UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 29, 2018~~March 30, 2019

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 Cincinnati, Ohio		45231
(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 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 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 ý 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 ý NO ¨

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):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. YES ¨ NO ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO ý

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



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

On ~~November 9, 2018,~~May 13, 2019, 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 symbol HLM.Pr.

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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

INDEX



PART I. FINANCIAL INFORMATION		PAGE

Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	67
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2826
Item 4.	Controls and Procedures	2926
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	3027
Item 1A.	Risk Factors	3027
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3027
Item 3.	Defaults upon Senior Securities	3027
Item 4.	Mine Safety Disclosures	3027
Item 5.	Other Information	3027
Item 6.	Exhibits	3128
SIGNATURES		3229

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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(dollars in thousands, except per share amounts)


	September 29, 2018			December 30, 2017			March 30, 2019			December 29, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	8,173		$	9,937		$	15,027		$	28,234
Accounts receivable, net of allowances of $1,031 ($1,121 - 2017)	94,334			78,994
Accounts receivable, net of allowances of $998 ($846 - 2018)							112,608			110,799
Inventories, net	268,517			219,479			314,766			320,281
Other current assets	7,778			11,850			12,035			18,727
Total current assets	378,802			320,260			454,436			478,041
Property and equipment, net of accumulated depreciation of $122,458 ($98,674 - 2017)	204,997			153,143
Property and equipment, net of accumulated depreciation of $143,054 ($131,169 - 2018)							208,764			208,279
Goodwill	678,416			620,503			804,661			803,847
Other intangibles, net of accumulated amortization of $162,528 ($132,659 - 2017)	736,263			693,195
Other intangibles, net of accumulated amortization of $191,597 ($176,677 - 2018)							916,447			930,525
Operating lease right of use assets							73,573			—
Other assets	11,594			12,116			10,537			10,778
Total assets	$	2,010,072		$	1,799,217		$	2,468,418		$	2,431,470
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	115,608		$	74,051		$	125,444		$	135,059
Current portion of debt and capital leases	7,482			5,706			11,009			10,985
Accrued expenses:
Salaries and wages	10,826			9,784			15,434			9,881
Pricing allowances	5,149			5,908			5,725			5,404
Income and other taxes	4,488			4,146			3,626			3,325
Interest	4,521			9,717			5,692			15,423
Current portion of operating lease liabilities							12,184			—
Other accrued expenses	18,229			19,911			22,314			17,941
Total current liabilities	166,303			129,223			201,428			198,018
Long term debt	1,204,647			989,674			1,585,534			1,586,084
Deferred income taxes, net	151,462			145,728			205,153			200,696
Other non-current liabilities	6,880			7,189			5,345			7,565
Operating lease liabilities							63,979			—
Total liabilities	$	1,529,292		$	1,271,814		$	2,061,439		$	1,992,363
Commitments and contingencies (Note 5)
Stockholder's Equity:
Preferred stock, $.01 par, 5,000 shares authorized, none issued or outstanding at September 29, 2018 and December 30, 2017	—			—
Common stock, $.01 par, 5,000 shares authorized, issued and outstanding at September 29, 2018 and December 30, 2017	—			—
Preferred stock, $.01 par, 5,000 shares authorized, none issued or outstanding at March 30, 2019 and December 29, 2018							—			—
Common stock, $.01 par, 5,000 shares authorized, issued and outstanding at March 30, 2019 and December 29, 2018							—			—
Additional paid-in capital	549,159			551,518			549,889			549,528
(Accumulated deficit) retained earnings	(37,950		)	2,422			(108,099		)	(72,831		)
Accumulated other comprehensive loss	(30,429		)	(26,537		)	(34,811		)	(37,590		)
Total stockholder's equity	480,780			527,403			406,979			439,107
Total liabilities and stockholder's equity	$	2,010,072		$	1,799,217		$	2,468,418		$	2,431,470

The accompanying notes are an integral part of these consolidated financial statements.

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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

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

(dollars in thousands)


	Thirteen Weeks Ended September 29, 2018			Thirteen Weeks Ended September 30, 2017			Thirty-nine Weeks Ended September 29, 2018			Thirty-nine Weeks Ended September 30, 2017			Thirteen Weeks Ended March 30, 2019			Thirteen Weeks Ended March 31, 2018
Net sales	$	243,839		$	218,955		$	697,588		$	631,994		$	287,659		$	207,595
Cost of sales (exclusive of depreciation and amortization shown separately below)	130,321			119,468			373,938			341,315			165,921			109,590
Selling, general and administrative expenses	83,575			69,165			233,448			203,091			91,835			71,076
Depreciation	12,004			7,300			30,481			25,473			15,816			8,942
Amortization	10,437			9,500			29,872			28,442			14,765			9,723
Management fees to related party	134			127			396			390			131			128
Other (income) expense	462			(589		)	59			(2,303		)	39			(981		)
Income from operations	6,906			13,984			29,394			35,586
Income (loss) from operations													(848		)	9,117
Interest expense, net	16,122			12,787			44,054			37,960			26,563			13,571
Interest expense on junior subordinated debentures	3,152			3,152			9,456			9,456			3,152			3,152
Refinancing charges	—			—			8,542			—
Investment income on trust common securities	(95		)	(95		)	(284		)	(284		)	(95		)	(95		)
Loss before income taxes	(12,273		)	(1,860		)	(32,374		)	(11,546		)	(30,468		)	(7,511		)
Income tax expense (benefit)	(1,565		)	(538		)	2,182			(4,759		)
Income tax expense													4,800			2,806
Net loss	$	(10,708	)	$	(1,322	)	$	(34,556	)	$	(6,787	)	$	(35,268	)	$	(10,317	)
Net loss from above	$	(10,708	)	$	(1,322	)	$	(34,556	)	$	(6,787	)	$	(35,268	)	$	(10,317	)
Other comprehensive income:
Other comprehensive income (loss):
Foreign currency translation adjustments	2,790			4,601			(3,892		)	10,034			2,779			(3,039		)
Total other comprehensive (loss) income	2,790			4,601			(3,892		)	10,034
Comprehensive (loss) income	$	(7,918	)	$	3,279		$	(38,448	)	$	3,247
Total other comprehensive income (loss)													2,779			(3,039		)
Comprehensive loss													$	(32,489	)	$	(13,356	)

The accompanying notes are an integral part of these consolidated financial statements.

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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(dollars in thousands)


	Thirty-nine Weeks Ended September 29, 2018			Thirty-nine Weeks Ended September 30, 2017			Thirteen Weeks Ended March 30, 2019			Thirteen Weeks Ended March 31, 2018
Cash flows from operating activities:
Net loss	$	(34,556	)	$	(6,787	)	$	(35,268	)	$	(10,317	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	60,353			53,915			30,581			18,665
Deferred income taxes	1,876			(5,920		)	4,398			3,068
Deferred financing and original issue discount amortization	1,522			1,907			935			616
Stock-based compensation expense	1,219			2,025			361			487
Loss on debt restructuring	8,542			—
Asset impairment	832			—
Loss on disposal of property and equipment	300			20			(473		)	—
Other non-cash interest and change in value of interest rate swap	(1,677		)	(984		)	1,113			(1,057		)
Changes in operating items:
Accounts receivable	(16,059		)	(12,393		)	(1,288		)	(5,752		)
Inventories	(45,687		)	1,311			6,581			(22,208		)
Other assets	(1,089		)	(583		)	4,297			(346		)
Accounts payable	38,482			10,735			(9,991		)	27,423
Other accrued liabilities	(8,205		)	10,173			(3,573		)	(8,160		)
Other items, net	—			8
Net cash provided by operating activities	5,853			53,427
Net cash (used for) provided by operating activities							(2,327		)	2,419
Cash flows from investing activities:
Acquisition of business, net of cash received	(154,498		)	—
Capital expenditures	(54,222		)	(35,864		)	(17,380		)	(20,994		)
Other items, net	—			(1,500		)
Proceeds from sale of property and equipment							7,633			—
Net cash used for investing activities	(208,720		)	(37,364		)	(9,747		)	(20,994		)
Cash flows from financing activities:
Repayments of senior term loans	(532,488		)	(4,125		)	(5,305		)	(1,375		)
Borrowings on senior term loans	695,000			—
Financing fees	(12,717		)	—
Borrowings on revolving credit loans	117,500			5,000			12,500			22,500
Repayments of revolving credit loans	(62,500		)	(5,000		)	(8,200		)	(7,000		)
Principal payments under capitalized lease obligations	(160		)	(104		)
Proceeds from exercise of stock options	200			—
Dividend to Holdco	(3,780		)	—
Net cash provided by (used in) financing activities	201,055			(4,229		)
Principal payments under finance and capitalized lease obligations							(142		)	(42		)
Net cash (used for) provided by financing activities							(1,147		)	14,083
Effect of exchange rate changes on cash	48			(1,450		)	14			(211		)
Net (decrease) increase in cash and cash equivalents	(1,764		)	10,384
Net decrease in cash and cash equivalents							(13,207		)	(4,703		)
Cash and cash equivalents at beginning of period	9,937			14,106			28,234			9,937
Cash and cash equivalents at end of period	$	8,173		$	24,490		$	15,027		$	5,234
Supplemental disclosure of cash flow information:
Interest paid on junior subordinated debentures, net	$	9,172		$	9,172		$	3,057		$	3,057
Interest paid	44,773			41,047			34,339			18,343
Income taxes paid	632			253			1,000			417

The accompanying notes are an integral part of these consolidated financial statements.

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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)

(dollars in thousands)



	Common Stock		Additional Paid-in-capital		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Total Stockholders Equity
Thirteen Weeks Ended March 30, 2019
Balance at December 29, 2018	$	—	$	549,528	$	(72,831	)	$	(37,590	)	$	439,107
Net Loss	—		—		(35,268		)	—			(35,268		)
Stock-based compensation	—		361		—			—			361
Change in cumulative foreign currency translation adjustment	—		—		—			2,779			2,779
Balance at March 30, 2019	—		549,889		(108,099		)	(34,811		)	406,979

Thirteen Weeks Ended March 31, 2018
Balance at December 30, 2017	—		551,518		2,422			(26,537		)	527,403
Net Loss	—		—		(10,317		)	—			(10,317		)
Stock-based compensation	—		487		—			—			487
Change in cumulative foreign currency translation adjustment	—		—		—			(3,039		)	(3,039		)
Cumulative effect of change in accounting principles	—		—		(7,852		)	—			(7,852		)
Other	—		15		(4		)	—			11
Balance at March 31, 2018	$	—	$	552,020	$	(15,751	)	$	(29,576	)	$	506,693

The accompanying notes are an integral part of these consolidated financial statements.

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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

1. Basis of Presentation:

The accompanying unaudited financial statements include the condensed consolidated accounts of The Hillman Companies, Inc. ~~(“Hillman Companies”)~~ and its wholly-owned subsidiaries (collectively “Hillman” or the “Company”). for the first quarter of fiscal 2019. 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. All significant intercompany balances and transactions have been eliminated. The Hillman Companies, Inc. is a wholly-owned subsidiary of HMAN Intermediate II Holdings Corp., and a wholly-owned subsidiary of HMAN Group Holdings Inc. (“Holdco”).

The accompanying unaudited condensed consolidated financial statements present information in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X. Accordingly, they do not include all information or footnotes required by U.S. generally accepted accounting principles for complete financial statements. Operating results for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018~~March 30, 2019 do not necessarily indicate the results that may be expected for the full year. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s annual report filed on Form 10-K for the year ended December ~~30, 2017.~~29, 2018.

2. Summary of Significant Accounting Policies:

The significant accounting policies should be read in conjunction with the significant accounting policies included in the Form 10-K for the year ended December ~~30, 2017.~~29, 2018.

Use of Estimates in the Preparation of Financial Statements:

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

Revenue Recognition:

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

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

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

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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

The following table ~~disaggregates~~displays our disaggregated revenue by product category.

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

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

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

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



	Thirteen Weeks Ended March 30, 2019
	Fastening Solutions	Home and Access Solutions	Consumer Connected Solutions	Personal Protective Solutions	Total Revenue
United States	102,365	63,194	27,387	62,156	255,102
Canada	22,714	5,942	361	966	29,983
Other	1,614	255	—	705	2,574
Consolidated	126,693	69,391	27,748	63,827	287,659

	Thirteen Weeks Ended March 31, 2018
	Fastening Solutions	Home and Access Solutions	Consumer Connected Solutions	Personal Protective Solutions	Total Revenue
United States	98,441	60,696	16,095	—	175,232
Canada	23,501	7,081	4	—	30,586
Other	1,578	199	—	—	1,777
Consolidated	123,520	67,976	16,099	—	207,595

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

~~Custom~~Home and access solutions revenues consist primarily of the delivery of keys and key accessories, ~~pet tags, and~~builders' hardware, wall hanging, threaded rod products, letters, numbers, and signs ~~(“LNS”~~("LNS") as well as in-store merchandising services for the related product categories and access to our proprietary key duplicating equipment.

Consumer connected solutions revenues consist primarily of sales of keys and identification tags through self-service key duplicating machines and engraving ~~equipment.~~kiosks.

~~Home~~Personal protective solutions revenues consist primarily of the delivery of ~~builders’ hardware, wall hanging,~~personal protective equipment such as gloves, soft sided tool storage, and ~~threaded rod products~~eye-wear as well as in-store merchandising services for the related product category.

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

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~~THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollars in thousands)~~

access to key duplicating and engraving equipment is recognized upon the customer’s acceptance of the products. The revenues for all performance obligations are recognized upon the customer's acceptance of the products.

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

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

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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

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, we 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. We recognized the cumulative effect of initially applying the new revenue standard as a $7,852 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, and an increase of $637 to other accrued expenses. 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 comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The impact to revenues for the thirteen and thirty-nine weeks ended September 29, 2018 as a result of applying Topic 606 was immaterial. A majority of our revenue continues to be recognized when products are shipped or delivered to customers. We expect 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 ~~amendments in this update require lessees, among other things, to recognize lease~~most significant impact was the recognition of right-of-use ("ROU") assets and liabilities for operating leases and finance leases applicable to lessees. The Company elected to utilize the transition guidance within the new standard which allows the Company to carry forward its historical lease classification(s). Operating and finance lease ROU assets and liabilities are recognized based on the ~~balance sheet for those~~present value of future minimum lease payments over the expected lease term at commencement date. As the implicit rate is not determinable in most of the Company’s leases, ~~classified as operating leases under previous authoritative guidance. This update also introduces new disclosure requirements for leasing arrangements.~~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 ~~new guidance will be effective for public business entities for annual periods beginning after December 15, 2018,~~Company elected to not separate lease and ~~interim periods therein. Early adoption will be permitted~~non-lease components for all ~~entities.~~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 Condensed Consolidated Balance Sheet. The ~~new standard~~expected lease terms include options to extend or terminate the lease when it is ~~required to be applied with~~reasonably certain the Company will exercise such option. Lease expense for minimum lease payments is recognized on a modified retrospective approach to each prior reporting period presented with various optional practical expedients.The Company had operating leases with remaining rental payments of approximately $72,426 asstraight-line basis over the expected lease term. As of December 30, ~~2017,~~2018, Company recorded an Operating ROU Asset of $76,737 and a Finance ROU Asset of $680 within our Condensed Consolidated Balance Sheet. Short-term and long-term operating lease liabilities were recorded as $12,579 and $66,703, respectively. Short-term and long-term finance lease liabilities were determined to be $442 and $524 respectively. The adoption of this guidance did not have an impact on net income. See Note 11 - Leases of the Company has assets that are deployed with customers that may qualify as leases under the new standard. The discounted minimum remaining rental payments will be the starting point for determining the right-of-use asset and lease liability. ASU 2018-10 was issued to provide more detailed guidance and additional clarification for implementing ASU 2016-02. ASU 2018-11 provides an optional transition method in additionNotes to the existing modified retrospective transition method by allowing a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption which allows entities to apply the provisions of the updated guidance at the effective date. The updated guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of implementing this guidance on itsCondensed Consolidated Financial ~~Statements.~~Statement for full lease 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 is currently assessing the impact of the adoption of this ASU on its Condensed Consolidated Financial Statements.

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging (Topic 815)~~: Targeted Improvements to Accounting for Hedging Activities, which amends and simplifies existing guidance in order to allow companies to more accurately present the economic effects of risk management activities in the financial statements. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted. The Company does not expect the provisions of this ASU to have a material impact on its Condensed Consolidated Financial Statements.

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~~(dollars in thousands)~~

~~In March 2018, the FASB issued ASU 2018-05,~~ ~~Income Taxes (Topic 740)~~: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“ASU 2018-05”), which amends the FASB Accounting Standards Codification and XBRL Taxonomy based on the Tax Cuts and Jobs Act (the “Act”) that was signed into law on December 22, 2017 and Staff Accounting Bulletin No. 118 (“SAB 118”) that was released by the Securities and Exchange Commission. The Act changes numerous provisions that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits and may additionally have international tax consequences for many companies that operate internationally. The Company has evaluated the impact of the Act as well as the guidance of SAB 118 and incorporated the changes into the determination of a reasonable estimate of its deferred tax liability and appropriate disclosures in the notes to its consolidated financial statements (See Note 8 - Income Taxes).

~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820) -~~ Disclosure Framework. The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance if effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company does not expect the provisions of this ASU to have a material impact on its Condensed Consolidated Financial Statements.

~~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, 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, it did not have a material impact on the financial statements.

4. Acquisitions

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. The Company believes that the combination of MinuteKey's self service kiosk business with Hillman's existing key duplication platform will create additional growth opportunities. MinuteKey is headquartered in Boulder, Colorado and has operations in the United States and ~~Canada and will fall into~~Canada. MinuteKey is included in the Company's United States and Canada reportable segments.

The Company is in the process of obtaining additional information necessary to finalize the valuation of the assets acquired and liabilities assumed including income tax related amounts. Therefore, the preliminary fair values set forth below are subject to adjustment as additional information is obtained and the valuations are completed. Measurement period adjustments for the quarter ended March 30, 2019 were immaterial. See Note 5 - Goodwill and Other Intangible Assets, The following table reconciles the preliminary estimated fair value of the acquired assets and assumed liabilities (net of purchase price accounting adjustments) to the total purchase price of the MinuteKey acquisition:

Cash $ 1,791
Inventory 4,266
Other current assets 756
Property and equipment 30,597
Goodwill 58,503
Customer relationships 49,000
Technology 19,000
Trade names 5,400
Patents 356
Other non-current assets 17
Total assets acquired 169,686
Less:
Liabilities assumed 13,397
Total purchase price $ 156,289

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~~The excess of the purchase price over the net assets has been allocated to goodwill and intangibles based on an independent valuation appraisal.~~



Cash	$	1,791
Inventory	3,952
Other current assets	766
Property and equipment	29,888
Goodwill	58,604
Customer relationships	50,000
Technology	19,000
Trade names	5,400
Other non-current assets	16
Total assets acquired	169,417
Less:
Liabilities assumed	(13,128		)
Total purchase price	$	156,289

The amount of net sales and operating loss of the acquired business included in the Company's ~~consolidated statement~~Consolidated Statement of ~~comprehensive income~~Comprehensive Income for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018~~March 30, 2019 were approximately ~~$7,342~~$11,730 and ~~$(608)~~$(1,541), respectively. Unaudited pro forma financial information has not been presented for MinuteKey as the financial results of MinuteKey were insignificant to the financial results of the Company on a standalone basis.

~~Subsequent to quarter end, on~~Big Time Products

On October 1, 2018, the Company ~~completed the acquisition of~~acquired NB Parent Company, Inc. and its affiliated companies including Big Time Products, ~~("Big~~LLC and Rooster Products International, Inc. (collectively, "Big Time"), a leading provider of personal protection and work gear products ranging from work gloves, tool belts and jobsite storage for a purchase price of ~~approximately $346,000.~~ $348,834. Big Time has business operations throughout North America and its financial results reside in the Company's United States, Canada and Mexico reportable segments.

The ~~acquisition was financed with~~Company is in the process of obtaining additional ~~term loan funding of $365,000. All requisite business combination disclosures required under~~information necessary to finalize the ~~FASB Accounting Standards Codification Topic 805, “Business Combinations,” cannot be made as~~valuation of the ~~financial statements issuance date~~assets acquired and liabilities assumed including income tax related amounts. Therefore, the preliminary fair values set forth below are subject to adjustment as additional information is obtained and the valuations are completed. Measurement period adjustments for the ~~acquisition of Big Time, given the acquisition date.~~

~~In connection with the acquisitions, the Company incurred approximately $4,479 and $6,939 of acquisition related charges in the thirteen and thirty-nine weeks~~quarter ended ~~September 29, 2018, respectively. These costs are included in selling, general, and administrative expense ("SG&A") on the Condensed Consolidated Statement of Comprehensive Income (Loss).~~

5.March 30, 2019 were immaterial. See Note 5 - Goodwill and Other Intangible ~~Assets:~~

~~Goodwill amounts by reporting unit are summarized as follows:~~

Goodwill at
Acquisitions ⁽¹⁾
Dispositions
Other⁽²⁾
Goodwill at
December 30, 2017 September 29, 2018
United States $ 586,437
$ 58,667
$ —
$ —
$ 645,104
Canada 30,372
—
—
(940 ) 29,432
Mexico 3,694
—
—
186
3,880
Total $ 620,503
$ 58,667
$ —
$ (754 ) $ 678,416


~~(1)~~	These amounts relate to the acquisition of MinuteKey in the third quarter of 2018 and adjustments to the opening balance sheet for the acquisition of ST Fastening Systems ("STFS"). STFS was acquired in the fourth quarter of 2017.


~~(2)~~	~~These amounts relate to adjustments resulting from fluctuations in foreign currency exchange rates.~~

~~Other intangibles, net, as of September 29, 2018 and December 30, 2017 consist~~Assets, The following table reconciles the preliminary fair value of the ~~following:~~ acquired assets and assumed liabilities (net of purchase price accounting adjustments) to the total purchase price of the Big Time acquisition:

Estimated
Useful Life
(Years)
September 29, 2018 December 30, 2017
Customer relationships 13-20 $ 751,634
$ 703,399
Trademarks - All Others Indefinite 85,586
85,759
Technology 8 19,000
—
Trade Names 15 5,400
—
Trademarks - TagWorks 5 300
300
KeyWorks license 7 4,447
4,455
Patents 7-15 32,424
31,941
Intangible assets, gross 898,791
825,854
Less: Accumulated amortization 162,528
132,659
Other intangibles, net $ 736,263
$ 693,195



Cash	$	2,507
Accounts receivable	41,237
Inventory	42,303
Other current assets	1,648
Property and equipment	3,703
Goodwill	127,183
Customer relationships	189,000
Trade names	21,000
Other non-current assets	159
Total assets acquired	428,740
Less:
Liabilities assumed	(79,906		)
Total purchase price	$	348,834

The amount of net sales and operating income from Big Time included in the Company's consolidated statement of comprehensive income for first quarter fiscal 2019 was approximately $63,827 and $5,775, respectively. The following table

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



	(Unaudited) Fiscal Period Ended
	Thirteen Weeks Ended March 30, 2019		Thirteen Weeks Ended March 31, 2018
Net revenues	287,659		260,807
Net income (loss)	(35,268	)	(13,322	)

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.

5. Goodwill and Other Intangible Assets:

Goodwill amounts by operating segment are summarized as follows:



	Goodwill at		Acquisitions		Dispositions		Other⁽¹⁾		Goodwill at
	December 29, 2018		Acquisitions		Dispositions		Other⁽¹⁾		March 30, 2019
United States	$	772,213	$	—	$	—	$	175	$	772,388
Canada	27,938		—		—		575		28,513
Other	3,696		—		—		64		3,760
Total	$	803,847	$	—	$	—	$	814	$	804,661


(1)	These amounts relate to adjustments resulting from fluctuations in foreign currency exchange rates as adjustments to the opening balance sheet for the acquisitions of MinuteKey and Big Time Products. The acquisitions were completed in the third and fourth quarters of 2018, respectively.

Other intangibles, net, as of March 30, 2019 and December 29, 2018 consist of the following:



	Estimated Useful Life (Years)	March 30, 2019		December 29, 2018
Customer relationships	13-20	$	940,549	$	939,880
Trademarks - Indefinite	Indefinite	85,365		85,228
Trademarks - Other	5-15	26,700		26,700
Technology and patents	7-12	55,430		55,394
Intangible assets, gross		1,108,044		1,107,202
Less: Accumulated amortization		191,597		176,677
Other intangibles, net		$	916,447	$	930,525

The amortization expense for amortizable assets including the adjustments resulting from fluctuations in foreign currency exchange rates was ~~$10,437 and $29,872~~$14,765 for the thirteen ~~and thirty-nine~~ weeks ended ~~September 29, 2018~~March 30, 2019 and ~~$9,500 and $28,442~~$9,723 for the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017.~~March 31, 2018.

The Company tests goodwill and indefinite-lived intangible assets for impairment annually. Impairment is also tested when events or changes in circumstances indicate that the carrying values of the assets may be greater than their fair values. During the thirteen ~~and thirty-nine~~ weeks ended ~~September 29, 2018~~March 30, 2019 and the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017,~~March 31, 2018, the Company did not adjust goodwill or intangible assets to their fair values as a result of any impairment analyses.

~~In 2017, the fair value~~

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(dollars in excess of its carrying value by more than 10%. In 2017, the fair value of United States reporting unit exceeded its carrying value by approximately 4%. A 100 basis point decrease in the projected long-term growth rate or a 100 basis point increase in the discount rate for this reporting unit could decrease the fair value by enough to result in some impairment based on the current forecast model. Future declines in the market and deterioration in earnings could lead to a potential impairment.thousands)

6. Commitments and Contingencies:

The Company self-insures its product liability, automotive, workers' compensation, and general liability losses up to $250 per occurrence. Catastrophic coverage has been purchased from third party insurers for occurrences in excess of $250 up to ~~$40,000.~~$60,000. The two risk areas involving the most significant accounting estimates are workers' compensation and automotive liability. Actuarial valuations performed by the Company's outside risk insurance expert were used by the Company's management to form the basis for workers' compensation and automotive liability loss reserves. The actuary contemplated the Company's specific loss history, actual claims reported, and industry trends among statistical and other factors to estimate the range of reserves required. Risk insurance reserves are comprised of specific reserves for individual claims and additional amounts expected for development of these claims, as well as for incurred but not yet reported claims. The Company believes that the liability of approximately ~~$2,107~~$1,745 recorded for such risks is adequate as of ~~September 29, 2018.~~March 30, 2019.

As of ~~September 29, 2018,~~March 30, 2019, the Company has provided certain vendors and insurers letters of credit aggregating ~~$6,936~~$11,736 related to our product purchases and insurance coverage for product liability, workers’ compensation, and general liability.

The Company self-insures 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. Provisions for losses expected under these programs are recorded based on an analysis of historical insurance claim data and certain actuarial assumptions. The Company believes that the liability of approximately ~~$1,814~~$2,037 recorded for such risks is adequate as of ~~September 29, 2018.~~March 30, 2019.

The Company imports large quantities of fastener products which are subject to customs requirements and to tariffs and quotas set by governments through mutual agreements and bilateral actions. The Company could be subject to the assessment of additional duties and interest if it or its suppliers fail to comply with customs regulations or similar laws. The U.S. Department of Commerce (the "Department”) has received requests from petitioners to conduct administrative reviews of compliance with anti-dumping duty and countervailing duty laws for certain nails products sourced from Asian countries. The Company sourced products under review from vendors in China and Taiwan during the periods currently open for review, and it is at least reasonably possible that the Company may be subject to additional duties pending the results of the review. The Company accrues for the duty expense once it is determined to be probable and the amount can be reasonably estimated. On March 16, 2018, the Department published updated results, which were finalized upon the completion of review of appeals in April 2018.

Based on the final results, our liability was reduced to $2,146 at March 31, 2018 from $6,274 at December 30, 2017. The Company recorded income of ~~$0 and~~ $4,128 in the thirteen ~~and thirty-nine~~ weeks ended ~~September 29,~~March 31, 2018, which is included in Cost of Goods Sold on the Condensed Consolidated Statement of Comprehensive ~~Income (Loss). In~~Loss. There were no related charges in the thirteen ~~and thirty-nine~~ weeks ended ~~September~~March 30, ~~2017, the Company recorded expense of $4,128 and $6,274, respectively, based on the Department's initial assessments.~~

On October 1, 2013, The Hillman Group, Inc. ("Hillman Group") filed a complaint against Minute Key Inc., a manufacturer of fully-automatic, self-service key duplication kiosks, in the United States District Court for the Southern District of Ohio (Western Division), seeking a declaratory judgment of non-infringement and invalidity of a U.S. patent issued to Minute Key Inc. on September 10, 2013. Hillman Group's filing against Minute Key Inc. was in response to a letter dated September 10, 2013 in which Minute Key Inc. alleged that Hillman Group's FastKey™ product infringes the newly-issued patent. On October 23, 2013, Minute Key Inc. filed an answer and counterclaim against the Hillman Group alleging patent infringement. Minute

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Key Inc. also requested that the court dismiss the Hillman Group's complaint, enter judgment against the Hillman Group that the Company is willfully and deliberately infringing the patent, grant a permanent injunction, and award unspecified monetary damages to Minute Key Inc.

Minute Key Inc. later filed two motions on March 17, 2014 seeking to voluntarily withdraw its counterclaim alleging infringement by Hillman Group and also to dismiss Hillman Group's complaint for non-infringement and invalidity. Shortly after an April 23, 2014 court-ordered mediation, Minute Key Inc. provided Hillman Group with a covenant promising not to sue for infringement of two of its patents against any existing Hillman Group product, including the FastKey™ and Key Express™ products.

Hillman Group filed a motion on May 9, 2014 seeking to add additional claims to the case against Minute Key Inc. under Federal and Ohio state unfair competition statutes. These claims relate to Minute Key Inc.'s business conduct during competition with Hillman Group over a mutual client.

In an August 15, 2014 order, the court granted Minute Key Inc.'s March 17, 2014 motions to dismiss the claims relating to patent infringement and also granted Hillman Group's May 9, 2014 motion to add its unfair competition claims.

Hillman Group formally amended its complaint to add the unfair competition claims on September 4, 2014, and Minute Key Inc. answered on September 29, 2014 without filing any counterclaims. Minute Key Inc. filed a motion on October 1, 2014 to move the case from Cincinnati to either the District of Colorado or the Western District of Arkansas. The court denied that motion on February 3, 2015.

As a result of the Minute Key Inc. covenant not to sue, the Company's FastKey™ and Key Express™ products no longer face any threat of patent infringement liability from two of Minute Key Inc.'s patents. The scope of the lawsuit changed from a bilateral dispute over patent infringement to a lawsuit solely about Minute Key Inc.'s business conduct. Minute Key Inc. filed a motion for summary judgment on February 8, 2016. The court denied that motion on July 8, 2016. Following the denial of Minute Key Inc.’s summary judgment motion, a jury trial was held between August 24, 2016 and September 6, 2016. The jury returned a verdict in Hillman Group’s favor on September 6, 2016 finding that Minute Key Inc.’s actions violated the Federal Lanham Act and the Ohio Deceptive Trade Practices Act. Following this verdict against Minute Key Inc., Hillman Group filed post-trial motions for recovery of its costs, attorney fees, pre-and post-judgment interest, and an injunction.

Minute Key Inc. also filed a post-trial motion to set aside the jury verdict. On March 29, 2018, the court denied Minute Key’s motion, finding that there was sufficient evidence presented at trial to permit the jury to reach its September 6, 2016 verdict. Minute Key appealed the court’s decision on the motion and the jury verdict itself to the United States Court of Appeals for the Federal Circuit on April 27, 2018. On May 23, 2018, the parties filed a joint motion in the Court of Appeals requesting that the appeal be deactivated until Hillman’s post-trial motions are decided in the district court, and the Court of Appeals granted the motion and deactivated the appeal on May 29, 2018.

In view of the Company’s agreement to acquire Minute Key, the parties filed a joint motion in the district court on June 7, 2018 requesting that the district court hold all decisions on post-trial motions in abeyance pending the closing of the acquisition. The district court granted the motion on June 12, 2018 and stayed the proceedings. Following completion of the Company’s acquisition of Minute Key, the parties filed a joint motion on September 11, 2018 to lift the stay, vacate the Court’s September 8, 2016 judgment, and dismiss the case, including all pending post-trial motions. The court granted the motion on September 12, 2018, closing the district court case.

Minute Key moved to voluntarily dismiss its appeal in the United States Court of Appeals for the Federal Circuit on October 1, 2018, and the Court of Appeals granted the motion and dismissed the appeal on October 4, 2018. This dismissal ends all litigation between the Company and Minute Key.2019.

In addition, legal proceedings are pending which are either in the ordinary course of business or incidental to the Company's business. Those legal proceedings incidental to the business of the Company are generally not covered by insurance or other indemnity. In the opinion of the Company's management, the ultimate resolution of the pending litigation matters will not have a material adverse effect on the consolidated financial position, operations, or cash flows of the Company.

7. Related Party Transactions

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~~(dollars in thousands)~~

The Company has recorded aggregate management fee charges and expenses from CCMP Capital Advisors, LLC (“CCMP”), 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”) of ~~$134 and $396~~$131 for the thirteen ~~and thirty-nine~~ weeks ended ~~September 29, 2018~~March 30, 2019 and ~~$127 and $390~~$128 for the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017.~~March 31, 2018.

Gregory Mann and Gabrielle Mann are employed by Hillman. The Company leases an industrial warehouse and office facility from companies under the control of the Manns. The rental expense for the lease of this facility was $87 ~~and $262~~ for the thirteen ~~and thirty-nine~~ weeks ended ~~September 29, 2018~~March 30, 2019 and ~~$88 and $265~~$87 for the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017.~~March 31, 2018.

The Hillman Group Canada ULC subsidiary of Hillman entered into three leases for five properties containing an industrial warehouse, manufacturing plant, and office facilities on February 19, 2013. 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 of the properties under the other two leases is a company which is owned by Richard Paulin and certain of

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his relatives. The rental expense for the three leases was ~~$164 and $501~~$162 for the thirteen ~~and thirty-nine~~ weeks ended ~~September 29, 2018~~March 30, 2019 and ~~$164 and $473~~$170 for the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017.~~

In the thirteen and thirty-nine weeks ended September 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 the thirteen and thirty-nine weeks ended September 30, 2017.March 31, 2018.

8. Income Taxes:

Accounting Standards Codification 740 (“ASC 740”) requires companies to apply their estimated annual effective tax rate on a year-to-date basis in each interim period. These rates are derived, in part, from expected annual pre-tax income or loss. In the thirteen ~~and thirty-nine~~ weeks ended ~~September 29, 2018~~March 30, 2019 and the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017,~~March 31, 2018, the Company applied an estimated annual effective tax rate to the interim period pre-tax ~~income (loss)~~loss to calculate the income tax ~~expense (benefit).~~expense.

For the thirteen ~~and thirty-nine~~ weeks ended ~~September 29, 2018,~~March 30, 2019, the effective income tax rate was ~~12.8% and (6.7)~~(15.8)%. The Company recorded income tax ~~(benefit)/~~expense for the thirteen ~~and thirty-nine~~ weeks ended ~~September 29, 2018~~March 30, 2019 of ~~$(1,565) and $2,182.~~$4,800. The negative effective tax rate for the thirteen ~~and thirty-nine~~ weeks ended ~~September 29,~~March 30, 2019 was the result of the Global Intangible Low-Taxed Income ("GILTI") and the IRC Section 163(j) interest limitation. Consistent with prior year, the primary impact of the effective tax rate differential for the thirteen weeks ended March 30, 2019 was due to the Company recording a valuation allowance on its interest limitation. In addition, the effective income tax rate differed from the federal statutory tax rate for the thirteen weeks ended March 30, 2019 due to certain non-deductible expenses and state and foreign income taxes.

The effective income tax rate was (37.4)% for the thirteen weeks ended March 31, 2018. The Company recorded income tax expense for the thirteen weeks ended March 31, 2018 of $2,806. The negative effective income tax rate for the thirteen weeks ended March 31, 2018 was primarily the result of the new provisions introduced by the Tax Cuts and Jobs Act (the "Tax Act") ~~including the new provision on Global Intangible Low-Taxed Income ("GILTI") and the IRC Section 163(j) interest limitation.~~. The effective income tax rate differed from the federal statutory ~~tax~~ rate in the thirteen ~~and thirty-nine~~ weeks ended ~~September 29,~~March 31, 2018 due to recognizing no benefit on losses in jurisdictions where valuation allowances are recorded against net deferred tax assets, certain non-deductible expenses, and several aspects of the Tax ~~Act.~~

~~The effective income tax rate was 28.9%~~Act including the new provision on Global Intangible Low-Taxed Income ("GILTI") and ~~41.2% for~~ the thirteen and thirty-nine weeks ended September 30, 2017. The Company recorded income tax expense/(benefit) for the thirteen and thirty-nine weeks ended September 30, 2017 of $(538) and $(4,759), respectively. The effective income tax rate differed from the federal statutory tax rate in the thirteen and thirty-nine weeks ended September 30, 2017 primarily due to the decrease in the valuation allowance attributable to a foreign subsidiary and certain non-deductible expenses. Additionally, the effective income tax rate differed from the federal statutory tax rate in the thirteen and thirty-nine weeks ended September 30, 2017 due in part to a tax benefit recorded in the current period from the reconciliation of a prior year’s tax return to the amount reported for tax provision purposes. The remaining differences between the effective income tax rate and the federal statutory rate in the thirteen and thirty-nine weeks ended September 30, 2017 were due to state and foreign income taxes.

In December 2017, the Tax Act was signed into law making significant changes to the Internal Revenue Code. Changes included, among other things, several new taxes that may impact the Company’s 2018 effective tax rate. The new taxes include: GILTI, Foreign Derived Intangible Income (FDII), Base Erosion and Anti-Abuse Tax (BEAT), and an IRC Section 163(j) interest limitation (Interest Limitation). For the thirty-nine weeks ended September 29, 2018, we have not recorded provisional estimates in our effective tax rate for FDII or BEAT because we currently estimate that these provisions of the Tax Act will not apply in 2018. However, the Company may be subject to GILTI, which is a tax on foreign income in excess of a deemed return on tangible assets of foreign subsidiaries. The Company currently included a provisional estimated increase to

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~~(dollars in thousands)~~

the effective tax rate related to GILTI income from its foreign subsidiaries. Companies subject to GILTI have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for temporary differences including outside basis differences expected to reverse as GILTI. The Company has elected to account for GILTI as a period cost, and therefore has included GILTI expense in the effective tax rate calculation. Lastly, the Company recorded a provisional increase to income tax expense for recording a $7,843 valuation allowance on the Company’s Interest Limitation for 2018. The Company will continue to refine our provisional estimates for our computations of the GILTI, FDII, BEAT and the valuation allowance recorded on the Interest Limitation as we gather additional information.

In accordance with U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 118 (“SAB 118”), the provisional amounts recorded represent reasonable estimates of the effects of the Tax Act for which the analysis is not yet complete. As the Company completes its analysis of the Tax Act, including collecting, preparing and analyzing necessary information, performing and refining calculations and obtaining additional guidance from the U.S. Internal Revenue Services (IRS), U.S. Treasury Department, FASB or other standard setting and regulatory bodies on the Tax Act, it may record adjustments to the provisional amounts, which may be material. In accordance with SAB 118, the Company’s accounting for the tax effects of the Tax Act will be completed during the measurement period, which should not extend beyond one year from the enactment date.limitation.

9. Restructuring

During 2018, the Company initiated plans to restructure the operations of the Canada segment. The restructuring seeks to streamline operations in the greater Toronto area by consolidating facilities, exiting certain lines of business, and rationalizing stock keeping units (“SKUs”). The intended result of the Canada restructuring will be a more streamlined and scalable operation focused on delivering optimal service and a broad offering of products across the Company's core categories. The Company expects to incur increased restructuring related charges and capital expenditures in our Canada segment over the next year as plans are finalized and implemented. Charges incurred in the current year include:


	Thirteen Weeks Ended September 29, 2018		Thirty-nine Weeks Ended September 29, 2018		Thirteen Weeks Ended March 30, 2019
Facility consolidation ⁽¹⁾
Labor expense	$	243	$	334	$	142
Consulting and legal fees	87		242		65
Other	6		11		124
Exit of certain lines of business ⁽²⁾
Inventory valuation adjustments	1,152		1,152
Asset impairments	796		796
Severance	239		239
Gain on disposal of assets					(469		)
Other					74
Total	$	2,523	$	2,774	$	(64	)


(1)	Facility consolidation includes labor expense related to organizing inventory and equipment in preparation for the facility consolation, consulting and legal fees related to the project, and other expenses. These expenses were included in SG&A on the Condensed Consolidated Statement of Comprehensive ~~Income (Loss).~~


~~(2)~~	As part of the restructuring, the Company is exiting a manufacturing business line. Related charges included adjustments to write inventory down to net realizable value, asset impairment charges, and employee severance, which were included in cost of goods sold, other income and expense, and SG&A on the Condensed Consolidated Statement of Comprehensive Income (Loss), respectively.Loss.

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~~(dollars in thousands)~~

~~10. Long Term Debt:~~

~~The following table summarizes the Company’s debt:~~

September 29, 2018 December 30, 2017
Revolving loans $ 74,500
$ 19,500
Senior term loan, due 2021 —
530,750
Senior term loan, due 2025 693,264
—
6.375% Senior Notes, due 2022 330,000
330,000
11.6% Junior Subordinated Debentures - Preferred 105,443
105,443
Junior Subordinated Debentures - Common 3,261
3,261
Capital leases & other obligations 1,149
435
1,207,617
989,389
(Add) unamortized premium on 11.6% Junior Subordinated Debentures 17,827
18,771
(Subtract) unamortized discount on Senior term loan (814 ) —
(Subtract) current portion of long term debt and capital leases (7,482 ) (5,706 )
(Subtract) deferred financing fees (12,501 ) (12,780 )
Total long term debt, net $ 1,204,647
$ 989,674

On May 31, 2018, the Company entered into a new credit agreement consisting of a new funded term loan of $530,000 and an unfunded delayed draw term loan facility ("DDTL") of $165,000 ("2018 Term Loan"). Concurrently, the Company also entered into a new $150,000 asset-based revolving credit agreement ("ABL Revolver"). The proceeds from the 2018 Term Loan and ABL Revolver were used to refinance in full all outstanding revolving loans and term loans under the existing agreements and to pay fees and other expenses related to the 2018 Term Loan and ABL revolver. The 2018 Term Loan and ABL Revolver require the Company to maintain certain financial and non-financial covenants. On August 10, 2018, the Company drew the full $165,000 on the DDTL to finance the acquisition of MinuteKey.

The interest rate on the 2018 Term Loan is, at the Company's option, either adjusted LIBOR plus 3.5% per annum or an alternate base rate plus 2.5% per annum. The Term Loan will be payable in quarterly installments equal to .25% of the original principal amount, increased by the funding under the DDTL. The maturity date for the 2018 Term Loan is May 31, 2025. The amounts outstanding under the 2018 Term Loan 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 the guarantors’ assets.

A portion of the ABL Revolver is available for borrowing by the Company's US subsidiary ($112,500) and a portion is available for borrowing by the Company's Canadian subsidiary ($37,500), in each case subject to a borrowing base. The interest rate for the ABL Revolver is, at the Company's option, either adjusted LIBOR (or a Canadian banker’s acceptance rate in the case of Canadian loans) plus a margin of 1.25% to 1.75% per annum based on availability or an alternate base rate (or a Canadian prime rate or alternate base rate in the case of Canadian loans) plus a margin varying from 0.25% to 0.75% per annum based on availability. The stated maturity date of the ABL Revolver is May 31, 2023. Amounts outstanding under the ABL revolver are guaranteed by the Company's wholly-owned domestic subsidiaries and are secured by substantially all of the Company's and the guarantors’ assets, plus, in the case of amounts borrowed by the Company's Canadian subsidiary, its and its wholly-owned Canadian subsidiary’s assets, which guarantee the Canadian portion under the ABL Credit Agreement.

In connection with the 2018 Term Loan, the Company recorded $8,755 in deferred financing fees and $825 in discount which are recorded as long term debt on the Condensed Consolidated Balance Sheet. In connection with the ABL Revolver, the Company recorded $1,841 in deferred financing fees which are recorded as other non-current assets on the Condensed Consolidated Balance Sheet. Additionally, the Company expensed approximately $8,542 in debt issuance costs which was recorded as refinancing charges in the thirty-nine weeks ended September 29, 2018.

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(2)	As part of the restructuring, the Company is exiting a manufacturing business line. Related charges included gains on disposals of assets, and other expenses, which were included other income and expense, and SG&A on the Condensed Consolidated Statement of Comprehensive Loss, respectively.

The following represents the roll forward of restructuring reserves for the thirteen weeks ended March 30, 2019:



	Balance at December 29, 2018		Impact to Earnings	Cash Paid		Balance at March 30, 2019
Severance and related	$	1,537	—	(608	)	$	929

10. Long Term Debt:

The following table summarizes the Company’s debt:



	March 30, 2019			December 29, 2018
Revolving loans	$	112,500		$	108,200
Senior term loan, due 2025	1,052,957			1,058,263
6.375% Senior Notes, due 2022	330,000			330,000
11.6% Junior Subordinated Debentures - Preferred	105,443			105,443
Junior Subordinated Debentures - Common	3,261			3,261
Capital & finance leases	847			1,213
	1,605,008			1,606,380
(Add) unamortized premium on 11.6% Junior Subordinated Debentures	17,162			17,498
(Subtract) unamortized discount on Senior term loan	(9,178		)	(9,558		)
(Subtract) current portion of long term debt, capital leases and finance leases	(11,009		)	(10,985		)
(Subtract) deferred financing fees	(16,449		)	(17,251		)
Total long term debt, net	$	1,585,534		$	1,586,084

As of ~~September 29, 2018,~~March 30, 2019, there was ~~$693,264~~$1,052,957 outstanding under the 2018 Term Loan. As of ~~September 29, 2018,~~March 30, 2019, the Company had ~~$74,500~~$112,500 outstanding under the ABL Revolver along with ~~$6,936~~$11,736 of letters of credit. The Company has approximately ~~$68,564~~$25,764 of available borrowings under the ABL Revolver as a source of liquidity.

Additional information with respect to the fair value of the Company’s fixed rate senior notes and junior subordinated debentures is included in Note 1213 - Fair Value Measurements.

11. 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.

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The components of operating and finance lease cost for the first quarter of 2019 were as follows:



	Thirteen Weeks Ended March 30, 2019
Operating lease cost	$	4,723
Short term lease costs	1,233
Variable lease costs	188
Finance lease cost:
Amortization of right of use assets	92
Interest on lease liabilities	15

Rent expense is recognized on a straight-line basis over the expected lease term. Rent expense totaled $6,144 and $4,395 in the first quarter of 2019 and 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 March 30, 2019:

(1) Upon adoption of the new lease standard, discount rates used for existing operating leases were established on January 1, 2019.

Supplemental balance sheet information related to the Company's finance leases as of March 30, 2019:



	March 30, 2019
Finance lease assets, net, included in property plant and equipment	$	618

Current portion of long-term debt	400
Long-term debt, less current portion	447
Total principal payable on finance leases	847

Supplemental cash flow information related to our operating leases was as follows for the period ended March 30, 2019:



	Thirteen Weeks Ended March 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	4,631
Operating cash flows from finance leases	10
Financing cash flows from finance leases	142

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Maturities of our lease liabilities for all operating and finance leases are as follows as of March 30, 2019:



	Operating Leases			Finance Leases
Less than one year	$	16,702		$	453
1 to 2 years	13,551			259
2 to 3 years	11,922			148
3 to 4 years	10,456			58
4 to 5 years	8,353			9
After 5 years	37,088			—
Total future minimum rental commitments	98,072			927
Less - amounts representing interest	(21,909		)	(80		)
Present value of lease liabilities	$	76,163		$	847

As of March 30, 2019, the Company has additional operating leases for warehouse equipment and a new office building being constructed by the Company’s landlord that had not yet commenced with estimated future minimum rental commitments of approximately $22,013.

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

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.

12. Derivatives and Hedging:

The Company uses derivative financial instruments to manage our exposures to (1) interest rate fluctuations on our floating rate senior debt 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.

Interest Rate Swap Agreements

On September 3, 2014, the Company entered into two forward Interest Rate Swap Agreements (the “2014 Swaps”) with three-year terms for notional amounts of $90,000 and $40,000. The forward start date of the 2014 Swaps was October 1, 2015 and the termination date is September 30, 2018. The 2014 Swaps fix the interest rate at 2.2% plus the applicable interest rate margin of 3.5% for an effective rate of 5.7%. The interest rate on the term loan was 5.7% at September 29, 2018.

On January 8, 2018, the Company entered into a forward Interest Rate Swap Agreement ~~(the "2018 Swap"~~("2018 Swap 1") with three-year terms for notional amounts of $90,000. The forward start date of the 2018 Swap was September 30, 2018 and the termination date is June 30, 2021. The 2018 ~~Swaps fix the~~Swap 1 has a determined interest rate atof 2.3% plus the applicable interest rate margin of ~~3.5%~~4.0% for an effective rate of ~~5.8%~~6.3%.

On November 8, 2018, the Company entered into another new forward Interest Rate Swap Agreement ("2018 Swap 2")with three-year terms for $60,000 notional amount. The ~~2014 Swaps were terminated in September~~forward start date of the 2018 Swap 2 was November 30, 2018 and ~~therefore had a fair value~~the

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termination date is November 30, 2022. The 2018 Swap 2 has an interest rate of ~~September 29, 2018.~~ 2.5% plus the applicable interest rate margin of 4.0% for an effective rate of 6.5%.

The fair value of the 2018 ~~Swap~~Swaps was ~~$1,300~~$2,097 as of ~~September 29, 2018.~~March 30, 2019. These were reported on the condensed consolidated balance sheet in other non-current ~~assets.~~liabilities. An increase in other expense recorded in the statement of comprehensive loss for the ~~favorable~~unfavorable change of ~~$1,677~~$1,113 in fair value since December ~~30, 2017.~~29, 2018.

The ~~total~~ fair value of ~~the 2014 Swaps~~2018 Swap 1 was ~~$392~~$394 as of December ~~30, 2017~~29, 2018 and it was reported on the ~~condensed~~ consolidated balance sheet in other ~~current liabilities.~~non-current assets. The fair value of 2018 Swap 2 was $1,378 and it was reported on the consolidated balance sheet in other non-current liabilities as of December 29, 2018.

The Company's interest rate swap agreements ~~did~~do not qualify for hedge accounting treatment because they did not meet the provisions specified in ASC 815, Derivatives and Hedging (“ASC 815”). Accordingly, the gain or loss on these derivatives was recognized in current earnings.

Foreign Currency Forward Contracts

During ~~2017~~2018 and ~~2018~~2019 the Company entered into multiple foreign currency forward contracts. ~~The table below summarizes the maturity dates and the fixed exchange rates of the contracts outstanding at:~~

September 29, 2018 December 30, 2017
Maturity date range:
   Minimum October 2018 January 2018
   Maximum December 2018 April 2018
Fixed exchange rate range:
   Minimum 1.2942 1.3201
   Maximum 1.3200 1.3498

The purpose of the Company's foreign currency forward contracts is to manage the Company's exposure to fluctuations in the exchange rate of the Canadian dollar.

The total notional amount of contracts outstanding was C$~~8,690~~3,205 and C$~~2,993~~5,790 as of ~~September~~March 30, 2019 and December 29, 2018, ~~and December 30, 2017,~~ respectively. The total fair value of the outstanding foreign currency forward contracts was ~~$64~~$13 and ~~$140~~$152 as of

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~~September 29, 2018~~ March 30, 2019 and December ~~30, 2017,~~29, 2018, respectively, and was reported on the condensed consolidated balance sheet in other current liabilities. An increase in other income of ~~$8,~~$114, including contracts settled during the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018,~~March 30, 2019, was recorded in the statement of comprehensive ~~income (loss)~~loss for the change in fair value from December ~~30, 2017.~~29, 2018.

The Company's foreign currency forward contracts ~~did~~do not qualify for hedge accounting treatment because they did not meet the provisions specified in ASC 815. Accordingly, the gain or loss on these derivatives was recognized in current earnings.

The Company does not enter into derivative transactions for speculative purposes and, therefore, holds no derivative instruments for trading purposes.

Additional information with respect to the fair value of derivative instruments is included in Note 1213 - Fair Value Measurements.

~~12.~~13. Fair Value Measurements:

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. The guidance also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:



Level 1:		Quoted market prices in active markets for identical assets or liabilities.
Level 2:		Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3:		Unobservable inputs reflecting the reporting entity’s own assumptions.

The following tables set forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis during the period, by level, within the fair value hierarchy:

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	As of September 29, 2018										As of March 30, 2019
	Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3		Total
Trading securities	$	2,109	$	—		$	—	$	2,109		$	1,623	$	—		$	—	$	1,623
Interest rate swaps	—		1,300			—		1,300			—		(2,097		)	—		(2,097		)
Foreign exchange forward contracts	—		(64		)	—		(64		)	—		(13		)	—		(13		)

	As of December 30, 2017										As of December 29, 2018
	Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3		Total
Trading securities	$	2,294	$	—		$	—	$	2,294		$	1,905	$	—		$	—	$	1,905
Interest rate swaps	—		(392		)	—		(392		)	—		(984		)	—		(984		)
Foreign exchange forward contracts	—		(140		)	—		(140		)	—		(152		)	—		(152		)

Trading securities are valued using quoted prices on an active exchange. Trading securities represent assets held in a Rabbi Trust to fund deferred compensation liabilities and are included as other assets on the accompanying condensed consolidated balance sheets.

The Company utilizes interest rate swap contracts to manage our targeted mix of fixed and floating rate debt, and these contracts are valued using observable benchmark rates at commonly quoted intervals for the full term of the swap contracts. As of ~~September 29, 2018,~~March 30, 2019, the 2018 Swap1 and 2018 Swap ~~was~~2 were recorded as other non-current ~~assets~~liabilities on the accompanying condensed consolidated balance sheets. As of December ~~30, 2017, the 2014 Swaps were included in~~29, 2018, 2018 Swap 1 was recorded as a non-current asset and 2018 Swap 2 was recorded as other ~~current~~non-current liabilities on the accompanying condensed consolidated balance sheets.

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The Company utilizes foreign exchange forward contracts to manage our exposure to currency fluctuations in the Canadian dollar versus the U.S. dollar. The forward contracts were valued using observable benchmark rates at commonly quoted intervals during the term of the forward contract. As of ~~September~~March 30, 2019 and December 29, 2018, ~~and December 30, 2017,~~ the foreign exchange forward contracts were included in other current liabilities on the accompanying condensed consolidated balance sheets.

The fair value of the Company's fixed rate senior notes and junior subordinated debentures as of ~~September~~March 30, 2019 and December 29, 2018 ~~and December 30, 2017~~ were determined by utilizing current trading prices obtained from indicative market data. As a result, the fair value measurements of the Company's senior term notes and debentures are considered to be Level 2.


	September 29, 2018				December 30, 2017				March 30, 2019				December 29, 2018
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
6.375% Senior Notes	$	325,833	$	296,175	$	325,000	$	325,050	$	326,388	$	295,350	$	326,110	$	267,300
Junior Subordinated Debentures	126,531		130,594		127,475		148,098		125,866		147,423		126,202		130,636

Cash, accounts receivable, accounts payable, and accrued liabilities are reflected in the condensed consolidated financial statements at book value, which approximates fair value, due to the short-term nature of these instruments. The carrying amount of the long-term debt under the revolving credit facility approximates the fair value at ~~September~~March 30, 2019 and December 29, 2018 ~~and December 30, 2017~~ as the interest rate is variable and approximates current market rates. The Company also believes the carrying amount of the long-term debt under the senior term loan approximates the fair value at ~~September~~March 30, 2019 and December 29, 2018 ~~and December 30, 2017~~ because, while subject to a minimum LIBOR floor rate, the interest rate approximates current market rates of debt with similar terms and comparable credit risk.

~~13.~~14. Segment Reporting:

The Company’s segment reporting structure uses the Company’s management reporting structure as the foundation for how the Company manages its business. The Company periodically evaluates its segment reporting structure in accordance with ASC 350-20-55 and has concluded that it has three reportable segments as of ~~September 29, 2018:~~March 30, 2019: The United States, Canada, and All Other. The United States segment and the Canada segment are considered material by the Company’s management as of ~~September 29, 2018.~~March 30, 2019. The Company's other segments have been combined in the "All Other" category. The Company evaluates the

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performance of its segments based on revenue and income (loss) from operations, and does not include segment assets or nonoperating income/expense items for management reporting purposes.

The table below presents revenues and income (loss) from operations for our reportable segments for the thirteen ~~and thirty-nine~~ weeks ended ~~September 29, 2018~~March 30, 2019 and thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017.~~March 31, 2018.


	Thirteen Weeks Ended September 29, 2018			Thirteen Weeks Ended September 30, 2017		Thirty-nine Weeks Ended September 29, 2018			Thirty-nine Weeks Ended September 30, 2017		Thirteen Weeks Ended March 30, 2019			Thirteen Weeks Ended March 31, 2018
Revenues
United States	$	204,450		$	179,705	$	581,238		$	520,557	$	255,102		$	175,232
Canada	37,422			37,430		110,574			106,292		29,983			30,586
All Other	1,967			1,820		5,776			5,145		2,574			1,777
Total revenues	$	243,839		$	218,955	$	697,588		$	631,994	$	287,659		$	207,595
Segment income (loss) from operations
United States	$	8,101		$	12,352	$	30,452		$	31,739	$	(716	)	$	10,924
Canada	(1,514		)	1,480		(1,671		)	3,140		(334		)	(2,021		)
All Other	319			152		613			707		202			214
Total income from operations	$	6,906		$	13,984	$	29,394		$	35,586
Total (loss) income from operations											$	(848	)	$	9,117

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~~14. Subsequent Events:~~

On October 1, 2018, the Company completed the acquisition of Big Time Products ("Big Time"), a leading provider of personal protection and work gear products for a purchase price of approximately $346,000. The acquisition was financed with additional term loan funding of $365,000. The Company entered into an amendment (the “Amendment”) to the term loan credit agreement dated as of May 31, 2018, which provided for $365 million of incremental term loans. The Amendment provided that the pricing for all funded term loans, including all existing term loans and the new incremental term loans, are at the either adjusted LIBOR plus 4.00% per annum or an alternate base rate plus 3.00% per annum, which reflects a 0.50% per annum margin increase with respect to the existing term loans. The new incremental term loans otherwise have the same terms, including guarantees, collateral, and a stated maturity of May 31, 2025, as the existing term loans. See Note 10 - Long Term Debt for additional details on the outstanding term loan.

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion provides information which the Company’s management believes is relevant to an assessment and understanding of the Company’s operations and financial condition. This discussion should be read in conjunction with the condensed consolidated financial statements and accompanying notes in addition to the consolidated statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December ~~30, 2017.~~29, 2018.

Forward-Looking Statements

Certain disclosures related to acquisitions, refinancing, capital expenditures, resolution of pending litigation, and realization of deferred tax assets contained in this quarterly 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. In some cases, you can identify forward-looking statements 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 management’s current expectations, assumptions, and projections about future events. Although management believes 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 the Company’s 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 the Company’s Annual Report on Form 10-K for the year ended December ~~30, 2017.~~29, 2018. 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 or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this report and the risks and uncertainties discussed under the caption “Risk Factors” set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December ~~30, 2017;~~29, 2018; they should not be regarded as a representation by the Company or any other individual. We undertake no obligation to update publicly 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 report might not occur or be materially different from those discussed.

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 the wholly-owned subsidiary, The Hillman Group, Inc. and its wholly-owned subsidiaries (collectively, “Hillman Group”). 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; and identification items, such as tags and letters, numbers, and signs. We support our product sales with services that include design and installation of merchandising systems and maintenance of appropriate in-store inventory levels.

On May 31, 2018, we entered into a new term credit agreement consisting of a a new funded term loan of $530 million and $165 million delayed draw term loan facility. Concurrently, we entered into a new $150 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.We recorded a loss on the refinancing of $8.5 million related to deferred financing costs in the thirty-nine weeks ended September 29, 2018. See Note 10 - Long Term Debt of the Notes to the Condensed Consolidated Financial statements for additional information.

On August 10, 2018, we completed the acquisition of Minute Key Holdings, Inc. (“MinuteKey”), an innovative leader in self-service key duplicating kiosks. We paid a cash purchase price of approximately $156.3 million. See Note 4 - Acquisitions of the Notes to the Condensed Consolidated Financial statements for additional information on the acquisition. We financed the acquisition by drawing $165 million on the delayed draw facility of our Term Loan (see Note 10 - Long Term Debt of the Notes to the Condensed Consolidated Financial statements for additional information).

On October 1, 2018, subsequent to quarter end, we completed the acquisition of Big Time Products ("Big Time"), a leading provider of personal protection and work gear products. The acquisition will enable us to expand into adjacent categories with Big Time’s expansive and innovative products in the hardware, automotive, garden, and cleaning industries that include work gloves, household gloves, knee pads, tool rigs and aprons, and job site storage. We paid a cash purchase price of approximately $346 million and financed the transaction through incremental term loans of $365 million.

As part of the ongoing restructuring of our Canada segment operations, we are finalizing additional restructuring plans that may include consolidating facilities, exiting certain lines of business, and rationalizing stock keeping units (“SKUs”). The intended result of the Canada restructuring will be a more streamlined and scalable operation focused on delivering optimal service and a broad offering of products across our core categories. We incurred charges of $2.5 million and $2.8 million in the thirteen and thirty-nine weeks ended September 29, 2018, respectively, and expect to incur increased restructuring related charges and capital expenditures in our Canada segment over the next year as we finalize and implement the plan. See Note 9 - Restructuring of the Notes to the Condensed 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.

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~~decreased in value relative to the CNY by approximately ~~7.2% in 2016, decreased by~~ 6.3% in 2017, ~~and~~ increased by ~~5.6%~~5.7% in 2018, and decreased by 2.4% during the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018.~~March 30, 2019. The U.S. dollar declined in value relative to the Taiwan dollar by approximately ~~1.2% in 2016, declined by~~ 8.5% in 2017, increased by 3.3% in 2018, and increased by ~~2.8%~~0.8% during the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018.~~March 30, 2019.

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 the 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 in value relative to the Canadian dollar by approximately ~~3.0% in 2016, decreased by~~ 6.6% in 2017, ~~and~~ increased by ~~3.2%~~8.7% in 2018, and decreased by 2.0% during the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018.~~March 30, 2019. 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. ~~We expect that the~~The recently implemented U.S. tariffs on steel and aluminum and other imported goods ~~will impact~~has increased our product costs ~~during the fourth quarter of 2018. This~~and required us to ~~take pricing action to offset~~increase prices on the increasing product costs. The price increase will be effective in the fourth quarter of 2018. The recently announced tariffs did not have a material impact on our results of operations in the third quarter of 2018.affected products.

Results of Operations

The following analysis of results of operations includes a brief discussion of the factors that affected our operating results and a comparative analysis of the thirteen ~~and thirty-nine~~ weeks ended ~~September 29, 2018~~March 30, 2019 and the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017.~~March 31, 2018.

Thirteen Week Period Ended ~~September 29, 2018~~March 30, 2019 vs the Thirteen Week Period Ended ~~September 30, 2017~~March 31, 2018


	Thirteen Weeks Ended September 29, 2018					Thirteen Weeks Ended September 30, 2017						Thirteen Weeks Ended March 30, 2019					Thirteen Weeks Ended March 31, 2018
(dollars in thousands)	Amount			% of Net Sales		Amount			��	% of Net Sales		Amount			% of Net Sales		Amount			% of Net Sales
Net sales	$	243,839		100.0	%	$	218,955			100.0	%	$	287,659		100.0	%	$	207,595		100.0	%
Cost of sales (exclusive of depreciation and amortization shown separately below)	130,321			53.4	%	119,468				54.6	%	165,921			57.7	%	109,590			52.8	%
Selling, general and administrative expenses	83,575			34.3	%	69,165				31.6	%	91,835			31.9	%	71,076			34.2	%
Depreciation	12,004			4.9	%	7,300				3.3	%	15,816			5.5	%	8,942			4.3	%
Amortization	10,437			4.3	%	9,500				4.3	%	14,765			5.1	%	9,723			4.7	%
Other (income) expense	596			0.2	%	(462		)		(0.2	)%	170			0.1	%	(853		)	(0.4	)%
Income from operations	6,906			2.8	%	13,984				6.4	%
Income (loss) from operations												(848		)	(0.3	)%	9,117			4.4	%
Interest expense, net of investment income	19,179			7.9	%	15,844				7.2	%	29,620			10.3	%	16,628			8.0	%
Refinancing charges	—			—	%	—				—	%
Loss before income taxes	(12,273		)	(5.0	)%	(1,860		)		(0.8	)%	(30,468		)	(10.6	)%	(7,511		)	(3.6	)%
Income tax benefit	(1,565		)	(0.6	)%	(538		)		(0.2	)%
Income tax expense												4,800			1.7	%	2,806			1.4	%
Net loss	$	(10,708	)	(4.4	)%	$	(1,322	)		(0.6	)%	$	(35,268	)	(12.3	)%	$	(10,317	)	(5.0	)%

Net Sales

Net sales for the ~~third~~first quarter of ~~2018~~2019 were ~~$243.8~~$287.7 million, an increase of approximately ~~$24.9~~$80.1 million compared to net sales of ~~$219.0~~$207.6 million for the ~~third~~first quarter of ~~2017.~~2018. The increase from prior year was primarily due to the ~~acquisition of ST Fastening Systems in the fourth quarter of 2017 which added approximately $12.0 million in net sales in the third quarter of 2018. Additionally, the acquisition~~acquisitions of MinuteKey in the third quarter of 2018 and Big Time Products in the fourth quarter of 2018 which added approximately ~~$7.3~~$11.7 million and $63.8 million, respectively, in net ~~sales. Key~~sales in the first quarter of 2018. Construction fastener products and ~~key accessory~~builders hardware sales increased ~~$3.4~~$6.8 million and $2.4 million, respectively, due to new product line roll outs with customers. These increases were offset by a decrease of $2.2 million in our ~~traditional market~~sales of letters, numbers and signs. Sales in our Canada segment decreased $0.6 million due to the closure of a ~~key program roll out~~manufacturing facility and exiting the related product lines (see Note 9 - Restructuring of the Notes to ~~a new customer. Finally, sales of hurricane related products increased $2.4 million.~~the Condensed Consolidated Financial statements for additional information).

Cost of Sales

Our cost of sales was ~~$130.3~~$165.9 million, or ~~53.4%~~57.7% of net sales, in the ~~third~~first quarter of ~~2018,~~2019, an increase of approximately ~~$10.9~~$56.3 million compared to ~~$119.5~~$109.6 million, or ~~54.6%~~52.8% of net sales, in the ~~third~~first quarter of ~~2017.~~2018. The ~~decrease~~increase of ~~1.2%~~4.9% in cost of sales, expressed as a percent of net sales, in the ~~third~~first quarter of ~~2018~~2019 compared to the ~~third~~first quarter of ~~2017~~2018 was primarily due to a higher mix of personal protective equipment and construction fastener products and a reduction of $4.1

million in cost of sales recorded in the first quarter of 2018 due to an adjustment of our accrual for anti-dumping duties ~~expensed in~~based on the ~~third quarter~~final results of ~~2017.~~the Department of Commerce’s administrative review of nails from China. See Note 6 - Commitments and Contingencies of the Notes to the Condensed Consolidated Financial statements for additional information. Additionally, net sales was reduced by $4.1 million in the first quarter of 2019 for payments made to customers associated with the new product line roll outs.

Expenses

Selling, general, and administrative ("SG&A") expenses were approximately ~~$83.6~~$91.8 million in the thirteen weeks ended ~~September 29, 2018,~~March 30, 2019, an increase of approximately ~~$14.4~~$20.8 million, compared to ~~$69.2~~$71.1 million in the thirteen weeks ended ~~September 30, 2017.~~March 31, 2018. The following changes in underlying trends impacted the change in operating expenses:

Selling expense was ~~$35.3~~$39.8 million in the ~~third~~first quarter of ~~2018,~~2019, an increase of ~~$4.8~~$8.7 million compared to ~~$30.5~~$31.1 million in the ~~third~~first quarter of ~~2017.~~2018. The increase in selling expense was primarily due to the ~~acquisition~~acquisitions of MinuteKey and Big Time which added ~~$3.4~~$5.6 million and $3.1 million in selling expense in the third quarter. Additionally, labor and benefit costs increased $1.1 million. Finally, the acquisition of ST Fastening Systems added $0.7 million in selling expense in the current year. These increases were offset by a decrease of $0.5 million in the cost of updating customer store labels for the implementation of a new pricing program.quarter, respectively.

Warehouse and delivery expenses were ~~$31.7~~$33.4 million in the first quarter of 2019, an increase of $5.0 million compared to $28.4 million in the first quarter of 2018. The acquisition of Big Time added $2.1 million in warehouse costs in the first quarter of 2019. The remaining increase was driven by increased labor, benefits, freight and maintenance costs.

General and administrative (“G&A”) expenses were $18.7 million in the first quarter of 2019, an increase of $7.1 million compared to $11.6 million in the first quarter of 2018. The increase was primarily due to the acquisitions of Big Time Products and MinuteKey, which added and $3.0 million and $1.8 million, respectively, in G&A expense in the current year. Additionally, we incurred $2.0 of expense for retention and long term incentive compensation and $1.1 million in integration related costs associated with MinuteKey and Big Time.

Depreciation expense was $15.8 million in the first quarter of 2019 compared to depreciation expense of $8.9 million in the first quarter of 2018. The increase in depreciation expense was due to $3.0 million in additional depreciation from the acquisition of MinuteKey. The remaining increase was driven by our investment in new, state of the art key cutting technology, the KeyKrafter™. Amortization expense was $14.8 million in the first quarter of 2019 compared to $9.7 million in the first quarter of 2018. The increase in amortization expense was driven by the acquisitions of MinuteKey in the third quarter of 2018 ~~an increase~~and Big Time Products in the fourth quarter of ~~$3.6 million compared to $28.1~~2018.

Other expense was $0.2 million in the ~~third~~first quarter of ~~2017. The increase was primarily due the acquisition~~2019 compared to other income of ~~ST Fastening Systems, which added $1.5~~$0.9 million in ~~warehouse and delivery expense in~~ the ~~current year. Labor, benefits, freight and maintenance costs increased $1.4 million from the prior year. Finally, we incurred $0.3 million of additional warehouse costs in the third~~first quarter of ~~2018 related to~~2018. In the ~~restructuring~~first quarter of 2019 other income consisted of a loss on the mark-to-market adjustment of our ~~Canada segment, see~~interest rate swaps of $1.1 million, offset by a gain the sale of machinery and equipment of $0.5 million (see Note 9 - Restructuring of the Notes to the Condensed Consolidated Financial statements for additional ~~information.~~

~~General~~information), and ~~administrative (“G&A”) expenses were $16.6 million~~exchange rate gains of $0.4 million. Other income in the ~~third~~first quarter of 2018 ~~an increase~~was comprised of $6.1 million compared to $10.5 million in the third quarter of 2017. The increase was primarily due to $4.5 million in acquisition related costs associated with MinuteKey and Big Time. Additionally, the acquisitions of MinuteKey and ST Fastening Systems added $1.3 million and $1.1 million, respectively, in G&A expense in the current year. These increases were offset by reductions in corporate overhead charges.

Depreciation expense was $12.0 million in the third quarter of 2018 compared to depreciation expense of $7.3 million in the third quarter of 2017. The increase in depreciation expense was due to $1.6 million in additional depreciation from the acquisition of MinuteKey and $0.5 million from the acquisition of ST Fastening Systems. The remaining increase was driven by in new, state of the art key cutting technology, the KeyKrafter™, as well as engraving machines and the implementation of our ERP system in Canada. Amortization expense was $10.4 million in the third quarter of 2018 compared to $9.5 million in the third quarter of 2017. The increase in amortization expense was driven by the acquisitions of ST Fastening Systems in the fourth quarter of 2017 and MinuteKey in the third quarter of 2018.

Other expense was $0.6 million in the third quarter of 2018 compared to other income of $0.5 million in the third quarter of 2017. In the third quarter of 2018, we recorded an asset impairment of $0.8 million related to restructuring activities in our Canada segment. See Note 9 - Restructuring of the Notes to the Condensed Consolidated Financial statements for additional information.We recorded immaterial exchange rate losses in the third quarter of 2018 as compared to a gain ~~of $0.3 million in the third quarter of 2017. The remainder of other income and expense for both periods is management fees, the gain or loss~~ on the mark-to-market adjustment of our interest rate swap ~~and losses on the disposal~~ of ~~fixed assets.~~$1.0 million, partially offset by insignificant exchange rate losses.

~~In the second quarter of~~During 2018 we refinanced our term loan and ~~revolver. In~~revolver, increasing the ~~third quarter of 2018 we drew $165 million on the delayed draw facility of the revolver.~~ outstanding term loan by approximately $527.5 million.

This activity, along with additional draws on our revolving credit facility during the year led to increased interest expense. See Note 10 - Long Term Debt of the Notes to the Condensed Consolidated Financial statements for additional information.

~~Thirty-nine Week Period Ended September 29, 2018 vs the Thirty-nine Week Period Ended September 30, 2017~~

Thirty-nine Weeks Ended
September 29, 2018 Thirty-nine Weeks Ended
September 30, 2017
(dollars in thousands) Amount
% of
Net Sales
Amount
% of
Net Sales
Net sales $ 697,588
100.0 % $ 631,994
100.0 %
Cost of sales (exclusive of depreciation and amortization shown separately below) 373,938
53.6 % 341,315
54.0 %
Selling, general and administrative expenses 233,448
33.5 % 203,091
32.1 %
Depreciation 30,481
4.4 % 25,473
4.0 %
Amortization 29,872
4.3 % 28,442
4.5 %
Other (income) expense 455
0.1 % (1,913 ) (0.3 )%
Income from operations 29,394
4.2 % 35,586
5.6 %
Interest expense, net of investment income 53,226
7.6 % 47,132
7.5 %
Refinancing charges 8,542
1.2 % —
— %
Loss before income taxes (32,374 ) (4.6 )% (11,546 ) (1.8 )%
Income tax expense (benefit) 2,182
0.3 % (4,759 ) (0.8 )%
Net loss $ (34,556 ) (5.0 )% $ (6,787 ) (1.1 )%

~~Net Sales~~

Net sales for the thirty-nine weeks ended September 29, 2018 were $697.6 million, an increase of approximately $65.6 million compared to net sales of $632.0 million for the thirty-nine weeks ended September 30, 2017. The increase from prior year was primarily due to the acquisition of ST Fastening Systems in the fourth quarter of 2017 which added approximately $35.7 million in net sales in 2018. Key and key accessory sales increased by $10.8 million primarily due to the key program roll out to a new key customer in 2018. Sales of hurricane related products increased $8.2 million. The acquisition of MinuteKey in the third quarter of 2018 added sales of $7.3 million. Lastly, sales in Canada, excluding acquisitions, increased by $4.1 million primarily due to the roll out of wall anchor and builders' hardware products to retail customers.

~~Cost of Sales~~

Our cost of sales was $373.9 million, or 53.6% of net sales, in the thirty-nine weeks ended September 29, 2018, an increase of approximately $32.6 million compared to $341.3 million, or 54.0% of net sales, in the thirty-nine weeks ended September 30, 2017. The decrease of 0.4% in cost of sales, expressed as a percent of net sales, was primarily driven by adjustments to our accrual for anti-dumping duties. In the thirty-nine weeks ended September 29, 2018 we recorded reduction of $4.1 million in cost of sales 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. In the thirty-nine weeks ended September 30, 2017 we recorded expense of $6.3 million in cost of sales due to an adjustment to our accrual for anti-dumping duties based on the preliminary review results available at that time. See Note 6 - Commitments and Contingencies of the Notes to the Condensed Consolidated Financial statements for additional information. This reduction was partially offset by the impact of commodity inflation which increased our cost of sales.

~~Expenses~~

Selling, general, and administrative ("SG&A") expenses were approximately $233.4 million in the thirty-nine weeks ended September 29, 2018, an increase of approximately $30.4 million, compared to $203.1 million in the thirty-nine weeks ended September 30, 2017. The following changes in underlying trends impacted the change in operating expenses:

Selling expense was $99.2 million in the thirty-nine weeks ended September 29, 2018, an increase of $10.6 million compared to $88.6 million in the thirty-nine weeks ended September 30, 2017. The increase in selling expense was

primarily due to increasing labor and benefit costs of $3.3 million and the $2.0 million cost of updating customer store labels for a new pricing program. Additionally, the acquisitions of MinuteKey and ST Fastening Systems added $3.4 million and $2.0 million, respectively, in selling expense in the current year.

Warehouse and delivery expenses were $92.8 million in the thirty-nine weeks ended September 29, 2018, an increase of $10.2 million compared to $82.6 million in the thirty-nine weeks ended September 30, 2017. The increase was primarily due to the acquisition of ST Fastening Systems, which added $4.1 million in warehouse and delivery expense in the current year. Labor, benefit, freight, and maintenance costs also increased $3.8 million from the prior year. We incurred $1.3 million in additional expense to relocate our distribution center in Dallas, Texas to a larger facility in the same area in order to optimize our distribution network. Finally, we incurred additional warehouse expense of $0.6 million related to restructuring activities in our Canada segment (see Note 9 - Restructuring of the Notes to the Condensed Consolidated Financial statements for additional information).

General and administrative (“G&A”) expenses were $41.5 million in the thirty-nine weeks ended September 29, 2018, an increase of $9.6 million compared to $31.9 million in the thirty-nine weeks ended September 30, 2017. The increase was primarily due to $6.9 million in acquisition cots related to MinuteKey and Big Time. Additionally, the acquisition of ST Fastening Systems added $2.9 million in G&A expense in the current year.

Depreciation expense was $30.5 million in the thirty-nine weeks ended September 29, 2018 compared to depreciation expense of $25.5 million in the thirty-nine weeks ended September 30, 2017. The increase in depreciation expense was due to $1.6 million in additional depreciation from the acquisition of MinuteKey and $1.5 million from the acquisition of ST Fastening Systems. The remaining increase was driven by new, state of the art key cutting technology, the KeyKrafter™, as well as engraving machines and the implementation of our ERP system in Canada. Amortization expense was $29.9 million in the thirty-nine weeks ended September 29, 2018 compared to $28.4 million in the thirty-nine weeks ended September 30, 2017. The increase amortization was driven by the acquisitions of ST Fastening Systems in the fourth quarter of 2017 and MinuteKey in the third quarter of 2018.

Other expense was $0.5 million in the thirty-nine weeks ended September 29, 2018 compared to other income of $1.9 million in the thirty-nine weeks ended September 30, 2017. We recorded an exchange rate loss of $0.8 million in the thirty-nine weeks ended September 29, 2018 as compared to a gain of $1.3 million in the thirty-nine weeks ended September 30, 2017. Additionally, in the thirty-nine weeks ended September 29, 2018 we recorded an asset impairment of $0.8 million related to restructuring activities in our Canada segment. See Note 9 - Restructuring of the Notes to the Condensed Consolidated Financial statements for additional information. These losses were offset by gains on the mark to market adjustment of our interest rate swap. In the thirty-nine weeks ended September 29, 2018, we recorded a gain of $1.7 million on the mark to market adjustments on the interest rate swaps as compared to a gain of $1.0 million in the thirty-nine weeks ended September 30, 2017. The remainder of other income and expense for both periods is management fees and losses on the disposal of fixed assets.

In the third quarter of 2018, we refinanced our term loan and revolving credit facility, incurring a loss of $8.5 million related to deferred financing costs and additional interest expense. See Note 10 - Long Term Debt of the Notes to the Condensed Consolidated Financial statements for additional information.

Results of Operations – Operating Segments

The following table provides supplemental information regarding our net sales and profitability by operating segment for the thirteen ~~and thirty-nine~~ weeks ended ~~September 29, 2018~~March 30, 2019 and the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017~~March 31, 2018 (dollars in thousands):


	Thirteen Weeks Ended September 29, 2018			Thirteen Weeks Ended September 30, 2017		Thirty-nine Weeks Ended September 29, 2018			Thirty-nine Weeks Ended September 30, 2017		Thirteen Weeks Ended March 30, 2019			Thirteen Weeks Ended March 31, 2018
Revenues
United States	$	204,450		$	179,705	$	581,238		$	520,557	$	255,102		$	175,232
Canada	37,422			37,430		110,574			106,292		29,983			30,586
All Other	1,967			1,820		5,776			5,145		2,574			1,777
Total revenues	$	243,839		$	218,955	$	697,588		$	631,994	$	287,659		$	207,595
Segment income (loss) from operations
United States	$	8,101		$	12,352	$	30,452		$	31,739	$	(716	)	$	10,924
Canada	(1,514		)	1,480		(1,671		)	3,140		(334		)	(2,021		)
All Other	319			152		613			707		202			214
Total income from operations	$	6,906		$	13,984	$	29,394		$	35,586
Total income (loss) from operations											$	(848	)	$	9,117

The Thirteen Week Period Ended ~~September 29, 2018~~March 30, 2019 vs the Thirteen Week Period Ended ~~September 30, 2017~~March 31, 2018

Net Sales

Net sales for the thirteen weeks ended ~~September 29, 2018~~March 30, 2019 increased ~~$24.9~~$80.1 million compared to the net sales for the thirteen weeks ended ~~September 30, 2017.~~March 31, 2018.

For the United States operating segment, net sales increased by ~~$24.7 million~~$79.9 millions primarily due to the ~~acquisition~~acquisitions of ~~ST Fastening Systems in the fourth quarter of 2017 which added $12.0 million in net sales~~MinuteKey in the third quarter of 2018 and Big Time Products in the ~~acquisition~~fourth quarter of ~~MinuteKey~~2018 which added approximately $11.4 million and $62.2 million, respectively, in net sales in the first quarter of ~~$7.2~~2018. Construction fastener products and builders hardware sales increased $6.8 million and $2.4 million, respectively, due to new product line roll outs with customers. These increases were offset by a decrease of $2.2 million in our ~~United States operating segment. Key~~sales of Letters, Numbers and ~~key accessory sales increased $3.4 million in our traditional market~~Signs due to the loss of a ~~key program roll out to a new~~ customer. ~~Finally, sales of hurricane related products increased $2.4 million.~~

~~Net sales for our Canada operating segment were consistent with the comparable prior year period.~~

~~Income from Operations~~

~~Income from operations for the thirteen weeks ended September 29, 2018 decreased $7.1 million compared to income from operations for the thirteen weeks ended September 30, 2017.~~

Income from operations of our United States segment decreased by approximately $4.3 million in the thirteen weeks ended September 29, 2018 to $8.1 million as compared to $12.4 million in the thirteen weeks ended September 30, 2017. The increase in sales was offset by higher operating costs as we incurred $4.5 million in acquisition related costs for MinuteKey and Big Time. Labor, benefit, and freight costs increased $2.7 million from prior year. The acquisitions of ST Fastening Systems and MinuteKey also contributed $0.4 million and $(0.6) million, respectively, in income from operations in the third quarter of 2018.

~~Loss from operations~~Sales in our Canada segment ~~for~~decreased $0.6 million due to the ~~thirteen weeks ended September 29, 2018~~closure of ~~$1.5 million was $3.0 million lower than income of $1.5 million in~~a manufacturing facility and exiting the ~~thirteen weeks ended September 30, 2017. In the thirteen weeks ended September 29, 2018 we incurred $2.5 million in restructuring~~ related ~~charges for our Canada segment consisting of inventory write offs, asset impairments, labor and severance, and consulting costs, see~~product lines (see Note 9 - Restructuring of the Notes to the Condensed Consolidated Financial statements for additional ~~information. Finally, we experienced rising labor, freight, and warehouse maintenance charges of $0.4 million.~~

~~The Thirty-nine Week Period Ended September 29, 2018 vs the Thirty-nine Week Period Ended September 30, 2017~~

~~Net Sales~~

Net sales for the thirty-nine weeks ended September 29, 2018 increased $65.6 million compared to the net sales for the thirty-nine weeks ended September 30, 2017. For the United States operating segment, net sales increased by $60.7 million primarily due to the acquisition of ST Fastening Systems in the fourth quarter of 2017 which added $35.7 million in net sales in the thirty-nine weeks ended September 29, 2018. Key and key accessory sales increased by $10.8 million primarily due to the key program roll out to a new key customer in 2018. Sales of hurricane related products increased $8.2 million. The acquisition of MinuteKey in the third quarter of 2018 added sales of $7.2 million.

~~Net sales for our Canada operating segment increased by $4.3 million primarily due to the roll out of wall anchor and builders' hardware products to retail customers.~~information).

Income from Operations

Income from operations for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018~~March 30, 2019 decreased ~~$6.2~~$10.0 million compared to income from operations for the ~~thirty-nine~~thirteen weeks ended ~~September 30, 2017.~~March 31, 2018.

Income from operations of our United States segment decreased by approximately ~~$1.3~~$11.6 million in the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018~~March 30, 2019 to ~~$30.5~~a loss of $0.7 million as compared to ~~$31.7~~income of $10.9 million in the ~~thirty-nine~~thirteen weeks ended ~~September 30, 2017.~~March 31, 2018. The increase in sales was ~~partially~~ offset by higher ~~operating costs as labor, benefit,~~cost of goods sold primarily due to a higher mix of personal protective equipment and ~~freight costs~~construction fastener products and a reduction of $4.1 million in cost of sales recorded in the first quarter of 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 6 - Commitments and Contingencies of the Notes to the Condensed Consolidated Financial statements for additional information. Additionally, net sales was reduced by $4.1 million in the first quarter of 2019 for payments made to customers associated with the new product line roll outs. We also incurred additional depreciation expense of $6.4 million driven by the prior year acquisitions along with additional depreciation expense driven by our investment in new, state of the art key cutting technology, the KeyKrafter™. Finally, amortization expense increased ~~$6.6~~$5.1 million ~~compared~~due to the prior year. We also incurred $6.9 million of acquisition related costs driven by MinuteKey and Big Time, $2.0 million in costs of updating customer store labels for a new pricing program, and $1.3 million in additional expense to relocate our distribution center in Dallas, Texas to a larger facility in the same area in order to optimize our distribution network. The acquisitions of ST Fastening Systems and MinuteKey contributed $2.4 million and $(0.6) million, respectively, in income from operations in the first half of 2018.year acquisitions.

Loss from operations in our Canada segment for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018~~March 30, 2019 of ~~$1.7~~$0.3 million ~~decreased $4.8 million as~~ compared to ~~income~~a loss of ~~$3.1~~$2.0 million in the ~~thirty-nine~~thirteen weeks ended ~~September 30, 2017 as~~March 31, 2018. In the ~~increase~~first quarter of 2019 we had other income of $0.9 million compared to immaterial expense in ~~sales~~the first quarter of 2018. The current year gain was ~~offset~~primarily driven by ~~restructuring charges of $2.8~~$0.5 million in ~~restructuring related charges for our Canada segment consisting~~gains on the disposal of ~~inventory write offs, asset impairments, labor~~assets and ~~severance, and consulting costs, see Note 9 - Restructuring~~$0.4 million in exchange rate gains. Additionally, in the first quarter of ~~the Notes to the Condensed Consolidated Financial statements for additional information.We experienced rising labor, freight, and warehouse maintenance charges of $1.7 million. Finally,~~2018, we incurred ~~an additional $1.0~~$0.6 million in ~~costs~~additional SG&A expense related to ~~completing~~ the implementation of our ERP ~~system.~~

system and the relocation of a distribution center.

Income Taxes

In the thirteen weeks ended ~~September 29, 2018,~~March 30, 2019, we recorded an income tax ~~benefit~~provision of ~~$1.6~~$4.8 million on pre-tax loss of ~~$12.3~~$30.5 million. The effective income tax rate was ~~12.8%~~(15.8)% for the thirteen weeks ended ~~September 29, 2018.~~ March 30, 2019.

In the ~~thirty-nine~~thirteen weeks ended ~~September 29,~~March 31, 2018, we recorded an income tax provision of ~~$2.2~~$2.8 million on a pre-tax loss of ~~$32.4~~$7.5 million. The effective income tax rate was ~~(6.7)~~(37.4)% ~~for the thirty-nine weeks ended September 29, 2018.~~

~~In the thirteen weeks ended September 30, 2017, we recorded an income tax benefit of $0.5 million on a pre-tax loss of $1.9 million. The effective income tax rate was 28.9%~~ for the thirteen weeks ended September 30, 2017. In the thirty-nine weeks ended September 30, 2017, we recorded an income tax benefit of $4.8 million on a pre-tax loss of $11.5 million. The effective income tax rate was 41.2% for the thirty-nine weeks ended September 30, 2017.March 31, 2018.

The effective income tax rate differed from the federal statutory tax rate in the thirteen ~~and thirty-nine~~ weeks ended ~~September 29, 2018~~March 30, 2019 primarily due to ~~new provisions introduced by~~ the ~~Tax Cuts and Jobs Act (the "Tax Act") including the new provision on~~ Global Intangible Low-Taxed Income ("GILTI") and the IRC Section 163(j) interest limitation. ~~In addition, the effective income tax rate was adversely impacted by non-deductible acquisition costs relating to MinuteKey and Big Time Products.~~ The remaining differences were due to ~~the lack of any~~state and foreign income ~~tax benefit recognized on losses in jurisdictions where valuation allowances are recorded against net deferred tax assets.~~

taxes and certain non-deductible expenses.

The effective income tax rate differed from the federal statutory tax rate in the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017~~March 31, 2018 primarily due to new provisions introduced by the ~~decrease in the valuation allowance attributable to a foreign subsidiary~~Tax Cuts and ~~certain non-deductible expenses.~~Jobs Act (the "Tax Act"). The ~~remaining differences between the~~ effective income tax rate ~~and~~differed from the federal statutory tax rate in the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017 were~~March 31, 2018 due to ~~state~~recognizing no benefit on losses in jurisdictions where valuation allowances are recorded against net deferred tax assets, certain non-deductible expenses, and ~~foreign income taxes.~~

several aspects of the Tax Act.

Liquidity and Capital Resources

The statements of cash flows reflect the changes in cash and cash equivalents for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018~~March 30, 2019 and the ~~thirty-nine~~thirteen weeks ended ~~September 30, 2017~~March 31, 2018 by classifying transactions into three major categories: operating, investing, and financing activities.

Net cash ~~provided~~used by operating activities for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018~~March 30, 2019 was ~~$5.9~~$2.3 million as compared to ~~$53.4~~$2.4 million of cash provided by operating activities in the comparable prior year period. Operating cash flows for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018~~March 30, 2019 were unfavorably impacted by ~~an increase~~a decrease in accounts payable due decreased inventory ~~due to commodity inflation and new business wins. Accounts receivable also increased due to higher sales. This was partially offset~~purchases. Operating cash flows for the thirteen weeks ended March 31, 2018 were were favorably impacted by an increase in accounts payable due to changes in payment terms and increased inventory purchases. Operating cash flows for the thirty-nine weeks ended September 30, 2017 were unfavorably impacted by an increase in accounts receivable due to higher sales. This was partially offset by an increase in accounts payable associated with inventory purchases and accrued liabilities for anti-dumping duties.

Net cash used by investing activities was ~~$208.7~~$9.7 million and ~~$37.4~~$21.0 million for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018~~March 30, 2019 and the ~~thirty-nine~~thirteen weeks ended ~~September 30, 2017,~~March 31, 2018, respectively. In the thirty-nine weeks ended September 29, 2018 we acquired MinuteKey for a net cash payment of $154,498. See Note 4 - Acquisitions of the Notes to the Condensed Consolidated Financial statements for additional information. The ~~other~~ primary use of cash in both periods was our investment in new ~~state of the art~~ key ~~cutting technology, the KeyKrafter™, as well as engraving machines and the implementation of our ERP system in Canada.~~duplicating machines. In ~~2018,~~2019, we also ~~invested capital~~received $7.6 million in ~~relocating two distribution centers.~~cash proceeds from the sale of a building in Canada.

Net cash ~~provided by~~used for financing activities was ~~$201.1~~$1.1 million for the ~~thirty-nine~~thirteen weeks ended September 29, 2018. During the thirty-nine weeks ended September 29, 2018, we entered into a new term credit agreement consisting of a new funded term loan of $530 million and $165 million delayed draw term loan facility. Concurrently, we entered into a new $150 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.We paid approximately $12.7 million in fees associated with the refinancing activities in the thirty-nine weeks ended September 29, 2018. See Note 10 - Long Term Debt of the Notes to the Condensed Consolidated Financial statements for additional information on the current quarter refinancing.March 30, 2019. Our revolver draws, net, were a source of cash of ~~$55.0~~$4.3 million in the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018.~~March 30, 2019. Additionally, we used cash to pay $5.3 million in principal payments on the ~~thirty-nine weeks ended September 29, 2018 we paid a dividend of $3.8 million to Holdco for~~senior term loan under the ~~purchase of shares of Holdco stock from former members of management.~~Senior Facilities.

Net cash ~~used~~provided by financing activities was ~~$4.2~~$14.1 million for the ~~thirty-nine~~thirteen weeks ended ~~September 30, 2017.~~March 31, 2018. Our revolver draws, net, were a source of cash of $15.5 million in the thirteen weeks ended March 31, 2018. We used cash to pay ~~$4.1~~$1.4 million in principal payments on the senior term loan under the Senior Facilities.

Management believes that projected cash flows from operations and revolver availability will be sufficient to fund working capital, capital expenditure, and acquisition related needs for the next 12 months. Our working capital (current assets minus current liabilities) position of ~~$212.5~~$253.0 million as of ~~September 29, 2018~~March 30, 2019 represents ~~an increase~~a decrease of ~~$21.5~~$27.0 million from the December ~~30, 2017~~29, 2018 level of ~~$191.0~~$280.0 million.

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 (the “Exchange Act”).

Critical Accounting Policies and Estimates

Significant accounting policies and estimates are summarized in the notes to the condensed consolidated financial statements. Some accounting policies require management to exercise significant judgment in selecting the appropriate assumptions for calculating financial estimates. Such judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, known trends in our industry, terms of existing contracts, and other information from outside sources, as appropriate. Management believes that these estimates and assumptions are reasonable based on the facts and circumstances as of ~~September 29, 2018,~~March 30, 2019, however, actual results may differ from these estimates under different assumptions and circumstances.

There have been no material changes ~~other than revenue recognition discussed below,~~ to our critical accounting policies and estimates which are discussed in the “Critical Accounting Policies and Estimates” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Annual Report on Form 10-K for the year ended December ~~30, 2017,~~29, 2018, as filed with the Securities and Exchange Commission. In addition, our most significant accounting policies are discussed in Note 2 and elsewhere in the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December ~~30, 2017.~~

~~Revenue Recognition:~~29, 2018.

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 arrangements with customers are providing products, in-store merchandising services, and access to key duplicating and engraving equipment. Generally, the price of the merchandising services and the access to the key duplicating and engraving equipment is included in the price of the related products. Control of products is transferred at the point in time when the customer accepts the goods. Judgment was required in applying the new revenue standard in determining the time at which to recognize revenue for the in-store services and the access to key duplicating and engraving equipment. 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 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.

~~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 Condensed Consolidated Financial statements for information on disaggregated revenue by product category.~~

Recent Accounting Pronouncements

See “Note 3 - Recent Accounting Pronouncements” of the Notes to Condensed Consolidated Financial Statements.

Item 3.

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 ~~September 29, 2018,~~March 30, 2019, 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 ~~$6.4~~$10.4 million.

Foreign Currency Exchange

We are exposed to foreign exchange rate changes of the Canadian and Mexican currencies as they impact the ~~$128.6~~$153.3 million tangible and intangible net asset value of our Canadian and Mexican subsidiaries as of ~~September 29, 2018.~~March 30, 2019. The foreign subsidiaries net tangible assets were ~~$60.3~~$87.9 million and the net intangible assets were ~~$68.3~~$65.3 million as of ~~September 29, 2018.~~March 30, 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 1112 - Derivatives and Hedging" of the Notes to Condensed Consolidated Financial Statements.

Item 4.

Controls and Procedures

Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, as of ~~September 29, 2018,~~March 30, 2019, in ensuring that material information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018~~March 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ~~We modified existing~~In 2018, the Company completed its acquisitions of MinuteKey and Big Tie Products. The Company is in the process of integrating the historical internal controls ~~to ensure we adequately evaluated our contracts~~over financial reporting of MinuteKey and ~~properly assessed~~Big Time Products with the ~~impact~~rest of the ~~new accounting standards~~Company. In addition, the Company implemented controls related to ~~revenue recognition to facilitate its~~the adoption ~~on December 31, 2017.~~of ASU 2016-02, Leases (Topic 842) and the related financial statement reporting. There were no significant changes to our internal control over financial reporting due to the adoption of this new standard.

PART II

OTHER INFORMATION

Item 1. – Legal Proceedings.

We are subject to various claims and litigation that arise in the normal course of business. In the opinion of our management, the ultimate resolution of the pending litigation matters will not have a material adverse effect on our consolidated financial position, operations, or cash flows.

Item 1A – Risk Factors.

There have been no material changes to the risks from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December ~~30, 2017.~~29, 2018.

Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds.

Not ~~Applicable~~Applicable.

Item 3. – Defaults Upon Senior Securities.

Not ~~Applicable~~Applicable.

Item 4. – Mine Safety Disclosures.

Not ~~Applicable~~Applicable.

Item 5. – Other Information.

Not ~~Applicable~~Applicable.

Item 6. – Exhibits.



a)	Exhibits, including those incorporated by reference.



31.1 *	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Exchange Act
31.2 *	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Exchange Act
32.1 *	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 *	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1*	Supplemental Financial Information for The Hillman Companies, Inc.
101	The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 29, 2018~~March 30, 2019 filed with the Securities and Exchange Commission on ~~November 9, 2018,~~May 13, 2019, formatted in eXtensible Business Reporting Language: (i) Condensed Consolidated Balance Sheets as of ~~September~~March 30, 2019 and December 29, 2018, ~~and December 30, 2017,~~ (ii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the thirteen ~~and thirty-nine~~ weeks ended ~~September 29, 2018~~March 30, 2019 and the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017,~~March 31, 2018, (iii) Condensed Consolidated Statements of Cash Flows for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2018~~March 30, 2019 and the thirteen ~~and thirty-nine~~ weeks ended ~~September 30, 2017,~~March 31, 2018, and (iv) Notes to Condensed Consolidated Financial Statements.



*	Filed herewith.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

THE HILLMAN COMPANIES, INC.




/s/ Robert O. Kraft		/s/ Nicholas P. Ruffing
Robert O. Kraft		Nicholas P. Ruffing
Chief Financial Officer		Controller
		(Chief Accounting Officer)

DATE: ~~November 9, 2018~~May 13, 2019

Page 3229



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

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



	Goodwill at		Acquisitions ⁽¹⁾		Dispositions		Other⁽²⁾			Goodwill at
	December 30, 2017		Acquisitions ⁽¹⁾		Dispositions		Other⁽²⁾			September 29, 2018
United States	$	586,437	$	58,667	$	—	$	—		$	645,104
Canada	30,372		—		—		(940		)	29,432
Mexico	3,694		—		—		186			3,880
Total	$	620,503	$	58,667	$	—	$	(754	)	$	678,416



	September 29, 2018	December 30, 2017
Maturity date range:
Minimum	October 2018	January 2018
Maximum	December 2018	April 2018
Fixed exchange rate range:
Minimum	1.2942	1.3201
Maximum	1.3200	1.3498

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