UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark one)


þ		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended January 2, 2010


o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 333-118086

AMES TRUE TEMPER, INC.

(Exact name of registrant as specified in its charter)


Delaware		22-2335400
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

465 Railroad Avenue, Camp Hill, Pennsylvania		17011
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:

(717) 737-1500

Former name, former address and former fiscal year, if changed since last report:

NOT APPLICABLE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

As of February 12, 2010 the Registrant had 1,000 shares of its common stock, $1.00 par value, outstanding.

ATT HOLDING CO.

TABLE OF CONTENTS


	Page No.
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited):

Condensed Consolidated Balance Sheets as of January 2, 2010 and October 3, 2009		1

Condensed Consolidated Statements of Operations for the thirteen week periods ended January 2, 2010 and December 27, 2008		2

Condensed Consolidated Statements of Cash Flows for the thirteen week periods ended January 2, 2010 and December 27, 2008		3

Notes to Condensed Consolidated Financial Statements		4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		21

Item 3. Quantitative and Qualitative Disclosures About Market Risk		29

Item 4T. Controls and Procedures		30

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		31

Item 1A. Risk Factors		31

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		31

Item 3. Defaults Upon Senior Securities		31

Item 4. Submission of Matters to a Vote of Security Holders		31

Item 5. Other Information		31

Item 6. Exhibits		31

Signatures		32
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ATT Holding Co.

Condensed Consolidated Balance Sheets
(Dollars In Thousands Except Per Share Amounts)

(Unaudited)


	January 2,			October 3,
	2010			2009
Assets
Current assets:
Cash and cash equivalents	$	41,308		$	33,609
Trade receivables, net		43,188			42,449
Inventories		106,379			90,305
Prepaid expenses and other current assets		6,042			6,315

Total current assets		196,917			172,678
Property, plant and equipment, net		42,063			44,239
Intangibles, net		53,580			53,681
Goodwill		57,971			57,494
Other noncurrent assets		5,922			6,531

Total assets	$	356,453		$	334,623

Liabilities and stockholder’s deficit
Current liabilities:
Trade accounts payable	$	34,701		$	18,214
Accrued interest payable		9,101			5,392
Accrued expenses and other current liabilities		23,540			26,642
Revolving loan		18,293			17,500
Current portion of long-term debt and capital lease obligations		374			489

Total current liabilities		86,009			68,237
Deferred income taxes		14,034			13,672
Long-term debt		299,886			299,791
Accrued retirement benefits		51,907			51,836
Other liabilities		12,156			12,661

Total liabilities		463,992			446,197
Commitments and contingencies
Stockholder’s deficit:
Preferred stock—Series A, $.0001 per share par value; 100,000 shares authorized; 62,495 shares issued and outstanding as of January 2, 2010 and October 3, 2009 (Liquidation preference of $62,495 at January 2, 2010)		—			—
Common stock—Class A, $.0001 per share par value; 1,600,000 shares authorized; 726,556 shares issued and outstanding as of January 2, 2010 and October 3, 2009		—			—
Common stock—Class B, $.0001 per share par value; 300,000 shares authorized; 267,448 shares issued and outstanding as of January 2, 2010 and October 3, 2009		—			—
Additional paid-in capital		111,170			111,168
Predecessor basis adjustment		(13,539	)		(13,539	)
Accumulated deficit		(165,913	)		(167,272	)
Accumulated other comprehensive loss		(39,257	)		(41,931	)

Total stockholder’s deficit		(107,539	)		(111,574	)

Total liabilities and stockholder’s deficit	$	356,453		$	334,623

See accompanying notes.

ATT Holding Co.

Condensed Consolidated Statements of Operations
(Dollars In Thousands)

(Unaudited)


	Thirteen Week Period Ended
	January 2,			December 27,
	2010			2008
Net sales	$	86,399		$	92,334
Cost of goods sold		59,228			64,449

Gross profit		27,171			27,885
Selling, general and administrative expenses		15,897			17,798
(Gain) loss on disposal of property, plant and equipment		(65	)		32
Amortization of intangible assets		304			305
Impairment charges		—			476

Operating income		11,035			9,274
Interest expense		6,821			7,971
Other expense		1,200			11,363

Income (loss) before income taxes		3,014			(10,060	)
Income tax expense		1,655			178

Net income (loss)	$	1,359		$	(10,238	)

See accompanying notes.

ATT Holding Co.

Condensed Consolidated Statements of Cash Flows
(Dollars In Thousands)

(Unaudited)


	Thirteen Week Period Ended
	January 2,			December 27,
	2010			2008
Operating activities
Net income (loss)	$	1,359		$	(10,238	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense		3,358			3,887
Amortization of intangible assets		304			305
Amortization of loan fees		555			555
Benefit from deferred taxes		(2,409	)		(359	)
(Benefit from) provision for bad debts		(58	)		132
Amortization of bond discount		27			27
(Gain) loss on disposal of property, plant and equipment		(65	)		32
Unrealized foreign currency losses		1,007			11,842
Impairment charges		—			476
Changes in assets and liabilities:
Trade receivables		(480	)		66
Inventories		(15,623	)		(32,519	)
Prepaid expenses and other assets		76			(416	)
Trade accounts payable		16,326			7,646
Accrued expenses and other liabilities		2,438			842

Net cash provided by (used in) operating activities		6,815			(17,722	)

Investing activities
Cash paid for property, plant and equipment		(944	)		(2,418	)
Proceeds from sale of property, plant and equipment		184			5

Net cash used in investing activities		(760	)		(2,413	)

Financing activities
Repayments of long-term debt		(143	)		(136	)
Borrowings on revolving loan		14,923			43,488
Repayments on revolving loan		(14,130	)		(18,900	)
Principal payments under capital lease obligations		(2	)		—

Net cash provided by financing activities		648			24,452
Effect of exchange rate changes on cash and cash equivalents		996			(2,488	)

Increase in cash and cash equivalents		7,699			1,829
Cash and cash equivalents at beginning of period		33,609			17,159

Cash and cash equivalents at end of period	$	41,308		$	18,988

Supplemental Cash Flow Information
Cash paid for interest	$	2,570		$	4,056

Cash paid for income taxes	$	1,123		$	89

Property, plant and equipment in trade accounts payable at end of period	$	16		$	1,054

Property acquired under capital lease obligations	$	98		$	—

See accompanying notes.

ATT HOLDING CO.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

1. Basis of Presentation

These interim financial statements and the related notes contain the accounts of ATT Holding Co. and its wholly-owned subsidiaries (the “Company”) on a condensed consolidated basis and should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 3, 2009. ATT Holding Co. is a holding company which has no interest, operations or activities other than through its ownership of 100% of Ames True Temper Inc., (“ATT”) and ATT’s wholly-owned subsidiaries.

The accompanying condensed consolidated financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). Due to the seasonal nature of our business, the results of operations for the thirteen week period ended January 2, 2010 are not necessarily indicative of results to be expected for the entire fiscal year ending October 2, 2010. Certain information and notes normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. In the opinion of management, all adjustments necessary for a fair presentation have been recorded. All adjustments were comprised of normal recurring adjustments, except as discussed in the Notes to Condensed Consolidated Financial Statements. All intercompany transactions have been eliminated in consolidation.

2. Recent Accounting Pronouncements

Adopted

In February 2008, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance that defers the effective date of applying fair value guidance for one year for certain nonfinancial assets and nonfinancial liabilities. The Company adopted the new guidance during the thirteen week period ended January 2, 2010. The new guidance had no material effect on the Company’s condensed consolidated financial statements.

In December 2007, the FASB issued new accounting guidance that establishes principles and requirements for how an acquirer in a business combination:

	•		Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree;

	•		Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and

	•		Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.

The Company adopted the new guidance during the thirteen week period ended January 2, 2010. The new guidance had no material effect on the Company’s condensed consolidated financial statements.

In December 2007, the FASB issued an amendment to existing accounting guidance to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It also amends certain consolidation procedures for consistency with the requirements of the new accounting guidance. The Company adopted the amendment during the thirteen week period ended January 2, 2010. The amendment had no material effect on the Company’s condensed consolidated financial statements.

To Be Adopted

In June 2009, the FASB issued an amendment to existing accounting guidance to require entities to perform an analysis to determine whether its variable interests give it controlling interest in a variable interest entity. In addition, enhanced disclosures are required for any enterprise that holds a variable interest in a variable interest entity. The Company is required to adopt the amendment in the first quarter of fiscal

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

2011. The Company has not yet assessed the impact of adoption, if any, on its condensed consolidated financial statements.

In January 2010, the FASB issued an amendment to existing accounting guidance to require new fair value measurement disclosures related to transfers in and out of Level 1 and 2 in the hierarchy as well as new disclosures related to activity in Level 3 fair value measurements. The amendment clarifies existing disclosures related to level of disaggregation, inputs and valuation techniques. In addition, the amendment includes conforming amendments to the guidance on employers’ disclosures about postretirement benefit plan assets. The Company is required to adopt the amendment in the second quarter of fiscal 2010, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. The Company is acquired to adopt the exception in the first quarter of fiscal 2012. The Company has not yet assessed the impact of adoption, if any, on its condensed consolidated financial statements.

3. Inventories

Inventories are as follows:


	January 2,		October 3,
	2010		2009
Finished goods	$	68,082	$	51,161
Work in process		13,649		14,595
Raw materials		24,648		24,549

	$	106,379	$	90,305

4. Goodwill and Other Intangibles

The change in carrying amount of goodwill for the thirteen week period ended January 2, 2010 is as follows:


	United States		Canada		Total
Goodwill at October 3, 2009	$	43,605	$	13,889	$	57,494
Currency translation adjustments		—		477		477

Goodwill at January 2, 2010	$	43,605	$	14,366	$	57,971

The following table reflects the components of intangible assets other than goodwill as of January 2, 2010 and October 3, 2009:


	January 2, 2010				October 3, 2009
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Indefinite lived intangible assets:
Trade names	$	48,062	$	—	$	47,879	$	—
Finite lived intangible assets:
Technology (patents)		1,356		1,154		1,356		1,142
Non-compete agreements		976		971		976		965
Customer relationships		11,638		6,327		11,617		6,040

		13,970		8,452		13,949		8,147

	$	62,032	$	8,452	$	61,828	$	8,147

The cost of other acquired intangible assets, including primarily customer relationships, patents and covenants not to compete is amortized on a straight-line basis over the estimated lives of 3 to 19 years. Amortization expense for the remainder of fiscal 2010 and thereafter is as follows:

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)


January 2010 — September 2010	$	905
Fiscal 2011		1,200
Fiscal 2012		1,180
Fiscal 2013		1,166
Fiscal 2014		867
Thereafter		200

	$	5,518

5. Income Taxes

The Company determines its income tax provision for each jurisdiction in which it operates. This determination includes making an estimate of the Company’s current income tax payable, effects of temporary differences, net operating loss and credit carryforwards and the need for valuation allowances for deferred tax assets. In assessing whether or not deferred tax assets will be realized, the Company considers whether it is “more likely than not” that some portion or all of its deferred tax assets will not be realized. In making this assessment, historical operating losses, scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies are considered.

As a result of the history of losses that the Company has incurred in recent years in the U.S., substantially all of the U.S. domestic deferred tax assets, including tax loss carryforwards, net of certain deferred tax liabilities, have been offset with a valuation allowance. The Company expects to maintain a valuation allowance on these deferred tax assets until it can sustain a sufficient level of profits in the applicable tax jurisdictions that will demonstrate the ability to realize these net deferred tax assets at a more likely than not level.

Income tax expense for the thirteen week period ended January 2, 2010 primarily represents taxes in certain foreign jurisdictions of $1,094, additional valuation allowance of $331 and accrual of tax, interest, and penalties on unrecognized tax benefits of $160.

Income tax expense for the thirteen week period ended December 27, 2008 mainly represents the recognition of additional valuation allowance of $274 and an accrual of tax, interest and penalties on unrecognized tax benefits of $80. This expense is partially offset by a reduction in current tax liabilities as a result of a change in Canadian withholding tax rates of $362.

6. Debt Arrangements

Total indebtedness is as follows:


	January 2,			October 3,
	2010			2009
Revolving Loan	$	18,293		$	17,500
Senior Floating Rate Notes, net of unamortized discount of $214 and $241, respectively		149,785			149,759
Senior Subordinated Notes		150,000			150,000
Term Note		338			479
Capital lease obligations		137			42

Total debt		318,553			317,780
Less:
Short-term Revolving Loan		(18,293	)		(17,500	)
Current portion of capital lease obligations		(36	)		(10	)
Current portion of long-term debt		(338	)		(479	)

Long-term debt	$	299,886		$	299,791

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

Letters of

(a)

(b)

Borrowing

Credit

Availability

Interest

Maximum

Base as of

Outstanding as

as of

Rate as of

Borrowing

January

of January

January

Expiration

Amount

2, 2010

Date

Revolving Loan

130,000

76,660

3,268

55,099

3.0

Apr 7, 2011

(d)

(e)

Original

(c)

Interest

Maturity

Call Option

Principal

Interest Rate

Payments

Date

Jan 15, Apr 15,

Senior Floating Rate Notes

150,000

LIBOR + 4

Jul 15, Oct 15

Jan 15, 2012

Jan 15, 2007

Senior Subordinated Notes

150,000

Jan 15, Jul 15

Jul 15, 2012

Jul 15, 2008

Term Note

2,700

2.5

Monthly

Jul 19, 2010

n/a


(a)		Total amount available is limited by the amount of eligible accounts receivable, inventory, machinery and equipment, and real estate less letters of credit outstanding.

(b)		The interest rate applicable to the loans under the Revolving Loan is either 1) the “Eurodollar Rate” or London Interbank Offered Rate (LIBOR) plus a margin of 1.75% to 2.75%, or 2) the “Base Rate” plus a margin of 0.50% to 1.50%. The Base Rate is calculated at the higher of 1) the prevailing Federal Funds rate plus 50 basis points or 2) the administrative agent’s prime interest rate plus an applicable rate determined by the Company’s consolidated leverage ratio as defined by the Amended and Restated Senior Secured Credit Agreement.

(c)		LIBOR represents the three month London Interbank Offered Rate which resets quarterly, LIBOR was .28% as of October 13, 2009. October 13, 2009 represents the reset date for the January 15, 2010 interest payment.

(d)		Interest payments are in cash and paid in arrears.

(e)		The Senior Floating Rate Notes do not have a redemption premium. The Senior Subordinated Notes have a redemption price of 102.5% of principal on or after July 15, 2009, and 100% of principal on or after July 15, 2010.

Interest Rate Swaps

The Company’s Senior Floating Rate Notes have an interest rate of 3-month LIBOR plus 4%. The Company has entered into interest rate swaps that fix the variable rate portion of the interest rate as follows:


							(a)
							Effective
					Notional		Interest
	Receive	Pay			Amount		Rate
January 16, 2009 through January 15, 2010	3-month LIBOR		4.31	%	$	33,333		8.31	%
January 16, 2009 through January 15, 2010	3-month LIBOR		4.29	%		16,667		8.29	%
January 15, 2009 through January 15, 2010	3-month LIBOR		1.40	%		100,000		5.40	%
January 15, 2010 through January 15, 2011	3-month LIBOR		1.90	%		150,000		5.90	%
January 18, 2011 through January 15, 2012	3-month LIBOR		2.50	%		150,000		6.50	%


(a)		Represents the effective interest rate on the respective portion of the Senior Floating Rate Notes including the contractual terms of the interest rate swap for the periods indicated.

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

7. Pension and Other Post-retirement Benefits


	Pension Benefits						Other Benefits
	Thirteen Week Period Ended						Thirteen Week Period Ended
	January 2,			December 27,			January 2,			December 27,
	2010			2008			2010			2008
Service cost	$	37		$	109		$	1		$	1
Interest cost		2,105			2,149			20			22
Expected return on plan assets		(2,438	)		(2,585	)		—			—
Amortization of prior service cost		—			6			—			—
Amortization of unrecognized net loss		727			98			(28	)		(30	)

Net periodic benefit (credit) cost	$	431		$	(223	)	$	(7	)	$	(7	)

Employer contributions	$	288		$	2,169		$	13		$	—

8. Other Comprehensive Income (Loss)


	Thirteen Week Period Ended
	January 2,		December 27,
	2010		2008
Net income (loss)	$	1,359	$	(10,238	)
Other comprehensive income (loss):
Currency translation adjustment		2,210		5,319
Fair value adjustments of swaps, net of tax		464		(600	)
Effect of pension measurement date provision, net of tax		—		95

Comprehensive income (loss)	$	4,033	$	(5,424	)

9. Segment Information

The Company has three operating segments, comprised of the United States, Canada and Other. All of the Company’s revenues represent sales of similar products. All intercompany amounts are eliminated in the eliminations column. During the fourteen week period ended October 3, 2009, the Company consummated an internal reorganization. Pursuant to this reorganization, a Canadian subsidiary of the Company transferred all of the outstanding shares of a U.S. subsidiary of the Company to a separate U.S. subsidiary. The Company has recast its segment information for the thirteen week period ended December 27, 2008 as a result of the reorganization. Segment information for the thirteen week periods ended January 2, 2010 and December 27, 2008, representing the reportable segments currently utilized by chief operating decision makers was as follows:

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)


	Thirteen Week Period Ended
	January 2, 2010
	United States		Canada		Other			Eliminations			Consolidated
Net sales	$	64,953	$	20,571	$	875		$	—		$	86,399
Intersegment sales		1,154		3,173		—			(4,327	)		—
Operating income (loss)		6,314		5,170		(449	)		—			11,035
Interest expense												6,821
Other expense												1,200

Income before income taxes											$	3,014


	Thirteen Week Period Ended
	December 27, 2008
	United States		Canada		Other			Eliminations			Consolidated
Net sales	$	66,500	$	24,325	$	1,509		$	—		$	92,334
Intersegment sales		1,800		911		582			(3,293	)		—
Operating income (loss)		3,561		5,886		(173	)		—			9,274
Interest expense												7,971
Other expense												11,363

Loss before income taxes											$	(10,060	)

Segment assets as of January 2, 2010 and October 3, 2009 are as follows:


	January 2,		October 3,
	2010		2009
United States	$	259,753	$	242,774
Canada		90,373		84,987
Other		6,327		6,862

Total	$	356,453	$	334,623

10. Other Expense

Other expense consists of the following:


	Thirteen Week Period Ended
	January 2,		December 27,
	2010		2008
Unrealized loss	$	1,007	$	11,842
Realized loss (gain)		193		(479	)

Total	$	1,200	$	11,363

On September 1, 2007, the Company entered into an intercompany financing arrangement whereby one of the Company’s Canadian subsidiaries issued a U. S. dollar denominated intercompany note as part of an internal legal entity restructuring. During the fourth quarter of the fiscal year ended October 3, 2009, the internal legal entity restructuring was reversed and a portion of the balance outstanding under the intercompany note was repaid. The intercompany note is not long-term in nature. As a result, the impact of exchange rate changes on the principal and interest of the note is recorded as an unrealized gain or loss in the condensed consolidated statements of operations. For the thirteen week periods ended January 2, 2010

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

and December 27, 2008, the Company recorded unrealized losses related to the intercompany note of $647 and $14,834, respectively. In the second quarter of fiscal 2010 the remaining outstanding balance under the intercompany note was paid in full. The Company recorded an unrealized foreign currency loss of $51 and an unrealized foreign currency gain of $1,934 related to a U.S. dollar bank account held by a Canadian subsidiary during the thirteen week periods ended January 2, 2010 and December 27, 2008, respectively. In addition, for the thirteen week periods ended January 2, 2010 and December 27, 2008, the Company recorded an unrealized foreign currency loss of $278 and an unrealized foreign currency gain of $1,139, respectively, related to foreign currency forward contracts.

11. Condensed Guarantor Data

On December 17, 2007, as a result of certain corporate restructuring activities, ATT entered into supplemental indenture agreements with respect to the Senior Subordinated Notes and Senior Floating Rate Notes (collectively, the “Notes”) to include certain domestic subsidiaries as guarantors. The Notes are fully and unconditionally and jointly and severally guaranteed by ATT Holding Co. and certain of its directly or indirectly wholly-owned subsidiaries, namely, Ames True Temper Properties, Inc., Ames Holdings, Inc. and Ames U.S. Holding Corp., (collectively the “Subsidiary Guarantors”). ATT Holding Co. is a holding company which has no interest, operations or activities other than through its ownership of 100% of ATT and ATT’s wholly-owned subsidiaries. The Notes are not guaranteed by any of ATT Holding Co.’s other directly and indirectly wholly-owned subsidiaries.

The following condensed consolidating information presents, in separate columns, the condensed consolidating balance sheets as of January 2, 2010 and October 3, 2009 and the related condensed consolidating statements of operations and condensed consolidating statements of cash flows for the thirteen week periods ended January 2, 2010 and December 27, 2008 for (i) ATT Holding Co. on a parent only basis, with its investment in subsidiary recorded under the equity method, (ii) the issuer (ATT) as a wholly-owned subsidiary, on a parent only basis, with its investments in subsidiaries recorded under the equity method, (iii) the subsidiary guarantors on a combined basis, (iv) the subsidiary non-guarantors on a combined basis and (v) the Company on a consolidated basis.

During the fourth quarter of the period ended October 3, 2009, the Company consummated an internal reorganization between the U.S. and Canada segments. Pursuant to this reorganization, a Canadian subsidiary of the Company transferred all of the outstanding shares of a U.S. subsidiary of the Company to a separate U.S. subsidiary. The Company has recast its condensed consolidating statement of operations and condensed consolidating statement of cash flows for the thirteen week period ended December 27, 2008 as a result of this reorganization.

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

ATT Holding Co.
Condensed Consolidating Balance Sheet
As of January 2, 2010


									Subsidiary
	ATT			Ames True			Subsidiary		Non-
	Holding Co.			Temper Inc.			Guarantors		Guarantors			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	31		$	9	$	41,268		$	—		$	41,308
Trade receivables, net		—			38,346			—		4,842			—			43,188
Inventories		—			87,822			—		18,557			—			106,379
Prepaid expenses and other current assets		—			4,351			36		1,655			—			6,042

Total current assets		—			130,550			45		66,322			—			196,917
Property, plant and equipment, net		—			31,204			—		10,859			—			42,063
Intangibles, net		—			4,831			41,900		6,849			—			53,580
Goodwill		—			43,605			—		14,366			—			57,971
Intercompany receivable		—			30,792			173,536		3,474			(207,802	)		—
Investment in subsidiaries		—			256,790			167,228		—			(424,018	)		—
Other noncurrent assets		—			5,922			—		—			—			5,922

Total assets	$	—		$	503,694		$	382,709	$	101,870		$	(631,820	)	$	356,453

Liabilities and stockholder’s deficit
Current liabilities:
Trade accounts payable	$	—		$	27,975		$	20	$	6,706		$	—		$	34,701
Accrued interest payable		—			9,101			—		—			—			9,101
Accrued expenses and other current liabilities		—			16,476			—		7,064			—			23,540
Revolving loan		—			18,293			—		—			—			18,293
Current portion of long-term debt and capital lease obligations		—			364			—		10			—			374

Total current liabilities		—			72,209			20		13,780			—			86,009
Deferred income taxes		—			1,544			11,446		1,044			—			14,034
Long-term debt		—			299,856			—		30			—			299,886
Accrued retirement benefits		—			50,997			—		910			—			51,907
Other liabilities		—			10,704			1,310		142			—			12,156
Intercompany payable		—			175,731			311		31,760			(207,802	)		—
Cumulative losses in subsidiaries		107,539			192			190		—			(107,921	)		—

Total liabilities		107,539			611,233			13,277		47,666			(315,723	)		463,992
Commitments and contingencies
Stockholder’s (deficit) equity:
Preferred stock-Series A		—			—			118,249		49,622			(167,871	)		—
Common stock-Class A		—			—			—		—			—			—
Common stock-Class B		—			—			—		—			—			—
Additional paid-in capital		111,170			111,170			154,502		—			(265,672	)		111,170
Predecessor basis adjustment		(13,539	)		(13,539	)		—		—			13,539			(13,539	)
(Accumulated deficit) retained earnings		(165,913	)		(165,913	)		83,669		(7,339	)		89,583			(165,913	)
Accumulated other comprehensive (loss) income		(39,257	)		(39,257	)		13,012		11,921			14,324			(39,257	)

Total stockholder’s (deficit) equity		(107,539	)		(107,539	)		369,432		54,204			(316,097	)		(107,539	)

Total liabilities and stockholder’s deficit	$	—		$	503,694		$	382,709	$	101,870		$	(631,820	)	$	356,453

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

ATT Holding Co.
Condensed Consolidating Balance Sheet
As of October 3, 2009


									Subsidiary
	ATT			Ames True			Subsidiary		Non-
	Holding Co.			Temper Inc.			Guarantors		Guarantors			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	454		$	9	$	33,146		$	—		$	33,609
Trade receivables, net		—			34,431			—		8,018			—			42,449
Inventories		—			71,933			—		18,372			—			90,305
Prepaid expenses and other current assets		—			4,450			—		1,865			—			6,315

Total current assets		—			111,268			9		61,401			—			172,678
Property, plant and equipment, net		—			33,246			—		10,993			—			44,239
Intangibles, net		—			5,098			41,900		6,683			—			53,681
Goodwill		—			43,605			—		13,889			—			57,494
Intercompany receivable		—			29,980			168,715		2,941			(201,636	)		—
Investment in subsidiaries		—			248,762			163,010		—			(411,772	)		—
Other noncurrent assets		—			6,531			—		—			—			6,531

Total assets	$	—		$	478,490		$	373,634	$	95,907		$	(613,408	)	$	334,623

Liabilities and stockholder’s (deficit) equity
Current liabilities:
Trade accounts payable	$	—		$	12,485		$	31	$	5,698		$	—		$	18,214
Accrued interest payable		—			5,392			—		—			—			5,392
Accrued expenses and other current liabilities		—			19,189			113		7,340			—			26,642
Revolving loan		—			17,500			—		—			—			17,500
Current portion of long-term debt and capital lease obligations		—			479			—		10			—			489

Total current liabilities		—			55,045			144		13,048			—			68,237
Deferred income taxes		—			1,544			11,115		1,013			—			13,672
Long-term debt		—			299,759			—		32			—			299,791
Accrued retirement benefits		—			50,893			—		943			—			51,836
Other liabilities		—			11,370			1,184		107			—			12,661
Intercompany payable		—			171,453			—		30,183			(201,636	)		—
Cumulative losses in subsidiaries		111,574			—			—		—			(111,574	)		—

Total liabilities		111,574			590,064			12,443		45,326			(313,210	)		446,197
Commitments and contingencies
Stockholder’s (deficit) equity:
Preferred stock-Series A		—			—			118,249		49,622			(167,871	)		—
Common stock-Class A		—			—			—		—			—			—
Common stock-Class B		—			—			—		—			—			—
Additional paid-in capital		111,168			111,168			154,502		—			(265,670	)		111,168
Predecessor basis adjustment		(13,539	)		(13,539	)		—		—			13,539			(13,539	)
(Accumulated deficit) retained earnings		(167,272	)		(167,272	)		77,681		(8,711	)		98,302			(167,272	)
Accumulated other comprehensive (loss) income		(41,931	)		(41,931	)		10,759		9,670			21,502			(41,931	)

Total stockholder’s (deficit) equity		(111,574	)		(111,574	)		361,191		50,581			(300,198	)		(111,574	)

Total liabilities and stockholder’s (deficit) equity	$	—		$	478,490		$	373,634	$	95,907		$	(613,408	)	$	334,623

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

ATT Holding Co.
Condensed Consolidating Statement of Operations
For the Thirteen Week Period Ended January 2, 2010


									Subsidiary
	ATT		Ames True			Subsidiary			Non-
	Holding Co.		Temper Inc.			Guarantors			Guarantors		Eliminations			Consolidated
Net sales	$	—	$	65,792		$	—		$	24,806	$	(4,199	)	$	86,399
Cost of goods sold		—		47,293			—			16,134		(4,199	)		59,228

Gross profit		—		18,499			—			8,672		—			27,171
Selling, general and administrative expenses		—		11,945			28			3,924		—			15,897
Gain on disposal of property, plant and equipment		—		(65	)		—			—		—			(65	)
Amortization of intangible assets		—		266			—			38		—			304

Operating income (loss)		—		6,353			(28	)		4,710		—			11,035
Interest expense (income)		—		9,384			(3,046	)		483		—			6,821
Other expense (income)		—		1,131			(1,655	)		1,724		—			1,200

(Loss) income before income taxes		—		(4,162	)		4,673			2,503		—			3,014
Income tax expense		—		64			460			1,131		—			1,655
Equity in earnings of subsidiaries		1,359		5,585			1,886			—		(8,830	)		—

Net income	$	1,359	$	1,359		$	6,099		$	1,372	$	(8,830	)	$	1,359

ATT Holding Co.
Condensed Consolidating Statement of Operations
For the Thirteen Week Period Ended December 27, 2008


										Subsidiary
	ATT			Ames True			Subsidiary			Non-
	Holding Co.			Temper Inc.			Guarantors			Guarantors			Eliminations			Consolidated
Net sales	$	—		$	68,196		$	—		$	26,795		$	(2,657	)	$	92,334
Cost of goods sold		—			50,105			—			17,001			(2,657	)		64,449

Gross profit		—			18,091			—			9,794			—			27,885
Selling, general and administrative expenses		—			13,657			43			4,098			—			17,798
Loss on disposal of property, plant and equipment		—			32			—			—			—			32
Amortization of intangible assets		—			267			—			38			—			305
Impairment charges		—			476			—			—			—			476

Operating income (loss)		—			3,659			(43	)		5,658			—			9,274
Interest expense (income)		—			10,305			(4,889	)		2,555			—			7,971
Other expense (income)		—			1,346			(1,870	)		11,887			—			11,363

(Loss) income before income taxes		—			(7,992	)		6,716			(8,784	)		—			(10,060	)
Income tax expense (benefit)		—			56			(9	)		131			—			178
Loss in earnings of subsidiaries		(10,238	)		(2,190	)		(8,752	)		—			21,180			—

Net loss	$	(10,238	)	$	(10,238	)	$	(2,027	)	$	(8,915	)	$	21,180		$	(10,238	)

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

ATT Holding Co.
Condensed Consolidating Statement of Cash Flows
For the Thirteen Week Period Ended January 2, 2010


										Subsidiary
	ATT			Ames True			Subsidiary			Non-
	Holding Co.			Temper Inc.			Guarantors			Guarantors			Eliminations			Consolidated
Operating activities
Net income	$	1,359		$	1,359		$	6,099		$	1,372		$	(8,830	)	$	1,359
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation expense		—			2,845			—			513			—			3,358
Equity in losses of subsidiaries		(1,359	)		(5,585	)		(1,886	)		—			8,830			—
Provision for (benefit from) deferred taxes		—			5			331			(2,745	)		—			(2,409	)
Other, net		—			767			—			(4	)		—			763
Unrealized foreign currency losses		—			—			—			1,007			—			1,007
Related party non-cash transactions		—			(153	)		153			—			—			—
Changes in assets and liabilities:
Trade receivables		—			(3,900	)		—			3,420			—			(480	)
Inventories		—			(15,889	)		—			266			—			(15,623	)
Prepaid expenses and other assets		—			618			(37	)		(505	)		—			76
Trade accounts payable		—			15,491			(11	)		846			—			16,326
Intercompany accounts		—			3,578			(4,662	)		1,084			—			—
Accrued expense and other liabilities		—			412			13			2,013			—			2,438

Net cash (used in) provided by operating activities		—			(452	)		—			7,267			—			6,815
Investing activities
Cash paid for property, plant and equipment		—			(806	)		—			(138	)		—			(944	)
Proceeds from sale of property, plant and equipment		—			184			—			—			—			184

Net cash used in investing activities		—			(622	)		—			(138	)		—			(760	)
Financing activities
Repayments of long-term debt		—			(143	)		—			—			—			(143	)
Borrowings on revolving loan		—			14,923			—			—			—			14,923
Repayments on revolving loan		—			(14,130	)		—			—			—			(14,130	)
Principal payments under capital lease obligations		—			—			—			(2	)		—			(2	)

Net cash provided by (used in) financing activities		—			650			—			(2	)		—			648
Effect of exchange rate changes on cash and cash equivalents		—			1			—			995			—			996

(Decrease) increase in cash and cash equivalents		—			(423	)		—			8,122			—			7,699
Cash and cash equivalents at beginning of period		—			454			9			33,146			—			33,609

Cash and cash equivalents at end of period	$	—		$	31		$	9		$	41,268		$	—		$	41,308

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

ATT Holding Co.
Condensed Consolidating Statement of Cash Flows
For the Thirteen Week Period Ended December 27, 2008


										Subsidiary
	ATT			Ames True			Subsidiary			Non-
	Holding Co.			Temper Inc.			Guarantors			Guarantors			Eliminations			Consolidated
Operating activities
Net loss	$	(10,238	)	$	(10,238	)	$	(2,027	)	$	(8,915	)	$	21,180		$	(10,238	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation expense		—			3,395			—			492			—			3,887
Equity in earnings of subsidiaries		10,238			2,190			8,752			—			(21,180	)		—
Provision for (benefit from) deferred taxes		—			—			274			(633	)		—			(359	)
Other, net		—			989			—			62			—			1,051
Related party non-cash transactions		—			(53	)		—			53			—			—
Impairment charges		—			476			—			—			—			476
Unrealized foreign currency losses		—			81			—			11,761			—			11,842
Changes in assets and liabilities:
Trade receivables		—			3,874			—			(3,808	)		—			66
Inventories		—			(30,002	)		—			(2,517	)		—			(32,519	)
Prepaid expenses and other assets		—			197			—			(613	)		—			(416	)
Trade accounts payable		—			4,921			(5	)		2,730			—			7,646
Intercompany accounts		—			3,300			(6,710	)		3,410			—			—
Accrued expense and other liabilities		—			(1,603	)		(283	)		2,728			—			842

Net cash (used in) provided by operating activities		—			(22,473	)		1			4,750			—			(17,722	)
Investing activities
Cash paid for property, plant and equipment		—			(2,223	)		—			(195	)		—			(2,418	)
Proceeds from sale of property, plant and equipment		—			5			—			—			—			5

Net cash used in investing activities		—			(2,218	)		—			(195	)		—			(2,413	)
Financing activities
Repayments of long-term debt		—			(136	)		—			—			—			(136	)
Borrowings on revolving loan		—			43,488			—			—			—			43,488
Repayments on revolving loan		—			(18,900	)		—			—			—			(18,900	)

Net cash provided by financing activities		—			24,452			—			—			—			24,452
Effect of exchange rate changes on cash and cash equivalents		—			—			—			(2,488	)		—			(2,488	)

(Decrease) increase in cash and cash equivalents		—			(239	)		1			2,067			—			1,829
Cash and cash equivalents at beginning of period		—			285			5			16,869			—			17,159

Cash and cash equivalents at end of period	$	—		$	46		$	6		$	18,936		$	—		$	18,988

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

12. Related Party Transactions

On June 28, 2004, affiliates of Castle Harlan, Inc., a New York-based private-equity investment firm, together with certain employees of the Company or its subsidiaries, completed the acquisition of the Company (the “Acquisition”). In connection with the Acquisition, CHATT Holdings LLC (“CHATT LLC”) was formed. CHATT LLC owns 100% of CHATT Holdings Inc. (“CHATT Inc.”); which owns 100% of ATT Holding Co.; which owns 100% of the Company. CHATT LLC and CHATT Inc. are not included in the consolidated financial statements of ATT Holding Co. Upon completion of the Acquisition, affiliates of Castle Harlan, Inc. owned approximately 87% of the equity interests of CHATT LLC and certain employees of the Company or its subsidiaries owned approximately 13% of the equity interests of CHATT LLC. The equity interests of CHATT LLC as of the completion of the Acquisition consisted of Class A Units and Class B Units, the terms of which are described below. The Class A Units and Class B Units were issued as strips of equal numbers of Class A Units and Class B Units (“Strips”). In addition, certain employees of the Company or its subsidiaries were issued Class B Units (sometimes referred to as Class B Incentive Units) that are subject to certain vesting requirements which are discussed below.

From time to time since June 28, 2004, CHATT LLC has issued additional Strips and additional Class B Units to employees of the Company or its subsidiaries that are subject to vesting requirements.

All of the Class B Units that are subject to vesting requirements were issued pursuant to employee subscription agreements entered into separately between CHATT LLC and each employee that received such Class B Units (“Employee Subscription Agreements”). Pursuant to the Employee Subscription Agreements, these Class B Units vest based on three criteria: (i) time vesting based on a five-year term, (ii) performance vesting based on the operating results of CHATT LLC and (iii) vesting based upon the achievement of a targeted rate of return upon a change of control of CHATT LLC. In addition, the vesting of these Class B Units is subject to acceleration in the event of a change of control of CHATT LLC. As of January 2, 2010 and October 3, 2009, there were 138,567 Class B Units subject to vesting issued to management and members of the CHATT Holdings LLC Board of Directors who are not employees of ATT or Castle Harlan, Inc. These units may not be sold, pledged, or otherwise transferred except in compliance with applicable securities laws. None of the Class A Units or Class B Units that were issued as Strips are subject to any vesting requirements.

Each Class A Unit and Class B Unit, whether issued as part of a Strip or pursuant to an Employee Subscription Agreement, is governed by and subject to the terms of an operating agreement among CHATT LLC and each of its equity holders (the “Operating Agreement”). Pursuant to the Operating Agreement: to the extent any distribution of assets is made by CHATT LLC, the holders of Class A Units are entitled to a preferred return prior to any distribution to holders of Class B Units; after the preferred return has been paid to the holders of Class A Units, the holders of Class B Units are entitled to receive any remaining amounts of any distribution on a pro rata basis; holders of Class A Units do not have any voting rights; and each holder of any Class B Units is entitled to one vote per Class B Unit on all matters to be voted on by the members of CHATT LLC.

The above-referenced rights of the Class B Units are applicable only to those Class B Units that (i) were issued as part of a Strip and therefore are not subject to vesting requirements or (ii) were issued pursuant to an Employee Subscription Agreement and have become vested. Unvested Class B Units do not have any voting rights or rights to receive distributions.

Each Class A Unit and Class B Unit held by employees of the Company or its subsidiaries is subject to repurchase by CHATT LLC or an affiliate of Castle Harlan, Inc. upon the termination of such employee’s employment.

At certain times following the Acquisition, CHATT LLC issued strips of Class A-1 Units and Class B Units to certain employees of the Company or its subsidiaries. Pursuant to the Operating Agreement, the holders of Class A-1 Units were entitled to a preferred return prior to any distribution of assets to holders of

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

Class A Units or Class B Units. The terms of the Class A-1 Units were otherwise identical to the Class A Units. In January 2007, all of the Class A-1 Units were converted into Class A Units pursuant to the terms of the Operating Agreement.

Following the conversion of the Class A-1 Units into Class A Units, CHATT LLC issued strips of Class A-2 Units and Class B Units to certain employees of the Company or its subsidiaries. Pursuant to the Operating Agreement, the holders of Class A-2 Units were entitled to a preferred return prior to any distribution of assets to holders of Class A Units or Class B Units. The terms of the Class A-2 Units were otherwise identical to the Class A Units. In January 2009, all of the Class A-2 Units were converted into Class A Units pursuant to the terms of the Operating Agreement.

Following the conversion of the Class A-2 Units into Class A Units, CHATT LLC issued strips of Class A-3 Units and Class B Units to certain employees of the Company or its subsidiaries. Pursuant to the Operating Agreement, the holders of Class A-3 Units are entitled to a preferred return prior to any distribution of assets to holders of Class A Units or Class B Units. The terms of the Class A-3 Units are otherwise identical to the Class A Units.

The Company is party to a management agreement with Castle Harlan, Inc., an affiliate of the shareholder, under which Castle Harlan, Inc. provides business and organizational strategy, financial and investment management, advisory and merchant and investment banking services to the Company. The Company recorded expenses of $845 and $806 for the thirteen week periods ending January 2, 2010 and December 27, 2008, respectively, related to the annual management fee plus expenses which are included in selling, general and administrative expenses. Management fees are payable quarterly in advance in accordance with the management agreement. The Company had an amount payable of $40 to Castle Harlan, Inc. as of January 2, 2010 which is included in trade accounts payable. No amounts were outstanding as of October 3, 2009.

13. Fair Value Measurements

The Company’s financial instruments include cash and cash equivalents, trade receivables, trade accounts payable, derivatives and debt. Because of short term maturities, the carrying amounts of cash and cash equivalents, trade receivables, trade accounts payable, the Revolving Loan and Term Note approximate fair value. See below for further information related to the fair value of the Company’s derivatives and remaining long-term debt.

The Company’s assets and liabilities that are measured at fair value, defined as the exit price or the price that would be received to sell the asset or paid to transfer the liability at the measurement date, on a recurring basis relate to the Company’s derivative contracts which are mainly comprised of interest rate swaps and foreign currency forward contracts. The Company utilizes a present value technique to fair value each derivative contract. The Company calculates the present value of future expected cash flows using a discount rate commensurate with the underlying risk of the debtor. If the derivative represents a liability to the Company, the Company’s incremental borrowing rate was utilized as the discount rate in the present value calculation. If the derivative represents an asset to the Company, the recorded value includes an estimate of a credit risk adjustment for the counterparty.

A fair value hierarchy exists that prioritizes the inputs to valuation techniques used to measure fair value into the following three categories (from highest to lowest priority):

	•		Level 1 — Inputs that represent quoted prices for identical instruments in active markets.

	•		Level 2 — Inputs that represent quoted prices for similar instruments in active markets, or quoted prices for identical instruments in non-active markets. Also includes valuation techniques whose inputs are derived principally from observable market data other than quoted prices, such as interest rates or other market-corroborated means.

	•		Level 3 — Inputs that are largely unobservable, as little or no market data exists for the instrument being valued.

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

The Company is required to categorize all financial assets and liabilities required to be measured at fair value on a recurring basis into the above three levels as of January 2, 2010 and October 3, 2009 as follows:


	January 2, 2010
	(Level 1)		(Level 2)		(Level 3)		Total
Foreign currency forward contracts	$	—		336	$	—	$	336
Interest rate swaps		—		2,261		—		2,261

Total liabilities	$	—	$	2,597	$	—	$	2,597


	October 3, 2009
	(Level 1)		(Level 2)		(Level 3)		Total
Foreign currency forward contracts	$	—	$	113	$	—	$	113

Total assets	$	—	$	113	$	—	$	113


Foreign currency forward contracts	$	—	$	171	$	—	$	171
Interest rate swaps		—		2,725		—		2,725

Total liabilities	$	—	$	2,896	$	—	$	2,896

The fair value of the Company’s long-term debt as of January 2, 2010 is as follows:

Balance Sheet

Carrying

Fair

Classification

Value

Senior Floating Rate Notes

Liability

149,785

135,750

Senior Subordinated Notes

Liability

150,000

134,370

To determine the fair value of the Notes, the Company utilized quoted prices for the debt instruments in the marketplace as well as market data for comparable securities, the credit rating of the Notes and the credit rating of the Company.

14. Derivative Instruments and Hedging Activities

The Company’s cash flows and earnings are subject to fluctuations resulting from changes in interest rates and foreign currency exchange rates. The Company manages the exposure to these market risks through internally established policies and procedures and, when deemed appropriate, through the use of derivative financial instruments. The Company’s policy does not allow speculation in derivative instruments for profit or execution of derivative instrument contracts for which there are no underlying exposures. Interest rate swaps are entered into to manage interest rate risk associated with the Company’s variable-rate borrowings. Foreign currency forward contracts are entered into to manage exchange rate risk for portions of the Company’s forecasted U.S. dollar purchases by the Canada segment. Accounting guidance requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet.

Interest rate swaps were entered into to fix the variable interest rate portion of the Senior Floating Rate Notes. The Company swaps 3-month LIBOR rates for fixed interest rates to limit the exposure of changes in interest payments. The Company has structured all existing interest rate swap agreements to be perfectly effective. The Company designates the interest rate swaps as cash flow hedges. The change in fair values

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

of the interest rate swaps are recorded within accumulated other comprehensive income (loss), net of deferred taxes. The remaining gain or loss, if any, is recognized currently in earnings. Gains and losses on the interest rate swaps are reclassified from accumulated other comprehensive income into earnings as interest expense on the Senior Floating Rate Notes is accrued. See Note 6 for further information regarding the notional amounts and duration of the interest rate swaps. See Note 13 for further information regarding the fair value of the interest rate swaps.

Foreign currency forward contracts do not qualify for hedge accounting treatment. Therefore, in accordance with US GAAP, the change in fair value is recognized as an unrealized gain or loss in earnings in the period of change. See Note 13 for further information regarding the fair value of the foreign currency forward contracts.

Other than standard cross default provisions if a default occurs across the organization, no credit-risk related-contingent features exist for the Company’s derivatives.

The fair value of derivative instruments as of January 2, 2010 is as follows:

Asset Derivatives

Liability Derivatives

Qualifies

Balance

Pretax Gain

Balance

Pretax Loss

Description of

for Hedge

Fair

Sheet

Recognized

Sheet

Recognized

Derivative

Designation

Value

Location

in AOCI

Fair Value

Location

in AOCI

Foreign currency forward contracts

—

336

)

—

Interest rate swaps

Yes

—

2,261

)

2,261


(a)		The balance sheet location for the foreign currency forward contracts is Accrued expenses and other current liabilities.

(b)		The balance sheet location for the interest rate swaps is Other liabilities.

The effect of derivative instruments on the condensed consolidated statements of operations for the thirteen weeks ended January 2, 2010 is as follows:

Location of pretax

Amount of pretax

gain or (loss)

Location of pretax

Amount of

Qualifies

reclassed from

gain or (loss)

pretax gain or

Description

for Hedge

AOCI into

recognized in

(loss) recognized

of Derivative

Designation

earnings

in earnings

Foreign currency forward contracts

—

Other expense

(196

)

Interest rate swaps

Yes

Interest expense

(779

)

—

The Company expects $1,978 of net pretax losses recognized in accumulated other comprehensive income as of January 2, 2010 to be reclassified into earnings within the next twelve months.

As of January 2, 2010, sixteen foreign currency forward contracts remain outstanding with a total notional amount of $12,483.

15. Commitments and Contingencies

During December 2004, a customer of the Company was named in litigation that involved UnionTools products. The complaint asserted causes of action against the defendant for improper advertisement to the end consumer. The allegation suggests that advertisements led the consumer to believe that the hand tools

ATT HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)

sold were manufactured within the boundaries of the United States. The allegation asserts cause of action against the customer for common law fraud. In the event that an adverse judgment is rendered against the customer, there is a possibility that the customer would seek legal recourse against the Company for an unspecified amount in contributory damages. Presently, the Company cannot estimate the amount of loss, if any, if the customer were to seek legal recourse against the Company.

From approximately 1993 through 1999, the Company manufactured and sold 647,000 wheelbarrows with poly wheel hubs. Various claims were submitted, and lawsuits filed, to recover for injuries sustained while inflating tires on these wheelbarrows. In 2002, the Company participated in a voluntary “fast track” recall of these wheelbarrows with the Consumer Product Safety Commission (“CPSC”). The Company again voluntarily recalled these wheelbarrows in June 2004 in cooperation with the CPSC. However, less than 1% of the total products sold were returned, leaving an unknown number in service. To date, the Company has responded to 34 claims involving this product. All known claims have been resolved. Although the Company believes it has sufficient insurance coverage in place to cover these claims, a successful claim may exceed the limits of the Company’s coverage.

During fiscal 2009, an underground fuel tank with surrounding soil contamination was discovered at the Frankfort, NY site which is the result of historical facility operations prior to the Company’s ownership. The Company is actively working with the New York Department of Environmental Conservation and the New York State Department of Health to comply with remediation efforts. The Company believes remediation will be completed by the end of the fiscal year ending on October 2, 2010. During the quarterly period ended October 3, 2009, the Company recorded a charge to cost of goods sold for approximately $2,567 associated with the removal of the fuel oil tank and soil contamination. The change in the environmental liability for the Frankfort, NY site is as follows:


Balance as of October 3, 2009	$	2,541
Adjustments to estimates		—
Payments		538

Balance as of January 2, 2010	$	2,003

The Company is involved in lawsuits and claims, including certain environmental matters, arising out of the normal course of its business. In the opinion of management, the ultimate amount of liability, if any, under pending litigation will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

16. Other

The Company applied for relief under the U. S. Continued Dumping and Subsidy Offset Act of 2000, or “Byrd Amendment,” as a result of foreign manufacturers selling certain tools at unfair prices within the U. S. market. During December 2009 and December 2008, the Company received a distribution of tariffs collected in the amount of $3,259 and $2,983, respectively. These amounts were recorded within selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

17. Subsequent Events

The Company has evaluated subsequent events through February 12, 2010, which is the date the condensed consolidated financial statements were issued, and have determined that except as set forth below, there are no subsequent events that require disclosure. During the second quarter of fiscal 2010, the outstanding balance of $21,299 under an intercompany note was paid in full. See Note 10 for further information.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our parent’s results of operations and financial condition should be read in conjunction with and is qualified in its entirety by reference to the unaudited condensed consolidated financial statements and notes of ATT Holding Co. (the ‘‘Company,’’ “we,” “us,” or “our”) as it relates to the consolidated financial performance and results of operations of our parent, ATT Holding Co. and Ames True Temper, Inc.’s (“ATT”) and its wholly-owned subsidiaries. A separate discussion for ATT is not presented since our parent has no operations or assets separate from its investment in Ames True Temper, Inc. and the Senior Subordinated Notes and the Senior Floating Rate Notes are guaranteed by our parent and all of our domestic subsidiaries.

Forward Looking Statements

This Form 10-Q contains forward-looking statements. All statements other than statements of historical fact are ‘‘forward-looking statements’’ for purposes of federal and state securities laws. Forward-looking statements are identified by terms and phrases such as ‘‘may,’’ ‘‘will,’’ ‘‘plans,’’ ‘‘estimates,’’ ‘‘anticipates,’’ ‘‘believes,’’ ‘‘expects,’’ ‘‘intends’’ and similar expressions and are based on assumptions related to our future business, financial condition, prospects, developments and business strategies.

Factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to the following:

	•		we depend on a small number of customers for a significant portion of our business;

	•		our results of operations may be adversely impacted by macroeconomic events;

	•		reliance on third party suppliers and manufacturers may impair our ability to meet customer demands;

	•		if we are unable to obtain raw materials for our products at favorable prices it could adversely impact our operating performance;

	•		we are subject to risks associated with our foreign operations;

	•		we are subject to risks associated with our operations in China;

	•		unseasonable weather could have a negative impact on our business and financial results;

	•		our lawn and garden sales are highly seasonal which could impact our cash flow and operating results;

	•		our industry is highly competitive and we may not be able to compete successfully;

	•		further consolidation in the retail industry may adversely affect our profitability;

	•		a failure to successfully introduce new products could result in a reduction in sales and floor space at retailers that carry our products;

	•		the products that we manufacture could expose us to product liability claims;

	•		our ability to pay our debt or seek alternative financing may be adversely impacted;

	•		environmental health and safety laws, ordinances, and regulations impose risks and costs on us;

	•		we depend on the service of key individuals, the loss of any of which could materially harm our business;

	•		unionized employees could strike or participate in a work stoppage;

	•		we may be required to record impairment charges for goodwill, indefinite-lived intangible assets and other long-lived assets; and

•

we may not be able to acquire complementary lawn and garden product manufacturers or brands; in addition, our acquisition strategy may negatively impact our operating results, divert management’s attention from operating our core business, and expose us to other risks.

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 or described in the forward-looking statements will occur or, if any of them do, what impact they will have on our business, results of operations and financial condition. We do not intend, and we undertake no obligation, to update any forward-looking statement included in this report, whether as a result of new information, future events or otherwise, after the date of this report. This report should be read in conjunction with the Company’s most recent consolidated financial statements, Risk Factors and the Management Discussion & Analysis (MD&A) included in the Company’s Form 10-K for the fiscal year ended October 3, 2009.

Overview

The following MD&A is intended to help the reader understand ATT, our operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, the condensed consolidated financial statements and notes thereto of our parent, ATT Holding Co., contained in Item 1 of this report. The following discussion includes forward-looking statements that involve certain risks and uncertainties. See ‘‘Forward-Looking Statements’’ above. The MD&A includes the following sections:

	•		“Our Business” – a general description of our business.

	•		“Operations Review” – an analysis of our consolidated results of operations.

	•		“Liquidity and Capital Resources” – an analysis of cash flows, debt and other obligations, off-balance sheet arrangements and aggregate contractual obligations and an overview of financial position.

Our Business

General

ATT is a leading global provider of non-powered landscaping products that make work easier for homeowners and professionals. We sell our products primarily in the U.S. and Canada through (1) retail centers, including home centers and mass merchandisers, (2) wholesale chains, including hardware stores and garden centers and (3) industrial distributors. We offer the following 8 distinct product lines: long handle tools, wheelbarrows, planters, garden hoses and hose reels, snow tools, striking tools, pruning tools, and Hound Dog specialty tools.

We believe that our global manufacturing strategy, based primarily upon a blend of domestic manufacturing and sourced product, makes us cost-competitive while allowing us to provide a high level of customer service.

Operations Review

Company-Wide

The table below and the following narrative compares our statements of operations for the thirteen week period ended January 2, 2010 (“Q1 2010”) to the thirteen week period ended December 27, 2008 (“Q1 2009”).

(Dollars in Millions)


	Q1			Q1			Increase/(Decrease)
	2010			2009			$			%
Net sales	$	86.4		$	92.3		$	(5.9	)		(6.4	)%
Cost of goods sold		59.2			64.4			(5.2	)		(8.1	)

Gross profit		27.2			27.9			(0.7	)		(2.5	)
Gross profit percentage		31.5	%		30.2	%
Selling, general, and administrative expenses		15.9			17.8			(1.9	)		(10.7	)
Gain on disposal of fixed assets		(0.1	)		—			(0.1	)		—
Amortization of intangible assets		0.3			0.3			—			—
Impairment charges		—			0.5			(0.5	)		(100.0	)

Operating income		11.0			9.3			1.7			18.3
Operating income percentage		12.7	%		10.1	%
Interest expense		6.8			8.0			(1.2	)		(15.0	)
Other expense		1.2			11.4			(10.2	)		(89.5	)

Income (loss) before taxes		3.0			(10.1	)		13.1				*
Income tax expense		1.7			0.2			1.5				*

Net income (loss)	$	1.4		$	(10.2	)	$	11.6				*


*		Greater than 100%.

Note: Totals may not sum due to rounding.

Net Sales. Overall net sales decreased primarily due to volume declines of $8.2 million (excluding snow tool sales) and selling price reductions of $0.9 million. Decreases were partially offset by favorable Canadian currency translation of $2.2 million and an increase of $0.9 million in snow tool sales. Volume declines resulted primarily from lower demand in the Canada segment and weak demand from U.S. Industrial customers mainly due to the global economic slowdown.

Gross Profit. Gross profit decreased primarily due to volume declines and price decreases partially offset by lower raw material costs.

Selling, General, and Administrative (SG&A). SG&A decreased primarily due to lower distribution expenses of $0.5 million attributed to a facility closure in fiscal 2009 and a $0.3 million increase in recoveries under the U.S. Continued Dumping and Subsidy Offset Act of 2000 or “Byrd Amendment.” We recovered $3.3 million in Q1 2010 and $3.0 million in Q1 2009 under the Byrd Amendment. Future recoveries under the Byrd Amendment are unknown and cannot be reasonably assured.

Amortization of Intangible Assets. Amortization expense is consistent with the prior period.

Impairment Charges. The Q1 2009 impairment charges represent a write-down of an available for sale asset to fair value due to real estate market conditions. During the thirteen week period ended June 27, 2009 (“Q3 2009”) the asset no longer met the available for sale criteria and was reclassified as held for use.

Interest Expense. Interest expense decreased partially due to lower average borrowings under our Amended and Restated Senior Secured Credit Facility (“Revolving Loan”). In addition, we entered into an interest rate swap during the thirteen week period ended March 28, 2009 (“Q2 2009”) to replace expiring swaps with a notional amount of $100 million related to our Senior Floating Rate Notes. The new swap reduced the effective interest rate on our Senior Floating Rate Notes to 6.4% in Q1 2010 from 8.1% in Q1 2009.

Other Expense. Other expense for Q1 2010 was primarily the result of unrealized foreign currency losses related to a U.S. dollar denominated intercompany note issued by a Canadian subsidiary that is not of a long term nature and foreign currency forward contracts of $0.6 million and $0.3 million, respectively.

During the thirteen week period ending April 3, 2010 (“Q2 2010”) the balance under the intercompany note was paid in full. Other expense for Q1 2010 also includes a realized loss related to the foreign currency forward contracts of $0.2 million. Other expense for Q1 2009 was primarily the result of an unrealized foreign currency loss of $14.8 million related to the intercompany note.

Income Tax Expense. Income tax expense for Q1 2010 was mainly comprised of taxes in certain foreign jurisdictions of $1.1 million, additional valuation allowance of $0.3 million and accrual of tax, interest, and penalties on unrecognized tax benefits of $0.2 million. Income tax expense for Q1 2009 was mainly comprised of recognition of additional valuation allowance of $0.3 million and an accrual of tax, interest and penalties on unrecognized tax benefits of $0.1 million. This expense is partially offset by a reduction in current tax liabilities as a result of a change in Canadian withholding tax rates of $0.4 million. As of January 2, 2010 and December 27, 2008, a deferred tax asset valuation allowance was necessary for substantially all of our U.S. domestic deferred tax assets, net of certain deferred tax liabilities. We expect to maintain a valuation allowance on these deferred tax assets until we can sustain a sufficient level of profits in the applicable jurisdictions that will demonstrate the ability to realize these net deferred tax assets

Our Segments

During the fourth quarter of fiscal 2009, we consummated an internal reorganization between our U.S. and Canada segments. Pursuant to this reorganization, our Canadian subsidiary transferred all of the outstanding shares of a U.S. subsidiary of the Company to a separate U.S. subsidiary. We have recast our Q1 2009 segment information as a result of this reorganization. The following table presents our net sales and operating income (loss) after intercompany eliminations by segment for Q1 2010 and Q1 2009:

(Dollars in Millions)


	Q1			Q1			Increase/(Decrease)
	2010			2009			$			%
Net sales:
United States	$	65.0		$	66.5		$	(1.5	)		(2.3	)%
Canada		20.6			24.3			(3.7	)		(15.2	)
Other		0.9			1.5			(0.6	)		(40.0	)

Net sales	$	86.4		$	92.3		$	(5.9	)		(6.4	)%


Operating income (loss):
United States	$	6.3		$	3.6		$	2.7			75.0	%
Canada		5.2			5.9			(0.7	)		(11.9	)
Other		(0.4	)		(0.1	)		(0.2	)		100.0

Operating income	$	11.0		$	9.3		$	1.7			18.3	%


*		Greater than 100%.

*		Note: Totals may not sum due to rounding.

United States

Net Sales. Overall net sales decreased primarily due to volume declines of $5.7 million (excluding snow tool sales) and selling price reductions of $1.0 million. Decreases were partially offset by an increase in snow tool sales of $5.1 million of which $2.5 million was due to the transition of a customer to the U.S. segment from the Canada segment in Q1 2010. Also, the U.S. experienced heavy snowfall in certain densely populated areas of the country which attributed to the increase in volume.

Operating income. Operating income increased due to lower distribution expenses of $0.5 million related to a facility closure in fiscal 2009, lower depreciation expense of $0.5 million and an increase of $0.3 million in Byrd Amendment recoveries as discussed above. Operating income for Q1 2009 also

includes impairment charges of $0.5 million related to the write-down of an available for sale asset to fair value due to the real estate market conditions at that time.

Canada

Net Sales. Net sales decreased primarily due to volume declines of $3.4 million and $2.5 million in lower sales due to the transition of a customer from the Canada segment to the U.S segment in Q1 2010 as discussed above. Decreases were partially offset by favorable foreign currency translation of $2.2 million.

Operating income. Operating income decreased due to lower sales volume.

Other

Changes in net sales and operating loss for this segment were not significant for the periods presented.

Liquidity and Capital Resources

Our principal liquidity requirements are to service our debt and meet our working capital and capital expenditure needs. We expect to be able to meet our liquidity requirements for at least the next twelve months through cash provided by operations and borrowings available under our Revolving Loan. We intend to seek to extend the maturity of our lenders’ commitments under the Revolving Loan or to refinance borrowings thereunder prior to the maturity of the Revolving Loan in April 2011. In addition, we will need to refinance our Senior Subordinated Notes and Senior Floating Rate Notes on or before maturity in 2012. We cannot assure you that we will be able to extend or refinance any of our indebtedness on commercially reasonable terms or at all.

(Dollars in Millions)


	Q1			Q1			Increase/(Decrease)
	2010			2009			$			%
Net cash provided by (used in) operating activities	$	6.8		$	(17.7	)	$	24.5				*
Net cash used in investing activities		(0.8	)		(2.4	)		(1.6	)		66.7	%
Net cash provided by financing activities		0.6			24.5			(23.9	)		97.6


*		Greater than 100%.

Cash Flows from Operating Activities

The increase in cash provided by operating activities was primarily the result of lower average inventory levels and higher trade accounts payable. Lower average inventory levels consumed less cash in Q1 2010 as compared to Q1 2009 due to inventory management efficiencies.

Cash Flows from Investing Activities

Purchases of property, plant and equipment are generally the main investing activity of the Company. We do not anticipate purchases of property, plant and equipment during fiscal 2010 to deviate from historical purchase levels.

Cash Flows from Financing Activities

The decrease in cash provided by financing activities was primarily related to lower net borrowings under our Revolving Loan.

During Q2 2010, an intercompany loan between our U.S. and Canadian subsidiaries was paid in full. The cash received of $21.3 million was utilized to reduce borrowings under our Revolving Loan.

Debt and Other Obligations

ATT has the following debt outstanding:

(Dollars in Thousands)


	January 2,			October 3,
	2010			2009
Revolving Loan	$	18,293		$	17,500
Senior Floating Rate Notes, net of unamortized discount of $214 and $241, respectively		149,785			149,759
Senior Subordinated Notes		150,000			150,000
Term Note		338			479
Capital lease obligations		137			42

Total debt		318,553			317,780
Less:
Short-term Revolving Loan		(18,293	)		(17,500	)
Current portion of capital lease obligations		(36	)		(10	)
Current portion of long-term debt		(338	)		(479	)

Long-term debt	$	299,886		$	299,791

Letters of

(a)

(b)

Borrowing

Credit

Availability

Interest

Maximum

Base as of

Outstanding as

as of

Rate as of

Borrowing

January

of January

January

Expiration

Amount

2, 2010

Date

Revolving Loan (f)

130,000

76,660

3,268

55,099

3.0

Apr 7, 2011

(d)

(e)

Original

(c)

Interest

Maturity

Call Option

Principal

Interest Rate

Payments

Date

Senior Floating Rate Notes (f)

150,000

LIBOR + 4

Jan 15, Apr 15,
Jul 15, Oct 15

Jan 15, 2012

Jan 15, 2007

Senior Subordinated Notes (f)

150,000

Jan 15, Jul 15

Jul 15, 2012

Jul 15, 2008

Term Note (f)

2,700

2.5

Monthly

Jul 19, 2010

n/a


(a)		Total amount available is limited by the amount of eligible accounts receivable, inventory, machinery and equipment, and real estate less letters of credit outstanding.

(b)		The interest rate applicable to the loans under the Revolving Loan is either 1) the “Eurodollar Rate” or London Interbank Offered Rate (LIBOR) plus a margin of 1.75% to 2.75%, or 2) the “Base Rate” plus a margin of 0.50% to 1.50%. The Base Rate is calculated at the higher of 1) the prevailing Federal Funds rate plus 50 basis points or 2) the administrative agent’s prime interest rate plus an applicable rate determined by the Company’s consolidated leverage ratio as defined by the Amended and Restated Senior Secured Credit Agreement.

(c)		LIBOR represents the three month London Interbank Offered Rate which resets quarterly, LIBOR was .28% as of October 13, 2009. October 13, 2009 represents the reset date for the January 15, 2010 interest payment.

(d)		Interest payments are in cash and paid in arrears.

(e)		The Senior Floating Rate Notes do not have a redemption premium. The Senior Subordinated Notes have a redemption price of 102.5% of principal on or after July 15, 2009, and 100% of principal on or after July 15, 2010.

(f)		As of January 2, 2010, the Company was in compliance with all financial covenants under its indebtedness agreements.

Revolving Loan

On April 7, 2006, we entered into the Revolving Loan with Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer. The Revolving Loan is a five-year revolving credit facility of up to $130.0 million, including a sub-facility for letters of credit in an amount not to exceed $15.0 million and a sub-facility for swing-line loans in an amount not to exceed $15.0 million. Our obligations under the Revolving Loan are guaranteed by ATT Holding Co. and collateralized by substantially all of the

assets of Ames True Temper, Inc. and Ames True Temper Properties, Inc. Future domestic subsidiaries will be required to guarantee the obligations and grant a lien on substantially all of their assets.

The terms of the Revolving Loan include various covenants that restrict our ability to, among other things, incur additional liens, incur additional indebtedness and make additional investments. In addition, we are prohibited from incurring capital expenditures exceeding $15.0 million in any fiscal year (subject to the right to carry over the unused portion to the following year). In addition, upon the occurrence of “Cash Dominion Trigger,” we will be required to have Consolidated EBITDA, as defined by the Revolving Loan, of at least $41.0 million for each period of four fiscal quarters. Under the Revolving Loan, a Cash Dominion Trigger shall have occurred if (1) an event of default under the Revolving Loan shall have occurred or (2) availability under the Revolving Loan falls below certain thresholds. The Revolving Loan also includes customary events of default, including, without limitation, payment defaults, cross defaults to other indebtedness and bankruptcy related defaults.

Senior Floating Rate Notes

The Senior Floating Rate Notes are fully and unconditionally guaranteed by our parent and all domestic subsidiaries on a senior unsecured basis. The Senior Floating Rate Notes are unsecured, unsubordinated obligations and are effectively subordinated to all of our existing and future secured debt, to the extent of the assets securing such debt, including borrowings under the senior secured credit facility, pari passu with all future senior unsecured indebtedness, senior in right of payment to all existing and future senior subordinated debt, including our Senior Subordinated Notes due 2012, and effectively behind all of the existing and future liabilities of our subsidiaries, including trade payables.

The indenture governing the Senior Floating Rate Notes contains various affirmative and negative covenants, subject to a number of important limitations and exceptions, including but not limited to those limiting our ability and the ability of our restricted subsidiaries to borrow money, guarantee debt or sell preferred stock, create liens, pay dividends on or redeem or repurchase stock, make specified types of investments, sell stock in our restricted subsidiaries, restrict dividends or other payments from restricted subsidiaries, enter into transactions with affiliates and sell assets or merge with other companies. The indenture governing the Senior Floating Rate Notes also contains various events of default, including but not limited to those related to non-payment of principal, interest or fees; failure to perform or observe certain covenants; inaccuracy of representations and warranties in any material respect, cross defaults with certain other indebtedness, certain bankruptcy related events, monetary judgment defaults and material non-monetary judgment defaults, ERISA (Employee Retirement Income Security Act) defaults and change of control. In addition, we are required to redeem the Senior Floating Rate Notes under certain circumstances involving changes of control.

Senior Subordinated Notes

The Senior Subordinated Notes are fully and unconditionally guaranteed by our parent, ATT Holding Co. and all domestic subsidiaries, on a senior subordinated basis. The Senior Subordinated Notes are unsecured senior subordinated obligations and rank behind all of our existing and future senior debt, including borrowings under the Revolver Loan, equally with any of our future senior subordinated debt, ahead of any of our future debt that expressly provides for subordination to the Senior Subordinated Notes and effectively behind all of the existing and future liabilities of our subsidiaries, including trade payables.

The indenture governing Senior Subordinated Notes contains various affirmative and negative covenants, subject to a number of important limitations and exceptions, including but not limited to those limiting our ability and the ability of our restricted subsidiaries to borrow money, guarantee debt or sell preferred stock, create liens, pay dividends on or redeem or repurchase stock, make certain investments, sell stock in our restricted subsidiaries, restrict dividends or other payments from restricted subsidiaries, enter into transactions with affiliates and sell assets or merge with other companies. The indenture governing the Senior Subordinated Notes also contains various events of default, including but not limited to those related to non-payment of principal, interest or fees; violations of certain covenants; certain bankruptcy-related events; invalidity of liens; non-payment of certain legal judgments and cross defaults with certain other

indebtedness. We are required to redeem the Senior Subordinated Notes under certain circumstances involving changes of control.

Other Debt

The Term Note contains customary events of default (subject to customary exceptions, thresholds and grace periods), including, without limitation, nonpayment of principal, interest, fees and failure to perform or observe certain covenants.

Interest Rate Swaps

The Senior Floating Rate Notes have an interest rate of 3-month LIBOR plus 4%. We have entered into interest rate swaps that fix the variable rate portion of the interest rate as follows:

(Dollars in Thousands)


							(a)
							Effective
					Notional		Interest
	Receive	Pay			Amount		Rate
January 16, 2009 through January 15, 2010	3-month LIBOR		4.31	%	$	33,333		8.31	%
January 16, 2009 through January 15, 2010	3-month LIBOR		4.29	%		16,667		8.29	%
January 15, 2009 through January 15, 2010	3-month LIBOR		1.40	%		100,000		5.40	%
January 15, 2010 through January 15, 2011	3-month LIBOR		1.90	%		150,000		5.90	%
January 18, 2011 through January 15, 2012	3-month LIBOR		2.50	%		150,000		6.50	%


(a)		Represents the effective interest rate on the respective portion of the Senior Floating Rate Notes including the contractual terms of the interest rate swap for the periods indicated.

As of January 2, 2010, the interest rate swaps were recorded as a liability of $2.4 million. The change in fair value was recognized as an increase in other comprehensive income of $0.5 million, net of taxes.

Off-Balance Sheet Arrangements

As of January 2, 2010, we had no off-balance sheet arrangements.

Contractual Obligations and Commitments

The following table represents our contractual commitments associated with our debt and other obligations as of January 2, 2010.

(Dollars in Thousands)


			January		October		October		October		October
			2010		2010		2011		2012		2013
			through		through		through		through		through
			September		September		September		September		September
	Total		2010		2011		2012		2013		2014		Thereafter
Contractual Obligations
Revolving Loan	$	18,293	$	18,293	$	—	$	—	$	—	$	—	$	—
Senior Floating Rate Notes		150,000		—		—		150,000		—		—		—
Senior Subordinated Notes		150,000		—		—		150,000		—		—		—
Term Note		338		338		—		—		—		—		—
Capital lease obligations		137		27		37		38		26		9		—
Interest on Notes		57,124		17,917		24,488		14,719		—		—		—
Operating leases		75,587		7,227		9,554		8,965		8,170		7,188		34,483
Pension and postretirement payments		53,954		2,607		6,389		9,803		8,166		7,879		19,110
Medical insurance		7,547		5,342		2,099		106		—		—		—
Open purchase orders		39,918		39,918		—		—		—		—		—
Other purchase obligations		521		12		471		12		13		13		—
Forward purchase obligations		12,483		12,483		—		—		—		—		—

Total contractual obligations	$	565,902	$	104,164	$	43,038	$	333,643	$	16,375	$	15,089	$	53,593

Commitments
Outstanding letters of credit	$	3,268	$	3,268	$	—	$	—	$	—	$	—	$	—

Total commitments	$	3,268	$	3,268	$	—	$	—	$	—	$	—	$	—

As of January 2, 2010, the total amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits was $1.7 million. We expect a tax payment of less than $0.3 million related to these obligations within the next year. Due to the uncertainty of the timing of these tax positions we have not included this liability in the above table.

Financial Position

Working capital as of January 2, 2010 and October 3, 2009 was as follows:

(Dollars in Thousands)


	January 2,		October 3,		Increase/(Decrease)
	2010		2009		$			%
Current assets:
Cash and cash equivalents	$	41,308	$	33,609	$	7,699			22.9	%
Trade receivables, net		43,188		42,449		739			1.7
Inventories		106,379		90,305		16,074			17.8
Prepaid expenses and other current assets		6,042		6,315		(273	)		(4.3	)

Total current assets		196,917		172,678		24,239			14.0
Current liabilities:
Trade accounts payable		34,701		18,214		16,487			90.5
Accrued interest payable		9,101		5,392		3,709			68.8
Accrued expenses and other current liabilities		23,540		26,642		(3,102	)		(11.6	)
Revolving loan		18,293		17,500		793			4.5
Current portion of long-term debt and capital lease obligations		374		489		(115	)		(23.5	)

Total current liabilities		86,009		68,237		17,772			26.0

Working capital	$	110,908	$	104,441	$	6,467			6.2	%

Our working capital as of January 2, 2010 compared to our working capital as of October 3, 2009 was similar. The offsetting increases in inventories and trade accounts payable are consistent with the seasonal nature of our business in anticipation of the Spring selling season.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our cash flows, results of operations and financial position are subject to fluctuations resulting from changes in interest rates, foreign currency exchange rates and raw material costs. We manage our exposure to these market risks through internally established policies and procedures and, when deemed appropriate, through the use of derivative financial instruments. Our policy does not allow speculation in derivative instruments for profit or execution of derivative instrument contracts for which there are no underlying exposures. Other than standard cross default provisions if a default occurs across the organization, no credit-risk related-contingent features exist for our derivatives. We do not use financial instruments for trading purposes and are not a party to any leveraged derivatives. We monitor our underlying market risk exposures on an ongoing basis and believe that we can modify or adapt our hedging strategies as needed.

Interest Rate Risk

Our primary market risk is interest rate exposure with respect to our floating rate debt, which includes the Senior Floating Rate Notes and Revolving Loan. The interest rate on the Senior Floating Rate Notes at January 2, 2010 was 4.3%. The interest rate on the Revolving Loan at January 2, 2010 was 3.0%. As of January 2, 2010, we had five outstanding interest rate swaps. These swaps effectively fix the variable interest rate portion of the Senior Floating Rate Notes. See “Debt and Other Obligations – Senior Floating

Rate Notes” and “— Interest Rate Swaps.” We estimate a 1% change in Revolving Loan interest rates would impact interest expense by approximately $0.5 million.

Foreign Operations; Currency Risk

We conduct foreign operations primarily in Canada and Ireland and utilize international suppliers and manufacturers. For fiscal year 2010, we have hedged $12.5 million of our forecasted Canadian subsidiary operations purchases that are denominated in U.S. dollars. Additionally, on September 1, 2007 a Canadian subsidiary issued a U.S. dollar denominated intercompany note in the principal amount of $105 million to a U.S. subsidiary as part of an internal legal entity reorganization. During the fourth quarter of fiscal 2009, the internal legal entity reorganization was reversed and a portion of the balance outstanding under the intercompany note was repaid. As of January 2, 2010, approximately $21.3 million remains outstanding. The remaining outstanding balance under the intercompany note was paid in full in Q2 2010. As a result, we are subject to risk from changes in foreign exchange rates. These changes result in either cumulative translation adjustments, which are included in accumulated other comprehensive income (loss), or realized and unrealized gains and losses which are included in other expense. As of January 2, 2010, a hypothetical 10% change in quoted foreign currency exchange rates would increase or decrease the income before income taxes by $1.7 million.

Raw Material; Commodity Price Risk

We purchase certain raw materials such as resin, steel and wood that are subject to price volatility caused by unpredictable factors. Where possible, we employ fixed rate raw material purchase contracts and customer price adjustments to help us to manage this risk. We do not currently manage our raw materials risk through the use of derivative instruments.

Item 4T. Controls and Procedures

Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of disclosure controls and procedures as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of January 2, 2010, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable

Item 1A. Risk Factors

See “Risk Factors” disclosed in the Form 10-K for the fiscal year ended October 3, 2009.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits


Exhibit 31.1		Certification of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2		Certification of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002

Exhibit 32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002

AMES TRUE TEMPER, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	AMES TRUE TEMPER, INC.
Date: February 12, 2010	/s/ Duane R. Greenly
	Duane R. Greenly
	President and Chief Executive Officer (Principal Executive Officer)


Date: February 12, 2010	/s/ David M. Nuti
	David M. Nuti
	Chief Financial Officer (Principal Financial Officer)

AMES TRUE TEMPER, INC.

EXHIBIT INDEX


Exhibit		Description
31.1		Certification of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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Ames True Temper, Inc. 10-Q