquired contract liability, and 2) payment terms and their effect on subsequent revenue recognized by the acquirer. The amendment is effective on fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact provided by the new standard.

On March 28, 2022, the FASB issued ASU 2022-01, which clarifies the guidance in ASC Topic 815, Derivatives and Hedging on fair value hedge accounting of interest rate risk for portfolios of financial assets. The ASU amends the guidance in ASU 2017-12 which established the "last-of-layer" method for making the fair value hedge accounting for these portfolios more accessible. ASU 2022-01 renames that method the "portfolio layer'' method. Under current guidance, the last-of-layer method enables an entity to apply fair value hedging to a stated amount of a closed portfolio of prepayable financial assets without having to consider prepayment risk or credit risk when measuring those assets. ASU 2022-01 expands the scope of this guidance to allow entities to apply the portfolio layer method to portfolios of all financial assets, including both prepayable and non-prepayable financial assets. The amendment is effective for fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact provided by the new standard.