Ames True Temper Reports Second Quarter Results

CAMP HILL, Pa., May. 13 /PRNewswire/ --

CAMP HILL, Pa., May 13 /PRNewswire/ -- ATT Holding Co., parent of Ames True Temper, Inc., reported today the results of the Company's fiscal 2008 second quarter ended March 29, 2008.

Second Quarter Results (13-week Period Ended March 29, 2008)

Net sales for the thirteen week period ended March 29, 2008 were $147.1 million, a 15.5 percent decrease compared to $174.0 million for the thirteen week period ended March 31, 2007. Net income for the second quarter of fiscal 2008 was $3.3 million, compared to a net loss of $0.9 million for the second quarter of fiscal 2007. Adjusted EBITDA (which is reconciled to net income (loss) on the attached table) for the second quarter of fiscal 2008 was $20.8 million compared to adjusted EBITDA for the second quarter of fiscal 2007 of $18.8 million.

"Our revenue performance this quarter was dramatically impacted by the soft U.S. housing market. However, our gross margin as a percent of sales increased significantly due to improved manufacturing efficiencies," said Rich Dell, President and CEO. "Our improvement in operating income is directly attributable to delivering on the key fundamentals of managing our business."

Borrowings outstanding under our revolving credit facility were $73.8 million at March 29, 2008, a decrease of $29.1 million from $102.9 million at March 31, 2007. Availability under our revolving credit facility was $45.2 million at March 29, 2008.

"We are pleased with the borrowing availability as we reach peak season. Our focused efforts on operating expenses and working capital have been the drivers for reducing our revolver balance," noted David Nuti, CFO.

Year-to-Date Results (26-week period ended March 29, 2008)

Net sales for the twenty-six week period ended March 29, 2008 were $245.9 million, a 5.0 percent decrease compared to $259.0 million for the twenty-six week period ended March 31, 2007. Net loss for the twenty-six week period ended March 29, 2008 was $0.5 million, compared to a $10.1 million net loss during the twenty-six week period ended March 31, 2007. Adjusted EBITDA (which is reconciled to net loss on the attached table) for the first half of fiscal 2008 was $29.8 million compared to adjusted EBITDA for the first half of fiscal 2007 of $26.2 million.

"While our business was impacted by the slow U.S. housing market in the first and second quarter, we are pleased with the significant improvement over the net loss we incurred in the prior year," 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" 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 the Company 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; * Increased concentration of its customers; * Sales levels to existing and new customers; * Availability of raw materials; * Risks relating to foreign sourcing, foreign operations; * General economic conditions, including downturns in housing markets; * Changing consumer preferences; * Seasonality and adverse weather conditions; * Competitive pressures and trends; * Product liability claims; * New product and customer initiatives; * Our ability to pay our debt or obtain alternative financing; and * The Company's ability to successfully consummate and integrate acquisitions.

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.

ATT Holding Co. Consolidated Balance Sheets (In thousands) (Unaudited) March 29, September 29, 2008 2007 Assets Current assets: Cash and cash equivalents $9,024 $5,182 Trade receivables, net 89,205 56,306 Inventories 132,379 115,063 Deferred income taxes 1,046 752 Prepaid expenses and other current assets 5,673 5,509 Total current assets 237,327 182,812 Property, plant and equipment, net 60,683 66,055 Intangibles, net 72,547 73,324 Goodwill 58,666 59,320 Other noncurrent assets 9,666 11,274 Total assets $438,889 $392,785 Liabilities and stockholder's deficit Current liabilities: Trade accounts payable $48,671 $35,341 Accrued interest payable 6,063 6,254 Accrued expenses and other current liabilities 21,563 23,432 Revolving loan 73,836 42,498 Current portion of long-term debt and capital lease obligations 588 612 Total current liabilities 150,721 108,137 Deferred income taxes 20,749 20,477 Long-term debt 300,356 300,578 Accrued retirement benefits 12,070 10,943 Other liabilities 11,623 6,638 Total liabilities 495,519 446,773 Commitments and contingencies Stockholder's deficit: Preferred stock - - Common stock - - Additional paid-in capital 110,500 110,500 Predecessor basis adjustment (13,539) (13,539) Accumulated deficit (156,162) (155,707) Accumulated other comprehensive income 2,571 4,758 Total stockholder's deficit (56,630) (53,988) Total liabilities and stockholder's deficit $438,889 $392,785 ATT Holding Co. Condensed Consolidated Statements of Operations (In thousands) (Unaudited) Thirteen week Thirteen week period ended period ended March 29, 2008 March 31, 2007 Net sales $147,143 100.0% $174,035 100.0% Cost of goods sold 107,222 72.9% 131,447 75.5% Gross profit 39,921 27.1% 42,588 24.5% Selling, general, and administrative expenses 24,487 16.6% 29,242 16.8% Loss on disposal of fixed assets 213 0.1% 94 0.1% Amortization of intangible assets 341 0.2% 372 0.2% Impairment of fixed assets 34 0.0% - 0.0% Operating income 14,846 10.1% 12,880 7.4% Interest expense, net 8,726 5.9% 9,510 5.5% Other expense 3,679 2.5% 108 0.1% Income before income taxes 2,441 1.7% 3,262 1.9% Income tax (benefit) expense (892) -0.6% 4,204 2.4% Net income (loss) $3,333 2.3% $(942) -0.5% ATT Holding Co. Condensed Consolidated Statements of Operations (In thousands) (Unaudited) Twenty-six week Twenty-six week period ended period ended March 29, 2008 March 31, 2007 Net sales $245,924 100.0% $258,977 100.0% Cost of goods sold 180,629 73.4% 194,062 74.9% Gross profit 65,295 26.6% 64,915 25.1% Selling, general, and administrative expenses 45,955 18.7% 49,944 19.3% Loss on disposal of fixed assets 499 0.2% 629 0.2% Amortization of intangible assets 683 0.3% 745 0.3% Impairment of fixed assets 34 0.0% - 0.0% Operating income 18,124 7.4% 13,597 5.3% Interest expense, net 17,232 7.0% 18,132 7.0% Other expense 1,389 0.6% 237 0.1% Loss before income taxes (497) -0.2% (4,772) -1.8% Income tax (benefit) expense (42) 0.0% 5,346 2.1% Net loss $(455) -0.2% $(10,118) -3.9% ATT Holding Co. Reconciliation of Net Income (Loss) to Adjusted EBITDA (In thousands) (Unaudited) Thirteen week Thirteen week period ended period ended March 29, 2008 March 31, 2007 Net income (loss) $3,333 $(942) Depreciation of property, plant and equipment 3,983 4,057 Amortization of intangible assets 341 372 Interest expense, net 8,726 9,510 Income tax (benefit) expense (892) 4,204 EBITDA (a) 15,491 17,201 Adjustments to EBITDA: Cost savings initiatives (b) - 283 One-time costs for new long handle tool distribution (d) 191 191 Equity sponsor fees and other expenses (e) 1,154 982 Impairment charges (f) 34 52 Loss on disposal of fixed assets (g) 213 94 Loss on foreign currency (h) 3,733 - Adjusted EBITDA (a) $20,816 $18,803 (a) "EBITDA" is calculated as net income (loss) plus income tax expense (benefit), interest expense, 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 U.S. 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) Not used. (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 and non- cash charges recorded in accordance with Statement of Financial Accounting Standards No. 13 due to the expensing of escalating rent on a straight-line basis. (f) Consists of impairment charges related to property and certain equipment at a closed manufacturing facility. (g) Consists of gains and losses on disposition of property, plant and equipment. (h) Represents loss on foreign currency. For the period ended March 29, 2008, other expense consists primarily of an unrealized foreign currency loss on a U.S. dollar denominated intercompany note issued by a Canadian subsidiary. ATT Holding Co. Reconciliation of Net Loss to Adjusted EBITDA (In thousands) (Unaudited) Twenty-six week Twenty-six week period ended period ended March 29, 2008 March 31, 2007 Net loss $(455) $(10,118) Depreciation of property, plant and equipment 7,861 7,947 Amortization of intangible assets 683 745 Interest expense, net 17,232 18,132 Income tax (benefit) expense (42) 5,346 EBITDA (a) 25,279 22,052 Adjustments to EBITDA: Cost savings initiatives (b) (77) 1,123 ERP expenses (c) - 26 One-time costs for new long handle tool distribution (d) 305 305 Equity sponsor fees and other expenses (e) 2,326 1,952 Impairment charges (f) 34 104 Loss on disposal of fixed assets (g) 499 629 Loss on foreign currency (h) 1,405 - Adjusted EBITDA (a) $29,771 $26,191 (a) "EBITDA" is calculated as net income (loss) plus income tax expense (benefit), interest expense, 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 U.S. 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 and non- cash charges recorded in accordance with Statement of Financial Accounting Standards No. 13 due to the expensing of escalating rent on a straight-line basis. (f) Consists of impairment charges related to property and certain equipment at a closed manufacturing facility. (g) Consists of gains and losses on disposition of property, plant and equipment. (h) Represents loss on foreign currency. For the period ended March 29, 2008, other expense consists primarily of an unrealized foreign currency loss on a U.S. dollar denominated intercompany note issued by a Canadian subsidiary.