AMES TRUE TEMPER REPORTS FOURTH QUARTER RESULTS
CAMP HILL, Pennsylvania, December 7, 2005 - ATT Holding Co., parent of Ames True
Temper, Inc., reported today the results of the Company's fiscal fourth quarter
ended October 1, 2005.
FOURTH QUARTER RESULTS (14-WEEK PERIOD ENDED OCTOBER 1, 2005)
Net sales for the fourteen-week fourth quarter ended October 1, 2005 were $90.0
million, an 8.4 percent increase over $83.0 million for the thirteen-week fourth
quarter ended September 25, 2004. Net loss for the fourth quarter of fiscal 2005
was $127.9 million, compared to a net loss of $7.8 million for the fourth
quarter of fiscal 2004. During the fourth quarter of fiscal 2005, the company
recorded non-cash impairment charges of $122.7 million related to the impairment
of goodwill in accordance with SFAS No. 142, Goodwill and Other Intangible
Assets, and the impairment of assets from the closure of a manufacturing
facility. Adjusted EBITDA (which is reconciled to net income on the attached
table) for the fiscal 2005 fourth quarter was $2.4 million, compared to $6.7
million for fiscal 2004 fourth quarter.
"We were pleased with our sales during our fourth quarter," said Rich Dell,
President and CEO. "Sales were strong to end the quarter, but resin costs
continued to put significant downward pressure on margins. We continue to have
plenty of liquidity, as we had zero borrowings under the revolving credit
facility and $21.4 million of cash invested at year end."
"We are very excited and optimistic about fiscal 2006. Overall, we have picked
up additional market share during customer line reviews. We have recently kicked
off an upgrade of our ERP system, which will position us to make better and
faster business decisions with more accurate, timely information. Additionally,
we have recently begun production at our new manufacturing facility that will
provide significant cost savings."
FULL YEAR RESULTS (53-WEEK PERIOD ENDED OCTOBER 1, 2005)
Net sales for the fifty-three week fiscal year 2005 were $450.6 million, a 2.8
percent increase over $438.5 million for the combined fifty-two week fiscal year
2004. Net loss for fiscal 2005 was $125.2 million, compared to net income of
$11.6 million fiscal 2004. Adjusted EBITDA for fiscal year 2005 was $42.3
million, compared to $54.7 million for the combined fiscal year 2004. The
combined fiscal year 2004 includes the 39-week period ended June 27, 2004 under
the predecessor company and the 13 weeks ended September 25, 2004.
RECENT DEVELOPMENTS
On December 1, 2005, Ames True Temper, Inc. entered into Amendment No. 2 of the
Credit Agreement, which amended certain defined terms and covenants in the
Credit Agreement. Under the new covenants, the Company will gain certain
covenant relief
during fiscal 2006. "This amendment provides us with the necessary flexibility
to position our company for the future," stated Dell.
Ames True Temper, Inc. is a leading North American manufacturer and marketer of
non-powered lawn and garden tools and accessories.
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act, and Section 21E of the Securities Exchange
Act of 1934. All statements other than statements of historical fact are
"forward-looking statements" for purposes of federal and state securities laws.
Forward-looking statements may include the words "may," "will," "plans,"
"estimates," "anticipates," "believes," "expects," "intends" and similar
expressions. Although Ames believes that such statements are based on reasonable
assumptions, these forward-looking statements are subject to numerous factors,
risks and uncertainties that could cause actual outcomes and results to be
materially different from those projected or assumed in its forward-looking
statements. These factors, risks and uncertainties include, among others, the
following:
* The Company's liquidity and capital resources;
* Sales levels to existing and new customers;
* Increased concentration of its customers;
* Seasonality and adverse weather conditions;
* Competitive pressures and trends;
* Changing consumer preferences;
* New product and customer initiatives;
* Risks relating to foreign sourcing, foreign operations and availability
of raw materials;
* The Company's ability to successfully consummate and integrate
acquisitions; and
* General economic conditions.
The Company's actual results, performance or achievements could differ
materially from those expressed in, or implied by, the forward-looking
statements. The Company can give no assurances that any of the events
anticipated by the forward-looking statements will occur or, if any of them do,
what impact they will have on its results of operations and financial condition.
The Company does not intend, and undertakes no obligation, to update any
forward-looking statement.
CONTACT: Eric Aumen, Director, Investor Relations and Public Reporting,
+1-717-730-2933, investor@amestruetemper.com, for Ames True Temper, Inc.
ATT Holding Co.
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
OCTOBER 1, SEPTEMBER 25,
2005 2004
----------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 21,394 $ 1,250
Trade receivables, net 49,677 57,904
Inventories 91,146 98,217
Deferred income taxes 6,265 4,387
Prepaid expenses and other current assets 10,040 6,289
----------------------------------------
Total current assets 178,522 168,047
Property, plant and equipment, net 61,907 63,677
Intangibles, net 81,129 82,291
Goodwill 41,735 156,563
Other noncurrent assets 15,300 12,659
----------------------------------------
Total assets $ 378,593 $ 483,237
========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 34,697 $ 28,926
Accrued payroll and related taxes 2,368 3,593
Accrued interest payable 5,832 4,804
Accrued expenses and other current liabilities 22,176 21,881
Revolving loan - 6,300
Current portion of long-term debt 515 1,400
----------------------------------------
Total current liabilities 65,588 66,904
Deferred income taxes 23,865 26,010
Long-term debt 301,433 288,600
Accrued retirement benefits 17,280 2,876
Other liabilities 7,325 7,458
----------------------------------------
Total liabilities 415,491 391,848
Stockholders' equity:
Preferred stock - -
Common stock - -
Additional paid-in capital 110,500 110,500
Predecessor basis adjustment (13,539) (13,539)
Retained (deficit) earnings (133,020) (7,820)
Accumulated other comprehensive income (595) 2,248
----------------------------------------
(36,654) 91,389
Treasury stock, at cost (244) -
----------------------------------------
Total stockholders' (deficit) equity (36,898) 91,389
----------------------------------------
Total liabilities and stockholders' equity $ 378,593 $ 483,237
========================================
ATT Holding Co.
Consolidated Statement of Income
(In Thousands)
(Unaudited)
FOURTEEN WEEKS THIRTEEN WEEKS
ENDED ENDED
OCTOBER 1, 2005 SEPTEMBER 25, 2004
----------------------------- ------------------------
Net sales $ 89,972 100.0% $ 83,044 100.0%
Cost of goods sold 72,894 81.0% 73,009 87.9%
----------------------------- ------------------------
Gross profit 17,078 19.0% 10,035 12.1%
Selling, general, and administrative expense 18,343 20.4% 16,560 19.9%
Loss (gain) on disposal of fixed assets 127 0.1% (7) 0.0%
Amortization of intangible assets 447 0.5% 477 0.6%
Impairment charges 122,678 136.4% - 0.0%
----------------------------- ------------------------
Operating loss (124,517) -138.4% (6,995) -8.4%
Interest expense 7,750 8.6% 5,899 7.1%
Other income (169) -0.2% (36) 0.0%
----------------------------- ------------------------
Loss before taxes (132,098) -146.8% (12,858) -15.5%
Income tax benefit (4,166) -4.6% (5,038) -6.1%
----------------------------- ------------------------
Net loss $ (127,932) -142.2% (7,820) -9.4%
============================= ========================
ATT Holding Co.
Consolidated Statement of Income
(In Thousands)
(Unaudited)
COMBINED
FIFTY-THREE WEEKS FIFTY-TWO WEEKS
ENDED ENDED
OCTOBER 1, 2005 SEPTEMBER 25, 2004
------------------------- ----------------------
Net sales $ 450,604 100.0% $ 438,487 100.0%
Cost of goods sold 344,544 76.5% 329,257 75.1%
------------------------- -----------------------
Gross profit 106,060 23.5% 109,230 24.9%
Selling, general, and administrative expense 77,319 17.2% 75,380 17.2%
Loss (gain) on disposal of fixed assets 23 0.0% (4,793) -1.1%
Amortization of intangible assets 1,754 0.4% 3,780 0.9%
Impairment charges 122,678 27.2% - 0.0%
Special charges - 0.0% 787 0.2%
------------------------- -----------------------
Operating (loss) income (95,714) -21.2% 34,076 7.8%
Interest expense 32,527 7.2% 13,462 3.1%
Other (income) expense (86) 0.0% 163 0.0%
------------------------- -----------------------
(Loss) income before taxes (128,155) -28.4% 20,451 4.7%
Income tax (benefit) expense (2,955) -0.7% 8,890 2.0%
------------------------- -----------------------
Net (loss) income $ (125,200) -27.8% $ 11,561 2.6%
========================= =======================
ATT Holding Co.
Reconciliation of Net Income to Adjusted EBITDA
(In Thousands)
(Unaudited)
FOURTEEN WEEKS THIRTEEN WEEKS
ENDED ENDED
OCTOBER 1, 2005 SEPTEMBER 25, 2004
------------------------ -----------------------
Net loss $ (127,932) $ (7,820)
Depreciation of property, plant and equipment 2,897 2,626
Amortization of intangible assets 447 477
Other income (169) (36)
Loss (gain) on disposal of fixed assets 127 (7)
Interest expense 7,750 5,899
Income tax benefit (4166) (5,038)
------------------------ -----------------------
EBITDA (a) (121,046) (3,899)
Adjustments to EBITDA
Inventory write-up (b) - 10,069
Impairment charges (c) 122,678 -
Equity sponsor fees and other expenses (d) 800 545
------------------------ -----------------------
Adjusted EBITDA (a) $ 2,432 $ 6,715
======================== =======================
(a) "EBITDA" is calculated as net income before income tax expense, interest
expense, other income and gain on disposal of fixed assets plus depreciation and
amortization. Adjusted EBITDA is EBITDA adjusted as indicated below. Adjusted
EBITDA is not intended to represent cash flow from operations as defined by GAAP
and should not be used as an alternative to net income as an indicator of
operating performance or to cash flow as a measure of liquidity. EBITDA and
Adjusted EBITDA are a basis upon which our management assesses financial
performance and covenants in our senior credit facility are tied to ratios based
on this measure. While EBITDA and adjusted EBITDA are frequently used as a
measure of operations and the ability to meet debt service requirements, they
are not necessarily comparable to other similarly titled captions of other
companies due to potential inconsistencies in the method of calculation.
(b) The Company adjusted inventory to fair market value for each acquisition.
These amounts represent additional costs of goods sold as a result of these
adjustments.
(c) Consists of impairment charges related to property and certain equipment at
a closed manufacturing facility and impairment of goodwill in accordance with
the Company's annual impairment test under SFAS No. 142, Goodwill and Other
Intangible Assets.
(d) Consists of management fees paid to private equity sponsor (Castle Harlan
subsequent to June 27, 2004 and Wind Point Partners prior thereto), transaction
fees associated with acquisitions, fees paid to lenders under our previous
revolving loan facility primarily related to the unused portion thereof (in
fiscal 2004), non-cash (income) expense related to our pension plan, non-cash
charges recorded in accordance with SFAS 13 due to the expensing of escalating
rent on a straight-line basis and allowable non-recurring expenses related to
cost saving initiatives.
ATT Holding Co.
Reconciliation of Net Income to Adjusted EBITDA
(In Thousands)
(Unaudited)
COMBINED
FIFTY-THREE WEEKS FIFTY-TWO WEEKS
ENDED ENDED
OCTOBER 1, 2005 SEPTEMBER 25, 2004
------------------------ -----------------------
Net (loss) income $ (125,200) $ 11,561
Depreciation of property, plant and equipment 10,277 8,579
Amortization of intangible assets 1,754 3,780
Other (income) expense (86) 163
Loss (gain) on disposal of fixed assets 23 (4,793)
Interest expense 32,527 13,462
Income tax (benefit) expense (2,955) 8,890
------------------------ -----------------------
EBITDA (a) (83,660) 41,642
Adjustments to EBITDA
Inventory write-up (b) - 10,159
Impairment charges (c) 122,678 -
Equity sponsor fees and other expenses (d) 3,266 2,893
------------------------ -----------------------
Adjusted EBITDA (a) $ 42,284 $ 54,694
======================== =======================
(a) "EBITDA" is calculated as net income before income tax expense, interest
expense, other income and gain on disposal of fixed assets plus depreciation and
amortization. Adjusted EBITDA is EBITDA adjusted as indicated below. Adjusted
EBITDA is not intended to represent cash flow from operations as defined by GAAP
and should not be used as an alternative to net income as an indicator of
operating performance or to cash flow as a measure of liquidity. EBITDA and
Adjusted EBITDA are a basis upon which our management assesses financial
performance and covenants in our senior credit facility are tied to ratios based
on this measure. While EBITDA and adjusted EBITDA are frequently used as a
measure of operations and the ability to meet debt service requirements, they
are not necessarily comparable to other similarly titled captions of other
companies due to potential inconsistencies in the method of calculation.
(b) The Company adjusted inventory to fair market value for each acquisition.
These amounts represent additional costs of goods sold as a result of these
adjustments.
(c) Consists of impairment charges related to property and certain equipment at
a closed manufacturing facility and impairment of goodwill in accordance with
the Company's annual impairment test under SFAS No. 142, Goodwill and Other
Intangible Assets.
(d) Consists of management fees paid to private equity sponsor (Castle Harlan
subsequent to June 27, 2004 and Wind Point Partners prior thereto), transaction
fees associated with acquisitions, fees paid to lenders under our previous
revolving loan facility primarily related to the unused portion thereof (in
fiscal 2004), non-cash (income) expense related to our pension plan, non-cash
charges recorded in accordance with SFAS 13 due to the expensing of escalating
rent on a straight-line basis and allowable non-recurring expenses related to
cost saving initiatives.
