Attached files

file filename
10-Q - 10-Q - HILLMAN COMPANIES INChillman10-q9302016.htm
EX-32.2 - EXHIBIT 32.2 - HILLMAN COMPANIES INCexhibit322-certificationof.htm
EX-32.1 - EXHIBIT 32.1 - HILLMAN COMPANIES INCexhibit321-certificationof.htm
EX-31.2 - EXHIBIT 31.2 - HILLMAN COMPANIES INCexhibit312-certificationof.htm
EX-31.1 - EXHIBIT 31.1 - HILLMAN COMPANIES INCexhibit311-certificationof.htm

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.

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 September 30, 2016, 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 income (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 Balance Sheet (Unaudited)
As of September 30, 2016
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
$
1,751

 
$

 
$
3,691

 
$

 
$
5,443

 
 
Accounts receivable, net
 

 
62,225

 

 
19,624

 

 
81,849

 
 
Inventories, net
 

 
164,868

 

 
66,462

 
(803
)
 
230,527

 
 
Other current assets
 
260

 
9,678

 

 
1,782

 

 
11,720

 
 
 
Total current assets
 
261

 
238,522

 

 
91,559

 
(803
)
 
329,539

 
 
Intercompany notes receivable
 
105,446

 
115,287

 

 
(115,287
)
 
(105,446
)
 

 
 
Intercompany interest receivable
 
9,174

 
11,120

 

 

 
(20,294
)
 

 
 
Investments in subsidiaries
 
(893,532
)
 
46,430

 
3,121

 
222,539

 
621,442

 

 
 
Property and equipment, net
 

 
104,075

 

 
11,847

 

 
115,922

 
 
Goodwill
 
814,413

 
354,328

 

 
32,798

 
(584,961
)
 
616,578

 
 
Other intangibles, net
 
688,206

 

 

 
38,115

 

 
726,321

 
 
Other assets
 
4,688

 
4,368

 

 
2,881

 

 
11,937

 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
Total assets
 
$
728,656

 
$
874,130

 
$
3,121

 
$
284,452

 
$
(90,062
)
 
$
1,800,297

 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$

 
$
60,592

 
$

 
$
10,105

 
$

 
$
70,697

 
 
Current portion of senior term loans
 

 
5,500

 

 

 

 
5,500

 
 
Current portion of capitalized lease and other obligations

 
158

 

 

 

 
158

 
 
Intercompany interest payable
 

 
9,174

 

 
11,120

 
(20,294
)
 

 
 
Accrued expenses:
 
 
 
 
 
 
 
 
 

 


 
 
 
Salaries and wages
 

 
7,733

 

 
1,726

 

 
9,459

 
 
 
Pricing allowances
 

 
3,378

 

 
1,217

 

 
4,595

 
 
 
Income and other taxes
 
(229
)
 
2,840

 

 
859

 

 
3,470

 
 
 
Interest
 

 
4,517

 

 

 

 
4,517

 
 
 
Other accrued expenses
 
260

 
7,553

 

 
1,638

 

 
9,451

 
 
 
 
Total current liabilities
 
31

 
101,445

 

 
26,665

 
(20,294
)
 
107,847

 
 
Intercompany debt payable
 

 
105,446

 

 

 
(105,446
)
 

 
 
Long term debt
 
128,916

 
845,358

 

 

 

 
974,274

 
 
Deferred income taxes, net
 
233,754

 

 

 
8,673

 

 
242,427

 
 
Other non-current liabilities
 
1,427

 
6,121

 

 
333

 

 
7,881

 
 
 
 
Total liabilities
 
364,128

 
1,058,370

 

 
35,671

 
(125,740
)
 
1,332,429

 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
Commitments and Contingencies
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
Stockholders' Equity:
 











 
 
 
Preferred stock, $.01 par, 5,000 shares authorized, none issued and outstanding at March 31, 2016
 

 

 

 

 

 

 
 
 
Common stock, $.01 par, 5,000 shares authorized, issued and outstanding at March 31, 2016
 

 
50

 

 

 
(50
)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 

 


 
 
Additional paid-in capital
 
640,093

 
7,069

 
4,180

 
375,287

 
(479,184
)
 
547,445

 
 
Accumulated deficit
 
(275,565
)
 
(172,253
)
 
(1,059
)
 
(42,606
)
 
442,928

 
(48,555
)
 
 
Accumulated other comprehensive (loss) income
 

 
(19,106
)
 

 
(83,900
)
 
71,984

 
(31,022
)
 
 
 
Total stockholders' equity
 
364,528

 
(184,240
)
 
3,121

 
248,781

 
35,678

 
467,868

 
 
 
 
Total liabilities and stockholders' equity
 
$
728,656

 
$
874,130

 
$
3,121

 
$
284,452

 
$
(90,062
)
 
$
1,800,297


Page 2



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Supplemental Consolidating Guarantor and Non-Guarantor Financial Information


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

 
$
3,023

 
$
612

 
$
7,749

 
$

 
$
11,385

 
 
Accounts receivable, net
 

 
55,665

 
1,020

 
16,896

 

 
73,581

 
 
Inventories, net
 

 
171,999

 
5,447

 
67,040

 
(803
)
 
243,683

 
 
Deferred income taxes, net
 
12,666

 
277

 
501

 
604

 
(167
)
 
13,881

 
 
Other current assets
 
639

 
7,671

 
75

 
2,156

 

 
10,541

 
 
 
Total current assets
 
13,306


238,635


7,655


94,445


(970
)

353,071

 
 
Intercompany notes receivable
 
105,446

 
117,368

 
(4,645
)
 
(112,723
)
 
(105,446
)
 

 
 
Intercompany interest receivable
 

 
6,359

 

 

 
(6,359
)
 

 
 
Investments in subsidiaries
 
(891,702
)
 
55,647

 
4,178

 
220,764

 
611,113

 

 
 
Property and equipment, net
 

 
101,034

 
308

 
9,050

 

 
110,392

 
 
Goodwill
 
814,413

 
350,968

 
3,240

 
31,735

 
(584,841
)
 
615,515

 
 
Other intangibles, net
 
710,820

 

 
4,467

 
38,196

 

 
753,483

 
 
Deferred income taxes
 
52,604

 
143

 
(979
)
 
2,909

 
(54,677
)
 

 
 
Other assets
 
4,643

 
4,365

 
25

 
3,505

 

 
12,538

 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
Total assets
 
$
809,530


$
874,519


$
14,249


$
287,881


$
(141,180
)

$
1,844,999

 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 

 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 

 
 
Accounts payable
 
$

 
$
51,095

 
$
710

 
$
13,203

 
$

 
$
65,008

 
 
Current portion of senior term loans
 

 
5,500

 

 

 

 
5,500

 
 
Current portion of capitalized lease and other obligations

 
217

 

 

 

 
217

 
 
Intercompany interest payable
 

 

 

 
6,359

 
(6,359
)
 

 
 
Accrued expenses:
 
 
 
 
 
 
 
 
 

 

 
 
 
Salaries and wages
 

 
4,861

 
94

 
453

 

 
5,408

 
 
 
Pricing allowances
 

 
3,991

 
3

 
3,222

 

 
7,216

 
 
 
Income and other taxes
 
(357
)
 
2,497

 
28

 
814

 

 
2,982

 
 
 
Interest
 

 
9,843

 

 

 

 
9,843

 
 
 
Other accrued expenses
 
639

 
6,325

 
38

 
1,546

 

 
8,548

 
 
 
 
Total current liabilities
 
282


84,329


873


25,597


(6,359
)

104,722

 
 
Intercompany debt payable
 

 
105,446

 

 

 
(105,446
)
 

 
 
Long term
 
129,707

 
875,112

 

 

 

 
1,004,819

 
 
Deferred income taxes, net
 
300,008

 

 
1,967

 
12,082

 
(54,844
)
 
259,213

 
 
Other non-current liabilities
 
1,382

 
6,003

 

 
316

 

 
7,701

 
 
 
 
Total liabilities
 
431,379


1,070,890


2,840


37,995


(166,649
)

1,376,455

 
Commitments and Contingencies
 
 
 
 
 
 
 
 
 

 


 
Stockholders' Equity:
 
 
 
 
 
 
 
 
 

 


 
 
 
Preferred stock, $.01 par, 5,000 shares authorized, none issued and outstanding at December 31, 2015
 

 

 

 

 

 

 
 
 
Common stock, $.01 par, 5,000 shares authorized, issued and outstanding at December 31, 2015
 

 

 
50

 

 
(50
)
 

 
 
Additional paid-in capital
 
633,612

 
5,842

 
10,197

 
375,287

 
(479,184
)
 
545,754

 
 
Accumulated deficit
 
(255,461
)
 
(178,533
)
 
1,162

 
(29,875
)
 
420,687

 
(42,020
)
 
 
Accumulated other comprehensive (loss) income
 

 
(23,680
)
 

 
(95,526
)
 
84,016

 
(35,190
)
 
 
 
Total stockholders' equity
 
378,151


(196,371
)

11,409


249,886


25,469


468,544

 
 
 
 
Total liabilities and stockholders' equity
 
$
809,530


$
874,519


$
14,249


$
287,881


$
(141,180
)

$
1,844,999


Page 3



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Supplemental Consolidating Guarantor and Non-Guarantor Financial Information


Condensed Consolidating Statement of Comprehensive Income (Unaudited)
Three Months Ended September 30, 2016
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantors
 
Issuer
 
 
 
Non-
 
 
 
 
 
 
 
 
 
The Hillman
 
The Hillman
 
Guarantor
 
Guarantor
 
Consolidating
 
 
 
 
 
 
 
Companies, Inc.
 
Group, Inc.
 
Subsidiaries
 
Subsidiaries
 
Adjustments
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$

 
$
174,716

 
$
1,495

 
$
35,317

 
$

 
$
211,528

 
Cost of sales (exclusive of depreciation and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
amortization shown separately below)
 

 
86,705

 
1,020

 
23,314

 

 
111,039

 
Selling, general and administrative expenses
 
634

 
55,883

 
367

 
11,258

 

 
68,142

 
Depreciation
 

 
7,528

 
7

 
439

 

 
7,974

 
Amortization
 
9,009

 

 
17

 
455

 

 
9,481

 
Intercompany administrative (income) expense
 

 
(72
)
 

 
72

 

 

 
Management and transaction fees to related party
 

 
148

 

 

 

 
148

 
Other expense (income)
 
(61
)
 
(509
)
 

 
(456
)
 

 
(1,026
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) income from operations
 
(9,582
)
 
25,033

 
84

 
235

 

 
15,770

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intercompany interest (income) expense
 
(3,058
)
 
3,058

 

 

 

 

 
Interest (income) expense, net
 
(269
)
 
11,477

 

 
1,463

 

 
12,671

 
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
(9,312
)
 
10,498

 
84

 
(1,228
)
 

 
42

 
Equity in subsidiaries' income (loss)
 
9,295

 
(1,203
)
 

 

 
(8,092
)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
(17
)
 
9,295

 
84

 
(1,228
)
 
(8,092
)
 
42

 
 
Income tax provision
 
420

 

 
34

 
25

 

 
479

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
$
(437
)
 
$
9,295

 
$
50

 
$
(1,253
)
 
$
(8,092
)
 
$
(437
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 

 
(764
)
 

 
(3,031
)
 
2,069

 
(1,726
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive (loss) income
 
$
(437
)
 
$
8,531

 
$
50

 
$
(4,284
)
 
$
(6,023
)
 
$
(2,163
)


Page 4



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Supplemental Consolidating Guarantor and Non-Guarantor Financial Information


Condensed Consolidating Statement of Comprehensive Loss (Unaudited)
Three Months Ended September 30, 2015
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantors
 
Issuer
 
 
 
Non-
 
 
 
 
 
 
 
 
 
The Hillman
 
The Hillman
 
Guarantor
 
Guarantor
 
Consolidating
 
 
 
 
 
 
 
Companies, Inc.
 
Group, Inc.
 
Subsidiaries
 
Subsidiaries
 
Adjustments
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$

 
$
167,260

 
$
5,116

 
$
37,557

 
$

 
$
209,933

 
Cost of sales (exclusive of depreciation and
 
 
 
 
 
 
 
 
 
 
 

 
 
amortization shown separately below)
 

 
84,928

 
3,575

 
25,337

 

 
113,840

 
Selling, general and administrative expenses
 
312

 
51,820

 
990

 
12,755

 

 
65,877

 
Transaction, acquisition and integration expenses
 

 

 

 

 

 

 
Depreciation
 

 
7,144

 
19

 
448

 

 
7,611

 
Amortization
 
8,974

 

 
53

 
461

 

 
9,488

 
Intercompany administrative (income) expense
 

 
(109
)
 

 
109

 

 

 
Management fees to related party
 

 
156

 

 

 

 
156

 
Other (income) expense, net
 
111

 
1,252

 
14

 
1,151

 

 
2,528

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) income from operations
 
(9,397
)
 
22,069

 
465

 
(2,704
)
 

 
10,433

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intercompany interest (income) expense
 
(3,058
)
 
3,058

 

 

 

 

 
Interest (income) expense, net
 
(246
)
 
11,443

 

 
1,406

 

 
12,603

 
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
(9,150
)
 
7,568

 
465

 
(4,110
)
 

 
(5,227
)
 
Equity in subsidiaries' (loss) income
 
5,127

 
(2,441
)
 

 

 
(2,686
)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) income before income taxes
 
(4,023
)
 
5,127

 
465

 
(4,110
)
 
(2,686
)
 
(5,227
)
 
 
Income tax (benefit) provision
 
(3,983
)
 

 
393

 
(1,597
)
 

 
(5,187
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
$
(40
)
 
$
5,127

 
$
72

 
$
(2,513
)
 
$
(2,686
)
 
$
(40
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 

 
(4,304
)
 

 
(13,908
)
 
11,827

 
(6,385
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive (loss) income
 
$
(40
)
 
$
823

 
$
72

 
$
(16,421
)
 
$
9,141

 
$
(6,425
)


Page 5



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Supplemental Consolidating Guarantor and Non-Guarantor Financial Information


Condensed Consolidating Statement of Comprehensive Loss (Unaudited)
Nine Months Ended September 30, 2016
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantors
 
Issuer
 
 
 
Non-
 
 
 

 
 
 
 
 
The Hillman
 
The Hillman
 
Guarantor
 
Guarantor
 
Consolidating
 
 
 
 
 
 
 
Companies, Inc.
 
Group, Inc.
 
Subsidiaries
 
Subsidiaries
 
Adjustments
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$

 
$
509,941

 
$
10,945

 
$
107,146

 
$

 
$
628,032

 
Cost of sales (exclusive of depreciation and
 
 
 
 
 
 
 
 
 
 
 

 
 
amortization shown separately below)
 

 
257,410

 
7,305

 
71,380

 

 
336,095

 
Selling, general and administrative expenses
 
1,769

 
164,696

 
2,461

 
31,591

 

 
200,517

 
Depreciation
 

 
23,025

 
46

 
1,323

 

 
24,394

 
Amortization
 
26,956

 

 
125

 
1,354

 

 
28,435

 
Intercompany administrative (income) expense
 

 
(264
)
 

 
264

 

 

 
Management fees to related party
 

 
420

 

 

 

 
420

 
Other expense (income)
 
(78
)
 
121

 

 
(618
)
 

 
(575
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
(Loss) income from operations
 
(28,647
)

64,533


1,008


1,852




38,746

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Intercompany interest (income) expense
 
(9,174
)
 
9,174

 

 

 

 

 
Interest (income) expense, net
 
(791
)
 
35,002

 

 
4,369

 

 
38,580

 
Interest expense on junior subordinated debentures
 
9,456

 

 

 

 

 
9,456

 
Investment income on trust common securities
 
(284
)
 

 

 

 

 
(284
)
 
 
(Loss) income before equity in subsidiaries' income
(27,854
)

20,357


1,008


(2,517
)



(9,006
)
 
Equity in subsidiaries' (loss) income
 
18,487

 
(1,870
)
 

 

 
(16,617
)
 

 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
 
(Loss) income before income taxes
 
(9,367
)

18,487


1,008


(2,517
)

(16,617
)

(9,006
)
 
 
Income tax (benefit) provision
 
(2,832
)
 

 
404

 
(43
)
 

 
(2,471
)
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
Net (loss) income
 
$
(6,535
)

$
18,487


$
604


$
(2,474
)

$
(16,617
)

$
(6,535
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Other comprehensive income (loss):
 
 
 

 
 
 
 
 
 
 

 
 
Foreign currency translation adjustments
 

 
4,574

 

 
11,626

 
(12,032
)
 
4,168

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Total comprehensive (loss) income
 
$
(6,535
)

$
23,061


$
604


$
9,152


$
(28,649
)

$
(2,367
)


Page 6



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Supplemental Consolidating Guarantor and Non-Guarantor Financial Information


Condensed Consolidating Statement of Comprehensive Loss (Unaudited)
Nine Months Ended September 30, 2015
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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

 
Net sales
 
$

 
$
479,202

 
$
15,857

 
$
112,388

 
$

 
$
607,447

 
Cost of sales (exclusive of depreciation and
 
 
 

 

 
 
 
 
 

 
 
amortization shown separately below)
 

 
250,055

 
11,306

 
74,814

 

 
336,175

 
Selling, general and administrative expenses
 
612

 
152,400

 
3,042

 
36,118

 

 
192,172

 
Transaction, acquisition and integration expenses
 

 
257

 

 

 

 
257

 
Depreciation
 

 
20,612

 
54

 
1,453

 

 
22,119

 
Amortization
 
26,920

 

 
161

 
1,442

 

 
28,523

 
Intercompany administrative (income) expense
 

 
(326
)
 

 
326

 

 

 
Management fees to related party
 

 
462

 

 

 

 
462

 
Other (income) expense, net
 
68

 
2,514

 
14

 
444

 

 
3,040

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) income from operations
 
(27,600
)
 
53,228

 
1,280

 
(2,209
)
 

 
24,699

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Intercompany interest (income) expense
 
(9,173
)
 
9,173

 

 

 

 

 
Interest (income) expense, net
 
(724
)
 
33,950

 

 
4,621

 

 
37,847

 
Interest expense on junior subordinated debentures
 
9,457

 

 

 

 

 
9,457

 
Investment income on trust common securities
 
(284
)
 

 

 

 

 
(284
)
 
 
(Loss) income before equity in subsidiaries' income
(26,876
)
 
10,105

 
1,280

 
(6,830
)
 

 
(22,321
)
 
Equity in subsidiaries' (loss) income
 
6,029

 
(4,076
)
 

 

 
(1,953
)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
(Loss) income before income taxes
 
(20,847
)
 
6,029

 
1,280

 
(6,830
)
 
(1,953
)
 
(22,321
)
 
 
Income tax (benefit) provision
 
(6,399
)
 

 
526

 
(2,000
)
 

 
(7,873
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
$
(14,448
)
 
$
6,029

 
$
754

 
$
(4,830
)
 
$
(1,953
)
 
$
(14,448
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 

 
(11,454
)
 

 
(38,013
)
 
32,197

 
(17,270
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive (loss) income
 
$
(14,448
)
 
$
(5,425
)
 
$
754

 
$
(42,843
)
 
$
30,244

 
$
(31,718
)


Page 7



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Supplemental Consolidating Guarantor and Non-Guarantor Financial Information


 
Consolidating Statement of Cash Flows (Unaudited)
 
Nine Months Ended September 30, 2016
 
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
$
(6,535
)
 
$
18,487

 
$
604

 
$
(2,474
)
 
$
(16,617
)
 
$
(6,535
)
 
 
Adjustments to reconcile net (loss) income to net cash
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
provided by (used for) operating activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
26,956

 
23,025

 
171

 
2,677

 

 
52,829

 
 
 
Gain on sale of property and equipment
 

 
4

 

 

 

 
4

 
 
 
Deferred income tax (benefit) provision
 
(984
)
 
420

 
(2,445
)
 
(148
)
 

 
(3,157
)
 
 
 
Deferred financing and original issue discount amortization
 
(791
)
 
2,770

 

 

 

 
1,979

 
 
 
Stock-based compensation expense
 
1,691

 

 

 

 

 
1,691

 
 
 
Loss on disposition
 

 

 

 
832

 

 
832

 
 
 
Equity in subsidiaries' loss (income)
 
(18,487
)
 
1,870

 

 

 
16,617

 

 
 
 
Other non-cash interest and change in value of interest rate swap
 

 
150

 

 

 

 
150

 
 
 
Changes in operating items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable
 

 
(6,560
)
 
1,020

 
(3,132
)
 

 
(8,672
)
 
 
 
 
Inventories
 

 
7,131

 
5,447

 
3,456

 

 
16,034

 
 
 
 
Other assets
 
(9,174
)
 
8,595

 
(4,545
)
 
2,450

 

 
(2,674
)
 
 
 
 
Accounts payable
 

 
9,497

 
(710
)
 
(2,105
)
 

 
6,682

 
 
 
 
Other accrued liabilities
 
128

 
(1,534
)
 
(125
)
 
(1,756
)
 

 
(3,287
)
 
 
 
 
Other items, net
 
7,196

 
(7,258
)
 
(21
)
 
(190
)
 

 
(273
)
 
 
 
Net cash provided by (used for) operating activities
 

 
56,597

 
(604
)
 
(390
)
 

 
55,603

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 

 
(25,739
)
 
(8
)
 
(3,655
)
 

 
(29,402
)
 
 
 
Net cash used for investing activities
 


(25,739
)

(8
)

(3,655
)



(29,402
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repayments of senior term loans
 

 
(4,125
)
 

 

 

 
(4,125
)
 
 
Borrowings on revolving credit loans
 

 
16,000

 

 

 

 
16,000

 
 
Repayments of revolving credit loans
 

 
(44,000
)
 

 

 

 
(44,000
)
 
 
Principal payments under capitalized lease obligations
 

 
(198
)
 

 

 

 
(198
)
 
 
 
Net cash used for financing activities
 

 
(32,323
)
 

 

 

 
(32,323
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash
 

 
193

 

 
(13
)
 

 
180

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (decrease) increase in cash and cash equivalents
 

 
(1,272
)
 
(612
)
 
(4,058
)
 

 
(5,942
)
 
Cash and cash equivalents at beginning of period
 
1

 
3,023

 
612

 
7,749

 

 
11,385

 
Cash and cash equivalents at end of period
 
$
1

 
$
1,751

 
$

 
$
3,691

 
$

 
$
5,443



Page 8



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Supplemental Consolidating Guarantor and Non-Guarantor Financial Information


 
Consolidating Statement of Cash Flows (Unaudited)
 
For the nine months ended September 30, 2015
 
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
$
(14,448
)
 
$
6,029

 
$
754

 
$
(4,830
)
 
$
(1,953
)
 
$
(14,448
)
 
 
Adjustments to reconcile net (loss) income to net cash
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
provided by (used for) operating activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
26,949

 
20,612

 
215

 
2,866

 

 
50,642

 
 
 
Gain on sale of property and equipment
 

 
288

 
30

 
(869
)
 

 
(551
)
 
 
 
Deferred income tax (benefit) provision
 
(6,939
)
 
277

 
481

 
(2,278
)
 

 
(8,459
)
 
 
 
Deferred financing and original issue discount amortization
 
(725
)
 
2,771

 

 

 

 
2,046

 
 
 
Stock-based compensation expense
 
680

 

 

 

 

 
680

 
 
 
Other non-cash interest and change in value of interest rate swap
 

 
2,528

 

 

 

 
2,528

 
 
 
Equity in subsidiaries' loss (income)
 
(6,029
)
 
4,076

 

 

 
1,953

 

 
 
 
Changes in operating items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable
 

 
(18,388
)
 
(352
)
 
(6,149
)
 

 
(24,889
)
 
 
 
 
Inventories
 

 
(34,812
)
 
336

 
(21,624
)
 

 
(56,100
)
 
 
 
 
Other assets
 
(9,173
)
 
(9,951
)
 
(1,434
)
 
19,046

 

 
(1,512
)
 
 
 
 
Accounts payable
 

 
(444
)
 
(6
)
 
12,404

 

 
11,954

 
 
 
 
Other accrued liabilities
 
515

 
(896
)
 
87

 
1,823

 

 
1,529

 
 
 
 
Other items, net
 
9,310

 
(9,512
)
 

 
(305
)
 

 
(507
)
 
 
 
Net cash provided by (used for) operating activities
 
140

 
(37,422
)
 
111

 
84

 

 
(37,087
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from sale of property and equipment
 

 

 

 
2,230

 

 
2,230

 
 
Capital expenditures
 

 
(19,791
)
 
(114
)
 
(1,057
)
 

 
(20,962
)
 
 
 
Net cash (used for) provided by investing activities
 

 
(19,791
)
 
(114
)
 
1,173

 

 
(18,732
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 

 
 
Repayments of senior term loans
 

 
(4,125
)
 

 

 

 
(4,125
)
 
 
Borrowings on revolving credit loans
 

 
53,000

 

 

 

 
53,000

 
 
Repayments of revolving credit loans
 

 
(2,000
)
 

 

 

 
(2,000
)
 
 
Principal payments under capitalized lease obligations
 

 
(127
)
 

 

 

 
(127
)
 
 
Proceeds from sale of stock
 
400

 

 

 

 

 
400

 
 
Purchase of stock from a former member of management
 
(540
)
 

 

 

 

 
(540
)
 
 
 
Net cash (used for) financing activities
 
(140
)
 
46,748

 

 

 

 
46,608

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash
 

 
120

 

 
(709
)
 

 
(589
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Net (decrease) increase in cash and cash equivalents
 

 
(10,345
)
 
(3
)
 
548

 

 
(9,800
)
 
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

 
$
2,846

 
$
693

 
$
5,145

 
$

 
$
8,685



Page 9