false--12-28trueFY2019false00010298310.010.01500050005000.05000.05000.05000.0P5YP3YP3YP3YP20YP12YP15YP5YP13YP7YP5Y00000.010.015000000P5YP8YP10YP2YP2YP6YP2YP3Y 0001029831 2018-12-30 2019-12-28 0001029831 2020-03-27 0001029831 2019-06-30 0001029831 2019-12-28 0001029831 2018-12-29 0001029831 2017-12-31 2018-12-29 0001029831 2017-01-01 2017-12-30 0001029831 2017-12-30 0001029831 2016-12-31 0001029831 us-gaap:RetainedEarningsMember 2016-12-31 0001029831 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 2018-12-29 0001029831 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-01-01 2017-12-30 0001029831 us-gaap:CommonStockMember 2017-12-30 0001029831 us-gaap:AdditionalPaidInCapitalMember 2016-12-31 0001029831 us-gaap:RetainedEarningsMember 2019-12-28 0001029831 us-gaap:RetainedEarningsMember 2017-01-01 2017-12-30 0001029831 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-30 0001029831 hlm:CumulativeEffectPeriodofAdoptionAdjustmentMember 2018-12-29 0001029831 us-gaap:RetainedEarningsMember 2018-12-29 0001029831 us-gaap:AdditionalPaidInCapitalMember 2019-12-28 0001029831 us-gaap:CommonStockMember 2016-12-31 0001029831 us-gaap:AdditionalPaidInCapitalMember 2017-01-01 2017-12-30 0001029831 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-28 0001029831 us-gaap:RetainedEarningsMember 2017-12-31 2018-12-29 0001029831 us-gaap:AdditionalPaidInCapitalMember 2017-12-30 0001029831 us-gaap:AdditionalPaidInCapitalMember 2018-12-29 0001029831 us-gaap:AdditionalPaidInCapitalMember 2018-12-30 2019-12-28 0001029831 us-gaap:RetainedEarningsMember 2017-12-30 0001029831 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2016-12-31 0001029831 hlm:CumulativeEffectPeriodofAdoptionAdjustmentMember us-gaap:RetainedEarningsMember 2018-12-29 0001029831 us-gaap:RetainedEarningsMember 2018-12-30 2019-12-28 0001029831 us-gaap:CommonStockMember 2018-12-29 0001029831 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-29 0001029831 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 2018-12-29 0001029831 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-30 2019-12-28 0001029831 us-gaap:CommonStockMember 2019-12-28 0001029831 hlm:OakHillFundsMember 2019-12-28 0001029831 hlm:BigTimeProductsMember 2018-10-01 2018-10-01 0001029831 hlm:MemberOfManagementMember 2019-12-28 0001029831 hlm:CapitalAdvisorsLlcMember 2019-12-28 0001029831 hlm:MinuteKeyInc.Member 2018-08-10 2018-08-10 0001029831 hlm:SharpSystemsLLCMember 2019-08-16 2019-08-16 0001029831 hlm:STFasteningSystemsMember 2017-11-08 2017-11-08 0001029831 hlm:KeyandKeyAccessoriesMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:ResharpMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:ResharpMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:EngravingMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:FasteningandHardwareMember 2017-01-01 2017-12-30 0001029831 hlm:FasteningandHardwareMember 2018-12-30 2019-12-28 0001029831 hlm:EngravingMember hlm:ConsumerConnectedSolutionsSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:ResharpMember hlm:ConsumerConnectedSolutionsSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:EngravingMember hlm:ConsumerConnectedSolutionsSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:CanadaSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:FasteningandHardwareMember hlm:ConsumerConnectedSolutionsSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:PersonalProtectionSolutionsMember 2017-01-01 2017-12-30 0001029831 hlm:ConsumerConnectedSolutionsSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:KeyandKeyAccessoriesMember hlm:CanadaSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:PersonalProtectionSolutionsMember 2018-12-30 2019-12-28 0001029831 hlm:FastenersHardwareandPersonalProtectionSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:PersonalProtectionSolutionsMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:CanadaSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:FasteningandHardwareMember hlm:CanadaSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:ResharpMember 2018-12-30 2019-12-28 0001029831 hlm:PersonalProtectionSolutionsMember hlm:ConsumerConnectedSolutionsSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:KeyandKeyAccessoriesMember 2018-12-30 2019-12-28 0001029831 hlm:EngravingMember 2017-12-31 2018-12-29 0001029831 hlm:PersonalProtectionSolutionsMember hlm:ConsumerConnectedSolutionsSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:ResharpMember 2017-01-01 2017-12-30 0001029831 hlm:FasteningandHardwareMember 2017-12-31 2018-12-29 0001029831 hlm:KeyandKeyAccessoriesMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:ResharpMember hlm:ConsumerConnectedSolutionsSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:EngravingMember hlm:CanadaSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:PersonalProtectionSolutionsMember hlm:CanadaSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:KeyandKeyAccessoriesMember hlm:CanadaSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:FasteningandHardwareMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:PersonalProtectionSolutionsMember hlm:ConsumerConnectedSolutionsSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:ConsumerConnectedSolutionsSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:PersonalProtectionSolutionsMember hlm:CanadaSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:EngravingMember hlm:ConsumerConnectedSolutionsSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:PersonalProtectionSolutionsMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:KeyandKeyAccessoriesMember hlm:CanadaSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:ConsumerConnectedSolutionsSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:EngravingMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:ResharpMember hlm:ConsumerConnectedSolutionsSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:KeyandKeyAccessoriesMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:PersonalProtectionSolutionsMember 2017-12-31 2018-12-29 0001029831 hlm:ResharpMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:ResharpMember hlm:CanadaSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:KeyandKeyAccessoriesMember 2017-12-31 2018-12-29 0001029831 hlm:EngravingMember 2018-12-30 2019-12-28 0001029831 hlm:FasteningandHardwareMember hlm:CanadaSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:FasteningandHardwareMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:FasteningandHardwareMember hlm:ConsumerConnectedSolutionsSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:EngravingMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:PersonalProtectionSolutionsMember hlm:CanadaSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:ResharpMember hlm:CanadaSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:KeyandKeyAccessoriesMember 2017-01-01 2017-12-30 0001029831 hlm:EngravingMember hlm:CanadaSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:ResharpMember hlm:CanadaSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:FasteningandHardwareMember hlm:ConsumerConnectedSolutionsSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:PersonalProtectionSolutionsMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:FasteningandHardwareMember hlm:CanadaSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:FasteningandHardwareMember hlm:FastenersHardwareandPersonalProtectionSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:ResharpMember 2017-12-31 2018-12-29 0001029831 hlm:EngravingMember 2017-01-01 2017-12-30 0001029831 hlm:KeyandKeyAccessoriesMember hlm:ConsumerConnectedSolutionsSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:EngravingMember hlm:CanadaSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:CanadaSegmentMember 2017-01-01 2017-12-30 0001029831 hlm:KeyandKeyAccessoriesMember hlm:ConsumerConnectedSolutionsSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:KeyandKeyAccessoriesMember hlm:ConsumerConnectedSolutionsSegmentMember 2018-12-30 2019-12-28 0001029831 hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-12-31 2018-12-29 0001029831 us-gaap:FurnitureAndFixturesMember 2019-12-28 0001029831 us-gaap:FurnitureAndFixturesMember 2018-12-29 0001029831 us-gaap:LeaseholdImprovementsMember 2019-12-28 0001029831 us-gaap:BuildingMember 2019-12-28 0001029831 us-gaap:LandMember 2019-12-28 0001029831 us-gaap:LeaseholdImprovementsMember 2018-12-29 0001029831 us-gaap:BuildingMember 2018-12-29 0001029831 us-gaap:MachineryAndEquipmentMember 2018-12-29 0001029831 us-gaap:ConstructionInProgressMember 2019-12-28 0001029831 us-gaap:BuildingMember 2018-12-30 2019-12-28 0001029831 us-gaap:LandMember 2018-12-29 0001029831 hlm:ComputerEquipmentandSoftwareMember 2018-12-29 0001029831 us-gaap:ConstructionInProgressMember 2018-12-29 0001029831 hlm:ComputerEquipmentandSoftwareMember 2019-12-28 0001029831 us-gaap:MachineryAndEquipmentMember 2019-12-28 0001029831 us-gaap:TrademarksMember 2018-12-29 0001029831 us-gaap:TrademarksMember 2019-12-28 0001029831 us-gaap:TrademarksMember 2019-12-28 0001029831 us-gaap:CustomerRelationshipsMember 2018-12-29 0001029831 us-gaap:TechnologyBasedIntangibleAssetsMember 2018-12-29 0001029831 us-gaap:TrademarksMember 2018-12-29 0001029831 us-gaap:CustomerRelationshipsMember 2019-12-28 0001029831 us-gaap:TechnologyBasedIntangibleAssetsMember 2019-12-28 0001029831 srt:MaximumMember 2018-12-30 2019-12-28 0001029831 us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember 2018-12-30 2019-12-28 0001029831 us-gaap:ShippingAndHandlingMember 2017-01-01 2017-12-30 0001029831 us-gaap:ShippingAndHandlingMember 2018-12-30 2019-12-28 0001029831 us-gaap:GeographicDistributionForeignMember 2019-12-28 0001029831 us-gaap:GeographicDistributionForeignMember 2018-12-29 0001029831 hlm:BigTimeProductsMember us-gaap:AcquisitionRelatedCostsMember 2019-12-28 0001029831 country:US 2019-12-28 0001029831 us-gaap:ShippingAndHandlingMember 2017-12-31 2018-12-29 0001029831 hlm:MinuteKeyInc.Member us-gaap:AcquisitionRelatedCostsMember 2019-12-28 0001029831 hlm:GroupHealthInsuranceClaimsMember 2019-12-28 0001029831 country:MX hlm:ConsumerConnectedSolutionsSegmentMember 2018-12-30 2019-12-28 0001029831 country:CA hlm:ConsumerConnectedSolutionsSegmentMember 2018-12-30 2019-12-28 0001029831 country:US 2017-12-31 2018-12-29 0001029831 country:US 2017-01-01 2017-12-30 0001029831 country:US hlm:FastenersHardwareandPersonalProtectionSegmentMember 2018-12-30 2019-12-28 0001029831 country:MX 2017-12-31 2018-12-29 0001029831 country:CA hlm:CanadaSegmentMember 2017-01-01 2017-12-30 0001029831 country:MX hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-01-01 2017-12-30 0001029831 country:CA 2018-12-30 2019-12-28 0001029831 country:CA hlm:ConsumerConnectedSolutionsSegmentMember 2017-12-31 2018-12-29 0001029831 country:CA 2017-12-31 2018-12-29 0001029831 country:MX hlm:FastenersHardwareandPersonalProtectionSegmentMember 2018-12-30 2019-12-28 0001029831 country:US hlm:CanadaSegmentMember 2017-12-31 2018-12-29 0001029831 country:CA hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-01-01 2017-12-30 0001029831 country:US hlm:CanadaSegmentMember 2017-01-01 2017-12-30 0001029831 country:US 2018-12-30 2019-12-28 0001029831 country:CA hlm:CanadaSegmentMember 2018-12-30 2019-12-28 0001029831 country:US hlm:ConsumerConnectedSolutionsSegmentMember 2017-01-01 2017-12-30 0001029831 country:US hlm:ConsumerConnectedSolutionsSegmentMember 2018-12-30 2019-12-28 0001029831 country:MX 2017-01-01 2017-12-30 0001029831 country:MX 2018-12-30 2019-12-28 0001029831 country:CA hlm:CanadaSegmentMember 2017-12-31 2018-12-29 0001029831 country:CA 2017-01-01 2017-12-30 0001029831 country:US hlm:CanadaSegmentMember 2018-12-30 2019-12-28 0001029831 country:MX hlm:ConsumerConnectedSolutionsSegmentMember 2017-01-01 2017-12-30 0001029831 country:MX hlm:CanadaSegmentMember 2018-12-30 2019-12-28 0001029831 country:MX hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-12-31 2018-12-29 0001029831 country:CA hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-12-31 2018-12-29 0001029831 country:CA hlm:FastenersHardwareandPersonalProtectionSegmentMember 2018-12-30 2019-12-28 0001029831 country:US hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-12-31 2018-12-29 0001029831 country:MX hlm:CanadaSegmentMember 2017-01-01 2017-12-30 0001029831 country:US hlm:ConsumerConnectedSolutionsSegmentMember 2017-12-31 2018-12-29 0001029831 country:US hlm:FastenersHardwareandPersonalProtectionSegmentMember 2017-01-01 2017-12-30 0001029831 country:CA hlm:ConsumerConnectedSolutionsSegmentMember 2017-01-01 2017-12-30 0001029831 country:MX hlm:ConsumerConnectedSolutionsSegmentMember 2017-12-31 2018-12-29 0001029831 country:MX hlm:CanadaSegmentMember 2017-12-31 2018-12-29 0001029831 hlm:CanadaSegmentMember 2019-12-28 0001029831 hlm:FastenersHardwareandPersonalProtectionSegmentMember 2019-12-28 0001029831 hlm:ConsumerConnectedSolutionsSegmentMember 2018-12-29 0001029831 hlm:FastenersHardwareandPersonalProtectionSegmentMember 2018-12-29 0001029831 hlm:CanadaSegmentMember 2018-12-29 0001029831 hlm:ConsumerConnectedSolutionsSegmentMember 2019-12-28 0001029831 srt:MaximumMember us-gaap:CustomerRelationshipsMember 2018-12-30 2019-12-28 0001029831 srt:MaximumMember us-gaap:TrademarksMember 2018-12-30 2019-12-28 0001029831 srt:MinimumMember us-gaap:TrademarksMember 2018-12-30 2019-12-28 0001029831 srt:MinimumMember us-gaap:TechnologyBasedIntangibleAssetsMember 2018-12-30 2019-12-28 0001029831 srt:MaximumMember us-gaap:TechnologyBasedIntangibleAssetsMember 2018-12-30 2019-12-28 0001029831 srt:MinimumMember us-gaap:CustomerRelationshipsMember 2018-12-30 2019-12-28 0001029831 srt:MaximumMember us-gaap:FurnitureAndFixturesMember 2018-12-30 2019-12-28 0001029831 srt:MaximumMember us-gaap:MachineryAndEquipmentMember 2018-12-30 2019-12-28 0001029831 srt:MinimumMember hlm:ComputerEquipmentandSoftwareMember 2018-12-30 2019-12-28 0001029831 srt:MinimumMember us-gaap:MachineryAndEquipmentMember 2018-12-30 2019-12-28 0001029831 srt:MaximumMember hlm:ComputerEquipmentandSoftwareMember 2018-12-30 2019-12-28 0001029831 srt:MinimumMember us-gaap:FurnitureAndFixturesMember 2018-12-30 2019-12-28 0001029831 srt:MinimumMember 2018-12-30 2019-12-28 0001029831 hlm:CumulativeEffectPeriodofAdoptionAdjustmentMember us-gaap:AccountingStandardsUpdate201409Member 2017-12-31 0001029831 hlm:CumulativeEffectPeriodofAdoptionAdjustmentMember us-gaap:AccountingStandardsUpdate201602Member 2018-12-30 0001029831 hlm:IndustrialWarehouseAndOfficeFacilityLeaseAgreementMannsMember srt:AffiliatedEntityMember 2017-12-31 2018-12-29 0001029831 hlm:IndustrialWarehouseManufacturingPlanAndOfficeFacilitiesLeaseAgreementHillmanGroupCanadaULCMember srt:AffiliatedEntityMember 2017-12-31 2018-12-29 0001029831 hlm:IndustrialWarehouseManufacturingPlanAndOfficeFacilitiesLeaseAgreementHillmanGroupCanadaULCMember srt:AffiliatedEntityMember 2018-12-30 2019-12-28 0001029831 hlm:IndustrialWarehouseAndOfficeFacilityLeaseAgreementMannsMember srt:AffiliatedEntityMember 2017-01-01 2017-12-30 0001029831 hlm:IndustrialWarehouseAndOfficeFacilityLeaseAgreementMannsMember srt:AffiliatedEntityMember 2018-12-30 2019-12-28 0001029831 hlm:IndustrialWarehouseManufacturingPlanAndOfficeFacilitiesLeaseAgreementHillmanGroupCanadaULCMember srt:AffiliatedEntityMember 2017-01-01 2017-12-30 0001029831 hlm:MinuteKeyInc.Member us-gaap:CustomerRelationshipsMember 2018-08-10 0001029831 hlm:MinuteKeyInc.Member 2018-08-10 0001029831 hlm:MinuteKeyInc.Member us-gaap:TechnologyBasedIntangibleAssetsMember 2018-08-10 0001029831 hlm:MinuteKeyInc.Member us-gaap:TradeNamesMember 2018-08-10 0001029831 hlm:STFasteningSystemsMember 2017-11-08 0001029831 hlm:SharpSystemsLLCMember 2019-08-16 0001029831 hlm:BigTimeProductsMember 2018-12-30 2019-12-28 0001029831 hlm:BigTimeProductsMember 2017-12-31 2018-12-29 0001029831 hlm:BigTimeProductsMember 2018-10-01 0001029831 hlm:BigTimeProductsMember us-gaap:TradeNamesMember 2018-10-01 0001029831 hlm:BigTimeProductsMember us-gaap:CustomerRelationshipsMember 2018-10-01 0001029831 hlm:A2018TermLoanTermAmendmentMember us-gaap:MediumTermNotesMember 2018-10-01 0001029831 hlm:WestCoastWashersMember 2019-07-01 2019-07-01 0001029831 hlm:MinuteKeyInc.Member hlm:A2018TermLoanMember us-gaap:UnsecuredDebtMember 2018-08-10 0001029831 us-gaap:ForeignCountryMember 2019-12-28 0001029831 us-gaap:StateAndLocalJurisdictionMember 2019-12-28 0001029831 us-gaap:GeneralBusinessMember 2019-12-28 0001029831 us-gaap:DomesticCountryMember 2019-12-28 0001029831 hlm:MinuteKeyInc.Member us-gaap:DomesticCountryMember 2019-12-28 0001029831 us-gaap:ForeignCountryMember 2018-12-30 2019-12-28 0001029831 us-gaap:MediumTermNotesMember 2014-06-30 0001029831 hlm:JuniorSubordinatedDebenturesMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2014-06-30 0001029831 us-gaap:MediumTermNotesMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-12-30 2019-12-28 0001029831 country:CA us-gaap:RevolvingCreditFacilityMember 2019-12-28 0001029831 us-gaap:RevolvingCreditFacilityMember 2018-12-29 0001029831 us-gaap:RevolvingCreditFacilityMember 2019-12-28 0001029831 us-gaap:MediumTermNotesMember 2019-12-28 0001029831 hlm:JuniorSubordinatedDebtPreferredMember 2019-12-28 0001029831 us-gaap:MediumTermNotesMember 2018-12-29 0001029831 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 1997-09-01 1997-09-30 0001029831 hlm:JuniorSubordinatedDebtPreferredMember 2018-12-30 2019-12-28 0001029831 us-gaap:MediumTermNotesMember 2018-12-30 2019-12-28 0001029831 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember us-gaap:BaseRateMember 2018-12-30 2019-12-28 0001029831 hlm:A2018TermLoanUnfundedMember us-gaap:MediumTermNotesMember 2018-05-31 0001029831 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-12-30 2019-12-28 0001029831 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember us-gaap:BaseRateMember 2018-12-30 2019-12-28 0001029831 us-gaap:RevolvingCreditFacilityMember 2019-11-15 2019-11-15 0001029831 us-gaap:RevolvingCreditFacilityMember 2019-11-15 0001029831 country:US us-gaap:RevolvingCreditFacilityMember 2019-12-28 0001029831 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember hlm:JuniorSubordinatedDebtCommonMember 1997-09-01 1997-09-30 0001029831 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-12-30 2019-12-28 0001029831 hlm:A2018TermLoanFundedMember us-gaap:MediumTermNotesMember 2018-05-31 0001029831 us-gaap:RevolvingCreditFacilityMember 2018-05-31 0001029831 hlm:JuniorSubordinatedDebenturesMember 2019-12-28 0001029831 hlm:JuniorSubordinatedDebenturesMember us-gaap:MeasurementInputSharePriceMember 2014-06-30 0001029831 hlm:JuniorSubordinatedDebenturesMember 2014-06-30 0001029831 us-gaap:MediumTermNotesMember us-gaap:BaseRateMember 2018-12-30 2019-12-28 0001029831 hlm:JuniorSubordinatedDebenturesMember 2018-12-29 0001029831 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-12-28 0001029831 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember hlm:JuniorSubordinatedDebtPreferredMember 2019-12-28 0001029831 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember hlm:JuniorSubordinatedDebtCommonMember 2019-12-28 0001029831 us-gaap:SeniorNotesMember 2019-12-28 0001029831 hlm:JuniorSubordinatedDebtCommonMember 2018-12-29 0001029831 us-gaap:SeniorNotesMember 2018-12-29 0001029831 hlm:JuniorSubordinatedDebtPreferredMember 2018-12-29 0001029831 hlm:JuniorSubordinatedDebtCommonMember 2019-12-28 0001029831 hlm:SeniorTermLoandue2025Member us-gaap:MediumTermNotesMember 2018-12-29 0001029831 hlm:SeniorTermLoandue2025Member us-gaap:MediumTermNotesMember 2019-12-28 0001029831 2019-07-29 0001029831 us-gaap:RestrictedStockMember 2017-01-01 2017-12-30 0001029831 us-gaap:RestrictedStockMember 2019-12-28 0001029831 2014-06-30 0001029831 us-gaap:EmployeeStockOptionMember 2017-01-01 2017-12-30 0001029831 us-gaap:RestrictedStockMember 2018-12-30 2019-12-28 0001029831 hlm:PerformanceBasedStockOptionMember 2019-12-28 0001029831 us-gaap:EmployeeStockOptionMember 2017-12-31 2018-12-29 0001029831 us-gaap:RestrictedStockMember 2017-12-31 2018-12-29 0001029831 hlm:TimeBasedVestingMember 2019-12-28 0001029831 us-gaap:EmployeeStockOptionMember 2018-12-30 2019-12-28 0001029831 us-gaap:EmployeeStockOptionMember 2018-08-10 0001029831 us-gaap:RestrictedStockMember 2018-12-29 0001029831 us-gaap:EmployeeStockOptionMember 2018-12-29 0001029831 us-gaap:EmployeeStockOptionMember 2019-12-28 0001029831 us-gaap:InterestRateSwapMember 2014-09-03 0001029831 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:InterestRateSwapMember us-gaap:NondesignatedMember 2019-12-28 0001029831 hlm:TwoThousandFourteenTwoSwapMember 2014-09-03 0001029831 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2018-12-30 2019-12-28 0001029831 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0001029831 hlm:A2018Swap1Member 2018-01-08 0001029831 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-28 0001029831 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2017-12-31 2018-12-29 0001029831 hlm:A2018Swap2Member 2018-01-08 0001029831 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2018-12-29 0001029831 hlm:TwoThousandFourteenOneSwapMember 2014-09-03 0001029831 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2019-12-28 0001029831 us-gaap:InterestRateSwapMember us-gaap:NondesignatedMember 2018-12-30 2019-12-28 0001029831 us-gaap:OtherCurrentAssetsMember hlm:A2018Swap1Member us-gaap:NondesignatedMember 2018-12-29 0001029831 us-gaap:OtherCurrentLiabilitiesMember hlm:A2018Swap2Member us-gaap:NondesignatedMember 2018-12-29 0001029831 us-gaap:InterestRateSwapMember us-gaap:NondesignatedMember 2017-12-31 2018-12-29 0001029831 hlm:A2018Swap2Member 2018-11-08 2018-11-08 0001029831 hlm:A2018Swap1Member 2018-01-08 2018-01-08 0001029831 us-gaap:InterestRateSwapMember 2014-09-03 2014-09-03 0001029831 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-28 0001029831 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0001029831 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-28 0001029831 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-28 0001029831 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0001029831 us-gaap:InterestRateSwapMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-28 0001029831 us-gaap:FairValueMeasurementsRecurringMember 2019-12-28 0001029831 us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0001029831 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0001029831 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0001029831 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0001029831 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-28 0001029831 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0001029831 us-gaap:InterestRateSwapMember us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0001029831 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-28 0001029831 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0001029831 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0001029831 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0001029831 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-28 0001029831 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-28 0001029831 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-28 0001029831 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-28 0001029831 hlm:JuniorSubordinatedDebenturesMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2018-12-29 0001029831 hlm:SixPointThreeSevenFivePercentSeniorNotesMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2018-12-29 0001029831 hlm:JuniorSubordinatedDebenturesMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-12-28 0001029831 hlm:SixPointThreeSevenFivePercentSeniorNotesMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2018-12-29 0001029831 hlm:JuniorSubordinatedDebenturesMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2018-12-29 0001029831 hlm:JuniorSubordinatedDebenturesMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-12-28 0001029831 hlm:SixPointThreeSevenFivePercentSeniorNotesMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-12-28 0001029831 hlm:SixPointThreeSevenFivePercentSeniorNotesMember 2019-12-28 0001029831 hlm:SixPointThreeSevenFivePercentSeniorNotesMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-12-28 0001029831 country:CA us-gaap:EmployeeSeveranceMember 2018-12-30 2019-12-28 0001029831 country:US us-gaap:EmployeeSeveranceMember 2018-12-30 2019-12-28 0001029831 country:CA hlm:TerminationOfLinesOfBusinessMember 2017-12-31 2018-12-29 0001029831 country:CA hlm:FacilityConsolidationMember 2017-12-31 2018-12-29 0001029831 country:CA hlm:FacilityConsolidationMember 2018-12-30 2019-12-28 0001029831 country:CA hlm:TerminationOfLinesOfBusinessMember 2018-12-30 2019-12-28 0001029831 country:CA us-gaap:EmployeeSeveranceMember 2019-12-28 0001029831 country:CA us-gaap:EmployeeSeveranceMember 2018-12-29 0001029831 country:US us-gaap:EmployeeSeveranceMember 2018-12-29 0001029831 country:US us-gaap:EmployeeSeveranceMember 2019-12-28 0001029831 hlm:AntidumpingDutiesMember 2017-12-31 2018-12-29 0001029831 us-gaap:InsuranceClaimsMember 2019-12-28 0001029831 hlm:AntidumpingDutiesMember 2019-12-28 0001029831 hlm:AntidumpingDutiesMember 2017-01-01 2017-12-30 0001029831 hlm:JuniorSubordinatedDebenturesMember 2017-12-31 2018-12-29 0001029831 hlm:JuniorSubordinatedDebenturesMember 2018-12-30 2019-12-28 0001029831 hlm:JuniorSubordinatedDebenturesMember 2017-01-01 2017-12-30 0001029831 2018-09-30 2018-12-29 0001029831 2018-07-01 2018-09-29 0001029831 2018-04-01 2018-06-30 0001029831 2019-09-29 2019-12-28 0001029831 2018-12-30 2019-03-30 0001029831 2019-03-31 2019-06-29 0001029831 2019-06-30 2019-09-28 0001029831 2017-12-31 2018-03-31 0001029831 hlm:ThreeLargestCustomersMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2018-12-30 2019-12-28 0001029831 hlm:ThreeLargestCustomersMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2017-12-31 2018-12-29 0001029831 hlm:ThreeLargestCustomersMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2017-12-31 2018-12-29 0001029831 hlm:ThreeLargestCustomersMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2018-12-30 2019-12-28 0001029831 hlm:CustomerTwoMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2017-12-31 2018-12-29 0001029831 hlm:CustomerOneMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2018-12-30 2019-12-28 0001029831 hlm:CustomerTwoMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2017-01-01 2017-12-30 0001029831 hlm:CustomerOneMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2017-12-31 2018-12-29 0001029831 hlm:CustomerOneMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2017-01-01 2017-12-30 0001029831 hlm:CustomerTwoMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2018-12-30 2019-12-28 0001029831 us-gaap:AllowanceForCreditLossMember 2017-12-31 2018-12-29 0001029831 us-gaap:AllowanceForCreditLossMember 2019-12-28 0001029831 us-gaap:AllowanceForCreditLossMember 2018-12-29 0001029831 us-gaap:AllowanceForCreditLossMember 2018-12-30 2019-12-28 0001029831 us-gaap:AllowanceForCreditLossMember 2017-01-01 2017-12-30 0001029831 us-gaap:AllowanceForCreditLossMember 2016-12-31 0001029831 us-gaap:AllowanceForCreditLossMember 2017-12-30 xbrli:shares iso4217:USD xbrli:pure iso4217:USD xbrli:shares hlm:Segment hlm:derivative_instrument iso4217:CAD

falseFY0001029831P5YP3YP3YP3YP3Y00010298312019-12-292020-12-26xbrli:shares00010298312021-03-03iso4217:USD00010298312020-06-3000010298312020-12-2600010298312019-12-28iso4217:USDxbrli:shares00010298312018-12-302019-12-2800010298312017-12-312018-12-2900010298312018-12-2900010298312017-12-300001029831us-gaap:CommonStockMember2017-12-300001029831us-gaap:AdditionalPaidInCapitalMember2017-12-300001029831us-gaap:RetainedEarningsMember2017-12-300001029831us-gaap:AccumulatedOtherComprehensiveIncomeMember2017-12-300001029831us-gaap:RetainedEarningsMember2017-12-312018-12-290001029831us-gaap:AdditionalPaidInCapitalMember2017-12-312018-12-290001029831us-gaap:RetainedEarningsMemberhlm:CumulativeEffectPeriodofAdoptionAdjustmentMember2018-12-290001029831hlm:CumulativeEffectPeriodofAdoptionAdjustmentMember2018-12-290001029831us-gaap:AccumulatedOtherComprehensiveIncomeMember2017-12-312018-12-290001029831us-gaap:CommonStockMember2018-12-290001029831us-gaap:AdditionalPaidInCapitalMember2018-12-290001029831us-gaap:RetainedEarningsMember2018-12-290001029831us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-290001029831us-gaap:RetainedEarningsMember2018-12-302019-12-280001029831us-gaap:AdditionalPaidInCapitalMember2018-12-302019-12-280001029831us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-302019-12-280001029831us-gaap:CommonStockMember2019-12-280001029831us-gaap:AdditionalPaidInCapitalMember2019-12-280001029831us-gaap:RetainedEarningsMember2019-12-280001029831us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-280001029831us-gaap:RetainedEarningsMember2019-12-292020-12-260001029831us-gaap:AdditionalPaidInCapitalMember2019-12-292020-12-260001029831us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-292020-12-260001029831us-gaap:CommonStockMember2020-12-260001029831us-gaap:AdditionalPaidInCapitalMember2020-12-260001029831us-gaap:RetainedEarningsMember2020-12-260001029831us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-26xbrli:pure0001029831hlm:CapitalAdvisorsLlcMember2020-12-260001029831hlm:OakHillFundsMember2020-12-260001029831hlm:MemberOfManagementMember2020-12-26hlm:Segment0001029831hlm:MinuteKeyInc.Member2018-08-102018-08-100001029831hlm:BigTimeProductsMember2018-10-012018-10-010001029831hlm:SharpSystemsLLCMember2019-08-162019-08-160001029831srt:RestatementAdjustmentMember2017-12-312018-12-290001029831srt:RestatementAdjustmentMember2018-12-290001029831srt:RestatementAdjustmentMember2018-12-302019-12-280001029831srt:RestatementAdjustmentMember2019-12-280001029831srt:ScenarioPreviouslyReportedMember2018-12-302019-12-280001029831srt:ScenarioPreviouslyReportedMember2017-12-312018-12-290001029831srt:ScenarioPreviouslyReportedMember2019-12-280001029831srt:ScenarioPreviouslyReportedMember2018-12-290001029831srt:RestatementAdjustmentMemberhlm:MinuteKeyInc.Member2018-08-100001029831hlm:BigTimeProductsMembersrt:RestatementAdjustmentMember2018-10-010001029831us-gaap:GeographicDistributionForeignMember2020-12-260001029831us-gaap:GeographicDistributionForeignMember2019-12-280001029831srt:MinimumMember2019-12-292020-12-260001029831srt:MaximumMember2019-12-292020-12-260001029831us-gaap:LeaseholdImprovementsMember2020-12-260001029831us-gaap:LeaseholdImprovementsMember2019-12-280001029831us-gaap:MachineryAndEquipmentMembersrt:MinimumMember2019-12-292020-12-260001029831srt:MaximumMemberus-gaap:MachineryAndEquipmentMember2019-12-292020-12-260001029831us-gaap:MachineryAndEquipmentMember2020-12-260001029831us-gaap:MachineryAndEquipmentMember2019-12-280001029831hlm:ComputerEquipmentandSoftwareMembersrt:MinimumMember2019-12-292020-12-260001029831srt:MaximumMemberhlm:ComputerEquipmentandSoftwareMember2019-12-292020-12-260001029831hlm:ComputerEquipmentandSoftwareMember2020-12-260001029831hlm:ComputerEquipmentandSoftwareMember2019-12-280001029831srt:MinimumMemberus-gaap:FurnitureAndFixturesMember2019-12-292020-12-260001029831srt:MaximumMemberus-gaap:FurnitureAndFixturesMember2019-12-292020-12-260001029831us-gaap:FurnitureAndFixturesMember2020-12-260001029831us-gaap:FurnitureAndFixturesMember2019-12-280001029831us-gaap:ConstructionInProgressMember2020-12-260001029831us-gaap:ConstructionInProgressMember2019-12-280001029831hlm:FastenersHardwareandPersonalProtectionSegmentMember2019-12-280001029831hlm:FastenersHardwareandPersonalProtectionSegmentMember2019-12-292020-12-260001029831hlm:FastenersHardwareandPersonalProtectionSegmentMember2020-12-260001029831hlm:ConsumerConnectedSolutionsSegmentMember2019-12-280001029831hlm:ConsumerConnectedSolutionsSegmentMember2019-12-292020-12-260001029831hlm:ConsumerConnectedSolutionsSegmentMember2020-12-260001029831hlm:CanadaSegmentMember2019-12-280001029831hlm:CanadaSegmentMember2019-12-292020-12-260001029831hlm:CanadaSegmentMember2020-12-260001029831srt:MinimumMemberus-gaap:CustomerRelationshipsMember2019-12-292020-12-260001029831srt:MaximumMemberus-gaap:CustomerRelationshipsMember2019-12-292020-12-260001029831us-gaap:CustomerRelationshipsMember2020-12-260001029831us-gaap:CustomerRelationshipsMember2019-12-280001029831us-gaap:TrademarksMember2020-12-260001029831us-gaap:TrademarksMember2019-12-280001029831srt:MinimumMemberus-gaap:TrademarksMember2019-12-292020-12-260001029831srt:MaximumMemberus-gaap:TrademarksMember2019-12-292020-12-260001029831us-gaap:TrademarksMember2020-12-260001029831us-gaap:TrademarksMember2019-12-280001029831us-gaap:TechnologyBasedIntangibleAssetsMembersrt:MinimumMember2019-12-292020-12-260001029831srt:MaximumMemberus-gaap:TechnologyBasedIntangibleAssetsMember2019-12-292020-12-260001029831us-gaap:TechnologyBasedIntangibleAssetsMember2020-12-260001029831us-gaap:TechnologyBasedIntangibleAssetsMember2019-12-280001029831country:US2020-12-260001029831hlm:GroupHealthInsuranceClaimsMember2020-12-260001029831us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember2019-12-292020-12-260001029831hlm:FastenersHardwareandPersonalProtectionSegmentMemberhlm:FasteningandHardwareMember2019-12-292020-12-260001029831hlm:FasteningandHardwareMemberhlm:ConsumerConnectedSolutionsSegmentMember2019-12-292020-12-260001029831hlm:CanadaSegmentMemberhlm:FasteningandHardwareMember2019-12-292020-12-260001029831hlm:FasteningandHardwareMember2019-12-292020-12-260001029831hlm:PersonalProtectionSolutionsMemberhlm:FastenersHardwareandPersonalProtectionSegmentMember2019-12-292020-12-260001029831hlm:PersonalProtectionSolutionsMemberhlm:ConsumerConnectedSolutionsSegmentMember2019-12-292020-12-260001029831hlm:CanadaSegmentMemberhlm:PersonalProtectionSolutionsMember2019-12-292020-12-260001029831hlm:PersonalProtectionSolutionsMember2019-12-292020-12-260001029831hlm:FastenersHardwareandPersonalProtectionSegmentMemberhlm:KeyandKeyAccessoriesMember2019-12-292020-12-260001029831hlm:ConsumerConnectedSolutionsSegmentMemberhlm:KeyandKeyAccessoriesMember2019-12-292020-12-260001029831hlm:CanadaSegmentMemberhlm:KeyandKeyAccessoriesMember2019-12-292020-12-260001029831hlm:KeyandKeyAccessoriesMember2019-12-292020-12-260001029831hlm:EngravingMemberhlm:FastenersHardwareandPersonalProtectionSegmentMember2019-12-292020-12-260001029831hlm:EngravingMemberhlm:ConsumerConnectedSolutionsSegmentMember2019-12-292020-12-260001029831hlm:EngravingMemberhlm:CanadaSegmentMember2019-12-292020-12-260001029831hlm:EngravingMember2019-12-292020-12-260001029831hlm:FastenersHardwareandPersonalProtectionSegmentMemberhlm:ResharpMember2019-12-292020-12-260001029831hlm:ConsumerConnectedSolutionsSegmentMemberhlm:ResharpMember2019-12-292020-12-260001029831hlm:CanadaSegmentMemberhlm:ResharpMember2019-12-292020-12-260001029831hlm:ResharpMember2019-12-292020-12-260001029831hlm:FastenersHardwareandPersonalProtectionSegmentMemberhlm:FasteningandHardwareMember2018-12-302019-12-280001029831hlm:FasteningandHardwareMemberhlm:ConsumerConnectedSolutionsSegmentMember2018-12-302019-12-280001029831hlm:CanadaSegmentMemberhlm:FasteningandHardwareMember2018-12-302019-12-280001029831hlm:FasteningandHardwareMember2018-12-302019-12-280001029831hlm:PersonalProtectionSolutionsMemberhlm:FastenersHardwareandPersonalProtectionSegmentMember2018-12-302019-12-280001029831hlm:PersonalProtectionSolutionsMemberhlm:ConsumerConnectedSolutionsSegmentMember2018-12-302019-12-280001029831hlm:CanadaSegmentMemberhlm:PersonalProtectionSolutionsMember2018-12-302019-12-280001029831hlm:PersonalProtectionSolutionsMember2018-12-302019-12-280001029831hlm:FastenersHardwareandPersonalProtectionSegmentMemberhlm:KeyandKeyAccessoriesMember2018-12-302019-12-280001029831hlm:ConsumerConnectedSolutionsSegmentMemberhlm:KeyandKeyAccessoriesMember2018-12-302019-12-280001029831hlm:CanadaSegmentMemberhlm:KeyandKeyAccessoriesMember2018-12-302019-12-280001029831hlm:KeyandKeyAccessoriesMember2018-12-302019-12-280001029831hlm:EngravingMemberhlm:FastenersHardwareandPersonalProtectionSegmentMember2018-12-302019-12-280001029831hlm:EngravingMemberhlm:ConsumerConnectedSolutionsSegmentMember2018-12-302019-12-280001029831hlm:EngravingMemberhlm:CanadaSegmentMember2018-12-302019-12-280001029831hlm:EngravingMember2018-12-302019-12-280001029831hlm:FastenersHardwareandPersonalProtectionSegmentMemberhlm:ResharpMember2018-12-302019-12-280001029831hlm:ConsumerConnectedSolutionsSegmentMemberhlm:ResharpMember2018-12-302019-12-280001029831hlm:CanadaSegmentMemberhlm:ResharpMember2018-12-302019-12-280001029831hlm:ResharpMember2018-12-302019-12-280001029831hlm:FastenersHardwareandPersonalProtectionSegmentMember2018-12-302019-12-280001029831hlm:ConsumerConnectedSolutionsSegmentMember2018-12-302019-12-280001029831hlm:CanadaSegmentMember2018-12-302019-12-280001029831hlm:FastenersHardwareandPersonalProtectionSegmentMemberhlm:FasteningandHardwareMember2017-12-312018-12-290001029831hlm:FasteningandHardwareMemberhlm:ConsumerConnectedSolutionsSegmentMember2017-12-312018-12-290001029831hlm:CanadaSegmentMemberhlm:FasteningandHardwareMember2017-12-312018-12-290001029831hlm:FasteningandHardwareMember2017-12-312018-12-290001029831hlm:PersonalProtectionSolutionsMemberhlm:FastenersHardwareandPersonalProtectionSegmentMember2017-12-312018-12-290001029831hlm:PersonalProtectionSolutionsMemberhlm:ConsumerConnectedSolutionsSegmentMember2017-12-312018-12-290001029831hlm:CanadaSegmentMemberhlm:PersonalProtectionSolutionsMember2017-12-312018-12-290001029831hlm:PersonalProtectionSolutionsMember2017-12-312018-12-290001029831hlm:FastenersHardwareandPersonalProtectionSegmentMemberhlm:KeyandKeyAccessoriesMember2017-12-312018-12-290001029831hlm:ConsumerConnectedSolutionsSegmentMemberhlm:KeyandKeyAccessoriesMember2017-12-312018-12-290001029831hlm:CanadaSegmentMemberhlm:KeyandKeyAccessoriesMember2017-12-312018-12-290001029831hlm:KeyandKeyAccessoriesMember2017-12-312018-12-290001029831hlm:EngravingMemberhlm:FastenersHardwareandPersonalProtectionSegmentMember2017-12-312018-12-290001029831hlm:EngravingMemberhlm:ConsumerConnectedSolutionsSegmentMember2017-12-312018-12-290001029831hlm:EngravingMemberhlm:CanadaSegmentMember2017-12-312018-12-290001029831hlm:EngravingMember2017-12-312018-12-290001029831hlm:FastenersHardwareandPersonalProtectionSegmentMemberhlm:ResharpMember2017-12-312018-12-290001029831hlm:ConsumerConnectedSolutionsSegmentMemberhlm:ResharpMember2017-12-312018-12-290001029831hlm:CanadaSegmentMemberhlm:ResharpMember2017-12-312018-12-290001029831hlm:ResharpMember2017-12-312018-12-290001029831hlm:FastenersHardwareandPersonalProtectionSegmentMember2017-12-312018-12-290001029831hlm:ConsumerConnectedSolutionsSegmentMember2017-12-312018-12-290001029831hlm:CanadaSegmentMember2017-12-312018-12-290001029831hlm:FastenersHardwareandPersonalProtectionSegmentMembercountry:US2019-12-292020-12-260001029831country:UShlm:ConsumerConnectedSolutionsSegmentMember2019-12-292020-12-260001029831hlm:CanadaSegmentMembercountry:US2019-12-292020-12-260001029831country:US2019-12-292020-12-260001029831hlm:FastenersHardwareandPersonalProtectionSegmentMembercountry:CA2019-12-292020-12-260001029831hlm:ConsumerConnectedSolutionsSegmentMembercountry:CA2019-12-292020-12-260001029831hlm:CanadaSegmentMembercountry:CA2019-12-292020-12-260001029831country:CA2019-12-292020-12-260001029831country:MXhlm:FastenersHardwareandPersonalProtectionSegmentMember2019-12-292020-12-260001029831country:MXhlm:ConsumerConnectedSolutionsSegmentMember2019-12-292020-12-260001029831country:MXhlm:CanadaSegmentMember2019-12-292020-12-260001029831country:MX2019-12-292020-12-260001029831hlm:FastenersHardwareandPersonalProtectionSegmentMembercountry:US2018-12-302019-12-280001029831country:UShlm:ConsumerConnectedSolutionsSegmentMember2018-12-302019-12-280001029831hlm:CanadaSegmentMembercountry:US2018-12-302019-12-280001029831country:US2018-12-302019-12-280001029831hlm:FastenersHardwareandPersonalProtectionSegmentMembercountry:CA2018-12-302019-12-280001029831hlm:ConsumerConnectedSolutionsSegmentMembercountry:CA2018-12-302019-12-280001029831hlm:CanadaSegmentMembercountry:CA2018-12-302019-12-280001029831country:CA2018-12-302019-12-280001029831country:MXhlm:FastenersHardwareandPersonalProtectionSegmentMember2018-12-302019-12-280001029831country:MXhlm:ConsumerConnectedSolutionsSegmentMember2018-12-302019-12-280001029831country:MXhlm:CanadaSegmentMember2018-12-302019-12-280001029831country:MX2018-12-302019-12-280001029831hlm:FastenersHardwareandPersonalProtectionSegmentMembercountry:US2017-12-312018-12-290001029831country:UShlm:ConsumerConnectedSolutionsSegmentMember2017-12-312018-12-290001029831hlm:CanadaSegmentMembercountry:US2017-12-312018-12-290001029831country:US2017-12-312018-12-290001029831hlm:FastenersHardwareandPersonalProtectionSegmentMembercountry:CA2017-12-312018-12-290001029831hlm:ConsumerConnectedSolutionsSegmentMembercountry:CA2017-12-312018-12-290001029831hlm:CanadaSegmentMembercountry:CA2017-12-312018-12-290001029831country:CA2017-12-312018-12-290001029831country:MXhlm:FastenersHardwareandPersonalProtectionSegmentMember2017-12-312018-12-290001029831country:MXhlm:ConsumerConnectedSolutionsSegmentMember2017-12-312018-12-290001029831country:MXhlm:CanadaSegmentMember2017-12-312018-12-290001029831country:MX2017-12-312018-12-290001029831us-gaap:ShippingAndHandlingMember2019-12-292020-12-260001029831us-gaap:ShippingAndHandlingMember2018-12-302019-12-280001029831us-gaap:ShippingAndHandlingMember2017-12-312018-12-290001029831us-gaap:AccountingStandardsUpdate201409Memberhlm:CumulativeEffectPeriodofAdoptionAdjustmentMember2017-12-310001029831hlm:CumulativeEffectPeriodofAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate201602Member2018-12-300001029831srt:AffiliatedEntityMemberhlm:IndustrialWarehouseAndOfficeFacilityLeaseAgreementMannsMember2019-12-292020-12-260001029831srt:AffiliatedEntityMemberhlm:IndustrialWarehouseAndOfficeFacilityLeaseAgreementMannsMember2018-12-302019-12-280001029831srt:AffiliatedEntityMemberhlm:IndustrialWarehouseAndOfficeFacilityLeaseAgreementMannsMember2017-12-312018-12-290001029831us-gaap:UnsecuredDebtMemberhlm:A2018TermLoanMemberhlm:MinuteKeyInc.Member2018-08-100001029831hlm:MinuteKeyInc.Member2018-08-100001029831hlm:MinuteKeyInc.Memberus-gaap:CustomerRelationshipsMember2018-08-100001029831us-gaap:TechnologyBasedIntangibleAssetsMemberhlm:MinuteKeyInc.Member2018-08-100001029831us-gaap:TradeNamesMemberhlm:MinuteKeyInc.Member2018-08-100001029831us-gaap:MediumTermNotesMemberhlm:A2018TermLoanTermAmendmentMember2018-10-010001029831hlm:BigTimeProductsMember2018-10-010001029831hlm:BigTimeProductsMemberus-gaap:CustomerRelationshipsMember2018-10-010001029831hlm:BigTimeProductsMemberus-gaap:TradeNamesMember2018-10-010001029831hlm:BigTimeProductsMember2019-12-292020-12-260001029831hlm:SharpSystemsLLCMember2019-08-160001029831hlm:WestCoastWashersMember2019-07-012019-07-010001029831hlm:InstafobMember2019-12-292020-12-260001029831hlm:InstafobMember2020-02-192020-02-190001029831us-gaap:DomesticCountryMember2020-12-260001029831us-gaap:ForeignCountryMember2020-12-260001029831us-gaap:StateAndLocalJurisdictionMember2020-12-260001029831us-gaap:GeneralBusinessMember2020-12-260001029831us-gaap:RevolvingCreditFacilityMember2020-12-260001029831us-gaap:RevolvingCreditFacilityMember2019-12-280001029831us-gaap:MediumTermNotesMemberhlm:SeniorTermLoandue2025Member2020-12-260001029831us-gaap:MediumTermNotesMemberhlm:SeniorTermLoandue2025Member2019-12-280001029831us-gaap:SeniorNotesMember2020-12-260001029831us-gaap:SeniorNotesMember2019-12-280001029831hlm:JuniorSubordinatedDebtPreferredMember2020-12-260001029831hlm:JuniorSubordinatedDebtPreferredMember2019-12-280001029831hlm:JuniorSubordinatedDebtCommonMember2020-12-260001029831hlm:JuniorSubordinatedDebtCommonMember2019-12-280001029831hlm:JuniorSubordinatedDebenturesMember2020-12-260001029831hlm:JuniorSubordinatedDebenturesMember2019-12-280001029831us-gaap:MediumTermNotesMemberhlm:A2018TermLoanFundedMember2018-05-310001029831us-gaap:MediumTermNotesMemberhlm:A2018TermLoanUnfundedMember2018-05-310001029831us-gaap:RevolvingCreditFacilityMember2018-05-310001029831us-gaap:RevolvingCreditFacilityMember2019-11-152019-11-150001029831us-gaap:RevolvingCreditFacilityMember2019-11-150001029831us-gaap:MediumTermNotesMemberus-gaap:LondonInterbankOfferedRateLIBORMember2019-12-292020-12-260001029831us-gaap:BaseRateMemberus-gaap:MediumTermNotesMember2019-12-292020-12-260001029831us-gaap:MediumTermNotesMember2019-12-292020-12-260001029831us-gaap:LondonInterbankOfferedRateLIBORMembersrt:MinimumMemberus-gaap:RevolvingCreditFacilityMember2019-12-292020-12-260001029831srt:MaximumMemberus-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:RevolvingCreditFacilityMember2019-12-292020-12-260001029831us-gaap:BaseRateMembersrt:MinimumMemberus-gaap:RevolvingCreditFacilityMember2019-12-292020-12-260001029831srt:MaximumMemberus-gaap:BaseRateMemberus-gaap:RevolvingCreditFacilityMember2019-12-292020-12-260001029831us-gaap:MediumTermNotesMember2020-12-260001029831country:USus-gaap:RevolvingCreditFacilityMember2020-12-260001029831country:CAus-gaap:RevolvingCreditFacilityMember2020-12-260001029831us-gaap:MediumTermNotesMember2018-12-290001029831us-gaap:RevolvingCreditFacilityMember2018-12-290001029831us-gaap:MediumTermNotesMember2014-06-300001029831us-gaap:VariableInterestEntityPrimaryBeneficiaryMember1997-09-011997-09-300001029831hlm:JuniorSubordinatedDebtPreferredMember2019-12-292020-12-260001029831us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberhlm:JuniorSubordinatedDebtCommonMember1997-09-011997-09-300001029831us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberhlm:JuniorSubordinatedDebtPreferredMember2020-12-260001029831us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberhlm:JuniorSubordinatedDebtCommonMember2020-12-260001029831us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-12-260001029831us-gaap:EstimateOfFairValueFairValueDisclosureMemberhlm:JuniorSubordinatedDebenturesMember2014-06-300001029831us-gaap:MeasurementInputSharePriceMemberhlm:JuniorSubordinatedDebenturesMember2014-06-300001029831hlm:JuniorSubordinatedDebenturesMember2014-06-3000010298312015-06-3000010298312018-08-1000010298312019-07-2900010298312020-07-280001029831hlm:TimeBasedVestingMember2020-12-260001029831us-gaap:EmployeeStockOptionMember2019-12-292020-12-260001029831us-gaap:EmployeeStockOptionMember2018-12-302019-12-280001029831us-gaap:EmployeeStockOptionMember2017-12-312018-12-290001029831hlm:PerformanceBasedStockOptionMember2020-12-260001029831us-gaap:EmployeeStockOptionMember2019-12-280001029831us-gaap:EmployeeStockOptionMember2020-12-260001029831us-gaap:RestrictedStockMember2020-12-260001029831us-gaap:RestrictedStockMember2019-12-292020-12-260001029831us-gaap:RestrictedStockMember2019-12-280001029831us-gaap:RestrictedStockMember2018-12-302019-12-280001029831us-gaap:RestrictedStockMember2017-12-312018-12-29hlm:derivative_instrument0001029831us-gaap:InterestRateSwapMember2014-09-030001029831us-gaap:InterestRateSwapMember2014-09-032014-09-030001029831hlm:TwoThousandFourteenOneSwapMember2014-09-030001029831hlm:TwoThousandFourteenTwoSwapMember2014-09-030001029831hlm:A2018Swap1Member2018-01-082018-01-080001029831hlm:A2018Swap1Member2018-01-080001029831hlm:A2018Swap2Member2018-11-082018-11-080001029831hlm:A2018Swap2Member2018-01-080001029831us-gaap:NondesignatedMemberhlm:A2018Swap1Memberus-gaap:OtherCurrentLiabilitiesMember2020-12-260001029831us-gaap:NondesignatedMemberus-gaap:OtherNoncurrentLiabilitiesMemberhlm:A2018Swap2Member2020-12-260001029831us-gaap:NondesignatedMemberus-gaap:InterestRateSwapMember2019-12-292020-12-260001029831us-gaap:NondesignatedMemberus-gaap:InterestRateSwapMemberus-gaap:OtherNoncurrentLiabilitiesMember2020-12-260001029831us-gaap:NondesignatedMemberus-gaap:InterestRateSwapMember2018-12-302019-12-28iso4217:CAD0001029831us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2020-12-260001029831us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2019-12-280001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignExchangeForwardMember2020-12-260001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignExchangeForwardMember2019-12-280001029831us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2019-12-292020-12-260001029831us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2018-12-302019-12-280001029831us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-260001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-12-260001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-260001029831us-gaap:FairValueMeasurementsRecurringMember2020-12-260001029831us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2020-12-260001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2020-12-260001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2020-12-260001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2020-12-260001029831us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignExchangeForwardMember2020-12-260001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel2Member2020-12-260001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel3Member2020-12-260001029831us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-280001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-12-280001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-280001029831us-gaap:FairValueMeasurementsRecurringMember2019-12-280001029831us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2019-12-280001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2019-12-280001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2019-12-280001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2019-12-280001029831us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignExchangeForwardMember2019-12-280001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel2Member2019-12-280001029831us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel3Member2019-12-280001029831hlm:SharpSystemsLLCMemberus-gaap:OtherCurrentLiabilitiesMember2020-12-260001029831hlm:InstafobMemberus-gaap:OtherCurrentLiabilitiesMember2020-12-260001029831us-gaap:OtherCurrentLiabilitiesMember2019-12-280001029831hlm:SharpSystemsLLCMemberus-gaap:AccountsPayableMember2019-12-292020-12-260001029831hlm:SharpSystemsLLCMember2019-12-292020-12-260001029831hlm:InstafobMember2019-12-292020-12-260001029831hlm:SixPointThreeSevenFivePercentSeniorNotesMember2020-12-260001029831us-gaap:CarryingReportedAmountFairValueDisclosureMemberhlm:SixPointThreeSevenFivePercentSeniorNotesMember2020-12-260001029831us-gaap:EstimateOfFairValueFairValueDisclosureMemberhlm:SixPointThreeSevenFivePercentSeniorNotesMember2020-12-260001029831us-gaap:CarryingReportedAmountFairValueDisclosureMemberhlm:SixPointThreeSevenFivePercentSeniorNotesMember2019-12-280001029831us-gaap:EstimateOfFairValueFairValueDisclosureMemberhlm:SixPointThreeSevenFivePercentSeniorNotesMember2019-12-280001029831us-gaap:CarryingReportedAmountFairValueDisclosureMemberhlm:JuniorSubordinatedDebenturesMember2020-12-260001029831us-gaap:EstimateOfFairValueFairValueDisclosureMemberhlm:JuniorSubordinatedDebenturesMember2020-12-260001029831us-gaap:CarryingReportedAmountFairValueDisclosureMemberhlm:JuniorSubordinatedDebenturesMember2019-12-280001029831us-gaap:EstimateOfFairValueFairValueDisclosureMemberhlm:JuniorSubordinatedDebenturesMember2019-12-280001029831hlm:FacilityConsolidationMembercountry:CA2019-12-292020-12-260001029831hlm:FacilityConsolidationMembercountry:CA2018-12-302019-12-280001029831hlm:FacilityConsolidationMembercountry:CA2017-12-312018-12-290001029831hlm:TerminationOfLinesOfBusinessMembercountry:CA2019-12-292020-12-260001029831hlm:TerminationOfLinesOfBusinessMembercountry:CA2018-12-302019-12-280001029831hlm:TerminationOfLinesOfBusinessMembercountry:CA2017-12-312018-12-290001029831country:CAus-gaap:EmployeeSeveranceMember2019-12-280001029831country:CAus-gaap:EmployeeSeveranceMember2019-12-292020-12-260001029831country:CAus-gaap:EmployeeSeveranceMember2020-12-260001029831country:USus-gaap:OtherRestructuringMember2019-12-292020-12-260001029831country:USus-gaap:OtherRestructuringMember2018-12-302019-12-280001029831us-gaap:FacilityClosingMembercountry:US2019-12-292020-12-260001029831us-gaap:FacilityClosingMembercountry:US2018-12-302019-12-280001029831country:USus-gaap:EmployeeSeveranceMember2019-12-280001029831country:USus-gaap:EmployeeSeveranceMember2019-12-292020-12-260001029831country:USus-gaap:EmployeeSeveranceMember2020-12-260001029831us-gaap:InsuranceClaimsMember2020-12-260001029831hlm:AntidumpingDutiesMember2020-12-260001029831hlm:AntidumpingDutiesMember2018-12-302019-12-280001029831hlm:JuniorSubordinatedDebenturesMember2019-12-292020-12-260001029831hlm:JuniorSubordinatedDebenturesMember2018-12-302019-12-280001029831hlm:JuniorSubordinatedDebenturesMember2017-12-312018-12-2900010298312019-12-292020-03-2800010298312020-03-292020-06-2700010298312020-06-282020-09-2600010298312020-09-272020-12-2600010298312018-12-302019-03-3000010298312019-03-312019-06-2900010298312019-06-302019-09-2800010298312019-09-292019-12-280001029831srt:ScenarioPreviouslyReportedMember2019-12-292020-03-280001029831srt:ScenarioPreviouslyReportedMember2020-03-292020-06-270001029831srt:ScenarioPreviouslyReportedMember2020-06-282020-09-260001029831srt:ScenarioPreviouslyReportedMember2018-12-302019-03-300001029831srt:ScenarioPreviouslyReportedMember2019-03-312019-06-290001029831srt:ScenarioPreviouslyReportedMember2019-06-302019-09-280001029831srt:ScenarioPreviouslyReportedMember2020-03-2800010298312020-03-280001029831srt:ScenarioPreviouslyReportedMember2020-06-2700010298312020-06-270001029831srt:ScenarioPreviouslyReportedMember2020-09-2600010298312020-09-260001029831srt:ScenarioPreviouslyReportedMember2019-03-3000010298312019-03-300001029831srt:ScenarioPreviouslyReportedMember2019-06-2900010298312019-06-290001029831srt:ScenarioPreviouslyReportedMember2019-09-2800010298312019-09-280001029831us-gaap:CustomerConcentrationRiskMemberhlm:TwoLargestCustomersMemberus-gaap:SalesRevenueNetMember2019-12-292020-12-260001029831us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberhlm:TwoLargestCustomersMember2019-12-292020-12-260001029831us-gaap:CustomerConcentrationRiskMemberhlm:TwoLargestCustomersMemberus-gaap:SalesRevenueNetMember2018-12-302019-12-280001029831us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberhlm:TwoLargestCustomersMember2018-12-302019-12-280001029831us-gaap:CustomerConcentrationRiskMemberhlm:CustomerOneMemberus-gaap:SalesRevenueNetMember2019-12-292020-12-260001029831us-gaap:CustomerConcentrationRiskMemberhlm:CustomerOneMemberus-gaap:SalesRevenueNetMember2018-12-302019-12-280001029831us-gaap:CustomerConcentrationRiskMemberhlm:CustomerOneMemberus-gaap:SalesRevenueNetMember2017-12-312018-12-290001029831us-gaap:CustomerConcentrationRiskMemberhlm:CustomerTwoMemberus-gaap:SalesRevenueNetMember2019-12-292020-12-260001029831us-gaap:CustomerConcentrationRiskMemberhlm:CustomerTwoMemberus-gaap:SalesRevenueNetMember2018-12-302019-12-280001029831us-gaap:CustomerConcentrationRiskMemberhlm:CustomerTwoMemberus-gaap:SalesRevenueNetMember2017-12-312018-12-290001029831us-gaap:AllowanceForCreditLossMember2017-12-300001029831us-gaap:AllowanceForCreditLossMember2017-12-312018-12-290001029831us-gaap:AllowanceForCreditLossMember2018-12-290001029831us-gaap:AllowanceForCreditLossMember2018-12-302019-12-280001029831us-gaap:AllowanceForCreditLossMember2019-12-280001029831us-gaap:AllowanceForCreditLossMember2019-12-292020-12-260001029831us-gaap:AllowanceForCreditLossMember2020-12-26

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~THE~~For ~~SECURITIES~~the ~~EXCHANGE~~fiscal ~~ACT~~year OFended ~~1934~~December 26, 2020

~~For~~ ☐ ~~the~~TRANSITION ~~fiscal~~REPORT ~~year~~PURSUANT ~~ended~~TO ~~December~~SECTION ~~28,~~13 ~~2019~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _____ TO _____

Commission file number 1-13293

The Hillman Companies, Inc.

(Exact name of registrant as specified in its charter)


Delaware			23-2874736
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

10590 Hamilton Avenue

45231

Cincinnati

Ohio

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (513) 851-4900

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class			Name of Each Exchange on Which Registered
11.6% Junior Subordinated Debentures			None
Preferred Securities Guaranty			None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act. (Check one):


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒ (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On March 273, ~~2020~~2021, 5,000 shares of the Registrant's common stock were issued and outstanding and 4,217,724 Trust Preferred Securities were issued and outstanding by the Hillman Group Capital Trust. The Trust Preferred Securities trade on the NYSE Amex under the symbol "HLM.Pr." The aggregate market value of the Trust Preferred Securities held by non-affiliates at June 30, ~~2019~~2020 was $~~143~~110,~~613~~082,~~502~~596.

PART I

Forward-Looking Statements

Certain disclosures related to acquisitions, refinancing, capital expenditures, resolution of pending litigation, and realization of deferred tax assets contained in this annual report involve substantial risks and uncertainties and may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements include statements regarding our future financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” “project,” or the negative of such terms or other similar expressions.

These forward-looking statements are not historical facts, but rather are based on our current expectations, assumptions, and projections about future events. Although we believe that the expectations, assumptions, and projections on which these forward-looking statements are based are reasonable, they nonetheless could prove to be inaccurate, and as a result, the forward-looking statements based on those expectations, assumptions, and projections also could be inaccurate. Forward-looking statements are not guarantees of future performance. Instead, forward-looking statements are subject to known and unknown risks, uncertainties, and assumptions that may cause our strategy, planning, actual results, levels of activity, performance, or achievements to be materially different from any strategy, planning, future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Actual results could differ materially from those currently anticipated as a result of a number of factors, including the risks and uncertainties discussed under the caption “Risk Factors” set forth in Item 1A of this annual report. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward-looking statements.

All forward-looking statements attributable to the Company, as defined herein, or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this annual report; they should not be regarded as a representation by the Company or any other individual. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed in this annual report might not occur or might be materially different from those discussed.

Item 1 – Business.

General

The Hillman Companies, Inc. and its wholly-owned subsidiaries (collectively, “Hillman” or “Company”) are one of the largest providers of hardware-related products and related merchandising services to retail markets in North America. Our principal business is operated through our wholly-owned subsidiary, The Hillman Group, Inc. and its wholly-owned subsidiaries (collectively, “Hillman Group”), which had net sales of approximately $1,~~214~~368.43 million in ~~2019~~2020. Hillman Group sells its products to hardware stores, home centers, mass merchants, pet supply stores, and other retail outlets principally in the United States, Canada, Mexico, Latin America, and the Caribbean. Product lines include thousands of small parts such as fasteners and related hardware items; threaded rod and metal shapes; keys, key duplication systems, and accessories; builder's hardware; personal protective equipment, such as gloves and eye-wear; and identification items, such as tags and letters, numbers, and signs. We support product sales with services that include design and installation of merchandising systems, ~~and~~ maintenance of appropriate in-store inventory levels, and break-fix for our robotics kiosks.

Our headquarters are located at 10590 Hamilton Avenue, Cincinnati, Ohio. We maintain a website at www.hillmangroup.com. Information contained or linked on our website is not incorporated by reference into this annual report and should not be considered a part of this annual report.

On August 16, 2019, we acquired the assets of Sharp Systems, LLC ("Resharp"), a California-based innovative developer of automated knife sharpening systems, for a cash payment of $3.0 million and contingent consideration valued at $18.1 million. The maximum payout for the contingent consideration is $25.0 million plus 1.8% of net knife-sharpening revenues for five years after the $25.0 million is fully paid. Resharp has business operations in the United States and its financial results reside within our ~~Consumer~~Robotics ~~Connected~~and Digital Solutions segment.

On July 1, 2019, the Company acquired the assets of West Coast Washers, Inc for a total purchase price of $3.1 million. The financial results of West Coast Washers, Inc. reside within the Company's ~~Fastening,~~ Hardware, and ~~Personal~~ Protective Solutions segment.

On October 1, 2018, we completed the acquisition of NB Parent Company, Inc. and its affiliated companies including Big Time Products, LLC and Rooster Products International, Inc. (collectively, "Big Time"), a leading provider of Personal Protective Solutions and work gear products for a purchase price of approximately $348.8 million. With the addition of Big Time, Hillman’s product portfolio now spans the hardware, automotive, garden, and cleaning categories and includes Big Time’s industry-leading brands such as Firm Grip, AWP, McGuire-Nicholas, Grease Monkey, and Gorilla Grip, which are sold throughout retailers in North America. Big Time has operations in the United States, Canada, and Mexico and is included in our ~~Fastening,~~ Hardware, and ~~Personal~~ Protective Solutions segment.

On August 10, 2018, we completed the acquisition of Minute Key Holdings, Inc. (“MinuteKey”), an innovative leader in self-service key duplicating kiosks, for a total consideration reflecting an enterprise value of $156.3 million. We believe that the combination of MinuteKey's self service kiosk business with Hillman's existing key duplication platform will create additional growth opportunities. MinuteKey has operations in the United States and Canada and is included in our ~~Consumer~~Robotics ~~Connected~~and Digital Solutions segment.

OnSubsequent ~~November~~to 8our year end, ~~2017~~on January 24, we2021, ~~entered~~the ~~into~~Company’s anparent, ~~Asset~~HMan ~~Purchase~~Group ~~Agreement~~Holdings, ~~with~~Inc., ~~Hargis~~and ~~Industries~~Landcadia Holdings III, LPInc. ~~doing~~("Landcadia"), ~~business~~a asspecial STpurpose ~~Fastening~~acquisition ~~Systems~~company ("~~STFS~~SPAC") ~~and~~entered ~~other~~into ~~related~~an ~~parties~~agreement ~~pursuant~~("Merger toAgreement") ~~which~~whereby ~~Hillman~~the ~~acquired~~Parent ~~substantially~~would ~~all~~become ofa ~~the~~wholly ~~assets,~~owned ~~and~~subsidiary ~~assumed~~of ~~certain~~Landcadia ~~liabilities,~~for the consideration of ~~STFS~~$911.3 ~~STFS,~~million ~~which~~upon isapproval ~~located~~of inthe ~~Tyler,~~Landcadia ~~Texas,~~shareholders ~~specializes~~shareholders and will be accounted for as a reverse acquisition resulting in ~~manufacturing~~a ~~and~~recapitalization ~~distributing~~of ~~threaded~~HMan ~~self~~Group Holdings. Consideration would be a combination of roll-~~drilling~~over ~~fasteners,~~equity ~~foam~~by ~~closure~~current ~~strips~~Company shareholders, ~~and~~new ~~other~~share ~~accessories~~purchases toby ~~the~~Landcadia ~~steel-frame,~~SPAC ~~post-frame~~participants, cash from a new credit agreement and ~~residential~~refinancing ~~building~~of ~~markets.~~existing ~~Pursuant~~credit tofacilities of the ~~terms~~Company. A full description of the ~~Agreement,~~proposed weacquisition ~~paid~~terms amay ~~cash~~be ~~purchase~~found ~~price~~in ofthe ~~approximately $47.~~Landcadia Proxy Statement dated February 3, ~~million. The~~2021 ~~STFS~~(the ~~business~~“Proxy”) isfiled ~~included~~with inthe ~~our~~United ~~Fastening,~~States ~~Hardware,~~Securities and ~~Personal~~Exchange ~~Protective~~Commission ~~Solutions~~(“SEC”), ~~segment~~which is available on www.sec.gov.

Hillman Group

We are comprised of three separate operating business segments: (1) ~~Fastening,~~ Hardware, and ~~Personal~~ Protective Solutions, (2) ~~Consumer~~Robotics ~~Connected~~and Digital Solutions, and (3) Canada.

In connection with the restructuring, and to better support the review of our results, we have revised the classification of certain product categories and associated costs within our operating segment reporting structure. In the fourth quarter of 2019, we moved from a geographic segment structure to a hybrid product based and geographic structure. This change aligns the reportable segments with the information reviewed by our chief operating decision maker. Concurrent with this change, the Company has revised prior period segment information to be consistent with the current period presentation. There was no impact on previously reported consolidated revenues, total operating expenditures, operating income or net income as a result of these changes.

We provide products such as fasteners and related hardware items; threaded rod and metal shapes; keys, key duplication systems, and accessories; builder's hardware; personal protective equipment, such as gloves and eye-wear; and identification items, such as tags and letters, numbers, and signs, to retail outlets, primarily hardware stores, home centers and mass merchants, pet supply stores, grocery stores, and drug stores. We complement our extensive product selection with regular retailer visits by our field sales and service organization.

We market and distribute a wide variety of stock keeping units (“SKUs”) of small, hard-to-find and hard-to-manage hardware items. We function as a category manager for retailers and support these products with in-store service, high order fill rates, and rapid delivery of products sold. Sales and service representatives regularly visit retail outlets to review stock levels, reorder items in need of replacement, and interact with the store management to offer new product and merchandising ideas. Thousands of items can be actively managed with the retailer experiencing a substantial reduction of in-store labor costs and replenishment paperwork. Service representatives also assist in organizing the products in a consumer-friendly manner. We complement our broad range of products with merchandising services such as displays, product identification stickers, retail price labels, store rack and drawer systems, assistance in rack positioning and store layout, and inventory restocking services. We regularly refresh retailers' displays with new products and package designs utilizing color-coding to simplify the shopping experience for consumers and improve the attractiveness of individual store displays.

3We operate from 22 strategically located distribution centers in North America. Our main distribution centers utilize state-of-the-art warehouse management systems (“WMS”) to ship customer orders within 48 hours while achieving a very high order fill rate. We also supplement our operations with third-party logistics providers to warehouse and ship customer orders in the certain areas.

We operate from 25 strategically located distribution centers in North America. Our main distribution centers utilize state-of-the-art warehouse management systems (“WMS”) to ship customer orders within 48 hours while achieving a very high order fill rate. We also supplement our operations with third-party logistics providers to warehouse and ship customer orders in the certain areas.

Products and Suppliers

Our product strategy concentrates on providing total project solutions using the latest technology for common and unique home improvement projects. Our portfolio provides retailers the assurance that their shoppers can find the right product at the right price within an 'easy to shop' environment.

We currently manage a worldwide supply chain comprised of a large number of vendors, the largest of which accounted for approximately 24.89% of the Company's annual purchases and the top five of which accounted for approximately 1115.67% of its annual purchases. Our vendor quality control procedures include on-site evaluations and frequent product testing. Vendors are also evaluated based on delivery performance and the accuracy of their shipments.

~~Fastening, Hardware, and Personal Protective Solutions~~3

~~Fastening~~ Hardware and ~~Hardware~~Protective Solutions

~~Fastening~~Hardware and ~~hardware~~protective ~~remains~~solutions ~~the~~segment ~~core~~includes ofa ~~our~~wide ~~business.~~selection ~~The~~of product ~~line encompasses one of the largest selections among suppliers servicing the retail hardware industry. Fastening solutions consist of three~~ categories: ~~core~~including fasteners,; ~~construction~~builders ~~fasteners,~~hardware; and anchors. Core fasteners include nuts, bolts, screws, washers, and specialty items. Construction fasteners include deck, drywall, metal screws, and both hand driven and collated nails. Anchors include hollow wall ~~and~~hanging; ~~solid wall items such as plastic anchors, toggle bolts, concrete screws, and wedge anchors. Hardware consists of builders’ hardware,~~ threaded rod and metal shapes,; ~~picture hanging, home décor, and~~ letters, numbers, and signs (“"LNS”"); personal protection products; and work gear.

~~There~~Our ~~are~~fastener ~~several~~business ~~brands~~consists ~~within~~of ~~the~~three ~~Fastening~~categories: ~~product~~core ~~category.~~fasteners, ~~The~~construction ~~core~~fasteners, ~~fastener~~and ~~line~~anchors, issold ~~marketed~~ under ~~the~~a variety of brands including Hillman, ~~name~~FasnTite, ~~for~~DeckPlus, ~~its~~and ~~brand~~PowerPro. ~~Construction~~Core fasteners ~~have~~include ~~several~~nuts, ~~brands~~bolts, ~~including: PowerPro™~~screws, ~~Deckplus™~~washers, and ~~Fas-n-Tite™~~specialty items. ~~Our~~Construction ~~premium~~fasteners ~~line~~include ofdeck, ~~PowerPro™~~drywall, ~~products~~metal ~~are~~screws, ~~specifically~~and ~~engineered~~both ~~for~~hand ~~ultimate~~driven ~~performance~~and ~~with~~collated ~~the~~nails. ~~most~~Anchors ~~advanced~~include ~~materials,~~hollow ~~coatings,~~wall and ~~designs~~solid ~~and~~wall ~~have~~items ~~earned~~such ~~the~~as ~~reputation~~plastic ~~and~~anchors, ~~trust~~toggle ofbolts, ~~both~~concrete ~~professionals~~screws, and ~~homeowners~~wedge ~~through its availability in retailers nationwide~~anchors.

~~The builder~~Builder's hardware ~~category~~ includes a variety of common household items such as coat hooks, door stops, hinges, gate latches, and decorative hardware. We market the builder's hardware products under the Hardware Essentials™® brand and provide the retailer with innovation in both product and merchandising solutions. The Hardware Essentials™® program utilizes modular packaging, color coding, and integrated merchandising to simplify the shopping experience for consumers. Colorful signs, packaging, and installation instructions guide the consumer quickly and easily to the correct product location in store while digital content including pictures and videos assist the on-line journey. Hardware Essentials™® provides retailers and consumers decorative upgrade opportunities through contemporary finishes and designs.

The wall hanging category includes traditional picture hanging hardware, primarily marketed under the Ook® and Hillman brands, and the High & Mighty™® series of tool-free wall hangers, decorative hooks and floating shelves that was launched in 2017.

We are the leading supplier of metal shapes and threaded rod in the retail market. The SteelWorks™® threaded rod product includes hot and cold rolled rod, both weldable and plated, as well as a complete offering of All-Thread rod in galvanized steel, stainless steel, and brass. The SteelWorks™® program is carried by many top retailers, including Lowe's and Menard's, and through cooperatives such as Ace Hardware. In addition, we are the primary supplier of metal shapes to many wholesalers throughout the country.

Letters, numbers, and signs (“LNS”) includes product lines that target both the homeowner and commercial user. Product lines within this category include individual and/or packaged letters, numbers, signs, safety related products (e.g. 911 signs), driveway markers, and a diversity of sign accessories, such as sign frames.

OnOur ~~November~~expansive 8,glove ~~2017,~~category wecovers ~~acquired~~many ~~STFS. STFS,~~uses ~~which~~for isDIYer ~~located~~around inthe ~~Tyler,~~house ~~Texas,~~and ~~specializes~~for inthe ~~manufacturing~~pro ~~and~~at ~~distributing~~the ~~threaded~~job ~~self-drilling~~site. We ~~fasteners,~~sell ~~foam~~a ~~closure~~full ~~strips,~~assortment ~~and~~of ~~other~~work ~~accessories~~gloves tounder the ~~steel-frame~~Firm Grip®, ~~post-frame~~True Grip®, and ~~residential~~Gorilla ~~building~~Grip ~~markets.~~brands, ~~STFS~~automotive ~~added~~gloves ~~$51.4~~including ~~million~~Grease Monkey®, ~~$47.2~~gardening ~~million~~gloves including Digz®, as well as cleaning and $5all-purpose gloves.9 As ~~million~~a incategory ~~revenue~~leader ~~for~~in ~~the~~work ~~years~~gloves ~~ended~~our ~~December 28,~~portfolio ~~2019,~~is ~~December 29,~~founded ~~2018,~~on design and ~~December 30,~~consumer ~~2017,~~driven ~~respectively~~innovation. Our products can be found at leading retailers across North America.

~~Fastening~~Our ~~and~~work ~~hardware~~gear ~~solutions~~category ~~generated~~consists ~~approximately~~of ~~$607.2~~tool ~~million~~storage, knee pads, clothing, and other accessories sold under variety of ~~revenues~~brands inincluding ~~2019~~AWP®, asMcGuire ~~compared~~Nicholas®, toand ~~$581~~Firm Grip®.3 The ~~million~~portfolio inoffers ~~2018~~a ~~and~~“one ~~$529.0~~stop ~~million~~shop” infor ~~2017~~leading retailers with an expansive assortment to meet the needs of both the pro and DIYer.

Our safety category includes face masks, safety vests, and sanitizing wipes and sprays sold under a variety of brands including Firm Grip®, AWP®, and Premium Defense®. With our focus on innovative materials and intuitive design, along with industry trends, this is a growth category for Hardware and Protective Solutions.

Hardware and protective solutions generated approximately $1,024.4 million, $853.0 million and $636.7 million of revenues in the years ended December 26, 2020, December 28, 2019, and December 29, 2018, respectively.

Robotics and Digital Solutions

Our Robotics and Digital Solutions segment consists primarily of software-enabled robotic key duplication and engraving solutions that are tailored to the unique needs of the consumer. We provide our offerings in retail and other high-traffic locations providing customized licensed and unlicensed key and engraving products targeted to consumers in the respective locations. Our offerings include self-service robotic engraving and robotic self service key duplication kiosks, as well as store associate assisted key duplication kiosks together with related software and systems, keys and key accessories sold in proximity to the kiosks. Our services include product and category management, merchandising services, and access to our proprietary robotic key duplicating and engraving software platforms and equipment.

~~Personal~~We ~~Protective~~design ~~Solutions~~proprietary software and engineer, design and manufacture our proprietary equipment in our Boulder, Colorado and Tempe, Arizona facilities, which forms the cornerstone for our key duplication business. Our key duplication system is offered in various retail channels including mass merchants, home centers, automotive parts retailers, franchise and independent hardware stores, and grocery/drug chains.We believe we provide the most complete key duplication systems in the industry, through our unique combination of self-service kiosk technology and store associate assisted duplication systems. Our self- service solutions are driven by our MinuteKey technology, while store associate assisted duplication currently uses the state of the art KeyKrafter equipment and other legacy duplication machines depending on the retail channel to fit that channel’s specific needs.

In ~~October~~ 2018, we completed the acquisition of ~~NB Parent Company~~MinuteKey, ~~Inc.~~the ~~and~~world’s ~~its~~first ~~affiliated~~self-service ~~companies~~robotic ~~including~~key ~~Big~~duplication ~~Time Products, LLC and Rooster Products International, Inc~~machine. ~~(collectively,~~The ~~"Big~~accuracy ~~Time"),~~of arobotics ~~leading~~technology ~~provider~~put ofto ~~personal~~work ~~protective~~in ~~and~~an ~~work~~innovative ~~gear~~way ~~products.~~makes ~~With~~MinuteKey ~~the~~machines ~~addition~~easy ofto ~~Big~~use, ~~Time~~convenient, ~~our~~fast ~~product~~and ~~portfolio~~highly ~~now~~reliable. ~~spans~~We ~~the~~utilize ~~hardware,~~a ~~automotive,~~propriety ~~garden,~~network ~~and~~integration ~~cleaning~~software ~~categories~~with our ~~and~~MinuteKey ~~includes~~kiosks ~~Big~~to ~~Time’s~~maintain ~~industry-leading~~high ~~brands~~levels ~~such~~of asmachine ~~Firm Grip, AWP, McGuire~~up-~~Nicholas,~~time ~~Grease~~and ~~Monkey,~~ensure ~~and~~machines ~~Gorilla~~have ~~Grip,~~the ~~which~~optimal ~~are~~mix ~~sold~~of ~~throughout~~key ~~retailers~~types inavailable ~~North~~for ~~America~~duplication. ~~Big~~The ~~Time’s~~kiosk ~~high-quality~~is ~~products~~completely ~~like~~self-service ~~gloves,~~and ~~wearable~~has ~~tool~~a ~~storage,~~100% ~~jobsite~~customer ~~storage~~satisfaction ~~and~~guarantee. ~~kneepads,~~We asmanufacture ~~well~~and assupport ~~outstanding~~the ~~customer~~Minute ~~service~~Key ~~and~~kiosk ~~award-winning~~out ~~packaging~~of ~~have~~our ~~had~~Boulder, aColorado ~~dramatic~~and ~~impact~~Tempe, onArizona ~~the industry~~facilities.

~~Personal~~The ~~protective~~Hillman ~~solutions~~KeyKrafter® ~~generated~~is ~~approximately~~our ~~$245~~most popular, innovative, and effective store associate assisted key duplication kiosk.8 ~~million~~It provides significant reduction in duplication time while increasing accuracy and ~~$55~~ease of use for unskilled store associates.4 ~~million~~Additionally, with the KeyKrafter® solution, the capability exists for consumers to securely store and retrieve digital back-ups of ~~revenues~~their inkey without the ~~years~~original ~~ended~~through ~~December 28~~the revolutionary Hillman KeyHero® Technology. Our Precision Laser Key System™ system uses a digital optical camera, ~~2019~~lasers, and ~~December 29~~proprietary software to scan a customer’s key. The system identifies the key and retrieves the key’s specifications, ~~2018~~including the appropriate blank and cutting pattern, ~~respectively~~from a comprehensive database. ~~There~~This ~~were~~technology noautomates ~~sales~~nearly every aspect of ~~personal~~key ~~protective~~duplication ~~solutions~~and ~~prior~~provides the ability for every store associate to ~~the~~cut ~~Big~~a ~~Time~~key ~~acquisition~~accurately. In the automotive key space, we offer the SmartBox Automotive Key Programmer which is a tool to quickly and easily pair transponder keys, remotes, and smart keys.

~~Consumer~~We ~~Connected~~retain ~~Solutions~~ownership of the key duplicating equipment and market and sell keys and key accessories. Our proprietary key offering features the universal blank which uses a “universal” keyway to replace up to five original equipment keys. This innovative system allows a retailer to duplicate 99% of the key market while stocking less than 100 SKUs. We continually refresh the retailer’s key offerings by introducing decorated and licensed keys and accessories. Our key offering features decorative themes of art and popular licenses such as NFL, Disney, Breast Cancer Awareness, and Marvel to increase personalization, purchase frequency and average transaction value per key. We also market a successful line of decorative and licensed lanyards and other key accessories.

~~Our~~All ~~Consumer Connected Solutions segment consists primarily~~ of key duplication and engraving solutions that are tailored to the unique need of the consumer. We provide these offerings in retail and other high-traffic locations offering customized licensed and unlicensed products targeted to consumers in the respective locations. It also includes our ~~associate-assisted~~ key duplication systems ~~and~~are ~~key~~supported ~~accessories.~~by ~~Our~~a ~~programs~~dedicated ~~include~~in ~~product~~store ~~and~~kiosk ~~category~~sales ~~management, merchandising services,~~ and ~~access~~service ~~to our proprietary key duplicating equipment~~team.

~~Keys~~In our engraving business, we supply a variety of innovative options of consumer-operated robotic kiosks such as Quick-Tag®, TagWorks®, and ~~Key~~FIDO® ~~Accessories~~for engraving specialty items such as pet identification tags, luggage tags, and other engraved identification tags. We have developed unique engraving systems leveraging state-of- the-art technologies to provide a customized solution for mass merchant, pet supply retailers, and other high traffic areas such as theme parks, all supported by our in store kiosk field service technicians. We design, engineer, manufacture, and assemble the engraving kiosks in our Boulder, Colorado and Tempe, Arizona facilities.

WeOur ~~design~~engraving ~~and~~business ~~manufacture~~focuses ~~proprietary~~on ~~equipment~~the ~~which~~growing ~~forms~~consumer ~~the~~spending ~~cornerstone~~trends ~~for~~surrounding ~~our~~personalized ~~key~~and ~~duplication~~pet ~~business~~identification. ~~Our~~Innovation ~~key~~has ~~duplication~~played ~~system~~a ismajor ~~offered~~role in ~~various~~the ~~retail~~development ~~channels~~of ~~including~~our ~~mass~~engraving ~~merchants,~~business ~~home~~unit. ~~centers,~~From ~~automotive~~the ~~parts~~original ~~retailers,~~Quick-Tag® ~~franchise~~consumer-operated ~~and~~Kiosk ~~independent~~system ~~(“F&I”)~~to ~~hardware~~the ~~stores~~proprietary laser system of TagWorks®, ~~and~~we ~~grocery/drug~~continue ~~chains~~to lead the industry with consumer-friendly engraving solutions. WeAs ~~design,~~in ~~manufacture~~our key business, ~~and~~we ~~assemble~~retain ownership of the key ~~duplication~~engraving ~~kiosks~~equipment inand ~~our~~market ~~Tempe,~~and ~~Arizona~~sell ~~facility~~blank tags.

~~This~~We ~~proprietary~~have ~~equipment~~continued ~~for key duplication varies by retail channel~~ to ~~fit~~build ~~that~~out ~~channel’s~~our ~~specific~~robotics ~~needs.~~and ~~The~~digital ~~Hillman~~solutions ~~key~~segment ~~program targets the F&I hardware retailers~~ with atwo ~~traditional~~recent ~~machine that works well in businesses with lower turnover and highly skilled employees~~acquisitions. ~~The~~In ~~Axxess~~August ~~Precision~~2019, ~~Key~~we ~~Duplication~~acquired ~~System™ continues to be~~ the ~~most~~assets ~~prevalent~~of ~~system~~Sharp ~~with approximately 8~~Systems,~~000~~ ~~programs~~LLC ~~placed~~(“Resharp”), ~~and marketed to national retailers requiring~~ a ~~high~~California-based ~~volume~~innovative ~~key~~developer ~~duplication~~of ~~program~~robotic ~~easily~~automated ~~mastered~~knife bysharpening ~~novice~~systems, ~~associates.~~for ~~Our Precision Laser Key System™ system uses~~ a ~~digital~~cash ~~optical~~payment ~~camera,~~of ~~lasers,~~$3.0 million and ~~proprietary~~contingent ~~software~~consideration tovalued ~~scan~~at a$18.1 ~~customer's key~~million. The ~~system~~maximum ~~identifies~~payout for the ~~key~~contingent ~~and~~consideration ~~retrieves~~is ~~the~~$25.0 ~~key's~~million ~~specifications,~~plus ~~including~~1.8% ~~the~~of ~~appropriate~~net ~~blank~~knife-sharpening ~~and~~revenues ~~cutting~~for ~~pattern,~~five ~~from~~years aafter ~~comprehensive~~the ~~database~~$25.0 ~~This~~million ~~technology~~is ~~automates~~fully ~~nearly~~paid. ~~every~~We ~~aspect~~expect ofto ~~key~~begin ~~duplication~~rolling ~~and~~out ~~provides~~ the ~~ability~~knife ~~for~~sharpening ~~every~~systems ~~store associate~~ to ~~cut~~customers ain ~~key~~early ~~accurately~~2021.In ~~Approximately~~February 22020,~~700~~ ofwe ~~these~~acquired ~~key~~the ~~duplicating~~assets ~~systems~~of ~~are~~Instafob, inLLC ~~service~~(“Instafob”), ~~throughout~~a ~~North~~California-based ~~American~~innovative ~~retailers.~~developer ~~The~~of ~~Hillman~~RFID ~~KeyKrafter™~~key isduplication ~~our~~systems ~~most~~and ~~innovative~~a ~~and~~cloud ~~effective~~based ~~key~~platform, ~~duplication~~for ~~equipment.~~a Itcash ~~provides~~payment for ~~significant~~a ~~reduction~~cash inpayment ~~duplication~~of ~~time~~$800 ~~while~~and ~~increasing~~a ~~accuracy~~total ~~and~~purchase ~~ease~~price of ~~use. Additionally~~$2,618, ~~with~~which ~~the~~includes ~~KeyKrafter™ solution~~$1,818 ~~the~~in ~~capability~~contingent ~~exists for consumers to securely store~~ and ~~retrieve digital back~~non-~~ups~~contingent ofconsiderations ~~their~~that ~~key~~remain ~~without~~payable ~~the~~to ~~original though~~ the ~~revolutionary Hillman KeyHero™ smart phone application~~seller.Contingent ~~There~~consideration ~~are~~is ~~over~~based on 5~~,400~~% ~~KeyKrafter™~~of ~~programs~~the ~~placed~~net insales ~~North~~from ~~American~~2020 ~~retailers.~~through ~~Finally,~~2022 inplus ~~the~~1% ~~automotive~~of ~~key~~net ~~space,~~sales wefrom ~~offer~~2023 ~~the~~through ~~SmartBox~~2029. ~~Automotive~~We ~~Key~~expect ~~Programmer~~to ~~which~~roll isout aInstafob ~~tool~~systems to ~~quickly~~customers ~~and easily pair transponder keys, remotes, and smart keys. There are over 2,800 SmartBox programs placed~~ in ~~retailers throughout North America~~2021.

In 2018, we completed the acquisition of MinuteKey, the world's first self-service key duplication machine. The accuracy of robotics technology put to work in an innovative way makes MinuteKey machines easy to use, convenient and fast. The kiosk is completely self-service and has a 100% customer satisfaction guarantee. We have over 6,000 MinuteKey machines located in high-traffic locations of some of the largest retailers throughout North America.

We also market keys and key accessories in conjunction with our duplication systems. Our proprietary key offering features the universal blank which uses a "universal" keyway to replace up to five original equipment keys. This innovative system allows a retailer to duplicate 99% of the key market while stocking less than 100 SKUs. We continually refresh the retailer's key offering by introducing decorated and licensed keys and accessories. Our Wackey™ and Fanatix™ lines feature decorative themes of art and popular licenses such as NFL, Disney, Breast Cancer Awareness, and M&M's to increase personalization, purchase frequency and average transaction value per key. We also market a successful line of decorative and licensed lanyards.

Keys and key accessories generated approximately $185.5 million of revenues in 2019, as compared to $143.9 million in 2018 and $115.9 million in 2017.

~~Engraving~~Robotics and Digital solutions generated approximately $209.3 million, $236.1 million, and $196.0 million of revenues in the years ended December 26, 2020, December 28, 2019, and December 29, 2018, respectively.

In addition, we supply a variety of innovative options of consumer-operated vending systems such as Quick-Tag™, TagWorks™, and FIDO™ for engraving specialty items such as pet identification tags, luggage tags, and other engraved identification tags. We have developed unique engraving systems leveraging state-of-the-art technologies to provide a customized solution for mass merchant, pet supply retailers, and other high traffic areas such as theme parks. As of December 29, 2018, over 7,500 of our engraving systems are in service in retail locations which are also supported by our sales and service representatives.

Our engraving business focuses on the growing consumer spending trends surrounding personalized and pet identification. Innovation has played a major role in the development of our engraving business unit. From the original Quick-Tag™ consumer-operated vending system to the proprietary laser system of TagWorks™, we continue to lead the industry with consumer-friendly engraving solutions.

We design, manufacture, and assemble the engraving kiosks in our Tempe, Arizona facility. Engraving generated approximately $50.6 million of revenues in 2019, as compared to $52.1 million in 2018 and $55.7 million in 2017.

Canada

Our Canada segment distributes fasteners and related hardware items, threaded rod, keys, key duplicating systems, accessories, and identification items, such as tags and letters, numbers, and signs to hardware stores, home centers, mass merchants, industrial distributors, automotive aftermarket distributors, and other retail outlets and industrial Original Equipment Manufacturers (“OEMs”) in Canada. The product lines offered in our Canada segment are consistent with the product offerings detailed ~~above~~in our other segments. The Canada segment also produces made to order screws and self-locking fasteners for automotive suppliers, OEMs, and industrial distributors.

Our Canada segment generated approximately $134.6 million, $125.3 million and $141.4 million of revenues in ~~2019,~~the asyears ~~compared~~ended toDecember 26, ~~$141.4~~2020, ~~million~~December 28, in2019, ~~2018~~ and ~~$137.8~~December 29, ~~million~~2018, ~~in 2017~~respectively.

Markets and Customers

We sell our products to national accounts such as ~~Lowe's,~~ Home Depot, ~~Walmart~~Lowe’s, ~~Tractor Supply,~~ Menard'’s, PETCO, PetSmart, Tractor Supply, and ~~PETCO~~Walmart. Our status as a national supplier of proprietary products to big box retailers allows us to develop a strong market position and high barriers to entry within our product categories.

We service a wide variety of ~~F&I~~franchise and independent retail outlets. These individual dealers are typically members of the larger cooperatives, such as Ace Hardware, True Value, and Do-It-Best. We ship directly to the cooperative's retail locations and also supply many items to the cooperative's central warehouses. These central warehouses distribute to their members that do not have a requirement for Hillman's in-store service. These arrangements reduce credit risk and logistic expenses for us while also reducing central warehouse inventory and delivery costs for the cooperatives.

A typical hardware store maintains thousands of different items in inventory, many of which generate small dollar sales but large profits. It is difficult for a retailer to economically monitor all stock levels and to reorder the products from multiple vendors. This problem is compounded by the necessity of receiving small shipments of inventory at different times and stocking the goods. The failure to have these small items available will have an adverse effect on store traffic, thereby possibly denying the retailer the opportunity to sell items that generate higher dollar sales.

We sell our products to a large volume of customers, the top ~~three~~two of which accounted for approximately $~~637~~671.04 million, or approximately 5249%, of our total revenue in ~~2019~~2020. For the year ended December 2826, ~~2019~~2020, Home Depot was the single largest customer, representing approximately $~~291~~362.9 million of our total revenues,. Lowe's was the second largest at approximately $~~251~~308.35 million~~, and Walmart was the third largest at approximately $93~~.9 ~~million of our total revenue.~~ No other customer accounted for more than ~~5.0~~10% of total revenue in ~~2019~~2020. In each of the years ended December 2826, ~~2019~~2020, December 2928, ~~2018~~2019, and December 30 29, ~~2017~~2018, we derived over 10% of our total revenues from Lowe's and Home Depot which operated in each of our operating segments.

~~In 2019,~~ Hillman ~~continued~~continues to ~~expanded~~expand its B2B eCommerce platform allowing certain customers to order online through the Company’s website, www.hillmangroup.com. The B2B eCommerce platform features ~~over~~many ~~50,000~~of our items available for sale online and over ~~2,500~~thousands of customers are enrolled with the online ordering platform. We continue to support direct-to-store and direct-to-consumer fulfillment for consumers who choose to order fasteners directly from retailers' websites~~, supporting over 30,000 items that are available for sale~~.

Sales and Marketing

We believe that our primary competitive advantage is rooted in our ability to provide a greater level of customer service than our competitors. We partner with our customers to understand the unmet needs of consumers, design creative solutions, and commercialize those solutions bringing them to life in both physical and digital channels through a tight alignment between the product management, marketing communications, and channel marketing functions. We provide best in class support and customer service at every touch point for our retail ~~distribution~~ partners, and service is the hallmark of Hillman company-wide. WeThe ~~believe~~national ~~that~~accounts ~~our~~field ~~competitive~~service ~~advantage~~organization isconsists of approximately 800 employees and 70 field managers focusing on big box retailers, pet super stores, large national discount chains, and grocery stores. This organization reorders products, details store shelves, and sets up in-store promotions. Many of our ~~ability~~largest tocustomers ~~provide~~use aelectronic ~~greater~~data ~~level~~interchange of(“EDI”) ~~customer~~for ~~service~~processing ~~than~~of ~~our~~orders ~~competitors~~and invoices.

~~Service~~We isemploy what we believe to be the ~~hallmark~~largest ofdirect ~~Hillman~~sales ~~company-wide.~~force ~~The~~in ~~national~~the ~~accounts~~industry. ~~field~~The ~~service~~sales ~~organization~~force, which consists of approximately ~~650~~270 employees and 50is managed by 30 field managers, ~~focusing~~focuses on ~~big~~the ~~box~~franchise ~~retailers,~~and ~~pet~~independent ~~super~~customers. ~~stores,~~The ~~large~~depth ~~national~~of ~~discount~~the ~~chains,~~sales and ~~grocery~~service ~~stores.~~team ~~This~~enables ~~organization~~us ~~reorders~~to ~~products,~~maintain ~~details~~consistent ~~store~~call ~~shelves,~~cycles ~~and~~ensuring ~~sets~~that upall ~~in-store~~customers ~~promotions~~experience proper stock levels and inventory turns. ~~Many~~This ofteam ~~our~~also ~~largest~~prepares ~~customers~~custom ~~use~~plan-o-grams ~~electronic~~of ~~data~~displays ~~interchange~~to ~~(“EDI”)~~fit ~~for~~the ~~processing~~needs of ~~orders~~any store and ~~invoices.~~establishes

We employ what we believe to be the largest direct sales force in the industry. The sales force, which consists of approximately 250 employees and is managed by 30 field managers, focuses on the F&I customers. The depth of the sales and service team enables us to maintain consistent call cycles ensuring that all customers experience proper stock levels and inventory turns. This team also prepares custom plan-o-grams of displays to fit the needs of any store and establishes programs that meet customers' requirements for pricing, invoicing, and other needs. This group also benefits from daily internal support from our inside sales and customer service teams. On average, each sales representative is responsible for approximately 60 full service accounts that the sales representative calls on approximately every two weeks.6

~~These~~programs ~~efforts,~~that ~~coupled~~meet ~~with~~customers' ~~those~~requirements offor ~~the~~pricing, ~~marketing department~~invoicing, ~~allow~~and ~~the~~other ~~sales~~needs. ~~force~~This togroup ~~sell~~also ~~and~~benefits ~~support~~from ~~our~~daily ~~product~~internal ~~lines.~~support ~~Our~~from ~~marketing~~our ~~department~~inside ~~provides~~sales ~~support~~and ~~through~~customer ~~the~~service ~~development~~teams. ofOn ~~new products and categories~~average, each sales ~~collateral~~representative ~~material,~~is ~~promotional~~responsible ~~items,~~for ~~merchandising~~approximately ~~aids,~~60 ~~and~~full ~~custom~~service ~~signage.~~accounts ~~Marketing~~that ~~services~~the ~~such~~sales asrepresentative ~~advertising,~~calls ~~graphic~~on ~~design,~~approximately ~~and~~every ~~trade~~two ~~show~~weeks. ~~management~~These ~~are~~efforts ~~also~~allow ~~provided to~~ the sales force. ~~The~~to ~~department~~sell isand ~~organized~~support ~~along~~ our ~~three marketing competencies:~~ product ~~management, channel marketing, and marketing communications~~lines.

Competition

Our primary competitors in the national accounts marketplace for fasteners are ~~Illinois~~Primesource ~~Tool~~Building ~~Works Inc.~~Products, ~~Dorman Products~~ Inc., Midwest Fastener Corporation, ~~Primesource~~Illinois ~~Building~~Tool ~~Products,~~Works Inc., Spectrum Brands, and competition from direct import by our customers. Our national competitors for gloves and personal protective equipment include West Chester Protective Gear, PIP, Iron Clad, and MidWest Quality Gloves, Inc. Competition is ~~based~~ primarily based on sourcing and price. We believe our product innovation and and in- store merchandising service create a more compelling and ~~price~~unique experience for both the consumer and our customers. Other competitors are local and regional distributors. Competitors in the pet tag market are specialty retailers, direct mail order, and retailers with in-store mail order capability. The Quick-Tag™®, FIDO™®, and TagWorks™® systems have patent protected technology that is a major barrier to entry and helps to preserve this market segment.

The principal ~~competitors~~competitor for our ~~F&I~~franchise and independent business ~~are~~is Midwest Fastener ~~and Hy-Ko Products Company (“Hy-Ko”)~~ in the hardware store marketplace. ~~Midwest Fastener primarily focuses on fasteners, while Hy-Ko is the major competitor in LNS products and keys/key accessories.~~ The hardware outlets that purchase our products without regularly scheduled sales representative visits may also purchase products from local and regional distributors and cooperatives. We compete primarily on field service, merchandising, as well as product availability, price, and depth of product line.

Insurance Arrangements

Under our current insurance programs, commercial umbrella coverage is obtained for catastrophic exposure and aggregate losses in excess of expected claims. We retain the exposure on certain expected losses related to workers' compensation, general liability, and automobile claims. We also retain the exposure on expected losses related to health benefits of certain employees. We believe that our present insurance is adequate for our businesses. See Note 15 - Commitments and Contingencies, of Notes to Consolidated Financial Statements.

Employees

As of December 2826, ~~2019~~2020, we had 3,~~764~~780 full time and part time employees, none of which were covered by a collective bargaining agreement. In our opinion, employee relations are good.

Backlog

We do not consider the sales backlog to be a significant indicator of future performance due to the short order cycle of our business. Our sales backlog from ongoing operations was approximately $1958.23 million as of December 2826, ~~2019~~2020 and approximately $1419.92 million as of December 2928, ~~2018~~2019. We expect to realize the entire December 2826, ~~2019~~2020 backlog during fiscal ~~2020~~2021.

Where You Can Find More Information

We file quarterly reports on Form 10-Q and annual reports on Form 10-K and furnish current reports on Form 8-K and other information with the Securities and Exchange Commission (the “Commission”). The Commission also maintains an Internet site at www.sec.gov that contains quarterly, annual, and current reports, proxy and information statements, and other information regarding issuers, like Hillman, that file electronically with the Commission.

In addition, our quarterly reports on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, and all amendments to those reports, are available free of charge on our website at www.hillmangroup.com as soon as reasonably practicable after such reports are electronically filed with the Commission. We are providing the address to our website solely for the information of investors. We do not intend the address to be an active link or to incorporate the contents of the website into this report.

Item 1A - Risk Factors.

You should carefully consider the following risks. However, the risks set forth below are not the only risks that we face, and we face other risks which have not yet been identified or which are not yet otherwise predictable. If any of the following risks occur or are otherwise realized, our business, financial condition, and results of operations could be materially adversely affected. You should carefully consider the risks described below and all other information in this Annual Report on Form 10-K, including our Consolidated Financial Statements and the related Notes to Consolidated Financial Statements and schedules thereto.

Risks Relating to Our Business

~~Unfavorable~~Supply and demand for our products is influenced by general economic conditions ~~may~~and ~~adversely~~trends ~~affect~~in ~~our~~spending ~~business~~on repair and remodel home projects, ~~results~~new home construction, and personal protective equipment. Adverse trends in, among other things, the general health of ~~operations~~the economy, ~~financial~~consumer ~~condition~~confidence, interest rates, repair and ~~cash~~remodel ~~flows~~home projects, new home construction activity, commercial construction activity, and the use of personal protective equipment could adversely affect our business.

~~Our~~Demand ~~business~~for our products is impacted by general economic conditions in North American and other international markets including, ~~particularly~~without limitation, inflation, recession, instability in financial or credit markets, the Ulevel of consumer debt, interest rates, discretionary spending and the ability of our customers to obtain credit.S. ~~retail~~We ~~markets~~are ~~including~~particularly ~~hardware~~impacted ~~stores~~by spending trends in existing home sales, new home ~~centers~~construction activity, ~~mass~~home ~~merchants~~repair and remodel activity, commercial construction and ~~other~~demand ~~retailers~~for personal protective equipment including masks and cleaning supplies. ~~The~~While ~~current~~we believe consumer preferences have increased spending on the home and ~~future~~personal ~~economic~~protective ~~conditions~~equipment, the level of spending could decrease in the Ufuture.S. ~~and~~Our ~~internationally~~customers, ~~including~~suppliers, ~~without~~and ~~limitation,~~other parties with whom we do business are also impacted by the ~~level~~foregoing ofconditions ~~consumer~~and ~~debt~~adverse changes may result in financial difficulties leading to restructurings, ~~higher~~bankruptcies, ~~interest~~liquidations, ~~rates~~and other unfavorable events for our customers, suppliers, and other service providers. Adverse trends in any of the ~~ability~~foregoing factors could reduce our sales, adversely impact the mix of our ~~customers~~sales toor ~~obtain~~increase ~~credit,~~our ~~may~~costs ~~cause~~which could have a ~~continued~~material oradverse ~~further~~effect ~~decline~~on inour business, financial condition and ~~consumer~~results ~~spending~~of operations.

Adverse changes in economic conditions, including inflation, recession, or instability in the financial markets or credit markets may either lower demand for our products or increase our operational costs, or both. Such conditions may also materially impact our customers, suppliers, and other parties with whom we do business and may result in financial difficulties leading to restructurings, bankruptcies, liquidations, and other unfavorable events for our customers, suppliers, and other service providers. Our revenue will be adversely affected if demand for our products declines. The ~~impact~~COVID-19 ofpandemic ~~unfavorable economic conditions may also impair the ability of our customers to pay for products they have purchased and~~ could have a material adverse effect on our ~~results of operations~~business, financial condition, and results of operations.

In December 2019, ~~an outbreak of~~ a ~~novel~~ strain of coronavirus, ~~("COVID-19")~~now ~~originated~~known inas ~~Wuhan~~COVID-19, ~~China,~~was ~~and~~reported ~~has since spread~~ to ahave ~~number~~surfaced ofin ~~other countries~~Wuhan, ~~including the United States~~China. OnSince ~~March~~that 11time, ~~2020,~~ the ~~World~~widespread ~~Health~~and ~~Organization~~sustained ~~characterized COVID-19~~transmission ~~as a pandemic. While all~~ of ~~our~~the ~~operations~~virus ~~are~~has ~~located~~reached ~~in North America, we participate in a~~ global ~~supply chain, and the existence of a worldwide~~ pandemic ~~and~~status. ~~the~~In ~~reactions of governments around the world in~~ response to ~~COVID-19~~ ~~to regulate~~ the ~~flow~~pandemic, ofmany ~~labor~~national and ~~products~~international ~~may~~health ~~impact~~agencies ~~our~~have ~~ability~~recommended, toand ~~conduct~~many ~~normal~~countries ~~business~~and ~~operations~~state, ~~which~~provincial ~~could adversely affect our results of operations~~ and ~~liquidity.~~local Ifgovernments wehave ~~need~~implemented, tovarious ~~close~~measures, ~~any~~including oftravel ~~our~~bans ~~facilities~~and ~~or a critical number of our employees become too ill to work~~restrictions, ~~our~~limitations ~~distribution~~on ~~network~~public ~~could~~and beprivate ~~materially adversely affected in a rapid manner. Similarly~~gatherings, ~~if our customers experience adverse~~ business ~~consequences~~closures ~~due~~or ~~to COVID-19,~~operating ~~demand for our products could also be materially adversely affected in a rapid manner. Global health concerns~~restrictions, ~~such as COVID-19, could also result in~~ social, ~~economic~~distancing, and ~~labor instability~~ shelter-in-place ~~the countries and localities in which we, our suppliers, and our customers operate~~orders. ~~Any of these uncertainties could have a material adverse effect on our business, financial condition or results of operations.~~

WeGiven ~~operate~~the inongoing aand ~~highly~~dynamic ~~competitive~~nature ~~industry~~of the COVID-19 virus and the worldwide response related thereto, ~~which~~it ~~may~~is ~~have~~difficult ato ~~material~~predict ~~adverse~~the ~~effect~~full impact of the ongoing COVID-19 pandemic on our business. Although the reported cases of COVID-19 have decreased in certain regions of the world, ~~financial~~they ~~condition~~have continued to increase in others, particularly following the 2020 holiday season, including the United States and ~~results~~other ofregions ~~operations~~in which we operate, and it is uncertain when the pandemic or its effects will subside.

~~The~~We ~~retail~~could ~~industry~~experience isfuture ~~highly~~reductions ~~competitive,~~in ~~with~~demand ~~the~~for ~~principal~~our ~~methods~~products ofdepending ~~competition~~on ~~being~~the ~~product~~future ~~innovation,~~course ~~price, quality~~ of ~~service, quality of products, product availability and timeliness, credit terms, and~~ the ~~provision~~pandemic ~~of value-added services, such as merchandising design, in-store service,~~ and ~~inventory~~related ~~management.~~actions Wetaken ~~encounter~~to ~~competition~~curb ~~from~~its ~~a large number of regional~~ spread.

The increased demand for imported goods driven by a shift in consumer spending has also stressed the global supply chain from factory production capacity to transportation availability. The impact of a continued COVID-19 outbreak or sustained measures taken to limit or contain the outbreak could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our suppliers could fail to deliver product in a timely manner as a result of disruption to the global supply chain due to the ongoing COVID-19 pandemic. If such failures occur, we may be unable to provide products when requested by our customers. Our business could be substantially disrupted if we were required to, or chose to, replace the products from one or more major suppliers with products or services from another source, especially if the replacement became necessary on short notice. Any such disruption could increase our costs, decrease our operating efficiencies, and have a material adverse effect on our business, results of operations, and financial condition.

Demand for our personal protective products could exceed global supply capacity thereby causing increased costs and limited availability.

~~and~~The ~~national~~extent ~~distributors,~~to ~~some of~~ which ~~have~~the ~~greater~~ongoing ~~financial~~COVID-19 ~~resources~~pandemic ~~than~~impacts us ~~and~~will ~~may~~depend ~~offer~~on anumerous ~~greater~~evolving ~~variety~~factors ofand ~~products.~~future Ifdevelopments ~~these~~that ~~competitors~~we are ~~successful,~~not ~~our~~able ~~business,~~to ~~financial condition~~predict, ~~and results of operations may be materially adversely affected.~~including:

•the duration of the pandemic, including the ability of governments and health care providers to timely distribute available vaccines and the efficacy of such vaccines;

•governmental, business and other actions (which could include limitations on our operations or mandates to provide products or services) taken to limit the reach of the virus and the impact of the pandemic;

•the impact on our supply chain;

•the impact on our contracts with customers and suppliers, including potential disputes over whether COVID-19 constitutes a force majeure event;

•the impact of the pandemic on worldwide economic activity;

•the health of and the effect on our workforce and our ability to meet the staffing needs of our critical functions, particularly if members of our work force are infected with COVID-19, quarantined as a result of exposure to COVID-19 or unable to work remotely in areas subject to shelter-in-place orders;

•the health and effect on our distribution network staff, if we need to close any of our facilities or a critical number of our employees become too ill to work;

•any impairment in value of our tangible or intangible assets that could be recorded as a result of a weaker economic conditions; and

•the potential effects on our internal controls including those over financial reporting as a result of changes in working environments such as shelter-in-place and similar orders that are applicable to our team members and business partners, among others.

We operate in a highly competitive industry, which may have a material adverse effect on our business, financial condition, and results of operations.

The retail industry is highly competitive, with the principal methods of competition being product innovation, price, quality of service, quality of products, product availability and timeliness, credit terms, and the provision of value-added services, such as merchandising design, in-store service, and inventory management. We encounter competition from a large number of regional and national distributors which could adversely affect our business, financial condition, and results of operations.

To compete successfully, we must develop and commercialize a continuing stream of innovative new products that create consumer demand.

Our long-term success in the current competitive environment depends on our ability to develop and commercialize a continuing stream of innovative new products, including those in our new mass merchant fastener program, which create and maintain consumer demand. We also face the risk that our competitors will introduce innovative new products that compete with our products. Our strategy includes increased investment in new product development and continued focus on innovation. There are, nevertheless, numerous uncertainties inherent in successfully developing and commercializing innovative new products on a continuing basis, and new product launches may not provide expected growth results.

Our business may be adversely affected by seasonality.

In general, we have experienced seasonal fluctuations in sales and operating results from quarter to quarter. Typically, the first calendar quarter is the weakest due to the effect of weather on home projects and the construction industry. If adverse weather conditions persist on a regional or national basis into the second or other calendar quarters, our business, financial condition, and results of operations may be materially adversely affected.

Because our business is working capital intensive, we rely on our ability to manage our product purchasing and customer credit policies.

Our operations are working capital intensive, and our inventories, accounts receivable and accounts payable are significant components of our net asset base. We manage our inventories and accounts payable through our purchasing policies and our accounts receivable through our customer credit policies. If we fail to adequately manage our product purchasing or customer credit policies, our working capital and financial condition may be adversely affected.

We are subject to inventory management risks: insufficient inventory may result in increased costs, lost sales and lost customers, while excess inventory may increase our costs.

We balance the need to maintain inventory levels that are sufficient to maintain superior customer fulfillment levels against the

risk and financial costs of carrying excess inventory levels. In order to successfully manage our inventories, we must estimate demand from our customers at the product level and timely purchase products in quantities that substantially correspond to that demand. If we overestimate demand and purchase too much of a particular product, we could have excess inventory handling costs, distribution center capacity constraints and inventory that we cannot sell profitably. In addition, we may have to write down such inventory if we are unable to sell it for its recorded value. By contrast, if we underestimate demand and purchase insufficient quantities of a product, and/or do not maintain enough inventory of a product we may not be able to fulfill customer orders on a timely basis which could result in fines, the loss of sales and ultimately loss of customers for those products as they turn to our competitors. Our business, financial condition and results of operations could suffer a material adverse effect if either or both of these situations occur frequently or in large volumes.

We have substantial fixed costs and, as a result, our operating income is sensitive to changes in our net sales.

A significant portion of our expenses are fixed costs (including personnel), which do not fluctuate with net sales. Consequently, a percentage decline in our net sales could have a greater percentage effect on our operating income if we do not act to reduce personnel or take other cost reduction actions. Any decline in our net sales would cause our profitability to be adversely affected.

Large customer concentration and the inability to penetrate new channels of distribution could adversely affect our business.

Our ~~three~~two largest customers constituted approximately $~~637~~671.04 million of net sales and $3754.27 million of the year-end accounts receivable balance for ~~2019~~2020. Each of these customers is a big box chain store. Our results of operations depend greatly on our ability to maintain existing relationships and arrangements with these big box chain stores. To the extent that the big box chain stores are materially adversely impacted by the changing retail landscape, this could have a negative effect on our results of operations. These ~~The~~two ~~loss~~customers ofhave ~~one~~been key components of ~~these~~our ~~customers~~growth orand afailure ~~material~~to ~~adverse~~maintain ~~change~~fulfillment inand ~~the~~service ~~relationship~~levels or relationships with these customers could ~~have~~result in a ~~negative~~material ~~impact~~loss onof ~~our~~ business. Our inability to penetrate new channels of distribution, including ecommerce, may also have a negative impact on our future sales and business.

Successful sales and marketing efforts depend on our ability to recruit and retain qualified employees.

The success of our efforts to grow our business depends on the contributions and abilities of key executives, our sales force, and other personnel, including the ability of our sales force to achieve adequate customer coverage. We must therefore continue to recruit, retain, and motivate management, sales, and other personnel to maintain our current business and to support our projected growth. A shortage of these key employees might jeopardize our ability to implement our growth strategy.

Increases in labor costs, potential labor disputes and work stoppages or an inability to hire skilled distribution, sales and other personnel could adversely affect our business.

An increase in labor costs, work stoppages or disruptions at our facilities or those of our suppliers or transportation service providers, or other labor disruptions, could decrease our sales and increase our expenses. In addition, although our employees are not represented by a union, our labor force may become subject to labor union organizing efforts, which could cause us to incur additional labor costs and increase the related risks that we now face.

A significant increase in the salaries and wages paid by competing employers could result in a reduction of our labor force, increases in the salaries and wages that we must pay or both. If we are unable to hire warehouse, distribution, sales and other personnel, our ability to execute our business plan and our results of operations would suffer.

We are exposed to adverse changes in currency exchange rates.

Exposure to foreign currency risk exists because we, through our global operations, enter into transactions and make investments denominated in multiple currencies. Our predominant exposures are in Canadian, Mexican, and Asian currencies, including the Chinese Yuan (“CNY”). In preparing our Consolidated Financial Statements for foreign operations with functional currencies other than the U.S. dollar, asset and liability accounts are translated at current exchange rates and income and expenses are translated using weighted-average exchange rates. With respect to the effects on translated earnings, if the U.S. dollar strengthens relative to local currencies, our earnings could be negatively impacted. We do not make a practice of hedging our non-U.S. dollar earnings.

We source many products from China and other Asian countries for resale in other regions. To the extent that the CNY or other currencies appreciate with respect to the U.S. dollar, we may experience cost increases on such purchases. The U.S. dollar increased in value relative to the CNY by 1.7% in 2019, increased by 5.7% in 2018 and decreased by 6.3% in 2017. Significant appreciation of the CNY or other currencies in countries where we source our products could adversely impact our profitability. In addition, our foreign subsidiaries in Canada and Mexico may purchase certain products from their vendors denominated in U.S. dollars. If the U.S. dollar strengthens compared to the local currencies, it may result in margin erosion. We have a practice of hedging some of our Canadian subsidiary's purchases denominated in U.S. dollars. We may not be successful at implementing customer pricing or other actions in an effort to mitigate the related cost increases and thus our results of operations may be adversely impacted.

910

~~Our~~decreased ~~results~~in value relative to the CNY by 6.5% in 2020, increased by 1.7% in 2019 and increased by 5.7% in 2018. Significant appreciation of ~~operations~~the CNY or other currencies in countries where we source our products could adversely impact our profitability. In addition, our foreign subsidiaries in Canada and Mexico may purchase certain products from their vendors denominated in U.S. dollars. If the U.S. dollar strengthens compared to the local currencies, it may result in margin erosion. We have a practice of hedging some of our Canadian subsidiary's purchases denominated in U.S. dollars. We may not be ~~negatively~~successful ~~impacted~~at byimplementing ~~inflation~~customer pricing or ~~deflation~~other actions in an effort to mitigate the related cost increases and thus our results of ~~raw~~operations ~~materials,~~may ~~freight,~~be ~~and~~adversely ~~energy~~impacted.

Our ~~products~~results ~~are manufactured~~ of ~~metals,~~operations ~~including~~could ~~but~~be ~~not~~negatively ~~limited~~impacted to steel, aluminum, zinc, and copper. Additionally, we use other commodity-based materials in the manufacture of LNS that are resin-based and subject to fluctuations in the price of oil. We are also exposed to fluctuations in the price of diesel fuel in the form of freight surcharges on customer shipments and the cost of gasoline used by ~~the field sales and service force. Continued~~ inflation ~~over~~or adeflation ~~period of years would result~~ in ~~significant~~supply ~~increases~~chain ~~in inventory~~ costs ~~and operating expenses. If we are unable to mitigate these inflation increases through various customer pricing actions and cost reduction initiatives~~, ~~our~~including ~~financial~~raw ~~condition may be adversely affected. Conversely~~materials, ~~in the event that there is deflation~~sourcing, wetransportation may experience pressure from our customers to reduce prices. There can be no assurance that we would be able to reduce our cost base (through negotiations with suppliers or other measures) to offset any such price concessions which could adversely impact our results of operations and ~~cash flows~~energy.

Our products are manufactured of metals, including but not limited to steel, aluminum, zinc, and copper. Additionally, we use other commodity-based materials in the manufacture of LNS that are resin-based and subject to fluctuations in the price of oil. We source the majority of our products from third parties and are subject to changes in their underlying manufacturing costs. We also use third parties for transportation and are exposed to fluctuations in freight costs to transport goods from our suppliers to our distribution facilities and from there to our customers, as well as the price of diesel fuel in the form of freight surcharges on customer shipments and the cost of gasoline used by the field sales and service force. Inflation in these costs could result in significant cost increases. If we are unable to mitigate the any cost increases from the foregoing factors through various customer pricing actions and cost reduction initiatives, our financial condition may be adversely affected. Conversely, in the event that there is deflation, we may experience pressure from our customers to reduce prices. There can be no assurance that we would be able to reduce our cost base (through negotiations with suppliers or other measures) to offset any such price concessions which could adversely impact our results of operations and cash flows.

We are subject to the risks of doing business internationally.

A portion of our revenue is generated outside the United States, primarily from customers located in Canada, Mexico, Latin America, and the Caribbean. Because we sell our products and services outside the United States, our business is subject to risks associated with doing business internationally, which include:

• changes in a specific country's or region's political and cultural climate or economic condition;

• unexpected or unfavorable changes in foreign laws and regulatory requirements;

• difficulty of effective enforcement of contractual provisions in local jurisdictions;

• inadequate intellectual property protection in foreign countries;

• the imposition of duties and tariffs and other trade barriers;

• trade-protection measures, import or export licensing requirements such as Export Administration Regulations promulgated by the U.S. Department of Commerce, Economic Sanctions Laws and Regulations administered by the Office of Foreign Assets Control, and fines, penalties, or suspension or revocation of export privileges;

• violations of the United States Foreign Corrupt Practices Act;

• the effects of applicable and potentially adverse foreign tax law changes;

• significant adverse changes in foreign currency exchange rates; and

•difficulties ~~longer~~associated ~~accounts~~with ~~receivable~~repatriating ~~cycles;~~cash in a tax-efficient manner.

• managing a geographically dispersed workforce; and

• difficulties associated with repatriating cash in a tax-efficient manner.

Any failure to adapt to these or other changing conditions in foreign countries in which we do business could have an adverse effect on our business and financial results.

Our business is subject to risks associated with sourcing product from overseas.

We import a significant amount of our products and rely on foreign sources to meet our supply demands at prices that support our current operating margins. Substantially all of our import operations are subject to customs requirements and to tariffs and quotas set by governments through mutual agreements or unilateral actions. The U.S. tariffs on steel and aluminum and other imported goods have materially increased the costs of many of our foreign sourced products, and any escalation in the tariffs will increase the impact. In order to sustain current operating margins while the tariffs are in effect, we must be able to increases prices with our customers and find alternative, similarly priced sources that are not subject to the tariffs. If we are unable to effectively implement these countermeasures, our operating margins will be impacted.

In addition, the countries from which our products and materials are manufactured or imported may, from time to time, impose additional quotas, duties, tariffs, or other restrictions on their imports or adversely modify existing restrictions. Adverse changes in these import costs and restrictions, or our suppliers' failure to comply with customs regulations or similar laws, could harm our business.

If any of our existing vendors fail to meet our needs, we believe that sufficient capacity exists in the open market to supply any shortfall that may result. However, it is not always possible to replace a vendor on short notice without disruption in our 11

10If any of our existing vendors fail to meet our needs, we believe that sufficient capacity exists in the open market to supply any shortfall that may result. However, it is not always possible to replace a vendor on short notice without disruption in our operations which may require more costly expedited transportation expense and replacement of a major vendor is often at higher prices.

operations which may require more costly expedited transportation expense and replacement of a major vendor is often at higher prices.

Our ability to import products in a timely and cost-effective manner may also be affected by conditions at ports or issues that otherwise affect transportation and warehousing providers, such as port and shipping capacity, labor disputes, severe weather, or increased homeland security requirements in the U.S. and other countries. These issues could delay importation of products or require us to locate alternative ports or warehousing providers to avoid disruption to customers. These alternatives may not be available on short notice or could result in higher transit costs, which could have an adverse impact on our business and financial condition.

Further, our business could be adversely affected by the recent outbreak of ~~the~~ COVID-19 ~~respiratory illness~~. This situation ~~is evolving and any further significant spread of this virus~~ may have a material and adverse effect on our business which could include temporary closures of our facilities, the facilities of our suppliers, and other disruptions caused to us, our suppliers or customers ~~as a result of this virus~~. This may adversely affect our results of operations, financial position, and cash flows.

Acquisitions have formed a significant part of our growth strategy in the past and may continue to do so. If we are unable to identify suitable acquisition candidates, successfully integrate an acquired business, or obtain financing needed to complete an acquisition, our growth strategy may not succeed.

Historically, our growth strategy has relied in part on acquisitions that either expand or complement our businesses in new or existing markets. However, there can be no assurance that we will be able to identify or acquire acceptable acquisition candidates on terms favorable to us and in a timely manner, if at all, to the extent necessary ~~to fulfill our growth strategy~~.

The process of integrating acquired businesses into our operations may result in unforeseen difficulties and may require a disproportionate amount of resources and management attention, and there can be no assurance that we will be able to successfully integrate acquired businesses into our operations. Additionally, we may not achieve the anticipated benefits from any acquisition.

Unfavorable changes in the current economic environment may make it difficult to acquire businesses in order to further our growth strategy. We will continue to seek acquisition opportunities both to expand into new markets and to enhance our position in our existing markets. However, our ability to do so will depend on a number of factors, including our ability to obtain financing that we may need to complete a proposed acquisition opportunity which may be unavailable or available on terms that are not advantageous to us. If financing is unavailable, we may be forced to forego otherwise attractive acquisition opportunities which may have a negative effect on our ability to grow.

If we were required to write down all or part of our goodwill or indefinite-lived trade names, our results of operations could be materially adversely affected.

We have $~~819~~816.12 million of goodwill and $85.56 million of indefinite-lived trade names recorded on our accompanying Consolidated Balance Sheets at December 2826, ~~2019~~2020. We are required to periodically determine if our goodwill or indefinite-lived trade names have become impaired, in which case we would write down the impaired portion. If we were required to write down all or part of our goodwill or indefinite-lived trade names, our net income could be materially adversely affected.

Our success is highly dependent on information and technology systems.

We believe that our proprietary computer software programs are an integral part of our business and growth strategies. We depend on our information systems to process orders, to manage inventory and accounts receivable collections, to purchase, sell, and ship products efficiently and on a timely basis, to maintain cost-effective operations, and to provide superior service to our customers. If these systems are damaged, intruded upon, shutdown, or cease to function properly (whether by planned upgrades, force majeure, telecommunications failures, hardware or software break-ins or viruses, other cyber-security incidents, or otherwise), we may suffer disruption in our ability to manage and operate our business.

There can be no assurance that the precautions which we have taken against certain events that could disrupt the operations of our information systems will prevent the occurrence of such a disruption. Any such disruption could have a material adverse effect on our business and results of operations.

In addition, we are in the process of expanding our enterprise resource planning (“ERP”) system to improve our business capabilities. Although it is not anticipated, any disruptions, delays, or deficiencies in the design and/or implementation of the ERP system, or our inability to accurately predict the costs of such initiatives or our failure to generate revenue and

corresponding profits from such activities and investments, could impact our ability to perform necessary business operations, which could adversely affect our reputation, competitive position, business, results of operations, and financial condition.

Unauthorized disclosure of sensitive or confidential customer, employee, supplier, or Company information, whether through a breach of our computer systems, including cyber-attacks or otherwise, could severely harm our business.

As part of our business, we collect, process, and retain sensitive and confidential personal information about our customers, employees, and suppliers. Despite the security measures we have in place, our facilities and systems, and those of the retailers and other third party distributors with which we do business, may be vulnerable to security breaches, cyber-attacks, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other similar events. Any security breach involving the misappropriation, loss, or other unauthorized disclosure of confidential customer, employee, supplier, or Company information, whether by us or by the retailers and other third party distributors with which we do business, could result in losses, severely damage our reputation, expose us to the risks of litigation and liability, disrupt our operations, and have a material adverse effect on our business, results of operations, and financial condition. The regulatory environment related to information security, data collection, and privacy is increasingly rigorous, with new and constantly changing requirements applicable to our business, and compliance with those requirements could result in additional costs.

Failure to adequately protect intellectual property could adversely affect our business.

Intellectual property rights are an important and integral component of our business. We attempt to protect our intellectual property rights through a combination of patent, trademark, copyright, and trade secret laws, as well as licensing agreements and third-party nondisclosure and assignment agreements. ~~Failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business.~~

In the event that our trademarks or patents are successfully challenged and we lose the rights to use those trademarks or patents, or if we fail to prevent others from using them, we could experience reduced sales or be forced to redesign or rebrand our products, requiring us to devote resources to product development, advertising and marketing new products and brands. In addition, we cannot be sure that any pending trademark or patent applications will be granted or will not be challenged or opposed by third parties or that we will be able to enforce our trademark rights against counterfeiters.

Failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial condition.

Our success depends in part on our ability to operate without infringing on or misappropriating the proprietary rights of others, and if we are unable to do so we may be liable for damages.

We cannot be certain that United States or foreign patents or patent applications of other companies do not exist or will not be issued that would prevent us from commercializing our products. Third parties may sue us for infringing or misappropriating their patent or other intellectual property rights. Intellectual property litigation is costly. If we do not prevail in litigation, in addition to any damages we might have to pay, we could be required to cease the infringing activity or obtain a license requiring us to make royalty payments. It is possible that a required license may not be available to us on commercially acceptable terms, if at all. In addition, a required license may be non-exclusive, and therefore our competitors may have access to the same technology licensed to us. If we fail to obtain a required license or are unable to design around another company’s patent, we may be unable to make use of some of the affected products, which would reduce our revenues.

The defense costs and settlements for patent infringement lawsuits are not covered by insurance. Patent infringement lawsuits can take years to settle. If we are not successful in our defenses or are not successful in obtaining dismissals of any such lawsuit, legal fees or settlement costs could have a material adverse effect on our results of operations and financial position.

Recent changes in United States patent laws may limit our ability to obtain, defend, and/or enforce our patents.

The United States has recently enacted and implemented wide ranging patent reform legislation. The United States Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on actions by the United States Congress, the United States federal courts, and the United States Patent and Trademark Office, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce patents that we have licensed or that we might obtain in the future. Similarly, changes in patent law and regulations in other countries or jurisdictions, changes in the governmental bodies that enforce them or changes in how the relevant governmental authority enforces patent laws or regulations may weaken our ability to obtain new patents or to enforce patents that we have licensed or that we may obtain in the future.

Regulations related to conflict minerals could adversely impact our business.

The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve transparency and accountability concerning the supply of certain minerals, known as “conflict minerals”, originating from the Democratic Republic of Congo (“DRC”) and adjoining countries. These rules could adversely affect the sourcing, supply, and pricing of materials used in our products, as the number of suppliers who provide conflict-free minerals may be limited. We may also suffer harm to our image if we determine that certain of our products contain minerals not determined to be conflict-free or if we are unable to modify our products to avoid the use of such materials. We may also face challenges in satisfying customers who may require that our products be certified as containing conflict-free minerals.

Republic of Congo (“DRC”) and adjoining countries. These rules could adversely affect the sourcing, supply, and pricing of materials used in our products, as the number of suppliers who provide conflict-free minerals may be limited. We may also suffer harm to our image if we determine that certain of our products contain minerals not determined to be conflict-free or if we are unable to modify our products to avoid the use of such materials. We may also face challenges in satisfying customers who may require that our products be certified as containing conflict-free minerals.

Future changes in financial accounting standards may significantly change our reported results of operations.

The accounting principles generally accepted in the United States of America (“GAAP”) are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the American Institute of Certified Public Accountants, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results and could affect the reporting of transactions completed before the announcement of a change. Additionally, our assumptions, estimates and judgments related to complex accounting matters could significantly affect our financial results. GAAP and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, including, but not limited to, revenue recognition, impairment of long-lived assets, leases and related economic transactions, intangibles, self-insurance, income taxes, property and equipment, litigation and stock-based compensation are highly complex and involve many subjective assumptions, estimates and judgments by us. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments by us (i) could require us to make changes to our accounting systems to implement these changes that could increase our operating costs and (ii) could significantly change our reported or expected financial performance.

Future tax law changes may materially increase our prospective income tax expense.

We are subject to income taxation in many jurisdictions in the U.S. as well as foreign jurisdictions. Judgment is required in determining our worldwide income tax provision and, accordingly, there are many transactions and computations for which our final income tax determination is uncertain. We are occasionally audited by income tax authorities in several tax jurisdictions. Although we believe the recorded tax estimates are reasonable, the ultimate outcome from any audit (or related litigation) could be materially different from amounts reflected in our income tax provisions and accruals. Future settlements of income tax audits may have a material effect on earnings between the period of initial recognition of tax estimates in the financial statements and the point of ultimate tax audit settlement.

Additionally, it is possible that future income tax legislation, regulations or interpretations thereof and/or import tariffs in any jurisdiction to which we are subject to taxation may be enacted and such changes could have a material impact on our worldwide income tax provision beginning with the period during which such changes become effective. In addition, our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

•changes in the valuation of our deferred tax assets and liabilities;

•expected timing and amount of the release of any tax valuation allowances;

•tax effects of stock-based compensation;

•costs related to intercompany restructurings; and

•lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates.

We have identified material weaknesses in our internal control over financial reporting that, if not properly corrected, could materially adversely affect our operations and result in material misstatements in our financial statements.

As described in “Item 9A. Controls and Procedures,” we have concluded that our internal control over financial reporting was ineffective as of December 26, 2020 because material weaknesses existed in our internal control over financial reporting. If we are unable to remediate our material weaknesses in a timely manner, we may be unable to provide required financial information in a timely and reliable manner and we may incorrectly report financial information. Either of these events could have a material adverse effect on our operations, investor, supplier and customer confidence in our reported financial information.

We are subject to legal proceedings and legal compliance risks.

We are involved in various legal proceedings, which from time to time may involve lawsuits, state and federal governmental inquiries, audits and investigations, environmental matters, employment, tort, state false claims act, consumer litigation, and intellectual property litigation. At times, such matters may involve executive officers and other management. Certain of these legal proceedings may be a significant distraction to management and could expose us to significant liability, including settlement expenses, damages, fines, penalties, attorneys' fees and costs, and non-monetary sanctions, any of which could have a material adverse effect on our business and results of operations.

legal proceedings may be a significant distraction to management and could expose us to significant liability, including settlement expenses, damages, fines, penalties, attorneys' fees and costs, and non-monetary sanctions, any of which could have a material adverse effect on our business and results of operations.

Increases in the cost of employee health benefits could impact our financial results and cash flows.

Our expenses relating to employee health benefits, for which we are primarily self insured, are significant. Healthcare costs have risen significantly in recent years, and recent legislative and private sector initiatives regarding healthcare reform have resulted and could continue to result in significant changes to the U.S. healthcare system. Unfavorable changes in the cost of such benefits could have a material adverse effect on our financial results and cash flows.

If we become subject to material liabilities under our self-insured programs, our financial results may be adversely affected.

We provide workers’ compensation, automobile, and product/general liability coverage through a high deductible insurance program. In addition, we are self-insured for our health benefits and maintain per employee stop-loss coverage. Although we believe that we have adequate stop-loss coverage for catastrophic claims to cap the risk of loss, our results of operations and financial condition may be adversely affected if the number and severity of claims that are not covered by stop-loss insurance increases.

We occupy most of our locations under long-term non-cancelable leases. We may be unable to renew leases on favorable terms or at all. Also, if we close a location, we may remain obligated under the applicable lease.

Most of our locations are located in leased premises. Many of our current leases are non-cancelable and typically have terms ranging from two to fourteen years, with options to renew for specified periods of time. We believe that leases we enter into in the future will likely be long-term and noncancelable and have similar renewal options. However, there can be no assurance that we will be able to renew our current or future leases on favorable terms or at all which could have an adverse effect on our ability to operate our business and on our results of operations. In addition, if we close a location, we generally remain committed to perform our obligations under the applicable lease, which include, among other things, payment of the base rent for the balance of the lease term. Our obligation to continue making rental payments in respect of leases for closed locations could have an adverse effect on our business and results of operations.

Risks Relating to Our Indebtedness

We have significant indebtedness that could affect operations and financial condition and prevent us from fulfilling our obligations under our indebtedness.

We have a significant amount of indebtedness. On December 2826, ~~2019~~2020, total indebtedness was $1,~~601~~549.68 million, consisting of $108.7 million of indebtedness of Hillman and $1,~~492~~441.91 million of indebtedness of Hillman Group.

Our substantial indebtedness could have important consequences. For example, it could:

12•make it more difficult for us to satisfy obligations to holders of our indebtedness;

•increase ~~make~~our itvulnerability ~~more difficult for us~~ to ~~satisfy~~general ~~obligations~~adverse toeconomic ~~holders~~and ofindustry ~~our indebtedness~~conditions;

•require ~~increase~~the ~~our~~dedication ~~vulnerability~~of a substantial portion of cash flow from operations to ~~general~~payments ~~adverse~~on ~~economic~~indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures, research and ~~industry~~development ~~conditions~~efforts, and other general corporate purposes;

•limit ~~require~~flexibility ~~the~~in ~~dedication~~planning ~~of a substantial portion of cash flow from operations to payments on indebtedness~~for, ~~thereby~~or ~~reducing~~reacting ~~the availability of cash flow~~ to ~~fund working capital~~, ~~capital~~changes ~~expenditures,~~in ~~research~~our business and ~~development~~the ~~efforts,~~industry ~~and~~in ~~other~~which ~~general~~we ~~corporate purposes~~operate;

•place ~~limit~~us ~~flexibility~~at ina ~~planning~~competitive ~~for,~~disadvantage orcompared ~~reacting~~ to, ~~changes~~competitors inthat ~~our~~have ~~business~~less ~~and the industry in which we operate~~debt; and

•limit ~~place~~our usability ~~at a competitive disadvantage compared~~ to ~~competitors~~borrow ~~that~~additional ~~have less debt; and~~funds.

• limit our ability to borrow additional funds.

In addition, the indenture governing Hillman Group's notes and senior secured credit facilities contain financial and other restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. The failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all outstanding debts.

Despite current indebtedness levels, we may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage.

We may be able to incur substantial additional indebtedness in the future. The terms of the indenture do not fully prohibit us from doing so. The senior secured credit facilities permit additional borrowing of $~~120~~154.04 million on the revolving credit facility. If new debt is added to our current debt levels, the related risks that we now face could intensify.

We rely on available borrowings under the asset-based revolving credit facility (“ABL Revolver”) for cash to operate our business, and the availability of credit under the ABL Revolver may be subject to significant fluctuation.

In addition to cash we generate from our business, our principal existing source of cash is borrowings available under the ABL Revolver. Availability will be limited to the lesser of a borrowing base and $250.0 million. The borrowing base is calculated on a monthly (or more frequent under certain circumstances) valuation of our inventory, accounts receivable and certain cash balances. As a result, our access to credit under the ABL Revolver is potentially subject to significant fluctuation, depending on the value of the borrowing base-eligible assets as of any measurement date. The inability to borrow under the ABL Revolver may adversely affect our liquidity, financial position and results of operations. As of December 26, 2020, the ABL Revolver had an outstanding amount of $72.0 million and outstanding letters of credit of $23.6 million leaving $154.4 million of available borrowings as a source of liquidity.

The failure to meet certain financial covenants required by our credit agreements may materially and adversely affect assets, financial position, and cash flows.

Certain aspects of our credit agreements require the maintenance of a leverage ratio and limit our ability to incur debt, make investments, make dividend payments to holders of the Trust Preferred Securities, or undertake certain other business activities. In particular, our minimum allowed fixed charge coverage ratio requirement is 1.0x as of December 2826, ~~2019~~2020. A breach of the covenant, or any other covenants, could result in an event of default under the credit agreements. Upon the occurrence of an event of default under the credit agreements, all amounts outstanding, together with accrued interest, could be declared immediately due and payable by our lenders. If this happens, our assets may not be sufficient to repay in full the payments due under the credit agreements. The current credit market environment and other macro-economic challenges affecting the global economy may adversely impact our ability to borrow sufficient funds or sell assets or equity in order to pay existing debt.

We are subject to fluctuations in interest rates.

On May 31, 2018 we entered into a new credit agreement that includes a funded term loan for $530.0 million and a unfunded delayed draw term loan facility ("DDTL") for $165.0 million (collectively, "2018 Term Loan"). Concurrently, we also entered into a new asset-based revolving credit agreement ("ABL Revolver") for $150.0 million. We utilized the full $165.0 million DDTL to finance the MinuteKey acquisition on August 10, 2018. On October 1, 2018, we entered into an amendment (the "Amendment") to the aforementioned 2018 Term Loan agreement which provided an additional $365.0 million of incremental term loan proceeds. On November 15, 2019, the Company entered into an amendment (the "ABL Amendment") to the aforementioned ABL Revolver agreement which provided an additional $100.0 million of revolving credit, bringing the total available to $250.0 million.

All of our indebtedness incurred in connection with the 2018 Term Loan and ABL Revolver has variable interest rates. Increases in borrowing rates will increase our cost of borrowing, which may adversely affect our results of operations and financial condition. Furthermore, regulatory changes, such as the announcement of the United Kingdom’s Financial Conduct Authority to phase out the London Interbank Offered Rate ("LIBOR") by the end of 2021, may adversely affect our floating rate debt and interest rate derivatives. If LIBOR ceases to exist, we may need to renegotiate any credit agreements or interest rate derivatives agreements extending beyond 2021 that utilize LIBOR as a factor in determining the interest rate or hedge rate, which could adversely impact our cost of debt.

Restrictions imposed by the indenture governing the 6.375% Senior Notes, and by our Senior Facilities and our other outstanding indebtedness, may limit our ability to operate our business and to finance our future operations or capital needs or to engage in other business activities.

The terms of our Senior Facilities and the indenture governing the notes restrict us from engaging in specified types of transactions. These covenants restrict our ability and the ability of our restricted subsidiaries, among other things, to:

• incur or guarantee additional indebtedness;

• pay dividends on our capital stock or redeem, repurchase, or retire our capital stock or indebtedness;

• make investments, loans, advances, and acquisitions;

~~• pay dividends or other amounts to us from our restricted subsidiaries;~~16

•pay ~~engage~~dividends inor ~~transactions~~other ~~with~~amounts to us from our ~~affiliates~~restricted subsidiaries;

•engage ~~sell~~in ~~assets,~~transactions ~~including~~with ~~capital stock of~~ our ~~subsidiaries~~affiliates;

•sell ~~consolidate~~assets, orincluding ~~merge;~~capital ~~and~~stock of our subsidiaries;

•consolidate ~~create~~or ~~liens.~~merge; and

•create liens.

In addition, the ABL Revolver requires us to maintain inventory and accounts receivable balances to collateralize the underlying loan with a maximum allowable borrowing limit of $250.0 million. Our ability to comply with this covenant can be affected by events beyond our control, and we may not be able to satisfy them. A breach of this covenant would be an event of default. In the event of a default under the ABL Revolver, those lenders could elect to declare all amounts outstanding under the ABL Revolver to be immediately due and payable or terminate their commitments to lend additional money, which would also lead to a cross-default and cross-acceleration of amounts owing under the Senior Facilities. If the indebtedness under our Senior Facilities or the notes were to be accelerated, our assets may not be sufficient to repay such indebtedness in full. In particular, note holders will be paid only if we have assets remaining after we pay amounts due on our secured indebtedness, including our Senior Facilities. We have pledged a significant portion of our assets as collateral under our Senior Facilities.

We may not be able to generate sufficient cash to service all of our indebtedness, including the notes, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business, and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, including the notes. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital, or restructure or refinance our indebtedness. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. ~~Our~~In ~~Senior~~addition, ~~Facilities and~~ the ~~indenture governing the notes restrict our~~ ability to borrow ~~dispose~~under ofour ~~assets~~asset-based ~~and~~revolving ~~use~~credit ~~the~~facility ~~proceeds~~is ~~from~~subject ~~the~~to ~~disposition.~~limitations Webased ~~may~~on ~~not~~advances berates ~~able~~against tocertain ~~consummate~~eligible ~~those~~inventory ~~dispositions~~and oraccounts toreceivables ~~obtain~~that collateralize the ~~proceeds~~underlying ~~that~~loans. weOur ~~could~~ability ~~realize~~to ~~from~~ability ~~them~~to ~~and~~access ~~these~~the ~~proceeds~~full ~~may~~$250.0 ~~not~~million beof ~~adequate~~revolving tocredit ~~meet~~can ~~any~~be ~~debt~~affected ~~service~~by ~~obligations~~events ~~then~~beyond ~~due.~~our ~~These~~control ~~alternative~~if ~~measures~~the ~~may~~value ~~not~~of beour ~~successful~~inventory and ~~may~~accounts ~~not~~receivables ~~permit~~is usmaterially toadversely ~~meet our scheduled debt service obligations~~affected.

Our ability to repay our debt is affected by the cash flow generated by our subsidiaries.

Our subsidiaries own substantially all of our assets and conduct substantially all of our operations. Accordingly, repayment of our indebtedness will be dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment, or otherwise. Unless they are guarantors of the notes, our subsidiaries will not have any obligation to pay amounts due on the notes or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. While the indenture governing the notes limits the ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to certain qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.

consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to certain qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.

Volatility and weakness in bank and capital markets may adversely affect credit availability and related financing costs for us.

Bank and capital markets can experience periods of volatility and disruption. If the disruption in these markets is prolonged, our ability to refinance, and the related cost of refinancing, some or all of our debt could be adversely affected. Additionally, during periods of volatile credit markets, there is a risk that lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under existing credit commitments. Although we currently can access the bank and capital markets, there is no assurance that such markets will continue to be a reliable source of financing for us. These factors, including the tightening of credit markets, could adversely affect our ability to obtain cost-effective financing. Increased volatility and disruptions in the financial markets also could make it more difficult and more expensive for us to refinance outstanding indebtedness and obtain financing. In addition, the adoption of new statutes and regulations, the implementation of recently enacted laws or new interpretations or the enforcement of older laws and regulations applicable to the financial markets or the financial services industry could result in a reduction in the amount of available credit or an increase in the cost of credit. Disruptions in the financial markets can also adversely affect our lenders, insurers, customers, and other counterparties. Any of these results could cause a material adverse effect to our business, financial condition, and results of operations.

expensive for us to refinance outstanding indebtedness and obtain financing. In addition, the adoption of new statutes and regulations, the implementation of recently enacted laws or new interpretations or the enforcement of older laws and regulations applicable to the financial markets or the financial services industry could result in a reduction in the amount of available credit or an increase in the cost of credit. Disruptions in the financial markets can also adversely affect our lenders, insurers, customers, and other counterparties. Any of these results could cause a material adverse effect to our business, financial condition, and results of operations.

Item 1B - Unresolved Staff Comments.

None.

Item 2 – Properties.

As of December 2826, ~~2019~~2020, our principal office, manufacturing, and distribution properties were as follows:

Business Segment

~~ApproximateSquareFootage~~

~~Description~~

ApproximateSquareFootage

Description

Fastening, Hardware, and Personal Protective Solutions & Consumer Connected Solutions

Hardware and Protective Solutions & Robotics and Digital Solutions

Cincinnati, Ohio

~~270,000~~

~~Office, Distribution~~

270,000

Office, Distribution

Dallas, Texas

~~166,000~~

~~Distribution~~

166,000

Distribution

Forest Park, Ohio

~~385,000~~

~~Office, Distribution~~

385,000

Office, Distribution

Jacksonville, Florida

~~97,000~~

~~Distribution~~

97,000

Distribution

Rialto, California

~~402,000~~

~~Distribution~~

402,000

Distribution

Shafter, California

~~134,000~~

~~Distribution~~

168,000

Distribution

Tempe, Arizona

~~184,000~~

~~Office, Mfg., Distribution~~

184,000

Office, Mfg., Distribution

Fastening, Hardware, and Personal Protective Solutions

Hardware and Protective Solutions

Atlanta, Georgia

~~14,000~~

~~Office~~

14,000

Office

Guadalajara, Mexico

12,000

Office, Distribution

Fairfield, Ohio

85,000

Distribution

Guleph, Ontario

25,000

Distribution

Guadalajara, Mexico

12,000

Office, Distribution

Parma, Ohio

16,000

Office, Distribution

Guleph, Ontario

25,000

Distribution

Pompano Beach, Florida

~~39,000~~

~~Office, Distribution~~

39,000

Office, Distribution

Monterrey, Mexico

~~13,000~~

~~Distribution~~

13,000

Distribution

Rome, Georgia

~~14,000~~

~~Office~~

14,000

Office

San Antonio, Texas

150,000

Office, Distribution

Shannon, Georgia

300,000

Distribution

Shannon, Georgia

300,000

Distribution

Springdale, Ohio

28,000

Mfg., Distribution

Springdale, Ohio

28,000

Mfg., Distribution

Tyler, Texas (1)

202,000

Office, Mfg., Distribution

Tyler, Texas (1)

202,000

Office, Mfg., Distribution

Robotics and Digital Solutions

Consumer Connected Solutions

Boulder, Colorado

20,000

Office

Boulder, Colorado

20,000

Office, Distribution

Canada

Burnaby, British Columbia

29,000

Distribution

Burnaby, British Columbia

29,000

Distribution

Edmonton, Alberta

100,000

Distribution

Edmonton, Alberta

100,000

Distribution

Laval, Quebec

34,000

Distribution

Laval, Quebec

34,000

Distribution

Milton, Ontario

26,000

Manufacturing

Milton, Ontario

26,000

Manufacturing

Pickering, Ontario

110,000

Distribution

Moncton, New Brunswick

16,000

Distribution

Scarborough, Ontario

23,000

Mfg., Distribution

Pickering, Ontario

110,000

Distribution

Toronto, Ontario

389,000

Office, Distribution

Scarborough, Ontario

304,000

Office, Mfg., Distribution

Winnipeg, Manitoba

42,000

Distribution

Toronto, Ontario

385,000

Office, Distribution

Winnipeg, Manitoba

42,000

Distribution

(1) The Company leases two facilities in Tyler, Texas. The first is a 139,000 square foot facility located at 2329 E. Commerce Street used for manufacturing and distribution. The second is a 63,000 square foot facility located at 6357 Reynolds Road used for offices, manufacturing, and distribution.18

(1)The Company leases two facilities in Tyler, Texas. The first is a 139,000 square foot facility located at 2329 E. Commerce Street used for manufacturing and distribution. The second is a 63,000 square foot facility located at 6357 Reynolds Road used for offices, manufacturing, and distribution.

All of the Company's facilities are leased. In the opinion of the Company's management, the Company's existing facilities are in good condition.

Item 3 – Legal Proceedings.

We are subject to various claims and litigation that arise in the normal course of business. For a description of our material legal proceedings, see Note 15 - Commitments and Contingencies, to the accompanying Consolidated Financial Statements included in this Annual Report on Form 10-K.

Item 4 – Mine Safety Disclosures.

Not Applicable.

PART II

Item 5 – Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Stock Exchange Listing

Our common stock does not trade and is not listed on or quoted in an exchange or other market. The Trust Preferred Securities trade under the ticker symbol "HLM.Pr." on the NYSE Amex. The following table sets forth the high and low sales prices as reported on the NYSE Amex for the Trust Preferred Securities.

2019	High				Low
2020			High				Low
First Quarter	$	~~34.18~~	$	36.27	$	~~30.49~~	$	25.19
Second Quarter	~~35.37~~		30.40		~~32.16~~		25.08
Third Quarter	~~36.21~~		30.19		~~33.85~~		25.03
Fourth Quarter	~~36.88~~		31.28		~~33.67~~		28.25
2018	High				Low
2019			High				Low
First Quarter	$	~~36.78~~	$	34.18	$	~~29.63~~	$	30.49
Second Quarter	~~34.40~~		35.37		~~26.41~~		32.16
Third Quarter	~~32.00~~		36.21		~~29.86~~		33.85
Fourth Quarter	~~30.94~~		36.88		~~26.00~~		33.67

The Trust Preferred Securities have a liquidation value of $25.00 per security. As of March 273, ~~2020~~2021, the total number of Trust Preferred Securities outstanding was 4,217,724. As of March 273, ~~2020~~2021, our total number of shares of common stock outstanding was 5,000, held by one stockholder.

Distributions

We pay interest to the Hillman Group Capital Trust (the “Trust”) on the junior subordinated debentures underlying the Trust Preferred Securities at the rate of 11.6% per annum on their face amount of $105.4 million, or $12.2 million per annum in the aggregate. The Trust distributes an equivalent amount to the holders of the Trust Preferred Securities. For the years ended December 2826, ~~2019~~2020 and December 2928, ~~2018~~2019, we paid $1112.23 million and $1211.2 million, respectively, per year in interest on the junior subordinated debentures, which was equivalent to the amounts distributed by the Trust for the same periods. As of December 2826, ~~2019~~2020 $1.0 million remained payable on our balance sheet due to the timing of our year end.

Pursuant to the indenture that governs the Trust Preferred Securities, the Trust is able to defer distribution payments to holders of the Trust Preferred Securities for a period that cannot exceed 60 months (the “Deferral Period”). During the Deferral Period, we are required to accrue the full amount of all interest payable, and such deferred interest payments are immediately payable at the end of the Deferral Period. In fiscal 2020, the Company elected to defer interest payments to the holders of the Trust Preferred Securities during April 2020 through July 2020. See Note 7 - Long-Term Debt for additional details. There were no deferrals of distribution payments to holders of the Trust Preferred Securities in ~~2019~~fiscal ~~or 2018~~2019.

The interest payments on the junior subordinated debentures underlying the Trust Preferred Securities are subject to the interest expense limitations arising from the Tax Cuts and Jobs Act (the “2017 Tax Act”) (see Note 6 - Income Taxes for further information) and will remain our obligation until the Trust Preferred Securities are redeemed or upon their maturity in 2027.

For more information on the Trust and junior subordinated debentures, see “Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations.”

Unregistered Sales of Equity Securities

We made no sales of our equity securities during the year ended December 2826, ~~2019~~2020.

Issuer Purchases of Equity Securities

We made no repurchases of our equity securities during the year ended December 2826, ~~2019~~2020.

Item 6 – Selected Financial Data.

The following table sets forth selected consolidated financial data for the years ended December 31, ~~2015~~2016 and ~~2016~~December 30 2017, December 3029, ~~2017~~2018, December 28, 2019, and December 26, 2020. Net (loss) income and total assets for the years ended December 29, 2018, and December 28, 2019 have been restated due to the correction of errors in the accounting for income taxes related to the valuation allowance against deferred tax assets, which impacted our net deferred tax liabilities. See Note 1 - Basis of Presentation for additional details.

(dollars in thousands)	~~YearEnded12/28/2019~~		YearEnded12/26/2020		~~YearEnded12/29/2018~~			YearEnded12/3028/~~2017~~2019As Restated		~~YearEnded12/31/2016~~		YearEnded12/29/2018As Restated		~~YearEnded12/31/2015~~			YearEnded12/30/2017		YearEnded12/31/2016
Income Statement Data:
Net sales	$	~~1,214,362~~	$	1,368,295	$	~~974,175~~		$	~~838~~1,~~368~~214,362	$	~~814,908~~	$	974,175	$	~~786,911~~		$	838,368	$	814,908
Cost of Sales (exclusive of depreciation and amortization)	~~693,881~~		781,815		~~537,885~~			~~455~~693,~~717~~881		~~438,418~~		537,885		~~436,004~~			455,717		438,418
Income from operations	~~7,695~~		65,766		~~27,443~~			357,~~504~~695		~~40,809~~		27,443		~~29,027~~			35,504		40,809
Net income (loss)	(103,386		)		(69,641		)	58,648		(14,206		)		(23,083		)
Net (loss) income			(24,499)					(85,479)				(58,681)					58,648		(14,206)
Balance Sheet Data:
Total assets	$	~~2,441,210~~	$	2,468,618	$	~~2,431,470~~		$	12,~~799~~437,~~217~~983	$	~~1,781,636~~	$	2,428,243	$	~~1,844,999~~		$	1,799,217	$	1,781,636
Long-term debt & finance lease obligations (1) (2)	~~1,162,928~~		1,111,088		~~1,167,676~~			~~550~~1,~~685~~162,928		~~536,572~~		1,167,676		~~570,277~~			550,685		536,572
11.6% Junior Subordinated Debentures	~~108,704~~		108,704		~~108,704~~			108,704		~~108,704~~		108,704		~~108,704~~			108,704		108,704
6.375% Senior Notes	~~330,000~~		330,000		~~330,000~~			330,000		~~330,000~~		330,000		~~330,000~~			330,000		330,000

(1) Includes current portion of long-term debt (at face value) and finance lease obligations in 2019, and capitalized lease obligations in ~~2015-~~2016.

(2) In 2018 we refinanced our term loan, see Note 7 - Long-Term Debt of the Notes to Consolidated Financial Statements for additional information on our current debt.

Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion provides information which our management believes is relevant to an assessment and understanding of our operations and financial condition. This discussion should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements and schedules thereto appearing elsewhere herein. In addition, see “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Regarding Forward-Looking Information”, as well as “Risk Factors” in Item 1A of this Annual Report. We have restated our financial statements for 2019 and 2018 due to the correction of errors in the accounting for income taxes related to the valuation allowance against deferred tax assets, which impacted our net deferred tax liabilities. Accordingly, the Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth below reflect the effects of the restatements. See Note 1 - Basis of Presentation for additional details.

General

Hillman is one of the largest providers of hardware-related products and related merchandising services to retail markets in North America. Our principal business is operated through our wholly-owned subsidiary, The Hillman Group, Inc. and its wholly-owned subsidiaries (collectively, “Hillman Group”), which had net sales of approximately $1,214.4 million in 2019. We sell our products to hardware stores, home centers, mass merchants, pet supply stores, and other retail outlets principally in the United States, Canada, Mexico, Latin America, and the Caribbean. Product lines include thousands of small parts such as fasteners and related hardware items; personal protective equipment, threaded rod and metal shapes; keys, key duplication systems, and accessories; builder's hardware; and identification items, such as tags and letters, numbers, and signs. We support our product sales with services that include the design and installation of merchandising systems and maintenance of appropriate in-store inventory levels.20

InHillman is one of the ~~year~~largest ~~ended December 28~~providers of hardware-related products and related merchandising services to retail markets in North America. Our principal business is operated through our wholly-owned subsidiary, ~~2019~~The Hillman Group, weInc. ~~recorded~~and anits ~~impairment~~wholly-owned ~~loss~~subsidiaries (collectively, “Hillman Group”), which had net sales of approximately $71,368.93 million ~~related~~ in 2020. Hillman Group sells its products to hardware stores, home centers, mass merchants, pet supply stores, and other retail outlets principally in the ~~disposal~~United States, Canada, Mexico, Latin America, and the Caribbean. Product lines include thousands of ~~our~~small ~~FastKey~~parts ~~self-service~~such as fasteners and related hardware items; threaded rod and metal shapes; keys, key ~~duplicating~~duplication ~~kiosks~~systems, and ~~related~~accessories; ~~assets~~builder's hardware; personal protective equipment, such as gloves and eye-wear; and identification items, such as tags and letters, numbers, and signs. We support product sales with services that include design and installation of merchandising systems, maintenance of appropriate in-store inventory levels, and break-fix for our robotics kiosks.

OnSubsequent ~~August~~to ~~16,~~our ~~2019~~year end, weon ~~acquired~~January 24, 2021, the ~~assets~~Company’s ofparent, ~~Sharp~~HMan ~~Systems~~Group Holdings, ~~LLC~~Inc., and Landcadia Holdings III, Inc. ("~~Resharp~~Landcadia"), a ~~California-based~~special ~~innovative~~purpose ~~developer~~acquisition ofcompany ~~automated~~("SPAC") ~~knife~~entered ~~sharpening~~into ~~systems,~~an ~~for~~agreement ("Merger Agreement") whereby the Parent would become a ~~cash~~wholly ~~payment~~owned subsidiary of ~~$3.0~~ ~~million and~~Landcadia ~~contingent~~for the consideration ~~valued~~of at $18911.13 million. ~~The~~upon ~~maximum~~approval ~~payout~~of the Landcadia shareholders and will be accounted for ~~the~~as ~~contingent~~a ~~consideration~~reverse ~~is $25.0~~acquisition ~~million plus~~resulting ~~1.8%~~in a recapitalization of ~~net~~HMan ~~knife~~Group Holdings. Consideration would be a combination of roll-~~sharpening~~over ~~revenues~~equity ~~for~~by ~~five~~current ~~years~~Company ~~after~~shareholders, new share purchases by Landcadia SPAC participants, cash from a new credit agreement and refinancing of existing credit facilities of the ~~$25~~ Company.0 ~~million is~~A ~~fully~~full ~~paid.~~description ~~Resharp~~of ~~has~~the ~~business~~proposed ~~operations~~acquisition terms may be found in the ~~United~~Landcadia ~~States~~Proxy ~~and~~Statement ~~its~~dated ~~financial~~February ~~results~~3, ~~reside~~2021 ~~within~~(the ~~our~~“Proxy”) ~~Consumer~~filed ~~Connected~~with ~~Solutions~~the ~~reportable~~United ~~segment.~~States Securities and Exchange Commission (“SEC”), which is available on www.sec.gov.

On July 1, 2019, the Company acquired the assets of West Coast Washers, Inc for a total purchase price of $3.1 million. The financial results of West Coast Washers, Inc. reside within the Company's Fastening, Hardware, and Personal Protective Equipment operating segment. See Note 5 - Acquisitions of the Notes to Consolidated Financial Statements for additional information.

In the fourth quarter of 2019, we implemented a plan to restructure the management and operations of our U.S. business to achieve synergies and cost savings associated with the recent acquisitions. The restructuring plan includes management realignment, integration of sales and operations functions, and strategic review of our product offerings. We incurred charges of $9.5 million in the year ended December 28, 2019, primarily related to inventory valuation adjustments and severance (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional details). We expect to incur restructuring related charges in our United States segment over the next year as we implement the plan.

On November 25, 2019, we entered into an amendment of our asset-based revolving credit agreement which provided for an additional $100.0 million of revolving credit, $12.5 million for the Canadian Borrower and $87.5 million for the US Borrowers, bringing the total to $250.0 million. After the amendment, $200.0 million of the revolving credit facilities under the amendment is available to the US Borrowers and $50.0 million of the revolving credit facilities under the amendment is available to the Canadian Borrower, in each case, subject to a borrowing base. See Note 7 - Long-Term Debt of the Notes to Consolidated Financial Statements for additional information.

Current Economic Conditions

Our business is impacted by general economic conditions in the North American and international markets, particularly the U.S. and Canadian retail markets including hardware stores, home centers, mass merchants, and other retailers.

WeIn ~~are~~December ~~exposed~~2019, toa ~~the~~novel ~~risk~~strain of ~~unfavorable~~coronavirus ~~changes~~(COVID-19) inwas ~~foreign~~reported ~~currency~~to ~~exchange~~have ~~rates~~surfaced ~~for~~in ~~the~~Wuhan, ~~U.S.~~China, ~~dollar~~and ~~versus~~has ~~local~~since ~~currency~~spread to a number of ~~our~~other ~~suppliers~~countries, ~~located~~including ~~primarily~~the inUnited ~~China~~States and ~~Taiwan~~Canada. WeIn ~~purchase~~March a2020, ~~significant~~the ~~variety~~World ofHealth ~~our~~Organization ~~products~~characterized ~~for~~COVID-19 ~~resale~~as ~~from~~a ~~multiple~~pandemic. ~~vendors~~Efforts ~~located~~to incontain ~~China~~the ~~and~~spread ~~Taiwan. The purchase price~~ of ~~these~~COVID-19 ~~products~~intensified isduring ~~routinely~~our ~~negotiated~~fiscal in2020 ~~U.S.~~second ~~dollar~~quarter ~~amounts~~and ~~rather~~remained ~~than~~in ~~the~~effect ~~local~~throughout ~~currency~~our offiscal ~~the~~year. ~~vendors~~Most states and ~~our~~municipalities ~~suppliers'~~within ~~profit margins decrease when~~ the U.S. ~~dollar~~enacted ~~declines~~temporary inclosures ~~value~~of ~~relative~~businesses, toissued ~~the~~quarantine ~~local~~orders ~~currency.~~and ~~This~~took ~~puts~~other ~~pressure~~restrictive onmeasures ~~our~~in ~~suppliers~~response to ~~increase~~the ~~prices~~COVID-19 ~~to us~~pandemic. ~~The~~Within ~~U.S.~~the ~~dollar~~United ~~decreased~~States inand ~~value~~Canada, ~~relative~~our tobusiness ~~the~~has ~~CNY~~been bydesignated ~~approximately~~an byessential ~~6.3% in 2017~~business, ~~increased~~which byallows ~~5.7%~~us into ~~2018,~~continue ~~and~~to ~~increased~~serve bycustomers ~~1.7%~~that inremain ~~2019~~open. ~~The~~

While all of our operations are located in North America, we participate in a global supply chain, and the existence of a worldwide pandemic and the reactions of governments around the world in response to COVID-19 to regulate the flow of labor and products began to impact our business in March 2020. If we need to close any of our facilities or a critical number of our employees become too ill to work, our distribution network could be materially adversely affected in a rapid manner. Similarly, if our customers experience adverse business consequences due to COVID-19, demand for our products could also be materially adversely affected in a rapid manner. The Company continues to experience customer demand during the year ended December 26, 2020 and during the subsequent period. Our teams continue to monitor demand disruption and there can be no assurance as to the level of demand that will prevail in fiscal 2021. A large portion of our customers continue to operate and sell our products, with some customers reducing operations or restricting some access to portions of the retail space. The magnitude of the financial impact on our quarterly and annual results is dependent on the duration of the COVID-19 pandemic and how quickly the U.S. and Canada economies resume normal operations.

~~U.S.~~An ~~dollar~~extended ~~decreased~~period inof ~~value~~global ~~relative~~supply chain, workforce availability, and economic disruption could materially affect the Company's business, the results of operations, financial condition, access to sources of liquidity, and the ~~Taiwan~~carrying ~~dollar~~value byof ~~approximately~~goodwill 8and intangible assets.5% inWhile ~~2017~~a triggering event did not occur during the year ended December 26, ~~increased~~2020, bya ~~3.3%~~prolonged COVID-19 pandemic could negatively impact net sales growth, change key assumptions and other global and regional macroeconomic factors that could result in ~~2018~~future impairment charges for goodwill, indefinite-lived intangible assets and ~~decreased~~definite bylived 0intangible assets.2% inThe ~~2019~~impact of the COVID-19 pandemic is fluid and continues to evolve, and therefore, we cannot predict the extent to which our business, results of operations, financial condition, or liquidity will ultimately be impacted.

We are exposed to the risk of unfavorable changes in foreign currency exchange rates for the U.S. dollar versus local currency of our suppliers located primarily in China and Taiwan. We purchase a significant variety of our products for resale from multiple vendors located in China and Taiwan. The purchase price of these products is routinely negotiated in U.S. dollar amounts rather than the local currency of the vendors and our suppliers' profit margins decrease when the U.S. dollar declines in value relative to the local currency. This puts pressure on our suppliers to increase prices to us. The U.S. dollar increased in value relative to the CNY by approximately by 5.7% in 2018, increased by 1.7% in 2019, and decreased by 6.5% in 2020. The

U.S. dollar increased in value relative to the Taiwan dollar by approximately 3.3% in 2018, decreased by 0.2% in 2019, and decreased by 7.9% in 2020.

In addition, the negotiated purchase price of our products may be dependent upon market fluctuations in the cost of raw materials such as steel, zinc, and nickel used by our vendors in their manufacturing processes. The final purchase cost of our products may also be dependent upon inflation or deflation in the local economies of vendors in China and Taiwan that could impact the cost of labor used in the manufacturing of our products. We identify the directional impact of changes in our product cost, but the quantification of each of these variable impacts cannot be measured as to the individual impact on our product cost with a sufficient level of precision.

We are also exposed to risk of unfavorable changes in Canadian dollar exchange rate versus the U.S. dollar. Our sales in Canada are denominated in Canadian dollars while a majority of the products are sourced in U.S. dollars. A weakening of the Canadian dollar versus the U.S. dollar results in lower sales in terms of U.S. dollars while the cost of sales remains unchanged. We have a practice of hedging some of our Canadian subsidiary's purchases denominated in U.S. dollars. The U.S. dollar ~~decreased~~increased in value relative to the Canadian dollar by approximately 68.67% in ~~2017~~2018, ~~increased~~decreased by 84.71% in ~~2018~~2019, and decreased by 4.1.9% in ~~2019~~2020. We may take pricing action, when warranted, in an attempt to offset a portion of product cost increases. The ability of our operating divisions to institute price increases and seek price concessions, as appropriate, is dependent on competitive market conditions.

We import large quantities of products which are subject to customs requirements and to tariffs and quotas set by governments through mutual agreements and bilateral actions. The recently implemented U.S. tariffs on steel and aluminum and other imported goods has increased our product costs and required us to increase prices on the affected products.

Product Revenues

The following is revenue based on products for our significant product categories and operating segments:

	Fastening, Hardware, and Personal Protective Solutions				Consumer Connected Solutions		Canada		Total Revenue
			Hardware and Protective Solutions				Robotics and Digital Solutions				Canada		Total Revenue
Year Ended December 28, 2019
Year Ended December 26, 2020
Fastening and hardware	$	~~607,247~~	$	706,865	$	—	$	~~121,242~~—	$	~~728,489~~	$	131,493	$	838,358
Personal protective	~~245,769~~		317,527		—		—		~~245,769~~		239		317,766
Keys and key accessories	—		—		~~185,451~~		4157,~~009~~828		~~189,460~~		2,878		160,706
Engraving	—		—		~~50,613~~		951,423		~~50,622~~		6		51,429
Resharp	—		—		22		—36		22		—		36
Consolidated	$	~~853,016~~	$	1,024,392	$	~~236,086~~	$	~~125~~209,~~260~~287	$	~~1,214,362~~	$	134,616	$	1,368,295
Year Ended December 29, 2018
Year Ended December 28, 2019
Fastening and hardware	$	~~581,269~~	$	607,247	$	—	$	~~137,186~~—	$	~~718,455~~	$	121,242	$	728,489
Personal protective	~~55,448~~		245,769		—		—		~~55,448~~		—		245,769
Keys and key accessories	—		—		~~143,898~~		4185,~~217~~451		~~148,115~~		4,009		189,460
Engraving	—		—		~~52,145~~		1250,613		~~52,157~~		9		50,622
Resharp	—		—		—		—22		—		—		22
Consolidated	$	~~636,717~~	$	853,016	$	~~196,043~~	$	~~141~~236,~~415~~086	$	~~974,175~~	$	125,260	$	1,214,362
Year Ended December 30, 2017
Year Ended December 29, 2018
Fastening and hardware	$	~~528,969~~	$	581,269	$	—	$	~~133,082~~—	$	~~662,051~~	$	137,186	$	718,455
Personal protective	—		55,448		—		—		—		—		55,448
Keys and key accessories	—		—		~~115,924~~		4143,~~706~~898		~~120,630~~		4,217		148,115
Engraving	—		—		~~55,674~~		1352,145		~~55,687~~		12		52,157
Resharp	—		—		—		—		—		—		—
Consolidated	$	~~528,969~~	$	636,717	$	~~171,598~~	$	~~137~~196,~~801~~043	$	~~838,368~~	$	141,415	$	974,175

2023

Results of Operations

~~Results~~The following table shows the results of operations for the years ended December 2826, ~~2019~~2020 and December 2928, ~~2018:~~2019. The income tax benefit and net loss for 2019 has been rested due to the correction of errors related to income tax accounting. See Note 1 - Basis of Presentation for additional details.

	Year EndedDecember 28, 2019						Year EndedDecember 29, 2018
			Year EndedDecember 26, 2020										Year EndedDecember 28, 2019As Restated
(dollars in thousands)	~~Amount~~		Amount		~~% ofNet Sales~~		~~Amount~~	% ofNet Sales			~~% ofNet Sales~~		Amount		% ofNet Sales
Net sales	$	~~1,214,362~~	$	1,368,295	~~100.0~~	%	$	~~974,175~~100.0		%	~~100.0~~	%	$	1,214,362	100.0	%
Cost of sales (exclusive of depreciation and amortization shown separately below)	~~693,881~~		781,815		~~57.1~~	%	~~537,885~~	57.1		%	~~55.2~~	%	693,881		57.1	%
Selling, general and administrative expenses	~~382,131~~		398,472		~~31.5~~	%	~~320,543~~	29.1		%	~~32.9~~	%	382,131		31.5	%
Depreciation	~~65,658~~		67,423		~~5.4~~	%	~~46,060~~	4.9		%	~~4.7~~	%	65,658		5.4	%
Amortization	~~58,910~~		59,492		~~4.9~~	%	~~44,572~~	4.3		%	~~4.6~~	%	58,910		4.9	%
Management fees to related party	~~562~~		577		—	%	~~546~~	—		%	~~0.1~~	%	562		—	%
Other (income) expense, net	~~5,525~~		(5,250)		~~0.5~~	%	~~(2,874~~	(0.4)	)	%	~~(0.3~~	)%	5,525		0.5	%
Income from operations	~~7,695~~		65,766		~~0.6~~	%	~~27,443~~	4.8		%	~~2.8~~	%	7,695		0.6	%
Interest expense, net	~~113,843~~		99,103		~~9.4~~	%	~~82,775~~	7.2		%	~~8.5~~	%	113,843		9.4	%
Refinancing charges	—				—	%	11,632				1.2	%
Mark-to-market adjustment of interest rate swap			601					—		%			2,608		0.2	%
Mark-to-market adjustment of interest rate swap	2,608				0.2	%	607				0.1	%
Loss before income taxes			(33,938)					(2.5)		%			(108,756)		(9.0)	%
Loss before income taxes	(108,756		)		(9.0	)%	(67,571		)		(6.9	)%
Income tax benefit			(9,439)					(0.7)		%			(23,277)		(1.9)	%
Income tax expense (benefit)	(5,370		)		(0.4	)%	2,070				0.2	%
Net loss			$	(24,499)				(1.8)		%			$	(85,479)	(7.0)	%
Net (loss) income	$	(103,386	)		(8.5	)%	$	(69,641	)		(7.1	)%
Adjusted EBITDA (1)			$	221,215				16.2		%			$	178,658	14.7	%

~~Year~~(1)Adjusted ~~Ended~~EBITDA ~~December 28~~is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, ~~2019~~including vsour ~~December 29~~definition and our use of Adjusted EBITDA, ~~2018~~and for a reconciliation from net income to Adjusted EBITDA.

Year Ended December 26, 2020 vs December 28, 2019

Net Sales

Net sales for the year ended December 2826, ~~2019~~2020 were $1,~~214~~368.43 million, or $45.84 million per shipping day, compared to net sales of $~~974~~1,214.24 million, or $34.98 million per shipping day for the year ended December 2928, ~~2018~~2019, an increase of approximately $~~240~~153.29 million. Sales ~~The~~of ~~increase~~personal ~~was~~protective ~~primarily~~equipment ~~driven~~increased by ~~the~~$71.8 ~~acquisitions~~million ofdue ~~MinuteKey~~to inhigh ~~the~~demand ~~third~~for ~~quarter~~gloves ofand ~~2018~~face masks. Fastening and ~~Big~~hardware ~~Time~~sales inincreased ~~the~~$99.6 ~~fourth~~million ~~quarter~~driven ofby ~~2018~~strong sales with big box retailers and traditional hardware stores. ~~The~~Finally, ~~acquisitions~~sales in Canada increased ~~revenue~~by $~~227~~9.64 million primarily due to strong retail demand for our products partially offset by in ~~the~~store ~~year~~shopping ~~ended~~restrictions ~~December 28,~~during ~~2019~~the assecond ~~compared~~quarter which lead to ~~the~~lower ~~year~~demand ~~ended~~during ~~December 29,~~that ~~2018~~period. These ~~Construction~~increases ~~fastener~~were ~~products~~offset ~~and~~by ~~builders~~a ~~hardware~~decrease ~~sales~~of ~~increased~~ $1927.26 million ~~and~~in $6key sales in the United States.4 ~~million,~~Key ~~respectively,~~sales ~~due~~were tonegatively ~~new~~impacted ~~product~~by ~~line~~restricted ~~roll~~access ~~outs~~to ~~with~~key ~~customers.~~duplicating ~~Additionally,~~kiosks ~~sales~~and ~~decreased $7.8~~retail ~~million due~~key toduplication ~~the~~services ~~closure~~as a result of aCOVID-19. ~~manufacturing~~As ~~facility~~the ineconomy ~~Canada~~has ~~and~~started ~~exiting~~to ~~the~~reopen, ~~related~~our ~~product~~service ~~lines~~team ~~(see Note~~has 14worked -closely ~~Restructuring of~~with ~~the~~our ~~Notes~~customers to ~~Consolidated~~restore ~~Financial~~access ~~Statements~~to ~~for~~key ~~additional information)~~machines.

Cost of Sales

Our cost of sales ("COS") is exclusive of depreciation and amortization expense. COS was $~~693~~781.98 million, or 57.1% of net sales, for the year ended December 2826, ~~2019~~2020, an increase of $~~156~~87.09 million compared to $~~537~~693.9 million, or 5557.21% of net sales, for the year ended December 2928, ~~2018~~2019. ~~The increase of~~Cost ~~1.9% in cost~~ of ~~sales,~~goods ~~expressed~~sold as a ~~percent~~percentage of net sales, inwas ~~2019 compared~~consistent ~~to 2018 was~~with the prior year primarily ~~due~~as toa result of the following ~~items~~offsetting factors:

•Sourcing Asavings ~~higher~~initiatives ~~mix~~that ofwe ~~personal~~achieved ~~protective~~in ~~equipment~~2020.

•2020 Inincluded ~~the~~a higher ~~year~~mix ~~ended December 28, 2019, we had inventory valuation adjustments in our Fastening, Hardware, and Personal Protective Solutions segment~~ of ~~$5.7~~construction ~~million~~fastener ~~primarily~~products ~~related to strategic review of our product offerings~~ and ~~restructuring~~personal ~~activities~~protective ~~(see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information)~~solutions.

• Net sales was reduced by $7.2 million in the year ended December 28, 2019 for payments made to customers associated with the new product line roll outs for construction fastener products and builders hardware.24

• We recorded a reduction of $3.8 million in cost of sales recorded in 2018 due to an adjustment of our accrual for anti-dumping duties based on the final results of the Department of Commerce’s administrative review of nails from China (see Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional information).

• The remaining increase was driven by higher product cost due to tariffs.

• These increases were partially offset by lower inventory valuation adjustments in our Canada segment of $5.5 million driven by charges taken in 2018 related to exiting certain lines of business and rationalizing stock keeping units (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information).

Expenses

~~Operating~~Selling, ~~expenses~~general, and ~~other~~administrative ~~income~~ (~~expenses~~"SG&A") expenses were $~~103~~398.95 million ~~higher~~in ~~for~~ the year ended December 2826, ~~2019~~2020, an increase of $16.3 million compared to $382.1 million in the year ended December 2928, ~~2018~~2019. The following changes in underlying trends impacted the change in ~~operating~~SG&A expenses:

• Selling expense was $~~156~~149.86 million in the year ended December 28 26, ~~2019~~2020, ana ~~increase~~decrease of $227.82 million compared to $~~134~~156.08 million for the year ended December 29 28, ~~2018~~2019. The ~~acquisition~~decrease ~~of MinuteKey~~ in ~~the~~selling ~~third~~expense ~~quarter~~was ofprimarily ~~2018~~due ~~and~~to ~~Big~~lower ~~Time~~marketing inand ~~the~~travel ~~fourth~~and ~~quarter~~entertainment ofexpense ~~2018 added $24.9 million~~ in ~~selling expense for~~ the year ended December 28 26, ~~2019~~2020. asAdditionally, ~~compared~~we tohad ~~2018.~~lower ~~These~~compensation ~~increases~~cost ~~were~~as ~~offset by~~ a ~~decrease~~result of ~~$3.3 million for~~ the ~~cost~~restructuring ofin ~~updating~~our ~~customer~~U.S. ~~store~~operations ~~labels~~that ~~for~~began ain ~~new~~the ~~pricing~~fourth ~~program~~quarter inof ~~2018~~2019.

• Warehouse and delivery expenses were $~~142~~159.30 million for the year ended December 28 26, ~~2019~~2020, an increase of $1716.37 million compared to warehouse and delivery expenses of $~~124~~142.93 million for the year ended December 29 28, ~~2018~~2019. The ~~acquisition~~additional ofexpense ~~MinuteKey~~was inprimarily ~~the~~due ~~third~~to ~~quarter~~higher ofvariable ~~2018~~compensation and ~~Big~~freight ~~Time~~expenses inrelated ~~the~~to ~~fourth~~increased ~~quarter of 2018 added $7~~sales.5 ~~million~~The inremaining ~~warehouse~~increase ~~expense~~was ~~for~~due ~~the~~to ~~year~~increased ~~ended December 28, 2019. We incurred $4.6 million of higher expense for increases in~~ labor, ~~benefits,~~driven ~~freight,~~by ~~and~~premium ~~equipment~~pay ~~costs.~~offered Weto ~~also incurred additional~~ warehouse ~~expense~~workers ofduring ~~$3.8~~the ~~million in 2019 related to restructuring activities in our Canada segment (see Note 14~~ COVID-19 ~~Restructuring~~outbreak ofalong ~~the~~with ~~Notes~~additional tosupplies ~~Consolidated~~and ~~Financial~~personal ~~Statements~~protective equipment for ~~additional~~our ~~information)~~facilities.

• General and administrative (“G&A”) expenses were $8389.08 million in the year ended December 28 26, ~~2019~~2020, an increase of $216.48 million compared to $6183.60 million in the year ended December 29 28, ~~2018~~2019. The increase was primarily due to ~~the~~increased ~~acquisitions~~legal offees ~~Big~~associated ~~Time~~with ~~and~~our ~~MinuteKey,~~ongoing ~~which~~litigation ~~added~~with ~~$10.1~~KeyMe million an G&A expense in the current year. We also incurred $5.4 million of additional expense for retention and long term incentive compensation plans introduced in the fourth quarter of 2018. Additionally, we incurred severance and related charges of $3.9 million related to corporate restructuring activities (see Note 1415 - ~~Restructuring~~Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional information). ~~Finally~~Additionally, we incurred ~~$1.6~~increased ~~million~~incentive ~~of higher~~ compensation ~~and benefits~~ expense in the ~~current~~ year. ~~These increases were partially offset by lower acquisition related charges in the year~~ ended December 28 26, ~~2019~~2020.

• Depreciation expense was $6567.74 million in the year ended December 28 26, ~~2019~~2020 compared to $4665.17 million in the year ended December 29 28, ~~2018~~2019. The increase was primarily ~~due to the acquisitions of Big Time and MinuteKey, which added $9.2 million in depreciation expense in the current year. The remaining increase was~~ driven by our investment in key ~~duplicating~~duplication machines and merchandising racks.

• Amortization expense of $5859.95 million in the year ended December 26, 282020, ~~2019~~which ~~compared~~was comparable to $4458.69 million in the year ended December 29 28, ~~2018~~2019. ~~The increase was primarily due to the acquisitions of Big Time and MinuteKey, which added $14.3 million an amortization expense in the current year.~~

• Other ~~expense~~income of $5.53 million for the year ended December 28 26, ~~2019~~2020 increased $810.48 million compared to ~~income~~expense of $25.95 million in the year ended December 29 28, ~~2018~~2019. In the year ended December 28 26, ~~2019,~~2020 other ~~expense~~income consisted ofprimarily ~~an impairment charge~~ of a $73.05 million ~~related~~gain toon the ~~loss~~revaluation onof the ~~disposal~~contingent ofconsideration ~~our~~associated ~~FastKey~~with ~~self-service~~the ~~key~~acquisition ~~duplicating~~of ~~kiosks.~~Resharp ~~These~~and ~~losses~~Instafob, ~~were~~(see ~~offset~~Note by13 a- ~~gain~~Fair onValue Measurements of the ~~sale~~Notes ofto ~~machinery~~Consolidated ~~and~~Financial ~~equipment~~Statements offor additional information). Additionally we received $01.48 million ~~(see~~in ~~Note~~cash 14from -the ~~Restructuring~~Canadian government as part of the ~~Notes~~Canada toEmergency ~~Consolidated~~Wage ~~Financial~~Subsidy ~~Statements~~program for ~~additional~~relief ~~information),~~during ~~and~~the ~~exchange~~second ~~rate~~quarter ~~gains~~shutdown ofin ~~$0.7~~Canada ~~million~~during the COVID-19 pandemic. ~~Other~~These ~~income~~gains were partially offset by exchange rate losses of $20.97 million. ~~for~~In the year ended December 28, 292019, ~~2018~~ other expense consisted of aan impairment charge of $57.30 million related ~~net~~to ~~gain~~the loss on the ~~sale and~~ disposal of ~~property,~~our ~~plant,~~FastKey ~~and~~self-service ~~equipment~~key ~~associated~~duplicating ~~with~~kiosks. This loss was offset by a gain on the ~~restructuring~~sale of ~~the~~machinery ~~Canada~~and ~~segment~~equipment of $0.4 million (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information)., ~~The~~and ~~gain~~exchange ~~was~~rate ~~partially~~gains ~~offset by~~ of $2.0.7 million ~~of exchange rate losses~~.

Interest expense, net, of $~~113~~99.81 million for the year ended December 2826, ~~2019~~2020 ~~increased~~decreased $3114.17 million, compared to $82113.8 million for the year ended December 2928, ~~2018~~2019. ~~During 2018, we refinanced our term loan and revolver, increasing the outstanding term loan by approximately $527.5 million.~~ This ~~activity,~~decrease ~~along~~was ~~with~~primarily ~~additional~~due ~~draws on our revolving credit facility during the year, led~~ to ~~increased~~lower interest ~~expense~~rates incombined ~~the year ended December 28, 2019. In connection~~ with ~~the~~lower ~~refinancing,~~outstanding wedebt ~~incurred~~balances ~~$11.6 million~~ in ~~refinancing charges during~~ the year ended December 2926, ~~2018~~2020. ~~See Note 7 - Long-Term Debt of the Notes to Consolidated Financial Statements for additional information.~~

2225

Results of Operations

~~Results~~The following table shows the results of operations for the years ended December 2928, ~~2018~~2019 and December 3029, ~~2017:~~2018. the income tax benefit and net loss for 2019 and 2019 has been rested due to the correction of errors related to income tax accounting. See Note 1 - Basis of Presentation for additional details.

	Year EndedDecember 29, 2018						Year Ended December 30, 2017
			Year EndedDecember 28, 2019As Restated										Year EndedDecember 29, 2018As Restated
(dollars in thousands)	~~Amount~~		Amount		~~% ofTotal~~		~~Amount~~	% ofTotal			~~% ofTotal~~		Amount		% ofTotal
Net sales	$	~~974,175~~	$	1,214,362	~~100.0~~	%	$	~~838,368~~100.0		%	~~100.0~~	%	$	974,175	100.0	%
Cost of sales (exclusive of depreciation and amortization shown separately below)	~~537,885~~		693,881		~~55.2~~	%	~~455,717~~	57.1		%	~~54.4~~	%	537,885		55.2	%
Selling, general and administrative expenses	~~320,543~~		382,131		~~32.9~~	%	~~274,044~~	31.5		%	~~32.7~~	%	320,543		32.9	%
Depreciation	~~46,060~~		65,658		~~4.7~~	%	~~34,016~~	5.4		%	~~4.1~~	%	46,060		4.7	%
Amortization	~~44,572~~		58,910		~~4.6~~	%	~~38,109~~	4.9		%	~~4.5~~	%	44,572		4.6	%
Management fees to related party	~~546~~		562		~~0.1~~	%	~~519~~	—		%	~~0.1~~	%	546		0.1	%
Other (income) expense, net	~~(2,874~~		)5,525		~~(0.3~~	)%	~~459~~	0.5		%	~~0.1~~	%	(2,874)		(0.3)	%
Income from operations	~~27,443~~		7,695		~~2.8~~	%	~~35,504~~	0.6		%	~~4.2~~	%	27,443		2.8	%
Interest expense, net	~~82,775~~		113,843		~~8.5~~	%	~~63,248~~	9.4		%	~~7.5~~	%	82,775		8.5	%
Refinancing charges	~~11,632~~		—		~~1.2~~	%	—	—		%	—	%	11,632		1.2	%
Mark-to-market adjustment of interest rate swap	~~607~~		2,608		~~0.1~~	%	~~(1,481~~	0.2	)	%	~~(0.2~~	)%	607		0.1	%
Loss before income taxes	~~(67,571~~		(108,756)		~~(6.9~~	)%	~~(26,263~~	(9.0)	)	%	~~(3.1~~	)%	(67,571)		(6.9)	%
Income tax expense (benefit)	2,070				0.2	%	(84,911		)		(10.1	)%
Income tax benefit			(23,277)					(1.9)		%			(8,890)		(0.9)	%
Net income (loss)	$	(69,641	)		(7.1	)%	$	58,648			7.0	%
Net loss			$	(85,479)				(7.0)		%			$	(58,681)	(6.0)	%
Adjusted EBITDA (1)			$	178,658				14.7		%			$	139,756	14.3	%

~~Year~~(1)Adjusted ~~Ended~~EBITDA ~~December 29~~is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, ~~2018~~including vsour ~~Year~~definition ~~Ended~~and ~~December 30~~our use of Adjusted EBITDA, ~~2017~~and for a reconciliation from net income to Adjusted EBITDA.

Year Ended December 28, 2019 vs Year Ended December 29, 2018

Net Sales

Net sales for the year ended December 2928, ~~2018~~2019 were $~~974~~1,214.24 million, or $34.98 million per shipping day, compared to net sales of $~~838~~974.42 million, or $3.39 million per shipping day, for the year ended December 3029, ~~2017~~2018. The increase was primarily driven by the acquisitions of ~~ST Fastening Systems in the fourth quarter of 2017,~~ MinuteKey in the third quarter of 2018, and Big Time in the fourth quarter of 2018. The acquisitions increased revenue $~~115~~227.46 million in the year ended December 28, 2019 as compared to the year ended December 29, 2018. ~~Sales~~Construction offastener ~~hurricane~~products ~~related~~and ~~products~~builders hardware sales increased $719.92 million~~. Key~~ and ~~key accessory sales increased by~~ $6.54 million, ~~primarily~~respectively, due to ~~the~~new ~~key~~product ~~program~~line roll ~~out~~outs towith ~~a new key customer in 2018~~customers. ~~Automotive~~Additionally, ~~keys~~sales ~~increased~~decreased $67.18 million due to the ~~launch~~closure of a ~~new~~manufacturing facility in Canada and exiting the related product ~~for~~lines ~~duplication~~(see Note 14 - Restructuring of ~~programmable~~the ~~key~~Notes ~~remotes~~to Consolidated Financial Statements for additional information).

Cost of Sales

Our cost of sales was $~~537~~693.9 million, or 5557.21% of net sales, for the year ended December 2928, ~~2018~~2019, an increase of $82156.20 million compared to $~~455~~537.79 million, or 5455.42% of net sales, for the year ended December 3029, ~~2017~~2018. The increase of 01.89% in cost of sales, expressed as a percent of net sales, in ~~2018~~2019 compared to ~~2017~~2018 was primarily due to the following items:

•Fiscal We2019 ~~recorded~~included ~~inventory~~a higher ~~valuation~~mix ~~adjustments in our Canada segment~~ of ~~$9.8~~personal ~~million~~protective ~~driven by exiting certain lines of business and rationalizing stock keeping units (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information)~~equipment.

•In ~~This~~the ~~additional~~year ~~expense~~ended ~~was~~December 28, ~~partially~~2019, ~~offset~~we byhad aninventory ~~adjustment~~valuation toadjustments in our ~~accrual~~Hardware ~~for~~and ~~anti-dumping~~Protective ~~duties.~~Solutions Wesegment ~~recorded a reduction~~ of $35.87 million inprimarily ~~cost~~related ~~of sales in the year ended December 28, 2019 due~~ to anstrategic ~~adjustment~~review toof our ~~accrual~~product ~~for~~offerings ~~anti-dumping~~and ~~duties~~restructuring activities (see Note 1514 - ~~Commitments~~Restructuring ~~and Contingencies~~ of the Notes to Consolidated Financial Statements for additional information).

~~• The remaining increase in in cost of sales, expressed as a percent of net sales, was the result of higher sales and product costs attributed to commodity inflation and tariffs.~~26

23•Net sales was reduced by $7.2 million in the year ended December 28, 2019 for payments made to customers associated with the new product line roll outs for construction fastener products and builders hardware.

•We recorded a reduction of $3.8 million in cost of sales recorded in 2018 due to an adjustment of our accrual for anti-dumping duties based on the final results of the Department of Commerce’s administrative review of nails from China (see Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional information).

•The remaining increase was driven by higher product cost due to tariffs.

•These increases were partially offset by lower inventory valuation adjustments in our Canada segment of $5.5 million driven by charges taken in 2018 related to exiting certain lines of business and rationalizing stock keeping units (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information).

Expenses

~~Operating~~Selling, ~~expenses~~general, and ~~other~~administrative ~~income~~ (~~expenses~~"SG&A") expenses were $61382.71 million ~~higher~~in ~~for~~ the year ended December 2928, ~~2018~~2019 an increase of $61.6 million compared to $320.5 million in the year ended December 3029, ~~2017~~2018. The following changes in underlying trends impacted the change in ~~operating~~SG&A expenses:

• Selling expense was $~~134~~156.08 million in the year ended December 29 28, ~~2018~~2019, an increase of $1422.18 million compared to $~~119~~134.90 million for the year ended December 30 29, ~~2017~~2018. The acquisition of STMinuteKey ~~Fastening~~in ~~Systems,~~the ~~Minute~~third ~~Key,~~quarter of 2018 and Big Time in the fourth quarter of 2018 added $1324.19 million ofin selling expense infor the year ended December 2928, ~~2018.~~2019 ~~The~~as ~~remaining~~compared ~~increase~~to in2018. ~~selling~~These ~~expense~~increases ~~was~~were ~~primarily~~offset ~~due~~by toa decrease of $03.93 million offor ~~additional~~the ~~expense~~cost ~~for~~of updating customer store labels for a new pricing program ~~with~~in ~~the remaining increase due to higher labor and benefit costs~~2018.

• Warehouse and delivery expenses were $~~124~~142.93 million for the year ended December 29 28, ~~2018~~2019, an increase of $1417.13 million compared to warehouse and delivery expenses of $~~110~~124.89 million for the year ended December 30 29, ~~2017~~2018. The acquisition of STMinuteKey ~~Fastening~~in ~~Systems,~~the ~~Minute~~third ~~Key,~~quarter of 2018 and Big Time in the fourth quarter of 2018 added $7.5 million ofin warehouse expense infor the year ended December 2928, ~~2018~~2019. ~~Additionally,~~We we incurred $4.6 million of higher expense for increases in labor, benefits, freight, and equipment costs. We also incurred additional warehouse expense of $23.28 million in 2019 related to restructuring activities in our Canada segment (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information).

• G&A expenses were $6183.60 million in the year ended December 29 28, ~~2018~~2019 an increase of $1821.34 million compared to $4361.46 million in the year ended December 30 29, ~~2017~~2018. The ~~acquisition~~increase ofwas STprimarily ~~Fastening~~due ~~Systems,~~to ~~Minute~~the ~~Key,~~acquisitions ~~and~~of Big Time and MinuteKey, which added $10.61 million ofan G&A expense in the current year. ~~ended~~We ~~December~~also ~~29,~~incurred ~~2018~~$5.4 Inmillion ~~the~~of ~~year~~additional ~~ended~~expense ~~December~~for ~~29,~~retention and long term incentive compensation plans introduced in the fourth quarter of 2018. Additionally, we incurred anseverance ~~additional~~and related charges of $113.29 million inrelated ~~acquisition~~to ~~related~~corporate ~~costs~~restructuring ~~associated~~activities ~~with~~(see ~~MinuteKey~~Note ~~and~~14 ~~Big~~- ~~Time~~Restructuring of the Notes to Consolidated Financial Statements for additional information). ~~The~~Finally, ~~increased~~we ~~acquisition~~incurred ~~expenses~~$1.6 million of higher compensation and benefits expense in 2019. These increases were partially offset by lower ~~variable~~acquisition ~~compensation~~related ~~expense~~charges in the year ended December 2928, ~~2018~~2019.

• Depreciation expense was $4665.17 million in the year ended December 29 28, ~~2018~~2019 compared to $3446.01 million in the year ended December 30 29, ~~2017~~2018. The ~~acquisition~~increase ofwas STprimarily ~~Fastening~~due ~~Systems,~~to ~~Minute~~the ~~Key,~~acquisitions ~~and~~of Big Time and MinuteKey, which added $69.52 million ofin depreciation expense in ~~the year ended December 29, 2018~~2019. The remaining increase was driven by our ~~continued~~ investment in ~~new, state of the art~~ key ~~cutting~~duplicating ~~technology,~~machines ~~the KeyKrafter™~~ and ~~the~~merchandising ~~implementation of our ERP system in Canada~~racks.

• Amortization expense was $4458.69 million in the year ended December 29 28, ~~2018~~2019 compared to $3844.16 million in the year ended December 30 29, ~~2017~~2018. The ~~acquisition~~increase ofwas STprimarily ~~Fastening~~due ~~Systems,~~to ~~Minute~~the ~~Key,~~acquisitions ~~and~~of Big Time and MinuteKey, which added $614.63 million ofan amortization expense in ~~the year ended December 29, 2018~~2019.

• Other ~~income~~expense was $25.95 million for the year ended December 29 28, ~~2018~~2019, an increase of $38.34 million compared to a loss of $02.59 million in the year ended December 30 29, ~~2017~~2018. In ~~Other income of $2.9 million for~~ the year ended December 2928, ~~2018~~2019, other expense consisted of aan impairment charge of $57.30 million ~~net~~related ~~gain~~to on the ~~sale~~loss ~~and~~on the disposal of ~~property,~~our ~~plant,~~FastKey ~~and~~self-service ~~equipment~~key ~~associated~~duplicating ~~with~~kiosks. These losses were offset by a gain on the ~~restructuring~~sale of ~~the~~machinery ~~Canada~~and ~~segment,~~equipment of $0.4 million (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information)., ~~The~~and ~~current~~exchange ~~year~~rate ~~gain~~gains ~~was~~of ~~offset by~~ $2.0.7 million. ofOther ~~exchange~~expense ~~rate~~of ~~losses~~$2.9 ~~Other~~million ~~income~~ for the year ended December 3029, ~~2017~~2018 ~~included~~consisted of a $15.3 million ofnet ~~exchange~~gain ~~rate~~on ~~gains.~~the ~~These~~sale ~~gains~~and ~~were~~disposal ~~offset~~of byproperty, ~~net~~plant, ~~impairment~~and ~~losses~~equipment associated with the restructuring of ~~$1.9~~the ~~million~~Canada assegment we(see ~~exited~~Note ~~certain~~14 ~~lines~~- Restructuring of ~~business.~~the InNotes ~~both~~to ~~years~~Consolidated weFinancial ~~incurred~~Statements ~~immaterial~~for ~~losses~~additional oninformation). ~~the~~The ~~disposal~~gain was partially offset by $2.0 million of ~~fixed~~exchange ~~assets~~rate losses.

Interest expense, net, was $82.8 million for the year ended December 29, 2018, an increase of $19.5 million, compared to $63.2 million for the year ended December 30, 2017. During 2018 we refinanced our term loan and revolver, increasing the outstanding term loan by approximately $527.5 million. In connection with the refinancing, we incurred $11.6 million in refinancing charges. The increase in the term loan and additional draws on our revolving credit facility during the year led to increased interest expense. See Note 7 - Long-Term Debt of the Notes to Consolidated Financial Statements for additional information.27

24Interest expense, net, was $113.8 million for the year ended December 28, 2019, an increase of $31.1 million, compared to $82.8 million for the year ended December 29, 2018. During 2018 we refinanced our term loan and revolver, increasing the outstanding term loan by approximately $527.5 million. In connection with the refinancing, we incurred $11.6 million in refinancing charges. The increase in the term loan and additional draws on our revolving credit facility during the year led to increased interest expense. See Note 7 - Long-Term Debt of the Notes to Consolidated Financial Statements for additional information.

Results of Operations – Operating Segments

The following table provides supplemental information of our sales and profitability by operating segment (in thousands):

~~Fastening,~~ Hardware, and ~~Personal~~ Protective Solutions

	Year EndedDecember 28, 2019				Year EndedDecember 29, 2018		Year EndedDecember 30, 2017
			Year EndedDecember 26, 2020				Year EndedDecember 28, 2019		Year EndedDecember 29, 2018
Fastening, Hardware, and Personal Protective Solutions
Hardware and Protective Solutions
Segment Revenues	$	~~853,016~~	$	1,024,392	$	~~636,717~~	$	~~528~~853,~~969~~016	$	636,717
Segment Income from Operations	$	~~14,204~~	$	67,313	$	~~18,555~~	$	714,~~765~~204	$	18,555
Adjusted EBITDA (1)			$	153,765			$	101,319	$	76,896

(1)Adjusted EBITDA is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our definition and our use of Adjusted EBITDA, and for a reconciliation from net income to Adjusted EBITDA.

Year Ended December 26, 2020 vs December 28, 2019

Net Sales

Hardware and Protective Solutions net sales for the year ended December 26, 2020 increased by $171.4 million from the prior year. The primary drivers of this increase were:

•Fastening and hardware sales increased $99.6 million due to strong demand from big box retailers and traditional hardware stores along with price increases initiated in the second quarter of 2019 to offset the impact of tariffs.

•Sales of personal protective equipment increased by $71.8 million due to high demand.

Income from Operations

Income from operations of our Hardware and Protective Solutions operating segment increased by approximately $53.1 million in the year ended December 26, 2020 to $67.3 million from $14.2 million in the year ended December 28, 2019. The increased sales noted above were partially offset by increased cost of sales and increased selling, general and administrative expenses as outlined below:

Cost of sales as a percentage of net sales was 60.8% in the year ended December 26, 2020, a decrease of 1.2 % from 62.0% in the year ended December 28, 2019. The decrease in cost of sales as a percentage of net sales was primarily driven $7.2 million for payments made to customers in the year ended December 28, 2019 associated with the new product line roll outs for construction fastener products and builders hardware combined with sourcing savings. This was partially offset by a higher mix of construction fastener products and personal protective solutions.

Operating expenses increased $25.1million in our Hardware and Protective Solutions segment primarily due to:

•Warehouse expense increased $17.7 million in the year ended December 26, 2020 compared to the year ended December 28, 2019. The additional expense was primarily due to increased labor driven by premium pay offered to warehouse workers during the COVID-19 pandemic along with additional supplies and personal protective equipment for our facilities. The remaining increase was primarily due to higher variable and incentive compensation expense related to increased sales.

•General and administrative (“G&A”) expenses increased $2.9 million in the year ended December 26, 2020. The increase was primarily due to increased incentive compensation in the year ended December 26, 2020.

•Depreciation expense increased $2.3 million in the year ended December 26, 2020 due to our merchandising racks.

Year Ended December 28, 2019 vs December 29, 2018

Net Sales

~~Fastening,~~Net sales for our Hardware, and ~~Personal~~ Protective Solutions ~~net~~operating ~~sales~~segment ~~for the year ended December 28, 2019~~ increased by $216.3 million ~~from~~in the ~~prior~~ year. ~~The~~ended ~~primary~~December 28, ~~drivers~~2019 ofprimarily ~~this~~due ~~increase were~~to:

• The acquisition of Big Time in the fourth quarter of 2018 increased revenue $190.3 million in the year ended December 28, 2019.

•Fastening ~~Construction fastener products~~ and ~~builders~~ hardware sales increased $1926.20 million ~~and~~primarily ~~$6.4 million, respectively,~~ due to new product line ~~roll~~rollouts ~~outs~~ with customers.

Income ~~(Loss)~~ from Operations

Income from operations of our ~~Fastening,~~ Hardware, and ~~Personal~~ Protective Solutions ~~operating~~ segment decreased by approximately $4.4 million in the year ended December 28, 2019 to $14.2 million ~~from~~as compared to $18.6 million in the year ended December 29, 2018. The increased sales noted above were offset by increased cost of sales and increased selling, general and administrative expenses as outlined below:

Cost of sales as a percentage of net sales was 62.0% in the year ended December 28, 2019, an increase of 5.3% from 56.7% in the year ended December 29, 2018. The primary drivers of this increase were:

•Fiscal ~~Cost~~2018 ofincluded ~~sales as~~ a ~~percentage of net sales was primarily driven by a~~ higher mix of personal protective equipment.

• Inventory valuation adjustments were $5.7 million in the current year primarily related to restructuring activities (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information).

Operating expenses increased $52.3 million in our Fastening, Hardware, and Personal Protective Solutions segment primarily due to:

• The acquisition of Big Time in the fourth quarter of 2018 increased SG&A $22.0 million and amortization expense of $10.6 million in ~~amortization expense in~~ the year ended December 28, 2019.

• Warehouse costs, excluding the acquisition of Big Time, increased $6.8 million primarily driven by increased labor, benefits, freight and maintenance costs.

• We incurred $4.4 million of additional expense for retention and long term incentive compensation plans introduced in the fourth quarter of 2018.

• Additionally, we incurred severance and related charges of $3.2 million related to corporate restructuring activities (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information).

25Robotics and Digital Solutions

Year Ended December 29, 2018 vs December 30, 2017



	Year Ended December 26, 2020		Year Ended December 28, 2019		Year Ended December 29, 2018
Robotics and Digital Solutions
Segment Revenues	$	209,287	$	236,086	$	196,043
Segment Income from Operations	$	3,177	$	3,385	$	17,705
Adjusted EBITDA (1)	$	60,265	$	70,966	$	57,369

Year Ended December 26, 2020 vs December 28, 2019

Net Sales

~~Net sales for our Fastening, Hardware, and Personal Protective Solutions operating segment increased by $107.7 million in the year ended December~~ 29~~, 2018 primarily due to:~~

•Net ~~The~~sales ~~acquisition~~for ofour STRobotics ~~Fastening~~and ~~Systems~~Digital Solutions operating segment decreased $26.8 million in the ~~fourth~~year ~~quarter~~ended ofDecember 26, ~~2017~~2020 ~~added~~compared to the net sales for 2019 primarily due to a decrease of $4127.46 million in ~~net~~key sales. Key sales were negatively impacted by reduced retail foot traffic and restricted access to key duplicating kiosks along with retail key duplication services as a result of COVID-19. As the economy has started to reopen, our service team has worked closely with our customers to restore access to key duplicating kiosks.

•Income ~~The~~from ~~acquisition of Big Time in the fourth quarter of 2018 added $55.4 million in net sales.~~Operations

•Income ~~Hurricane~~from ~~related~~operations ~~sales~~of ~~increased~~our Robotics and Digital Solutions operating segment decreased by approximately $70.92 million in the year ended December 26, 2020 to $3.2 million from $3.4 million in the year ended December 29 28, ~~2018~~2019. The decreased sales were offset by decreased SG&A and other income as outlined below:

~~Income~~•Selling ~~(Loss)~~expense ~~from~~decreased ~~Operations~~$6.7 million in the year ended December 26, 2020 compared to the year ended December 28, 2019. The decrease was primarily due to lower sales commissions for kiosk sales and reduced travel and compensation expense.

~~Income~~•Warehouse ~~from~~expense ~~operations~~decreased ~~of our Fastening, Hardware, and Personal Protective Solutions segment increased by approximately~~ $101.8 million in the year ended December 2926, ~~2018 to $18.6~~2020 ~~million as~~ compared to ~~$7.8~~ ~~million in~~ the year ended December 3028, ~~2017~~2019. The ~~increases~~decrease inwas ~~sales~~primarily ~~were~~due ~~partially~~to ~~offset~~lower byfreight ~~increased COS~~ and ~~SG&A~~shipping ~~costs.~~expenses ~~Cost~~driven ofby ~~sales~~lower ~~as a percentage of net~~ sales ~~was 56~~volume.7% in the year ended December 29, 2018, an increase of 0.2% from 56.5% in the year ended December 30, 2017. SG&A increased $25.5 million in the year ended December 29, 2018. The primary drivers of this increase were:

•General ~~The~~and ~~acquisition~~administrative ofexpense STincreased ~~Fastening~~by ~~Systems~~$4.1 inmillion ~~the~~primarily ~~fourth~~due ~~quarter~~to ofincreased ~~2017~~legal ~~which~~fees ~~added~~associated ~~$10~~with our ongoing litigation with KeyMe, Inc.5 ~~million~~(see inNote ~~SG&A~~15 ~~expense~~- Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional information).

•Other ~~The~~income ~~acquisition~~increased ofby ~~Big~~$10.4 ~~Time~~million in the ~~fourth~~year ~~quarter~~ended December 26, of2020 ~~2018~~compared ~~added~~to the year ended December 28, 2019. Other income was $83.05 million in ~~SG&A~~the year ended December 26, 2020 and was driven by revaluation of the contingent consideration associated with the acquisition of Resharp and Instafob (see Note 13 - Fair Value Measurements of the Notes to Consolidated Financial Statements for additional information). In the year ended December 26, 2020 other expense was comprised primarily of an impairment charge of $7.7 million related to the loss on the disposal of our FastKey self-service key duplicating kiosks and related assets.

• We incurred $5.1 million of acquisition related expenses associated with Big Time.

• We incurred $1.1 million of additional expense for retention and long term incentive compensation plans introduced in the fourth quarter of 2018.

Consumer Connected Solutions

	Year EndedDecember 28, 2019		Year EndedDecember 29, 2018		Year EndedDecember 30, 2017
Consumer Connected Solutions
Segment Revenues	$	236,086	$	196,043	$	171,598
Segment Income from Operations	$	3,385	$	17,705	$	24,800

Year Ended December 28, 2019 vs December 29, 2018

Net Sales

Net sales for our ~~Consumer~~Robotics ~~Connected~~and Digital Solutions operating segment increased $40.0 million in the year ended December 28, 2019 as compared to ~~the net sales for~~ 2018 primarily due to:

• The acquisition of Minute Key in the third quarter of 2018, ~~which~~ increased revenue $37.3 million in the year ended December 28, 2019.

• Automotive key sales increased $4.2 million in the year ended December 28, 2019.

Income ~~(Loss)~~ from Operations

Income from operations of our ~~Consumer~~Robotics ~~Connected~~and Digital Solutions operating segment decreased ~~by approximately~~ $14.3 million in the year ended December 28, 2019 to $3.4 million ~~from~~as compared to $17.7 million in the year ended December 29, 2018. The ~~increased~~increases in net sales were offset by increased ~~SG&A,~~operating ~~depreciation and amortization~~ expenses as outlined below:

• The acquisition of MinuteKey added $20.5 million in SG&A expenses, $8.5 million in depreciation and $3.7 million in amortization expense in the year ended December 28, 2019.

• We incurred $7.7 million of impairment charges in 2019 related to the loss on the disposal of our FastKey self-service key duplicating kiosks.

• Depreciation expense, excluding MinuteKey, increased $4.4 million driven by our continued investment in key duplicating machines.

• We incurred $1.5 million in legal fees related to the ongoing litigation with KeyMe, Inc. (see Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional information).

26•We incurred $1.0 million of additional expense for retention and long term incentive compensation plans introduced in the fourth quarter of 2018.

~~• We incurred $1.0 million of additional expense for retention and long term incentive compensation plans introduced in the fourth quarter of 2018.~~30

Year Ended December 29, 2018 vs December 30, 2017

Net Sales

Net sales for our Consumer Connected Solutions operating segment increased $24.4 million in the year ended December 29, 2018 as compared to 2017 primarily due to:

• The increase in sales was primarily driven by the acquisition of MinuteKey in the third quarter of 2018 which added $18.6 million to net sales.

• Key and key accessory sales increased by $6.5 million primarily due to the key program roll out to a new key customer in 2018.

• Automotive keys increased $6.1 million due to the launch of a new product for duplication of programmable key remotes.

• These increases were offset by lower key sales to big box customers and lower engraving sales.

Income (Loss) from Operations

Income from operations of our Consumer Connected Solutions operating segment decreased $7.1 million the year ended December 29, 2018 to $17.7 million as compared to $24.8 million in the year ended December 30, 2017. The increases in net sales were offset by increased operating expenses as outlined below:

• The acquisition of MinuteKey added $12.7 million in SG&A expenses, $4.7 million in depreciation and $2.2 million in amortization expense in the year ended December 29, 2018.

• We incurred $5.2 million in acquisition related expense associated with MinuteKey.

• Depreciation expense increased $3.0 million due to our continued investment in key and engraving machines.

Canada

	Year EndedDecember 28, 2019				Year EndedDecember 29, 2018			Year EndedDecember 30, 2017
			Year EndedDecember 26, 2020					Year EndedDecember 28, 2019		Year EndedDecember 29, 2018
Canada
Segment Revenues	$	~~125,260~~	$	134,616	$	~~141,415~~		$	~~137~~125,~~801~~260	$	141,415
Segment Income (Loss) from Operations	$	(9,894	)		$	(8,817	)	$	2,939
Segment Loss from Operations			$	(4,724)				$	(9,894)	$	(8,817)
Adjusted EBITDA (1)			$	7,185				$	6,373	$	5,491

Year Ended December 26, 2020 vs December 28, 2019

Net Sales

Net sales in our Canada operating segment increased by $9.4 million in the year ended December 26, 2020 primarily due to strong retail demand for our products partially offset by in store shopping restrictions in the second quarter which lead to lower demand during that period

Loss from Operations

Loss from operations of our Canada segment decreased by $5.2 million in the year ended December 26, 2020 to a loss of $4.7 million as compared to a loss of $9.9 million in the year ended December 28, 2019. In addition to the increased sales, loss from operations increased due to the following items:

•COS as a percentage of net sales decreased 1.5% from 69.1% in the year ended December 28, 2019 to 67.6% in the year ended December 26, 2020 primarily due to $4.3 million of inventory valuation adjustments taken in 2019 in our Canada segment driven by exiting certain lines of business and rationalizing stock keeping units (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information).

•Other income and expense increased $0.7 million to income of $1.8 million in the current year compared with income of $1.1 million in the year ended December 28, 2019. Other income for the year ended December 26, 2020 consisted primarily of $1.8 million in cash received from the Canadian government as a part of the Canada Emergency Wage Subsidy program for relief during the second quarter shutdown in Canada during the COVID-19 outbreak. This was partially offset by exchange rate losses of $0.6 million. Other income for the year ended December 28, 2019 included a gain on the sale of machinery and equipment of $0.4 million (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information), and exchange rate gains of $0.7 million.

Year Ended December 28, 2019 vs December 29, 2018

Net Sales

Net sales infor our Canada operating segment decreased by $16.2 million in the year ended December 28, 2019 primarily due to:.

• The unfavorable impact of conversion of the local currency to U.S. dollars.

• The closure of a manufacturing facility in Canada and exiting the related product lines resulted in to $7.8 million in lower sales.

~~Income (~~Loss) from Operations

Income from operations of our Canada segment decreased by $1.1 million in the year ended December 28, 2019 to a loss of $9.9 million as compared to a loss of $8.8 million in the year ended December 29, 2018. The decrease in sales was offset by lower COS as percentage of sales. Additionally, we incurred higher other expense in the year ended December 28, 2019.

• COS as a percentage of net sales decreased 5.3% from 74.4% in the year ended December 29, 2018 to 69.1% in the year ended December 28, 2019 primarily due to $9.8 million of inventory valuation adjustments taken in 2018 in our Canada segment driven by exiting certain lines of business and rationalizing stock keeping units as compared to ~~inventory adjustments of $4.3 million in the year ended December 28, 2019 (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information).~~

2731

•inventory ~~Other~~adjustments ~~income and expense decreased $2.4 million to income~~ of $14.~~1 million in the current year compared with income of $~~3.5 million in the year ended December ~~29, 2018. Other income for the year ended December~~ 28, 2019 ~~included a gain on the sale of machinery and equipment of $0.4 million~~ (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information)~~, and exchange rate gains of $0~~.7 million. Other income for the year ended December 29, 2018 consisted of a $5.3 million net gain on the sale and disposal of property, plant, and equipment associated with the restructuring of the Canada segment, (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information). The gain in the year ended December 29, 2018 was offset by $1.8 million exchange rate losses of exchange rate losses.

~~Year~~•Other ~~Ended~~income and expense decreased $2.4 million to income of $1.1 million in the current year compared with income of $3.5 million in the year ended December 29, 2018. vsOther income for the year ended December 30 28, ~~2017~~2019 included a gain on the sale of machinery and equipment of $0.4 million (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information), and exchange rate gains of $0.7 million. Other income for the year ended December 29, 2018 consisted of a $5.3 million net gain on the sale and disposal of property, plant, and equipment associated with the restructuring of the Canada segment, (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information). The gain in the year ended December 29, 2018 was offset by $1.8 million exchange rate losses of exchange rate losses.

~~Net~~Non-GAAP ~~Sales~~Financial Measures

~~Net~~Adjusted ~~sales~~EBITDA ~~for~~is a non-GAAP financial measure and is the primary basis used to measure the operational strength and performance of our ~~Canada~~businesses ~~operating~~as ~~segment increased by $3.6~~well ~~million~~as to assist in the ~~year~~evaluation ~~ended~~of ~~December 29~~underlying trends in our businesses. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of our businesses and from intangible assets recognized in business combinations. It is also unaffected by our capital and tax structures, ~~2018~~as ~~primarily~~our ~~due~~management excludes these results when evaluating our operating performance. Our management and Board of Directors use this financial measure to evaluate our consolidated operating performance and the ~~roll~~operating ~~out~~performance of ~~wall~~our ~~anchor~~operating segments and ~~builders~~to ~~hardware~~allocate ~~products~~resources and capital to ~~retail~~our ~~customers~~operating segments. Additionally, we believe that Adjusted EBITDA is useful to investors because it is one of the bases for comparing our operating performance with that of other companies in our industries, although our measure of Adjusted EBITDA may not be directly comparable to similar measures used by other companies.

~~Income~~We ~~(Loss)~~have ~~from~~restated ~~Operations~~our financial statements for 2019 and 2018 due to the correction of errors in the accounting for income taxes related to the valuation allowance against deferred tax assets, which impacted our net deferred tax liabilities. Accordingly, the EBITDA reconciliation below has been restated. There was no impact to EBITDA or Adjusted EBITDA in either 2019 or 2018. See Note 1 - Basis of Presentation for additional details.The following table presents a reconciliation of Net loss, the most directly comparable financial measures under GAAP, to Adjusted EBITDA for the periods presented:

Income from operations of our Canada segment decreased by $11.8 million in the year ended December 29, 2018 to a loss of $8.8 million as compared to income of $2.9 million in the year ended December 30, 2017. The increase in sales was offset by net restructuring charges of $8.3 million consisting of inventory valuation adjustments, asset impairments, labor and severance, and consulting costs, partially offset by a gain on the sale of real estate (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional information). Additionally, in the year ended December 29, 2018 we incurred exchange rate losses of $1.8 million compared to gains of $0.9 million in the year ended December 30, 2017.32


	Year Ended December 26, 2020		Year Ended December 28, 2019 As Restated		Year Ended December 29, 2018 As Restated
Net loss	$	(24,499)	$	(85,479)	$	(58,681)
Income tax (benefit) expense	(9,439)		(23,277)		(8,890)
Interest expense, net	86,774		101,613		70,545
Interest expense on junior subordinated debentures	12,707		12,608		12,608
Investment income on trust common securities	(378)		(378)		(378)
Depreciation	67,423		65,658		46,060
Amortization	59,492		58,910		44,572
Mark-to-market adjustment on interest rate swaps	601		2,608		607
EBITDA	$	192,681	$	132,263	$	106,443

Stock compensation expense	5,125		2,981		1,590
Management fees	577		562		546
Facility exits (1)	3,894		—		1,279
Restructuring (2)	4,902		13,749		9,737
Litigation expense (3)	7,719		1,463		—
Acquisition and integration expense (4)	9,832		12,557		12,358
Change in fair value of contingent consideration	(3,515)		—		—
Buy-back expense (5)	—		7,196		—
Asset impairment charges (6)	—		7,887		—
Refinancing costs	—		—		11,632
Anti-dumping duties	—		—		(3,829)
Adjusted EBITDA	$	221,215	$	178,658	$	139,756

(1)Facility exits include costs associated with the closure of facilities in Parma, Ohio, San Antonio, Texas, and Dallas, Texas.

(2)Restructuring includes restructuring costs associated with restructuring in our Canada segment announced in 2018, including facility consolidation, stock keeping unit rationalization, severance, sale of property and equipment, and charges relating to exiting certain lines of business. Also included is restructuring in our United Stated business announced in 2019, including severance related to management realignment and the integration of sales and operating functions. See Note 14 - Restructuring of the Notes to the Consolidated Financial Statements for additional information. Finally, includes consulting and other costs associated with streamlining our manufacturing and distribution operations.

(3)Litigation expense includes legal fees associated with our ongoing litigation with KeyMe, Inc. (see Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional information).

(4)Acquisition and integration expense includes professional fees, non-recurring bonuses, and other costs related to historical acquisitions.

(5)Buy-back expense includes one-time payments made to customers associated with the new product line roll outs for construction fastener products and builders hardware.

(6)Asset impairment charges includes impairment losses for the disposal of FastKey self-service key duplicating kiosks and related assets.

The following tables presents a reconciliation of segment operating income, the most directly comparable financial measures under GAAP, to segment Adjusted EBITDA for the periods presented (amounts in millions):


Year Ended December 26, 2020	Hardware and Protective Solutions		Robotics and Digital Solutions		Canada		Consolidated
Operating income (loss)	$	67,313	$	3,177	$	(4,724)	$	65,766
Depreciation and amortization	69,164		50,670		7,081		126,915

Stock compensation expense	4,464		661		—		5,125
Management fees	502		75		—		577
Facility exits	3,894		—		—		3,894
Restructuring	74		—		4,828		4,902
Litigation expense	—		7,719		—		7,719
Acquisition and integration expense	8,284		1,548		—		9,832
Change in fair value of contingent consideration	—		(3,515)		—		(3,515)
Corporate and intersegment adjustments	70		(70)		—		—
Adjusted EBITDA	$	153,765	$	60,265	$	7,185	$	221,215


Year Ended December 28, 2019	Hardware and Protective Solutions		Robotics and Digital Solutions		Canada		Consolidated
Operating income (loss)	$	14,204	$	3,385	$	(9,894)	$	7,695
Depreciation and amortization	65,369		52,924		6,275		124,568

Stock compensation expense	2,436		545		—		2,981
Management fees	562		—		—		562
Restructuring	3,163		708		9,878		13,749
Litigation expense	—		1,463		—		1,463
Acquisition and integration expense	8,837		3,720		—		12,557
Buy-back expense	7,196		—		—		7,196
Asset impairment charges	—		7,773		114		7,887
Corporate and intersegment adjustments	(448)		448		—		—
Adjusted EBITDA	$	101,319	$	70,966	$	6,373	$	178,658


Year Ended December 29, 2018	Hardware and Protective Solutions		Robotics and Digital Solutions		Canada		Consolidated
Operating income (loss)	$	18,555	$	17,705	$	(8,817)	$	27,443
Depreciation and amortization	50,163		35,898		4,571		90,632

Stock compensation expense	1,302		288		—		1,590
Management fees	546		—		—		546
Facility exits	1,279		—		—		1,279
Restructuring	—		—		9,737		9,737
Acquisition and integration expense	7,126		5,232		—		12,358
Anti-dumping duties	(3,829)		—		—		(3,829)
Corporate and intersegment adjustments	1,754		(1,754)		—		—
Adjusted EBITDA	$	76,896	$	57,369	$	5,491	$	139,756

Income Taxes

Effective tax rates for the years ended December 29, 2018 and December 28, 2019 have been restated due to the correction of errors in the accounting for income taxes related to the valuation allowance against deferred tax assets, which impacted our net deferred tax liabilities. See Note 1 - Basis of Presentation for additional details.

Year Ended December 26, 2020 vs December 28, 2019

In the year ended December 26, 2020, we recorded an income tax benefit of $9.4 million on a pre-tax loss of $33.9 million. The effective income tax rate was 27.8% for the year ended December 26, 2020. In the year ended December 28, 2019, we recorded income tax benefit of $23.3 million on a pre-tax loss of $108.8 million. The effective income tax rate was 21.4% for the year ended December 28, 2019.

On March 27, 2020, the CARES Act was signed into law by the President of the United States. The CARES Act included, among other things, corporate income tax relief in the form of accelerated alternative minimum tax ("AMT") refunds, allowed employers to defer certain payroll tax payments throughout 2020, and provided favorable corporate interest deductions for the 2019 and 2020 periods. During 2020, the Company received an accelerated AMT income tax refund of $1.1 million and was able to defer $7.1 million of payroll taxes. The CARES Act interest modification provisions allowed for increased interest deductions. The Company was able to deduct an additional $32.0 million in interest on its 2019 income tax return when compared to the 2019 income tax provision. For the fiscal year 2020, the Company's increased interest deduction will result in the utilization of accumulated interest limitation carryforwards.

In 2020, the Company's effective tax rate differed from the federal statutory tax rate primarily due to state and foreign income taxes. In 2019, the Company's effective tax rate differed from the federal statutory tax rate primarily due to state and foreign income taxes. The Company recorded $1.0 million in income tax expense attributable to state NOLs that are expected to expire prior to their utilization.

Year Ended December 28, 2019 vs December 29, 2018

In the year ended December 28, 2019, we recorded an income tax benefit of $523.43 million on a pre-tax loss of $108.8 million. The effective income tax rate was 421.94% for the year ended December 28, 2019. In the year ended December 29, 2018, we recorded income tax ~~expense~~benefit of $28.19 million on a pre-tax loss of $67.6 million. The effective income tax rate was (313.1)2% for the year ended December 29, 2018.

In 2019, the Company's effective tax rate differed from the federal statutory tax rate primarily due to ~~valuation allowances recorded for the Company's non-deductible interest expense as well as certain~~ state ~~net~~and ~~operating~~foreign ~~losses~~income ~~("NOLs")~~taxes. The Company recorded $161.~~7 million in income tax expense attributable to a valuation allowance recorded on the Company's non-deductible interest expense. The Company anticipates that approximately $72.~~0 million ~~of the $114.2 million~~ in ~~interest expense will be considered non-deductible for the 2019 period. Additionally, the Company recorded $2.7 million in~~ income tax expense attributable to state NOLs that are expected to expire prior to their utilization.

The effective income tax rate differed from the federal statutory tax rate in the year ended December 29, 2018 primarily due to the provisions established with the Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”). We recorded approximately $11.7 million in income tax expense attributable to certain provisions of the 2017 Tax Act. The Company recorded a valuation allowance of $6.1 million for certain U.S. federal net operating losses that are subject to the dual consolidated loss limitation rules. Additionally, the Company recorded $2.2 million in income tax expense for certain non-deductible acquisition costs attributable to the MinuteKey and Big Time acquisitions. The remaining differences between the effective income tax rate and the federal statutory rate in the year ended December 29, 2018 were attributable to state and foreign income taxes.

~~Year Ended December 29, 2018 vs December 30, 2017~~35

Inlimitation ~~the~~rules. ~~year ended December 29~~Additionally, ~~2018,~~the weCompany recorded ~~an income tax benefit of~~ $2.12 million on ain ~~pre-tax loss of $67.6 million. The effective~~ income tax ~~rate~~expense ~~was (3.1)%~~ for ~~the~~certain ~~year~~non-deductible ~~ended~~acquisition ~~December 29,~~costs ~~2018.~~attributable Into the ~~year~~MinuteKey ~~ended~~and ~~December 30,~~Big ~~2017,~~Time weacquisitions. ~~recorded~~The anremaining ~~income~~differences ~~tax benefit of $84.9~~between ~~million on~~the aeffective ~~pre-~~income tax ~~loss of $26.3~~ ~~million.~~rate ~~The~~and ~~effective~~the ~~income~~federal ~~tax~~statutory rate ~~was 323.3% for~~in the year ended December 3029, ~~2017~~2018 were attributable to state and foreign income taxes.

rules. Additionally, the Company recorded $2.2 million in income tax expense for certain non-deductible acquisition costs attributable to the MinuteKey and Big Time acquisitions. The remaining differences between the effective income tax rate and the federal statutory rate in the year ended December 29, 2018 were attributable to state and foreign income taxes.

On December 22, 2017, the 2017 Tax Act was signed into law making significant changes to the Internal Revenue Code. Changes included, among other things, a permanent corporate rate reduction to 21% from 35%, implementing a modified territorial system including a mandatory deemed repatriation on certain unrepatriated earnings of foreign subsidiaries (“Transition Tax”), and providing for additional first-year depreciation that allows full expensing of qualified property placed into service after September 27, 2017.

During 2017, the Company recorded a provisional $75 million deferred income tax benefit for the remeasurement of its net deferred tax liabilities. Additionally, the Company did not record a provision for the Transition Tax in 2017 given the lack of historical earnings in the Company's foreign subsidiaries. During 2018, the Company did not significantly adjust the provisional estimate from the provisional calculations. In 2018, the Company became subject to certain provisions of the 2017 Tax Act including computations related to Global Intangible Low Taxed Income ("GILTI"), and the IRC §163(j) interest limitation ("Interest Limitation") (see Note 6 - Income Taxes of the Notes to Consolidated Financial Statements for additional information).

Liquidity and Capital Resources

Cash Flows

The statements of cash flows reflect the changes in cash and cash equivalents for the years ended December 2826, ~~2019~~2020, December 2928, ~~2018~~2019, and December 3029, ~~2017~~2018 by classifying transactions into three major categories: operating, investing, and financing activities.

Operating Activities

Net cash provided by operating activities for the year ended December 2826, ~~2019~~2020 was approximately $5292.41 million. Operating cash flows for the year ended December 26, 2020 were favorably impacted by the increased net income in the current year. Net cash provided by operating activities for the year ended December 28, 2019 ~~were~~was approximately $52.4 million and was unfavorably impacted by lower net income driven by increased interest expense, partially offset by improvements in working capital. Net cash provided by operating activities for the year ended December 29, 2018 was approximately $7.5 million and was unfavorably impacted by lower net income driven by increased interest expense and acquisition related costs along with an increase in inventory due to commodity inflation and new business wins. This was partially offset by an increase in accounts payable due to changes in payment terms and increased inventory purchases and a decrease in accounts receivable. Net cash provided by operating activities for the year ended December 30, 2017 was approximately $82.9 million and was favorably impacted by our focus on reducing net working capital which translated to improvements in inventory and accounts payable.

Investing Activities

Net cash used for investing activities was $5346.51 million, $~~572~~53.65 million, and $~~100~~572.16 million for the years ended December 2826, ~~2019~~2020, December 2928, ~~2018~~2019 and December 3029, ~~2017~~2018, respectively. In the year ending December 26, 2020 we acquired Instafob for approximately $0.8 million. In the year ended December 28, 2019 we acquired Resharp and West Coast Washers for approximately $6.1 million. In the year ended December 29, 2018 we acquired MinuteKey and Big Time and made a final working capital true up payment for ST Fastening Systems which equated a total net cash outflow of approximately $501.0 million. Additionally, in the year ended December 30, 2017, we acquired STFS with a cash payment of $47.2 million (see Note 5 - Acquisitions of the Notes to Consolidated Financial Statements for additional information). Finally, cash was used in all periods to invest in our investment in new key duplicating kiosks and machines and merchandising racks. In 2019, we also received $10.4 million in cash proceeds from the sale of a building and machinery in Canada and a building in Georgia.

Financing Activities

Net cash used for financing activities was $45.1 million for the year ended December 26, 2020. The borrowings on revolving credit loans provided $99.0 million. The Company used $140.0 million of cash for the repayment of revolving credit loans and $10.6 million for principal payments on the senior term loans. In the year ended December 26, 2020 the Company received $7.3 million on the exercise of stock options.

Net cash used for financing activities was $7.1 million for the year ended December 28, 2019. The borrowings on revolving credit loans provided $43.5 million. The Company used $38.7 million of cash for the repayment of revolving credit loans and $10.6 million for principal payments on the senior term loans. On November 15, 2019, we amended the ABL Revolver agreement which provided an additional $100.0 million of revolving credit, bringing the total available to $250.0 million. In connection with the amendment we paid $1.4 million in fees.

Net cash provided by financing activities was $581.9 million for the year ended December 29, 2018. On May 31, we entered into a new term credit agreement consisting of a new funded term loan of $530.0 million and $165.0 million delayed draw term loan facility. Concurrently, we entered into a new $150.0 million asset-based revolving credit agreement. The proceeds were used to refinance in full all outstanding revolving credit and term loans under the existing credit agreement. In the third quarter of 2018, we drew $165.0 million on the delayed draw facility of the term loan to finance the MinuteKey acquisition. In the fourth quarter, we amended the credit agreement and added an additional $365.0 million in incremental term loans to finance the acquisition of Big Time. We paid approximately $20.5 million in fees associated with the refinancing activities in the year ended December 29, 2018. See Note 7 - Long-Term Debt of the Notes to Consolidated Financial Statements for additional information on the refinancing. Our revolver draws, net, were a source of cash of $88.7 million in the year ended December 29, 2018. Additionally, in the year ended December 29, 2018 we paid a dividend of $3.8 million to Holdco for the purchase of shares of Holdco stock from former members of management.

loan facility. Concurrently, we entered into a new $150.0 million asset-based revolving credit agreement. The proceeds were used to refinance in full all outstanding revolving credit and term loans under the existing credit agreement. In the third quarter of 2018, we drew $165.0 million on the delayed draw facility of the term loan to finance the MinuteKey acquisition. In the fourth quarter, we amended the credit agreement and added an additional $365.0 million in incremental term loans to finance the acquisition of Big Time. We paid approximately $20.5 million in fees associated with the refinancing activities in the year ended December 28, 2019. See Note 7 - Long-Term Debt of the Notes to Consolidated Financial Statements for additional information on the refinancing. Our revolver draws, net, were a source of cash of $88.7 million in the year ended December 28, 2019. Additionally, in the year ended December 29, 2018 we paid a dividend of $3.8 million to Holdco for the purchase of shares of Holdco stock from former members of management.

Net cash used for financing activities was $14.4 million for the year ended December 30, 2017. The borrowings on revolving credit loans provided $35.5 million. The Company used $16.0 million of cash for the repayment of revolving credit loans and $5.5 million for principal payments on the senior term loans.

Liquidity

We believe that projected cash flows from operations and Revolver availability will be sufficient to fund working capital and capital expenditure needs for the next 12 months.

Our working capital (current assets minus current liabilities) position of $~~231~~241.8 million as of December 2826, ~~2019~~2020 represents aan ~~decrease~~increase of $4810.20 million from the December 2928, ~~2018~~2019 level of $~~280~~231.08 million. Because COVID-19 pandemic has not, as of the date of this report, had a materially negative impact on our operations or demand for our products, it has not had a materially negative impact on the Company's liquidity position. We have initiated mitigating efforts to manage non-critical capital spending, assess operating spend, and preserve cash. We expect to generate sufficient operating cash flows to meet our short-term liquidity needs, and we expect to maintain access to the capital markets, although there can be no assurance of our ability to do so. However, the continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which, depending on future developments, could impact our capital resources and liquidity in the future.

Contractual Obligations

Our contractual obligations as of December 2826, ~~2019~~2020 are summarized below:

					~~Payments Due~~		Payments Due
(dollars in thousands)	~~Total~~		Total		~~Less ThanOne Year~~		1Less toThanOne ~~3Years~~Year		~~3 to 5Years~~		1 to 3Years		~~More ThanFive Years~~		3 to 5Years		More ThanFive Years
Junior Subordinated Debentures (1)	$	~~108,704~~	$	108,704	$	—	$	—	$	—	$	—	$	~~108,704~~	$	—	$	108,704
Interest on Jr Subordinated Debentures	~~94,793~~		82,562		~~12,231~~		2412,~~463~~231		~~24,463~~		24,463		~~33,636~~		24,463		21,405
Long Term Senior Term Loans	~~1,047,653~~		1,037,044		~~10,609~~		2110,~~218~~609		~~21,218~~		21,218		~~994,608~~		1,005,217		—
Bank Revolving Credit Facility	~~113,000~~		72,000		—		—		—		—		~~113,000~~		72,000		—
6.375% Senior Notes	~~330,000~~		330,000		—		~~330,000~~—		—		330,000		—		—		—
KeyWorks License Agreement	~~422~~		72		~~350~~		72		—		—		—		—		—
Interest payments (2)	~~381,971~~		218,053		~~84,604~~		~~156~~64,~~606~~970		~~121,921~~		97,001		~~18,840~~		56,082		—
Operating Leases	~~114,758~~		108,169		~~17,525~~		2918,~~881~~259		~~23,761~~		29,575		~~43,591~~		24,993		35,342
Deferred Compensation Obligations	~~1,911~~		1,911		~~355~~		—595		—		—		~~1,556~~		—		1,316
Finance Lease Obligations	~~2,551~~		2,252		~~873~~		~~1,168~~993		~~510~~		1,129		—		130		—
Other Obligations	~~8,210~~		7,578		~~2,492~~		42,~~274~~793		~~1,444~~		4,509		—		276		—
Uncertain Tax Position Liabilities	~~1,101~~		1,101		~~1,101~~		—1,101		—		—		—		—		—
Total Contractual Cash Obligations (3)	$	~~2,205,074~~	$	1,969,446	$	~~130,140~~	$	~~567~~111,~~682~~623	$	~~193,317~~	$	507,895	$	~~1,313,935~~	$	1,183,161	$	166,767

(1) The Junior Subordinated Debentures liquidation value is approximately $108,704.

(2) Interest payments for borrowings under the Senior Facilities, the 6.375% Senior Notes, and Revolver borrowings. Interest payments on the variable rate Senior Term Loans were calculated using the actual interest rate of 54.7015% as of December 28 26, ~~2019~~2020. Interest payments on the 6.375% Senior Notes were calculated at their fixed rate. Interest payments on the variable rate Revolver borrowings were calculated using the actual interest rate of 31.5965% as of December 28 26, ~~2019~~2020.

(3) All of the contractual obligations noted above are reflected on the Company's Consolidated Balance Sheet as of December 28 26, ~~2019~~2020 except for the interest payments. Contingent consideration related to the ~~acquisition~~acquisitions of Resharp and Instafob of $1814,~~100~~197 is not included in the chart above due to uncertainty about timing of the payments.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K under the Securities Exchange Act of 1934, as amended.

Related Party Transactions

The Company has recorded aggregate management fee charges and expenses from the Oak Hill Funds and CCMP of approximately $0.6 million for each of the years ended December 2826, ~~2019~~2020 and December 2928, ~~2018~~2019, and $0.5 million for the year ended December 3029, ~~2017~~2018.

We recorded proceeds from the sale of Holdco stock to members of management and the Board of Directors of $0.8 million for the year ended December 28, 2019 ~~and $0~~.5 ~~million for the year ended December 30, 2017.~~ No such sales were recorded in the ~~year~~years ended December 26, 2020 or December 29, 2018.

In the year ended December 29, 2018, the Company paid a dividend of approximately $3.8 million to Holdco for the purchase of 4,200 shares of Holdco stock from former members of management. No such dividends were paid in fiscal 2019 or fiscal 2017.37

~~Gregory~~In ~~Mann~~the ~~and~~year ~~Gabrielle~~ended ~~Mann~~December 29, ~~are~~2018, ~~employed by~~ the Company. ~~The~~paid ~~Company~~a ~~leases~~dividend ~~an industrial warehouse and office facility from companies under the control~~ of ~~the~~approximately ~~Manns~~$3.8 Wemillion ~~have~~to ~~recorded~~Holdco ~~rental expense~~ for the ~~lease~~purchase of ~~this~~4,200 ~~facility~~shares onof anHoldco ~~arm's~~stock ~~length~~from ~~basis.~~former ~~Our~~members ~~rental expense for the lease~~ of ~~this facility was $0~~management.4 ~~million~~No ~~for~~such ~~each~~dividends ofwere ~~the~~paid ~~years~~in ~~ended~~fiscal ~~December 28,~~2020 ~~2019,~~or ~~December 29,~~fiscal ~~2018, and December 30, 2017~~2019.

~~During~~Gregory ~~2019,~~Mann ~~2018~~ and ~~2017,~~Gabrielle ~~the~~Mann ~~Company~~are ~~had~~employed ~~three~~by ~~leases~~the ~~for~~Company. ~~five~~The ~~properties~~Company ~~containing~~leases an industrial warehouse, ~~manufacturing plant,~~ and office ~~facilities~~facility infrom ~~Canada.~~companies ~~The owners of the properties~~ under ~~one lease are relatives of Richard Paulin, who was employed by The Hillman Group Canada ULC until his retirement effective April 30, 2017, and~~ the ~~owner~~control of the ~~properties under the other two leases is a company which is owned by Richard Paulin and certain of his relatives~~Manns. We have recorded rental expense for the ~~three~~lease ~~leases~~of this facility on an arm's length basis. ~~Rental~~Our rental expense for ~~these~~the ~~facilities~~lease of this facility was $0.64 million for each of the years ended December 2826, ~~2019~~2020, ~~and~~ December 2928, ~~2018~~2019, and ~~$0.7 million for the year ended~~ December 3029, ~~2017~~2018.

Douglas J. Cahill iswas ~~currently~~hired ~~Hillman’s~~effective July 29, 2019 as our Executive Chairman, Senior Executive Officer. He was promoted to President and ~~CEO~~Chief ~~and~~Executive Officer on September 16, 2019. Mr. Cahill is also a former Managing Director of CCMP Capital Advisors, LP ("CCMP"). CCMP’s private equity fund CCMP Capital Investors III, L.P. (“CCMP III”), together with its related fund vehicles, owns approximately 8079.41% of Holdco's outstanding common stock as of December 28 26, ~~2019~~2020. Mr. Cahill has retained a carried interest in CCMP III and the fair value of this carried interest, which is based on the overall performance of CCMP III, is contingent on several factors. As of December 28 26, ~~2019~~2020, the fair value of the carried interest is not estimable in accordance with ASC 405 - Contingencies.

Critical Accounting Policies and Estimates

Our accounting policies are more fully described in Note 2 - Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements. As disclosed in that note, the preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Future events cannot be predicted with certainty and, therefore, actual results could differ from those estimates. The following section describes our critical accounting policies.

Revenue Recognition:

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

We offer a variety of sales incentives to our 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.

We also establish 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.

Our performance obligations under ~~our~~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.

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. We used judgement in applying the 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. Our 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 ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("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.

We 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.

See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for information on disaggregated revenue by product category.

Inventory Realization:

Inventories consisting predominantly of finished goods are valued at the lower of cost or net realizable value, cost being determined principally on the ~~weighted~~standard ~~average~~ cost method. The historical usage rate is the primary factor used in assessing the net realizable value of excess and obsolete inventory. A reduction in the carrying value of an inventory item from cost to net realizable value is recorded for inventory with excess on-hand quantities as determined based on historic and projected sales, product category, and stage in the product life cycle. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate our excess and obsolete inventory reserve. However, if our estimates regarding excess and obsolete inventory are inaccurate, we may be exposed to losses or gains that could be material. A 5% difference in actual excess and obsolete inventory reserved for at December 2826, ~~2019~~2020, would have affected net earnings by approximately $1.01 million in fiscal ~~2019~~2020.

Goodwill:

We have adopted ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment which eliminates Step 2 from the goodwill impairment test and instead requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If, after assessing the totality of events or circumstances, we determine that the fair value of a reporting unit is less than the carrying value, then we would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

Our annual impairment assessment is performed for the reporting units as of October 1. In ~~2019~~2020, ~~2018~~2019, and ~~2017~~2018, with the assistance of an independent ~~appraiser~~third-party specialist, management assessed the value of our reporting units based on a discounted cash flow model and multiple of earnings. Assumptions critical to our fair value estimates under the discounted cash flow model include the discount rate, ~~projected average revenue growth~~ and projected ~~long-term~~revenue growth ~~rates in the determination of terminal values~~. The results of the quantitative assessments in 2020, 2019, ~~2018,~~ and ~~2017~~2018 indicated that the fair value of each reporting unit was in excess of its carrying value. In our annual review of goodwill for impairment in the fourth quarter of 2020, the fair value of each reporting unit exceeded its carrying value by over 6% of its carrying value.

Intangible Assets:

We evaluate our indefinite-lived intangible assets (primarily trademarks and trade names) for impairment annually or more frequently if events and circumstances indicate that it is more likely than not that the fair value of an indefinite-lived intangible asset is below its carrying amount. InWith ~~connection with~~ the ~~evaluation,~~assistance of an independent ~~appraiser~~third-party specialist, management assessed the fair value of our indefinite-lived intangible assets based on a relief from royalties, excess earnings, and lost profits discounted cash flow model. Assumptions critical to our fair value estimates under the discounted cash flow model include the discount rate, projected average revenue growth and projected long-term growth rates in the determination of terminal values. An impairment charge is recorded if the carrying amount of an indefinite-lived intangible asset exceeds the estimated fair value on the measurement date. No impairment charges related to indefinite-lived intangible assets were recorded in ~~2019~~2020, ~~2018~~2019, or ~~2017~~2018 as a result of the quantitative annual impairment test.

Income Taxes:

Deferred income taxes are computed using the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial reporting basis and income tax basis of assets and liabilities, based on enacted tax laws and statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Valuation allowances are provided for tax benefits where it is more likely than not that certain tax benefits will not be realized. Adjustments to valuation allowances are recorded for changes in utilization of the tax related item. For additional information, see Note 6 - Income Taxes, of the Notes to Consolidated Financial Statements.

In accordance with guidance regarding the accounting for uncertainty in income taxes, we recognize a tax position if, based solely on its technical merits, it is more likely than not to be sustained upon examination by the relevant taxing authority.

If a tax position does not meet the more likely than not recognition threshold, we do not recognize the benefit of that position in our financial statements. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to be recognized in the financial statements.

Business Combinations:

As we enter into business combinations, we perform acquisition accounting requirements including the following:

•Identifying the acquirer

•Determining the acquisition date

•Recognizing and measuring the identifiable assets acquired and the liabilities assumed, and

•Recognizing and measuring goodwill or a gain from a bargain purchase

We complete valuation procedures and record the resulting fair value of the acquired assets and assumed liabilities based upon the valuation of the business enterprise and the tangible and intangible assets acquired. Enterprise value allocation methodology requires management to make assumptions and apply judgment to estimate the fair value of assets acquired and liabilities assumed. If estimates or assumptions used to complete the enterprise valuation and estimates of the fair value of the acquired assets and assumed liabilities significantly differed from assumptions made, the resulting difference could materially affect the fair value of net assets.

The calculation of the fair value of the tangible assets, including property, plant and equipment, utilizes the cost approach, which computes the cost to replace the asset, less accrued depreciation resulting from physical deterioration, functional obsolescence and external obsolescence. The calculation of the fair value of the identified intangible assets are determined using cash flow models following the income approach or a discounted market-based methodology approach. Significant inputs include estimated revenue growth rates, gross margins, operating expenses, and estimated attrition, royalty and discount rates. Goodwill is recorded as the difference in the fair value of the acquired assets and assumed liabilities and the purchase price.We Each period, we estimate the fair value of liabilities for contingent consideration by applying a ~~scenario-based~~Monte ~~method,~~Carlo ~~estimating~~analysis ~~(probability-weighted)~~examining ~~payments~~the ~~based~~frequency onand ~~the~~mean ~~likelihood~~value of ~~achieving~~the resulting payments. The resulting value captures the ~~milestones~~risk ~~and~~associated ~~payments~~with ~~corresponding~~the toform ~~each~~of ~~milestone~~the payout structure. We ~~then~~The ~~estimate~~risk ~~the~~neutral ~~present-~~method is applied, resulting in a value that captures the risk associated with the form of the ~~expected~~payout ~~payments~~structure ~~from~~and the ~~time~~projection atrisk. ~~which~~The assumptions utilized in the ~~obligations~~calculation ~~are~~based ~~settled~~on byfinancial ~~applying~~performance amilestones include projected revenue and/or EBITDA amounts, volatility and discount ~~rate~~rates. ~~that~~For ~~appropriately~~potential ~~captures~~payments arelated ~~market~~to ~~participant’s~~product ~~view~~development ofmilestones, we estimated the ~~risk~~fair ~~associated~~value ~~with~~based on the ~~payments~~probability of achievement of such milestones. Any changes in fair value are recorded as other income (expense) in the Consolidated Statement of Comprehensive Loss.

Recent Accounting Pronouncements:

Recently issued accounting standards are described in Note 3 - Recent Accounting Pronouncements of the Notes to Consolidated Financial Statements.

Item 7A – Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Exposure

We are exposed to the impact of interest rate changes as borrowings under the Senior Facilities bear interest at variable interest rates. It is our policy to enter into interest rate swap and interest rate cap transactions only to the extent considered necessary to meet our objectives.

Based on our exposure to variable rate borrowings at December 2826, ~~2019~~2020, after consideration of our LIBOR floor rate and interest rate swap agreements, a one percent (1%) change in the weighted average interest rate for a period of one year would change the annual interest expense by approximately $109.16 million.

Foreign Currency Exchange

33We are exposed to foreign exchange rate changes of the Canadian and Mexican currencies as it impacts the $157.8 million tangible and intangible net asset value of our Canadian and Mexican subsidiaries as of December 26, 2020. The foreign subsidiaries net tangible assets were $93.9 million and the net intangible assets were $63.8 million as of December 26, 2020.

We are exposed to foreign exchange rate changes of the Canadian and Mexican currencies as it impacts the $149.3 million tangible and intangible net asset value of our Canadian and Mexican subsidiaries as of December 28, 2019. The foreign subsidiaries net tangible assets were $83.9 million and the net intangible assets were $65.4 million as of December 28, 2019.

We utilize foreign exchange forward contracts to manage the exposure to currency fluctuations in the Canadian dollar versus the U.S. Dollar. See Note 12 - Derivatives and Hedging, of the Notes to Consolidated Financial Statements.

Item 8 – Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULE

	~~Page(s)~~	Page(s)
Report of Management on Internal Control Over Financial Reporting	35	42
Report of Independent Registered Public Accounting Firm	36	44
Consolidated Financial Statements:
Consolidated Balance Sheets	37	46
Consolidated Statements of Comprehensive Income (Loss)	38
Consolidated Statements of Comprehensive Loss		47
Consolidated Statements of Cash Flows	39	48
Consolidated Statements of Stockholder's Equity	40	49
Notes to Consolidated Financial Statements	41	50
Financial Statement Schedule:
Valuation Accounts	75	86

3441

Report of Management on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of The Hillman Companies, Inc. and its consolidated subsidiaries; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures of The Hillman Companies, Inc. and its consolidated subsidiaries are being made only in accordance with authorizations of management and directors of The Hillman Companies, Inc. and its consolidated subsidiaries, as appropriate; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of The Hillman Companies, Inc. and its consolidated subsidiaries that could have a material effect on the consolidated financial statements.

Our management, with the participation of our principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting as of December 2826, ~~2019~~2020, the end of our fiscal year. Management based its assessment on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management's assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment. This assessment is supported by testing and monitoring performed under the direction of management.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, even an effective system of internal control over financial reporting will provide only reasonable assurance with respect to financial statement preparation.

~~Based~~A onmaterial ~~its assessment~~weakness, ~~our~~as ~~management~~defined ~~has~~in ~~concluded~~Exchange ~~that~~Act ~~our~~Rule ~~internal~~12b-2, ~~control~~is ~~over~~a ~~financial~~deficiency, ~~reporting~~or ~~was~~a ~~effective,~~combination as of ~~December 28~~deficiencies, ~~2019,~~in tointernal ~~provide~~control ~~reasonable~~over ~~assurance regarding the reliability of~~ financial reporting, ~~and~~such ~~the~~that ~~preparation~~there ofis ~~financial~~a ~~statements~~reasonable ~~for~~possibility ~~external~~that ~~reporting~~a ~~purposes~~material inmisstatement ~~accordance~~of ~~with accounting principles generally accepted in~~ the ~~United~~company’s ~~States.~~annual Weor ~~reviewed~~interim ~~the~~financial ~~results~~statements ofwill ~~management's~~not ~~assessment~~be ~~with~~prevented ~~the~~or ~~Audit~~detected ~~Committee~~on ofa ~~The~~timely ~~Hillman Companies, Inc~~basis.

~~This~~While ~~annual~~preparing ~~report~~our ~~does~~2020 ~~not~~consolidated ~~include~~financial anstatements, ~~attestation~~the ~~report~~Company ofidentified ~~our~~errors ~~independent~~in ~~registered~~the ~~public~~ accounting ~~firm~~for ~~regarding~~income ~~internal~~taxes ~~control~~during ~~over~~2018 ~~financial~~and ~~reporting~~2019. ~~Management's~~During ~~report~~2018, ~~was~~the ~~not~~Company became subject to ~~attestation~~additional byprovisions ~~our~~of ~~independent~~the ~~registered~~Tax ~~public~~Cuts ~~accounting~~and ~~firm~~Jobs ~~pursuant~~Act of 2017 (“2017 Tax Act”) including computations related to ~~rules~~the ofIRC §163(j) interest limitation (Interest Limitation). The Company incorrectly established valuation allowances against the ~~Securities~~portion ~~and~~of ~~Exchange~~interest ~~Commission~~expense that ~~permit~~was usnot tocurrently ~~provide~~deductible. ~~only~~In ~~management's~~addition, ~~report~~the inCompany ~~this~~incorrectly ~~annual~~established ~~report~~a valuation allowance on certain U.S. state NOLs. Upon further review of the guidance, the Company determined that the valuation allowance should not have been established.

/s/ DOUGLAS J. CAHILL		/s/ ROBERT O. KRAFT
Douglas J. Cahill		Robert O. Kraft
President and Chief Executive Officer		Chief Financial Officer
Dated:	March 27, 2020	Dated:	March 27, 2020

As part of our annual assessment of internal control over financial reporting, we have determined that a material weakness existed in the Company's internal control over financial reporting as of December 26, 2020. A material weakness existed in that we did not design and maintain effective controls over the completeness and accuracy of the accounting for, and disclosure of, the valuation allowance against deferred income taxes. The material weakness resulted in material errors in the application of certain provisions of the Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”) related to the IRC §163(j) interest limitation (Interest Limitation). This material weakness resulted in material errors in our income tax benefit and deferred tax liabilities that were corrected through the restatement of the consolidated financial statements as of and for the years ended December 28, 2019 and December 29, 2018 as described in Note 1 - Basis of Presentation of the notes to the consolidated financial statements and the correction of unaudited quarterly financial information for fiscal years 2020 and 2019. Additionally, this material weakness could result in misstatements to the aforementioned account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

35As a result of the material weakness in internal control over financial reporting described above, management has concluded that we did not maintain effective internal control over financial reporting as of December 26, 2020.

Management's Plan for Remediation of the Material Weakness

In response to the material weakness described above, management implemented changes to its internal control over financial reporting to remediate the control deficiencies that gave rise to the material weakness. Those changes included the engagement of third party consultants to assist with technical tax accounting research and application of guidance, the addition of a

committee to review technical accounting issues and ensure we have the appropriate subject matter experts engaged, and hiring additional personnel in our tax department.

While significant progress has been made to enhance our internal control over financial reporting, we are still in the process of testing these recently implemented processes, procedures, and controls. Additional time is required to complete the assessment to ensure the sustainability of these procedures. We believe the above actions will be effective in remediating the material weakness. However, the material weakness cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

The remediation efforts are intended both to address the identified material weakness and to enhance our overall financial control environment. Management is committed to continuous improvement of the company’s internal control over financial reporting and will continue to diligently review the company’s internal control over financial reporting.

We reviewed the results of management's assessment with the Audit Committee of The Hillman Companies, Inc. This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.

/s/ DOUGLAS J. CAHILL

/s/ ROBERT O. KRAFT

Douglas J. Cahill

Robert O. Kraft

President and Chief Executive Officer

Chief Financial Officer

Dated:

March 3, 2021

Dated:

March 3, 2021

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

The Hillman Companies, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of The Hillman Companies, Inc. and subsidiaries (the Company) as of December 28 26, ~~2019~~2020 and December 2928, ~~2018~~2019, the related consolidated statements of comprehensive ~~income (~~loss), stockholder’s equity, and cash flows for each of the years in the three‑year period ended December 28 26, ~~2019~~2020, and the related notes and financial statement schedule II -– Valuation Accounts (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 28 26, ~~2019~~2020 and December 2928, ~~2018~~2019, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 28 26, ~~2019~~2020, in conformity with U.S. generally accepted accounting principles.

Restatement of Previously Issued Financial Statements

As discussed in Note 1 to the consolidated financial statements, the Company has restated its consolidated financial statements as of December 28, 2019, and for the two-year period ended December 29, 2019 to correct misstatements.

Changes in Accounting Principles

As discussed in Note 3 to the consolidated financial statements, the Company has changed its method of accounting for leases as of December 30, 2018 due to the adoption of Accounting Standards Update (ASU) No. 2016-12, Leases (Topic 842).

As discussed in Note 3 to the consolidated financial statements, the Company has changed its method of accounting for revenue recognition as of December 31, 2017 due to the ~~modified retrospective~~ adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606).

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Goodwill

As discussed in Note 2 to the consolidated financial statements, the goodwill balance as of December 26, 2020 was $816 million. The Company performs goodwill impairment testing annually as of October 1st and whenever events or changes in circumstances indicate that the fair value of a reporting unit is less than the carrying value. With the assistance of a third-party specialist, management assesses the fair value of the reporting units based on a discounted cash flow model and multiples of earnings. Assumptions critical to fair value estimates under the discounted cash flow model include the discount rates and the projected revenue growth rates.

We identified the assessment of the fair value of two of the Company’s reporting units within its goodwill impairment analysis as a critical audit matter. The estimation of fair value of the specific reporting units is complex and subject to significant management judgment and estimation uncertainties. Specifically, the discount rate and projected revenue growth rates used to determine the fair value of these reporting units were challenging to test as they represented subjective determinations of current and future market and economic conditions that were sensitive to variation. Additionally, the audit effort associated with the discount rate required specialized skills and knowledge. Changes to those assumptions could have had a significant effect on the Company’s assessment of the fair value of the two reporting units.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design of controls over the Company’s goodwill impairment process, including controls related to the projected revenue growth rates and discount rate for the two reporting units. We performed sensitivity analyses over the Company’s discount rates and projected revenue growth rates to assess their impact on the determination that the fair values of the specific reporting units exceeded their carrying values. We compared the Company’s historical revenue forecasts to actual results to assess the Company’s ability to accurately forecast. We compared forecasted revenue growth rates used in the valuation model against underlying business strategies and growth plans. We evaluated the reasonableness of the Company’s forecasted revenue growth rates for these reporting units by comparing the growth assumptions to comparable entities within the industry. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

•evaluating the discount rate used by management in the valuation, by comparing it to a range of discount rates developed using existing market information for comparable entities within the industry

•developing an estimate of certain of the Company’s reporting units’ fair value using each reporting unit’s cash flow forecast and discount rate and compared the results of our estimate of fair value to the Company’s fair value estimate.

/s/ KPMG LLP

We have served as the Company’s auditor since 2010.

Cincinnati, Ohio

March 273, ~~2020~~2021

3645

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

	December 28, 2019				December 29, 2018
			December 26, 2020					December 28, 2019
ASSETS
								As Restated
Current assets:
ASSETS
Cash and cash equivalents	$	19,973			$	28,234
Current assets:
Accounts receivable, net of allowances of $1,891 ($846 - 2018)	88,374				110,799
Cash and cash equivalents			$	21,520				$	19,973
Inventories, net	323,496				320,281
Accounts receivable, net of allowances of $2,395 ($1,891 - 2019)			121,228					88,374
Other current assets	8,828				18,727
Inventories, net			391,679					323,496
Total current assets	440,671				478,041
Other current assets			19,280					8,828
Property and equipment, net of accumulated depreciation of $179,791 ($131,169 - 2018)	205,160				208,279
Total current assets			553,707					440,671
Goodwill	819,077				803,847
Property and equipment, net of accumulated depreciation of $236,031 ($179,791 - 2019)			182,674					205,160
Other intangibles, net of accumulated amortization of $232,060 ($176,677 - 2018)	882,430				930,525
Goodwill			816,200					815,850
Operating lease right of use assets	81,613				—
Other intangibles, net of accumulated amortization of $291,434 ($232,060 - 2019)			825,966					882,430
Deferred tax asset	702				—
Operating lease right of use assets			76,820					81,613
Other assets	11,557				10,778
Deferred tax asset			2,075					702
Total assets	$	2,441,210			$	2,431,470
Other assets			11,176					11,557
LIABILITIES AND STOCKHOLDERS' EQUITY
Total assets			$	2,468,618				$	2,437,983
Current liabilities:
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable	$	125,042			$	135,059
Current liabilities:
Current portion of debt and capital lease obligations	11,358				10,985
Accounts payable			$	201,461				$	125,042
Current portion of operating lease liabilities	11,459				—
Current portion of debt and capital lease obligations			11,481					11,358
Accrued expenses:
Current portion of operating lease liabilities			12,168					11,459
Salaries and wages	12,937				9,881
Accrued expenses:
Pricing allowances	6,553				5,404
Salaries and wages			29,800					12,937
Income and other taxes	5,248				3,325
Pricing allowances			6,422					6,553
Interest	14,726				15,423
Income and other taxes			5,986					5,248
Other accrued expenses	21,545				17,941
Interest			12,988					14,726
Total current liabilities	208,868				198,018
Other accrued expenses			31,605					21,545
Long-term debt	1,584,289				1,586,084
Total current liabilities			311,911					208,868
Deferred income taxes, net	196,437				200,696
Long-term debt			1,535,508					1,584,289
Operating lease liabilities	73,227				—
Deferred tax liabilities			156,118					164,343
Other non-current liabilities	33,287				7,565
Operating lease liabilities			68,934					73,227
Total liabilities	2,096,108				1,992,363
Other non-current liabilities			31,560					33,287
Commitments and Contingencies (Note 15)	—				—
Total liabilities			2,104,031					2,064,014
Stockholder's Equity:
Commitments and Contingencies (Note 15)			—					—
Preferred stock, $.01 par, 5,000 shares authorized, none issued and outstanding at December 28, 2019 and December 29, 2018	—				—
Stockholder's Equity:
Common stock, $.01 par, 5,000 shares authorized, issued and outstanding at December 28, 2019 and December 29, 2018	—				—
Preferred stock, $0.01 par, 5,000 shares authorized, none issued and outstanding at December 26, 2020 and December 28, 2019			—					—
Additional paid-in capital	553,359				549,528
Common stock, $0.01 par, 5,000 shares authorized, issued and outstanding at December 26, 2020 and December 28, 2019			—					—
Accumulated deficit	(176,217		)		(72,831		)
Additional paid-in capital			565,824					553,359
Accumulated other comprehensive loss	(32,040		)		(37,590		)
Accumulated deficit			(171,849)					(147,350)
Total stockholder's equity	345,102				439,107
Accumulated other comprehensive loss			(29,388)					(32,040)
Total liabilities and stockholder's equity	$	2,441,210			$	2,431,470
Total stockholder's equity			364,587					373,969
Total liabilities and stockholder's equity			$	2,468,618				$	2,437,983

The Notes to Consolidated Financial Statements are an integral part of these statements.

3746

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME (~~LOSS)

(dollars in thousands)

	Year EndedDecember 28, 2019				Year EndedDecember 29, 2018			Year Ended December 30, 2017
			Year EndedDecember 26, 2020					Year EndedDecember 28, 2019As Restated			Year Ended December 29, 2018As Restated
Net sales	$	~~1,214,362~~	$	1,368,295	$	~~974,175~~		$	~~838~~1,~~368~~214,362		$	974,175
Cost of sales (exclusive of depreciation and amortization shown separately below)	~~693,881~~		781,815		~~537,885~~			~~455~~693,~~717~~881			537,885
Selling, general and administrative expenses	~~382,131~~		398,472		~~320,543~~			~~274~~382,~~044~~131			320,543
Depreciation	~~65,658~~		67,423		~~46,060~~			3465,~~016~~658			46,060
Amortization	~~58,910~~		59,492		~~44,572~~			3858,~~109~~910			44,572
Management fees to related party	~~562~~		577		~~546~~			~~519~~562			546
Other (income) expense	~~5,525~~		(5,250)		~~(2,874~~		)	~~459~~5,525			(2,874)
Income from operations	~~7,695~~		65,766		~~27,443~~			357,~~504~~695			27,443
Interest expense, net	~~101,613~~		86,774		~~70,545~~			51101,~~018~~613			70,545
Interest expense on junior subordinated debentures	~~12,608~~		12,707		~~12,608~~			12,608			12,608
Investment income on trust common securities	~~(378~~		(378)		~~(378~~		)	(378)		)	(378)
Loss (gain) on mark-to-market adjustment of interest rate swap	2,608				607			(1,481		)
Loss on mark-to-market adjustment of interest rate swap			601					2,608			607
Refinancing costs	—		—		~~11,632~~			—			11,632
Loss before income taxes	~~(108,756~~		(33,938)		~~(67,571~~		)	(26108,~~263~~756)		)	(67,571)
Income tax expense (benefit)	(5,370		)		2,070			(84,911		)
Income tax benefit			(9,439)					(23,277)			(8,890)
Net income (loss)	$	(103,386	)		$	(69,641	)	$	58,648
Net loss			$	(24,499)				$	(85,479)		$	(58,681)
Net income (loss) from above	$	(103,386	)		$	(69,641	)	$	58,648
Net loss from above			$	(24,499)				$	(85,479)		$	(58,681)
Other comprehensive income (loss):
Foreign currency translation adjustments	~~5,550~~		2,652		~~(11,053~~		)	75,~~845~~550			(11,053)
Total other comprehensive income (loss)	~~5,550~~		2,652		~~(11,053~~		)	75,~~845~~550			(11,053)
Comprehensive income (loss)	$	~~(97,836~~	)$	(21,847)	$	~~(80,694~~	)	$	66(79,~~493~~929)		$	(69,734)

The Notes to Consolidated Financial Statements are an integral part of these statements.

3847

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

	Year EndedDecember 28, 2019				Year EndedDecember 29, 2018			Year EndedDecember 30, 2017
			Year EndedDecember 26, 2020					Year EndedDecember 28, 2019As Restated			Year EndedDecember 29, 2018As Restated
Cash flows from operating activities:
Net income (loss)	$	(103,386	)		$	(69,641	)	$	58,648
Net loss			$	(24,499)				$	(85,479)		$	(58,681)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	~~124,568~~		126,915		~~90,632~~			72124,~~125~~568			90,632
(Gain) loss on dispositions of property and equipment	(573		)		(5,988		)	1,140
Loss (gain) on dispositions of property and equipment			161					(573)			(5,988)
Impairment of long lived assets	~~7,887~~		210		~~837~~			17,~~569~~887			837
Deferred income taxes	~~(5,679~~		(9,462)		~~394~~			(8523,~~874~~586)		)	(10,566)
Deferred financing and original issue discount amortization	~~3,726~~		3,722		~~2,455~~			23,~~530~~726			2,455
Loss on debt restructuring	—		—		~~11,632~~			—			11,632
Stock-based compensation expense	~~2,981~~		5,125		~~1,590~~			2,~~484~~981			1,590
Gain on disposition of Australia assets	—				—			(638		)
Change in fair value of contingent consideration			(3,515)					—			—
Other non-cash interest and change in value of interest rate swap	~~2,608~~		601		~~607~~			(12,~~481~~608		)	607
Changes in operating items:
Accounts receivable	~~22,863~~		(32,417)		~~7,934~~			(222,~~777~~863		)	7,934
Inventories	~~(3,205~~		(67,147)		~~(68,978~~		)	13(3,~~800~~205)			(68,978)
Other assets	~~2,878~~		(10,743)		~~(1,496~~		)	~~517~~2,878			(1,496)
Accounts payable	~~(11,975~~		)76,031		~~41,092~~			9(11,~~305~~975)			41,092
Other accrued liabilities	~~9,666~~		27,098		~~(3,523~~		)	119,~~562~~666			(3,523)
Net cash provided by operating activities	~~52,359~~		92,080		~~7,547~~			8252,~~910~~359			7,547
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired	~~(6,135~~		(800)		~~(500,989~~		)	(476,~~188~~135)		)	(500,989)
Capital expenditures	~~(57,753~~		(45,274)		~~(71,621~~		)	(5157,~~410~~753)		)	(71,621)
Proceeds from sale of property and equipment	~~10,400~~		—		—			—10,400			—
Other investing activities	—		—		—			~~(1,500~~—		)	—
Net cash used for investing activities	~~(53,488~~		(46,074)		~~(572,610~~		)	(~~100~~53,~~098~~488)		)	(572,610)
Cash flows from financing activities:
Borrowings on senior term loans, net of discount	—		—		~~1,050,050~~			—			1,050,050
Repayments of senior term loans	~~(10,608~~		(10,608)		~~(532,488~~		)	(510,~~500~~608)		)	(532,488)
Borrowings of revolving credit loans	~~43,500~~		99,000		~~165,550~~			3543,500			165,550
Repayments of revolving credit loans	~~(38,700~~		(140,000)		~~(76,850~~		)	(1638,~~000~~700)		)	(76,850)
Financing fees	~~(1,412~~		)—		~~(20,520~~		)	—(1,412)			(20,520)
Principal payments under capitalized lease obligations	~~(683~~		(836)		~~(235~~		)	(~~124~~683)		)	(235)
Dividend to Holdco	—		—		~~(3,780~~		)	—			(3,780)
Proceeds from exercise of stock options	~~100~~		7,340		~~200~~			—100			200
Proceeds from sale of Holdco stock	~~750~~		—		—			~~500~~750			—
Net cash provided by (used for) financing activities	(7,053		)		581,927			14,376
Net cash (used for) provided by financing activities			(45,104)					(7,053)			581,927
Effect of exchange rate changes on cash	~~(79~~		)645		~~1,433~~			(~~1,357~~79)		)	1,433
Net increase (decrease) in cash and cash equivalents	~~(8,261~~		)1,547		~~18,297~~			(48,~~169~~261)		)	18,297
Cash and cash equivalents at beginning of period	~~28,234~~		19,973		~~9,937~~			1428,~~106~~234			9,937
Cash and cash equivalents at end of period	$	~~19,973~~	$	21,520	$	~~28,234~~		$	919,~~937~~973		$	28,234

The Notes to Consolidated Financial Statements are an integral part of these statements.

3948

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

(dollars in thousands)

	~~CommonStock~~		CommonStock		~~AdditionalPaid-inCapital~~			~~Retained Earnings (Accumulated Deficit)~~AdditionalPaid-inCapital			~~AccumulatedOtherComprehensive(Loss)~~		Retained Earnings (Accumulated Deficit)		~~TotalStockholder'sEquity~~			AccumulatedOtherComprehensive(Loss)		TotalStockholder'sEquity
Balance at December 31, 2016	$	—			$	548,534		$	(56,226	)	$	(34,382	)		$	457,926
Balance at December 30, 2017			$	—				$	551,518				$	2,422				$	(26,537)	$	527,403
Net Income	—				—			58,648			—				58,648
Net Loss - As Restated			—					—					(58,681)					—		(58,681)
Stock-based compensation	—		—		~~2,484~~			—1,590			—		—		~~2,484~~			—		1,590
Proceeds from sale of Holdco shares of stock	—				500			—			—				500
Proceeds from exercise of stock options			—					200					—					—		200
Change in cumulative foreign currency translation adjustment	—				—			—			7,845				7,845
Dividend to Holdco			—					(3,780)					—					—		(3,780)
Balance at December 30, 2017	$	—			$	551,518		$	2,422		$	(26,537	)		$	527,403
Cumulative effect of change in accounting principle			—					—					(5,612)					—		(5,612)
Net Loss	—				—			(69,641		)	—				(69,641		)
Change in cumulative foreign currency translation adjustment			—					—					—					(11,053)		(11,053)
Stock-based compensation	—				1,590			—			—				1,590
Balance at December 29, 2018 - As Restated			$	—				$	549,528				$	(61,871)				$	(37,590)	$	450,067
Proceeds from exercise of stock options	—				200			—			—				200
Net Loss - As Restated			—					—					(85,479)					—		(85,479)
Dividend to Holdco	—				(3,780		)	—			—				(3,780		)
Stock-based compensation			—					2,981					—					—		2,981
Cumulative effect of change in accounting principals	—				—			(5,612		)	—				(5,612		)
Proceeds from exercise of stock options			—					100					—					—		100
Change in cumulative foreign currency translation adjustment	—				—			—			(11,053		)		(11,053		)
Proceeds from sale of Holdco shares of stock			—					750					—					—		750
Balance at December 29, 2018	$	—			$	549,528		$	(72,831	)	$	(37,590	)		$	439,107
Change in cumulative foreign currency translation adjustment			—					—					—					5,550		5,550
Net Loss	—				—			(103,386		)	—				(103,386		)
Balance at December 28, 2019 - As Restated			$	—				$	553,359				$	(147,350)				$	(32,040)	$	373,969
Stock-based compensation	—				2,981			—			—				2,981
Net Loss			—					—					(24,499)					—		(24,499)
Proceeds from exercise of stock options	—				100			—			—				100
Stock-based compensation			—					5,125					—					—		5,125
Proceeds from sale of Holdco shares of stock	—				750			—			—				750
Proceeds from exercise of stock options			—					7,340					—					—		7,340
Change in cumulative foreign currency translation adjustment	—		—		—			—			~~5,550~~		—		~~5,550~~			2,652		2,652
Balance at December 28, 2019	$	—			$	553,359		$	(176,217	)	$	(32,040	)		$	345,102
Balance at December 26, 2020			$	—				$	565,824				$	(171,849)				$	(29,388)	$	364,587

The Notes to Consolidated Financial Statements are an integral part of these statements.

4049

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

1. Basis of Presentation:

The accompanying financial statements include the consolidated accounts of The Hillman Companies, Inc. and its wholly-owned subsidiaries (collectively “Hillman” or the “Company”). Unless the context requires otherwise, references to "Hillman," "we," "us," "our," or "our Company" refer to The Hillman Companies, Inc. and its wholly-owned subsidiaries. The Consolidated Financial Statements included herein have been prepared in accordance with accounting standards generally accepted in the United States of America (U.S. GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. References to ~~2019~~2020, ~~2018~~2019, and ~~2017~~2018 are for fiscal years ended December 2826, ~~2019~~2020, December 2928, ~~2018~~2019, and December 3029, ~~2017~~2018, respectively.

We are a wholly-owned subsidiary of HMAN Group Holdings Inc. (“Holdco”). Affiliates of CCMP Capital Advisors, LLC (“CCMP”) own 8079.41% of Holdco's outstanding common stock, affiliates of Oak Hill Capital Partners III, L.P., Oak Hill Capital Management Partners III, L.P. and OHCP III HC RO, L.P. (collectively “Oak Hill Funds”) own 16.97% of Holdco's outstanding common stock, and certain current and former members of management own 24.72% of Holdco's outstanding common stock.

The Company has a 52-53 week fiscal year ending on the last Saturday in December 2017. In a 52 week fiscal year, each of the Company’s quarterly periods will comprise 13 weeks. The additional week in a 53 week fiscal year is added to the fourth quarter, making such quarter consist of 14 weeks. The Company’s first 53 week fiscal year will occur in fiscal year 2022.

Nature of Operations:

The Company is comprised of three separate operating business segments: (1) ~~Fastening,~~ Hardware, and ~~Personal~~ Protective Solutions, (2) ~~Consumer~~Robotics ~~Connected~~and Digital Solutions, and (3) Canada.

In the fourth quarter of 2019, the Company implemented a plan to restructure the management and operations of our U.S. business to achieve synergies and cost savings associated with the recent acquisitions. The restructuring plan includes management realignment, integration of sales and operations functions, and strategic review of our product offerings (see Note 14 - Restructuring of the Notes to Consolidated Financial Statements for additional details). In connection with the restructuring, and to better support the review of our results, the Company revised the classification of certain product categories and associated costs within the operating segment reporting structure. In the fourth quarter of 2019, the Company moved from a geographic segment structure to a hybrid product based and geographic structure. This change aligns the reportable segments with the information reviewed by the chief operating decision maker. Concurrent with this change, the Company has revised prior period segment information to be consistent with the current period presentation. There was no impact on previously reported consolidated revenues, total operating expenditures, operating income or net income as a result of these changes.

Hillman Group provides and, on a limited basis, produces products such as fasteners and related hardware items; threaded rod and metal shapes; keys, key duplication systems, and accessories; personal protective equipment such as gloves and eye-wear; builder's hardware; and identification items, such as tags and letters, numbers, and signs, to retail outlets, primarily hardware stores, home centers and mass merchants, pet supply stores, grocery stores, and drug stores. The Canada segment also produces fasteners, stampings, fittings, and processes threaded parts for automotive suppliers, industrial Original Equipment Manufacturers (“OEMs”), and industrial distributors.

On ~~November~~August 810, ~~2017~~2018, the Company ~~entered~~completed ~~into~~the anacquisition ~~Asset~~of ~~Purchase~~Minute ~~Agreement~~Key ~~with Hargis Industries~~Holdings, LPInc. ~~doing business as ST Fastening Systems~~ ("~~STFS~~MinuteKey") ~~and other related parties~~, ~~pursuant~~an toinnovative ~~which~~leader ~~Hillman acquired substantially all of the assets and assumed certain liabilities of STFS. STFS, located~~ in ~~Tyler, Texas, specializes in manufacturing and distributing threaded~~ self-~~drilling~~service ~~fasteners,~~key ~~foam~~duplicating ~~closure~~kiosks ~~strips,~~for ~~and other accessories to the steel-frame, post-frame, and residential building markets. Pursuant to the terms of the Asset Purchase Agreement, the Company paid~~ a ~~purchase~~total ~~price~~consideration of $47156,~~339~~289. ~~which~~MinuteKey ~~reflects~~has ~~finalized~~existing ~~purchase~~operations ~~price~~in ~~accounting~~the ~~adjustments~~United asStates ofand ~~December 29,~~Canada ~~2018.~~and ~~STFS~~is ~~resides~~included ~~within~~in ~~the Company~~Hillman's ~~Fastening,~~Robotics ~~Hardware,~~ and ~~Personal~~Digital ~~Protection~~ Solutions reportable segment. See Note 5 - Acquisitions for additional information.

On ~~August~~October 101, 2018, the Company completed the acquisition of ~~Minute~~Big ~~Key~~Time ~~Holdings,~~Products ~~Inc.~~ ("~~MinuteKey~~Big Time"), ana ~~innovative~~leading ~~leader~~provider inof ~~self-service~~personal ~~key~~protective ~~duplicating~~and ~~kiosks~~work ~~for~~gear aproducts ~~total~~ranging ~~consideration~~from ofwork ~~$156~~gloves,~~289,~~ ~~which~~tool ~~reflects~~belts ~~finalized~~and ~~purchase~~jobsite ~~accounting~~storage, ~~adjustments~~for astotal consideration of ~~December 28~~$348, ~~2019~~834. ~~MinuteKey~~Big Time has existing operations inthroughout ~~the~~North ~~United~~America ~~States~~ and ~~Canada~~its ~~and~~operating beresults ~~included~~reside inwithin ~~Hillman~~the Company's ~~Consumer~~Hardware ~~Connected~~and Protective Solutions reportable ~~segments~~segment. See Note 5 - Acquisitions for additional information.

41On August 16, 2019, the Company acquired the assets of Sharp Systems, LLC ("Resharp"), a California-based innovative developer of automated knife sharpening systems, for a total purchase price of $21,100. Resharp has existing operations in the United States and its operating results reside within the Company's Robotics and Digital reportable segment. See Note 5 - Acquisitions for additional information.

Restatement of Previously Issued Consolidated Financial Statements for Income Tax Accounting Errors

On February 25, 2021, the Audit Committee of the Board of Directors (the “Audit Committee”) of the Company, after considering the recommendations of management, and discussing such recommendations with SEC counsel, concluded that our 2019 and 2018 Financial Statements, included in our Annual Reports on Form 10-K as of and for the fiscal years ended

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

~~On October 1~~December 29, 2018, ~~the~~and ~~Company~~December 28, ~~completed~~2019, ~~the~~and ~~acquisition~~our ofunaudited ~~Big~~condensed ~~Time~~consolidated ~~Products~~financial ~~("Big~~statements ~~Time"),~~as ~~a leading provider~~ of ~~personal protective~~ and ~~work~~for ~~gear~~the ~~products~~quarterly ~~ranging~~periods ~~from~~ended ~~work~~within ~~gloves,~~those ~~tool~~years ~~belts~~along ~~and~~with ~~jobsite~~the ~~storage,~~three ~~for~~quarters ~~total~~in ~~consideration~~the ofthirty-nine ~~$348,834,~~weeks ~~which~~ended ~~reflects~~September ~~finalized~~26, ~~purchase accounting adjustments as of December 28~~2020, ~~2019.~~should ~~Big~~no ~~Time~~longer ~~has~~be ~~existing~~relied ~~operations~~upon ~~throughout~~due ~~North~~to ~~America~~misstatements ~~and~~that ~~its~~are ~~operating~~described ~~results~~in ~~reside~~greater ~~within~~detail ~~the Company's Fastening~~below, ~~Hardware,~~ and ~~Personal~~that ~~Protective~~we ~~Solutions~~would ~~reportable~~restate ~~segment.~~such ~~See~~financial ~~Note~~statements 5to -make ~~Acquisitions~~the ~~for~~necessary ~~additional~~accounting ~~information~~corrections.

OnWhile ~~August~~preparing 16our 2020 consolidated financial statements, the Company identified errors in the accounting for income taxes during 2018 and 2019. During 2018, the Company ~~acquired~~became ~~the~~subject ~~assets~~to additional provisions of ~~Sharp~~the ~~Systems,~~Tax ~~LLC~~Cuts and Jobs Act of 2017 (~~"Resharp"~~“2017 Tax Act”), aincluding ~~California-based~~computations ~~innovative~~related ~~developer~~to ofthe ~~automated~~IRC ~~knife~~§163(j) ~~sharpening~~interest ~~systems,~~limitation ~~for~~(Interest aLimitation). ~~total~~The ~~purchase~~Company ~~price~~incorrectly established valuation allowances against the portion of ~~$21,100.~~interest ~~Resharp~~expense ~~has~~that ~~existing~~was ~~operations~~not currently deductible in the ~~United~~years ~~States~~ended December 28, 2019 and ~~its~~December 29, ~~operating~~2018 ~~results~~and ~~reside~~during ~~within~~the thirty-nine weeks ended September 26, 2020. In addition, the Company's ~~Consumer~~incorrectly ~~Connected~~established ~~Solutions~~a ~~reportable~~valuation ~~segment~~allowance on certain U.S. ~~See~~state ~~Note~~NOLs. 5Upon -further ~~Acquisitions~~review ~~for~~of ~~additional~~income ~~information~~tax accounting guidance, the Company determined the valuation allowance should not have been established.

~~Reclassifications:~~The Company evaluated the materiality of these errors both qualitatively and quantitatively in accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality and SAB No. 108, Considering the Effects of Prior Year Misstatements in Current Year Financial Statements, and determined the effect of these corrections was material to the consolidated financial statements as of and for the years ended December 28, 2019 and December 29, 2018.

~~Certain~~Accordingly, ~~amounts~~the inCompany ~~the~~has ~~prior~~restated ~~year~~the ~~Consolidated~~2018 ~~Financial~~consolidated ~~Statements~~financial statements and to reduce net loss by $10,960, driven by an increase in deferred tax benefit. Deferred tax liabilities and goodwill decreased by $14,187 and $3,227, respectively. The Company has also restated the ~~Notes~~2019 toconsolidated ~~Consolidated~~financial ~~Financial~~statements, ~~Statements~~reducing ~~were~~net ~~reclassified~~loss toby ~~conform~~$17,907 due to ~~the~~an ~~current~~increase ~~year’s~~in ~~presentation~~deferred tax benefit. ~~The~~These ~~reclassifications~~adjustments ~~were~~resulted ~~primarily~~in ~~related~~a cumulative decrease to ~~our~~goodwill ~~efforts~~of $3,227, a decrease to ~~realign~~the ~~our~~deferred ~~operating~~tax ~~segment~~liabilities ~~structure~~of to$32,094 ~~conform~~and ~~with~~a ~~management~~corresponding ~~review~~decrease in accumulated deficit and increase in total equity of ~~our~~$28,867 ~~results~~as of December 28, 2019. ~~Additionally~~These errors had no impact on any period prior to 2018, when the Company ~~reclassified~~became ~~the~~subject ~~mark-~~to~~-market~~ ~~adjustment~~the provisions of ~~our~~the ~~interest~~2017 ~~rate~~Tax ~~swap~~Act. ~~from~~Impacts ~~other~~to ~~income/expense~~the toconsolidated ~~its~~statements ~~own~~of ~~line~~cash onflow ~~the~~are ~~income~~limited ~~statement~~to ~~below~~changes ~~income~~within ~~from~~operating ~~operations.~~activities ~~This~~as ~~had~~noted below, and, therefore, there are no ~~impact~~impacts on the ~~prior~~operating, ~~periods’~~investing ~~statement~~or offinancing ~~financial~~subtotals. ~~position,~~Refer ~~net~~to ~~income~~Note 17 - Quarterly Data (~~loss~~unaudited), ~~cash~~for ~~flows,~~the orimpact ~~stockholder’s~~of ~~equity~~correcting these previously reported errors on our unaudited quarterly results.

The impacts of these corrections to fiscal years 2018 and 2019 are as follows:

Consolidated Statement of Comprehensive Loss


	Year Ended December 28, 2019						Year Ended December 29, 2018
	As Reported		Restatement Adjustments		As Restated		As Reported		Restatement Adjustments		As Restated
Income tax (benefit) expense	$	(5,370)	$	(17,907)	$	(23,277)	$	2,070	$	(10,960)	$	(8,890)
Net loss	(103,386)		17,907		(85,479)		(69,641)		10,960		(58,681)
Comprehensive loss	(97,836)		17,907		(79,929)		(80,694)		10,960		(69,734)

Consolidated Balance Sheets


	Year Ended December 28, 2019						Year Ended December 29, 2018
	As Reported		Restatement Adjustments		As Restated		As Reported		Restatement Adjustments		As Restated
Goodwill (1)	$	819,077	$	(3,227)	$	815,850	$	803,847	$	(3,227)	$	800,620
Total Assets	2,441,210		(3,227)		2,437,983		2,431,470		(3,227)		2,428,243
Deferred tax liabilities	196,437		(32,094)		164,343		200,696		(14,187)		186,509
Total liabilities	2,096,108		(32,094)		2,064,014		1,992,363		(14,187)		1,978,176
Accumulated deficit	(176,217)		28,867		(147,350)		(72,831)		10,960		(61,871)
Total stockholder's equity	345,102		28,867		373,969		439,107		10,960		450,067
Total liabilities and stockholder's equity	2,441,210		(3,227)		2,437,983		2,431,470		(3,227)		2,428,243

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

(1)The Company incorrectly established a valuation allowance on deferred taxes related to the interest limitations from the MinuteKey and Big Time Products acquisitions in 2018 during purchase accounting through goodwill. The correction of the error resulted in a reduction of goodwill of $1,160 for MinuteKey and $2,067 for Big Time Products.

Consolidated Statements of Cash Flows


	Year Ended December 28, 2019			Year Ended December 29, 2018
	As Reported	Restatement Adjustments	As Restated	As Reported	Restatement Adjustments	As Restated
Cash flows from operating activities:
Net loss	(103,386)	17,907	(85,479)	(69,641)	10,960	(58,681)
Deferred income taxes	(5,679)	(17,907)	(23,586)	394	(10,960)	(10,566)
Net cash provided by operating activities	52,359	—	52,359	7,547	—	7,547

The impacts of the restatement have been reflected throughout the financial statements, including the applicable footnotes, as appropriate.

2. Summary of Significant Accounting Policies:

Cash and Cash Equivalents:

Cash and cash equivalents consist of commercial paper, U.S. Treasury obligations, and other liquid securities purchased with initial maturities less than 90 days and are stated at cost which approximates fair value. The Company has foreign bank balances of approximately $9,~~301~~279 and $69,~~943~~301 at December 2826, ~~2019~~2020 and December 2928, ~~2018~~2019, respectively. The Company maintains cash and cash equivalent balances with financial institutions that exceed federally insured limits. The Company has not experienced any losses related to these balances. Management believes its credit risk is minimal.

Restricted Investments:

The Company's restricted investments are trading securities carried at fair market value which represent assets held in a Rabbi Trust to fund deferred compensation liabilities owed to the Company's employees. The current portion of the investments is included in other current assets and the long term portion in other assets on the accompanying Consolidated Balance Sheets. See Note 9 - Deferred Compensation Plan.

Accounts Receivable and Allowance for Doubtful Accounts:

The Company establishes the allowance for doubtful accounts using the specific identification method and also provides a reserve in the aggregate. The estimates for calculating the aggregate reserve are based on the financial condition of the customers, the length of time receivables are past due, historical collection experience, current economic trends, and reasonably supported forecasts. Increases to the allowance for doubtful accounts result in a corresponding expense. The Company writes off individual accounts receivable when collection becomes improbable. The allowance for doubtful accounts was $12,~~891~~395 and $~~846~~1,891 as of December 2826, ~~2019~~2020 and December 2928, ~~2018~~2019, respectively.

In the years ended December 2826, ~~2019~~2020 and December 2928, ~~2018~~2019, the Company entered into agreements to sell, on an ongoing basis and without recourse, certain trade accounts receivable. The buyer is responsible for servicing the receivables. The sale of the receivables is accounted for in accordance with Financial Accounting Standards Board (“FASB”) ASC 860, Transfers and Servicing. Under that guidance, receivables are considered sold when they are transferred beyond the reach of the Company and its creditors, the purchaser has the right to pledge or exchange the receivables, and the Company has surrendered control over the transferred receivables. The Company has received proceeds from the sales of trade accounts receivable of approximately $~~292~~323,~~432~~715 and $~~215~~292,~~833~~432 for the years ended December 2826, ~~2019~~2020 and December 2928, ~~2018~~2019, respectively, and has included the proceeds in net cash provided by operating activities in the Consolidated Statements of Cash Flows. Related to the sale of ~~accounts receivable, the Company recorded losses of approximately $2,923 and $2,233 for the years ended December 28, 2019 and December 29, 2018, respectively.~~

4252

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

accounts receivable, the Company recorded losses of approximately $1,782 and $2,923 for the years ended December 26, 2020 and December 28, 2019, respectively.

Inventories:

Property and Equipment:

Property and equipment are carried at cost and include expenditures for new facilities and major renewals. For financial accounting purposes, depreciation is computed on the straight-line method over the estimated useful lives of the assets, generally ~~two~~2 to 2515 years. Assets acquired under ~~capital~~finance leases are depreciated over the terms of the related leases. Maintenance and repairs are charged to expense as incurred. The Company capitalizes certain costs that are directly associated with the development of internally developed software, representing the historical cost of these assets. Once the software is completed and placed into service, such costs are amortized over the estimated useful lives. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from their respective accounts, and the resulting gain or loss is reflected in income (loss) from operations.

Property and equipment, net, consists of the following at December 2826, ~~2019~~2020 and December 2928, ~~2018~~2019:

	~~EstimatedUseful Life~~	EstimatedUseful Life
	~~(Years)~~	~~2019~~(Years)			~~2018~~			2020		2019
Land	n/a	$	—		$	20
Leasehold improvements		life of lease						11,506		10,982
Buildings	25	—			341
Machinery and equipment		2		-			10	334,643		308,096
Leasehold improvements	life of lease	10,982			8,273
Computer equipment and software		2		-			5	61,737		60,412
Machinery and equipment	2-10	308,096			271,061
Furniture and fixtures		6		-			8	5,467		2,749
Computer equipment and software	2-5	60,412			53,471
Construction in process								5,352		2,712
Furniture and fixtures	6-8	2,749			2,629
Property and equipment, gross								418,705		384,951
Construction in process		2,712			3,653
Less: Accumulated depreciation								236,031		179,791
Property and equipment, gross		384,951			339,448
Property and equipment, net								$	182,674	$	205,160
Less: Accumulated depreciation		179,791			131,169
Property and equipment, net		$	205,160		$	208,279

Goodwill:

The Company has adopted ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test and instead requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If, after assessing the totality of events or circumstances, the Company determines that the fair value of a reporting unit is less than the carrying value, then the Company would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

The Company’s annual impairment assessment is performed for its reporting units as of October 1st. AnWith the assistance of an independent ~~appraiser~~third-party specialist, management assessed the value the of the reporting units based on a discounted cash flow model and multiple of earnings. Assumptions critical to our fair value estimates under the discounted cash flow model include the discount rate, and projected average revenue growth ~~and projected long-term growth rates in the determination of terminal values~~. The results of the quantitative assessment in ~~2019~~2020, ~~2018~~2019, and ~~2017~~2018 indicated that the fair value of each reporting unit was in excess of its carrying value. Therefore goodwill was not impaired as of our annual testing dates. In our annual review of goodwill for impairment in the fourth quarter of ~~2019~~2020, the fair value of each reporting unit exceeded its carrying value by over 56% of its carrying value.

No impairment charges were recorded in the years ended December 2826, ~~2019~~2020, December 2928, ~~2018~~2019, or December 3029, ~~2017~~2018.

4353

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

Goodwill for the years ended December 29, 2018 and December 28, 2019 has been restated due to the correction of errors in the accounting for income taxes related to the valuation allowance against deferred tax assets, which impacted our net deferred tax liabilities. See Note 1 - Basis of Presentation for additional details.

Goodwill amounts by reportable segment are summarized as follows:

	~~Goodwill at~~		Goodwill at										~~Goodwill at~~				Goodwill at
	December 29, 2018		Acquisitions(1)		Disposals				Adjustments(2)		Other(3)		December 28, 2019
			December 29, 2019As Restated				Acquisitions				Disposals				Other(1)		December 26, 2020
Fastening, Hardware, and Personal Protection	$	564,143	$	—	$	—			$	3,540	$	164	$	567,847
Hardware and Protective Solutions			$	565,780			$	—			$	—			$	(202)	$	565,578
Consumer Connected Solutions	211,766		9,382		—				948		—		222,096
Robotics and Digital Solutions			220,936				—				—				—		220,936
Canada	~~27,938~~		—29,134		—		—		—		~~1,196~~—		~~29,134~~		552		29,686
Total	$	~~803,847~~	$	9815,~~382~~850	$	—	$	—	$	~~4,488~~	$	~~1,360~~—	$	~~819,077~~	$	350	$	816,200

(1)The ~~See~~"Other" ~~Note~~change 5to -goodwill ~~Acquisitions~~relates ~~for~~to ~~additional~~adjustments ~~information~~resulting ~~regarding~~from fluctuations in foreign currency exchange rates for the ~~Resharp~~Canada ~~acquisition~~and Mexico reporting units.

(2) These amounts related to opening balance sheet adjustments from the acquisition of MinuteKey and Big Time. These adjustments were primarily related to $2,087 increase in inventory reserve and a $1,106 increase in assumed liabilities for Big Time, as well as a $633 increase in assumed liabilities for MinuteKey. These acquisitions were completed in the third and fourth quarter of 2018, respectively and purchase price accounting adjustments are finalized as of the current period.

(3) The "Other" change to goodwill relates to adjustments resulting from fluctuations in foreign currency exchange rates for the Canada and Mexico reporting units.

Intangible Assets:

Intangible assets ~~are~~arise ~~stated~~primarily atfrom the ~~lower~~determination of ~~cost~~their orrespective fair ~~value~~market values at the date of acquisition. With the exception of certain trade names, intangible assets are amortized on a straight-line basis over periods ranging from 5 to 20 years, representing the period over which the Company expects to receive future economic benefits from these assets.

Other intangibles, net, as of December 2826, ~~2019~~2020 and December 2928, ~~2018~~2019 consist of the following:

	~~Estimated~~	Estimated
	~~Useful Life(Years)~~	~~December~~Useful ~~28, 2019~~Life(Years)			~~December 29, 2018~~			December 26, 2020		December 28, 2019
Customer relationships	~~13-20~~	$13	~~941,305~~	-	$	~~939,880~~	20	$	941,648	$	941,305
Trademarks - Indefinite	~~Indefinite~~	~~85,517~~Indefinite			~~85,228~~			85,603		85,517
Trademarks - Other	~~5-15~~	~~26,700~~5		-	~~26,700~~		15	26,400		26,700
Technology and patents	~~7-12~~	~~60,968~~7		-	~~55,394~~		12	63,749		60,968
Intangible assets, gross		~~1,114,490~~			~~1,107,202~~			1,117,400		1,114,490
Less: Accumulated amortization		~~232,060~~			~~176,677~~			291,434		232,060
Intangible assets, net		$	~~882,430~~		$	~~930,525~~		$	825,966	$	882,430

Estimated annual amortization expense for intangible assets subject to amortization at December 2826, ~~2019~~2020 for the next five fiscal years is as follows:

Fiscal Year Ended	~~Amortization Expense~~		Amortization Expense
2020	$	59,262
2021			$	59,608
2021	$	59,262
2022			$	59,608
2022	$	59,262
2023			$	59,608
2023	$	59,262
2024			$	59,608
2024	$	59,262
2025			$	58,858

The Company also evaluates indefinite-lived intangible assets (primarily trademarks and trade names) for impairment annually or more frequently if events and circumstances indicate that it is more likely than not that the fair value of an indefinite-lived intangible asset is below its carrying amount. With the assistance of an independent third-party specialist, management assessed the fair value of our indefinite-lived intangible assets based on a relief from royalties model. An impairment charge is recorded

4454

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

intangible asset is below its carrying amount. In connection with the evaluation, an independent appraiser assessed the fair value of our indefinite-lived intangible assets based on a relief from royalties model. An impairment charge is recorded if the carrying amount of an indefinite-lived intangible asset exceeds the estimated fair value on the measurement date. No impairment charges related to indefinite-lived intangible assets were recorded by the Company in ~~2019~~2020, ~~2018~~2019, or ~~2017~~2018 as a result of the quantitative annual impairment test.

Long-Lived Assets:

~~The Company evaluates its long~~Long-lived assets, ~~including~~such as property plant and equipment and definite-lived intangibles assets, are reviewed for impairment ~~including~~whenever events or circumstances indicate that the carrying amount of an ~~evaluation~~asset ~~based~~may onnot be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the ~~estimated~~Company ~~undiscounted~~first ~~future~~compares undiscounted cash flows asexpected ~~events~~to be generated by the asset or ~~changes~~asset ingroup ~~circumstances~~to ~~indicate~~its ~~that~~carrying value. If the carrying amount of ~~such~~the ~~assets~~long-lived ~~may~~asset ~~not~~or beasset ~~fully~~group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its' fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. In the year ended December 28, 2019, the Company recorded an impairment charge of $7,887 related to the loss on the disposal of our FastKey self-service duplicating kiosks and related assets in our ~~Consumer~~Robotics ~~Connected~~and Digital Solutions operating segment. In the fiscal year ended December 29, 2018, the Company recorded an impairment ~~charge~~charges of $837 related to exiting certain lines of business in our Canada segment, see Note 14 - Restructuring for more details. In the fiscal year ended December 30, 2017, the Company recorded impairment charges of $1,569 related to the exit of a pilot program in the kiosk business in our Consumer Connected Solutions operating segment. All of the aforementioned impairment charges incurred were included within the respective other income/expense on the Consolidated Statements of Comprehensive Income (Loss). Approximately 95% of the Company’s long-lived assets are held within the United States.

Income Taxes:

Deferred income taxes are computed using the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial reporting basis and income tax basis of assets and liabilities, based on enacted tax laws and statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Valuation allowances are provided for tax benefits where management estimates it is more likely than not that certain tax benefits will not be realized. Adjustments to valuation allowances are recorded for changes in utilization of the tax related item. See Note 6 - Income Taxes for additional information.

In accordance with guidance regarding the accounting for uncertainty in income taxes, the Company recognizes a tax position if, based solely on its technical merits, it is more likely than not to be sustained upon examination by the relevant taxing authority. If a tax position does not meet the more likely than not recognition threshold, the Company does not recognize the benefit of that position in its Consolidated Financial Statements. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to be recognized in the Consolidated Financial Statements.

Contingent Consideration:

Contingent Consideration relates to the potential payment for an acquisition that is contingent upon the achievement of the acquired business meeting certain product development milestones and/or certain financial performance milestones. The Company records contingent consideration at fair value at the date of acquisition based on the consideration expected to be transferred. The estimated fair value of the contingent consideration was determined using a Monte Carlo analysis examining the frequency and mean value of the resulting payments. The resulting value captures the risk associated with the form of the payout structure. The risk neutral method is applied, resulting in a value that captures the risk associated with the form of the payout structure and the projection risk. The assumptions utilized in the calculation based on financial performance milestones include projected revenue and/or EBITDA amounts, volatility and discount rates. For potential payments related to product development milestones, we estimated the fair value based on the probability of achievement of such milestones. The assumptions utilized in the calculation of the acquisition date fair value include probability of success and the discount rates. Contingent consideration involves certain assumptions requiring significant judgment and actual results may differ from assumed and estimated amounts.

Risk Insurance Reserves:

The Company self-insures our product liability, automotive, and workers' compensation, ~~and~~liability ~~general~~losses up to $250 per occurrence. General liability losses are self-insured up to $~~250~~500 per occurrence. Our policy is to estimate reserves based upon a number of factors, including known claims, estimated incurred but not reported claims, and third-party actuarial analysis. The ~~third-party actuarial analysis is based on historical information~~

4555

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

third-party actuarial analysis is based on historical information along with certain assumptions about future events. These reserves are classified as other current and other long-term liabilities within the balance sheets.

The Company self-insures our group health claims up to an annual stop loss limit of $250 per participant. Historical group insurance loss experience forms the basis for the recognition of group health insurance reserves.

Retirement Benefits:

Certain employees of the Company are covered under a profit-sharing and retirement savings plan. The plan provides for a matching contribution for eligible employees of 50% of each dollar contributed by the employee up to 6% of the employee's compensation. In addition, the plan provides an annual contribution in amounts authorized by the Board of Directors, subject to the terms and conditions of the plan.

Hillman Canada sponsors a Deferred Profit Sharing Plan (“DPSP”) and a Group Registered Retirement Savings Plan (“RRSP”) for all qualified, full-time employees, with at least three months of continuous service. DPSP is an employer-sponsored profit sharing plan registered as a trust with the Canada Revenue Agency (“CRA”). On a periodic basis, Hillman Canada shares business profits with employees by contributing to the DPSP on each employee's behalf. Employees do not contribute to the DPSP. There is no minimum required contribution; however, DPSPs are subject to maximum contribution limits set by the CRA. The DPSP is offered in conjunction with a RRSP. All eligible employees may contribute an additional voluntary amount of up to eight percent of the employee's gross earnings. Hillman Canada is required to match 100% of all employee contributions up to 2% of the employee's compensation. The assets of the RRSP are held separately from those of Hillman Canada in independently administered funds.

Retirement benefit costs were $23,~~725~~343, $2,~~567~~725, and $2,~~222~~567 in the years ended December 2826, ~~2019~~2020, December 2928, ~~2018~~2019, and December 3029, ~~2017~~2018, respectively.

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 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 rebate 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~~Discounts and allowances are included in the determination of net sales.

46The following table disaggregates our revenue by product category:

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

The following table disaggregates our revenue by product category:


	Hardware and Protective Solutions		Robotics and Digital Solutions		Canada		Total Revenue
Year Ended December 26, 2020
Fastening and Hardware	$	706,865	$	—	$	131,493	$	838,358
Personal Protective	317,527		—		239		317,766
Keys and Key Accessories	—		157,828		2,878		160,706
Engraving	—		51,423		6		51,429
Resharp	—		36		—		36
Consolidated	$	1,024,392	$	209,287	$	134,616	$	1,368,295

Year Ended December 28, 2019
Fastening and Hardware	$	607,247	$	—	$	121,242	$	728,489
Personal Protective	245,769		—		—		245,769
Keys and Key Accessories	—		185,451		4,009		189,460
Engraving	—		50,613		9		50,622
Resharp	—		22		—		22
Consolidated	$	853,016	$	236,086	$	125,260	$	1,214,362

Year Ended December 29, 2018
Fastening and Hardware	$	581,269	$	—	$	137,186	$	718,455
Personal Protective	55,448		—		—		55,448
Keys and Key Accessories	—		143,898		4,217		148,115
Engraving	—		52,145		12		52,157
Resharp	—		—		—		—
Consolidated	$	636,717	$	196,043	$	141,415	$	974,175

	Fastening, Hardware, and Personal Protective Solutions		Consumer Connected Solutions		Canada		Total Revenue
Year Ended December 28, 2019
Fastening and Hardware	$	607,247	$	—	$	121,242	$	728,489
Personal Protective	245,769		—		—		245,769
Keys and Key Accessories	—		185,451		4,009		189,460
Engraving	—		50,613		9		50,622
Resharp	—		22		—		22
Consolidated	$	853,016	$	236,086	$	125,260	$	1,214,362
Year Ended December 29, 2018
Fastening and Hardware	$	581,269	$	—	$	137,186	$	718,455
Personal Protective	55,448		—		—		55,448
Keys and Key Accessories	—		143,898		4,217		148,115
Engraving	—		52,145		12		52,157
Resharp	—		—		—		—
Consolidated	$	636,717	$	196,043	$	141,415	$	974,175
Year Ended December 30, 2017
Fastening and Hardware	$	528,969	$	—	$	133,082	$	662,051
Personal Protective	—		—		—		—
Keys and Key Accessories	—		115,924		4,706		120,630
Engraving	—		55,674		13		55,687
Resharp	—		—		—		—
Consolidated	$	528,969	$	171,598	$	137,801	$	838,368

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

The following table disaggregates our revenue by geographic location:

	Fastening, Hardware, and Personal Protective Solutions				Consumer Connected Solutions		Canada		Total Revenue
			Hardware and Protective Solutions				Robotics and Digital Solutions				Canada		Total Revenue
Year Ended December 28, 2019
Year Ended December 26, 2020
United States	$	~~835,957~~	$	1,007,135	$	~~234,216~~	$	—207,283	$	~~1,070,173~~	$	—	$	1,214,418
Canada	~~5,905~~		7,789		~~1,870~~		~~125~~2,~~260~~004		~~133,035~~		134,616		144,409
Mexico	~~11,154~~		9,468		—		—		~~11,154~~		—		9,468
Consolidated	$	~~853,016~~	$	1,024,392	$	~~236,086~~	$	~~125~~209,~~260~~287	$	~~1,214,362~~	$	134,616	$	1,368,295
Year Ended December 29, 2018
Year Ended December 28, 2019
United States	$	~~626,490~~	$	835,957	$	~~195,538~~	$	—234,216	$	~~822,028~~	$	—	$	1,070,173
Canada	~~1,944~~		5,905		~~505~~		~~141~~1,~~415~~870		~~143,864~~		125,260		133,035
Mexico	~~8,283~~		11,154		—		—		~~8,283~~		—		11,154
Consolidated	$	~~636,717~~	$	853,016	$	~~196,043~~	$	~~141~~236,~~415~~086	$	~~974,175~~	$	125,260	$	1,214,362
Year Ended December 30, 2017
Year Ended December 29, 2018
United States	$	~~522,002~~	$	626,490	$	~~171,598~~	$	—195,538	$	~~693,600~~	$	—	$	822,028
Canada	—		1,944		—		~~137,801~~505		~~137,801~~		141,415		143,864
Mexico	~~6,967~~		8,283		—		—		~~6,967~~		—		8,283
Consolidated	$	~~528,969~~	$	636,717	$	~~171,598~~	$	~~137~~196,~~801~~043	$	~~838,368~~	$	141,415	$	974,175

Our revenue by geography is allocated based on the location of our sales operations. Our ~~Fastening,~~ Hardware, and ~~Personal~~ Protective Solutions segment contains sales of Big Time personal protective equipment into Canada. Our ~~Consumer~~Robotics ~~Connected~~and Digital Solutions segment contains sales of MinuteKey Canada.

~~Fastening,~~ Hardware, and ~~Personal~~ 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.

~~Consumer~~Robotics ~~Connected~~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., ~~Judgment~~which ~~was~~occurs ~~required~~upon indelivery ~~applying~~of the ~~new~~products. ~~revenue~~Judgment ~~standard~~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. ~~The~~Revenue ~~Company’s~~is ~~obligation~~recognized tofor ~~provide~~ in-store service and access to key duplicating and engraving equipment isas ~~satisfied when control of~~ the related products isare ~~transferred. Therefore~~delivered, ~~consistent~~which ~~with~~approximates ~~the~~a ~~practice~~time-based ~~prior~~recognition ~~to the adoption of ASU No~~pattern. ~~2014-09~~Therefore, ~~Revenue~~ ~~from Contracts with Customers (Topic 606) ("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 delivery of the products.

48The 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 HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

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 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.

Shipping and Handling:

The costs incurred to ship product to customers, including freight and handling expenses, are included in selling, general, and administrative (“SG&A”) expenses on the Company's Consolidated Statements of Comprehensive ~~Income (~~Loss).

Shipping and handling costs were $4750,~~713~~891, $4247,~~458~~713, and $3942,~~205~~458 in the years ended December 2826, ~~2019~~2020, December 2928, ~~2018~~2019, and December 3029, ~~2017~~2018, respectively.

Research and Development:

The Company expenses research and development costs consisting primarily of internal wages and benefits in connection with improvements to the Company's fastening product lines along with the key duplicating and engraving machines. The Company's research and development costs were $2,~~075~~876, $2,~~181~~075, and $2,~~216~~181 in the years ended December 2826, ~~2019~~2020, December 2928, ~~2018~~2019, and December 3029, ~~2017~~2018, respectively.

Common Stock:

The Hillman Companies, Inc. has one class of common stock. All outstanding shares of The Hillman Companies, Inc. common stock are owned by Holdco. The management shareholders of Holdco do not have the ability to put their shares back to Holdco.

Stock Based Compensation:

The Company has a stock-based employee compensation plan pursuant to which Holdco may grant options, stock appreciation rights, restricted stock, and other stock-based awards. Hillman reflects the options granted by ~~HoldCo~~Holdco in its stand-alone Consolidated Financial Statements in accordance with Accounting Standards Codification 718, Compensation - Stock Compensation ("ASC 718"). The Company uses a Black-Scholes option pricing model to determine the fair value of stock options on the dates of grant. The Black-Scholes pricing model requires various assumptions, including expected term, which is based on our historical experience and expected volatility which is estimated based on the average historical volatility of similar entities with publicly traded shares. The Company also makes assumptions regarding the risk-free interest rate and the expected dividend yield. The risk-free interest rate is based on the U.S. Treasury interest rate whose term is consistent with the expected term of the share-based award. The dividend yield on our common stock is assumed to be zero since we do not pay dividends and have no current plans to do so in the future. Determining the fair value of stock options at the grant date requires judgment, including estimates for the expected life of the share-based award, stock price volatility, dividend yield, and interest rate. These assumptions may differ significantly between grant dates because of changes in the actual results of these inputs that occur over time.

Stock-based compensation expense is recognized using a fair value based recognition method. Stock-based compensation cost is estimated at the grant date based on the fair value of the award and is recognized as expense over the requisite vesting period or performance period of the award on a straight-line basis. The stock-based compensation expense is recorded in general and administrative expenses. The plan is more fully described in Note 11 - Stock Based Compensation.

4959

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

Fair Value of Financial Instruments:

The Company uses the accounting guidance that applies to all assets and liabilities that are being measured and reported on a fair value basis. The guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. Whenever possible, quoted prices in active markets are used to determine the fair value of the Company's financial instruments.

Derivatives and Hedging:

The Company uses derivative financial instruments to manage its exposures to (1) interest rate fluctuations on its floating rate senior ~~debt~~term loan and (2) fluctuations in foreign currency exchange rates. The Company measures those instruments at fair value and recognizes changes in the fair value of derivatives in earnings in the period of change, unless the derivative qualifies as an effective hedge that offsets certain exposures. The Company enters into derivative instrument transactions with financial institutions acting as the counter-party. The Company does not enter into derivative transactions for speculative purposes and, therefore, holds no derivative instruments for trading purposes.

The relationships between hedging instruments and hedged items are formally documented, in addition to the risk management objective and strategy for each hedge transaction. For interest rate swaps, the notional amounts, rates, and maturities of our interest rate swaps are closely matched to the related terms of hedged debt obligations. The critical terms of the interest rate swap are matched to the critical terms of the underlying hedged item to determine whether the derivatives used for hedging transactions are highly effective in offsetting changes in the cash flows of the underlying hedged item. If it is determined that a derivative ceases to be a highly effective hedge, the hedge accounting is discontinued and all subsequent derivative gains and losses are recognized in the statement of comprehensive income or loss.

Derivative instruments designated in hedging relationships that mitigate exposure to the variability in future cash flows of the variable-rate debt and foreign currency exchange rates are considered cash flow hedges. The Company records all derivative instruments in other assets or other liabilities on the Consolidated Balance Sheets at their fair values. If the derivative is designated as a cash flow hedge and the hedging relationship qualifies for hedge accounting, the effective portion of the change in the fair value of the derivative is recorded in other comprehensive income or loss. The change in fair value for instruments not qualifying for hedge accounting are recognized in the statement of comprehensive income or loss in the period of the change. See Note 12 - Derivatives and Hedging.

Translation of Foreign Currencies:

The translation of the Company's Canadian and Mexican local currency based financial statements into U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate during the period. Cumulative translation adjustments are recorded as a component of accumulated other comprehensive ~~income (~~loss) in stockholder's equity.

Use of Estimates in the Preparation of Financial Statements:

The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses for the reporting period. Actual results may differ from these estimates.

~~3. Recent Accounting Pronouncements:~~ 60

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

~~primarily~~The ~~relates~~extent to ~~payments~~which toCOVID-19 ~~customers.~~impacts ~~The~~the Company’s business and financial results will ~~now~~depend ~~recognize~~on ~~certain~~numerous ~~payments~~evolving asfactors aincluding, ~~reduction~~but ofnot ~~revenue~~limited ~~when~~to: the ~~payment~~magnitude isand ~~made~~duration asof ~~opposed~~COVID-19, the extent to ~~over~~which ~~the~~it ~~life~~will ofimpact ~~the~~worldwide ~~master~~macroeconomic ~~service~~conditions ~~agreement.~~including ~~The~~interest ~~comparative~~rates, ~~information~~employment ~~has~~rates ~~not~~and ~~been~~health ~~restated~~insurance coverage, the speed of the anticipated recovery, and ~~continues~~governmental toand bebusiness ~~reported~~reactions ~~under~~to the pandemic. The Company assessed certain accounting ~~standards~~matters that generally require consideration of forecasted financial information in ~~effect~~context ~~for~~with ~~those~~the ~~periods.~~information ~~The~~reasonably ~~impact~~available to ~~revenues~~the ~~for~~Company and the ~~year~~ ~~ended~~unknown future impacts COVID-19 as of December 2826, ~~2019~~2020 and ~~December 29~~through the date of this report. The accounting matters assessed included, ~~2018 as~~but awere ~~result~~not limited to the carrying value of ~~applying~~the ~~ASU~~goodwill ~~2014-09~~and ~~were~~other ~~immaterial~~long-lived assets. AWhile ~~majority~~there ofwas ~~revenue~~not ~~continues~~a material impact to bethe ~~recognized~~Company’s ~~when~~Consolidated ~~products~~Financial ~~are~~Statements ~~shipped~~as orof ~~delivered~~and tofor ~~customers.~~the ~~The~~year ~~Company~~ended ~~expects~~December 26, 2020, the ~~impact~~Company’s future assessment of the ~~adoption~~magnitude and duration of ~~the~~COVID-19, ~~new~~as ~~standard~~well toas beother ~~immaterial~~factors, could result in material impacts to ~~our~~the ~~net~~Company’s ~~income~~Consolidated onFinancial anStatements ~~ongoing~~in ~~basis~~future reporting periods.

3. Recent Accounting Pronouncements:

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). On December 31, 2017, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers and all the related amendments (“new revenue standard”) to all contracts using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as a $5,612 reduction to the opening balance of retained earnings with corresponding decreases to other current assets and other assets of $3,846 and $3,370, respectively, an increase of $637 to other accrued expenses, and a decrease of $2,241 in deferred tax liabilities. The cumulative adjustment primarily relates to payments to customers. The Company will now recognize certain payments as a reduction of revenue when the payment is made as opposed to over the life of the master service agreement. The impact to revenues as a result of applying ASU 2014-09 were immaterial. A majority of revenue continues to be recognized when products are shipped or delivered to customers. The Company expects the impact of the adoption of the new standard to be immaterial to our net income on an ongoing basis.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Subsequently, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements and ASU 2018-10, Codification Improvements to Topic 842, Leases. Effective December 30, 2018, the Company adopted the comprehensive new lease standard issued by the FASB. The most significant impact was the recognition of right-of-use ("ROU") assets and liabilities for operating and finance leases applicable to lessees. The Company elected to utilize the transition guidance within the new standard that allowed the Company to carry forward its historical lease classification(s). Operating and finance ROU assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. As the implicit rate is not determinable for most of the Company's leases, management uses the Company's incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The Company elected to not separate lease and non-lease components for all classes of underlying assets in which it is the lessee and made an accounting policy election to not account for leases within an initial term of 12 months or less on the accompanying Consolidated Balance Sheets. The expected lease terms include options to extend or terminate the lease when its reasonably certain that the Company will exercise such option. Lease expense for minimum lease payments is recognized over a straight-line basis over the expected lease term. As of December 30, 2018, the Company recorded an Operating ROU Asset of $72,785 and a Finance ROU Asset of $672 within our Consolidated Balance Sheets. Short-term and long-term operating lease liabilities were recorded as $12,040 and $63,291, respectively. Short-term and long-term finance lease liabilities were determined to be $436 and $477, respectively. The adoption of this guidance did not have an impact on net income. Refer to Note 8 - Leases for full lease-related disclosures.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. The ASU sets forth a “current expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. ~~This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.~~ The Company isadopted ~~still~~this ASU in the ~~process~~first ofquarter ~~evaluating the impact~~ of ~~this~~fiscal ~~new guidance~~2020, ~~however~~and weit ~~anticipate~~did ~~adoption will~~ not have a material impact on the Company's Consolidated Financial Statements.

In ~~March~~August 2018, the FASB issued ASU 2018-0515, Intangibles—Goodwill ~~Income~~and ~~Taxes~~Other—Internal-Use ~~(Topic~~Software ~~740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118~~ (~~“ASU~~Subtopic ~~2018~~350-~~05”~~40),: ~~which~~Customer’s ~~amends the FASB~~ Accounting ~~Standards~~for ~~Codification~~Implementation ~~and~~Costs ~~XBRL~~Incurred ~~Taxonomy~~in ~~based~~a onCloud ~~the~~Computing ~~Tax~~Arrangement ~~Cuts~~That ~~and~~Is ~~Jobs~~a ~~Act~~Service Contract, (~~the~~"ASC ~~“Act”~~350-40") ~~that~~requiring ~~was~~a ~~signed~~customer ~~into~~in ~~law~~a oncloud ~~December~~computing ~~22,~~arrangement ~~2017~~that ~~and~~is ~~Staff~~a ~~Accounting~~service ~~Bulletin~~contract ~~No.~~to ~~118~~follow ~~(“SAB~~the ~~118”)~~internal ~~that~~use ~~was~~software ~~released~~guidance byin ~~the~~ASC ~~Securities~~350-40 ~~and~~to ~~Exchange~~determine ~~Commission.~~which ~~The~~implementation ~~Act~~costs ~~changes~~to ~~numerous~~capitalize ~~provisions~~as ~~that impact U~~assets.S. ~~corporate~~Capitalized ~~tax~~implementation ~~rates,~~costs ~~business-~~related ~~exclusions,~~to ~~and~~a ~~deductions~~hosting ~~and~~arrangement ~~credits and may additionally have international tax consequences for many companies~~ that ~~operate~~is ~~internationally.~~a ~~The~~service ~~Company~~contract ~~has~~will ~~evaluated~~be ~~the~~amortized ~~impact~~over of the ~~Act~~term ~~as well as the guidance~~ of ~~SAB 118 and incorporated~~ the ~~changes~~hosting ~~into the determination of a reasonable estimate of its deferred tax liability and appropriate disclosures in the Notes to Consolidated Financial Statements. Refer to Note 6 - Income Taxes.~~

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, ("ASC 350-40") requiring a customer in a cloud computing arrangement that is a service contract to follow the internal use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. The Company early adopted this ASU in the third quarter of 2018, and it did not have a material impact on the Company's Consolidated Financial Statements.61

4. Related Party Transactions:

The Company has recorded aggregate management fee charges and expenses from CCMP and Oak Hill Funds of $562, $546, and $519 for the years ended December 28, 2019, December 29, 2018, and December 30, 2017, respectively.

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

~~The~~arrangement, ~~Company~~beginning ~~recorded~~when ~~proceeds~~the ~~from~~module ~~the~~or ~~sale~~component of ~~Holdco~~the ~~stock~~hosting toarrangement ~~members~~is ofready ~~management~~for ~~and~~its ~~the~~intended ~~Board~~use. The ofCompany ~~Directors~~early ofadopted ~~$750~~this ~~for~~ASU in the ~~year~~third ~~ended~~quarter ~~December 28~~of 2018, ~~2019~~ and ~~$500~~it ~~for~~did ~~the~~not ~~year~~have ~~ended~~a ~~December 30,~~material ~~2017.~~impact ~~There~~on ~~were no sales~~ the ~~year~~Company's ~~ended~~Consolidated ~~December 29,~~Financial ~~2018~~Statements.

In March 2020, the ~~year~~FASB ~~ended~~issued ~~December 29,~~ASU ~~2018~~2020-04, ~~the~~Reference ~~Company~~Rate ~~paid~~Reform a(Topic ~~dividend~~848): Facilitation of ~~approximately~~the ~~$3,780~~Effects toof ~~Holdco~~Reference Rate Reform on Financial Reporting which provide optional guidance for a limited time to ease the ~~purchase~~potential ofburden 4in accounting for reference rate reform. The new guidance provide optional expedients and exceptions for applying GAAP to contracts,~~200~~ ~~shares~~hedging ofrelationships ~~Holdco~~and ~~stock~~other ~~from~~transactions ~~former~~affected ~~members~~by ofreference ~~management~~rate reform if certain criteria are met. NoThe ~~such~~amendments ~~dividends~~apply ~~were~~only ~~paid~~to incontracts ~~fiscal~~and ~~2019~~hedging ~~nor~~relationships ~~fiscal~~that ~~2017~~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 contract and the optional expedients provided by the new standard.

~~Gregory Mann and Gabrielle Mann are employed by Hillman~~4. Related ~~Hillman~~Party leases an industrial warehouse and office facility from companies under the control of the Manns. The Company has recorded rental expense for the lease of this facility on an arm's length basis. Rental expense for the lease of this facility was $350 for the year ended December 28, 2019, $350 for the year ended December 29, 2018, and $353 for the year ended December 30, 2017.Transactions:

~~During the years ended December 28, 2019, December 29, 2018, and December 30, 2017,~~ The ~~Hillman Group Canada ULC, subsidiary of the~~ Company, ~~was~~has arecorded ~~party~~aggregate tomanagement ~~three~~fee ~~leases~~charges ~~for~~and ~~five~~expenses ~~properties~~from ~~containing~~CCMP ~~industrial warehouse, manufacturing plant,~~ and ~~office~~Oak ~~facilities~~Hill onFunds ~~February 19, 2013. The owners~~ of ~~the properties under one lease are relatives of Richard Paulin~~$577, ~~who was employed by The Hillman Group Canada ULC until his retirement effective April 30~~$562, ~~2017,~~ and ~~the owner of the properties under the other two leases is a company which is owned by Richard Paulin and certain of his relatives. The rental expense for the three leases was~~ $~~648~~546 for the ~~year~~years ended December 2826, ~~2019~~2020, ~~$664 for the year ended~~ December 2928, ~~2018~~2019, and ~~$663 for the year ended~~ December 3029, ~~2017~~2018, respectively.

~~Douglas~~The J.Company ~~Cahill~~recorded isproceeds ~~currently~~from ~~Hillman’s~~the ~~President~~sale ~~and~~of ~~CEO~~Holdco ~~and~~stock isto ~~also~~members ~~a former Managing Director~~ of ~~CCMP~~management ~~Capital~~and ~~Advisors,~~the LPBoard ~~("CCMP"). CCMP’s private equity fund CCMP Capital Investors III, L.P. (“CCMP III”), together with its related fund vehicles, owns approximately 80.4%~~ of ~~Holdco's~~Directors ~~outstanding~~for ~~common~~$750 ~~stock~~during asyear ofended December 28, 2019. ~~Mr.~~ ~~Cahill~~There ~~has~~were ~~retained~~no asuch ~~carried~~sales ~~interest in CCMP III and~~ the ~~fair~~year ~~value~~ended ~~of this carried interest~~December 26, ~~which~~2020 isnor ~~based on the overall performance of CCMP III, is contingent on several factors. As of~~ December 28 29, ~~2019, the fair value of the carried interest is not estimable in accordance with ASC 405 - Contingencies~~2018.

In the year ended December 29, 2018, the Company paid a dividend of approximately $3,780 to Holdco for the purchase of 4,200 shares of Holdco stock from former members of management. No such dividends were paid in fiscal 2020 nor fiscal 2019.

Gregory Mann and Gabrielle Mann are employed by Hillman. Hillman leases an industrial warehouse and office facility from companies under the control of the Manns. The Company has recorded rental expense for the lease of this facility on an arm's length basis. Rental expense for the lease of this facility was $351 for the year ended December 26, 2020, $350 for the year ended December 28, 2019, and $350 for the year ended December 29, 2018.

Douglas J. Cahill was hired effective July 29, 2019 as our Executive Chairman, Senior Executive Officer. He was promoted to President and Chief Executive Officer September 16, 2019. Mr. Cahill is also a former Managing Director of CCMP Capital Advisors, LP ("CCMP"). CCMP’s private equity fund CCMP Capital Investors III, L.P. (“CCMP III”), together with its related fund vehicles, owns approximately 79.1% of Holdco's outstanding common stock as of December 26, 2020. Mr. Cahill has retained a carried interest in CCMP III and the fair value of this carried interest, which is based on the overall performance of CCMP III, is contingent on several factors. As of December 26, 2020, the fair value of the carried interest is not estimable in accordance with ASC 405 - Contingencies.

5. Acquisitions

STMinute ~~Fastening~~Key ~~Systems~~Holdings, Inc.

On ~~November 8~~August 10, ~~2017~~2018, the Company ~~entered~~completed ~~into~~the anacquisition ~~Asset~~of ~~Purchase~~Minute ~~Agreement~~Key ~~with~~Holdings, ~~Hargis~~Inc. ~~Industries~~("MinuteKey"), LPan ~~doing~~innovative ~~business~~leader asin STself-service ~~Fastening~~key ~~Systems~~duplicating ~~and~~kiosks, ~~other~~for ~~related~~a ~~parties~~total ~~pursuant~~consideration toreflecting ~~which~~an ~~Hillman~~enterprise ~~acquired~~value ~~substantially all~~ of ~~the assets~~$156, ~~and assumed certain liabilities, of STFS~~289. ~~STFS,~~ ~~which~~The isCompany ~~located~~financed inthe ~~Tyler,~~acquisition ~~Texas,~~with ~~specializes~~the inunfunded ~~manufacturing~~delayed ~~and~~draw ~~distributing~~term ~~threaded~~loan ~~self-drilling~~facility ~~fasteners,~~of ~~foam closure strips~~$165,000. ~~and~~MinuteKey ~~other~~is ~~accessories~~headquartered toin ~~the steel-frame~~Boulder, ~~post-frame,~~Colorado and ~~residential~~has ~~building~~operations ~~markets.~~in ~~Pursuant to~~ the ~~terms~~United ofStates ~~the~~and ~~Agreement, Hillman paid a cash purchase price of $47,339~~Canada. ~~The~~ ~~transaction was financed with additional borrowings under the Company~~MinuteKey's ~~revolving~~financial ~~credit~~results ~~facility.~~reside ~~The~~within ~~STFS business is included in~~ the Company’'s ~~Fastening,~~Robotics ~~Hardware,~~ and ~~Personal~~Digital ~~Protective~~ Solutions reportable segment.

~~The following table reconciles the fair value of the acquired assets and assumed liabilities to the finalized total purchase price of the STFS acquisition:~~ 62

Accounts receivable	$	3,975
Inventory	7,820
Property and equipment	16,281
Goodwill	9,045
Customer relationships	13,500
Other non-current assets	6
Total assets acquired	50,627
Less:
Liabilities assumed	(3,288		)
Total purchase price	$	47,339

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

The excess of the purchase price over the net assets has been allocated to goodwill and intangibles based on a valuation appraisal. The customer relationships have been assigned a useful life of 13 years based on the limited turnover and long-standing relationships STFS has with its existing customer base. The acquired customer relationships were valued using the discounted cash flow approach, and significant assumptions used in the valuation included the customer attrition rate assumed and the expected level of future sales.

Pro forma financial information has not been presented for STFS as the financial results of STFS were insignificant to the financial results of the Company on a standalone basis.

Minute Key Holdings, Inc.

On August 10, 2018, the Company completed the acquisition of Minute Key Holdings, Inc. ("MinuteKey"), an innovative leader in self-service key duplicating kiosks, for a total consideration reflecting an enterprise value of $156,289. The Company financed the acquisition with the unfunded delayed draw term loan facility of $165,000. MinuteKey is headquartered in Boulder, Colorado and has operations in the United States and Canada. MinuteKey will be included in the Company's Consumer Connected Solutions reportable segments.

The following table reconciles the fair value of the acquired assets and assumed liabilities to the finalized total purchase price of the MinuteKey acquisition:

Cash	$	~~1,791~~		$	1,791
Inventory	~~3,952~~			3,952
Other current assets	~~766~~			766
Property and equipment	~~29,888~~			29,888
Goodwill	59,237
Goodwill (1)				58,077
Customer relationships	~~50,000~~			50,000
Developed technology	~~19,000~~			19,000
Trade names	~~5,400~~			5,400
Other non-current assets	16			16
Total assets acquired	~~170,050~~			168,890
Less:
Liabilities assumed	(13,761		)
Liabilities assumed (1)				(12,601)
Total purchase price	$	~~156,289~~		$	156,289

(1)Goodwill and deferred tax liabilities have been reduced by $1,160 due to the correction of errors related to income taxes related to the valuation allowance against deferred tax assets, which impacted our net deferred tax liabilities. See Note 1 - Basis of Presentation for additional details.

Pro forma financial information has not been presented for MinuteKey as their associated financial results are insignificant to the financial results of the Company on a standalone basis.

Big Time Products

On October 1, 2018, the Company acquired NB Parent Company, LLC. and its affiliated companies including Big Time Products, LLC (collectively, "Big Time"), a leading provider of personal protective and work gear products ranging from work gloves, tool belts and jobsite storage for a purchase price of $348,834. Coinciding with the Big Time acquisition, the Company entered into an amendment (the "Amendment") to the Company's existing term loan credit agreement dated May 31, 2018 (the "Term Credit Agreement"). The Amendment provided approximately $365,000 of incremental term loans. Refer to Note 7 - Long-Term Debt for further details on the Term Credit Agreement and the associated Amendment. Big Time has business operations throughout North America and its financial results reside in the Company's ~~Fastening,~~ Hardware, and ~~Personal~~ Protective Solutions ~~reporting~~reportable segment.

53The following table reconciles the fair value of the acquired assets and assumed liabilities to the finalized total purchase price of the Big Time acquisition:


Cash	$	2,507
Accounts receivable	40,828
Inventory	40,216
Other current assets	1,623
Property and equipment	3,703
Goodwill (1)	128,796
Customer Relationships	189,000
Trade names	21,000
Other non-current assets	159
Total assets acquired	427,832
Less:
Liabilities assumed (1)	(78,998)
Total purchase price	$	348,834

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

~~The~~(1)Goodwill ~~following~~and ~~table~~deferred ~~reconciles~~tax ~~the~~liabilities ~~fair~~have ~~value~~been ofreduced by $2,067 due to the ~~acquired~~correction ~~assets~~of ~~and~~errors ~~assumed~~related ~~liabilities~~to income taxes related to the ~~finalized~~valuation ~~total~~allowance ~~purchase~~against ~~price~~deferred tax assets, which impacted our net deferred tax liabilities. See Note 1 - Basis of ~~the~~Presentation ~~Big~~for ~~Time~~additional ~~acquisition:~~details.

Cash	$	2,507
Accounts receivable	40,828
Inventory	40,216
Other current assets	1,623
Property and equipment	3,703
Goodwill	130,863
Customer Relationships	189,000
Trade names	21,000
Other non-current assets	159
Total assets acquired	429,899
Less:
Liabilities assumed	(81,065		)
Total purchase price	$	348,834

The following table provides unaudited pro forma results of the combined entities of Hillman and Big Time, had the acquisition occurred at the beginning of fiscal 2018:

The following table provides unaudited pro forma results of the combined entities of Hillman and Big Time, had the acquisition occurred at the beginning of fiscal 2017:


	(Unaudited) Fiscal Year-ended
	2018
Net revenues	$	1,139,562
Net earnings (loss)	$	(74,976)

	(Unaudited) Fiscal Year-ended
	2018			2017
Net revenues	$	1,139,562		$	1,045,447
Net earnings (loss)	$	(74,976	)	$	52,010

The pro forma results are based on assumptions that the Company believes are reasonable under certain circumstances. The pro forma results presented are not intended to be indicative of results that may occur in the future. The underlying pro forma information includes historical results of the Company, the Company's financing arrangements related to the Big Time acquisition, and certain purchase price accounting adjustments, including amortization of acquired intangibles.

Sharp Systems, LLC

On August 16, 2019, the Company acquired the assets of Sharp Systems, LLC ("Resharp"), a California-based innovative developer of automated knife sharpening systems, for a total purchase price of $21,100, including a contingent consideration provision with an estimated fair value of $18,100, with a maximum payout of $25,000 plus 1.8% of net knife-sharpening revenues for five years after the $25,000 is fully paid. Contingent consideration to be paid subsequent to December 2826, ~~2019~~2020 is contingent upon several business performance metrics over a multi-year period. AnSee ~~amount~~Note of13 of- ~~the~~Fair ~~acquisition~~Value ~~consideration~~Measurements ~~totaling~~for ~~$18,100~~additional ~~remains~~information on the contingent consideration payable toas ~~the~~of ~~seller~~December 26, 2020. Resharp has existing operations in the United States and its operating results reside within the Company's ~~Consumer~~Robotics ~~Connected~~and Digital Solutions reportable segment.

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

The following table reconciles the fair value of the acquired assets and assumed liabilities to the finalized total purchase price of the Resharp acquisition:

Property and equipment	~~218~~			218
Goodwill	~~9,382~~			9,382
Technology	~~11,500~~			11,500
Total assets acquired	~~21,100~~			21,100
Less:
Contingent consideration payable	~~(18,100~~		)	(18,100)
Net cash paid	$	~~3,000~~		$	3,000

Pro forma financial information has not been presented for Resharp as their associated financial results are insignificant to the financial results of the Company on a standalone basis.

Other Acquisitions

On July 1, 2019, the Company acquired the assets of West Coast Washers, Inc. for a total purchase price of $3,135. The financial results of West Coast Washers, Inc. reside within the Company's ~~Fastening,~~ Hardware, and ~~Personal~~ Protective Solutions reportable segment and have been determined to be immaterial for purposes of additional disclosure.

55On February 19, 2020, the Company acquired the assets of Instafob LLC ("Instafob") for a cash payment of $800 and a total purchase price of $2,618, which includes $1,818 in contingent and non-contingent considerations that remain payable to the seller. The financial results of Instafob reside within the Company's Robotics and Digital Solutions reportable segment and have been determined to be immaterial for purposes of additional disclosure.

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

6. Income Taxes:

Income tax expense (benefit), deferred taxes and effective tax rates for the years ended December 29, 2018 and December 28, 2019 have been restated due to the correction of errors in the accounting for income taxes related to the valuation allowance against deferred tax assets, which impacted our net deferred tax liabilities. See Note 1 - Basis of Presentation for additional details.

Loss before income taxes are comprised of the following components for the periods indicated:

		Year EndedDecember 28, 2019			Year EndedDecember 29, 2018				Year EndedDecember 30, 2017
			Year EndedDecember 26, 2020					Year EndedDecember 28, 2019				Year EndedDecember 29, 2018
United States based operations	~~United States based operations~~	$	~~(101,197~~$	(30,083)	$	~~(53,254~~	)	$	$(101,197)	~~(24,624~~	)	$	(53,254)
Non-United States based operations	~~Non-United States based operations~~	~~(7,559~~	(3,855)	)	~~(14,317~~		)	(7,559)	~~(1,639~~		)	(14,317)
Loss before income taxes	~~Loss before income taxes~~	$	~~(108,756~~$	(33,938)	$	~~(67,571~~	)	$	$(108,756)	~~(26,263~~	)	$	(67,571)

Below are the components of the Company's income tax (benefit) provision for the periods indicated:

		Year EndedDecember 28, 2019			Year EndedDecember 29, 2018				Year EndedDecember 30, 2017
			Year EndedDecember 26, 2020					Year EndedDecember 28, 2019As Restated				Year EndedDecember 29, 2018As Restated
Current:	~~Current:~~
Federal & State	~~Federal & State~~	$	~~1,235~~$	629	$	~~263~~		$	$1,235	~~164~~		$	263
Foreign	~~Foreign~~	~~611~~	(49)		67			611	~~814~~			67
Total current	~~Total current~~	~~1,846~~	580		~~330~~			1,846	~~978~~			330
Deferred:	~~Deferred:~~
Federal & State	~~Federal & State~~	~~(23,675~~	(7,625)	)	~~(11,679~~		)	(23,333)	~~(85,461~~		)	(11,679)
Foreign	~~Foreign~~	~~(2,625~~	(1,356)	)	~~(4,741~~		)	(2,625)	~~(1,989~~		)	(4,741)
Total deferred	~~Total deferred~~	~~(26,300~~	(8,981)	)	~~(16,420~~		)	(25,958)	~~(87,450~~		)	(16,420)
Valuation allowance	~~Valuation allowance~~	~~19,084~~	(1,038)		~~18,160~~			835	~~1,561~~			7,200
Income tax expense/(benefit)	~~Income tax expense/(benefit)~~	$	~~(5,370~~$	(9,439)	$	~~2,070~~		$	$(23,277)	~~(84,911~~	)	$	(8,890)

The Company has U.S. federal net operating loss (“NOL”) carryforwards totaling $~~149~~134,~~754~~347 as of December 2826, ~~2019~~2020 that are available to offset future taxable income. These carryforwards expire from 2027 to 2038. A ~~Approximately~~portion ~~$59,611~~ of the U.S. federal NOLs were acquired with the MinuteKey purchase in 2018. The MinuteKey NOLs are subject to limitation under IRC §382 from current and prior ownership changes. ~~The Company noted that $2,503 of the MinuteKey NOLs are expected to expire prior to their utilization and has recorded a valuation allowance of $526 for the MinuteKey NOLs.~~ In addition, the Company's foreign subsidiaries have NOL carryforwards aggregating $2730,~~008~~717. A portion of these carryforwards expire from 2035 to ~~2039~~2040. Management anticipates utilizing all foreign NOLs prior to their expiration.

The Company has state NOL carryforwards with an aggregate tax benefit of $53,~~426~~806 which expire from ~~2019~~2020 to ~~2039~~2040. The Company has recorded a valuation allowance of $~~2,709~~439 in fiscal ~~2019~~2020 for the state NOLs expected to expire prior to utilization.

The Company has $~~908~~891 of general business tax credit carryforwards which expire from ~~2019~~2020 to ~~2039~~2040. A valuation allowance of $~~287~~210 has been maintained for a portion of these tax credits. The Company has $822 of foreign tax credit carryforwards which expire from ~~2019~~2020 to 2025. A valuation allowance of $822 has been established for these credits given insufficient foreign source income projected to utilize these credits.

5665

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

The table below reflects the significant components of the Company's net deferred tax assets and liabilities at December 2826, ~~2019~~2020 and December 2928, ~~2018~~2019:

	As of December 28, 2019			As of December 29, 2018
							December 26, 2020		December 28, 2019As Restated
	~~Non-current~~			~~Non-current~~			Non-current		Non-current
Deferred Tax Asset:
Inventory	$	~~10,043~~		$	~~12,798~~		$	11,423	$	10,043
Bad debt reserve	~~868~~			~~838~~			1,497		868
Casualty loss reserve	~~498~~			~~405~~			279		498
Accrued bonus / deferred compensation	~~5,174~~			~~3,517~~			7,411		5,174
Deferred rent	80			~~995~~			54		80
Derivative security value	~~845~~			~~362~~			817		845
Interest limitation	30,533			14,187
Deferred social security (CARES Act)							1,798		—
Lease liabilities	16,487			—
Interest limitation							21,011		30,335
Deferred revenue - shipping terms	315			301
Lease liabilities							21,241		22,134
Medical insurance reserve	—			12
Deferred revenue - shipping terms							315		315
Original issue discount amortization	~~3,372~~			~~3,649~~			3,078		3,372
Transaction costs	~~2,302~~			~~2,301~~			3,061		2,302
Federal / foreign net operating loss	~~38,478~~			~~47,171~~			36,217		38,478
State net operating loss	~~5,426~~			~~6,650~~			3,806		5,426
Tax credit carryforwards	~~2,636~~			~~4,984~~			2,150		2,636
All other	~~401~~			36			610		401
Gross deferred tax assets	~~117,458~~			~~98,206~~			114,768		122,907
Valuation allowance for deferred tax assets	~~(34,877~~		)	~~(24,993~~		)	(1,471)		(2,586)
Net deferred tax assets	$	~~82,581~~		$	~~73,213~~		$	113,297	$	120,321
Deferred Tax Liability:
Intangible asset amortization	$	~~227,007~~		$	~~238,929~~		$	216,354	$	227,007
Property and equipment	~~34,218~~			~~34,327~~			29,901		34,218
Lease assets	~~16,473~~			—			20,598		22,119
All other items	~~618~~			~~653~~			487		618
Deferred tax liabilities	$	~~278,316~~		$	~~273,909~~		$	267,340	$	283,962
Net deferred tax liability	$	~~195,735~~		$	~~200,696~~		$	154,043	$	163,641

~~Realization~~The ofDecember 28, ~~the~~2019 ~~net~~lease ~~deferred~~liability ~~tax assets is dependent on the reversal of~~ deferred tax ~~liabilities~~asset and ~~generating sufficient taxable income prior to their expiration. Although realization is not assured, management estimates it is more likely than not that~~ the ~~net~~lease ~~deferred~~asset ~~tax assets will be realized. The amount of net~~ deferred tax ~~assets~~liability ~~considered~~were ~~realizable,~~each ~~however,~~increased ~~could~~by ~~be reduced in the near term if estimates of future taxable income during the carryforward periods are reduced. In 2019, the Company established a valuation allowance in the amount of~~ $165,~~720~~646 ~~against the portion of interest expense that is not currently deductible for domestic federal income tax due~~ to ~~the~~correct ~~Tax Cuts and Jobs Act of 2017 ("2017 Tax Act") effective for the first year beginning after December 31, 2017. In addition, the Company established~~ a ~~valuation allowance of $2,709 on U~~misstatement.S. state NOLs due to the Company's inability to utilize the losses prior to expiration. Lastly, the Company liquidated its Luxembourg entity as of December 28, 2019 and is no longer reporting the Company's $23,600 of dual consolidated losses that were subject to a full valuation allowance. With this liquidation, the Company removed $9,579 from the cumulative valuation allowance for deferred tax assets.

Realization of the net deferred tax assets is dependent on the reversal of deferred tax liabilities. Although realization is not assured, management estimates it is more likely than not that the net deferred tax assets will be realized. The amount of net deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward periods are reduced. The Company maintains a valuation allowance of $439 on U.S. state NOLs due to the Company's inability to utilize the losses prior to expiration.

Hillman considers the earnings of certain non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestment of those subsidiary earnings. The Company has not recorded a deferred tax liability related to the U.S. federal and state income taxes and foreign withholding taxes of undistributed earnings of foreign subsidiaries indefinitely invested outside the United States. Should management decide to repatriate the foreign earnings, the Company would need to adjust the income tax provision in the period the earnings will no longer be indefinitely invested outside the United States.

5766

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

Below is a reconciliation of statutory income tax rates to the effective income tax rates for the periods indicated:

	Year EndedDecember 28, 2019		Year EndedDecember 29, 2018		Year Ended December 30, 2017
				Year EndedDecember 26, 2020			Year EndedDecember 28, 2019As Restated		Year Ended December 29, 2018As Restated
Statutory federal income tax rate	~~21.0~~	%	~~21.0~~	%21.0	~~35.0~~%	%	21.0	%	21.0	%
Non-U.S. taxes and the impact of non-U.S. losses for which a current tax benefit is not available	~~0.3~~	%	~~0.9~~	%0.6	~~6.9~~%	%	0.4	%	0.9	%
State and local income taxes, net of U.S. federal income tax benefit	~~3.9~~	%	~~(0.5~~	)%5.7	~~3.4~~%	%	3.0	%	1.4	%
Change in valuation allowance and other items	(18.9	)%	(21.7	)%	(6.5	)%
Change in valuation allowance				1.6	%		(1.2)	%	(7.5)	%
Adjustment for change in tax law	—	%	~~(0.9~~	)%0.5	~~281.4~~%	%	—	%	(0.9)	%
Adjustment of unrecognized tax benefits	—	%	—	%	1.4	%
Permanent differences:
Permanent differences:
Acquisition and related transaction costs				—	%		—	%	(2.7)	%
Acquisition and related transaction costs	—	%	(2.7	)%	—	%
Meals and entertainment expense				(0.4)	%		(0.2)	%	(0.3)	%
Meals and entertainment expense	(0.2	)%	(0.3	)%	(0.9	)%
Reconciliation of tax provision to return				0.6	%		(0.5)	%	—	%
Reconciliation of tax provision to return	(0.2	)%	—	%	1.7	%
Reconciliation of other adjustments				(1.6)	%		(1.0)	%	1.2	%
Reconciliation of other adjustments	(1.0	)%	1.1	%	0.9	%
Effective income tax rate				27.8	%		21.4	%	13.2	%
Effective income tax rate	4.9	%	(3.1	)%	323.3	%

The Company's reserve for unrecognized tax benefits remains unchanged for the year ended December 2826, ~~2019~~2020. A balance of $1,101 of unrecognized tax benefit is shown in the financial statements at December 2826, ~~2019~~2020 as a reduction of the deferred tax asset for the Company's NOL carryforward.

The following is a summary of the changes for the periods indicated below:

	Year EndedDecember 28, 2019		Year EndedDecember 29, 2018		Year EndedDecember 30, 2017
			Year EndedDecember 26, 2020				Year EndedDecember 28, 2019		Year EndedDecember 29, 2018
Unrecognized tax benefits - beginning balance	$	~~1,101~~	$	1,101	$	~~2,060~~	$	1,101	$	1,101
Gross increases - tax positions in current period	—		—		—		—		—
Gross increases - tax positions in prior period	—		—		—		—		—
Gross decreases - tax positions in prior period	—		—		~~(959~~		)—		—
Unrecognized tax benefits - ending balance	$	~~1,101~~	$	1,101	$	~~1,101~~	$	1,101	$	1,101
Amount of unrecognized tax benefit that, if recognized would affect the Company's effective tax rate	$	~~1,101~~	$	1,101	$	~~1,101~~	$	1,101	$	1,101

~~Tax~~Coronavirus ~~Cuts~~Aid, Relief and ~~Jobs~~Economic Security Act (the "~~2017~~CARES ~~Tax~~ Act")

On ~~December~~March 2227, ~~2017~~2020, the ~~Tax~~CARES ~~Cuts~~Act ~~and~~was ~~Jobs~~signed ~~Act~~into law by the President of ~~2017~~the ~~(“2017~~United ~~Tax~~States. The CARES Act”) ~~was~~included, ~~signed~~among ~~into~~other ~~law~~things, ~~making~~corporate ~~significant~~income ~~changes~~tax torelief in the ~~Internal~~form ~~Revenue~~of ~~Code. Changes~~accelerated ~~include~~alternative minimum tax ("AMT") refunds, ~~among~~allowed ~~other~~employers ~~things~~to defer certain payroll tax payments throughout 2020, aand ~~permanent~~provided favorable corporate ~~rate~~interest ~~reduction~~deductions tofor ~~21%~~the ~~requiring~~2019 aand ~~remeasurement~~2020 ofperiods. During 2020, the Company’s ~~U.S.~~received ~~net~~an ~~deferred~~accelerated AMT income tax ~~liabilities~~refund of $1,147 aand ~~change~~was inable Uto defer $7,136 of payroll taxes.S The CARES Act interest modification provisions allowed for increased interest deductions. The ~~international~~Company ~~taxation~~was able to adeduct ~~modified~~an ~~territorial~~additional ~~system~~$32,000 ~~including~~in ainterest ~~mandatory~~on ~~deemed~~its ~~repatriation~~2019 onincome ~~certain~~tax ~~unrepatriated~~return ~~earnings~~when ofcompared ~~foreign~~to ~~subsidiaries~~the ~~(“Transition~~2019 ~~Tax”),~~income ~~and~~tax ~~providing~~provision. For ~~for~~the ~~additional~~fiscal ~~first-~~year ~~depreciation~~2020, ~~that~~the ~~allows~~Company's ~~full~~increased ~~expensing~~interest ofdeduction ~~qualified~~will ~~property~~result ~~placed~~in ~~into~~the ~~service~~utilization ~~after~~of ~~September~~accumulated ~~27,~~interest ~~2017~~limitation carryforwards.

~~During~~The ~~2017, the~~ Company ~~recorded~~files a ~~provisional~~consolidated ~~$75,000 deferred~~ income tax ~~benefit~~return ~~associated~~in ~~with~~ the ~~provisions~~U.S. ofand ~~the~~numerous ~~2017~~consolidated ~~Tax~~and ~~Act~~separate ~~based~~income ontax ~~currently~~returns ~~available~~in ~~information~~various states and foreign jurisdictions. The Company ~~did~~is not ~~record~~under aany ~~provision~~significant audits for the ~~Transition~~period ~~Tax~~ended ~~in 2017 given the lack of historical earnings in the Company's foreign subsidiaries. Additionally~~December 26, ~~the Company recorded a provisional~~ 2020.

587. Long-Term Debt:

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

$807 valuation allowance on its foreign tax credit deferred tax asset given insufficient foreign source income projected to utilize the credits. The Company did not significantly adjust the estimate from the 2017 provisional calculations.

During 2018, the Company became subject to additional provisions of the 2017 Tax Act including computations related to Global Intangible Low Taxed Income ("GILTI") and the IRC §163(j) interest limitation (Interest Limitation). In 2019, our effective tax rate includes $16,720 in income tax expense, a (15.4)% impact to the effective tax rate, related to the Interest Limitation. Our 2018 effective tax rate includes the impact both GILTI and the Interest Limitation, which was approximately $11,700 in income tax expense, a (17.3)% impact to the effective tax rate.

The Company files a consolidated income tax return in the U.S. and numerous consolidated and separate income tax returns in various states and foreign jurisdictions. The Company is not under any significant audits for the period ended December 28, 2019.

7. Long-Term Debt:

The following table summarizes the Company’s debt:

	December 28, 2019				December 29, 2018
			December 26, 2020					December 28, 2019
Revolving loans	$	~~113,000~~	$	72,000	$	~~108,200~~		$	113,000
Senior Term Loan, due 2025	~~1,047,653~~		1,037,044		~~1,058,263~~			1,047,653
6.375% Senior Notes, due 2022	~~330,000~~		330,000		~~330,000~~			330,000
11.6% Junior Subordinated Debentures - Preferred	~~105,443~~		105,443		~~105,443~~			105,443
Junior Subordinated Debentures - Common	~~3,261~~		3,261		~~3,261~~			3,261
Finance leases & other obligations	~~2,275~~		2,044		~~1,213~~			2,275
	1,601,632				1,606,380
			1,549,792					1,601,632
Unamortized premium on 11.6% Junior Subordinated Debentures	~~16,110~~		14,591		~~17,498~~			16,110
Unamortized discount on Senior Term Loan	~~(8,040~~		(6,532)		~~(9,558~~		)	(8,040)
Current portion of long term debt and capital leases	~~(11,358~~		(11,481)		~~(10,985~~		)	(11,358)
Deferred financing fees	~~(14,055~~		(10,862)		~~(17,251~~		)	(14,055)
Total long term debt, net	$	~~1,584,289~~	$	1,535,508	$	~~1,586,084~~		$	1,584,289

Revolving Loans and Term Loans

On May 31, 2018, the Company entered into a new credit agreement that includes a funded term loan for $530,000 and a unfunded delayed draw term loan facility ("DDTL") for $165,000 (collectively, "2018 Term Loan"). Concurrently, the Company also entered into a new asset-based revolving credit agreement ("ABL Revolver") for $150,000. The proceeds from the 2018 Term Loan and ABL Revolver were used to refinance previous debt obligations, revolvers and the associated fees and expenses. As mentioned in Note 5 - Acquisitions, the Company utilized the full $165,000 DDTL to finance the MinuteKey acquisition on August 10, 2018. Both the 2018 Term Loan and ABL Revolver require the Company to maintain certain financial and non-financial covenants. As of December 2826, ~~2019~~2020, the Company is in compliance with all financial and non-financial debt covenants with our existing obligations and agreements with external lenders.

On October 1, 2018, the Company entered into an amendment (the "Term Amendment") to the aforementioned 2018 Term Loan agreement which provided an additional $365,000 of incremental term loan proceeds. These proceeds from the Amendment were used to (1) finance the acquisition of Big Time, (2) refinance certain pre-existing Big Time indebtedness, and (3) pay related transaction costs. Refer to Note 5 - Acquisitions for additional Big Time acquisition details.

On November 15, 2019, the Company entered into an amendment (the "ABL Amendment") to the aforementioned ABL Revolver agreement which provided an additional $100,000 of revolving credit, bringing the total available to $250,000.

The interest rate on the 2018 Term Loan is, at the discretion of the Company, either the adjusted London Interbank Offered Rate ("LIBOR") rate plus 4.00% per annum for LIBOR loans or an alternate base rate plus 3.00% per annum. The 2018 Term Loan is payable in fixed installments of approximately $2,652 per quarter, with a balloon payment scheduled on the loan's maturity date of May 31, 2025.

59The interest rate for the ABL Revolver is, at the discretion of the Company, either (1) adjusted LIBOR plus a margin of 1.25% to 1.75% per annum or (2) an alternate base rate plus a margin varying from 0.25% to 0.75% per annum. The maturity date for the ABL Revolver is November 15, 2024, provided that, if the 6.375% Senior Notes with a maturity date of July 15, 2022 remain outstanding in a principal amount in excess of $50,000 on April 15, 2022, the maturity date shall be April 15, 2022, unless, at the Company's sole discretion, the Company elects to take a reserve against the borrowing base in an amount equal to the amount of such excess and, after giving effect thereto, availability as of such date is equal to or greater than $30,000. Portions of the ABL Revolver are separately available for borrowing by the Company's United States subsidiary and Canadian subsidiary for $200,000 and $50,000, respectively.

In connection with the 2019 ABL Revolver refinancing activities, the Company recorded an additional $1,412 in deferred financing fees which are recorded as other non-current assets on the accompanying Consolidated Balance Sheets as of December 28, 2019.

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

is payable in fixed installments of approximately $2,652 per quarter, with a balloon payment scheduled on the loan's maturity date of May 31, 2025.

The interest rate for the ABL Revolver is, at the discretion of the Company, either (1) adjusted LIBOR plus a margin of 1.25% to 1.75% per annum or (2) an alternate base rate plus a margin varying from 0.25% to 0.75% per annum. The maturity date for the ABL Revolver is November 15, 2024, provided that, if the 6.375% Senior Notes with a maturity date of July 15, 2022 remain outstanding in a principal amount in excess of $50,000 on April 15, 2022, the maturity date shall be April 15, 2022, unless, at the Company's sole discretion, the Company elects to take a reserve against the borrowing base in an amount equal to the amount of such excess and, after giving effect thereto, availability as of such date is equal to or greater than $30,000. Portions of the ABL Revolver are separately available for borrowing by the Company's United States subsidiary and Canadian subsidiary for $200,000 and $50,000, respectively.

In connection with the 2018 refinancing activities, the Company recorded $14,293 in deferred financing fees and $9,950 in discount which were recorded as long term debt on the accompanying Consolidated Balance Sheets as of December 29, 2018. In connection with the ABL Revolver, the Company recorded $1,841 in deferred financing fees which were recorded as other non-current assets on the accompanying Consolidated Balance Sheets as of December 29, 2018.

The amounts outstanding under the 2018 Term Loan and ABL Revolver are guaranteed by the Company and, subject to certain exceptions, the Company's wholly-owned domestic subsidiaries and are secured by substantially all of the Company's and guarantor's assets.

As of December 2826, ~~2019~~2020, the ABL Revolver had an outstanding amount of $~~113~~72,000 and outstanding letters of credit of approximately $1723,~~001~~590. The Company has approximately $~~119~~154,~~999~~410 of available borrowings under the revolving credit facility as a source of liquidity as of December 2826, ~~2019~~2020.

6.375% Senior Notes, due 2022

On June 30, 2014, Hillman Group issued $330,000 aggregate principal amount of its senior notes due July 15, 2022 (the “6.375% Senior Notes”), which are guaranteed by The Hillman Companies, Inc. and its domestic subsidiaries other than the Hillman Group Capital Trust. Hillman Group pays interest on the 6.375% Senior Notes semi-annually on January 15 and July 15 of each fiscal year.

Guaranteed Preferred Beneficial Interest in the Company's Junior Subordinated Debentures

In September 1997, The Hillman Group Capital Trust ("Trust"), a Grantor trust, completed a $105,443 underwritten public offering of 4,217,724 Trust Preferred Securities (“TOPrS”). The Trust invested the proceeds from the sale of the preferred securities in an equal principal amount of 11.6% Junior Subordinated Debentures of Hillman due September 30, 2027.

The Company pays interest to the Trust on the Junior Subordinated Debentures underlying the TOPrS at the rate of 11.6% per annum on their face amount of $105,443, or $12,231 per annum in the aggregate. The Trust distributes monthly cash payments it receives from the Company as interest on the debentures to preferred security holders at an annual rate of 11.6% on the liquidation amount of $25.00 per preferred security. Pursuant to the Indenture that governs the TOPrS, the Trust is able to defer distribution payments to holders of the TOPrS for a period that cannot exceed 60 months (the “Deferral Period”). During a Deferral Period, the Company is required to accrue the full amount of all interest payable, and such deferred interest payable would become immediately payable by the Company at the end of the Deferral Period. ~~There~~During ~~were~~fiscal no2020, ~~deferrals~~the ofCompany ~~distribution~~elected to defer interest payments to ~~holders~~the bondholders during April 2020 through July 2020. The additional interest incurred as a result of the ~~Trust~~deferral ~~Preferred~~was ~~Securities~~immaterial. Interest paid to the bondholders at the end of the Deferral Period was paid in ~~2019~~full. ~~nor~~There ~~2018~~were no interest deferrals during fiscal 2019.

In connection with the public offering of TOPrS, the Trust issued $3,261 of trust common securities to the Company. The Trust invested the proceeds from the sale of the trust common securities in an equal principal amount of 11.6% Junior Subordinated Debentures of Hillman due September 30, 2027. The Trust distributes monthly cash payments it receives from the Company as interest on the debentures to the Company at an annual rate of 11.6% on the liquidation amount of the common security.

60The Company has determined that the Trust is a variable interest entity and the holders of the TOPrS are the primary beneficiaries of the Trust. Accordingly, the Company does not consolidate the Trust. Summarized below is the financial information of the Trust as of December 26, 2020:


December 26, 2020	Amount
Non-current assets - junior subordinated debentures - preferred	$	120,034
Non-current assets - junior subordinated debentures - common	3,261
Total assets	$	123,295
Non-current liabilities - trust preferred securities	$	120,034
Stockholder's equity - trust common securities	3,261
Total liabilities and stockholders' equity	$	123,295

The non-current assets for the Trust relate to its investment in the 11.6% junior subordinated deferrable interest debentures of Hillman due September 30, 2027.

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

The Company has determined that the Trust is a variable interest entity and the holders of the TOPrS are the primary beneficiaries of the Trust. Accordingly, the Company does not consolidate the Trust. Summarized below is the financial information of the Trust as of December 28, 2019:

December 28, 2019	Amount
Non-current assets - junior subordinated debentures - preferred	$	121,553
Non-current assets - junior subordinated debentures - common	3,261
Total assets	$	124,814
Non-current liabilities - trust preferred securities	$	121,553
Stockholder's equity - trust common securities	3,261
Total liabilities and stockholders' equity	$	124,814

The non-current assets for the Trust relate to its investment in the 11.6% junior subordinated deferrable interest debentures of Hillman due September 30, 2027.

The TOPrS constitute mandatory redeemable financial instruments. The Company guarantees the obligations of the Trust on the TOPrS. Accordingly, the guaranteed preferred beneficial interest in the Company's junior subordinated debentures is presented in long-term liabilities in the accompanying Consolidated Balance Sheets.

On June 30, 2014, the junior subordinated debentures were recorded at the fair value of $131,141 based on the price underlying the Trust Preferred Securities of $30.32 per share upon close of trading on the NYSE Amex on that date plus the liquidation value of the trust common securities. The Company is amortizing the premium on the junior subordinated debentures of $22,437 over their remaining life. Unamortized premium on the junior subordinated debentures was $1614,~~110~~591 and $1716,~~498~~110 as of December 2826, ~~2019~~2020 and December 2928, ~~2018~~2019, respectively.

The aggregate minimum principal maturities of the long-term debt obligations for each of the five years following December 2826, ~~2019~~2020 are as follows:

Year	~~Amount~~		Amount
2020	$	10,609
2021			$	10,609
2021	10,609
2022			340,609
2022	340,609
2023			10,609
2023	10,609
2024			82,609
2024	123,609
2025			994,606
Thereafter	~~1,103,312~~		108,706
	$	~~1,599,357~~	$	1,547,748

Note that future finance lease payments were excluded from the maturity schedule above. Refer to Note 8 - Leases.

Additional information with respect to the Company's fixed rate senior notes and junior subordinated debentures is included in Note 13 - Fair Value Measurements.

6170

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

8. Leases:

Lessee

The Company determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. The Company leases certain distribution center locations, vehicles, forklifts, computer equipment, and its corporate headquarters with expiration dates through 2032. Certain lease arrangements include escalating rent payments and options to extend the lease term. Expected lease terms include these options to extend or terminate the lease when it is reasonably certain the Company will exercise the option. The Company's leasing arrangements do not contain material residual value guarantees nor material restrictive covenants.

The components of operating and finance lease cost for the year ended December 26, 2020 and December 28, 2019 were as follows:

	Year EndedDecember 28, 2019
			Year EndedDecember 26, 2020		Year EndedDecember 28, 2019
Operating lease cost	$	~~19,456~~	$	19,189	$	19,456
Short term lease costs	~~2,587~~		2,404		2,587
Variable lease costs	~~2,731~~		898		2,731
Finance lease cost:
Amortization of right of use assets	~~616~~		813		616
Interest on lease liabilities	~~115~~		143		115

Rent expense is recognized on a straight-line basis over the expected lease term. Rent expense totaled $2422,~~774~~491, $1924,~~281~~774 and $1619,~~814~~281 in the year ended December 2826, ~~2019~~2020, December 2928, ~~2018~~2019 and December 3029, ~~2017~~2018, respectively. Rent expense includes operating lease cost as well as expense for non-lease components such as common area maintenance, real estate taxes, real estate insurance, variable costs related to our leased vehicles and also short-term rental expenses.

The implicit rate is not determinable in most of the Company’s leases, as such management uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of December 26, 2020 and December 28, 2019:

	Operating Leases(1)		Finance Leases
				December 26, 2020		December 28, 2019
Weighted average remaining lease term	7.88		3.46
				Operating Leases	Finance Leases	Operating Leases(1)	Finance Leases
Weighted average discount rate	7.81	%	6.49	%
Weighted average remaining lease term				7.19	2.61	7.88	3.46
Weighted average discount rate				8.28%	7.14%	7.81%	6.49%

(1) Upon adoption of the new lease standard, discount rates used for existing operating leases were established on December 30, 2018.

6271

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

Supplemental balance sheet information related to the Company's finance leases as of December 26, 2020 and December 28, 2019:

	December 28, 2019
			December 26, 2020		December 28, 2019
Finance lease assets, net, included in property plant and equipment	$	~~2,101~~	$	1,919	$	2,101
Current portion of long-term debt	~~749~~		872		749
Long-term debt, less current portion	~~1,526~~		1,172		1,526
Total principal payable on finance leases	$	~~2,275~~	$	2,044	$	2,275

Supplemental cash flow information related to our operating leases was as follows for the year ended December 26, 2020 and December 28, 2019:

	Year EndedDecember 28, 2019
			Year EndedDecember 26, 2020		Year EndedDecember 28, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	~~18,668~~	$	18,641	$	18,668
Operating cash outflow from finance leases	~~104~~		143		104
Financing cash outflow from finance leases	~~683~~		836		683

As of December 2826, ~~2019~~2020, our future minimum rental commitments are immaterial for lease agreements beginning after the current reporting period. Maturities of our lease liabilities for all operating and finance leases are as follows as of December 2826, ~~2019~~2020:

~~Operating Leases~~

~~Finance~~Operating Leases

Finance Leases

Less than one year

~~17,525~~

~~873~~18,259

993

1 to 2 years

~~15,956~~

~~712~~15,919

708

2 to 3 years

~~13,925~~

~~456~~13,656

421

3 to 4 years

~~12,045~~

~~383~~13,065

129

4 to 5 years

~~11,716~~

~~127~~11,928

—

After 5 years

~~43,591~~

—35,342

—

Total future minimum rental commitments

~~114,758~~

2108,~~551~~169

2,251

Less - amounts representing interest

~~(30,072~~

)

(~~276~~27,067)

)

(207)

Present value of lease liabilities

~~84,686~~

281,~~275~~102

2,044

As of December 29, 2018, minimum lease payments under non-cancellable operating leases by period were expected to be as follows:

	Operating Leases
Less than one year	$	17,326
1 to 2 years	14,736
2 to 3 years	13,305
3 to 4 years	12,012
4 to 5 years	9,541
After 5 years	16,664
Total future minimum rental commitments	$	83,584

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

Lessor

The Company has certain arrangements for key duplication equipment under which we are the lessor. These leases meet the criteria for operating lease classification. Lease income associated with these leases is not material.

9. Deferred Compensation Plan:

The Company maintains a deferred compensation plan for key employees (the “Nonqualified Deferred Compensation Plan” or “NQDC”) which allows the participants to defer up to 25% of salary and commissions and up to 100% of bonuses to be paid during the year and invest these deferred amounts into certain Company directed mutual fund investments, subject to the election of the participants. The Company is permitted to make a 25% matching contribution on deferred amounts up to $10, subject to a five year vesting schedule.

As of December 28, 2019 and December 29, 2018, the Company's Consolidated Balance Sheets included $1,911 and $1,905, respectively, in restricted investments representing the assets held in mutual funds to fund deferred compensation liabilities owed to the Company's current and former employees. The current portion of the restricted investments was $355 and $545 as of December 28, 2019 and December 29, 2018, respectively, and is included in other current assets on the accompanying Consolidated Balance Sheets. The assets held in the NQDC are classified as an investment in trading securities, accordingly, the investments are marked-to-market, see Note 13 - Fair Value Measurements of the Notes to Consolidated Financial Statements for additional detail. 72

~~During~~THE ~~the~~HILLMAN ~~years ended December 28~~COMPANIES, ~~2019,~~INC. ~~December 29,~~AND ~~2018, and December 30, 2017 distributions from the deferred compensation plan aggregated $686, $849, and $289, respectively.~~SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

As of December 26, 2020 and December 28, 2019, the Company's Consolidated Balance Sheets included $1,911 and $1,911, respectively, in restricted investments representing the assets held in mutual funds to fund deferred compensation liabilities owed to the Company's current and former employees. The current portion of the restricted investments was $595 and $355 as of December 26, 2020 and December 28, 2019, respectively, and is included in other current assets on the accompanying Consolidated Balance Sheets. The assets held in the NQDC are classified as an investment in trading securities, accordingly, the investments are marked-to-market, see Note 13 - Fair Value Measurements of the Notes to Consolidated Financial Statements for additional detail.

During the years ended December 26, 2020, December 28, 2019, and December 29, 2018 distributions from the deferred compensation plan aggregated $527, $686, and $849, respectively.

Filing Compare · HILLMAN COMPANIES INC