Ames Companies 8-K Ames True Temper Reports Third Quarter Results

Ames True Temper Reports Third Quarter Results

CAMP HILL, Pennsylvania, August 13, 2007 – ATT Holding Co., parent of Ames True Temper, Inc., reported today the results of the Company’s fiscal third quarter ended June 30, 2007.

Third Quarter Results (13-week Period Ended June 30, 2007)

Net sales for the thirteen-week third quarter ended June 30, 2007 were $156.9 million, a 3.9 percent decrease from $163.3 million for the thirteen-week third quarter ended July 1, 2006. Net income for the third quarter of fiscal 2007 was $1.7 million, compared to net income of $7.6 million for the third quarter of fiscal 2006. Adjusted EBITDA (which is reconciled to net income on the attached table) for the third quarter of fiscal 2007 was $18.0 million compared to adjusted EBITDA for the third quarter of fiscal 2006 of $21.9 million.

‘‘Third quarter revenue was impacted by the late spring coupled with a soft housing market that negatively affected retail demand. Net Sales were also impacted by the recording of certain store servicing and advertising fees as a reduction of revenue in the quarter,’’ said Rich Dell, President and CEO. ‘‘In spite of the challenging retail environment we successfully achieved our working capital target for the quarter.’’

Year-to-Date Results (39-week period ended June 30, 2007)

Net sales for the thirty-nine week period ended June 30, 2007 were $415.9 million, a 7.7 percent increase over $386.0 million for the thirty-nine week period ended July 1, 2006. Net loss for the thirty-nine weeks ended June 30, 2007 was $8.4 million, compared to net income of $5.5 million during the thirty-nine weeks ended July 1, 2006. Adjusted EBITDA (which is reconciled to net income on the attached table) for the first three quarters of fiscal 2007 was $44.2 million compared to adjusted EBITDA for the first three quarters of fiscal 2006 of $48.5 million.

Dell commented, ‘‘YTD Net Income and Adjusted EBITDA were lower than the prior year primarily from unfavorable product mix and also from lower levels of production that negatively impacted overhead absorption.’’

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;

	*	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: Dave Nuti, Chief Financial Officer, +1-717-730-2933, investor@amestruetemper.com, for Ames True Temper, Inc.

ATT Holding Co.
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)

			June 30, 2007						September 30, 2006
Assets
Current assets:
Cash and cash equivalents				$	2,806					$	5,638
Restricted cash					—						2,081
Trade receivables, net					100,006						66,418
Inventories					112,008						141,239
Deferred income taxes					8,411						8,521
Prepaid expenses and other current assets					6,387						6,673
Total current assets					229,618						230,570
Property, plant and equipment, net					67,305						72,680
Intangibles, net					77,668						78,450
Goodwill					58,888						58,359
Other noncurrent assets					13,468						15,720
Total assets				$	446,947					$	455,779
Liabilities and stockholders’ deficit
Current liabilities:
Trade accounts payable				$	36,196					$	39,773
Accrued interest payable					10,260						7,325
Accrued expenses and other current liabilities					26,227						29,944
Revolving loan					67,099						66,608
Current portion of long-term debt					541						715
Total current liabilities					140,323						144,365
Deferred income taxes					28,244						26,325
Long-term debt					300,700						301,077
Accrued retirement benefits					7,362						7,812
Other liabilities					7,251						6,927
Total liabilities					483,880						486,506
Stockholders’ deficit:
Preferred stock					—						—
Common stock					—						—
Additional paid-in capital					110,500						110,500
Predecessor basis adjustment					(13,539	)					(13,539	)
Accumulated deficit					(146,005	)					(137,597	)
Accumulated other comprehensive income					12,111						9,909
Total stockholders’ deficit					(36,933	)					(30,727	)
Total liabilities and stockholders’ deficit				$	446,947					$	455,779

ATT Holding Co.
Condensed Consolidated Statements of Operations
(In Thousands)
(Unaudited)

			Thirteen weeks ended June 30, 2007												Thirteen weeks ended July 1, 2006
Net sales				$	156,889						100.0	%				$	163,331						100.0	%
Cost of goods sold					118,744						75.7	%					119,422						73.1	%
Gross profit					38,145						24.3	%					43,909						26.9	%
Selling, general and administrative expense					25,602						16.3	%					30,006						18.4	%
Loss on disposal of fixed assets					583						0.4	%					6						0.0	%
Amortization of intangible assets					375						0.2	%					450						0.3	%
Operating income					11,585						7.4	%					13,447						8.2	%
Interest expense					9,279						5.9	%					9,411						5.8	%
Other income (a)					(619	)					−0.4	%					(5,866	)					−3.6	%
Income before income taxes					2,925						1.9	%					9,902						6.1	%
Income tax expense					1,215						0.8	%					2,330						1.4	%
Net income				$	1,710						1.1	%				$	7,572						4.6	%

(a) Other income for the period ended July 1, 2006 includes $5,587 related to the settlement of a legal proceeding.

ATT Holding Co.
Condensed Consolidated Statements of Operations
(In Thousands)
(Unaudited)

			Thirty-nine weeks ended June 30, 2007												Thirty-nine weeks ended July 1, 2006
Net sales				$	415,866						100.0	%				$	385,952						100.0	%
Cost of goods sold					312,806						75.2	%					285,615						74.0	%
Gross profit					103,060						24.8	%					100,337						26.0	%
Selling, general and administrative expense					75,546						18.2	%					73,564						19.1	%
Loss (gain) on disposal of fixed assets					1,212						0.3	%					(493	)					−0.1	%
Amortization of intangible assets					1,120						0.3	%					1,347						0.3	%
Operating income					25,182						6.1	%					25,919						6.7	%
Interest expense					27,411						6.6	%					24,692						6.4	%
Other income (a)					(382	)					−0.1	%					(5,735	)					−1.5	%
(Loss) income before income taxes					(1,847	)					−0.4	%					6,962						1.8	%
Income tax expense					6,561						1.6	%					1,438						0.4	%
Net (loss) income				$	(8,408	)					−2.0	%				$	5,524						1.4	%

(a) Other income for the period ended July 1, 2006 includes $5,587 related to the settlement of a legal proceeding.

ATT Holding Co.
Reconciliation of Net Income to Adjusted EBITDA
(In Thousands)
(Unaudited)

			Thirteen weeks ended June 30, 2007						Thirteen weeks ended July 1, 2006
Net income				$	1,710					$	7,572
Depreciation of property, plant and equipment					4,228						3,277
Amortization of intangible assets					375						450
Interest expense					9,279						9,411
Income tax expense					1,215						2,330
EBITDA (a)					16,807						23,040
Adjustments to EBITDA
Cost savings initiatives (b)					6						441
ERP expenses (c)					—						26
One-time costs for new long handle tool distribution (d)					195						1,398
Equity sponsor fees and other expenses (e)					396						872
One-time costs related to acquisitions (f)					—						2,006
Loss on disposal of fixed assets (g)					583						6
Other income (h)					—						(5,866	)
Adjusted EBITDA (a)				$	17,987					$	21,923

(a) ‘‘EBITDA’’ is calculated as net income (loss) before income tax expense (benefit), interest expense plus depreciation and amortization. ‘‘Adjusted EBITDA’’ is EBITDA adjusted as indicated below. EBITDA and Adjusted EBITDA are 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) Represents expenses associated with non-recurring cash restructuring charges and cost savings initiatives, primarily plant closure and plant start-up costs.

(c) Consists of non-capitalizable expenses associated with the implementation of a new ERP system.

(d) Represents allowable addbacks for one-time set up expenses associated with new long handle tool business at one or more primary customers.

(e) Consists of management fees paid to private equity sponsor (Castle Harlan), transaction fees associated with acquisitions, 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 other non-cash charges.

(f) Represents expenses associated with acquisitions, primarily for employee retention.

(g) Consists of losses on the dispostion of property, plant and equipment.

(h) Represents non-operating revenue and expense. For the period ended July 1, 2006 includes $5,587 related to the settlement of legal proceeding.

ATT Holding Co.
Reconciliation of Net (Loss) Income to Adjusted EBITDA
(In Thousands)
(Unaudited)

			Thirty-nine weeks ended June 30, 2007						Thirty-nine weeks ended July 1, 2006
Net (loss) income				$	(8,408	)				$	5,524
Depreciation of property, plant and equipment					12,175						8,654
Amortization of intangible assets					1,120						1,347
Interest expense					27,411						24,692
Income tax expense					6,561						1,438
EBITDA (a)					38,859						41,655
Adjustments to EBITDA
Cost savings initiatives (b)					1,129						2,431
ERP expenses (c)					26						176
One-time costs for new long handle tool distribution (d)					500						6,000
Equity sponsor fees and other expenses (e)					2,452						2,454
One-time costs related to acquisitions (f)					—						2,006
Loss (gain) on disposal of fixed assets (g)					1,212						(493	)
Other income (h)					—						(5,735	)
Adjusted EBITDA (a)				$	44,178					$	48,494

(a) ‘‘EBITDA’’ is calculated as net income (loss) before income tax expense (benefit), interest expense plus depreciation and amortization. ‘‘Adjusted EBITDA’’ is EBITDA adjusted as indicated below. EBITDA and Adjusted EBITDA are 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) Represents expenses associated with non-recurring cash restructuring charges and cost savings initiatives, primarily plant closure and plant start-up costs.

(c) Consists of non-capitalizable expenses associated with the implementation of a new ERP system.

(d) Represents allowable addbacks for one-time set up expenses associated with new long handle tool business at one or more primary customers.

(e) Consists of management fees paid to private equity sponsor (Castle Harlan), transaction fees associated with acquisitions, 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 other non-cash charges.

(f) Represents expenses associated with acquisitions, primarily for employee retention.

(g) Consists of losses on the dispostion of property, plant and equipment.

(h) Represents non-operating revenue and expense. For the period ended July 1, 2006 includes $5,587 related to the settlement of legal proceeding.