Mail Stop 6010
February 7, 2006
VIA U.S. MAIL AND FACSIMILE (717) 730-2550
Troy Bryce
Ames True Temper, Inc.
Chief Accounting Officer
465 Railroad Avenue
Camp Hill, Pennsylvania 17011
Re: Ames True Temper, Inc.
Form 10-K for the fiscal year ended October 1, 2005
Filed December 22, 2005
File No. 333-118086
Dear Mr. Bryce:
We have reviewed your filing and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and do not intend to expand our review to
other
portions of your documents. Where indicated, we think you should
revise your document in response to these comments. If you
disagree,
we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure. After reviewing this information, we may raise
additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K for the fiscal year ended October 1, 2005
Note 2. Significant Accounting Policies, page 39
Revenue and Cost Recognition, page 41
1. Please reference your disclosure on page 29 that you have
customer
incentive programs such as discounts and co-op advertising.
Explain
to us the specific incentive programs that you offer to your
customers and discuss the classification of and accounting for
these
sales incentives. Tell us how these incentives are estimated at
the
time of shipment and show us that your accounting conforms to
GAAP.
Refer as necessary to EITF 01-9. Please also expand future filings
to
provide more detail about these programs and the underlying
accounting.
2. Tell us whether you permit returns for other than normal
warranty
matters. If so, tell us how you estimate such returns and show us
that your accounting is appropriate under SFAS 48.
Stock-Based Compensation, page 43
3. Please describe to us and expand future filings to clarify the
nature of a "Class B management incentive unit." Please also
clarify
how you applied the requirements of APB 25 in determining that no
compensation should be recorded, including detail about how you
measured fair value for purposes of that determination.
Note 4. Restructuring and Purchase Accounting, page 45
4. With respect to restructuring reserves, please make more
detailed
and specific disclosure about the nature, timing and extent of the
underlying plans. Also disclose why you adjusted the pension
asset
by $6.8 million and disclose the underlying reasons for the
adjustments to plant reserves. Clarify how you accounted for the
revisions. Please apply in future filings.
Note 8. Goodwill and Other Intangibles, page 49
5. We note that you recognized an expense of $111.9 million for
the
impairment of goodwill during fiscal year 2005. With respect to
that
charge please respond to the following.
a. Provide us a description of the facts and circumstances leading
to
the impairment. Please specifically address the circumstances that
changed from June 2004, when the goodwill was initially recorded,
including timing. The response should address the underlying
business reasons for the impairment and should specifically
address
the business and operational conditions that did not turn out as
expected when the goodwill was initially recorded.
b. Describe the method of determining the fair value of the
associated reporting unit. We see the general disclosure in
financial statement footnote 2 (page 41); however, the response
should describe the specific methods and assumptions used in
determining the material amount of impairment recorded in 2005.
Your response to this comment should be detailed and specific.
That
response should clearly lay out the facts and circumstances
leading
to the charge and the methods and assumptions that underlie your
measurement. Future filings should present more detailed and
specific
disclosure under paragraph 47 of SFAS 142. Please provide us a
sample
of your proposed future disclosure.
6. In light of the significant goodwill impairment, describe to us
the details about how you assessed the recoverability of the trade
name. Specifically address methods and assumptions, including any
assumptions that are different from those used in assessing the
recoverability of goodwill. Your response should demonstrate that
the trade name asset is not similarly impaired.
Note 10, Debt Arrangements, page 52
7. With respect to your Senior Subordinated and Senior Floating
Rate
Notes, please describe your consideration of the disclosure
provisions of SX Rule 3-10.
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your response that keys your
responses to our comments and provides any requested information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed decision. Since the company and
its management are in possession of all facts relating to a
company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Kristin Lochhead at (202) 551-3664 or me at
(202) 551-3605 if you have questions. In this regard, please do
not
hesitate to contact Brian Cascio, Accounting Branch Chief, at
(202)
551-3676 with any other questions.
Sincerely,
Gary Todd
Reviewing Accountant
??
??
??
??
Mr. Bryce
Ames True Temper, Inc.
February 7, 2006
Page 2