Exhibit 99.1
AMES TRUE TEMPER REPORTS FOURTH QUARTER RESULTS
CAMP HILL, Pennsylvania, December 1, 2004 - ATT Holding Co., parent of Ames True
Temper, Inc., reported today the results of the Company's fiscal fourth quarter
ended September 25, 2004.
On June 28, 2004 an affiliate of Castle Harlan, Inc., a New York private-equity
investment firm, completed the acquisition of ATT Holding Co., and its
affiliates, in a transaction that was valued at approximately $380 million. This
sale resulted in a $45 million increase in the carrying value of inventory and
property, plant and equipment to the fair market value, as required by U.S.
generally accepted accounting principles ("GAAP").
FOURTH QUARTER RESULTS (13-WEEK PERIOD ENDED SEPTEMBER 25, 2004)
Net sales for the fiscal 2004 13-week fourth quarter were $83.0 million, versus
$83.1 million for the comparable period in fiscal 2003. Adjusted net income
(which excludes costs incurred as a result of the sale of the Company to Castle
Harlan and is calculated on attached table) was $0.3 million for the fourth
quarter of fiscal 2004, compared to $2.0 million in the fourth quarter of fiscal
2003. Net loss under GAAP for the fourth quarter of fiscal 2004 was $7.8
million, compared to GAAP net income of $2.8 million for the fourth quarter of
fiscal 2003. Adjusted EBITDA (which is reconciled to net income on the attached
table) for the fiscal 2004 fourth quarter was $6.7 million, compared to $9.2
million for fiscal 2003 fourth quarter.
"We have been challenged by the significant increases in commodity costs. We
continue to explore opportunities to reduce costs and increase our selling
prices to offset this commodity inflation. To date we have initiated two price
increases, one effective August 1 and another effective October 1, 2004," said
Rich Dell, President and CEO.
Judy Schuchart, VP of Finance and CFO, noted that during the fourth quarter, in
connection with the sale of the Company, the Company was required, by GAAP, to
increase the value of certain assets up to fair market value. The effect of
these increases was a reduction in gross margin for the fourth quarter of $10.4
million for the inventory step-up and increased depreciation.
FULL YEAR RESULTS
Net sales for the combined fiscal year 2004 were $438.5 million, an 8 percent
increase over $407.4 million for fiscal 2003. Adjusted net income on a
comparative basis for fiscal year 2004 was $19.1 million, compared to GAAP net
income of $16.6 million, or a 15 percent increase over fiscal year 2003. Net
income under GAAP for the combined fiscal year 2004 was $11.6 million. Adjusted
EBITDA for the combined fiscal year 2004
was $54.7 million, or a 9 percent increase over $50.2 million for fiscal year
2003. 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.
"We were pleased with our full year fiscal 2004 top line sales growth of 8% and
adjusted EBITDA growth of 9%. We are excited about our new product opportunities
for 2005 and continue to pursue our successful blended manufacturing strategy,"
Dell commented.
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. Forward-looking
statements include, without limitation, any statement that may predict,
forecast, indicate or imply future results, performance or achievements.
Forward-looking statements involve risks and uncertainties faced by Ames
including, but not limited to, economic, competitive, governmental and
technological factors outside the control of Ames that may cause actual results
to differ materially from the forward-looking statements. These factors, risks
and uncertainties include, among others, the following:
* Our liquidity and capital resources;
* Sales levels to existing and new customers;
* Increased concentration of our customers;
* Seasonality and adverse weather conditions;
* Competitive pressures and trends;
* Changing consumer preferences;
* New product and customer initiatives;
* Risks relating to foreign sourcing and foreign operations and availability
of raw materials;
* Our ability to successfully consummate and integrate acquisitions; and
* General economic conditions.
Our actual results, performance or achievements could differ materially from
those expressed in, or implied by, the forward-looking statements. We 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 our
results of operations and financial condition. We do not intend, and we
undertake no obligation, to update any forward-looking statement.
CONTACT: Judy Schuchart, +1-717-730-2576, investor@amestruetemper.com, for Ames
True Temper, Inc.
ATT HOLDING CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 25, SEPTEMBER 27,
2004 2003
--------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,250 $ 1,688
Trade receivables, net 57,904 51,023
Inventories 98,217 77,051
Deferred taxes 4,888 10,199
Other current assets 6,289 4,639
--------------- ---------------
Total current assets 168,548 144,600
Property, plant and equipment, net 63,677 31,228
Pension asset 7,072 22,761
Intangibles, net 82,291 16,407
Goodwill 147,325 9,810
Other noncurrent assets 12,412 3,275
--------------- ---------------
Total assets $ 481,325 $ 228,081
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 28,926 $ 24,555
Accrued payroll and related taxes 3,593 3,425
Accrued interest payable 4,804 1,501
Accrued expenses and other current liabilities 21,881 20,713
Revolving loan 6,300 1,941
Current portion of long-term debt 1,400 13,794
--------------- ---------------
Total current liabilities 66,904 65,929
Deferred taxes 24,098 11,077
Long-term debt 288,600 62,753
Other liabilities 10,334 4,149
--------------- ---------------
Total liabilities 389,936 143,908
Stockholders' equity:
Preferred stock - -
Common stock - -
Additional paid-in capital 110,500 63,543
Predecessor basis adjustment (13,539) -
Retained (deficit) earnings (7,820) 18,120
Accumulated other comprehensive income 2,248 2,510
--------------- ----------------
Total stockholders' equity 91,389 84,173
--------------- ----------------
Total liabilities and stockholders' equity $ 481,325 $ 228,081
=============== ================
ATT HOLDING CO.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS)
ADJUSTED ADJUSTED
THIRTEEN WEEKS THIRTEEN WEEKS THIRTEEN WEEKS THIRTEEN WEEKS
ENDED ENDED ENDED ENDED
SEPTEMBER 25, 2004 SEPTEMBER 25, 2004 SEPTEMBER 27, 2003 SEPTEMBER 27, 2003
---------------------- --------------------- ---------------------- ----------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
Net sales $83,044 100.0% $83,044 100.0% $83,098 100.0% $ 83,098 100.0%
Cost of goods sold 73,009 87.9% 73,009 87.9% 59,817 72.0% 59,817 72.0%
Less inventory write-up (a) - 0.0% (10,069) -12.1% - 0.0% - 0.0%
Change in depreciation (b) - 0.0% (315) -0.4% - 0.0% 1,391 1.7%
---------------------- --------------------- ---------------------- ----------------------
Gross profit 10,035 12.1% 20,419 24.6% 23,281 28.0% 21,890 26.3%
Selling, general, and
administrative expense 16,572 20.0% 16,572 20.0% 15,953 19.2% 15,953 19.2%
Less increased
management fee (c) - 0.0% (162) -0.2% - 0.0% - 0.0%
Gain on disposal of fixed assets (7) 0.0% (7) 0.0% (619) -0.7% (619) -0.7%
Amortization of intangible assets 477 0.6% 477 0.6% 1,063 1.3% 1,063 1.3%
Plus decreased
amortization (b) - 0.0% 563 0.7% - 0.0% - 0.0%
Special Charges (12) 0.0% (12) 0.0% - 0.0% - 0.0%
Operating income (6,995) -8.4% 2,988 3.6% 6,884 8.3% 5,493 6.6%
---------------------- --------------------- ---------------------- ----------------------
Interest expense 5,899 7.1% 5,899 7.1% 2,499 3.0% 2,499 3.0%
Less increased
interest (d) - 0.0% (3,398) -4.1% - 0.0% - 0.0%
Other income (36) 0.0% (36) 0.0% (300) -0.4% (300) -0.4%
---------------------- --------------------- ---------------------- ----------------------
Income before taxes (12,858) -15.5% 523 0.6% 4,685 5.6% 3,294 4.0%
Income tax (benefit) expense (5,038) -6.1% (5,038) -6.1% 1,912 2.3% 1,912 2.3%
Tax effect of
adjustments (e) - 0.0% 5,243 6.3% - 0.0% (568) -0.7%
---------------------- --------------------- ---------------------- ----------------------
Net income (7,820) -9.4% $ 318 0.4% $ 2,773 3.3% $ 1,950 2.3%
====================== ===================== ====================== ======================
(a) We are required by GAAP to adjust inventory to fair market value for each
acquisition. These amounts represent additional costs of goods sold as a result
of these adjustments.
(b) In the thirteen weeks ended September 25, 2004, we incurred additional
depreciation as a result of the write-up of assets to fair market value as
required under GAAP, the amortization decreased as a result of the valuation and
the lives of the intangible assets. In the thirteen weeks ended September 27,
2004, there was a reduction of $1.4 million to depreciation expense as a result
of a change in estimate of capital spending.
(c) Consists of increased management fees to Castle Harlan compared to
management fees paid to Wind Point Partners.
(d) As a result of the sale of the Company, our capital structure changed to
include a significant amount of long-term debt. This resulted in increased
interest expense of $3.4 million.
(e) Represents the change in tax expense as a result of the adjustments.
ATT HOLDING CO.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS)
COMBINED ADJUSTED COMBINED
FIFTY-TWO WEEKS FIFTY-TWO WEEKS FISCAL YEAR
ENDED ENDED ENDED
SEPTEMBER 25, 2004 SEPTEMBER 25, 2004 SEPTEMBER 27, 2003
-------------------- -------------------- --------------------
(UNAUDITED) (UNAUDITED)
Net sales $438,487 100.0% 438,487 100.0% $ 407,426 100.0%
Cost of goods sold 329,257 75.1% 329,257 75.1% 294,487 72.3%
Less inventory write-up (a) - 0.0% (10,069) -2.3% - 0.0%
Change in depreciation (b) - 0.0% (315) -0.1% - 0.0%
--------------------- -------------------- --------------------
Gross profit 109,230 24.9% 119,614 27.3% 112,939 27.7%
Selling, general, and administrative expense 75,380 17.2% 75,380 17.2% 73,142 18.0%
Less increased management fee (c) - 0.0% (162) 0.0% - 0.0%
Gain on disposal of fixed assets (4,793) -1.1% (4,793) -1.1% (880) -0.2%
Amortization of intangible assets 3,780 0.9% 3,780 0.9% 3,508 0.9%
Plus decreased amortization (b) - 0.0% 563 0.1% - 0.0%
Special Charges 787 0.2% 787 0.2% 797 0.2%
--------------------- -------------------- --------------------
Operating income 34,076 7.8% 44,059 10.0% 36,372 8.9%
Interest expense 13,462 3.1% 13,462 3.1% 10,377 2.5%
Less increased interest (d) - 0.0% (3,398) -0.8% - 0.0%
Other expense (income) 163 0.0% 163 0.0% (1,065) -0.3%
--------------------- -------------------- --------------------
Income before taxes (e) 20,451 4.7% 33,832 7.7% 27,060 6.6%
Income tax expense 8,890 2.0% 8,890 2.0% 10,495 2.6%
Tax effect of adjustments - 0.0% 5,817 1.3% - 0.0%
--------------------- -------------------- -------------------
Net income $ 11,561 2.6% 19,125 4.4% $ 16,565 4.1%
===================== ==================== ===================
(a) We are required by GAAP to adjust inventory to fair market value for each
acquisition. These amounts represent additional costs of goods sold as a result
of these adjustments.
(b) We incurred additional depreciation as a result of the write-up of assets to
fair market value as required under GAAP, the amortization decreased as a result
of the valuation and the lives of the intangible assets.
(c) Consists of increased management fees to Castle Harlan compared to
management fees paid to Wind Point Partners.
(d) As a result of the sale of the Company, our capital structure changed to
include a significant amount of long-term debt. This resulted in increased
interest expense of $3.4 million.
(e) Represents the change in tax expense as a result of the adjustments.
ATT HOLDING CO.
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(IN THOUSANDS)
(UNAUDITED)
THIRTEEN WEEKS THIRTEEN WEEKS
ENDED ENDED
SEPTEMBER 25, 2004 SEPTEMBER 27, 2003
------------------------------------------------
Net income $ (7,820) $ 2,773
Depreciation of property, plant and equipment 2,626 927
Amortization of intangible assets 477 1,063
Other expense (income) (36) (300)
Gain on disposal of fixed assets (7) (619)
Interest expense 5,899 2,499
Income tax (benefit) expense (5,038) 1,912
-----------------------------------------------
EBITDA (3,899) 8,255
Adjustments to EBITDA
Special charges (a) (12) -
Inventory write-up (b) 10,069 339
Equity sponsor fees and other expenses (c) 557 615
-----------------------------------------------
Adjusted EBITDA (d) $ 6,715 $ 9,209
===============================================
(a) In fiscal 2004, we incurred certain non-capitalizable transaction costs.
(b) We are required by GAAP to adjust 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 management fees paid to Wind Point Partners, fees paid to
lenders under our existing revolving loan facility primarily related to the
unused portion thereof, non-cash (income) expense related to our pension plan
and non-cash charges recorded in accordance with SFAS 13 due to the expensing of
escalating rent on a straight-line basis. During the thirteen weeks ended
September 25, 2004, we also incurred management fees payable to Castle Harlan.
(d) "EBITDA" is calculated as net (loss) income before income tax expense,
interest expense, other expense (income) and gain on disposal of fixed assets
plus depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for
management fees, and non-recurring items. 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 is a basis upon which
our management assesses financial performance and covenants in our new 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.
ATT HOLDING CO.
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(IN THOUSANDS)
(UNAUDITED)
COMBINED
FIFTY-TWO WEEKS FISCAL YEAR
ENDED ENDED
SEPTEMBER 25, 2004 SEPTEMBER 27, 2003
----------------------------------------------
Net income $ 11,561 $ 16,565
Depreciation of property, plant and equipment 8,579 7,485
Amortization of intangible assets 3,780 3,508
Other expense (income) 163 (1,065)
Gain on disposal of fixed assets (4,793) (880)
Interest expense 13,462 10,377
Income taxes 8,890 10,495
---------------------------------------------
EBITDA 41,642 46,485
Adjustments to EBITDA
Special charges (a) 787 797
Inventory write-up (b) 10,159 892
Equity sponsor fees and other expenses (c) 2,106 2,018
---------------------------------------------
Adjusted EBITDA (d) $ 54,694 $ 50,192
=============================================
(a) In fiscal 2004, we incurred certain non-capitalizable transaction costs. In
fiscal 2003, we incurred a $0.8 million special charge as a result of medical
expenses related to an employee.
(b) We are required by GAAP to adjust 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 management fees paid to Wind Point Partners, fees paid to
lenders under our existing revolving loan facility primarily related to the
unused portion thereof, non-cash (income) expense related to our pension plan
and non-cash charges recorded in accordance with SFAS 13 due to the expensing of
escalating rent on a straight-line basis. During the thirteen weeks ended
September 25, 2004, we also incurred management fees payable to Castle Harlan.
(d) "EBITDA" is calculated as net (loss) income before income tax expense,
interest expense, other expense (income) and gain on disposal of fixed assets
plus depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for
management fees, and non-recurring items. 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 is a basis upon which
our management assesses financial performance and covenants in our new 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.