UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 Commission file number 1-13293
 The Hillman Companies, Inc.
  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)
 (513) 851-4900
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which Registered11.6% Junior Subordinated Debentures 
Preferred Securities Guaranty
    
    None
None
 Securities registered pursuant to Section 12(g) of the Act:
 o þ
 o þ
  þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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PART I
 Item 1  Business .
 General
  http://www.hillmangroup.com
 Background
     2




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Industry Overview
     The Hillman Group
   3




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Products and Suppliers
  Fasteners
 ,
   4




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Keys and Key Accessories
      Engraving
   5




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Letters, Numbers and Signs
      Threaded Rod
    Builders Hardware
 
 6




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Markets and Customers
      Sales and Marketing
   7




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Competition
 
 Insurance Arrangements
  Employees
  Backlog
  Where You Can Find More Information
  8




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http://www.sec.gov
 Item 1A  Risk Factors.
  Current economic conditions may adversely impact demand for our products, reduce access to credit
and cause our customers and others with which we do business to suffer financial hardship, all of
which could adversely impact our business, results of operations, financial condition and cash
flows.
  The Companys Board of Directors recently determined to temporarily defer the payment of
distributions to holders of Trust Preferred Securities in order to retain capital and remain in
compliance with the Companys credit facility. At the conclusion of the Deferral Period, the
Company may conclude that it is necessary to declare a new Deferral Period in order to retain
capital. If so, the value of the market price of the Trust Preferred Securities may continue to
suffer.
  9




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The Company operates in a highly competitive industry, which may have a material adverse effect on
its business, financial condition and results of operations.
  If the current weakness continues in the retail markets including hardware stores, home centers,
mass merchants and other retail outlets in North America, or general recessionary conditions
worsen, it could have a material adverse effect on the Companys business.
  The Company has significant indebtedness that could affect operations and financial condition.
   The failure to meet certain financial covenants required by our credit agreements may materially
and adversely affect assets, financial position and cash flows.
  10




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The Companys business, financial condition and results of operations may be materially adversely
affected by seasonality.
  Large customer concentration and the inability to penetrate new channels of distribution could
adversely affect the business.
  Successful sales and marketing efforts depend on the Companys ability to recruit and retain
qualified employees.
  The Company is exposed to adverse changes in currency exchange rates.
   The Companys results of operations could be negatively impacted by inflation or deflation in the
cost of raw materials, freight and energy.
  11




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The Companys business is subject to risks associated with sourcing product from overseas.
   Acquisitions have formed a significant part of our growth strategy in the past and may continue to
do so. If we are unable to identify suitable acquisition candidates or obtain financing needed to
complete an acquisition, our growth strategy may not succeed.
  If the Company were required to write down all or part of its goodwill or indefinite-lived
tradenames, its results of operations could be materially adversely affected.
  12




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The Companys success is highly dependent on information and technology systems.
  The inability to make timely and cost effective acquisitions may adversely affect the Companys
business.
   The Company is subject to fluctuations in interest rates.
  Item 1B  Unresolved Staff Comments.
  13




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Item 2  Properties.
  ApproximateLocation
    
    Square Footage
    
    DescriptionCincinnati, Ohio
    
    
    248,200
    
    
    Office, DistributionForest Park, Ohio
    
    
    335,700
    
    
    DistributionTempe, Arizona
    
    
    184,100
    
    
    Office, Mfg., DistributionJacksonville, Florida
    
    
    96,500
    
    
    DistributionShafter, California
    
    
    84,000
    
    
    DistributionLewisville, Texas
    
    
    80,500
    
    
    DistributionWilsonville, Oregon
    
    
    29,400
    
    
    DistributionGreen Island, New York
    
    
    56,000
    
    
    DistributionLaCrosse, Wisconsin
    
    
    48,000
    
    
    DistributionGoodlettsville, Tennessee
    
    
    72,000
    
    
    Mfg., DistributionPompano Beach, Florida
    
    
    38,800
    
    
    Office, DistributionMississauga, Ontario
    
    
    34,700
    
    
    Office, Distribution
  Item 3  Legal Proceedings.
  Item 4  Submission of Matters to a Vote of Security Holders.
  14




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PART II
 Item 5 Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities.
 Stock Exchange Listing
  2008
    
    High
    
    LowFirst Quarter
    
    $
    29.81
    
    
    $
    28.47Second Quarter
    
    
    30.22
    
    
    
    29.30Third Quarter
    
    
    30.23
    
    
    
    28.75Fourth Quarter
    
    
    28.50
    
    
    
    10.00
 2007
    
    High
    
    LowFirst Quarter
    
    $
    30.10
    
    
    $
    28.85Second Quarter
    
    
    30.20
    
    
    
    29.15Third Quarter
    
    
    29.75
    
    
    
    28.25Fourth Quarter
    
    
    29.35
    
    
    
    28.20
  Distributions
     15




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Issuer Purchases of Equity Securities
  Item 6  Selected Financial Data.
   (dollars in thousands)Successor
    
    
    PredecessorNine
    
    
    ThreeMonths
    
    
    MonthsYear Ended December 31,
    
    Ended
    
    
    Ended2008
    
    2007
    
    2006
    
    2005
    
    12/31/04
    
    
    03/31/04Income Statement Data:Net sales
    
    $
    481,923
    
    
    $
    445,628
    
    
    $
    423,901
    
    
    $
    382,512
    
    
    $
    273,374
    
    
    
    $
    78,190Gross profit
    
    
    237,276
    
    
    
    229,895
    
    
    
    220,450
    
    
    
    206,290
    
    
    
    150,402
    
    
    
    
    42,807Non-recurring expense (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,707Extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    726
    
    
    
    
    
    
    
    
    
    
    
    
    Net (loss) income
    
    
    (2,953
    )
    
    
    (9,759
    )
    
    
    (7,648
    )
    
    
    (2,442
    )
    
    
    779
    
    
    
    
    (20,366
    )Balance Sheet Data at December 31:Total assets (3)
    
    $
    652,794
    
    
    $
    662,475
    
    
    $
    655,999
    
    
    $
    633,703
    
    
    $
    631,314
    
    
    
    
    N/ALong-term debt and
capitalized lease obligations (1)
    
    
    253,069
    
    
    
    281,800
    
    
    
    284,406
    
    
    
    263,508
    
    
    
    264,101
    
    
    
    
    N/A
 
 (1)
    
    Includes current portion of long-term debt and capitalized lease obligations.(2)
    
    Non-recurring expenses incurred in connection with CHS merger including $24,353 for
stock options granted at an exercise price below fair value, $4,035 in investment banking
and legal fees, $1,922 in management bonuses and $397 in payroll taxes.(3)
    
    Financing fees in the amount of $2,415 that were previously netted against mandatorily
redeemable preferred stock at December 31, 2004 through 2007 have been reclassified to
deferred financing fees. 16




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Item 7 Managements Discussion and Analysis of Financial
Condition and Results of Operation.
  Forward Looking Statements
    General
  17




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Merger Transaction
   Financing Arrangements
     18




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Acquisitions
   19




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Product Revenues
  Year
    
    
    Year
    
    
    YearEnded
    
    
    Ended
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006Net salesKeys
    
    $
    80,754
    
    
    $
    79,370
    
    
    $
    72,870Engraving
    
    
    40,945
    
    
    
    39,158
    
    
    
    35,976Letters, numbers and signs
    
    
    34,671
    
    
    
    37,711
    
    
    
    34,518Fasteners
    
    
    261,461
    
    
    
    230,857
    
    
    
    229,732Threaded rod
    
    
    37,330
    
    
    
    30,693
    
    
    
    28,156Code cutter
    
    
    4,934
    
    
    
    5,149
    
    
    
    4,810Builders hardware
    
    
    1,606
    
    
    
    2,578
    
    
    
    Other
    
    
    20,222
    
    
    
    20,112
    
    
    
    17,839Consolidated net sales
    
    $
    481,923
    
    
    $
    445,628
    
    
    $
    423,901
 20




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Results of Operations
 Sales and Profitability for each of the Three Years Ended December 31,
 (dollars in thousands)2008
    
    
    2007
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    TotalNet sales
    
    $
    481,923
    
    
    
    100.0
    %
    
    $
    445,628
    
    
    
    100.0
    %
    
    $
    423,901
    
    
    
    100.0
    %Cost of sales (exclusive of
depreciation and amortization
shown below)
    
    
    244,647
    
    
    
    50.8
    %
    
    
    215,733
    
    
    
    48.4
    %
    
    
    203,451
    
    
    
    48.0
    %Gross profit
    
    
    237,276
    
    
    
    49.2
    %
    
    
    229,895
    
    
    
    51.6
    %
    
    
    220,450
    
    
    
    52.0
    %Operating expenses:Selling
    
    
    82,312
    
    
    
    17.1
    %
    
    
    80,174
    
    
    
    18.0
    %
    
    
    75,868
    
    
    
    17.9
    %Warehouse & delivery
    
    
    55,781
    
    
    
    11.6
    %
    
    
    55,328
    
    
    
    12.4
    %
    
    
    55,183
    
    
    
    13.0
    %General & administrative
    
    
    20,776
    
    
    
    4.3
    %
    
    
    21,232
    
    
    
    4.8
    %
    
    
    21,257
    
    
    
    5.0
    %Stock compensation expense
    
    
    2,481
    
    
    
    0.5
    %
    
    
    5,322
    
    
    
    1.2
    %
    
    
    1,239
    
    
    
    0.3
    %Total SG&A
    
    
    161,350
    
    
    
    33.5
    %
    
    
    162,056
    
    
    
    36.4
    %
    
    
    153,547
    
    
    
    36.2
    %Depreciation
    
    
    17,835
    
    
    
    3.7
    %
    
    
    18,224
    
    
    
    4.1
    %
    
    
    17,132
    
    
    
    4.0
    %Amortization
    
    
    7,073
    
    
    
    1.5
    %
    
    
    7,274
    
    
    
    1.6
    %
    
    
    7,748
    
    
    
    1.8
    %Extinguishment of debt
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    726
    
    
    
    0.2
    %Management fees
    
    
    1,043
    
    
    
    0.2
    %
    
    
    1,023
    
    
    
    0.2
    %
    
    
    1,019
    
    
    
    0.2
    %Total operating expenses
    
    
    187,301
    
    
    
    38.9
    %
    
    
    188,577
    
    
    
    42.3
    %
    
    
    180,172
    
    
    
    42.5
    %Other income (expense)
    
    
    (2,250
    )
    
    
    -0.5
    %
    
    
    839
    
    
    
    0.2
    %
    
    
    1,042
    
    
    
    0.2
    %Income from operations
    
    
    47,725
    
    
    
    9.9
    %
    
    
    42,157
    
    
    
    9.5
    %
    
    
    41,320
    
    
    
    9.7
    %Interest expense
    
    
    20,545
    
    
    
    4.3
    %
    
    
    25,528
    
    
    
    5.7
    %
    
    
    25,799
    
    
    
    6.1
    %Interest expense on mandatorily
redeemable preferred stock &
management purchased preferred
options
    
    
    11,091
    
    
    
    2.3
    %
    
    
    9,919
    
    
    
    2.2
    %
    
    
    8,894
    
    
    
    2.1
    %Interest expense on junior
subordinated debentures
    
    
    12,609
    
    
    
    2.6
    %
    
    
    12,609
    
    
    
    2.8
    %
    
    
    12,609
    
    
    
    3.0
    %Investment income on trust
common securities
    
    
    (378
    )
    
    
    -0.1
    %
    
    
    (378
    )
    
    
    -0.1
    %
    
    
    (378
    )
    
    
    -0.1
    %Income (loss) before taxes
    
    
    3,858
    
    
    
    0.8
    %
    
    
    (5,521
    )
    
    
    -1.2
    %
    
    
    (5,604
    )
    
    
    -1.3
    %Income tax provision
    
    
    6,811
    
    
    
    1.4
    %
    
    
    4,238
    
    
    
    1.0
    %
    
    
    2,044
    
    
    
    0.5
    %Net loss
    
    $
    (2,953
    )
    
    
    -0.6
    %
    
    $
    (9,759
    )
    
    
    -2.2
    %
    
    $
    (7,648
    )
    
    
    -1.8
    %
 21




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Current Economic Conditions
    Years Ended December 31, 2008 and 2007
    22




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23




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Years Ended December 31, 2007 and 2006
     24




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25




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Liquidity and Capital Resources
 Cash Flows
         26




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Liquidity
    AmountDecrease in cash and cash equivalents
    
    $
    (4,786
    )Increase in accounts receivable, net
    
    
    4,428Increase in inventories, net
    
    
    3,488Increase in other current assets
    
    
    69Increase in deferred taxes
    
    
    615Increase in accounts payable
    
    
    (2,177
    )Decrease in senior term loans & capital lease obligations
    
    
    311Increase in accrued salaries and wages
    
    
    (874
    )Decrease in accrued pricing allowances
    
    
    194Decrease in accrued income and other taxes
    
    
    157Increase in accrued interest
    
    
    (10
    )Increase in other accrued liabilities
    
    
    (36
    )Net increase in working capital for the year ended
December 31, 2008
    
    $
    1,379
 27




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Contractual Obligations
  Payments DueLess Than
    
    
    1 to 3
    
    
    3 to 5
    
    
    More ThanTotal
    
    
    One Year
    
    
    Years
    
    
    Years
    
    
    Five YearsContractual ObligationsJunior Subordinated Debentures (1)
    
    $
    116,110
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    116,110Long Term Senior Term Loans
    
    
    202,849
    
    
    
    2,080
    
    
    
    200,769
    
    
    
    
    
    
    
    Bank Revolving Credit Facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Long Term Unsecured Subordinated Notes
    
    
    49,820
    
    
    
    
    
    
    
    
    
    
    
    49,820
    
    
    
    Interest payments (2)
    
    
    26,765
    
    
    
    11,977
    
    
    
    14,788
    
    
    
    
    
    
    
    Operating Leases
    
    
    39,412
    
    
    
    8,254
    
    
    
    10,624
    
    
    
    7,355
    
    
    
    13,179Mandatorily Redeemable Preferred Stock
    
    
    100,146
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,146Management Purchased Preferred Options
    
    
    6,016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,016Accrued Compensation Preferred Options
    
    
    11,219
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,219Deferred Compensation Obligations
    
    
    4,254
    
    
    
    282
    
    
    
    564
    
    
    
    564
    
    
    
    2,844Capital Lease Obligations
    
    
    443
    
    
    
    250
    
    
    
    153
    
    
    
    40
    
    
    
    Other Long Term Obligations
    
    
    2,695
    
    
    
    1,153
    
    
    
    810
    
    
    
    203
    
    
    
    529FIN 48 Liabilities
    
    
    2,872
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,872Total Contractual Cash Obligations (3)
    
    $
    562,601
    
    
    $
    23,996
    
    
    $
    227,708
    
    
    $
    57,982
    
    
    $
    252,915
 
 (1)
    
    The junior subordinated debentures liquidation value is approximately $108,707.(2)
    
    Interest payments for Long Term Senior Term Loans and the Long Term Unsecured
Subordinated Notes. Interest payments on the variable rate Long Term Senior Term
Loans were calculated at the LIBOR rate plus margin of 3.46125% in effect as of
December 31, 2008.(3)
    
    All of the contractual obligations noted above are reflected on the Companys consolidated
balance sheet as of December 31, 2008 except for the interest payments and operating leases.
In addition to the contractual obligations above, the Company has issued certain equity
securities to management shareholders with terms that allow them to be put back to the Company
upon termination from employment, death or disability. The terms of the equity securities held
by management limit cash distributions for puttable equity securities to an aggregate of
$5.0 million per annum. As of December 31, 2008, no equity securities have been put back to
the Company by management shareholders. See Notes to
Consolidated Financial Statements for additional information.   Borrowings
  28




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(dollars in 000s)
    
    
    
    
    
    
    RatioActual
    
    
    RequirementFixed Charge RatioAdjusted EBITDA (1)
    
    $
    76,211Cash interest expense (2)
    
    
    19,112Interest on junior subordinated debentures
    
    
    12,231Capital expenditures, net of disposals
    
    
    13,334Scheduled principal payments
    
    
    2,283Tax payments, net
    
    
    985Total fixed charges
    
    $
    47,945Fixed charge ratio (must be above requirement)
    
    
    1.59
    
    
    
    1.15Interest Coverage RatioAdjusted EBITDA (1)
    
    $
    76,211Cash interest expense (2)
    
    $
    19,112Interest coverage ratio (must be above requirement)
    
    
    3.99
    
    
    
    2.50Leverage RatioSenior term loan balance
    
    $
    202,849Capital lease obligations
    
    
    400Subordinated notes
    
    
    49,820Total debt
    
    $
    253,069Adjusted EBITDA (1)
    
    $
    76,211Leverage ratio (must be below requirement)
    
    
    3.32
    
    
    
    3.50
 
 (1)
    
    Adjusted EBITDA is defined as income from operations ($47,725) plus depreciation
($17,835), amortization ($7,073), non-cash stock compensation expense ($2,481), foreign
exchange gains or losses ($980) and other non recurring expenses ($117).(2)
    
    Includes cash interest expense on senior term loans, capitalized lease obligations and
subordinated notes.  29




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Related Party Transactions
   Critical Accounting Policies and Estimates
  Revenue Recognition :
    Accounts Receivable and Allowance for Doubtful Accounts
  30




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Inventory Realization
  Goodwill and Other Intangible Assets
     Long-Lived Assets
  Income Taxes
  31




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Risk Insurance Reserves
   Common and Preferred Stock:
   32




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##### 



December 31,
    
    
    December 31,
    
    
    December 31,(dollars in 000s)
    
    2008
    
    
    2007
    
    
    2006Trailing twelve fiscal months EBITDA (1)
    
    $
    77,391
    
    
    $
    74,623
    
    
    $
    70,065Valuation Multiple (2)
    
    
    8.0
    
    
    
    8.3
    
    
    
    8.3Hillman Enterprise Value Excluding All Points
    
    
    619,128
    
    
    
    619,371
    
    
    
    581,540All Points Fair Value (3)
    
    
    
    
    
    
    10,243
    
    
    
    Hillman Enterprise Value
    
    
    619,128
    
    
    
    629,614
    
    
    
    581,540Less:Senior term loans
    
    
    202,849
    
    
    
    231,475
    
    
    
    233,825Bank revolving credit
    
    
    
    
    
    
    
    
    
    
    Unsecured subordinated notes
    
    
    49,820
    
    
    
    49,820
    
    
    
    49,820Junior subordinated debentures redemption value, net (4)
    
    
    105,446
    
    
    
    105,446
    
    
    
    105,446Total Debt
    
    
    358,115
    
    
    
    386,741
    
    
    
    389,091Plus:Cash
    
    
    7,133
    
    
    
    11,919
    
    
    
    2,551Less:Accrued Hillman Investment Company Class A Preferred (5)
    
    
    105,038
    
    
    
    93,480
    
    
    
    83,181Accrued Hillman Class A Preferred (5)
    
    
    154,297
    
    
    
    136,630
    
    
    
    120,960259,335
    
    
    
    230,110
    
    
    
    204,141Common Equity Value
    
    
    8,811
    
    
    
    24,682
    
    
    
    (9,142
    )Liquidity & Minority Discount on Common Only (6)
    
    
    2,643
    
    
    
    7,405
    
    
    
    (2,742
    )Discounted Common Equity Value
    
    
    6,168
    
    
    
    17,277
    
    
    
    (6,400
    )Fully-diluted Common Shares outstanding
    
    
    10,309
    
    
    
    10,209
    
    
    
    10,113Fully-diluted Discounted Common Value Per Common Share
    
    $
    598
    
    
    $
    1,692
    
    
    $
    (633
    )
 
 (1)
    -
    EBITDA is calculated for the most recent four fiscal quarters as follows: December 31,
    
    
    December 31,
    
    
    December 31,2008
    
    
    2007
    
    


    2006Income from operations
    
    $
    47,725
    
    
    $
    42,157
    
    
    $
    41,320Depreciation and amortization
    
    
    24,908
    
    
    
    25,498
    
    
    
    24,880Management fees
    
    
    1,043
    
    
    
    1,023
    
    
    
    1,019Stock compensation expense
    
    
    2,481
    
    
    
    5,322
    
    
    
    1,239Exchange rate (gain) loss
    
    
    980
    
    
    
    (409
    )
    
    
    76Extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    726Other adjustments
    
    
    254
    
    
    
    1,032
    
    
    
    805EBITDA
    
    $
    77,391
    
    
    $
    74,623
    
    
    $
    70,065
 
 The other adjustments include one time legal and professional fees.(2)
    -
    The Company periodically reviews the valuation multiple used and notes that it is consistent with
comparable multiples used for distribution companies.(3)
    -
    In the initial period following the acquisition of All Points, the purchase price was deemed the most
accurate measure of enterprise value.(4)
    -
    The value of the junior subordinated debentures is the redemption value of $25 per share.(5)
    -
    Redemption value of all preferred shares and options thereon, less any applicable strike price.(6)
    -
    Under the terms of the ESA agreement with management shareholders, the redemption of shares is subject to
discount given the lack of a public market for the shares. A 30% discount has applied to the equity value to
for the lack of an active market for the shares. 33




---



##### 



Stock Based Compensation
  Fair Value of Financial Instruments :
  Recent Accounting Pronouncements
  34




---



##### 



35




---



##### 



Item 7A  Quantitative and Qualitative Disclosures About Market Risk.
       36




---



##### 



Item 8  Financial Statements and Supplementary Data .
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
 Page(s)Report of Management on Internal Control Over Financial Reporting
    
    38Report of Independent Registered Public Accounting Firm
    
    39Consolidated Financial Statements:Consolidated Balance Sheets
    
    4041Consolidated Statements of Operations
    
    42Consolidated Statements of Cash Flows
    
    43Consolidated Statements of Changes in Stockholders Equity
    
    44Notes to Consolidated Financial Statements
    
    4573Financial Statement Schedule:Valuation Accounts
    
    74
 37




---



##### 



Report of Management on Internal Control Over Financial Reporting
  Internal Control  Integrated Framework
    /s/ Max W. Hillman
    
    
    
    /s/ James P. WatersMax W. Hillman
    
    
    
    James P. WatersChief Executive Officer
    
    
    
    Chief Financial OfficerDated: March 27, 2009
    
    
    
    Dated: March 27, 2009
 38




---



##### 



Report of Independent Registered Public Accounting Firm
 Board of Directors and Shareholders of  The Hillman Companies, Inc.
    Share-Based Payments Accounting for Uncertainty in Income Taxes  an interpretation of FASB
Statement No. 109
 The Fair Value Option for Financial Assets and Liabilities  Including an amendment of FASB
Statement No. 115 Fair Value Measurements
  
 39




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 (dollars in thousands)
 December 31,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    7,133
    
    
    $
    11,919Restricted investments
    
    
    282
    
    
    
    325Accounts receivable, net
    
    
    53,390
    
    
    
    48,962Inventories, net
    
    
    101,464
    
    
    
    97,976Deferred income taxes, net
    
    
    8,395
    
    
    
    7,780Other current assets
    
    
    3,424
    
    
    
    3,355Total current assets
    
    
    174,088
    
    
    
    170,317Property and equipment, net
    
    
    51,694
    
    
    
    56,088Goodwill
    
    
    259,923
    
    
    
    260,687Other intangibles, net
    
    
    153,553
    
    
    
    159,971Restricted investments
    
    
    3,972
    
    
    
    5,316Deferred income taxes, net
    
    
    485
    
    
    
    Deferred financing fees, net
    
    
    4,438
    
    
    
    6,126Investment in trust common securities
    
    
    3,261
    
    
    
    3,261Other assets
    
    
    1,380
    
    
    
    709Total assets
    
    $
    652,794
    
    
    $
    662,475LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    25,410
    
    
    $
    23,233Current portion of senior term loans
    
    
    2,080
    
    
    
    2,350Current portion of capitalized lease obligations
    
    
    225
    
    
    
    266Accrued expenses:Salaries and wages
    
    
    5,502
    
    
    
    4,628Pricing allowances
    
    
    5,290
    
    
    
    5,484Income and other taxes
    
    
    2,009
    
    
    
    2,166Interest
    
    
    1,251
    
    
    
    1,241Deferred compensation
    
    
    282
    
    
    
    325Other accrued expenses
    
    
    5,512
    
    
    
    5,476Total current liabilities
    
    
    47,561
    
    
    
    45,169Long term senior term loans
    
    
    200,769
    
    
    
    229,125Long term capitalized lease obligations
    
    
    175
    
    
    
    239Long term unsecured subordinated notes
    
    
    49,820
    
    
    
    49,820Junior subordinated debentures
    
    
    116,110
    
    
    
    116,505Mandatorily redeemable preferred stock
    
    
    100,146
    
    
    
    89,773Management purchased preferred options
    
    
    6,016
    
    
    
    5,298Deferred compensation
    
    
    3,972
    
    
    
    5,316Deferred income taxes, net
    
    
    50,068
    
    
    
    43,704Accrued dividends on preferred stock
    
    
    58,708
    
    
    
    43,566Other non-current liabilities
    
    
    15,131
    
    
    
    9,353Total liabilities
    
    
    648,476
    
    
    
    637,868
 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
 40




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 (dollars in thousands)
 December 31,
    
    
    December 31,2008
    
    
    2007LIABILITIES AND STOCKHOLDERS EQUITY (CONTINUED)Common and Preferred stock with put options:Class A Preferred stock, $.01 par, $1,000 liquidation value, 238,889 shares
authorized, 88.0 issued and outstanding at December 31, 2008 and 2007
    
    
    88
    
    
    
    88Class A Common stock, $.01 par, 23,141 shares authorized,
412.0 issued and outstanding at December 31, 2008 and 2007
    
    
    247
    
    
    
    417Class B Common stock, $.01 par, 2,500 shares authorized,
1,000 issued and outstanding at December 31, 2008 and 2007
    
    
    598
    
    
    
    1,635Commitments and contingencies (Note 17)Stockholders equity:Preferred Stock:Class A Preferred stock, $.01 par, $1,000 liquidation value, 238,889 shares
authorized, 82,104.8 issued and outstanding at December 31, 2008 and 2007
    
    
    1
    
    
    
    1Common Stock:Class A Common stock, $.01 par, 23,141 shares authorized,
5,805.3 issued and outstanding at December 31, 2008 and 2007
    
    
    
    
    
    
    Class C Common stock, $.01 par, 30,109 shares authorized,
2,787.1 issued and outstanding at December 31, 2008 and 2007
    
    
    
    
    
    
    Additional paid-in capital
    
    
    29,209
    
    
    
    44,164Accumulated deficit
    
    
    (24,240
    )
    
    
    (21,287
    )Accumulated other comprehensive loss
    
    
    (1,585
    )
    
    
    (411
    )Total stockholders equity
    
    
    3,385
    
    
    
    22,467Total liabilities and stockholders equity
    
    $
    652,794
    
    
    $
    662,475
 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
 41




---



##### 



THE HILLMAN COMPANIES , INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
 For the years ended December 31, 2008, 2007, and 2006 
(dollars in thousands)
 2008
    
    
    2007
    
    
    2006Net sales
    
    $
    481,923
    
    
    $
    445,628
    
    
    $
    423,901Cost of sales (exclusive of depreciation and
amortization shown separately below)
    
    
    244,647
    
    
    
    215,733
    
    
    
    203,451Gross profit
    
    
    237,276
    
    
    
    229,895
    
    
    
    220,450Operating expenses:Selling, general and administrative expenses
    
    
    161,350
    
    
    
    162,056
    
    
    
    153,547Depreciation
    
    
    17,835
    
    
    
    18,224
    
    
    
    17,132Amortization
    
    
    7,073
    
    
    
    7,274
    
    
    
    7,748Extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    726Management and transaction fees to related party
    
    
    1,043
    
    
    
    1,023
    
    
    
    1,019Total operating expenses
    
    
    187,301
    
    
    
    188,577
    
    
    
    180,172Other (expense) income, net
    
    
    (2,250
    )
    
    
    839
    
    
    
    1,042Income from operations
    
    
    47,725
    
    
    
    42,157
    
    
    
    41,320Interest expense, net
    
    
    20,545
    
    
    
    25,528
    
    
    
    25,799Interest expense on mandatorily redeemable
preferred stock and management purchased
preferred options
    
    
    11,091
    
    
    
    9,919
    
    
    
    8,894Interest expense on junior subordinated debentures
    
    
    12,609
    
    
    
    12,609
    
    
    
    12,609Investment income on trust common securities
    
    
    (378
    )
    
    
    (378
    )
    
    
    (378
    )Income (loss) before income taxes
    
    
    3,858
    
    
    
    (5,521
    )
    
    
    (5,604
    )Income tax provision
    
    
    6,811
    
    
    
    4,238
    
    
    
    2,044Net loss
    
    $
    (2,953
    )
    
    $
    (9,759
    )
    
    $
    (7,648
    )
 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
 42




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2008, 2007, and 2006
(dollars in thousands)
 2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net loss
    
    $
    (2,953
    )
    
    $
    (9,759
    )
    
    $
    (7,648
    )Adjustments to reconcile net loss to net cash
provided by operating activities:Depreciation and amortization
    
    
    24,908
    
    
    
    25,498
    
    
    
    24,880Dispositions of property and equipment
    
    
    75
    
    
    
    4
    
    
    
    28Deferred income tax
    
    
    5,264
    
    
    
    6,028
    
    
    
    1,692PIK interest on unsecured subordinated notes
    
    
    
    
    
    
    
    
    
    
    648Interest on mandatorily redeemable preferred stock
and management purchased options
    
    
    11,091
    
    
    
    9,919
    
    
    
    8,893Changes in operating items, net of effects of
acquisitions:(Increase) decrease in accounts receivable, net
    
    
    (4,428
    )
    
    
    386
    
    
    
    (6,848
    )(Increase) decrease in inventories, net
    
    
    (3,488
    )
    
    
    1,777
    
    
    
    (15,203
    )(Increase) decrease in other assets
    
    
    (740
    )
    
    
    (749
    )
    
    
    324Increase in accounts payable
    
    
    2,177
    
    
    
    108
    
    
    
    4,713Increase (decrease) in other accrued liabilities
    
    
    569
    
    
    
    (2,739
    )
    
    
    (5,218
    )Other items, net
    
    
    5,117
    
    
    
    6,043
    
    
    
    (712
    )Net cash provided by operating activities
    
    
    37,592
    
    
    
    36,516
    
    
    
    5,549Cash flows from investing activities:All Points acquisition
    
    
    
    
    
    
    (9,762
    )
    
    
    SteelWorks acquisition
    
    
    
    
    
    
    
    
    
    
    (34,364
    )Capital expenditures
    
    
    (13,409
    )
    
    
    (14,765
    )
    
    
    (14,681
    )Other, net
    
    
    
    
    
    
    
    
    
    
    425Net cash used for investing activities
    
    
    (13,409
    )
    
    
    (24,527
    )
    
    
    (48,620
    )Cash flows from financing activities:Borrowings of senior term loans
    
    
    
    
    
    
    
    
    
    
    22,394Repayments of senior term loans
    
    
    (28,626
    )
    
    
    (2,350
    )
    
    
    (2,806
    )Borrowings of revolving credit loans
    
    
    24,250
    
    
    
    9,500
    
    
    
    31,091Repayments of revolving credit loans
    
    
    (24,250
    )
    
    
    (9,500
    )
    
    
    (31,091
    )Principal payments under capitalized lease obligations
    
    
    (343
    )
    
    
    (271
    )
    
    
    (162
    )Financing fees, net
    
    
    
    
    
    
    
    
    
    
    (455
    )Proceeds from sale of securities
    
    
    
    
    
    
    
    
    
    
    160Net cash (used for) provided by financing activities
    
    
    (28,969
    )
    
    
    (2,621
    )
    
    
    19,131Net (decrease) increase in cash and cash equivalents
    
    
    (4,786
    )
    
    
    9,368
    
    
    
    (23,940
    )Cash and cash equivalents at beginning of period
    
    
    11,919
    
    
    
    2,551
    
    
    
    26,491Cash and cash equivalents at end of period
    
    $
    7,133
    
    
    $
    11,919
    
    
    $
    2,551
 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
 43




---



##### 



AccumulatedAdditional
    
    
    Class A
    
    
    
    
    
    
    Other
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Preferred
    
    
    Accumulated
    
    
    Comprehensive
    
    
    StockholdersClass A
    
    
    Class C
    
    
    Capital
    
    
    Stock
    
    
    Deficit
    
    
    Income (Loss)
    
    
    EquityBalance at December 31, 2005
    
    $
    
    
    
    $
    
    
    
    $
    69,594
    
    
    $
    1
    
    
    $
    (2,442
    )
    
    $
    32
    
    
    $
    67,185Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,648
    )
    
    
    
    
    
    
    (7,648
    )Dividends to shareholders
    
    
    
    
    
    
    
    
    
    
    (12,025
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,025
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30Net realized gains on investments (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75
    )
    
    
    (75
    )Change in cumulative foreign translation adjustment (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13
    )
    
    
    (13
    )Change in derivative security value (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (221
    )
    
    
    (221
    )Balance at December 31, 2006
    
    
    
    
    
    
    
    
    
    
    57,599
    
    
    
    1
    
    
    
    (10,090
    )
    
    
    (277
    )
    
    
    47,233Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,759
    )
    
    
    
    
    
    
    (9,759
    )Adoption of FIN No. 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,438
    )
    
    
    
    
    
    
    (1,438
    )Dividends to shareholders
    
    
    
    
    
    
    
    
    
    
    (13,484
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,484
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49Change in cumulative foreign translation adjustment (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54
    )
    
    
    (54
    )Change in derivative security value (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Balance at December 31, 2007
    
    
    
    
    
    
    
    
    
    
    44,164
    
    
    
    1
    
    
    
    (21,287
    )
    
    
    (411
    )
    
    
    22,467Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,953
    )
    
    
    
    
    
    
    (2,953
    )Class A Common Stock FMV adjustment (2)
    
    
    
    
    
    
    
    
    
    
    170
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    170Dividends to shareholders
    
    
    
    
    
    
    
    
    
    
    (15,141
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,141
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16Change in cumulative foreign translation adjustment (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    74Change in derivative security value (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,248
    )
    
    
    (1,248
    )Balance at December 31, 2008
    
    $
    
    
    
    $
    
    
    
    $
    29,209
    
    
    $
    1
    
    
    $
    (24,240
    )
    
    $
    (1,585
    )
    
    $
    3,385
 
 (1)
    
    The realized gains on investments, cumulative foreign translation adjustment and change in derivative
security value are net of taxes and represent the only items of other comprehensive income (loss).(2)
    
    Management controls 412 shares of class A common stock which contain a put feature that allows redemption
at the holders option. These shares are classified as temporary equity and have been adjusted to fair value
in accordance with EITF Topic D-98, Classification and Measurement of Redeemable Securities. See Note 13,
Common and Preferred Stock, for further details.  44




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 1. Basis of Presentation:
    Nature of Operations:
  2. Summary of Significant Accounting Policies:
 Cash and Cash Equivalents :
  Restricted Investments :
  45




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 2. Summary of Significant Accounting Policies: (continued)
 Accounts Receivable and Allowance for Doubtful Accounts
  Inventories :
  Property and Equipment :
  Depreciation :
  Goodwill and Other Intangible Assets :
   46




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 2. Summary of Significant Accounting Policies: (continued)
   Long-Lived Assets :
  Income Taxes :
   Risk Insurance Reserves
   47




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 2. Summary of Significant Accounting Policies: (continued)
 Retirement Benefits :
   Revenue Recognition :
    Shipping and Handling :
  Research and Development
  Common and Preferred Stock:
  48




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 2. Summary of Significant Accounting Policies: (continued)
      Stock Based Compensation
  49




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 2. Summary of Significant Accounting Policies: (continued)
 Fair Value of Financial Instruments :
  Translation of Foreign Currencies :
  Comprehensive Income (Loss):
  Year
    
    
    Year
    
    
    Yearended
    
    
    ended
    
    
    endedDecember 31,
    
    
    December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006Net loss
    
    $
    (2,953
    )
    
    $
    (9,759
    )
    
    $
    (7,648
    )Realized gains on investments, net (1)
    
    
    
    
    
    
    
    
    
    
    (75
    )Foreign currency translation adjustment, net
    
    
    74
    
    
    
    (54
    )
    
    
    (13
    )Change in derivative security value, net (1)
    
    
    (1,248
    )
    
    
    (80
    )
    
    
    (221
    )Comprehensive loss
    
    $
    (4,127
    )
    
    $
    (9,893
    )
    
    $
    (7,957
    )
 
 (1)
    
    Utilizing an income tax rate of 38.5%, 38.5%, and 39.5% for the years ended December 31,
2008, 2007, and 2006, respectively.  Use of Estimates in the Preparation of Financial Statements:
  Reclassifications:
  50




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 3. Recent Accounting Pronouncements:
      51




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 3. Recent Accounting Pronouncements: (continued)
   4. Acquisitions:
   Cash
    
    $
    481Account receivable, net
    
    
    1,017Inventory, net
    
    
    7,563Other current assets
    
    
    51Deferred income taxes
    
    
    614Property and equipment
    
    
    435Goodwill
    
    
    292Intangibles
    
    
    655Total assets acquired
    
    
    11,108Less:Liabilities assumed
    
    
    865Total purchase price
    
    $
    10,243
  52




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 4. Acquisitions: (continued)
   Customer relationships
    
    $
    11,861Trademarks
    
    
    2,624Goodwill
    
    
    19,879Total purchase price
    
    $
    34,364
    (unaudited)2007
    
    2006Net sales
    
    $
    468,415
    
    
    $
    458,337Net loss
    
    
    (9,225
    )
    
    
    (4,771
    )
  5. Related Party Transactions:
  53




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 5. Related Party Transactions: (continued)
  6. Income Taxes:
  Year
    
    
    Year
    
    
    Yearended
    
    
    ended
    
    
    endedDecember 31,
    
    
    December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006Current:Federal & State
    
    $
    878
    
    
    $
    462
    
    
    $
    271Foreign
    
    
    104
    
    
    
    
    
    
    
    Total current
    
    
    982
    
    
    
    462
    
    
    
    271Deferred:Federal & State
    
    
    6,376
    
    
    
    3,692
    
    
    
    1,682Foreign
    
    
    (547
    )
    
    
    84
    
    
    
    91Total deferred
    
    
    5,829
    
    
    
    3,776
    
    
    
    1,773Provision for income taxes
    
    $
    6,811
    
    
    $
    4,238
    
    
    $
    2,044
    54




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 6. Income Taxes: (continued)
     As of December 31, 2008
    
    
    As of December 31, 2007Current
    
    
    Non-current
    
    
    Current
    
    
    Non-currentDeferred Tax Asset:Inventory
    
    $
    5,287
    
    
    $
    
    
    
    $
    4,839
    
    
    $
    Bad debt reserve
    
    
    641
    
    
    
    
    
    
    
    633
    
    
    
    Casualty loss reserve
    
    
    444
    
    
    
    390
    
    
    
    455
    
    
    
    473Accrued bonus / deferred compensation
    
    
    1,181
    
    
    
    1,529
    
    
    
    1,073
    
    
    
    2,052Medical insurance reserve
    
    
    670
    
    
    
    
    
    
    
    565
    
    
    
    Original issue discount amortization
    
    
    
    
    
    
    370
    
    
    
    
    
    
    
    388Derivative security value
    
    
    
    
    
    
    912
    
    
    
    131
    
    
    
    Transaction costs
    
    
    
    
    
    
    2,024
    
    
    
    
    
    
    
    2,054Federal / foreign net operating loss
    
    
    
    
    
    
    16,315
    
    
    
    
    
    
    
    22,719State net operating loss
    
    
    
    
    
    
    2,178
    
    
    
    
    
    
    
    2,780Unrecognized tax benefit
    
    
    
    
    
    
    (2,872
    )
    
    
    
    
    
    
    (2,875
    )Federal capital loss carryforwards
    
    
    
    
    
    
    134
    
    
    
    
    
    
    
    Federal / foreign tax credits
    
    
    
    
    
    
    1,436
    
    
    
    
    
    
    
    1,074All other items
    
    
    728
    
    
    
    720
    
    
    
    537
    
    
    
    582Gross deferred tax assets
    
    
    8,951
    
    
    
    23,136
    
    
    
    8,233
    
    
    
    29,247Valuation allowance for deferred tax assets
    
    
    (556
    )
    
    
    (1,430
    )
    
    
    (453
    )
    
    
    (1,609
    )Net deferred tax assets
    
    $
    8,395
    
    
    $
    21,706
    
    
    $
    7,780
    
    
    $
    27,638Deferred Tax Liability:Intangible asset amortization
    
    $
    
    
    
    $
    65,888
    
    
    $
    
    
    
    $
    66,728Property and equipment
    
    
    
    
    
    
    5,401
    
    
    
    
    
    
    
    4,583All other items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31Deferred tax liabilities
    
    $
    
    
    
    $
    71,289
    
    
    $
    
    
    
    $
    71,342Net deferred tax liability
    
    
    
    
    
    $
    41,188
    
    
    
    
    
    
    $
    35,924Long term net deferred tax liability
    
    
    
    
    
    $
    50,068
    
    
    
    
    
    
    $
    43,704Current net deferred tax asset
    
    
    
    
    
    
    8,395
    
    
    
    
    
    
    
    7,780Long term net deferred tax asset
    
    
    
    
    
    
    485
    
    
    
    
    
    
    
    Net deferred tax liability
    
    
    
    
    
    $
    41,188
    
    
    
    
    
    
    $
    35,924
 55




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 6. Income Taxes: (continued)
     Year
    
    Year
    
    Yearended
    
    ended
    
    endedDecember 31,
    
    December 31,
    
    December 31,2008
    
    2007
    
    2006Statutory federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Non-U.S. taxes and the impact of non-U.S. losses
for which a current tax benefit is not available
    
    
    -0.9
    %
    
    
    1.0
    %
    
    
    -1.6
    %State and local income taxes, net of U.S. federal
income tax benefit
    
    
    20.5
    %
    
    
    -8.7
    %
    
    
    -3.9
    %Adjustment of reserve for change in valuation
allowance and other items
    
    
    -1.5
    %
    
    
    -1.4
    %
    
    
    -1.5
    %Adjustment for change in tax law
    
    
    -4.1
    %
    
    
    -4.1
    %
    
    
    0.0
    %Permanent differences:Interest expense on mandatorily redeemable
preferred stock
    
    
    100.6
    %
    
    
    -62.9
    %
    
    
    -55.5
    %Stock based compensation expense
    
    
    22.4
    %
    
    
    -33.4
    %
    
    
    -7.6
    %Dividends received exclusion
    
    
    -0.1
    %
    
    
    0.1
    %
    
    
    0.3
    %Meals and entertainment expense
    
    
    3.2
    %
    
    
    -2.3
    %
    
    
    -2.1
    %Other permanent differences
    
    
    1.4
    %
    
    
    -0.1
    %
    
    
    -0.3
    %Tax credits utilized
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.7
    %Effective income tax rate
    
    
    176.5
    %
    
    
    -76.8
    %
    
    
    -36.5
    %
 56




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 6. Income Taxes: (continued)
  2008
    
    
    2007Unrecognized tax benefits  January 1
    
    $
    2,875
    
    
    $
    2,868Gross increases  tax positions in prior period
    
    
    
    
    
    
    7Gross decreases  tax positions in prior period
    
    
    (3
    )
    
    
    Unrecognized tax benefits  December 31
    
    $
    2,872
    
    
    $
    2,875Amount of unrecognized tax benefit that, if
recognized would affect the companys effective
tax rate
    
    $
    2,872
    
    
    $
    1,445
   57




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 7. Property and Equipment, net:
  EstimatedUseful Life(Years)
    
    
    2008
    
    
    2007Land
    
    
    n/a
    
    
    $
    131
    
    
    $
    131Buildings
    
    
    27
    
    
    
    781
    
    
    
    781Leasehold improvements
    
    
    310
    
    
    
    4,540
    
    
    
    4,457Machinery and equipment
    
    
    210
    
    
    
    100,173
    
    
    
    94,402Furniture and fixtures
    
    
    35
    
    
    
    1,469
    
    
    
    1,435Construction in process
    
    
    
    
    
    
    1,539
    
    
    
    966Property and equipment, gross
    
    
    
    
    
    
    108,633
    
    
    
    102,172Less: Accumulated depreciation
    
    
    
    
    
    
    56,939
    
    
    
    46,084Property and equipment, net
    
    
    
    
    
    $
    51,694
    
    
    $
    56,088
  8. Other Intangibles, net:
   EstimatedUseful Life(Years)
    
    2008
    
    
    2007Customer relationships  Hillman
    
    

    23
    
    $
    126,651
    
    
    $
    126,651Customer relationships  All Points
    
    

    15
    
    
    555
    
    
    
    Trademarks
    
    
    Indefinite
    
    
    47,394
    
    
    
    47,294Patents
    
    

    9
    
    
    7,960
    
    
    
    7,960Non Compete Agreements
    
    

    4
    
    
    5,742
    
    
    
    5,742Intangible assets, gross
    
    
    
    
    
    
    188,302
    
    
    
    187,647Less: Accumulated amortization
    
    
    
    
    
    
    34,749
    
    
    
    27,676Other intangibles, net
    
    
    
    
    
    $
    153,553
    
    
    $
    159,971
  58




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 9. Long-Term Debt:
      59




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 9. Long-Term Debt: (continued)
   2008
    
    
    2007Revolving Credit Agreement
    
    $
    
    
    
    $
    Term Loan B
    
    
    202,849
    
    
    
    231,475Subordinated Debt Issuance
    
    
    49,820
    
    
    
    49,820Capital Leases
    
    
    400
    
    
    
    505253,069
    
    
    
    281,800Less: amounts due in one year
    
    
    2,305
    
    
    
    2,616Long-term debt
    
    $
    250,764
    
    
    $
    279,184
  2009
    
    $
    2,3052010
    
    
    150,8092011
    
    
    99,9172012
    
    
    382013
    
    
    2014 and thereafter
    
    
    
   60




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 10. Leases:
  Capital
    
    
    OperatingLeases
    
    
    Leases2009
    
    $
    250
    
    
    $
    8,2542010
    
    
    113
    
    
    
    5,8142011
    
    
    40
    
    
    
    4,8102012
    
    
    40
    
    
    
    4,2082013
    
    
    
    
    
    
    3,147Later years
    
    
    
    
    
    
    13,179Total minimum lease payments
    
    
    443
    
    
    $
    39,412Less amounts representing interest
    
    
    (43
    )Present value of net minimum lease payments
(including $225 currently payable)
    
    $
    400
  11. Deferred Compensation Plans:
     12. Guaranteed Preferred Beneficial Interest in the Companys
Junior Subordinated Debentures:
  61




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 12. Guaranteed Preferred Beneficial Interest in the Companys Junior Subordinated Debentures: (continued)
     Non-current assets  junior subordinated debentures  preferred
    
    $
    112,849Non-current assets  junior subordinated debentures  common
    
    
    3,261Total assets
    
    $
    116,110Non-current liabilities  trust preferred securities
    
    $
    112,849Stockholders equity  trust common securities
    
    
    3,261Total liabilities and stockholders equity
    
    $
    116,110
   62




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 12. Guaranteed Preferred Beneficial Interest in the Companys Junior Subordinated Debentures: (continued)
    13. Common and Preferred Stock:
 Common Stock issued in connection with the Merger Transaction:
    63




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 13. Common and Preferred Stock: (continued)
    Preferred Stock:
     64




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 13. Common and Preferred Stock: (continued)
   2006 Equity Issuance:
    Purchased Options:
  65




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 13. Common and Preferred Stock: (continued)
   December 31,
    
    
    December 31,2008
    
    
    2007Hillman Investment Company Class A Preferred Stock
    
    $
    57,344
    
    
    $
    57,344Purchased Options  Hillman Investment Company
Class A Preferred Stock
    
    
    2,254
    
    
    
    2,254Accumulated and unpaid dividends
    
    
    40,548
    
    
    
    30,175Total mandatorily redeemable preferred stock
    
    $
    100,146
    
    
    $
    89,773Purchased Options  Hillman Companies, Inc. Class A
Preferred Stock
    
    $
    3,230
    
    
    $
    3,230Accumulated and unpaid dividends
    
    
    2,786
    
    
    
    2,068Total management purchased preferred options
    
    $
    6,016
    
    
    $
    5,298
 14. Stock-Based Compensation:
   66




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 14. Stock-Based Compensation: (continued)
 Common Option Plan:
   Preferred Options:
     67




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 14. Stock-Based Compensation: (continued)
 Class B Shares:
   15. Derivatives and Hedging:
     68




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 15. Derivatives and Hedging: (continued)
  16. Fair Value Measurements:
  
    Fair Value Measurementat December 31, 2008Level 1
    
    Level 2
    
    Level 3
    
    TotalTrading securities
    
    $
    4,254
    
    
    $
    
    
    
    $
    
    
    
    $
    4,254Interest rate swaps
    
    
    
    
    
    
    (1,457
    )
    
    
    
    
    
    
    (1,457
    )
   69




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 16. Fair Value Measurements: (continued)
  17. Commitments and Contingencies:
      70




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 18. Statements of Cash Flows:
  Year
    
    
    Year
    
    
    Yearended
    
    
    ended
    
    
    endedDecember 31,
    
    
    December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006Cash paid (refunded) during the
period for:Interest on junior subordinated
debentures
    
    $
    12,231
    
    
    $
    12,231
    
    
    $
    12,231Interest
    
    $
    19,112
    
    
    $
    26,117
    
    
    $
    25,587Income taxes
    
    $
    985
    
    
    $
    (17
    )
    
    $
    245Non-cash investing activities:Property and equipment purchased
with capital lease
    
    $
    238
    
    
    $
    15
    
    
    $
    824Non-cash financing activities:Increase in accrued dividends on preferred stock
    
    $
    15,142
    
    
    $
    13,484
    
    
    $
    12,025
 19. Quarterly Data (unaudited):
 2008
    
    Fourth
    
    Third
    
    Second
    
    FirstNet sales
    
    $
    113,469
    
    
    $
    132,588
    
    
    $
    129,070
    
    
    $
    106,796Gross profit
    
    
    54,520
    
    
    
    64,653
    
    
    
    64,252
    
    
    
    53,851Net (loss) income
    
    
    (2,606
    )
    
    
    1,321
    
    
    
    1,686
    
    
    
    (3,354
    )
 2007
    
    Fourth
    
    Third
    
    Second
    
    FirstNet sales
    
    $
    104,684
    
    
    $
    118,715
    
    
    $
    121,305
    
    
    $
    100,924Gross profit
    
    
    52,944
    
    
    
    61,891
    
    
    
    62,414
    
    
    
    52,646Net (loss) income
    
    
    (4,183
    )
    
    
    (1,371
    )
    
    
    541
    
    
    
    (4,746
    )
 20. Concentration of Credit Risks:
  71




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 20. Concentration of Credit Risks: (continued)
   21. Segment and Geographic Information:
   Year
    
    
    Year
    
    
    YearEnded
    
    
    Ended
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006Net salesUnited States
    
    $
    467,925
    
    
    $
    429,627
    
    
    $
    412,467Canada
    
    
    4,241
    
    
    
    7,289
    
    
    
    3,726Mexico
    
    
    3,416
    
    
    
    2,523
    
    
    
    2,158Other
    
    
    6,341
    
    
    
    6,189
    
    
    
    5,550Consolidated net sales
    
    $
    481,923
    
    
    $
    445,628
    
    
    $
    423,901Long-lived assets:United States
    
    $
    477,855
    
    
    $
    489,234
    
    
    $
    500,591Canada
    
    
    311
    
    
    
    509
    
    
    
    18Mexico
    
    
    55
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    Consolidated long-lived assets
    
    $
    478,221
    
    
    $
    489,743
    
    
    $
    500,609
 72




---



##### 



THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 21. Segment and Geographic Information: (continued)
 Year
    
    
    Year
    
    
    YearEnded
    
    
    Ended
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006Cash & cash equivalentsUnited States
    
    $
    6,775
    
    
    $
    11,080
    
    
    $
    1,236Canada
    
    
    234
    
    
    
    288
    
    
    
    267Mexico
    
    
    124
    
    
    
    551
    
    
    
    1,048Other
    
    
    
    
    
    
    
    
    
    
    Consolidated cash & cash equivalents
    
    $
    7,133
    
    
    $
    11,919
    
    
    $
    2,551
  Year
    
    
    Year
    
    
    YearEnded
    
    
    Ended
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006Net salesKeys
    
    $
    80,754
    
    
    $
    79,370
    
    
    $
    72,870Engraving
    
    
    40,945
    
    
    
    39,158
    
    
    
    35,976Letters, numbers and signs
    
    
    34,671
    
    
    
    37,711
    
    
    
    34,518Fasteners
    
    
    261,461
    
    
    
    230,857
    
    
    
    229,732Threaded rod
    
    
    37,330
    
    
    
    30,693
    
    
    
    28,156Code cutter
    
    
    4,934
    
    
    
    5,149
    
    
    
    4,810Builders hardware
    
    
    1,606
    
    
    
    2,578
    
    
    
    Other
    
    
    20,222
    
    
    
    20,112
    
    
    
    17,839Consolidated net sales
    
    $
    481,923
    
    
    $
    445,628
    
    
    $
    423,901
 73




---



##### 



Financial Statement Schedule:
 Schedule II  VALUATION ACCOUNTS
  Deducted From Assets in Balance SheetAllowance forAllowance for
    
    
    Obsolete/Doubtful
    
    
    ExcessAccounts
    
    
    InventoryEnding Balance  December 31, 2005
    
    
    434
    
    
    
    3,948Additions charged to cost and expense
    
    
    46
    
    
    
    725Deductions due to:Others
    
    
    111
    (A)
    
    
    31
    (A)Ending Balance  December 31, 2006
    
    
    369
    
    
    
    4,642Additions charged to cost and expense
    
    
    200
    
    
    
    230Additions from acquired company
    
    
    124
    
    
    
    1,629Deductions due to:Others
    
    
    96
    (A)
    
    
    337
    (A)Ending Balance  December 31, 2007
    
    
    597
    
    
    
    6,164Additions charged to cost and expense
    
    
    40
    
    
    
    381Deductions from acquired company
    
    
    
    
    
    
    (191
    )Deductions due to:Others
    
    
    93
    (A)
    
    
    266
    (A)Ending Balance  December 31, 2008
    
    $
    544
    
    
    $
    6,088
 
 Notes:(A)
    
    Includes write-off of accounts receivable (net of bad debt recoveries)
and inventories. 74




---



##### 



Item 9
 Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.
  Item 9A
 Controls and Procedures.
 Disclosure Controls and Procedures
  Managements Annual Report on Internal Control Over Financial Reporting.
  
    
    Pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and the dispositions of assets;
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in
accordance with appropriate authorizations; and
    
    Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the companys assets that could have a material effect
on our financial statements. Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation.
  75




---



##### 



Attestation Report of Registered Public Accounting Firm on Internal Control Over Financial
Reporting.
  Changes in Internal Control over Financial Reporting.
  Item 9B
 Other Information.
  76




---



##### 



PART III
 Item 10
 Directors, Executive Officers, and Corporate Governance.
  Directors
 Principal Occupation; Five-YearName and Age
    
    Employment; Other DirectorshipsPeter M. Gotsch (44)
    
    Chairman of The Hillman Companies, Inc. since
March 31, 2004. Mr. Gotsch has been a general
partner of Ellipse Capital LLC since June
2008. Mr. Gotsch had been a member of Code
Hennessy & Simmons LLC since 1997 and
employed by its affiliates since 1989.
Mr. Gotsch presently serves on the Board of
Beacon Roofing Supply, Inc. and the Board of
Houston Wire & Cable Company.Maurice P. Andrien, Jr. (67)
    
    From September 2001 to March 2004, Mr.
Andrien was Chairman of The Hillman
Companies, Inc., Cincinnati, Ohio. From
April 1999 to November 2001, Mr. Andrien was
President and Chief Executive Officer of
SunSource Inc., the predecessor of the
Company. Mr. Andrien presently serves on the
Boards of State Industrial Products, Inc.,
Cogniscape LLC and Kaba Holding AG.Max W. Hillman (62)
    
    President and Chief Executive Officer of The
Hillman Companies, Inc., Chief Executive
Officer of The Hillman Group, Inc.,
Cincinnati, Ohio. From April 2000 to
November 2001, Mr. Hillman was Co-Chief
Executive Officer of The Hillman Group, Inc.
Mr. Hillman presently serves on the Boards of
State Industrial Products, Inc., Sunsource
Technology Services Inc. and Woodstream Corp.Andrew W. Code (50)
    
    Mr. Code has been a general partner of CHS
Management Limited Partnership (CHS
Management) and a general partner of Code
Hennessy & Simmons Limited Partnership
(CHS) since August 1988. Mr. Code is on the
Boards of Pool Corporation and Woodstream
Corp.
 77




---



##### 



Principal Occupation; Five-YearName and Age
    
    Employment; Other DirectorshipsLarry Wilton (61)
    
    Mr. Wilton has been CEO of United Plastics Group
since 2007 and he was CEO of Compass Home Inc. from
2004 to 2005. From 1996 to 2002, Mr. Wilton was
President and CEO of Philips Lamps NAFTA. From 1994
to 1996, Mr. Wilton was Executive Vice President of
Philips Lighting United States and Canada. From 1999
to 2002, Mr. Wilton served on the Philips NV Lamps
Board of Directors.Shael J. Dolman (37)
    
    Mr. Dolman is a Director at the private equity arm of
the Ontario Teachers Pension Plan (OTPP).
Mr. Dolman joined OTPP in 1997 after working in
Commercial and Corporate Banking at a Canadian
chartered bank. He is a director of ALH Holding, Inc
and Easton-Bell Sports, Inc.
  Committees
    Code of Ethics
  78




---



##### 



Executive Officers
 Position with the Company;Name and Age
    
    Five-year Employment HistoryMax W. Hillman (62)
    
    President and Chief Executive Officer of The
Hillman Companies, Inc., Chief Executive Officer
of The Hillman Group, Inc., Cincinnati, Ohio. See
page 77 for five-year employment history. Mr.
Hillman is the brother of Richard P. Hillman.Richard P. Hillman (60)
    
    President of The Hillman Group, Inc., Cincinnati,
Ohio. Mr. Hillman has held such position since
1991. Mr. Hillman is the brother of Max W.
Hillman.James P. Waters (47)
    
    Chief Financial Officer and Secretary of The
Hillman Companies, Inc., Cincinnati, Ohio and Vice
President, Chief Financial Officer and Secretary
of The Hillman Group, Inc., Cincinnati, Ohio.
From September 1999 to November 2001, Mr. Waters
was Vice President and Chief Financial Officer of
The Hillman Group, Inc.George L. Heredia (50)
    
    Senior Vice President of Engraving for The Hillman
Group, Inc., Tempe, Arizona. Mr. Heredia has held
various executive positions since April 2000.
Prior to April 2000, Mr. Heredia had held the
positions of Senior Vice President of Marketing
and Senior Vice President of Operations for Axxess
Technologies, Inc.Ali Fartaj (41)
    
    Senior Vice President of Operations for The
Hillman Group, Inc., Cincinnati, Ohio since
January 2008. From 2006 to 2008, Mr. Fartaj was a
Principal with AMF Partners. From 1999 to 2006,
Mr. Fartaj was with Thomas & Betts Corporation,
most recently as Vice President of Global
Logistics and Transportation.
  79




---



##### 



Item 11
 Executive Compensation
 Compensation Discussion & Analysis
 Overview of the Compensation Program
 Compensation Philosophy
  Components of Total Compensation
  
    
    Annual base salary;
    
    Performance based bonuses, determined on an annual basis; and
    
    Benefits, which consist primarily of health and welfare benefits and retirement benefits
under its Defined Contribution Plan and its Deferred Compensation Plan.
 Establishing Compensation Levels
 Role of the Compensation Committee and Management
   Assessment of Market Data, Peer Comparisons and Benchmarking of Compensation
  80




---



##### 



Determination of NEO Compensation
   Base Salary
        Performance Based Bonuses
  81




---



##### 



Benefits
  Amended Stock Option Plan
   Defined Contribution Plan
  82




---



##### 



Perquisites
  Executive Securities Agreement
  Compensation Committee Report
      
  83




---



##### 



Summary Compensation Table
  Change inPensionValue andNonqualifiedDeferred
    
    All OtherName and
    
    
    
    
    
    
    
    
    
    
    
    
    
    Option
    
    Compensation
    
    Compen-Principal Position
    
    Year
    

Salary (1)
    

Bonus (2)
    
    Awards (3)
    

Earnings
(4)
    
    sation
    
    TotalMax W. Hillman
    
    
    2008
    
    
    
    424,182
    
    
    
    207,506
    
    
    
    
    
    
    
    
    
    
    
    36,503
    (6)
    
    
    668,191President and CEO
    
    
    2007
    
    
    
    413,284
    
    
    
    185,468
    
    
    
    
    
    
    
    
    
    
    
    35,041
    (7)
    
    
    633,793The Hillman Companies, Inc.
    
    
    2006
    
    
    
    399,746
    
    
    
    68,701
    
    
    
    
    
    
    
    
    
    
    
    28,689
    (8)
    
    
    497,136James P. Waters
    
    
    2008
    
    
    
    218,615
    
    
    
    57,750
    
    
    
    
    
    
    
    
    
    
    
    11,429
    (5)
    
    
    287,794CFO and Secretary
    
    
    2007
    
    
    
    201,477
    
    
    
    48,225
    
    
    
    
    
    
    
    
    
    
    
    9,383
    (5)
    
    
    259,085The Hillman Companies, Inc.
    
    
    2006
    
    
    
    194,761
    
    
    
    22,292
    
    
    
    
    
    
    
    
    
    
    
    9,207
    (5)
    
    
    226,260Richard P. Hillman
    
    
    2008
    
    
    
    289,231
    
    
    
    87,000
    
    
    
    
    
    
    
    
    
    
    
    13,228
    (5)
    
    
    389,459President
    
    
    2007
    
    
    
    279,231
    
    
    
    74,622
    
    
    
    
    
    
    
    
    
    
    
    14,359
    (5)
    
    
    368,212The Hillman Group, Inc.
    
    
    2006
    
    
    
    269,423
    
    
    
    49,066
    
    
    
    
    
    
    
    
    
    
    
    10,808
    (5)
    
    
    329,297George L. Heredia
    
    
    2008
    
    
    
    242,615
    
    
    
    51,231
    
    
    
    
    
    
    
    
    
    
    
    16,150
    (9)
    
    
    309,996Senior VP of Engraving
    
    
    2007
    
    
    
    237,462
    
    
    
    44,527
    
    
    
    
    
    
    
    
    
    
    
    16,286
    (10)
    
    
    298,275The Hillman Group, Inc.
    
    
    2006
    
    
    
    230,500
    
    
    
    46,952
    
    
    
    
    
    
    
    
    
    
    
    17,269
    (11)
    
    
    294,721Ali Fartaj (13)
    
    
    2008
    
    
    
    216,346
    
    
    
    74,260
    
    
    
    
    
    
    
    
    
    
    
    13,863
    (12)
    
    
    304,469Senior VP of Operations
    
    
    2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    The Hillman Group, Inc.
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Represents base salary including any deferral of salary into the Hillman Nonqualified
Deferred Compensation Plan.(2)
    
    Represents earned bonus for services rendered in each year.(3)
    
    In connection with the 2004 acquisition by CHS, Max W. Hillman, James P. Waters, Richard P.
Hillman and George L. Heredia were issued options to purchase Class A Preferred Stock and
shares of Class A Preferred Stock in Hillman Investment Company. The options were issued with
a strike price equal to the fair value of the underlying securities. The option awards are
classified as liability based awards, and accordingly, no compensation would have been
recognized under SFAS 123R.In June 2008, Ali Fartaj was issued 50 options to purchase shares of the Companys Class B
Common Shares. The Class B Common Options were issued with a strike price equal to the fair
value at the date of grant which was $6,000. The stock options issued under the Common
Option Plan are accounted for in accordance with SFAS 123R which indicates that options
should be classified in a manner consistent with the underlying security. Therefore the
Class B Common Stock Options are adjusted to the fair value of the Class B Common shares less
the strike price of the Class B Common shares, and accordingly, no compensation expense was
recognized under SFAS 123R.(4)
    
    There were no above market earnings in the Hillman Nonqualified Deferred Compensation Plan
for the NEOs.(5)
    
    Represents employer matching contributions to the Hillman Retirement Savings and 401(k) Plan,
employer matching contributions to the Hillman Nonqualified Deferred Compensation Plan, and
personal use of Company owned vehicles.(6)
    
    Includes employer matching contributions to the Hillman Retirement Savings and 401(k) Plan of
$6,971, employer matching contributions to the Hillman Nonqualified Deferred Compensation Plan
of $2,500, reimbursement of country club dues of $14,432 and car allowance of $12,600.(7)
    
    Includes employer matching contributions to the Hillman Retirement Savings and 401(k) Plan of
$8,941, employer matching contributions to the Hillman Nonqualified Deferred Compensation Plan
of $2,500, reimbursement of country club dues of $11,000 and car allowance of $12,600.(8)
    
    Includes employer matching contributions to the Hillman Retirement Savings and 401(k) Plan of
$3,214, employer matching contributions to the Hillman Nonqualified Deferred Compensation Plan
of $2,500, reimbursement of country club dues of $10,375 and car allowance of $12,600. 84




---



##### 



(9)
    
    Includes employer matching contributions to the Hillman Retirement Savings and 401(k) Plan of
$7,750 and car allowance of $8,400.(10)
    
    Includes employer matching contributions to the Hillman Retirement Savings and 401(k) Plan of
$5,386, employer matching contributions to the Hillman Nonqualified Deferred Compensation Plan
of $2,500, and car allowance of $8,400.(11)
    
    Includes employer matching contributions to the Hillman Retirement Savings and 401(k) Plan of
$6,369, employer matching contributions to the Hillman Nonqualified Deferred Compensation Plan
of $2,500, and car allowance of $8,400.(12)
    
    Includes employer matching contributions to the Hillman Retirement Savings and 401(k) Plan of
$4,439, employer matching contributions to the Hillman Nonqualified Deferred Compensation Plan
of $2,500 and a car allowance of $6,924.(13)
    
    Mr. Fartaj joined the Company on January 6, 2008 as Senior Vice of Operations. As a result,
no compensation information is included for the years ended December 31, 2007 and 2006. Grants of Plan-Based Award Tables
  All Other OptionAwards; Number of
    
    Exercise or Base
    
    Grant Date Fair ValueSecurities Underlying
    
    Price of Option
    
    of Stock and OptionName
    
    Grant Date
    
    Options
    
    Awards
    
    Awards1Max W. Hillman
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    James P. Waters
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Richard P. Hillman
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    George L. Heredia
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ali Fartaj
    
    
    06/30/2008
    
    
    
    50
    
    
    $
    6,000
    
    
    $
    6,000
 
 1
    
    Represents the fair value of the stock options as of
the date of grant, computed in accordance with FAS 123(R). Outstanding Equity Awards at Fiscal Year-End
   EquityIncentivePlan Awards:Number of
    
    Number of
    
    Number ofSecurities
    
    Securities
    
    SecuritiesUnderlying
    
    Underlying
    
    UnderlyingUnexercised
    
    Unexercised
    
    Unexercised
    
    Option
    
    OptionOptions
    
    Options
    
    Unearned
    
    Exercise
    
    ExpirationName
    
    Exercisable
    
    Unexercisable
    
    Options
    
    Price
    
    Date(a)
    
    (b)
    
    (c)
    
    (d)
    
    (e)
    
    (f)Max W. Hillman
    
    
    2,598
    (1)
    
    
    649
    (1)
    
    
    
    
    
    $
    1,000
    
    
    
    03/31/20141,812
    (2)
    
    
    453
    (2)
    
    
    
    
    
    $
    1,000
    
    
    
    03/31/2014James P. Waters
    
    
    546
    (1)
    
    
    137
    (1)
    
    
    
    
    
    $
    1,000
    
    
    
    03/31/2014381
    (2)
    
    
    95
    (2)
    
    
    
    
    
    $
    1,000
    
    
    
    03/31/2014Richard P. Hillman
    
    
    1,111
    (1)
    
    
    278
    (1)
    
    
    
    
    
    $
    1,000
    
    
    
    03/31/2014775
    (2)
    
    
    194
    (2)
    
    
    
    
    
    $
    1,000
    
    
    
    03/31/2014George L. Heredia
    
    
    574
    (1)
    
    
    143
    (1)
    
    
    
    
    
    $
    1,000
    
    
    
    03/31/2014400
    (2)
    
    
    100
    (2)
    
    
    
    
    
    $
    1,000
    
    
    
    03/31/2014Ali Fartaj
    
    
    
    (3)
    
    
    50
    (3)
    
    
    
    
    
    $
    6,000
    
    
    
    06/30/2018
 
 (1)
    
    Class A Preferred Options of the Company.(2)
    
    Class A Preferred Options of The Hillman Investment Company, a wholly-owned subsidiary of the
Company.(3)
    
    Class B Common Shares were granted under the 2004 Stock Option Plan (Common Option Plan)
following Board and shareholder approval. Grants under the Common Option Plan consist of
non-qualified stock options for the purchase of Class B Common Shares and vest 100% on the
second anniversary of the date of grant.  85




---



##### 



Option Exercises and Stock Vested
  Nonqualified Deferred Compensation
   Executive
    
    Registrant
    
    Aggregate
    
    Aggregate
    
    AggregateContributions
    
    Contributions
    
    Earnings
    
    Withdrawals/
    
    Balance atName
    
    in Last FY (1)
    
    in Last FY (2)
    
    in Last FY (3)
    
    Distributions
    
    Last FYEMax W. Hillman
    
    $
    15,000
    
    
    $
    2,500
    
    
    $
    (1,023,066
    )
    
    $
    
    
    
    $
    3,179,408James P. Waters
    
    $
    23,212
    
    
    $
    2,500
    
    
    $
    (28,719
    )
    
    $
    
    
    
    $
    94,794Richard P. Hillman
    
    $
    29,386
    
    
    $
    2,500
    
    
    $
    (80,933
    )
    
    $
    
    
    
    $
    286,837George L. Heredia
    
    $
    
    
    
    $
    
    
    
    $
    (1,418
    )
    
    $
    (51,474
    )
    
    $
    Ali Fartaj
    
    $
    10,817
    
    
    $
    2,500
    
    
    $
    (3,508
    )
    
    $
    
    
    
    $
    9,809
 
 (1)
    
    Executive Contributions represent the deferral of Base Salary and Bonuses and are also
included in the Summary Compensation Table in the Salary column.(2)
    
    The amounts in this column are also included in the Summary Compensation Table in the all
other compensation column.(3)
    
    Earnings in the deferred compensation plan are excluded from the base salary and bonus
reported in the Summary Compensation Table. Severance and Change in Control Arrangements
  Employment Contracts, Termination of Employment and Change-in-Control Arrangements
 Max W. Hillman, President and Chief Executive Officer
  86




---



##### 



James P. Waters, Chief Financial Officer
  Richard P. Hillman, President of The Hillman Group, Inc.
  87




---



##### 



Director Compensation
  Change inPensionValue andFees
    
    
    
    
    
    
    
    
    
    Non-Equity
    
    NonqualifiedEarned
    
    
    
    
    
    
    
    
    
    Incentive
    
    Deferredor Paid
    
    Stock
    
    Option
    
    Plan
    
    Compensation
    
    All OtherName
    
    in Cash
    
    Awards
    
    Awards
    
    Compensation
    
    Earnings
    
    Compensation
    
    Total(a)
    
    (b)
    
    (c)
    
    (d)
    
    (e)
    
    (f)
    
    (g)
    
    (h)Peter M. Gotsch
    
    $
    0
    
    
    NA
    
    NA
    
    NA
    
    $
    0
    
    
    $
    0
    
    
    $
    0Maurice P.
Andrien, Jr.
    
    $
    29,500
    
    
    NA
    
    NA
    
    NA
    
    $
    0
    
    
    $
    0
    
    
    $
    29,500Max W. Hillman (1)
    
    $
    0
    
    
    NA
    
    NA
    
    NA
    
    $
    0
    
    
    $
    0
    
    
    $
    0Andrew W. Code
    
    $
    0
    
    
    NA
    
    NA
    
    NA
    
    $
    0
    
    
    $
    0
    
    
    $
    0Larry Wilton
    
    $
    29,500
    
    
    NA
    
    NA
    
    NA
    
    $
    0
    
    
    $
    0
    
    
    $
    29,500Shael J. Dolman
    
    $
    0
    
    
    NA
    
    NA
    
    NA
    
    $
    0
    
    
    $
    0
    
    
    $
    0
 
 (1)
    
    Mr. Hillman also serves as the Companys Chief Executive Officer. The compensation awarded
to him in these capacities is represented in the Summary Compensation Table. He is not
compensated in his role as a Director.  88




---



##### 



Item 12
 Security Ownership of Certain Beneficial Owners and Management.
  Class A Common
    
    Class B Common
    
    Class C Common
    

    Total Common
    
    Class A PreferredName
    
    Stock (1)
    
    Stock (2)
    
    Stock (3)
    

    Stock (4)

    
    Stock (5)5% Owners
    
    Shares
    
    Percent
    
    Shares
    
    Percent
    
    Shares
    
    Percent
    

    Shares
    
    Percent





    
    Shares
    
    PercentCode Hennessy &

Simmons IV LP

10 South Wacker Dr.

Suite 3175

Chicago, IL 60606
    
    
    4,904.9
    
    
    
    78.89
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,904.9
    
    
    
    49.03
    %
    
    
    46,869.4
    
    
    
    49.00
    %Ontario Teachers

Pension Plan
5650 Yonge St.

North York, 
Ontario

M2M 4H5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,787.1
    
    
    
    100.00
    %
    
    
    2,787.1
    
    
    
    27.86
    %
    
    
    26,632.3
    
    
    
    27.84
    %HarbourVest 
Partners
VI  
Direct Fund,
L.P.
One Financial 
Center


44th Floor

Boston, MA 02111
    
    
    871.0
    
    
    
    14.01
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    871.0
    
    
    
    8.71
    %
    
    
    8,322.6
    
    
    
    8.70
    %Directors and

Executive OfficersMax W. Hillman
    
    
    166.4
    
    
    
    2.68
    %
    
    
    343.4
    
    
    
    34.34
    %
    
    
    
    
    
    
    
    
    
    
    509.8
    
    
    
    5.10
    %
    
    
    4,565.9
    
    
    
    4.78
    % (6)Richard P. Hillman
    
    
    54.6
    
    
    
    0.88
    %
    
    
    144.6
    
    
    
    14.46
    %
    
    
    
    
    
    
    
    
    
    
    199.2
    
    
    
    1.99
    %
    
    
    1,953.7
    
    
    
    2.04
    % (7)George L. Heredia
    
    
    23.3
    
    
    
    0.38
    %
    
    
    73.9
    
    
    
    7.39
    %
    
    
    
    
    
    
    
    
    
    
    97.2
    
    
    
    0.97
    %
    
    
    1,007.8
    
    
    
    1.05
    % (8)James P. Waters
    
    
    23.9
    
    
    
    0.38
    %
    
    
    67.3
    
    
    
    6.73
    %
    
    
    
    
    
    
    
    
    
    
    91.2
    
    
    
    0.91
    %
    
    
    912.4
    
    
    
    0.95
    % (9)Ali Fartaj
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    All Directors and
Executive Officers
as a Group (11
persons)
    
    
    412.0
    
    
    
    6.63
    %
    
    
    1,000.0
    
    
    
    100.00
    %
    
    
    
    
    
    
    
    
    
    
    1,412.0

    
    
    
    14.11
    %
    
    
    13,548.5
    
    
    
    14.16
    %
 
 (1)
    
    Each holder of Class A Common Stock is entitled at any time to convert any or all
of the shares into an equal number of shares of Class C Common Stock.(2)
    
    Class B Common Stock has no voting rights.(3)
    
    Each holder of Class C Common Stock is entitled at any time to convert any or all
of the shares into an equal number of shares of Class A Common Stock. Each share of
Class C Common Stock is entitled to one vote provided that the aggregate voting power of
Class C Common Stock (with respect to the election of directors) never exceeds 30%.(4)
    
    Total of all classes of Common Stock(5)
    
    Class A Preferred shares do not have voting rights.(6)
    
    Includes options to purchase 3,243.7 shares of Class A Preferred stock(7)
    
    Includes options to purchase 1,387.9 shares of Class A Preferred stock.(8)
    
    Includes options to purchase 716.0 shares of Class A Preferred stock.(9)
    
    Includes options to purchase 648.2 shares of Class A Preferred stock. 89




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##### 



Item 13
 Certain Relationships and Related Transactions.
    Item 14
 Principal Accounting Fees and Services.
 Audit Fees
  Audit Related Fees
  90




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##### 



Tax Fees
  All Other Fees
   91




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##### 



PART IV
 Item 15
 Exhibits and Financial Statement Schedules.
 (a) Documents Filed as a Part of the Report:
 1.
    
    Financial Statements.The information concerning financial statements called for by Item 15 of Form 10-K is set
forth in Part II, Item 8 of this annual report on Form 10-K.2.
    
    Financial Statement Schedules.The information concerning financial statement schedules called for by Item 15 of Form 10-K
is set forth in Part II, Item 8 of this annual report on Form 10-K.3.
    
    Exhibits, Including Those Incorporated by Reference.The following is a list of exhibits filed as part of this annual report on Form 10-K. 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. (6)(Exhibit 10.2)2.2
    
    Asset Purchase Agreement between Fastenal Company and The Hillman Group, Inc.
dated October 3, 2002. (7)(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.
(4)(Exhibit 2.1)2.4
    
    Asset Purchase Agreement dated September 28, 2001, by and between SunSource
Technology Services, LLC, and STS Operating, Inc. (5)(Exhibit 2.1)2.5
    
    Agreement and Plan of Merger dated as of February 14, 2004 by and among the
Company, HCI Acquisition Corp. and the Common Stockholders of the Company. (2)(Exhibit
2.1)2.6
    
    Stock Purchase Agreement by and among All Points Industries, Inc., Gabrielle
Mann, Gregory Mann, and The Hillman Group, Inc. dated as of December 28, 2007.
(16)(Exhibit 2.6)3.1
    
    Bylaws as adopted by the Corporations stockholders as of March 30, 2004.
(10)(Exhibit 3.2)3.2
    
    Amendment No. 1 to the Companys Bylaws effective October 26, 2007. (15)(Exhibit
99.1)3.3
    
    Restated Certificate of Incorporation of the Company as of March 30, 2004.
(10)(Exhibit 3.1)4.1
    
    HCI Stockholders Agreement dated March 31, 2004. (9)(Exhibit 4.1)4.2
    
    Amended and Restated Declaration of Trust. (1)(Exhibit 4.1)4.3
    
    Indenture between the Company and the Bank of New York. (1)(Exhibit 4.2)4.4
    
    Preferred Securities Guarantee. (1)(Exhibit 4.3)
 92




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##### 



4.5
    
    Rights Agreement between the Company and the Registrar and Transfer Company.
(1)(Exhibit 10.5)4.6
    
    Amendment No. 1 to the Rights Agreement dated June 18, 2001. (8)(Exhibit 4.6)4.7
    
    Amendment No. 2 to the Rights Agreement dated February 14, 2004. (8)(Exhibit 4.7)4.8
    
    Hillman Investment Company Stockholders Agreement dated March 31, 2004. (9)
(Exhibit 4.2)4.9
    
    Registration Agreement dated March 31, 2004. (9) (Exhibit 4.3)10.1
    
    Credit Agreement dated as of March 31, 2004 by and among The Hillman Companies,
Inc., Hillman Investment Company, The Hillman Group, Inc., Merrill Lynch Capital as
Administrative Agent, Issuing Lender and Swingline Lender, JP Morgan Chase Bank as
Syndication Agent, and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and JP Morgan Securities as Joint Lead Arrangers and Joint Lead
Bookrunners. (9)(Exhibit 10.1)10.2
    
    Loan Agreement dated as of March 31, 2004 by and among The Hillman Companies,
Inc., Hillman Investment Company, The Hillman Group, Inc., and Allied Capital
Corporation. (9)(Exhibit 10.2)10.3
    
    Subordination and Intercreditor Agreement dated March 31, 2004. (9)(Exhibit 10.3)10.4
    
    The Hillman Companies, Inc. 2004 Stock Option Plan. (9)(Exhibit 10.4)10.5
    
    The Hillman Companies, Inc. Amended and Restated 2004 Stock Option Plan. (12)
(Exhibit 10.5)10.6
    
    The Hillman Companies, Inc. Employee Securities Purchase Plan. (9)(Exhibit 10.5)10.7
    
    Hillman Investment Company Employee Securities Purchase Plan. (9)(Exhibit 10.6)10.8
    
    HCI Securities Purchase Agreement dated March 31, 2004. (9)(Exhibit 10.7)10.9
    
    Joinder to Securities Purchase Agreement dated March 31, 2004. (9)(Exhibit 10.8)10.10
    
    Hillman Investment Company Securities Purchase Agreement dated March 31, 2004.
(9)(Exhibit 10.9)10.11
    
    Management Agreement dated March 31, 2004. (9)(Exhibit 10.10)10.12
    
    Employment Agreement by and between The Hillman Group, Inc. and Max W. Hillman
dated March 31, 2004. (9)(Exhibit 10.11)10.13
    
    Executive Securities Agreement between Max W. Hillman and HCI Acquisition Corp.
dated March 31, 2004. (9)(Exhibit 10.12)10.14
    
    Employment Agreement by and between The Hillman Group, Inc. and Richard P.
Hillman dated March 31, 2004. (9)(Exhibit 10.13)10.15
    
    Executive Securities Purchase Agreement between HCI Acquisition Corp. and
Richard P. Hillman dated March 31, 2004. (9)(Exhibit 10.14)10.16
    
    Employment Agreement by and between The Hillman Group, Inc. and James P. Waters
dated March 31, 2004. (9)(Exhibit 10.15)
 93




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##### 



10.17
    
    Executive Securities Agreement by and between HCI Acquisition Corp. and James
P. Waters dated March 31, 2004. (9)(Exhibit 10.16)10.18
    
    Executive Securities Agreement by and between HCI Acquisition Corp. and George
L. Heredia dated March 31, 2004. (12)(Exhibit 10.18)10.19
    
    Executive Securities Agreement by and between HCI Acquisition Corp. and Terry R.
Rowe dated March 31, 2004. (12)(Exhibit 10.19)10.20
    
    SunSource Inc. Nonqualified Deferred Compensation Plan dated as of August 1,
2000. (3)(Exhibit 10.1)10.21
    
    The Hillman Companies, Inc. Nonqualified Deferred Compensation Plan (amended and
restated). (11)(Exhibit 10.1)10.22
    
    First Amendment to The Hillman Companies, Inc. Nonqualified Deferred
Compensation Plan. (11)(Exhibit 10.2)10.23
    
    Asset Purchase Agreement dated January 5, 2006 between The SteelWorks
Corporation and The Hillman Group, Inc. (13)(Exhibit 10.1)10.24
    
    Supply Agreement dated January 5, 2006 between The SteelWorks Corporation and
The Hillman Group, Inc. (13)(Exhibit 10.2)10.25
    
    Amended and Restated Credit Agreement dated July 21, 2006. (14)(Exhibit 10.1)10.26
    
    Second Amendment to Loan Agreement dated July 21, 2006. (14)(Exhibit 10.2)12.1
    
    * Computation of Ratio of Income to Fixed Charges.21.1
    
    * Subsidiaries. (As of December 31, 2008)31.1
    
    * Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or
15d-14(a) under the Securities Exchange Act of 1934.31.2
    
    * Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or
15d-14(a) under the Securities Exchange Act of 1934.32.1
    
    * Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    * 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 Registration Statement No. 333-44733 on Form S-2.(2)
    
    Filed as an exhibit to the Form 8-K filed February 17, 2004.(3)
    
    Filed as an exhibit to Annual Report on Form 10-K for the year ended December 31,
2000.(4)
    
    Filed on June 21, 2001 as an exhibit to the Current Report on Form 8-K filed on
June 21, 2001.(5)
    
    Filed as an exhibit to the Current Report on Form 8-K filed on October 15, 2001.(6)
    
    Filed as an exhibit to Quarterly Report on Form 10-Q for the Quarter ended June
30, 2002. 94




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##### 



(7)
    
    Filed as an exhibit to the Current Report on Form 8-K filed on October 4, 2002.(8)
    
    Filed as an exhibit to the Annual Report on Form 10-K for the year ended December
31, 2003.(9)
    
    Filed as an exhibit to the Quarterly Report on Form 10-Q for the Quarter ended
March 31, 2004.(10)
    
    Filed as an exhibit to the Quarterly Report on Form 10-Q for the Quarter ended
June 30, 2004.(11)
    
    Filed as an exhibit to the Quarterly Report on Form 10-Q for the Quarter ended
September 30, 2004.(12)
    
    Filed as an exhibit to the Annual Report on Form 10-K for the year ended December
31, 2004.(13)
    
    Filed as an exhibit to the Current Report on Form 8-K filed on January 11, 2006.(14)
    
    Filed as an exhibit to the Current Report on Form 8-K filed on August 1, 2006.(15)
    
    Filed as an exhibit to the Current Report on Form 8-K filed on November 1, 2007.(16)
    
    Filed as an exhibit to the Current Report on Form 8-K filed on December 28, 2007.*
    
    Filed herewith. 95




---



##### 



SIGNATURES
  THE HILLMAN COMPANIES, INC.Date: March 27, 2009
    
    By:
    
    /s/ James P. WatersJames P. WatersTitle:
    
    Chief Financial
Officer and Duly
Authorized Officer
of the Registrant
(Principal
Financial Officer)
  Signature
    
    Capacity
    
    Date/s/ Max W. Hillman

Max W. Hillman
    
    Principal Executive 
Officer and Director
    
    March 27, 2009/s/ Peter M. Gotsch

Peter M. Gotsch
    
    Chairman and Director
    
    March 27, 2009/s/ Harold J. Wilder

Harold J. Wilder
    
    Principal Accounting
Officer
    
    March 27, 2009/s/ Andrew W. Code

Andrew W. Code
    
    Director
    
    March 27, 2009/s/ Larry Wilton

Larry Wilton
    
    Director
    
    March 27, 2009/s/ Maurice P. Andrien, Jr.

Maurice P. Andrien, Jr.
    
    Director
    
    March 27, 2009/s/ Shael J. Dolman

Shael J. Dolman
    
    Director
    
    March 27, 2009
 96