HILLMAN COMPANIES INC - FORM 10-Q - EX-99.1 - EXHIBIT 99.1

Attached files

file	filename
10-Q - 10-Q - HILLMAN COMPANIES INC	hillman10-q3312015.htm
EX-31.1 - EXHIBIT 31.1 - HILLMAN COMPANIES INC	exhibit31-certifications.htm
EX-32.2 - EXHIBIT 32.2 - HILLMAN COMPANIES INC	exhibit322-certificationof.htm
EX-31.2 - EXHIBIT 31.2 - HILLMAN COMPANIES INC	exhibit312-certificationof.htm
EX-32.1 - EXHIBIT 32.1 - HILLMAN COMPANIES INC	exhibit321-certificationof.htm
EXCEL - IDEA: XBRL DOCUMENT - HILLMAN COMPANIES INC	Financial_Report.xls

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

Supplemental Consolidating Guarantor and Non-Guarantor Financial Information

(dollars in thousands)

EXHIBIT 99.1

On June 30, 2014, affiliates of CCMP Capital Advisors, LLC (“CCMP”) and Oak Hill Capital Partners III, L.P., Oak Hill Capital

Management Partners III, L.P. and OHCP III HC RO, L.P.), together with certain current and former members of Hillman’s

management, consummated a merger transaction (the “Merger Transaction”) pursuant to the terms and conditions of an Agreement and Plan of Merger dated as of May 16, 2014.

The Company, through Hillman Group, had issued $265,000 in aggregate principal amount of 10.875% Senior Notes that were

scheduled to mature on June 1, 2018. In connection with the Merger Transaction, the 10.875% Senior Notes were repaid and

terminated.

Hillman Group issued $330,000 aggregate principal amount of its senior notes due July 15, 2022 (the “6.375% Senior Notes”). The 6.375% Senior Notes, of which $330,000 aggregate principal amount was outstanding as of March 31, 2015, are fully and

unconditionally guaranteed on a joint and several basis by The Hillman Companies, Inc., Hillman Investment Company, and certain of the Company’s wholly-owned subsidiaries. The non-guarantor information presented represents our Australian, Canadian, and Mexican subsidiaries.

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

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

Supplemental Consolidating Guarantor and Non-Guarantor Financial Information



Condensed Consolidating Statements of Comprehensive Loss (Unaudited)
For the three months ended March 31, 2015
(dollars in thousands)


			Successor

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

	Net sales		$	—		$	144,121		$	5,113		$	31,462		$	—	$	180,696
	Cost of sales (exclusive of depreciation and
		amortization shown separately below)	—			79,045			3,692			20,611			—		103,348
	Selling, general and administrative expenses		254			49,923			1,018			10,503			—		61,698
	Transaction, acquisition and integration expenses		—			165			—			—			—		165
	Depreciation		—			6,949			17			571			—		7,537
	Amortization		8,974			—			54			489			—		9,517
	Intercompany administrative (income) expense		—			(108		)	—			108			—		—
	Management fees to related party		—			151			—			—			—		151
	Other (income) expense, net		(50		)	1,541			(2		)	(259		)	—		1,230

		(Loss) income from operations	(9,178		)	6,455			334			(561		)	—		(2,950		)

	Intercompany interest (income) expense		(3,057		)	3,057			—			—			—		—
	Interest (income) expense, net		(235		)	11,263			—			1,599			—		12,627
	Interest expense on junior subordinated debentures		3,152			—			—			—			—		3,152
	Investment income on trust common securities		(95		)	—			—			—			—		(95		)
		(Loss) income before equity in subsidiaries' income	(8,943		)	(7,865		)	334			(2,160		)	—		(18,634		)
	Equity in subsidiaries' (loss) income		(8,708		)	(843		)	—			—			9,551		—

		(Loss) income before income taxes	(17,651		)	(8,708		)	334			(2,160		)	9,551		(18,634		)
		Income tax (benefit) provision	(7,786		)	—			156			(1,139		)	—		(8,769		)

	Net (loss) income		$	(9,865	)	$	(8,708	)	$	178		$	(1,021	)	$	9,551	$	(9,865	)

	Other comprehensive (loss) income:
		Foreign currency translation adjustments	—			(7,229		)	—			(24,528		)	21,245		(10,512		)

	Total comprehensive (loss) income		$	(9,865	)	$	(15,937	)	$	178		$	(25,549	)	$	30,796	$	(20,377	)

Page 2 of 9

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

Supplemental Consolidating Guarantor and Non-Guarantor Financial Information



Condensed Consolidating Statements of Comprehensive Loss (Unaudited)
For the three months ended March 31, 2014
(dollars in thousands)

			Predecessor

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

	Net sales		$	—		$	115,365		$	7,307		$	32,107		$	—	$	154,779
	Cost of sales (exclusive of depreciation and
	amortization shown below)		—			54,735			5,106			19,574			—		79,415
	Selling, general and administrative expenses		526			42,363			1,726			11,228			—		55,843
	Transaction, acquisition and integration expenses		—			—			—			—			—		—
	Depreciation		—			6,196			21			651			—		6,868
	Amortization		4,515			772			—			257			—		5,544
	Intercompany administrative (income) expense		—			(108		)	—			108			—		—
	Other (income) expense, net		(18		)	32			(129		)	(373		)	—		(488		)

		(Loss) income from operations	(5,023		)	11,375			583			662			—		7,597

	Intercompany interest (income) expense		(3,058		)	3,058			—			—			—		—
	Interest (income) expense, net		(51		)	9,916			—			1,680			—		11,545
	Interest expense on junior subordinated debentures		3,152			—			—			—			—		3,152
	Investment income on trust common securities		(95		)	—			—			—			—		(95		)
		(loss) income before equity in subsidiaries' income	(4,971		)	(1,599		)	583			(1,018		)	—		(7,005		)
	Equity in subsidiaries' income (loss)		(1,842		)	(243		)	—			—			2,085		—

		(Loss) income before income taxes	(6,813		)	(1,842		)	583			(1,018		)	2,085		(7,005		)
		Income tax (benefit) provision	(2,751		)	—			244			(436		)	—		(2,943		)

	Net (loss) income		$	(4,062	)	$	(1,842	)	$	339		$	(582	)	$	2,085	$	(4,062	)

	Other comprehensive (loss) income:
		Foreign currency translation adjustments	—			(4,067		)	—			20			—		(4,047		)

	Total comprehensive (loss) income		$	(4,062	)	$	(5,909	)	$	339		$	(562	)	$	2,085	$	(8,109	)

Page 3 of 9

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

Supplemental Consolidating Guarantor and Non-Guarantor Financial Information



Condensed Consolidating Balance Sheet (Unaudited)
As of March 31, 2015
(dollars in thousands)

					Successor

					Guarantors			Issuer					Non-
					The Hillman			The Hillman		Guarantor			Guarantor			Consolidating
					Companies, Inc.			Group, Inc.		Subsidiaries			Subsidiaries			Adjustments			Consolidated
	ASSETS
	Current assets:
		Cash and cash equivalents			$	1		$	600	$	380		$	1,156		$	—		$	2,137
		Restricted investments			494			—		—			—			—			494
		Accounts receivable, net			—			80,713		2,040			25,349			—			108,102
		Inventories, net			—			156,788		5,314			65,989			(492		)	227,599
		Deferred income taxes, net			10,611			277		514			1,318			(87		)	12,633
		Other current assets			—			7,689		162			2,243			—			10,094
			Total current assets		11,106			246,067		8,410			96,055			(579		)	361,059
		Intercompany notes receivable			105,446			110,768		(7,033		)	(103,735		)	(105,446		)	—
		Intercompany interest receivable			3,057			2,450		—			—			(5,507		)	—
		Investments in subsidiaries			(847,170		)	69,419		4,300			250,469			522,982			—
		Property and equipment, net			—			100,304		281			11,741			—			112,326
		Goodwill			789,870			338,696		3,240			35,102			(548,026		)	618,882
		Other intangibles, net			737,740			—		4,629			43,696			—			786,065
		Restricted investments			1,720			—		—			—			—			1,720
		Deferred income taxes			58,404			143		(610		)	1,132			(59,069		)	—
		Deferred financing fees, net			—			23,483		—			—			—			23,483
		Investment in trust common securities			3,261			—		—			—			—			3,261
		Other assets			—			3,023		25			45			—			3,093

				Total assets	$	863,434		$	894,353	$	13,242		$	334,505		$	(195,645	)	$	1,909,889

	LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities:
		Accounts payable			—			$	57,979	$	152		$	18,733		—			$	76,864
		Current portion of senior term loans			—			5,500		—			—			—			5,500
		Current portion of capitalized lease and other obligations			—			207		—			—			—			207
		Intercompany interest payable			—			3,057		—			2,450			(5,507		)	—
		Accrued expenses:
			Salaries and wages		—			6,210		123			1,286			—			7,619
			Pricing allowances		—			4,538		5			2,097			—			6,640
			Income and other taxes		(213		)	2,423		68			500			—			2,778
			Interest		—			4,795		—			—			—			4,795
			Deferred compensation		494			—		—			—			—			494
			Other accrued expenses		—			7,546		40			1,732			—			9,318
				Total current liabilities	281			92,255		388			26,798			(5,507		)	114,215

Page 4 of 9

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

Supplemental Consolidating Guarantor and Non-Guarantor Financial Information




Condensed Consolidating Balance Sheet (Unaudited)
As of March 31, 2015
(dollars in thousands)

					Successor

					Guarantors			Issuer					Non-
					The Hillman			The Hillman			Guarantor		Guarantor			Consolidating
					Companies, Inc.			Group, Inc.			Subsidiaries		Subsidiaries			Adjustments			Consolidated
	LIABILITIES AND STOCKHOLDERS' EQUITY(CONTINUED)
		Intercompany debt payable			—			105,446			—		—			(105,446		)	—
		Long term senior term loans			—			540,375			—		—			—			540,375
		Bank revolving credit			—			29,000			—		—			—			29,000
		Long term capitalized leases and other obligations			—			350			—		—			—			350
		Long term senior notes			—			330,000			—		—			—			330,000
		Junior subordinated debentures			130,448			—			—		—			—			130,448
		Deferred compensation			1,720			—			—		—			—			1,720
		Deferred income taxes, net			306,873			—			2,022		13,375			(59,156		)	263,114
		Other non-current liabilities			—			6,593			—		1,644			—			8,237
				Total liabilities	439,322			1,104,019			2,410		41,817			(170,109		)	1,417,459

	Commitments and Contingencies

	Stockholders' Equity:
		Preferred Stock:
			Preferred stock, $.01 par, 5,000 shares authorized, none issued and outstanding at March 31, 2015		—			—			—		—			—			—
		Common Stock:
			Common stock, $.01 par, 5,000 shares authorized, issued and outstanding at March 31, 2015		—			—			50		—			(50		)	—

		Additional paid-in capital			631,726			5,842			10,197		375,287			(478,784		)	544,268
		Accumulated deficit			(207,614		)	(199,959		)	585		(12,505		)	390,691			(28,802		)
		Accumulated other comprehensive (loss) income			—			(15,549		)	—		(70,094		)	62,607			(23,036		)
			Total stockholders' equity		424,112			(209,666		)	10,832		292,688			(25,536		)	492,430
				Total liabilities and stockholders' equity	$	863,434		$	894,353		$	13,242	$	334,505		$	(195,645	)	$	1,909,889

Page 5 of 9

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

Supplemental Consolidating Guarantor and Non-Guarantor Financial Information



Condensed Consolidating Balance Sheet (Unaudited)
As of December 31, 2014
(dollars in thousands)

					Successor

					Guarantors			Issuer					Non-
					The Hillman			The Hillman		Guarantor			Guarantor			Consolidating
					Companies, Inc.			Group, Inc.		Subsidiaries			Subsidiaries			Adjustments			Consolidated
	ASSETS
	Current assets:
		Cash and cash equivalents			$	1		$	13,191	$	696		$	4,597		—			$	18,485
		Restricted investments			494			—		—			—			—			494
		Accounts receivable, net			—			65,270		1,175			23,439			—			89,884
		Inventories, net			—			141,472		5,687			57,885			(321		)	204,723
		Deferred income taxes, net			11,191			277		538			1,331			(98		)	13,239
		Other current assets			—			8,142		124			2,058			—			10,324
			Total current assets		11,686			228,352		8,220			89,310			(419		)	337,149
		Intercompany notes receivable			105,446			112,977		(6,975		)	(106,002		)	(105,446		)	—
		Intercompany interest receivable			—			948		—			—			(948		)	—
		Investments in subsidiaries			(840,201		)	69,419		4,300			271,714			494,768			—
		Property and equipment, net			—			101,299		298			12,934			—			114,531
		Goodwill			789,870			338,696		3,240			37,780			(548,026		)	621,560
		Other intangibles, net			746,714			—		4,682			47,545			—			798,941
		Restricted investments			1,750			—		—			—			—			1,750
		Deferred income taxes			53,715			143		(477		)	(2		)	(53,379		)	—
		Deferred financing fees, net			—			24,407		—			—			—			24,407
		Investment in trust common securities			3,261			—		—			—			—			3,261
		Other assets			—			1,317		25			72			—			1,414

				Total assets	$	872,241		$	877,558	$	13,313		$	353,351		$	(213,450	)	$	1,903,013

	LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities:
		Accounts payable			—			$	53,487	$	422		$	12,553		—			$	66,462
		Current portion of senior term loans			—			5,500		—			—			—			5,500
		Current portion of capitalized lease and other obligations			—			207		—			—			—			207
		Intercompany interest payable			—			—		—			948			(948		)	—
		Accrued expenses:
			Salaries and wages		—			4,144		120			983			—			5,247
			Pricing allowances		—			3,621		3			3,038			—			6,662
			Income and other taxes		(581		)	2,325		37			1,520			—			3,301
			Interest		—			10,587		—			—			—			10,587
			Deferred compensation		494			—		—			—			—			494
			Other accrued expenses		—			6,990		40			393			—			7,423
				Total current liabilities	(87		)	86,861		622			19,435			(948		)	105,883

Page 6 of 9

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

Supplemental Consolidating Guarantor and Non-Guarantor Financial Information



Condensed Consolidating Balance Sheet (Unaudited)
As of December 31, 2014
(dollars in thousands)

					Successor
					Guarantors			Issuer					Non-
					The Hillman			The Hillman			Guarantor		Guarantor			Consolidating
					Companies, Inc.			Group, Inc.			Subsidiaries		Subsidiaries			Adjustments			Consolidated
	LIABILITIES AND STOCKHOLDERS' EQUITY(CONTINUED)
		Intercompany debt payable			—			105,446			—		—			(105,446		)	—
		Long term senior term loans			—			541,750			—		—			—			541,750
		Long term capitalized leases and other obligations			—			400			—		—			—			400
		Long term senior notes			—			330,000			—		—			—			330,000
		Junior subordinated debentures			130,685			—			—		—			—			130,685
		Deferred compensation			1,750			—			—		—			—			1,750
		Deferred income taxes, net			310,804			—			2,037		14,417			(53,477		)	273,781
		Other non-current liabilities			—			4,359			—		1,262			—			5,621
				Total liabilities	443,152			1,068,816			2,659		35,114			(159,871		)	1,389,870


	Commitments and Contingencies

	Stockholders' Equity:
		Preferred Stock:
			Preferred stock, $.01 par, 5,000 shares authorized, none issued and outstanding at December 31, 2014		—			—			—		—			—			—
		Common Stock:
			Common stock, $.01 par, 5,000 shares authorized, issued and outstanding at December 31, 2014		—			—			50		—			(50		)	—
		Additional paid-in capital			632,602			5,842			10,197		375,287			(479,324		)	544,604
		Accumulated deficit			(203,513		)	(188,780		)	407		(11,484		)	384,433			(18,937		)
		Accumulated other comprehensive (loss) income			—			(8,320		)	—		(45,566		)	41,362			(12,524		)
			Total stockholders' equity		429,089			(191,258		)	10,654		318,237			(53,579		)	513,143
				Total liabilities and stockholders' equity	$	872,241		$	877,558		$	13,313	$	353,351		$	(213,450	)	$	1,903,013

Page 7 of 9

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

Supplemental Consolidating Guarantor and Non-Guarantor Financial Information



Consolidating Statement of Cash Flows (Unaudited)
For the three months ended March 31, 2015
(dollars in thousands)

				Successor

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

Cash flows from operating activities:
	Net (loss) income			$	(1,157	)	$	(7,865	)	$	178		$	(1,021	)	—	$	(9,865	)
	Adjustments to reconcile net (loss) income to net cash
		provided by used for operating activities:
		Depreciation and amortization		8,974			6,949			70			1,061			—	17,054
		Dispositions of property and equipment		—			16			—			47			—	63
		Deferred income tax (benefit) provision		(8,040		)	—			142			(1,262		)	—	(9,160		)
		Deferred financing and original issue discount amortization		(237		)	924			—			—			—	687
		Stock-based compensation expense		204			—			—			—			—	204
		Other non-cash interest and change in value of interest rate swap		—			1,543			—			—			—	1,543
		Changes in operating items:
			Accounts receivable	—			(15,443		)	(865		)	(1,649		)	—	(17,957		)
			Inventories	—			(15,145		)	373			(12,841		)	—	(27,613		)
			Other assets	(3,057		)	3,281			20			7,690			—	7,934
			Accounts payable	—			4,492			(270		)	6,828			—	11,050
			Interest payable on junior subordinated debentures	—			—			—			—			—	—
			Other accrued liabilities	368			(2,248		)	36			(1,279		)	—	(3,123		)
			Other items, net	3,485			(3,447		)	—			(367		)	—	(329		)
		Net cash provided by (used for) operating activities		540			(26,943		)	(316		)	(2,793		)	—	(29,512		)

Cash flows from investing activities:
	Capital expenditures			—			(5,994		)	—			(434		)	—	(6,428		)
		Net cash (used for) provided by investing activities		—			(5,994		)	—			(434		)	—	(6,428		)

Cash flows from financing activities:
	Repayments of senior term loans			—			(1,375		)	—			—			—	(1,375		)
	Borrowings on revolving credit loans			—			29,000			—			—			—	29,000
	Principal payments under capitalized lease obligations			—			(50		)	—			—			—	(50		)
	Purchase of stock from a former member of management			(540		)	—			—			—			—	(540		)
		Net cash (used for) financing activities		(540		)	27,575			—			—			—	27,035

Effect of exchange rate changes on cash				—			(7,229		)	—			(214		)	—	(7,443		)

Net (decrease) increase in cash and cash equivalents				—			(12,591		)	(316		)	(3,441		)	—	(16,348		)
Cash and cash equivalents at beginning of period				1			13,191			696			4,597			—	18,485
Cash and cash equivalents at end of period				1			600			380			1,156			—	2,137

Page 8 of 9

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

Supplemental Consolidating Guarantor and Non-Guarantor Financial Information



Condensed Consolidating Statement of Cash Flows (Unaudited)
For the three months ended March 31, 2014
(dollars in thousands)

				Predecessor

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

Cash flows from operating activities:
	Net income (loss)			$	(2,220	)	$	(1,599	)	$	339		$	(582	)	—	$	(4,062	)
	Adjustments to reconcile net income (loss) to net cash
		provided by operating activities:
		Depreciation and amortization		4,515			6,948			23			697			—	12,183
		Deferred income tax (benefit) provision		(1,741		)	—			112			(746		)	—	(2,375		)
		Deferred financing and original issue discount amortization		(50		)	743			—			—			—	693
		Stock-based compensation expense		508			—			—			—			—	508
		Changes in operating items:
			Accounts receivable	—			(5,473		)	85			(1,655		)	—	(7,043		)
			Inventories	—			(3,588		)	(86		)	(2,956		)	—	(6,630		)
			Other assets	(3,058		)	(2,881		)	1,328			9,357			—	4,746
			Accounts payable	—			6,390			(350		)	(2,439		)	—	3,601
			Interest payable on junior subordinated debentures	1,019			—			—			—			—	1,019
			Other accrued liabilities	(99		)	1,018			(36		)	407			—	1,290
			Other items, net	652			(533		)	(853		)	200			—	(534		)
		Net cash (used for) provided by operating activities		(474		)	1,025			562			2,283			—	3,396

Cash flows from investing activities:
	Capital expenditures			—			(6,216		)	(9		)	(700		)	—	(6,925		)
		Net cash used for investing activities		—			(6,216		)	(9		)	(700		)	—	(6,925		)

Cash flows from financing activities:
	Repayments of senior term loans			—			(992		)	—			—			—	(992		)
	Proceeds from exercise of stock options			474			—			—			—			—	474
	Principal payments under capitalized lease obligations			—			(41		)	—			—			—	(41		)
		Net cash provided by (used for) financing activities		474			(1,033		)	—			—			—	(559		)

Effect of exchange rate changes on cash				—			(4,067		)	—			(184		)	—	(4,251		)

Net (decrease) increase in cash and cash equivalents				—			(10,291		)	553			1,399			—	(8,339		)
Cash and cash equivalents at beginning of period				1			27,553			792			6,623			—	34,969
Cash and cash equivalents at end of period				1			17,262			1,345			8,022			—	26,630

Page 9 of 9

HILLMAN COMPANIES INC - FORM 10-Q - EX-99.1 - EXHIBIT 99.1 - May 15, 2015

Attached files

HILLMAN COMPANIES INC Reports