content_image/76322.jpg
## 2004 

## Notes to Consolidated Financial Statements 

(Dollar and Share Amounts in Thousands except Per Share Information and as Otherwise Noted) 

## Income Taxes, continued 

The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of December 31 are as follows: 

<img src='content_image/76322.jpg'>

No valuation allowance for deferred tax assets was necessary as of December 31, 2004 and 2003. The character of the deferred tax assets is such that they can be realized through carryback to prior tax periods or offset against future taxable income. 

During 2004, 2003, and 2002, $4,248, $1,973, and $3,428, respectively, were added to additional paid-in capital reflecting the permanent book to tax difference in accounting for tax benefits related to employee stock option transactions. 

## 8 Acquisition and Disposal of Business 

On August 31, 2001, the Company acquired certain assets of two subsidiaries of Textron, Inc. These assets were used in their business of selling packaged fasteners to the retail market (Do-It-Yourself or DIY Business). The purchase price consisted of a cash payment and the assumption of certain liabilities at closing. The acquisition was not material to the financial statements of the Company. The purchase price was finalized during the second quarter of 2002. The final purchase price resulted in tangible assets in excess of the cash paid and liabilities assumed, or negative goodwill. The negative goodwill, net of tax, of $716 was recognized in earnings during the second quarter of 2002 as an extraordinary gain. 

The net sales from the DIY Business totaled $8,526 from August 31, 2001 through December 31, 2001. The DIY Business was sold to The Hillman Group, Inc. on October 3, 2002. The net sales from the DIY Business totaled $16,974 from January 1, 2002 through October 3, 2002. The Company recognized a gain, before tax, of $5,934 from the sale of the DIY Business during the fourth quarter of 2002. 

