##### 



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 March 31, 2003

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
Preferred Securities Guaranty
Preferred Share Purchase Rights |  | 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  X  NO

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).  YES    NO  X

On May 14, 2003 there were 7,118,665 Common Shares issued and outstanding by
the Registrant and 4,217,724 Trust Preferred Securities issued and outstanding
by the Hillman Group Capital Trust. The Trust Preferred Securities trade on
the American Stock Exchange under symbol HLM.Pr.

Page 1 of  26





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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
INDEX

|                                                                       |                       |                                                                                        |                                                                                                      |       |      | 
|---------------------------------------------------------------------- | --------------------- | -------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | ----- | ---- | 
|PART I.                                                                | FINANCIAL INFORMATION | PAGE(S)                                                                               
|                                                                      
|Item 1.                                                                |                       | Consolidated Financial Statements                                                      |                                                                                                      |       |     
|                                                                      
|                                                                       |                       |                                                                                        | Consolidated Balance Sheets as of March 31, 2003
(Unaudited) and December 31, 2002                   |       | 3    | 
|                                                                      
|                                                                       |                       |                                                                                        | Consolidated Statements of Operations for
the Three Months ended March 31, 2003 and 2002
(Unaudited) |       | 4    | 
|                                                                      
|                                                                       |                       |                                                                                        | Consolidated Statements of Cash Flows for the
Three Months ended March 31, 2003 and 2002
(Unaudited) |       | 5    | 
|                                                                      
|                                                                       |                       |                                                                                        | Notes to Consolidated Financial Statements
(Unaudited)                                               |       | 6-11 | 
|                                                                      
|Item 2.                                                                |                       | Managements Discussion and Analysis of Financial Conditions
and Results of Operations |                                                                                                      | 12-20 |     
|                                                                      
|Item 3.                                                                |                       | Quantitative and Qualitative Disclosures about Market Risk                             |                                                                                                      | 20    |     
|                                                                      
|Item 4.                                                                |                       | Controls and Procedures                                                                |                                                                                                      | 20    |     
|                                                                      
|PART II.                                                               |                       | OTHER INFORMATION                                                                      |                                                                                                      | 21-23 |     
|                                                                      
|SIGNATURES                                                             |                       | 24                                                                                     |                                                                                                     
|                                                                      
|CERTIFICATES PURSUANT to SECTION 302 of the SARBANES-OXLEY ACT OF 2002 |                       | 25-26                                                                                  |                                                                                                     



Page 2 of  26



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Item 1.

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)

|                                                                                          |                                                                                        |                        |                                            |                                      |        |           |         |              |        |         |  | 
|----------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | ---------------------- | ------------------------------------------ | ------------------------------------ | ------ | --------- | ------- | ------------ | ------ | ------- |  | 
|                                                                                          |                                                                                        |                        |                                            |                                      |        | March 31, |         |              |        |        
|                                                                                          |                                                                                        |                        |                                            |                                      |        | 2003      |         | December 31,
|ASSETS                                                                                    |                                                                                        | (Unaudited)            |                                            | 2002                                
|                                                                                          |                                                                                        |                        |                                            |                                      |       
|Current
assets:                                                                           |                                                                                        |                        |                                            |                                      |        |           |         |             
|                                                                                          | Cash and cash equivalents                                                              |                        | $                                          | 1,228                                |        |           | $       | 2,768        |       
|                                                                                          | Restricted investments                                                                 |                        |                                            | 948                                  |        |           |         | 1,142        |       
|                                                                                          | Accounts receivable, net                                                               |                        |                                            | 38,955                               |        |           |         | 31,855       |       
|                                                                                          | Inventories                                                                            |                        |                                            | 61,689                               |        |           |         | 59,783       |       
|                                                                                          | Deferred income taxes                                                                  |                        |                                            | 10,893                               |        |           |         | 10,911       |       
|                                                                                          | Other current assets                                                                   |                        |                                            | 3,349                                |        |           |         | 3,249        |       
|                                                                                          |                                                                                        |                        |                                            |                                      |        |           |         |              |       
|                                                                                          |                                                                                        |                        | Total current assets                       |                                      |        | 117,062   |         |              |        | 109,708 | 
|Property and equipment, net                                                               |                                                                                        |                        | 68,423                                     |                                      |        |           | 68,596  |             
|Goodwill                                                                                  |                                                                                        |                        | 132,677                                    |                                      |        |           | 132,677 |             
|Other intangibles, net                                                                    |                                                                                        |                        | 10,697                                     |                                      |        |           | 11,068  |             
|Deferred income taxes                                                                     |                                                                                        |                        | 24,128                                     |                                      |        |           | 21,638  |             
|Restricted investments                                                                    |                                                                                        |                        | 5,410                                      |                                      |        |           | 5,923   |             
|Note receivable                                                                           |                                                                                        |                        | 5,600                                      |                                      |        |           | 11,258  |             
|Deferred financing fees, net                                                              |                                                                                        |                        | 5,446                                      |                                      |        |           | 5,774   |             
|Other assets                                                                              |                                                                                        |                        | 1,525                                      |                                      |        |           | 2,212   |             
|                                                                                          |                                                                                        |                        |                                            |                                      |        |           |         |              |       
|                                                                                          |                                                                                        |                        | Total assets                               |                                      | $      | 370,968   |         |              | $      | 368,854 | 
|                                                                                          |                                                                                        |                        |                                            |                                      |        |           |         |              |       
|                                                                                          |                                                                                        |                        |                                            | LIABILITIES AND STOCKHOLDERS EQUITY |        |           |         |              |        |         |  | 
|Current liabilities:                                                                      |                                                                                        |                        |                                            |                                      |        |           |         |             
|                                                                                          | Accounts payable                                                                       |                        | $                                          | 20,946                               |        |           | $       | 20,373       |       
|                                                                                          | Current portion of senior term loans                                                   |                        |                                            | 9,268                                |        |           |         | 9,268        |       
|                                                                                          | Current portion of capitalized lease obligations                                       |                        |                                            | 56                                   |        |           |         | 55           |       
|                                                                                          | Accrued expenses:                                                                      |                        |                                            |                                      |        |           |         |              |       
|                                                                                          |                                                                                        | Salaries and wages     |                                            |                                      | 2,547  |           |         |              | 5,523  |        
|                                                                                          |                                                                                        | Pricing allowances     |                                            |                                      | 3,525  |           |         |              | 6,118  |        
|                                                                                          |                                                                                        | Integration costs      |                                            |                                      | 4,094  |           |         |              | 4,378  |        
|                                                                                          |                                                                                        | Income and other taxes |                                            |                                      | 1,406  |           |         |              | 1,329  |        
|                                                                                          |                                                                                        | Deferred compensation  |                                            |                                      | 948    |           |         |              | 1,142  |        
|                                                                                          |                                                                                        | Other accrued expenses |                                            |                                      | 11,491 |           |         |              | 11,814 |        
|                                                                                          |                                                                                        |                        |                                            |                                      |        |           |         |              |       
|                                                                                          |                                                                                        |                        | Total current liabilities                  |                                      |        | 54,281    |         |              |        | 60,000  | 
|Long term senior term loans                                                               |                                                                                        |                        | 58,242                                     |                                      |        |           | 60,559  |             
|Bank revolving credit                                                                     |                                                                                        |                        | 48,286                                     |                                      |        |           | 34,532  |             
|Long term capitalized lease obligations                                                   |                                                                                        |                        | 179                                        |                                      |        |           | 194     |             
|Long term unsecured subordinated notes to related party                                   |                                                                                        |                        | 42,591                                     |                                      |        |           | 42,108  |             
|Deferred compensation                                                                     |                                                                                        |                        | 5,410                                      |                                      |        |           | 5,923   |             
|Deferred income tax liability                                                             |                                                                                        |                        | 5,707                                      |                                      |        |           | 5,660   |             
|Other non-current liabilities                                                             |                                                                                        |                        | 5,697                                      |                                      |        |           | 5,258   |             
|                                                                                          |                                                                                        |                        |                                            |                                      |        |           |         |              |       
|                                                                                          |                                                                                        |                        | Total liabilities                          |                                      |        | 220,393   |         |              |        | 214,234 | 
|                                                                                          |                                                                                        |                        |                                            |                                      |        |           |         |              |       
|Guaranteed preferred beneficial interests in the
Companys junior subordinated debentures |                                                                                        |                        | 102,266                                    |                                      |        |           | 102,234 |             
|                                                                                          |                                                                                        |                        |                                            |                                      |        |           |         |              |       
|Commitments and contingencies                                                             |                                                                                        |                        |                                            |                                      |        |           |         |             
|                                                                                         
|Stockholders equity:                                                                     |                                                                                        |                        |                                            |                                      |        |           |         |             
|                                                                                          | Preferred stock, $.01 par, 1,000,000 shares
authorized, none outstanding               |                        |                                            |                                     |        |           |         |             |       
|                                                                                          | Common stock, $.01 par, 20,000,000 shares authorized,
7,118,665 issued and outstanding |                        |                                            | 71                                   |        |           |         | 71           |       
|                                                                                          | Additional paid-in capital                                                             |                        |                                            | 52,310                               |        |           |         | 52,310       |       
|                                                                                          | Accumulated deficit                                                                    |                        |                                            | (4,041                               | )      |           |         |             |       
|                                                                                          | Accumulated other comprehensive (loss) income                                          |                        |                                            | (31                                  | )      |           |         | 5            |       
|                                                                                          |                                                                                        |                        | Total stockholders equity                 |                                      |        | 48,309    |         |              |        | 52,386  | 
|                                                                                          |                                                                                        |                        |                                            |                                      |        |           |         |              |       
|                                                                                          |                                                                                        |                        | Total liabilities and stockholders equity |                                      | $      | 370,968   |         |              | $      | 368,854 | 
|                                                                                          |                                                                                        |                        |                                            |                                      |        |           |         |              |       

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Page 3 of  26



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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
FOR THE THREE MONTHS ENDED,
(dollars in thousands)

|                                                           |                                              |                                |        |           |        |           |        |        |        |  
|---------------------------------------------------------- | -------------------------------------------- | ------------------------------ | ------ | --------- | ------ | --------- | ------ | ------ | ------ | -
|                                                           |                                              |                                |        | March 31, |        | March 31,
|                                                           |                                              |                                |        | 2003      |        | 2002     
|                                                           |                                              |                                |        |           |        |          
|Net sales                                                  |                                              | $                              | 69,989 |           |        | $         | 63,425 |       
|Cost of sales                                              |                                              |                                | 31,664 |           |        |           | 28,475 |       
|                                                           |                                              |                                |        |           |        |           |        |       
|                                                           |                                              | Gross profit                   |        |           | 38,325 |           |        |        | 34,950 |  
|                                                           |                                              |                                |        |           |        |           |        |       
|Operating expenses:                                        |                                              |                                |        |           |        |           |        |       
|                                                           | Selling, general and administrative expenses |                                |        | 28,200    |        |           |        | 26,549 |       
|                                                           | Depreciation                                 |                                |        | 3,467     |        |           |        | 3,083  |       
|                                                           | Amortization                                 |                                |        | 371       |        |           |        | 370    |       
|                                                           | Management fee to related party              |                                |        | 450       |        |           |        | 450    |       
|                                                           |                                              |                                |        |           |        |           |        |       
|                                                           |                                              | Total operating expenses       |        |           | 32,488 |           |        |        | 30,452 |  
|                                                           |                                              |                                |        |           |        |           |        |       
|Other income, net                                          |                                              |                                | 53     |           |        |           | 52     |       
|                                                           |                                              |                                |        |           |        |           |        |       
|                                                           |                                              | Income from operations         |        |           | 5,890  |           |        |        | 4,550  |  
|Interest expense, net                                      |                                              |                                | 3,635  |           |        |           | 3,450  |       
|Distributions on guaranteed preferred
beneficial interests |                                              |                                | 3,058  |           |        |           | 3,057  |       
|Write-down of note receivable                              |                                              |                                | 5,657  |           |        |           |       |       
|                                                           |                                              |                                |        |           |        |           |        |       
|                                                           |                                              | Loss before income tax benefit |        |           | (6,460 | )         |        |        | (1,957 | )
|Income tax benefit                                         |                                              |                                | (2,419 | )         |        |           | (695   | )     
|                                                           |                                              |                                |        |           |        |           |        |       
|                                                           |                                              | Net loss                       |        | $         | (4,041 | )         |        | $      | (1,262 | )
|                                                           |                                              |                                |        |           |        |           |        |       

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE THREE MONTHS ENDED,
(dollars in thousands)

|                                                 |                                                                              |                                           |                                              |                                             |        |           |        |           |        |       |        |  
|------------------------------------------------ | ---------------------------------------------------------------------------- | ----------------------------------------- | -------------------------------------------- | ------------------------------------------- | ------ | --------- | ------ | --------- | ------ | ----- | ------ | -
|                                                 |                                                                              |                                           |                                              |                                             |        | March 31, |        | March 31,
|                                                 |                                                                              |                                           |                                              |                                             |        | 2003      |        | 2002     
|                                                 |                                                                              |                                           |                                              |                                             |        |           |        |          
|Cash flows from operating activities:            |                                                                              |                                           |                                              |                                             |        |           |        |          
|                                                 | Net loss                                                                     |                                           | $                                            | (4,041                                      | )      |           | $      | (1,262    | )     
|                                                 | Adjustments to reconcile net loss to net cash
used for operating activities: |                                           |                                              |                                             |        |           |        |           |       
|                                                 |                                                                              |                                           | Depreciation and amortization                |                                             |        | 3,838     |        |           |        | 3,453 |       
|                                                 |                                                                              |                                           | Deferred income tax benefit                  |                                             |        | (2,425    | )      |           |        | (695  | )     
|                                                 |                                                                              |                                           | PIK interest on unsecured subordinated notes |                                             |        | 483       |        |           |        | 463   |       
|                                                 |                                                                              |                                           | Write-down of note receivable                |                                             |        | 5,657     |        |           |        |      |       
|                                                 |                                                                              |                                           | Changes in current operating items:          |                                             |        |           |        |           |        |       |       
|                                                 |                                                                              |                                           |                                              | Increase in accounts receivable             |        |           | (7,100 | )         |        |       | (6,599 | )
|                                                 |                                                                              |                                           |                                              | Decrease (increase) in inventories          |        |           | (1,906 | )         |        |       | 1,313  |  
|                                                 |                                                                              |                                           |                                              | Decrease (increase) in other current assets |        |           | 369    |           |        |       | (70    | )
|                                                 |                                                                              |                                           |                                              | Increase in accounts payable                |        |           | 573    |           |        |       | 2,556  |  
|                                                 |                                                                              |                                           |                                              | Decrease in other accrued liabilities       |        |           | (6,032 | )         |        |       | (2,666 | )
|                                                 |                                                                              |                                           |                                              | Other items, net                            |        |           | 755    |           |        |       | (361   | )
|                                                 |                                                                              |                                           |                                              |                                             |        |           |        |           |       
|                                                 |                                                                              | Net cash used for operating activities    |                                              |                                             | (9,829 | )         |        |           | (3,868 | )    
|                                                 |                                                                              |                                           |                                              |                                             |        |           |        |           |       
|Cash flows from investing activities:            |                                                                              |                                           |                                              |                                             |        |           |        |          
|                                                 | Capital expenditures                                                         |                                           |                                              | (3,294                                      | )      |           |        | (2,600    | )     
|                                                 | Other, net                                                                   |                                           |                                              | 152                                         |        |           |        | 89        |       
|                                                 |                                                                              |                                           |                                              |                                             |        |           |        |           |       
|                                                 |                                                                              | Net cash used for investing activities    |                                              |                                             | (3,142 | )         |        |           | (2,511 | )    
|                                                 |                                                                              |                                           |                                              |                                             |        |           |        |           |       
|Cash flows from financing activities:            |                                                                              |                                           |                                              |                                             |        |           |        |          
|                                                 | Repayments of senior term loans                                              |                                           |                                              | (2,317                                      | )      |           |        | (1,187    | )     
|                                                 | Borrowings of revolving credit loans, net                                    |                                           |                                              | 13,754                                      |        |           |        | 7,125     |       
|                                                 | Borrowings of unsecured subordinated notes                                   |                                           |                                              |                                            |        |           |        | 312       |       
|                                                 | Principal payments under capitalized lease obligations                       |                                           |                                              | (14                                         | )      |           |        | (30       | )     
|                                                 | Financing fees, net                                                          |                                           |                                              | 8                                           |        |           |        | (248      | )     
|                                                 |                                                                              |                                           |                                              |                                             |        |           |        |          
|                                                 |                                                                              | Net cash provided by financing activities |                                              |                                             | 11,431 |           |        |           | 5,972  |      
|                                                 |                                                                              |                                           |                                              |                                             |        |           |        |          
|Net decrease in cash and cash equivalents        |                                                                              |                                           | (1,540                                       | )                                           |        |           | (407   | )        
|Cash and cash equivalents at beginning of period |                                                                              |                                           | 2,768                                        |                                             |        |           | 2,059  |          
|                                                 |                                                                              |                                           |                                              |                                             |        |           |        |          
|Cash and cash equivalents at end of period       |                                                                              | $                                         | 1,228                                        |                                             |        | $         | 1,652  |          
|                                                 |                                                                              |                                           |                                              |                                             |        |           |        |          

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Page 5 of  26



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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)

1.     Basis of Presentation:

The accompanying financial statements include the consolidated accounts of The
Hillman Companies, Inc. (Hillman or the Company), and its wholly owned
subsidiaries including an investment trust, Hillman Group Capital Trust (the
Trust). All significant intercompany balances and transactions have been
eliminated. The Company is organized as an independently managed portfolio
company of Allied Capital Corporation (Allied Capital). Allied Capital owns
approximately 96.8% of Hillmans common stock with the remainder being held
primarily by Company Management.

The accompanying unaudited consolidated financial statements present
information in accordance with generally accepted accounting principles 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 generally accepted accounting principles for complete
financial statements. Management believes the financial statements include all
normal recurring accrual adjustments necessary for a fair presentation.
Operating results for the three months ended March 31, 2003 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 31, 2002.

Other Intangible Assets

Intangible assets subject to amortization consisted of the following
as of March 31, 2003:

|                       |  |          |        |              |  |   |       | 
|---------------------- |  | -------- | ------ | ------------ |  | - | ----- | 
|                       |  | Carrying |        | Accumulated 
|                       |  | Amount   |        | Amortization
|                       |  |          |        |             
|Trademarks             |  | $        | 6,500  |              |  | $ | 780   | 
|Patents                |  |          | 6,700  |              |  |   | 2,512 | 
|Proprietary software   |  |          | 1,000  |              |  |   | 375   | 
|Non-compete agreements |  |          | 1,250  |              |  |   | 1,086 | 
|                       |  |          |        |              |  |   |       | 
|                       |  | $        | 15,450 |              |  | $ | 4,753 | 
|                       |  |          |        |              |  |   |       | 

Amortization expense for intangible assets for the three months ended
March 31, 2003 and 2002 was $371 and $370, respectively. Amortization
expense for the next five years is estimated to be as follows:

| |             |      |        |  |   |       | 
| | ----------- | ---- | ------ |  | - | ----- | 
| | Year Ended  |      |        |  |  
| | December 31 |      | Amount
| |             |      |       
| |             | 2003 |        |  | $ | 1,437 | 
| |             | 2004 |        |  | $ | 1,238 | 
| |             | 2005 |        |  | $ | 1,223 | 
| |             | 2006 |        |  | $ | 1,222 | 
| |             | 2007 |        |  | $ | 1,223 | 



Page 6 of  26



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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)

2.     Summary of Significant Accounting Policies:

Cash Equivalents:

Cash equivalents consist of commercial paper, U.S. Treasury obligations and
other liquid securities purchased with initial maturities less than 90 days and
are stated at cost which approximates market value.

Restricted Investments:

Restricted investments represent assets held in a Rabbi Trust to fund deferred
compensation liabilities due to the Companys employees.

Inventories:

Inventories consisting predominantly of finished goods are valued at the lower
of cost or market, cost being determined principally on the first-in, first-out
method.

Property and Equipment:

Property and equipment, including assets acquired under capital leases, are
carried at cost and include expenditures for new facilities and major renewals.
Maintenance and repairs are charged to expense as incurred. The cost and
related accumulated depreciation are removed from their respective accounts
when assets are sold or otherwise disposed of and the resulting gain or loss is
reflected in current operations.

Depreciation:

For financial accounting purposes, depreciation, including that related to
plant and equipment acquired under capital leases, is computed on the
straight-line method over the estimated useful lives of the assets, generally
three to ten years, or, if shorter, over the terms of the related leases.

Long-Lived Assets:

Under the provisions of SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, the Company has evaluated its long-lived assets
for financial impairment and will continue to evaluate them based on the
estimated undiscounted future cash flows as events or changes in circumstances
indicate that the carrying amount of such assets may not be fully recoverable.

Income Taxes:

Deferred income taxes are computed using the asset and liability method. Under
this method, deferred income tax assets and liabilities are determined based on
differences between financial reporting and tax basis of assets and liabilities
(temporary differences) and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.

Retirement Benefits:

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



Page 7 of  26



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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)

2.     Summary of Significant Accounting Policies (continued):

Revenue Recognition:

Revenue from sales of products is recorded upon the passing of title and risks
of ownership which occurs upon the shipment of goods. Revenue is recorded net
of pricing allowances such as customer rebates and discounts.

Shipping and Handling:

The costs incurred to ship product to customers, including freight and handling
expenses, are included in selling, general and administrative expenses on the
Companys Statements of Operations. For the three months ended March 31, 2003
and 2002, shipping and handling costs included in selling, general and
administrative were $3,482 and $2,936, respectively.

Research and Development:

The Company incurs research and development costs in connection with
improvements to the key duplicating and engraving machines. For the three
months ended March 31, 2003 and 2002, research and development expenses,
consisting primarily of internal wages and benefits, were $293 and $360,
respectively.

Translation of Foreign Currencies:

The translation of the Companys Canadian foreign currency based financial
statements into U.S. dollars is performed for balance sheet accounts using
exchange rates in effect at the balance sheet date and for revenue and expense
accounts using an average exchange rate during the period.

Comprehensive Income (Loss):

The components of comprehensive income (loss) for the three months ended March
31, 2003 and 2002 were as follows:

|                                        |  |                    |        |      |  |   |        |  
|--------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|                                        |  | Three Months Ended
|                                        |  | March 31          
|                                        |  | 2003               |        | 2002
|                                        |  |                    |        |     
|Net loss                                |  | $                  | (4,041 | )    |  | $ | (1,262 | )
|Foreign currency translation
adjustment |  |                    | (36    | )    |  |   |       |  
|                                        |  |                    |        |      |  |   |        |  
|Comprehensive loss                      |  | $                  | (4,077 | )    |  | $ | (1,262 | )
|                                        |  |                    |        |      |  |   |        |  

Use of Estimates in the Preparation of Financial Statements:

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.



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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)

3.     Acquisitions:

On May 1, 2002, the Company purchased certain assets of the Lowes specialty
fastener business from R&B, Inc. for cash consideration of $6,207. On October
3, 2002, the Company purchased the net assets of the DIY division (DIY) of
the Fastenal Company for cash consideration of $15,218. The following
disclosures indicate the Companys estimate of pro forma financial results for
the three month period ended March 31, 2002 had the acquisitions of the Lowes
specialty fastener business and the DIY business been consummated on January 1,
2002:

|          |  |                    |        |  
|--------- |  | ------------------ | ------ | -
|          |  | Three months ended
|          |  | March 31, 2002    
|          |  |                   
|Net sales |  | $                  | 69,752 |  
|Net loss  |  | $                  | (994   | )

4.     Contingencies:

Under the Companys insurance programs, commercial umbrella coverage is
obtained for catastrophic exposure and aggregate losses in excess of normal
claims. Beginning in 1991, the Company has retained risk on certain expected
losses from both asserted and unasserted claims related to workers
compensation, general liability and automobile as well as the health benefits
of certain employees. Provisions for losses expected under these programs are
recorded based on an analysis of historical insurance claim data and certain
actuarial assumptions. As of March 31, 2003, the Company has provided insurers
letters of credit aggregating $3,857 related to certain insurance programs.

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 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.

5.     Related Party Transactions:

On September 26, 2001, the Company was acquired by Allied Capital pursuant to
the terms and conditions of an Agreement and Plan of Merger dated as of June
18, 2001. In connection with the Merger Transaction, the Company is obligated
to pay management fees to a subsidiary of Allied Capital for management
services rendered in the amount of $1,800 for calendar years subsequent to
2001. The Company has recorded a management fee charge of $450 for the three
months ended March 31, 2003 and 2002. Payment of management fees are due
annually after delivery of the Companys annual audited financial statements to
the Board of Directors of the Company. The management fee for the year ended
December 31, 2002 was paid in April 2003.

The Company incurs interest expense to Allied Capital on the subordinated debt
at a fixed rate of 18.0% per annum. Cash interest payments are required on a
quarterly basis at a fixed rate of 13.5% with the remaining 4.5% fixed rate
(the PIK Amount) being added to the principal balance. As of March 31, 2003,
the outstanding subordinated debt including the PIK amounts was $42,591.



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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)

6.     Recent Accounting Pronouncements:

In November 2002, the FASB issued Interpretation (FIN) No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. FIN No. 45 requires that a guarantor
must recognize, at the inception of a guarantee, a liability for the fair value
of the obligation that it has undertaken in issuing a guarantee. FIN No. 45
also addresses the disclosure requirements that a guarantor must include in its
financial statements for guarantees issued. The disclosure requirements in
this interpretation are effective for financial statements ending after
December 15, 2002. The initial recognition and measurement provisions of this
interpretation are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002. The Company adopted the provisions of FIN
No. 45 effective January 1, 2003. The adoption of FIN 45 did not have an
impact on the Companys consolidated financial position, results of operations
or cash flows.

In January 2003, the FASB issued FIN No. 46, Consolidation of Variable
Interest Entities (an interpretation of Accounting Research Bulletin No. 51,
Consolidated Financial Statements), which becomes effective for the Company
in June 2003. FIN No. 46 provides consolidation guidance for certain variable
interest entities (VIE) in which equity investors of the VIE do not have the
characteristics of a controlling interest or do not have sufficient equity at
risk for the VIE to finance its activities independently. FIN No. 46 requires
each enterprise involved with a special purpose entity to determine whether it
provides financial support to the special purpose entity through a variable
interest. Variable interests may arise from financial instruments, service
contracts, minority ownership interests or other arrangements. If an entity
holds a majority of the variable interests, or a significant variable interest
that is considerably more than any other partys variable interest, that entity
would be the primary beneficiary and would be required to include the assets,
liabilities and results of operations of the special purpose entity in its
consolidated financial statements. The Company does not expect the adoption of
FIN 46 to have a material impact on its financial position or results of
operations.

In April 2002, the FASB issued Statement of Financial Accounting Standards No.
145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections (SFAS No. 145). Among other
items, SFAS No. 145 updates and clarifies existing accounting pronouncements
related to reporting gains and losses from the extinguishment of debt and
certain lease modifications that have economic effects similar to
sale-leaseback transactions. The provisions of SFAS No. 145 are generally
effective for fiscal years beginning after May 15, 2002, with earlier adoption
of certain provisions encouraged. The Company adopted the provisions of SFAS
No. 145 effective January 1, 2003. The adoption of SFAS No. 145 did not have
an impact on the Companys consolidated financial position, results of
operations or cash flows.

In June 2002, the FASB issued Statement of Financial Accounting Standards No.
146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS
No. 146). SFAS No. 146 nullifies Emerging Issues Task Force (EITF) Issue No.
94-3, Liability Recognition for Costs to Exit an Activity (Including Certain
Costs Incurred in a Restructuring). SFAS No. 146 requires that a liability for
a cost associated with an exit or disposal activity be recognized when the
liability is incurred. Under EITF Issue 94-3, a liability for an exit cost as
defined in EITF Issue 94-3 was recognized at the date of an entitys commitment
to an exit plan. The provisions of SFAS No. 146 are effective for exit or
disposal activities that are initiated after December 31, 2002, with earlier
application encouraged. Under SFAS No. 146, an entity may not restate its
previously issued financial statements and the new statement grandfathers the
accounting for liabilities that an entity had previously recorded under EITF
Issue 94-3. The Company adopted the provisions of SFAS No. 146 effective
January 1, 2003. The adoption of SFAS No. 146 did not have an impact on the
Companys consolidated financial position, results of operations or cash flows.



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THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)

6.     Recent Accounting Pronouncements (continued):

In December 2002, the FASB issued Statement of Financial Accounting Standards
No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure
(SFAS No. 148). SFAS No. 148 amends FASB Statement No. 123, Accounting for
Stock-Based Compensation, to provide alternative methods of transition for a
voluntary change to the fair value method of accounting for stock-based
employee compensation. In addition, SFAS No. 148 amends the prior disclosure
guidance and requires prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The
provisions of SFAS No. 148 are generally effective for fiscal years ending
after December 15, 2002. At this time the Company does not plan to adopt the
accounting provisions of SFAS No. 123 and will continue to account for stock
options in accordance with Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees.

7.     Note Receivable:

On April 13, 2002, the Company entered into a Unit Repurchase Agreement with
GC-Sun Holdings, L.P. (G-C), pursuant to which G-C exercised its call right
under the G-C partnership agreement to purchase the Companys interest in G-C.
The Unit Repurchase Agreement closed on June 25, 2002. In exchange for its
interest in G-C, the Company received a $10,000 subordinated note from G-C.
Interest on the note is payable quarterly at a rate of 18% from May 1, 2002 to
April 30, 2003, 17% from May 1, 2003 to April 30, 2004, and 16% thereafter.
G-Cs payment of interest on the note is subject to certain restrictions under
the terms of the subordinated note agreement. If such restrictions do not
permit the current payment of interest in cash when due, accrued interest is
added to the principal.

In February 2003, G-C sold the assets of its largest operating division, Kar
Products. The proceeds of the sale were primarily used to pay down G-Cs senior
creditors. Following the sale of Kar Products, the Company estimated the
enterprise value of G-C based on the cash flows and book value of the remaining
operating division. The excess of the estimated enterprise value less debt
obligations senior to the G-C note were determined to be insufficient to
support the value of the G-C note. Accordingly, the Company recorded a $5,657
charge to income in the first quarter of 2003 to write-down the face value of
the note and accrued interest thereon to its estimated fair value.



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Item 2.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion provides information which 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
consolidated financial statements and notes thereto appearing elsewhere herein.

General

The Hillman Companies, Inc. (Hillman or the Company), is one of the largest
providers of value-added merchandising services and hardware-related products
to retail markets in North America.

The Company, through its wholly owned subsidiary, The Hillman Group, Inc. (the
Hillman Group) provides merchandising services and hardware and related
products, such as, fasteners and similar items, key duplication equipment, keys
and related accessories and identification equipment and items to retail
outlets, primarily hardware stores, home centers and mass merchants.

Hillman is organized as an independently managed portfolio company of Allied
Capital Corporation (Allied Capital). Allied Capital owns approximately
96.8% of Hillmans common stock with the remainder being held primarily by
Company Management.

Financing Arrangements

On December 28, 2000, the Company issued $30 million of unsecured subordinated
notes to Allied Capital and issued an additional $10 million of these notes to
Allied Capital on September 28, 2001 (the Amended Subordinated Debt Issuance). The majority of the cash
proceeds generated from the Amended Subordinated Debt Issuance were used to
repay at a discount an unsecured subordinated note issued in connection with
the acquisition of Axxess Technologies, Inc. on April 7, 2000 (the Axxess
Subordinated Note Repayment).

On September 28, 2001, the Company refinanced its $115 million bank revolving
credit and $21.5 million term loan with $105 million in senior secured credit
facilities (the Refinancing). The new senior debt agreement (Credit
Agreement) has a $50 million revolving credit line, a $20 million term loan
that expires on September 27, 2006, and a $35 million term loan that expires on
September 27, 2008.

On May 1, 2002, the Credit Agreement was amended to provide an additional $10.0
million of availability under the revolving credit facility and to increase the
term loans by $15.0 million. Proceeds of the additional financing were used to
finance the purchase of the specialty fastener business of Lowes, Inc. from
R&B, Inc., the settlement of litigation with R&B, Inc. and the expansion and
automation of the Companys distribution facilities.

On December 23, 2002, the Credit Agreement was amended to provide an additional
$4.8 million of availability under the revolving credit agreement and to
increase the term loans by $5.2 million. As of March 31, 2003, the outstanding
balance of the term loans aggregated $67.5 million.

Acquisitions

On May 1, 2002, the Company purchased certain assets of the Lowes specialty
fastener business from R&B, Inc. for cash consideration of $6,207. On October
3, 2002, the Company purchased the net assets of the DIY division (DIY) of
the Fastenal Company for cash consideration of $15,218.



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Results of Operations

Three Months Ended March 31, 2003 and 2002

Net sales increased $6.6 million or 10.4% in the first quarter of 2003 to $70.0
million from $63.4 million in 2002. Total fastener sales to Lowes represented
$1.5 million of the $6.6 million total sales increase in the first quarter
primarily as a result of the May 2002 acquisition of the Lowes specialty
fastener business from R&B, Inc. Sales to other national accounts, including
Home Depot and Wal-Mart, increased by an aggregate $1.7 million in the first
quarter of 2003 compared to the first quarter of 2002, led by sales growth in
the LNS and keys product lines. In October 2002, Hillman acquired the DIY
division (DIY) of the Fastenal Company which contributed fastener related
sales of $4.2 million in the first quarter of 2003. In addition, franchise and
independent (F&I) accounts decreased $1.7 million from the comparable period
in 2002. The F&I accounts are typically individual hardware dealers who are
members of larger cooperatives, such as TruServ, Ace, and Do-It-Best. Other
sales, including regional accounts and engraving products were up $0.9 million
compared to the first quarter of 2002.

The Hillman Groups gross profit was 54.8% in the first quarter of 2003
compared to 55.1% in the first quarter of 2002. The margin rate decrease from
the prior year was the result of lower margins on the newly acquired DIY
business.

The Companys consolidated selling, general and administrative expenses
(S,G&A) increased $1.7 million or 6.2% from $26.5 million in the first
quarter of 2002 to $28.2 million in the first quarter of 2003. Selling
expenses decreased $0.1 million or 1.0% primarily as a result of a reduction in
the amount of opening and servicing costs at new national account stores.
Warehouse and delivery expenses increased $2.2 million or 30.5% primarily as a
result of increased freight and labor of $0.9 million on increased sales volume
and labor and other costs of $0.9 million related to start up of the new
distribution facility in 2003. Management expects the startup costs
associated with the new distribution facility to moderate in the
second quarter and to be eliminated by the end of the third
quarter of 2003. General and administrative expenses
decreased by $0.4 million or 7.1% primarily as a result of a reduction in
corporate overhead costs following elimination of the Philadelphia corporate
office in May 2002.

Total S,G&A expenses in the first quarter of 2003 expressed as a percentage of
sales compared with the first quarter of 2002 are as follows:

|                                    |                      |      |                              |      |   |  |      |      |  
|----------------------------------- | -------------------- | ---- | ---------------------------- | ---- | - |  | ---- | ---- | -
|                                    |                      |      | Three Months ended March 31,
|                                    |                      |      |                             
|As of a % of Sales                  |                      | 2003 |                              | 2002
|                                    |                      |      |                              |     
|Selling Expenses                    |                      |      | 20.0                         | %    |   |  | 22.3 | %   
|Warehouse and Delivery Expenses     |                      |      | 13.2                         | %    |   |  | 11.2 | %   
|General and Administrative Expenses |                      |      | 7.1                          | %    |   |  | 8.4  | %   
|                                    |                      |      |                              |      |   |  |      |     
|                                    | Total S,G&A Expenses |      |                              | 40.3 | % |  |      | 41.9 | %
|                                    |                      |      |                              |      |   |  |      |     

Income from operations for the first quarter of 2003 was $5.9 million compared
with $4.6 million for the same prior-year period, representing an increase of
28.3%.

The Companys consolidated operating profit margin (income from operations as a
percentage of sales) increased to 8.4% in the first quarter of 2003 compared
with 7.2% in 2002. The operating profit margin improvement was due primarily
to the reduction of S,G&A expenses as a percentage of sales. The 2003 first
quarters 10.4% sales increase outpaced the smaller 6.2% S,G&A expense increase,
thereby raising the overall operating profit margin. The smaller S,G&A rate of
increase was due to a reduction in costs associated with promotional marketing
materials and corporate overhead expenses.

Depreciation expense increased $0.4 million to $3.5 million in the first
quarter of 2003 from $3.1 million in the same quarter of 2002.



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Amortization expense of $0.4 million in the first quarter of 2003 was equal to
the amortization in the same quarter of 2002. This was the result of there
being no change in the amount of intangible assets subject to amortization.

Interest expense increased $0.2 million to $3.6 million in the first quarter of
2003 from $3.4 million in the same period of 2002. The increase was primarily
the result of additional borrowings to finance the expansion and automation of
the Companys distribution facility, to purchase the Lowes specialty fastener
business from R&B, Inc. in May 2002, and to purchase the DIY business from
Fastenal Company in October 2002.

The Company has recorded a management fee charge of $0.45 million for the first
quarter of 2003 and $0.45 million for the first quarter of 2002. The Company
is obligated to pay management fees to a subsidiary of Allied Capital for
management services rendered in the amount of $1.8 million for calendar years
subsequent to 2001. The payment of management fees is due annually after
delivery of the Companys annual audited financial statements to the Board of
Directors of the Company.

On April 13, 2002, the Company entered into a Unit Repurchase Agreement with
GC-Sun Holdings, L.P. (G-C), pursuant to which G-C exercised its call right
under the G-C partnership agreement to purchase the Companys interest in G-C.
The Unit Repurchase Agreement closed on June 25, 2002. In exchange for its
interest in G-C, the Company received a $10,000 subordinated note from G-C.
Interest on the note is payable quarterly at a rate of 18% from May 1, 2002 to
April 30, 2003, 17% from May 1, 2003 to April 30, 2004, and 16% thereafter.
G-Cs payment of interest on the note is subject to certain restrictions under
the terms of the subordinated note agreement. If such restrictions do not
permit the current payment of interest in cash when due, accrued interest is
added to the principal.

In February 2003, G-C sold the assets of its largest operating division, Kar
Products. The proceeds of the sale were primarily used to pay down G-Cs senior
creditors. Following the sale of Kar Products, the Company estimated the
enterprise value of G-C based on the cash flows and book value of the remaining
operating division. The excess of the estimated enterprise value less debt
obligations senior to the G-C note were determined to be insufficient to
support the value of the G-C note. Accordingly, the Company recorded a $5.7
million charge to income in the first quarter of 2003 to write-down the face
value of the note and accrued interest thereon to its estimated fair value.

The Company pays interest to the Trust on the Junior Subordinated Debentures
underlying the Trust Preferred Securities at the rate of 11.6% per annum on
their face amount of $105.4 million, or $12.2 million per annum in the
aggregate. The Trust distributes an equivalent amount to the holders of the
Trust Preferred Securities. For the three months ended March 31, 2003 and
2002, the Company paid $3.1 million in interest on the Junior Subordinated
Debentures, equivalent to the amounts distributed by the Trust on the Trust
Preferred Securities.

The Company is subject to federal, state and local income taxes on its domestic
operations and foreign income taxes on its Canadian operation as accounted for
in accordance with Statement of Financial Accounting Standard (SFAS) No. 109,
Accounting for Income Taxes. Deferred income taxes represent differences
between the financial statement and tax basis of assets and liabilities as
classified on the Companys balance sheet. The Company recorded a tax benefit
for income taxes of $2.4 million on pre-tax losses of $6.5 million in the first
quarter of 2003. The effective tax rate in the first quarter of 2003 was 37.5%
compared to 35.5% in the first quarter of 2002 due to a change in permanent tax
items.

Cash Flows

The statements of cash flows reflect the changes in cash and cash equivalents
for the three months ended March 31, 2003 and 2002 by classifying transactions
into three major categories: operating, investing and financing activities.



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Operating Activities

The Companys main source of liquidity is cash generated from operating
activities consisting of net earnings from operations adjusted for non-cash
operating items such as depreciation and changes in operating assets and
liabilities such as receivables, inventories and payables.

Cash used by operating activities for the first three months of 2003 was $9.8
million compared to cash used of $3.9 million in the same prior year period.
The negative net change of $5.9 million in the current three months compared to
the same period in 2002 was primarily due to the use of $3.2 million more
operating cash to fund the increased inventory requirements and the use of $2.1
million more operating cash for the higher customer pricing allowances earned
and accrued in 2002, but paid in 2003.

Investing Activities

The principal recurring investing activities are property additions primarily
for key duplicating machines. Net property additions for the first three
months of 2003 were $3.3 million compared to $2.6 million in the comparable
prior year period. The increase in capital expenditures in the first three
months of 2003 compared to the prior year period results from an additional
$0.4 million of engraving machines, $0.2 million of key machines and $0.1 of
equipment.

Financing Activities

Net borrowings under the Companys senior credit facilities of $11.4 million
for the three months ended March 31, 2003 increased $5.5 million from the
comparable prior year period as a result primarily of cash flow used for
operations. See Operating Activities noted above.

Liquidity and Capital Resources

The Companys working capital position (defined as current assets less current
liabilities) of $62.8 million at March 31, 2003 represents an increase of $13.1
million from the December 31, 2002 level of $49.7 million primarily as a result
of the seasonal increase in accounts receivable of $7.1 million and inventories
of $1.9 million together with a decrease in accrued salaries and wages of $3.0
million. The Companys current ratio (defined as current assets divided by
current liabilities) increased to 2.16x at March 31, 2003 from 1.83x at
December 31, 2002.

The Companys contractual obligations in thousands of dollars as of March 31,
2003 are summarized below:

|                                       |                                    |                                   |        |          |         |       |       |              |   |        |        |           |   |  |        |         |         | 
|-------------------------------------- | ---------------------------------- | --------------------------------- | ------ | -------- | ------- | ----- | ----- | ------------ | - | ------ | ------ | --------- | - |  | ------ | ------- | ------- | 
|                                       |                                    |                                   |        |          |         |       |       | Payments
Due
|                                       |                                    |                                   |        |          |         |       |       |             
|                                       |                                    |                                   |        |          |         |       |       | Less Than    |   | 1 to 3 |        | More Than
|Contractual
Obligations                |                                    | Total                             |        | One Year |         | Years |       | 3 Years     
|                                       |                                    |                                   |        |          |         |       |       |             
|Guaranteed Preferred Beneficial        |                                    |                                   |        |          |         |       |       |              |   |        |        |           |   |  |        |        
|                                       |                                    | Interests in the Companys Junior |        |          |         |       |       |              |   |        |        |           |   |  |        |         |         | 
|                                       |                                    | Subordinated Debentures           |        | $        | 105,446 |       |       |              |  |        |        |           |  |  |        | $       | 105,446 | 
|Long Term Senior Term Loans            |                                    |                                   | 67,510 |          |         | $     | 9,268 |              |   | $      | 18,537 |           |   |  | 39,705 |        
|Bank Revolving Credit Facility         |                                    |                                   | 48,286 |          |         |       |      |              |   |        |       |           |   |  | 48,286 |        
|Long Term Unsecured Subordinated Notes |                                    |                                   | 42,591 |          |         |       |      |              |   |        |       |           |   |  | 42,591 |        
|Operating Leases                       |                                    |                                   | 32,563 |          |         |       | 6,677 |              |   |        | 9,402  |           |   |  | 16,484 |        
|Deferrred Compensation Obligations     |                                    |                                   | 6,358  |          |         |       | 948   |              |   |        | 1,896  |           |   |  | 3,514  |        
|Capital Lease Obligations              |                                    |                                   | 235    |          |         |       | 74    |              |   |        | 108    |           |   |  | 53     |        
|Other Long Term Obligations            |                                    |                                   | 6,349  |          |         |       | 1,544 |              |   |        | 1,541  |           |   |  | 3,264  |        
|                                       |                                    |                                   |        |          |         |       |       |              |   |        |        |           |   |  |        |         |         | 
|                                       | Total Contractual Cash Obligations |                                   | $      | 309,338  |         |       | $     | 18,511       |   |        | $      | 31,484    |   |  | $      | 259,343 |        
|                                       |                                    |                                   |        |          |         |       |       |              |   |        |        |           |   |  |        |         |         | 

All of the obligations noted above are reflected on the Companys Consolidated
Balance Sheet as of March 31, 2003, except for the Operating Leases.



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As of March 31, 2003, the Company had $5.2 million available under its secured
credit facilities. The Company had approximately $116.0 million of outstanding
debt under its secured credit facilities at March 31, 2003, consisting of $67.5
million in term loans, $48.3 million in revolving credit borrowings and $0.2
million in capitalized lease obligations. The term loans consisted of a $37.0
million Term B Loan (the Term Loan B) currently at a three (3) month LIBOR
rate of 5.125% and a $30.5 million Term A loan (the Term Loan A) at a three
(3) month LIBOR rate of 4.375%. The revolver borrowings (the Revolver)
consist of $20.0 million currently at a three (3) month
LIBOR rate of 4.44%,
$8.0 million at a three (3) month LIBOR rate of 4.375% and
$20.3 million at the prime rate of 6.00%. The capitalized lease
obligations were at various interest rates.

As of March 31, 2003 the Company had no material purchase commitments for
capital expenditures.

Interest on the Amended Subordinated Debt Issuance of $40 million which matures
September 29, 2009 is at a fixed rate of 18.0% per annum, with cash interest
payments being required on a quarterly basis at a fixed rate of 13.5%
commencing November 15, 2001. The outstanding principal balance of the Amended
Subordinated Debt Issuance shall be increased on a quarterly basis at the
remaining 4.5% fixed rate (the PIK Amount). All of the PIK Amounts are due
on the fifth anniversary of the Amended Subordinated Debt Issuance. As of
March 31, 2003, the outstanding Amended Subordinated Debt Issuance including
the PIK Amounts was $42.6 million.

The Senior Credit Agreement, among other provisions, contains financial
covenants requiring the maintenance of specific ratios and levels of financial
position, restricts the incurrence of additional debt, and the sale of assets,
and permits acquisitions only with the consent of the lenders. The Company was
in full compliance with all provisions of the Senior Credit Agreement as of
March 31, 2003.

The Company has deferred tax assets aggregating $35.0 million and deferred tax
liabilities of $5.7 million as of March 31, 2003, as determined in accordance
with SFAS 109. Management believes that the Companys deferred tax assets will
be realized through the reversal of existing temporary differences between the
financial statement and tax basis, as well as through future taxable income.

Critical Accounting Policies and Estimates

The Companys accounting policies are more fully described in Note 2, Summary
of Significant Accounting Policies, of Notes To Consolidated Financial
Statements. As disclosed in Note 2, the preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions about future events that affect the amounts
reported in the financial statements and accompanying notes. Future events and
their effects cannot be determined with absolute certainty. Therefore, the
determination of estimates requires the exercise of judgment. Actual results
may differ from those estimates, and such differences may be material to the
consolidated financial statements.

The most significant accounting estimates inherent in the preparation of the
Companys consolidated financial statements include estimates associated with
its evaluation of the recoverability of goodwill as well as those used in the
determination of liabilities related to insurance programs, litigation, and
taxation. In addition, significant estimates form the basis for the Companys
reserves with respect to sales and returns allowances, collectibility of
accounts receivable, inventory valuations, deferred tax assets, and certain
benefits provided to current employees. Various assumptions and other factors
underlie the determination of these significant estimates. The process of
determining significant estimates is fact specific and takes into account
factors such as historical experience, current and expected economic conditions
and product mix. The Company constantly re-evaluates these significant factors
and makes adjustments where facts and circumstances dictate. Specific factors
are as follows: recoverability of goodwill and intangible assets are subject
to annual impairment testing; litigation is based on projections provided by
legal counsel; deferred taxes are based on the Companys projections of future
taxable income; sales



Page 16 of  26



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##### 



and returns and allowances are based on historical activity and customer
contracts; accounts receivable reserves are based on doubtful accounts and
aging of outstanding balances; inventory reserves are based on expected
obsolescence and excess inventory levels; and employee benefits are based on
benefit plan requirements and severance agreements. Historically, actual
results have not significantly deviated from those determined using the
estimates described above.

Revenue Recognition:

Revenue from sales of products is recorded upon the passing of title and risks
of ownership to the customer, which occurs upon the shipment of goods.

The Company offers a variety of sales incentives to its customers primarily in
the form of discounts and rebates. Discounts are recognized in the financial
statements at the date of the related sale. Rebates are estimated based on the
anticipated rebate to be paid and a portion of the estimated cost of the rebate
is allocated to each underlying sales transaction. Rebates and discounts 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.

Inventory Realization:

Inventories consisting predominantly of finished goods are valued at the lower
of cost or market, cost being determined principally on the first-in, first-out
method. Excess and obsolete inventories are carried at net realizable value.
The historical usage rate is the primary factor used by the Company in
assessing the net realizable value of excess and obsolete inventory. A
reduction in the carrying value of an inventory item from cost to market is
recorded for inventory with no usage in the preceding twelve month period or
with on hand quantities in excess of twenty-four months average usage.

Property and Equipment:

Property and equipment, including assets acquired under capital leases, are
carried at cost and include expenditures for new facilities and major renewals.
Maintenance and repairs are charged to expense as incurred. When assets are
sold or otherwise disposed of, the cost and related accumulated depreciation
are removed from their respective accounts, and the resulting gain or loss is
reflected in current operations.

Depreciation:

For financial accounting purposes, depreciation, including that related to
plant and equipment acquired under capital leases, is computed on the
straight-line method over the estimated useful lives of the assets, generally
three to ten years, or, if shorter, over the terms of the related leases.

Goodwill and Other Intangible Assets:

Prior to January 1, 2002, the Company recorded goodwill related to the excess
of acquisition cost over the fair value of net assets acquired and amortized
the goodwill on a straight-line basis over twenty-five to forty years. The
Company adopted SFAS No. 142, Goodwill and Other Intangible Assets and
accordingly, goodwill is no longer amortized, but is reviewed periodically for
impairment. Other intangible assets arising principally from acquisitions are
amortized on a straight-line basis over periods ranging from three to
twenty-five years.

Long-Lived Assets:

Under the provisions of SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, the Company has evaluated its long-lived assets
for financial impairment and will continue to evaluate them based on the
estimated undiscounted future cash flows as events or changes in circumstances
indicate that the carrying amount of such assets may not be fully recoverable.



Page 17 of  26



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Income Taxes:

Deferred income taxes are computed using the asset and liability method. Under
this method, deferred income tax assets and liabilities are determined based on
differences between financial reporting and tax basis of assets and liabilities
(temporary differences) and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.

Self-insurance Reserves:

The Company purchases third party insurance for workers compensation,
automobile, product and general liability claims that exceed a certain level.
However, the Company is responsible for the payment of claims under these
insured limits. In estimating the obligation associated with incurred losses,
the Company utilizes loss development factors prepared by consulting insurance
carriers. These development factors utilize historical data to project the
future development of incurred losses. Loss estimates are adjusted based upon
actual claims settlements and reported claims.

Retirement Benefits:

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

Shipping and Handling

The costs incurred to ship product to customers, including freight and handling
expenses, are included in selling, general and administrative expenses on the
Companys Statements of Operations. For the three months ended March 31, 2003
and 2002, shipping and handling costs included in selling, general and
administrative were $3,482 and $2,936, respectively.

Research and Development:

The Company incurs research and development costs in connection with
improvements to the key duplicating and engraving machines. For the three
months ended March 31, 2003 and 2002, research and development expenses,
consisting primarily of internal wages and benefits, were $293 and $360,
respectively.

Fair Value of Financial Instruments:

Cash, accounts receivable, short-term borrowings, accounts payable, accrued
liabilities and bank revolving credit are reflected in the consolidated
financial statements at fair value due to short-term maturity or revolving
nature of these instruments.

Translation of Foreign Currencies:

The translation of the Companys Canadian foreign currency based financial
statements into U.S. dollars is performed for balance sheet accounts using
exchange rates in effect at the balance sheet date and for revenue and expense
accounts using an average exchange rate during the period.



Page 18 of  26



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##### 



Comprehensive Income (Loss):

The components of comprehensive income (loss) for the three month periods ended
March 31, 2003 and 2002 were as follows:

|                                        |  |                    |        |      |  |   |        |  
|--------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|                                        |  | Three Months Ended
|                                        |  | March 31          
|                                        |  | 2003               |        | 2002
|                                        |  |                    |        |     
|Net loss                                |  | $                  | (4,041 | )    |  | $ | (1,262 | )
|Foreign currency translation
adjustment |  |                    | (36    | )    |  |   |       |  
|                                        |  |                    |        |      |  |   |        |  
|Comprehensive loss                      |  | $                  | (4,077 | )    |  | $ | (1,262 | )
|                                        |  |                    |        |      |  |   |        |  

Use of Estimates in the Preparation of Financial Statements:

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Please reference Note 2, Summary of Significant Accounting Policies, of Notes
To Consolidated Financial Statements for additional related information.

Inflation

Inflation in recent years has had a modest impact on the operations of the
Company. Continued inflation, over a period of years at higher than current
rates, would result in significant increases in inventory costs and operating
expenses. However, such higher cost of sales and operating expenses can
generally be offset by increases in selling prices, although the ability of the
Companys operating divisions to raise prices is dependent on competitive
market conditions.

Forward Looking Statements

Certain disclosures related to acquisitions and divestitures, refinancing,
capital expenditures, resolution of pending litigation and realization of
deferred tax assets contained in this report involve risks and uncertainties
and may constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. We have based these forward-looking
statements on our current expectations, assumptions and projections about
future events. These forward-looking statements are subject to known and
unknown risks, uncertainties and assumptions that may cause our actual results,
levels of activity, performance, or achievements to be materially different
from any 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 captions Risk
Factors set forth in Item 1 of the Companys Annual Report on Form 10-K for
the year ended December 31, 2002. Given these uncertainties, current or
prospective investors are cautioned not to place undue reliance on any such
forward-looking statements.

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. All forward-looking statements attributable to us
or persons acting on



Page 19 of  26



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##### 



our behalf are expressly qualified in their entirety by the cautionary
statements included in this Report. We undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this
Report might not occur.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to the impact of interest rate changes as borrowings
under the senior credit facility bear interest at variable interest rates. It
is Hillmans policy to enter into interest rate transactions only to the extent
considered necessary to meet objectives. On March 31, 2002, the Company
entered into an interest rate cap agreement on a notional amount of $26.6
million of senior term debt. The interest rate cap agreement, which expires
September 30, 2004, caps the LIBOR interest rate at 6% plus the senior credit
facility LIBOR margin of between 3.25% and 3.75%. Based on Hillmans exposure
to variable rate borrowings at March 31, 2003, a one percent (1%) change in the
weighted average interest rate would change the annual interest expense by
approximately $1.0 million.

The Company is exposed to foreign exchange rate changes of the Canadian
currency as it impacts the $0.4 million net asset value of its Canadian
subsidiary, The Hillman Group Canada, Ltd., as of March 31, 2003. Management
considers the Companys exposure to foreign currency translation gains or
losses to be minimal.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Companys Chief Executive Officer and Chief Financial Officer have
evaluated the effectiveness of the Companys disclosure controls and procedures
(as such term is defined in Rules 13a-14 and 15d-14 under the Securities
Exchanges Act of 1934, as amended) as of a date within 90 days prior to filing
date of this annual report (the Evaluation Date). Based on such evaluation,
such officers have concluded that, as of the Evaluation Date, the companys
disclosure controls and procedures are effective in alerting them on a timely
basis to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the Companys reports
filed or submitted under the Securities Exchange Act of 1934.

Changes in Internal Controls

Since the Evaluation Date, there have not been any significant changes in the
Companys internal controls or in other factors that could significantly affect
such controls.



Page 20 of  26



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##### 



PART II
OTHER INFORMATION

Items 1, 2, 3, 4 & 5  None

Item 6  Exhibits and Reports on Form 8-K

a)                Exhibits, Including Those Incorporated by Reference.



|    |  | The following is a list of exhibits filed as part of this
quarterly report on Form 10-Q. Where so indicated by footnote,
exhibits which were previously filed are incorporated by reference.
For exhibits incorporated by reference, the location of the
exhibit in the previous filing is indicated in parentheses.                                          
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|2.1 |  | Unit Repurchase Agreement by and among The Hillman Companies, Inc.,
SunSub Holdings LLC and GC-Sun Holdings, L.P. dated April 13, 2002. (15)
(Exhibit 10.2)                                                                                                                                                                                                   
|   
|2.2 |  | Asset Purchase Agreement between Fastenal Company and The Hillman Group,
Inc. dated October 3, 2002. (16) (Exhibit 10.3)                                                                                                                                                                                                                                      
|   
|2.3 |  | Agreement and Plan of Merger dated as of June 18, 2001 by and among
Allied Capital Corporation, Allied Capital Lock Acquisition Corporation
and SunSource Inc. (10) (Exhibit 2.1)                                                                                                                                                                             
|   
|2.4 |  | Asset Purchase Agreement dated September 28, 2001, by and between
SunSource Technology Services, LLC, and STS Operating, Inc. (12) (Exhibit
2.1)                                                                                                                                                                                                              
|   
|2.5 |  | Amended and Restated Agreement and Plan of Merger dated as of April 7,
2000 among SunSource Inc., The Hillman Group, Inc., the Hillman Group
Acquisition Corp., Axxess Technologies, Inc., and certain security holders
of Axxess (6) (Exhibit 2.1)                                                                                                           
|   
|2.6 |  | Asset Purchase Agreement dated as of April 12, 2000, among VVP America,
Inc., VVP America Acquisition, L.L.C., SunSource Inc., SunSource
Investment Company, Inc., Harding Glass, Inc., and SunSub A Inc. (6)
(Exhibit 2.2)                                                                                                                                   
|   
|2.7 |  | Contribution Agreement by and among SunSource Inc., SunSource Industrial
Services Company, Inc., KAR Products Inc., A & H Holding Company, Inc.,
SunSource Canada Investment Company, A. & H. Bolt & Nut Company Limited
and GC-Sun Holdings, L.P. dated as of February 10, 2000. (5) (Exhibit 2.1)                                                           
|   
|2.8 |  | Amendment No. 1 to Contribution Agreement by and among SunSource Inc.,
SunSource Industrial Services Company, Inc., Kar Products LLC (as
successor by merger to Kar Products, Inc.), A&H Holding Company, Inc.,
SunSource Canada Investment Company, A. & H. Bolt & Nut Company Limited
and GC-Sun Holdings, L.P. dated as of March 2, 2000. (5) (Exhibit 2.2)
|   
|3.1 |  | Amended and Restated bylaws as adopted by the Corporations stockholders
as of September 26, 2001 (13) (Exhibit 3.1)                                                                                                                                                                                                                                          
|   
|3.2 |  | Amended and Restated Certificate of Incorporation of the Company. (3) (Exhibit 3.1)                                                                                                                                                                                                                                                                           
|   
|3.3 |  | Amendment to Amended and Restated Certificate of Incorporation of the Company. (17) (Exhibit 3.3)                                                                                                                                                                                                                                                             
|   
|4.1 |  | Form of Stockholders Agreement (11) (Exhibit d5)                                                                                                                                                                                                                                                                                                              
|   
|4.2 |  | Amended and Restated Declaration of Trust (3) (Exhibit 4.1)                                                                                                                                                                                                                                                                                                   



Page 21 of  26



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|4.3   |  | Indenture between the Company and the Bank of New York (3) (Exhibit 4.2)                                                                                                                                                                                                                                                                                                                                                                           
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|4.4   |  | Preferred Securities Guarantee (3) (Exhibit 4.3)                                                                                                                                                                                                                                                                                                                                                                                                   
|     
|4.5   |  | Rights Agreement between the Company and the Registrar and Transfer Company (3) (Exhibit 10.5)                                                                                                                                                                                                                                                                                                                                                     
|     
|10.1  |  | Credit Agreement dated as of September 28, 2001, by and among The Hillman
Group, Inc., as Borrower and Heller Financial, Inc., as Agent, an Issuing
Lender and a Lender and Antares Capital Corporation, General Electric
Capital Corporation and Madison Capital Funding LLC each as a Co-Agent and
the other financial institutions party hereto as lenders. (13) (Exhibit
10.1)                                                                 
|     
|10.2  |  | Consent and First Amendment to the Credit Agreement dated as of September
28, 2001, by and among The Hillman Group, Inc. as Borrower and Heller
Financial, Inc. as Agent, an Issuing Lender and a Lender and Antares
Capital Corporation, General Electric Capital Corporation and Madison
Capital Funding, LLC, each as Co-Agent and the other financial
institutions party hereto as lenders. (14) (Exhibit 10.1)                                
|     
|10.3  |  | Consent and Second Amendment to the Credit Agreement dated as of
September 28, 2001, by and among The Hillman Group, Inc. as Borrower and
Heller Financial, Inc. as Agent, an Issuing Lender and a Lender and
Antares Capital Corporation, General Electric Capital Corporation and
Madison Capital Funding, LLC, each as Co-Agent and the other financial
institutions party hereto as lenders. (18) (Exhibit 10.3)                               
|     
|10.4  |  | Third Amendment to the Credit Agreement dated as of September 28, 2001,
by and among The Hillman Group, Inc. as Borrower and Heller Financial,
Inc. as Agent, an Issuing Lender and a Lender and Antares Capital
Corporation, General Electric Capital Corporation and Madison Capital
Funding, LLC, each as Co-Agent and the other financial institutions party
hereto as lenders. (18) (Exhibit 10.4)                                            
|     
|10.5  |  | First Amended and Restated Investment Agreement by and among SunSource
Inc., SunSource Investment Company, Inc., The Hillman Group, Inc., and
Allied Capital Corporation dated September 28, 2001. (13) (Exhibit 10.2)                                                                                                                                                                                                                             
|     
|10.6  |  | SunSource Inc. 2001 Stock Incentive Plan. (13) (Exhibit 10.3)                                                                                                                                                                                                                                                                                                                                                                                      
|     
|10.7  |  | Termination Agreement dated as of June 18, 2001 by and among SunSource,
Lehman Brothers, Donald T. Marshall, John P. McDonnell, Norman V.
Edmonson, Harold Cornelius, Max W. Hillman, Joseph P. Corvino and the
respective S corporations of Marshall, McDonnell, Edmonson, Cornelius,
Hillman and Corvino. (11) (Exhibit d6)                                                                                                                      
|     
|10.8  |  | Employment Agreement by and between SunSource Inc. and Maurice P.
Andrien, Jr. entered into June 18, 2001. (11) (Exhibit e1)                                                                                                                                                                                                                                                                                                                       
|     
|10.9  |  | Employment Agreement by and between SunSource Inc. and Stephen W. Miller
entered into June 18, 2001 (11) (Exhibit e2)                                                                                                                                                                                                                                                                                                                              
|     
|10.10 |  | Employment Agreement by and between SunSource Inc. and Joseph M. Corvino
entered into June 18, 2001. (13) (Exhibit 10.7)                                                                                                                                                                                                                                                                                                                           
|     
|10.11 |  | Employment Agreement by and between SunSource Inc. and Max. W. Hillman
entered into June 18, 2001. (13) (Exhibit 10.8)                                                                                                                                                                                                                                                                                                                             
|     
|10.12 |  | SunSource Inc. Nonqualified Deferred Compensation Plan dated as of
August 1, 2000. (9) (Exhibit 10.1)                                                                                                                                                                                                                                                                                                                                              
|     
|10.13 |  | Investment Agreement entered into as of December 28, 2000 by and among
SunSource Technology Services, Inc., SunSource Investment Company, Inc.,
SunSub A, Inc., the Hillman Group, Inc., Axxess Technologies, Inc.,
SunSource Corporate Group, Inc., SunSource Industrial Services, Inc.,
SunSource inventory Management Company, Inc., A&H Holding Co., SunSub C,
Inc., SunSub Holdings, L.L.C. and Allied Capital Corporation. (9) (Exhibit
10.8)



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|10.14 |  | 1998 Equity Compensation Plan-Amendment to Nonqualified Stock Option
Grant dated as of January 26, 2000. (8) (Exhibit 10.1)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------
|     
|10.15 |  | 1998 Equity Compensation Plan  Restricted Stock Grant dated as of
January 26, 2000. (8) (Exhibit 10.2)                    
|     
|10.16 |  | SunSource Inc. 1998 Equity Compensation Plan (1) (Exhibit 10.1)                                                            
|     
|10.17 |  | SunSource Inc. Stock Compensation Plan for Non-Employee Directors (1)
(Exhibit 10.2)                                       
|     
|21.1  |  | Subsidiaries (As of December 31, 2002) (18) (Exhibit 21.1)                                                                 
|     
|99.1  |  | * Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.  
|     
|99.2  |  | * Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.  
|     
|     
|     
|(1)   |  | Filed as an exhibit to Quarterly Report on Form 10-Q for the Quarter
ended March 31, 1998.                                 
|     
|(2)   |  | Filed as an exhibit to Registration Statement No. 333-19077 on Form S-4.                                                   
|     
|(3)   |  | Filed as an exhibit to Registration Statement No. 333-44733 on Form S-2.                                                   
|     
|(4)   |  | Filed on March 31, 1994, as an exhibit to Annual Report on Form 10-K for
the year ended December 31, 1993.                 
|     
|(5)   |  | Filed on March 17, 2000 as an exhibit to Current Report on Form 8-K.                                                       
|     
|(6)   |  | Filed on April 24, 2000 as an exhibit to Current Report on Form 8-K.                                                       
|     
|(7)   |  | Filed on May 11, 2000 as Item 7 to Current Report on Amendment No. 1 to
Form 8-K originally filed on April 24, 2000.       
|     
|(8)   |  | Filed on March 30, 2000 as an exhibit to Annual Report on Form 10-K for
the year ended December 31, 1999.                  
|     
|(9)   |  | Filed on April 2, 2001 as an exhibit to Annual Report on form 10-K for
the year ended December 31, 2000.                   
|     
|(10)  |  | Filed on June 21, 2001 as an exhibit to the Current Report on form 8-K
filed on June 21, 2001.                             
|     
|(11)  |  | Filed as an exhibit to Schedule 13E-3 filed on July 11, 2001, as amended.                                                  
|     
|(12)  |  | Filed as an exhibit to the Current Report on Form 8-K filed on October
15, 2001.                                           
|     
|(13)  |  | Filed as an exhibit to Quarterly Report on form 10-Q for the Quarter
ended September 30, 2001.                             
|     
|(14)  |  | Filed as an exhibit to Quarterly Report on form 10-Q for the Quarter
ended March 31, 2002.                                 
|     
|(15)  |  | Filed as an exhibit to Quarterly Report on form 10-Q for the Quarter
ended June 30, 2002.                                  
|     
|(16)  |  | Filed as an exhibit to the Current Report on Form 8-K filed on October 4,
2002.                                            
|     
|(17)  |  | Filed on April 1, 2002 as an exhibit to the Annual Report on Form 10-K
for the year ended December 31, 2001.               
|     
|(18)  |  | Filed on March 27, 2003 as an exhibit to the Annual Report on Form 10-K
for the year ended December 31, 2002.              



|* |  | Filed herewith.
|- |  | ---------------



Page 23 of  26



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

THE HILLMAN COMPANIES, INC.









|                          |  |                            | 
|------------------------- |  | -------------------------- | 
|/s/ James P. Waters       |  | /s/ Harold J. Wilder       | 
|                          |  |                            | 
|James P. Waters           |  | Harold J. Wilder           | 
|Vice President  Finance  |  | Controller                 | 
|(Chief Financial Officer) |  | (Chief Accounting Officer) | 

DATE: May 14, 2003



Page 24 of  26



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CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Max W. Hillman, Chief Executive Officer, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of The Hillman
Companies, Inc.;                                                                                                                                                                                                                                            
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                   
|
| | 4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                      
|



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        
|



| | 5. |  | The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the
audit committee of registrants board of directors (or persons
performing the equivalent functions):
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        

|
|
|

Date: 5/14/03

| |                                                          | 
| | -------------------------------------------------------- | 
| | /s/ Max W. HillmanMax W. Hillman
Chief Executive Officer | 



Page 25 of  26



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CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, James P. Waters, Chief Financial Officer, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of The Hillman
Companies, Inc.;                                                                                                                                                                                                                                            
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                   
|
| | 4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                      
|



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        
|



| | 5. |  | The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the
audit committee of registrants board of directors (or persons
performing the equivalent functions):
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|



| | d) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | e) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        
|



| | 6. |  | The registrants other certifying officer and I have indicated in
this quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: 5/14/03

| |                                                            | 
| | ---------------------------------------------------------- | 
| | /s/ James P. WatersJames P. Waters
Chief Financial Officer | 



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