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 ~~April~~July 3, 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)



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



465 Railroad Avenue, Camp Hill, Pennsylvania (Address of principal executive offices)		17011 (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) Smaller reporting company o

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 ~~May~~August 145, 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):
Item 1.Financial Statements (unaudited):
Condensed Consolidated Balance Sheets as of April 3, 2010 and October 3, 2009		1
Condensed Consolidated Balance Sheets as of July 3, 2010 and October 3, 2009		1
Condensed Consolidated Statements of Operations for the thirteen week periods ended April 3, 2010 and March 28, 2009		2
Condensed Consolidated Statements of Operations for the thirteen week periods ended July 3, 2010 and June 27, 2009		2
Condensed Consolidated Statements of Operations for the twenty-six week periods ended April 3, 2010 and March 28, 2009		3
Condensed Consolidated Statements of Operations for the thirty-nine week periods ended July 3, 2010 and June 27, 2009		3
Condensed Consolidated Statements of Cash Flows for the twenty-six week periods ended April 3, 2010 and March 28, 2009		4
Condensed Consolidated Statements of Cash Flows for the thirty-nine week periods ended July 3, 2010 and June 27, 2009		4
Notes to Condensed Consolidated Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
Item 3. Quantitative and Qualitative Disclosures About Market Risk		38
Item 3.Quantitative and Qualitative Disclosures About Market Risk		41
Item 4T. Controls and Procedures		39
Item 4T.Controls and Procedures		41
PART II. OTHER INFORMATION
PART II.OTHER INFORMATION
Item 1. Legal Proceedings		40
Item 1.Legal Proceedings		42
Item 1A. Risk Factors		40
Item 1A.Risk Factors		42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		40
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 3. Defaults Upon Senior Securities		40
Item 3.Defaults Upon Senior Securities		42
Item 4. [Removed and Reserved]		40
Item 4.[Removed and Reserved]		42
Item 5. Other Information		40
Item 5.Other Information		42
Item 6. Exhibits		41
Item 6.Exhibits		42
Signatures		4243
EX-10.1
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)

Condensed Consolidated Balance Sheets

(Dollars In Thousands Except Per Share Amounts)

(Unaudited)

	April 3,			October 3,
	July 3,			October 3,
	2010			2009
Assets
Current assets:
Cash and cash equivalents	$	1930,~~468~~435		$	33,609
Trade receivables, net		9358,~~491~~544			42,449
Inventories		~~101~~103,~~361~~085			90,305
Prepaid expenses and other current assets		57,~~955~~429			6,315
Total current assets		~~220~~199,~~275~~493			172,678
Property, plant and equipment, net		4039,~~699~~250			44,239
Intangibles, net		5352,~~561~~620			53,681
Goodwill		5857,~~643~~835			57,494
Other noncurrent assets		5,~~260~~731			6,531
Total assets	$	~~378~~354,~~438~~929		$	334,623
Liabilities and stockholder’s deficit
Current liabilities:
Trade payables	$	3729,~~380~~227		$	18,214
Accrued interest payable		58,~~152~~864			5,392
Accrued expenses and other current liabilities		2428,~~745~~960			26,642
Revolving loan		~~28,500~~—			17,500
Current portion of long-term debt and capital lease obligations		~~252~~103			489
Total current liabilities		9667,~~029~~154			68,237
Deferred income taxes		1517,~~865~~490			13,672
Long-term debt		299,~~902~~931			299,791
Accrued retirement benefits		51,~~974~~837			51,836
Other liabilities		1211,~~284~~963			12,661
Total liabilities		~~476~~448,~~054~~375			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 April 3, 2010 and October 3, 2009 (Liquidation preference of $62,495 at April 3, 2010)		—			—
Preferred stock — Series A, $.0001 per share par value; 100,000 shares authorized; 62,495 shares issued and outstanding as of July 3, 2010 and October 3, 2009 (Liquidation preference of $62,495 at July 3, 2010)		—			—
Common stock—Class A, $.0001 per share par value; 1,600,000 shares authorized; 726,556 shares issued and outstanding as of April 3, 2010 and October 3, 2009		—			—
Common stock — Class A, $.0001 per share par value; 1,600,000 shares authorized; 726,556 shares issued and outstanding as of July 3, 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 April 3, 2009 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 July 3, 2010 and October 3, 2009		—			—
Additional paid-in capital		111,~~172~~174			111,168
Predecessor basis adjustment		(13,539	)		(13,539	)
Accumulated deficit		(~~157~~149,~~865~~614	)		(167,272	)
Accumulated other comprehensive loss		(3741,~~384~~467	)		(41,931	)
Total stockholder’s deficit		(9793,~~616~~446	)		(111,574	)
Total liabilities and stockholder’s deficit	$	~~378~~354,~~438~~929		$	334,623

See accompanying notes.

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

Condensed Consolidated Statements of Operations

(Dollars In Thousands)

(Unaudited)

	Thirteen Week Period Ended
	April 3,			March 28,
	July 3,			June 27,
	2010			2009
Net sales	$	~~139~~123,~~379~~360		$	~~142~~130,~~293~~036
Cost of goods sold		9780,~~578~~813			~~107~~96,~~490~~362
Gross profit		4142,~~801~~547			3433,~~803~~674
Selling, general and administrative expenses		2324,~~774~~803			2221,~~502~~843
(Gain) loss on disposal of fixed assets		(92	)		270
Loss on disposal of fixed assets		128			599
Amortization of intangible assets		~~305~~300			~~304~~302
Operating income		17,814			11,727
Impairment charges		300			451
Interest expense		6,661			7,364
Operating income		17,016			10,479
Other expense		692			1,073
Interest expense		6,630			7,085
Income before income taxes		10,461			3,290
Other income		(790	)		(6,793	)
Income tax expense		2,413			1,123
Income before income taxes		11,176			10,187
Net income	$	8,048		$	2,167
Income tax expense		2,925			941
Net income	$	8,251		$	9,246

See accompanying notes.

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

Condensed Consolidated Statements of Operations

(Dollars In Thousands)

(Unaudited)

	Twenty-Six Week Period Ended
	Thirty-Nine Week Period Ended
	April 3,			March 28,
	July 3,			June 27,
	2010			2009
Net sales	$	~~225~~349,~~778~~138		$	~~234~~364,~~627~~663
Cost of goods sold		~~156~~237,~~806~~619			~~171~~268,~~939~~301
Gross profit		68111,~~972~~519			6296,~~688~~362
Selling, general and administrative expenses		3964,~~671~~474			4062,~~300~~143
(Gain) loss on disposal of fixed assets		(~~157~~29	)		~~302~~901
Amortization of intangible assets		~~609~~909			~~609~~911
Impairment charge		—			476
Impairment charges		300			927
Operating income		2845,~~849~~865			2131,~~001~~480
Interest expense		1320,~~482~~112			1522,~~335~~420
Other expense		1,~~892~~102			125,~~436~~643
Income (loss) before income taxes		13,475			(6,770	)
Income before income taxes		24,651			3,417
Income tax expense		46,~~068~~993			12,~~301~~242
Net income (loss)	$	9,407		$	(8,071	)
Net income	$	17,658		$	1,175

See accompanying notes.

ATT Holding Co. Condensed Consolidated Statements of Cash Flows (Dollars In Thousands)

Condensed Consolidated Statements of Cash Flows

(Dollars In Thousands)

(Unaudited)

	Twenty-Six Week Period Ended
	Thirty-Nine Week Period Ended
	April 3,			March 28,
	July 3,			June 27,
	2010			2009
Operating activities
Net income (loss)	$	9,407		$	(8,071	)
Net income	$	17,658		$	1,175
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		69,~~616~~788			711,~~943~~825
Amortization of intangible assets		~~609~~909			~~609~~911
Amortization of loan fees		1,085			1,110
Amortization of loan fees included in interest expense		1,634			1,665
(Benefit from) provision for deferred taxes		(382	)		938
Provision for deferred taxes		2,270			1,106
Provision for bad debts		65			208
(Benefit from) provision for bad debts		(29	)		46
Amortization of bond discount		5480			5480
(Gain) loss on disposal of fixed assets		(~~157~~29	)		~~302~~901
Unrealized losses		1,~~602~~282			137,~~682~~047
Impairment charges		—300			~~476~~927
Changes in assets and liabilities:
Trade receivables		(5016,~~692~~014	)		(~~29,494~~884	)
Inventories		(1012,~~031~~738	)		~~(23~~12,~~974~~262	)
Prepaid expenses and other assets		~~530~~(804	)		12,~~697~~261
Trade payables		1810,~~815~~906			1(12,~~856~~593	)
Accrued expenses and other liabilities		(14,~~853~~608	)		(34,~~413~~166	)
Net cash used in operating activities		(24,332	)		(36,077	)
Net cash provided by operating activities		19,821			22,563
Investing activities
Cash paid for property, plant and equipment		(25,~~543~~016	)		(35,~~908~~016	)
Proceeds from sale of property, plant and equipment		~~284~~333			3949
Net cash used in investing activities		(2,259	)		(3,869	)
Restricted cash placed in escrow		(1,186	)		—
Net cash used in investing activities		(5,869	)		(4,967	)
Financing activities
Repayments of long-term debt		(~~283~~426	)		(~~275~~414	)
Borrowings on revolving loan		70,050			99,590
Borrowings on revolver		93,377			120,422
Repayments on revolving loan		(59,050	)		(57,500	)
Repayments on revolver		(110,877	)		(128,417	)
Principal payments under capital lease obligations		(1931	)		(3	)
Net cash provided by financing activities		10,698			41,812
Net cash used in financing activities		(17,957	)		(8,412	)
Effect of exchange rate changes on cash and cash equivalents		1,752			(2,652	)
Effect of exchange rate changes on cash		831			(708	)
Decrease in cash and cash equivalents		(14,141	)		(786	)
(Decrease) increase in cash and cash equivalents		(3,174	)		8,476
Cash and cash equivalents at beginning of period		33,609			17,159
Cash and cash equivalents at end of period	$	1930,~~468~~435		$	1625,~~373~~635
Supplemental Cash Flow Information
Cash paid for interest	$	1215,~~663~~046		$	1518,~~273~~128
Cash paid for income taxes	$	1,~~303~~887		$	~~155~~274
Property, plant and equipment in trade payables at end of period	$	303		$	323
Property, plant and equipment in trade accounts payable at end of period	$	378		$	216
Equipment acquired under capital lease obligations	$	~~122~~131		$	—

See accompanying notes.

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

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 ~~twenty-six~~thirteen and thirty-nine week ~~period~~periods ended ~~April~~ July 3, 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~~ fair presentation have been recorded. All adjustments were comprised of normal recurring ~~adjustments,~~ ~~except as discussed in the Notes to Condensed Consolidated Financial Statements~~adjustments. 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. See Note 14 for further information.

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.

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

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 fair value hierarchy and clarify disclosures related to level of disaggregation, inputs and valuation techniques. The Company adopted the amendment in the thirteen week period ended April 3, 2010. See Note 1314 for further information.

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 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 a reporting entity to present separately information about purchases, sales, issuances and settlements in the reconciliation required for activity in Level 3 fair value measurements. 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 guidance on employers’ disclosures about postretirement benefit plan assets in the fourth quarter of fiscal 2010 and the requirement for the reconciliation for activity in Level 3 fair value measurements 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.

In July 2010, the FASB issued new accounting guidance to require a reporting entity to provide disclosures that facilitate financial statement users’ evaluation of the nature of credit risk inherent in the entity’s portfolio of financing receivables, how that risk is analyzed and assessed in arriving at the allowance for credit losses and the changes and reasons for those changes in the allowance for credit losses. The Company is required to adopt the new guidance for disclosures as of the end of a reporting period during the first quarter of fiscal 2011. The Company is required to adopt the new guidance for disclosures about activity that occurs during a reporting period during the second quarter of fiscal 2011. The Company has not yet assessed the impact of adoption, if any, on its condensed consolidated financial statements.

3. Inventories

Inventories are as follows:

	April 3,		October 3,
	July 3,		October 3,
	2010		2009
Finished goods	$	6567,~~331~~521	$	51,161
Work in process		1211,~~420~~737		14,595
Raw materials		23,~~610~~827		24,549
	$	~~101~~103,~~361~~085	$	90,305

4. Goodwill and Other Intangibles

The changes in carrying amount of goodwill are as follows:

	United States		Canada		Total
Goodwill at October 3, 2009	$	43,605	$	13,889	$	57,494
Currency translation adjustments		—		~~1,149~~341		~~1,149~~341
Goodwill at April 3, 2010	$	43,605	$	15,038	$	58,643
Goodwill at July 3, 2010	$	43,605	$	14,230	$	57,835

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

During the thirteen week period ended July 3, 2010, the Company reduced its forecast for Dynamic Design branded sales due to a shift in branding strategies by certain customers whereby the mix of sales was less heavily weighted with Dynamic Design branded product. This led the Company to conclude an interim impairment assessment should be performed. The Company concluded the reduction in forecasted branded sales led to a reduction in Dynamic Design’s trade name fair value. As a result, the Company recorded an impairment charge in the amount of $300 within the U.S. segment. The Company performed the interim impairment test using the relief-from-royalty method. The impairment is included in impairment charges in the accompanying condensed consolidated statement of operations. See Note 14 for further information.

The following table reflects the components of intangible assets:

	April 3, 2010				October 3, 2009
	July 3, 2010				October 3, 2009
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Indefinite lived intangible assets:
Trade names	$	4847,~~321~~710	$	—	$	47,879	$	—
Finite lived intangible assets:
Technology (patents)		1,356		1,~~165~~177		1,356		1,142
Non-compete agreements		—		—		976		965
Customer relationships		11,~~664~~665		6,~~615~~934		11,617		6,040
		13,020		7,780		13,949		8,147
		13,021		8,111		13,949		8,147
	$	6160,~~341~~731	$	78,~~780~~111	$	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:

April 2010 — September 2010	$	600
July 2010 — September 2010	$	299
Fiscal 2011		1,~~200~~196
Fiscal 2012		1,~~180~~176
Fiscal 2013		1,~~166~~161
Fiscal 2014		~~895~~879
Thereafter		199
	$	54,~~240~~910

5. ~~Income~~Other ~~Taxes~~Noncurrent Assets

~~The~~Other ~~Company~~noncurrent ~~determines~~assets ~~its~~as ~~income~~of ~~tax~~July 3, ~~provision~~2010 ~~under~~include ~~the~~restricted ~~effective~~cash ~~rate method. This determination includes making an estimate~~ of ~~the Company’s current income tax payable~~$1,186 ~~effects of~~($1,405 ~~temporary~~Australian ~~differences,~~dollars) ~~net~~placed ~~operating~~in ~~loss~~escrow ~~and~~as ~~credit~~part ~~carryforwards~~of ~~and~~ the ~~need~~agreement ~~for~~to ~~valuation allowances~~purchase ~~for~~certain ~~deferred tax~~ assets. Infrom ~~assessing whether or not deferred tax assets will be~~West ~~realized,~~Barrows ~~the~~Mix ~~Company~~Pty ~~considers~~Ltd. ~~whether it is ‘‘more likely than not’’ that some portion or all of its deferred tax assets will not be realized~~(“Westmix”). InSee ~~making~~Note ~~this~~19 ~~assessment,~~for ~~historical~~further ~~operating losses, scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies are considered~~information.

~~As a result of the history of losses that the Company has incurred in recent years in the U~~6.~~S.,~~ ~~substantially~~Income ~~all of the U.S. domestic deferred tax assets, including tax loss carryforwards,~~Taxes 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~~The Company determines its income tax ~~expense~~provision ~~for~~under the ~~thirteen~~effective ~~and~~rate ~~twenty-six~~method. ~~week~~This determination ~~periods~~includes ~~ended~~making ~~April 3,~~an ~~2010~~estimate ~~was primarily~~of ~~comprised~~the ofCompany’s current income tax ~~expense~~payable, effects of temporary differences, net operating loss and credit carryforwards and the need for ~~foreign~~valuation allowances ~~subsidiaries~~for deferred tax assets. In assessing whether or not deferred tax assets will be realized, ~~withholding~~the Company considers whether it is “more likely than not” that some portion or all of its deferred tax ~~and~~assets Uwill not be realized.S. ~~income~~In making this assessment, historical operating losses, scheduled reversal of deferred tax ~~related~~liabilities, projected tofuture ~~foreign~~taxable ~~unremitted~~income ~~earnings~~and tax planning strategies are considered.

Income tax expense for the thirteen week period ended March 28, 2009 was primarily comprised of additional valuation allowances and accrual of withholding taxes and interest on unrecognized tax benefits. Income tax expense for the twenty-six week period ended March 28, 2009 was mainly comprised of additional valuation allowances and accrual of interest on unrecognized tax benefits partially offset by a reduction in current tax liabilities as a result of a change in Canadian withholding tax rates.

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

6 As a result of the history of losses that the Company has incurred in recent years in the U.S., ~~Debt~~substantially ~~Arrangements~~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 and thirty-nine week periods ended July 3, 2010 was primarily comprised of income tax expense for foreign subsidiaries and withholding tax and U.S. income tax related to foreign unremitted earnings. The accrual for U.S. income tax related to foreign unremitted earnings reduced the valuation allowance required due to expected net operating loss usage.

Income tax expense for the thirteen and thirty-nine week periods ended June 27, 2009 was primarily comprised of additional valuation allowances related to intangible assets and U.S. income tax related to foreign unremitted earnings.

7. Debt Arrangements

Total indebtedness is as follows:

	April 3,			October 3,
	July 3,			October 3,
	2010			2009
Revolving Loan (a)	$	~~28,500~~—		$	17,500
Senior Floating Rate Notes, net of unamortized discount of $187 and $241, respectively		149,813			149,759
Senior Floating Rate Notes, net of unamortized discount of $161 and $241, respectively		149,839			149,759
Senior Subordinated Notes		150,000			150,000
Term Note		~~196~~53			479
Capital lease obligations		~~145~~142			42
Total debt		~~328~~300,~~654~~034			317,780
Less:
Short-term Revolving Loan		~~(28,500~~—	)		(17,500	)
Current portion of capital lease obligations		(5650	)		(10	)
Current portion of long-term debt		(~~196~~53	)		(479	)
Long-term debt	$	299,~~902~~931		$	299,791

(a) The Company has commenced a process to extend the maturity of the Revolving Loan or to refinance borrowings prior to maturity in April 2011.

					Letters of				(c)
			Borrowing		Credit		(b)		Interest
	Maximum		Base as of		Outstanding as		Availability		Rate as of
	Borrowing		April		of April		as of April		April			Expiration
	Amount		3, 2010		3, 2010		3, 2010		3, 2010			Date
Revolving Loan	$	130,000	$	116,816	$	3,268	$	85,048		2.0	%	Apr 7, 2011

(e)

(f)

Original

(d)

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

(b) Total amount available is limited by the amount of eligible accounts receivable, inventory, machinery and equipment, and real estate less letters of credit outstanding. (c) 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. (d) LIBOR represents the three month London Interbank Offered Rate which resets quarterly. LIBOR was .25% as of January 13, 2010. January 13, 2010 is the reset date for the April 15, 2010 interest payment. (e) Interest payments are in cash and paid in arrears. (f) 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.

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

Letters of

Borrowing

Credit

(b)

Interest

Maximum

Base as

Outstanding

Availability

Rate as of

Borrowing

of July 3,

as of July 3,

July 3,

Expiration

Amount

2010

Date

Revolving Loan (a)

130,000

90,248

3,268

86,980

(c)

Apr 7, 2011

(e)

(f)

Original

(d)

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)		See Note 19 for further information regarding the expiration of the Revolving Loan.

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

(c)		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. As of July 3, 2010, there were no amounts outstanding under the Revolving Loan.

(d)		LIBOR represents the three month London Interbank Offered Rate which resets quarterly. LIBOR was .3% as of April 13, 2010. April 13, 2010 is the reset date for the July 15, 2010 interest payment.

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

(f)		The Senior Floating Rate Notes do not have a redemption premium. The Senior Subordinated Notes have a redemption price of 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 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.

7. Pension and Other Post-retirement Benefits

	Pension Benefits						Other Benefits
	Thirteen Week Period Ended						Thirteen Week Period Ended
	April 3,			March 28,			April 3,			March 28,
	2010			2009			2010			2009
Service Cost	$	34		$	109		$	1		$	—
Interest Cost		2,096			2,149			21			22
Expected return on plan assets		(2,429	)		(2,585	)		—			—
Amortization of prior service cost		—			6			—			—
Amortization of unrecognized net loss (gain)		726			98			(29	)		(29	)
Net periodic benefit cost (credit)	$	427		$	(223	)	$	(7	)	$	(7	)
Employer contributions	$	283		$	61		$	14		$	—

	Pension Benefits						Other Benefits
	Twenty-Six Week Period Ended						Twenty-Six Week Period Ended
	April 3,			March 28,			April 3,			March 28,
	2010			2009			2010			2009
Service Cost	$	71		$	218		$	2		$	1
Interest Cost		4,201			4,298			41			44
Expected return on plan assets		(4,867	)		(5,170	)		—			—
Amortization of prior service cost		—			12			—			—
Amortization of unrecognized net loss (gain)		1,453			196			(57	)		(59	)
Net periodic benefit cost (credit)	$	858		$	(446	)	$	(14	)	$	(14	)
Employer contributions	$	571		$	2,230		$	27		$	—

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

8. ~~Other~~Pension ~~Comprehensive~~and ~~Income~~Other ~~(Loss)~~Post-retirement Benefits

	Thirteen Week Period Ended
	Pension Benefits						Other Benefits
	April 3,			March 28,
	Thirteen Week Period Ended						Thirteen Week Period Ended
	2010			2009
	July 3,			June 27,			July 3,			June 27,
Net income	$	8,048		$	2,167
	2010			2009			2010			2009
Other comprehensive income (loss):
Service Cost	$	22		$	110		$	1		$	—
Currency translation adjustment		2,533			359
Interest Cost		2,058			2,151			21			23
Fair value adjustments of swaps, net of tax		(660	)		(849	)
Expected return on plan assets		(2,393	)		(2,588	)		—			—
Comprehensive income	$	9,921		$	1,677
Amortization of prior service cost		—			6			—			—
Amortization of unrecognized net loss (gain)		722			99			(29	)		(30	)
Net periodic benefit cost (credit)	$	409		$	(222	)	$	(7	)	$	(7	)
Employer contributions	$	461		$	1,352		$	19		$	—

	Twenty-Six Week Period Ended
	Pension Benefits						Other Benefits
	April 3,			March 29,
	Thirty-nine Week Period Ended						Thirty-nine Week Period Ended
	2010			2008
	June 3,			June 27,			July 3,			June 27,
Net income (loss)	$	9,407		$	(8,071	)
	2010			2009			2010			2009
Other comprehensive income (loss):
Service Cost	$	93		$	328		$	3		$	1
Currency translation adjustment		4,743			5,678
Interest Cost		6,259			6,449			62			67
Fair value adjustments of swaps, net of tax		(196	)		(1,449	)
Expected return on plan assets		(7,260	)		(7,758	)		—			—
Effect of pension measurement date provision, net of tax		—			95
Amortization of prior service cost		—			18			—			—
Comprehensive income (loss)	$	13,954		$	(3,747	)
Amortization of unrecognized net loss (gain)		2,175			295			(86	)		(89	)
Net periodic benefit cost (credit)	$	1,267		$	(668	)	$	(21	)	$	(21	)
Employer contributions	$	1,032		$	3,581		$	46		$	—

9. ~~Segment~~Other ~~Information~~Comprehensive Income

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 and twenty-six week periods ended March 28, 2009 as a result of the reorganization. Segment information representing the reportable segments currently utilized by chief operating decision makers was as follows:


	Thirteen Week Period Ended
	July 3,			June 27,
	2010			2009
Net income	$	8,251		$	9,246
Other comprehensive income:
Currency translation adjustment		(3,795	)		(3,015	)
Fair value adjustments of swaps, net of tax		(288	)		611

Comprehensive income	$	4,168		$	6,842

	Thirteen Week Period Ended
	Thirty-nine Week Period Ended
	April 3, 2010
	July 3,			June 27,
	United States			Canada			Other			Eliminations			Consolidated
	2010			2009
Net sales	$	116,832		$	20,948		$	1,599		$	—		$	139,379
Net income	$	17,658		$	1,175
Intersegment sales		3,483			2,427			—			(5,910	)		—
Other comprehensive income:
Operating income (loss)		14,165			3,771			(122	)		—			17,814
Currency translation adjustment		948			2,663
Interest expense														6,661
Fair value adjustments of swaps, net of tax		(484	)		(838	)
Other expense														692
Effect of pension measurement date provision, net of tax		—			95
Income before income taxes													$	10,461
Comprehensive income	$	18,122		$	3,095

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

	Thirteen Week Period Ended
	March 28, 2009
	United States		Canada		Other			Eliminations			Consolidated
Net sales	$	117,107	$	24,026	$	1,160		$	—		$	142,293
Intersegment sales		5,339		547		587			(6,473	)		—
Operating income (loss)		8,855		3,446		(574	)		—			11,727
Interest expense												7,364
Other expense												1,073
Income before income taxes											$	3,290

10. Segment Information

	Twenty-Six Week Period Ended
	April 3, 2010
	United States		Canada		Other			Eliminations			Consolidated
Net sales	$	181,786	$	41,519	$	2,473		$	—		$	225,778
Intersegment sales		4,636		5,601		—			(10,237	)		—
Operating income (loss)		20,479		8,941		(571	)		—			28,849
Interest expense												13,482
Other expense												1,892
Income before income taxes											$	13,475

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 and thirty-nine week periods ended June 27, 2009 as a result of the reorganization. Segment information representing the reportable segments currently utilized by chief operating decision makers was as follows:

Twenty-Six Week Period Ended

Thirteen Week Period Ended

March 28, 2009

July 3, 2010

United States

Canada

Other

Eliminations

Consolidated

Net sales

~~183~~102,~~607~~565

4819,~~351~~479

21,~~669~~316

—

~~234~~123,~~627~~360

Intersegment sales

73,~~139~~361

1,~~458~~441

~~1,169~~—

(94,~~766~~802

)

—

Operating income (loss)

1213,~~416~~692

93,~~332~~520

(~~747~~196

)

—

2117,~~001~~016

Interest expense

156,~~335~~630

Other expense

12,436

Other income

(790

)

Loss before income taxes

(6,770

)

Income before income taxes

11,176

Segment assets are as follows:


	Thirteen Week Period Ended
	June 27, 2009
	United States		Canada		Other			Eliminations			Consolidated
Net sales	$	109,695	$	19,124	$	1,217		$	—		$	130,036
Intersegment sales		3,979		527		483			(4,989	)		—
Operating income (loss)		11,030		648		(1,199	)		—			10,479
Interest expense												7,085
Other income												(6,793	)

Income before income taxes											$	10,187

	April 3,		October 3,
	Thirty-nine Week Period Ended
	2010		2009
	July 3, 2010
~~United States~~	$United States	~~299,084~~	$Canada	~~242,774~~	Other			Eliminations			Consolidated
Canada		73,235		84,987
Net sales	$	284,351	$	60,998	$	3,789		$	—		$	349,138
Other		6,119		6,862
Intersegment sales		7,997		7,041		—			(15,038	)		—
Total	$	378,438	$	334,623
Operating income (loss)		34,172		12,461		(768	)		—			45,865
Interest expense												20,112
Other expense												1,102
Income before income taxes											$	24,651

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

10. Other Expense


	Thirty-nine Week Period Ended
	June 27, 2009
	United States		Canada		Other			Eliminations			Consolidated
Net sales	$	293,302	$	67,475	$	3,886		$	—		$	364,663
Intersegment sales		11,118		1,985		1,652			(14,755	)		—
Operating income (loss)		23,446		9,980		(1,946	)		—			31,480
Interest expense												22,420
Other expense												5,643

Income before income taxes											$	3,417

~~Other~~Segment ~~expense~~assets ~~consists~~are ofas ~~the following~~follows:

	Thirteen Week Period Ended
	July 3,		October 3,
	April 3,		March 28,
	2010		2009
Unrealized loss	$	520	$	1,840
United States	$	277,776	$	242,774
Realized loss (gain)		172		(767	)
Canada		71,723		84,987
Total	$	692	$	1,073
Other		5,430		6,862
Total	$	354,929	$	334,623

	Twenty-Six Week Period Ended
	April 3,		March 28,
	2010		2009
Unrealized loss	$	1,602	$	13,682
Realized loss (gain)		290		(1,246	)
Total	$	1,892	$	12,436

11. Other (Income) Expense

OnOther ~~September~~(income) 1,expense ~~2007,~~consists ~~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~~following: 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. During the thirteen week period ended April 3, 2010, the remaining balance under the intercompany note was paid in full. The intercompany note was not long-term in nature. As a result, the impact of exchange rate changes on the note was recorded as an unrealized gain or loss in the condensed consolidated statements of operations.

For the thirteen week period ended April 3, 2010 other expense primarily includes an unrealized loss of $700 related to a U.S. dollar bank account held by a Canadian subsidiary and an unrealized gain of $219 related to foreign currency forward contracts. For the thirteen week period ended March 28, 2009 other expense primarily includes an unrealized gain of $125 related to the U.S. dollar bank account and unrealized losses of $1,430 related to the intercompany note and $561 related to foreign currency forward contracts. Also during the thirteen week period ended March 28, 2009, the Company recorded a realized gain of $771 related to foreign currency forward contracts.


	Thirteen Week Period Ended
	July 3,			June 27,
	2010			2009
Unrealized gain	$	(320	)	$	(6,530	)
Realized gain		(470	)		(263	)

Total	$	(790	)	$	(6,793	)

For the twenty-six week period ended April 3, 2010 other expense primarily includes an unrealized loss of $1,480 related to the U.S. dollar bank account. Other expense for the twenty-six week period ended April 3, 2010 also includes a realized loss of $503 related to foreign currency forward contracts. For the twenty-six week period ended March 28, 2009 other expense primarily includes an unrealized loss of $16,264 related to the intercompany note and unrealized gains of $2,059 related to the U.S. dollar bank account and $578 related to foreign currency forward contracts. Also during the twenty-six week period ended March 28, 2009, the Company recorded a realized gain of $1,268 related to foreign currency forward contracts.


	Thirty-nine Week Period Ended
	July 3,			June 27,
	2010			2009
Unrealized loss	$	1,282		$	7,047
Realized gain		(180	)		(1,404	)

Total	$	1,102		$	5,643

11 On September 1, 2007, the Company entered into an intercompany financing arrangement whereby one of the Company’s Canadian subsidiaries issued a U.S. ~~Condensed~~dollar ~~Guarantor~~denominated ~~Data~~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. During the thirty-nine week period ended July 3, 2010, the remaining balance under the intercompany note was paid in full. The intercompany note was not long-term in nature. As a result, the impact of exchange rate changes on the note was recorded as an unrealized gain or loss in the condensed consolidated statements of operations.

On December 17, 2007, as a result of certain corporate restructuring activities, ATT entered into supplemental indentures 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 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

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

~~which~~ For ~~has~~the nothirteen ~~interest,~~week ~~operations~~period orended ~~activities~~July 3, 2010 other ~~than~~income ~~through~~primarily ~~its~~includes ~~ownership~~an unrealized gain of ~~100%~~$585 related to a U.S. dollar bank account held by a Canadian subsidiary and an unrealized loss of $204 related to an intercompany note with a subsidiary in the Other segment. Other income ~~ATT~~for the thirteen week period ended July 3, 2010 also includes a realized gain of $739 related to the Canadian intercompany note and ~~ATT’s~~a ~~wholly-owned~~realized ~~subsidiaries~~loss of $209 related to U.S. ~~The~~dollar ~~Notes~~denominated ~~are~~trade receivables ~~not~~and ~~guaranteed~~payables held by ~~any~~a Canadian subsidiary. For the thirteen week period ended June 27, 2009 other income primarily includes an unrealized gain of ~~ATT~~$7,471 ~~Holding~~related Coto the Canadian intercompany note and unrealized losses of $605 related to a U.’sS. dollar bank account held by a ~~other~~Canadian ~~indirectly~~subsidiary ~~wholly-owned~~and ~~subsidiaries~~$475 related to foreign currency forward contracts. Other income for the thirteen week period ended June 27, 2009 also includes a realized gain of $254 related to foreign currency forward contracts.

For the thirty-nine week period ended July 3, 2010 other expense primarily includes unrealized losses of $895 related to a U.S. dollar bank account held by a Canadian subsidiary and $395 related to an intercompany note with a subsidiary in the Other segment. Other expense for the thirty-nine week period ended July 3, 2010 also includes a realized gain of $739 related to the Canadian intercompany note and a realized loss of $561 related to foreign currency forward contracts. Other expense for the thirty-nine week period ended June 27, 2009 primarily includes an unrealized loss of $8,793 related to the Canadian intercompany note and an unrealized gain of $1,494 related to a U.S. dollar bank account held by a Canadian subsidiary. Other expense for the thirty-nine week period ended June 27, 2009 also includes a realized gain of $1,522 related to foreign currency forward contracts.

12. Condensed Guarantor Data

On December 17, 2007, as a result of certain corporate restructuring activities, ATT entered into supplemental indentures 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 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 indirectly wholly-owned subsidiaries.

The following condensed consolidating information presents, in separate columns, the condensed consolidating balance sheets, the related condensed consolidating statements of operations and the condensed consolidating statements of cash flows 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~~fourteen ~~quarter~~week ~~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. As a result of this reorganization, the Company has recast its condensed consolidating statements of operations for the thirteen and ~~twenty~~thirty-~~six~~nine week periods ended ~~March~~June 2827, 2009 and its condensed consolidating statement of cash flows for the ~~twenty~~thirty-~~six~~nine week period ended ~~March~~June 2827, 2009.

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

ATT Holding Co. Condensed Consolidating Balance Sheet As of ~~April~~July 3, 2010

									Subsidiary
	ATT			Ames True			Subsidiary		Non-
	Holding Co.			Temper, Inc.			Guarantors		Guarantors			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	358,888		$	79	$	1921,~~426~~538		$	—		$	1930,~~468~~435
Trade receivables, net		—			8551,~~193~~879			—		86,~~298~~665			—			9358,~~491~~544
Inventories		—			8284,~~654~~311			—		18,~~707~~774			—			~~101~~103,~~361~~085
Prepaid expenses and other current assets		—			46,~~733~~588			3736		~~1,185~~805			—			57,~~955~~429
Total current assets		—			~~172~~151,~~615~~666			4445		47,~~616~~782			—			~~220~~199,~~275~~493
Property, plant and equipment, net		—			29,~~761~~215			—		10,~~938~~035			—			4039,~~699~~250
Intangibles, net		—			4,~~565~~304			41,~~900~~600		76,~~096~~716			—			5352,~~561~~620
Goodwill		—			43,605			—		1514,~~038~~230			—			5857,~~643~~835
Other noncurrent assets		—			5,~~225~~697			—		3534			—			5,~~260~~731
Intercompany receivable		—			30,~~708~~960			~~179~~184,~~352~~950		5,~~062~~090			(~~215~~221,~~122~~000	)		—
Investment in subsidiaries		—			~~265~~267,~~419~~827			~~172~~171,~~275~~693		—			(~~437~~439,~~694~~520	)		—
Total assets	$	—		$	~~551~~533,~~898~~274		$	~~393~~398,~~571~~288	$	8583,~~785~~887		$	(~~652~~660,~~816~~520	)	$	~~378~~354,~~438~~929
Liabilities and stockholder’s (deficit) equity
Current liabilities:
Trade payables	$	—		$	3124,~~283~~811		$	4326	$	64,~~054~~390		$	—		$	3729,~~380~~227
Accrued interest payable		—			58,~~152~~864			—		—			—			58,~~152~~864
Accrued expenses and other current liabilities		—			1720,~~011~~432			—		78,~~734~~528			—			2428,~~745~~960
Revolving loan		—			~~28,500~~—			—		—			—			~~28,500~~—
Current portion of long-term debt and capital lease obligations		—			~~242~~94			—		109			—			~~252~~103
Total current liabilities		—			8254,~~188~~201			4326		1312,~~798~~927			—			9667,~~029~~154
Deferred income taxes		—			1,544			1314,~~233~~911		1,~~088~~035			—			1517,~~865~~490
Long-term debt		—			299,~~877~~910			—		2521			—			299,~~902~~931
Accrued retirement benefits		—			51,~~099~~014			—		~~875~~823			—			51,~~974~~837
Other liabilities		—			10,~~774~~457			1,~~366~~390		~~144~~116			—			1211,~~284~~963
Intercompany payable		—			~~203~~209,~~882~~594			311		1011,~~929~~095			(~~215~~221,~~122~~000	)		—
Cumulative losses in subsidiaries		9793,~~616~~446			~~150~~—			~~164~~336		—			(9793,~~930~~782	)		—
Total liabilities		9793,~~616~~446			~~649~~626,~~514~~720			1516,~~117~~974		26,~~859~~017			(~~313~~314,~~052~~782	)		~~476~~448,~~054~~375
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,~~172~~174			111,~~172~~174			154,502		—150			(265,~~674~~826	)		111,~~172~~174
Predecessor basis adjustment		(13,539	)		(13,539	)		—		—			13,539			(13,539	)
(Accumulated deficit) retained earnings		(~~157~~149,~~865~~614	)		(~~157~~149,~~865~~614	)		9096,~~038~~780		(52,~~363~~583	)		7355,~~190~~417			(~~157~~149,~~865~~614	)
Accumulated other comprehensive (loss) income		(3741,~~384~~467	)		(3741,~~384~~467	)		1511,~~665~~783		1410,~~667~~681			719,~~052~~003			(3741,~~384~~467	)
Total stockholder’s (deficit) equity		(9793,~~616~~446	)		(9793,~~616~~446	)		~~378~~381,~~454~~314		5857,~~926~~870			(~~339~~345,~~764~~738	)		(9793,~~616~~446	)
Total liabilities and stockholder’s (deficit) equity	$	—		$	~~551~~533,~~898~~274		$	~~393~~398,~~571~~288	$	8583,~~785~~887		$	(~~652~~660,~~816~~520	)	$	~~378~~354,~~438~~929

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
Other noncurrent assets		—			6,531			—		—			—			6,531
Intercompany receivable		—			29,980			168,715		2,941			(201,636	)		—
Investment in subsidiaries		—			248,762			163,010		—			(411,772	)		—

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

Liabilities and stockholder’s (deficit) equity
Current liabilities:
Trade payables	$	—		$	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 ~~April~~July 3, 2010

									Subsidiary
	ATT		Ames True			Subsidiary			Non-
	Holding Co.		Temper, Inc.			Guarantors			Guarantors			Eliminations			Consolidated
Net sales	$	—	$	~~119~~105,~~458~~210		$	—		$	2522,~~633~~909		$	(54,~~712~~759	)	$	~~139~~123,~~379~~360
Cost of goods sold		—		8570,~~788~~333			—			1715,~~502~~239			(54,~~712~~759	)		9780,~~578~~813
Gross profit		—		3334,~~670~~877			—			87,~~131~~670			—			4142,~~801~~547
Selling, general and administrative expenses		—		1920,~~234~~447			6643			4,~~474~~313			—			2324,~~774~~803
Gain on disposal of fixed assets		—		(84	)		—			(8	)		—			(92	)
Loss on disposal of fixed assets		—		128			—			—			—			128
Amortization of intangible assets		—		~~267~~261			—			3839			—			~~305~~300
Operating income (loss)		—		14,253			(66	)		3,627			—			17,814
Impairment of fixed assets		—		—			300			—			—			300
Interest expense (income)		—		9,287			(2,694	)		68			—			6,661
Operating income (loss)		—		14,041			(343	)		3,318			—			17,016
Other expense (income)		—		2,767			(3,164	)		1,089			—			692
Interest expense (income)		—		9,342			(2,770	)		58			—			6,630
Income before income taxes		—		2,199			5,792			2,470			—			10,461
Other expense (income)		—		2,560			(2,889	)		(461	)		—			(790	)
Income tax expense		—		197			1,722			494			—			2,413
Income before income taxes		—		2,139			5,316			3,721			—			11,176
Equity in earnings of subsidiaries		8,048		6,046			2,299			—			(16,393	)		—
Income tax expense		—		192			1,793			940			—			2,925
Net income	$	8,048	$	8,048		$	6,369		$	1,976		$	(16,393	)	$	8,048
Equity in earnings of subsidiaries		8,251		6,304			3,219			—			(17,774	)		—
Net income	$	8,251	$	8,251		$	6,742		$	2,781		$	(17,774	)	$	8,251

ATT Holding Co. Condensed Consolidating Statement of Operations For the Thirteen Week Period Ended ~~March~~June 2827, 2009

									Subsidiary
	ATT		Ames True			Subsidiary			Non-
	Holding Co.		Temper, Inc.			Guarantors			Guarantors			Eliminations			Consolidated
Net sales	$	—	$	~~121~~112,~~743~~795		$	—		$	2621,~~397~~703		$	(54,~~847~~462	)	$	~~142~~130,~~293~~036
Cost of goods sold		—		9483,~~073~~650			—			1917,~~264~~174			(54,~~847~~462	)		~~107~~96,~~490~~362
Gross profit		—		2729,~~670~~145			—			74,~~133~~529			—			3433,~~803~~674
Selling, general and administrative expenses		—		1817,~~268~~228			5766			4,~~177~~549			—			2221,~~502~~843
Loss on disposal of fixed assets		—		~~270~~599			—			—			—			~~270~~599
Amortization of intangible assets		—		266			—			3836			—			~~304~~302
Operating income (loss)		—		8,866			(57	)		2,918			—			11,727
Impairment of fixed assets		—		—			—			451			—			451
Interest expense (income)		—		9,751			(4,899	)		2,512			—			7,364
Operating income (loss)		—		11,052			(66	)		(507	)		—			10,479
Other expense (income)		—		2,432			(2,976	)		1,617			—			1,073
Interest expense (income)		—		9,515			(4,993	)		2,563			—			7,085
(Loss) income before income taxes		—		(3,317	)		7,818			(1,211	)		—			3,290
Other expense (income)		—		2,292			(2,629	)		(6,456	)		—			(6,793	)
Income tax expense		—		43			227			853			—			1,123
(Loss) income before income taxes		—		(755	)		7,556			3,386			—			10,187
Equity (loss) in earnings of subsidiaries		2,167		5,527			(1,446	)		—			(6,248	)		—
Income tax expense (benefit)		—		137			1,585			(781	)		—			941
Net income (loss)	$	2,167	$	2,167		$	6,145		$	(2,064	)	$	(6,248	)	$	2,167
Equity in earnings of subsidiaries		9,246		10,138			5,323			—			(24,707	)		—
Net income	$	9,246	$	9,246		$	11,294		$	4,167		$	(24,707	)	$	9,246

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

ATT Holding Co. Condensed Consolidating Statement of Operations For the ~~Twenty~~Thirty-~~Six~~Nine Week Period Ended ~~April~~July 3, 2010

									Subsidiary
	ATT		Ames True			Subsidiary			Non-
	Holding Co.		Temper, Inc.			Guarantors			Guarantors			Eliminations			Consolidated
Net sales	$	—	$	~~185~~290,~~250~~460		$	—		$	5073,~~439~~348		$	(914,~~911~~670	)	$	~~225~~349,~~778~~138
Cost of goods sold		—		~~133~~203,~~081~~414			—			3348,~~636~~875			(914,~~911~~670	)		~~156~~237,~~806~~619
Gross profit		—		5287,~~169~~046			—			1624,~~803~~473			—			68111,~~972~~519
Selling, general and administrative expenses		—		3151,~~179~~626			94137			812,~~398~~711			—			3964,~~671~~474
Gain on disposal of fixed assets		—		(~~149~~21	)		—			(8	)		—			(~~157~~29	)
Amortization of intangible assets		—		~~533~~794			—			76115			—			~~609~~909
Operating income (loss)		—		20,606			(94	)		8,337			—			28,849
Impairment of fixed assets		—		—			300			—			—			300
Interest expense (income)		—		18,671			(5,740	)		551			—			13,482
Operating income (loss)		—		34,647			(437	)		11,655			—			45,865
Other expense (income)		—		3,898			(4,819	)		2,813			—			1,892
Interest expense (income)		—		28,013			(8,510	)		609			—			20,112
(Loss) income before income taxes		—		(1,963	)		10,465			4,973			—			13,475
Other expense (income)		—		6,458			(7,708	)		2,352			—			1,102
Income tax expense		—		261			2,182			1,625			—			4,068
Income before income taxes		—		176			15,781			8,694			—			24,651
Equity in earnings of subsidiaries		9,407		11,631			4,185			—			(25,223	)		—
Income tax expense		—		453			3,975			2,565			—			6,993
Net income	$	9,407	$	9,407		$	12,468		$	3,348		$	(25,223	)	$	9,407
Equity in earnings of subsidiaries		17,658		17,935			7,404			—			(42,997	)		—
Net income	$	17,658	$	17,658		$	19,210		$	6,129		$	(42,997	)	$	17,658

ATT Holding Co. Condensed Consolidating Statement of Operations For the ~~Twenty~~Thirty-~~Six~~Nine Week Period Ended ~~March~~June 2827, 2009

										Subsidiary
	ATT			Ames True			Subsidiary			Non-
	Holding Co.			Temper, Inc.			Guarantors			Guarantors			Eliminations			Consolidated
Net sales	$	—		$	~~189~~302,~~939~~734		$	—		$	5374,~~192~~895		$	(812,~~504~~966	)	$	~~234~~364,~~627~~663
Cost of goods sold		—			~~144~~227,~~178~~828			—			3653,~~265~~439			(812,~~504~~966	)		~~171~~268,~~939~~301
Gross profit		—			4574,~~761~~906			—			1621,~~927~~456			—			6296,~~688~~362
Selling, general and administrative expenses		—			3149,~~925~~153			~~100~~166			812,~~275~~824			—			4062,~~300~~143
Loss on disposal of fixed assets		—			~~302~~901			—			—			—			~~302~~901
Amortization of intangible assets		—			~~533~~799			—			76112			—			~~609~~911
Impairment charge		—			476			—			—			—			476
Impairment of fixed assets		—			476			—			451			—			927
Operating income (loss)		—			1223,~~525~~577			(~~100~~166	)		8,~~576~~069			—			2131,~~001~~480
Interest expense (income)		—			2029,~~056~~571			(914,~~788~~781	)		57,~~067~~630			—			1522,~~335~~420
Other expense (income)		—			36,~~778~~070			(47,~~846~~475	)		137,~~504~~048			—			125,~~436~~643
(Loss) income before income taxes		—			(1112,~~309~~064	)		1422,~~534~~090			(96,~~995~~609	)		—			(63,~~770~~417	)
Income tax expense		—			99236			~~218~~1,803			~~984~~203			—			12,~~301~~242
(Loss) equity in earnings of subsidiaries		(8,071	)		3,337			(10,198	)		—			14,932			—
Equity in earnings of subsidiaries		1,175			13,475			(4,875	)		—			(9,775	)		—
Net (loss) income	$	(8,071	)	$	(8,071	)	$	4,118		$	(10,979	)	$	14,932		$	(8,071	)
Net income (loss)	$	1,175		$	1,175		$	15,412		$	(6,812	)	$	(9,775	)	$	1,175

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

ATT Holding Co. Condensed Consolidating Statement of Cash Flows For the ~~Twenty~~Thirty-~~Six~~Nine Week Period Ended ~~April~~July 3, 2010

										Subsidiary
	ATT			Ames True			Subsidiary			Non-
	Holding Co.			Temper, Inc.			Guarantors			Guarantors			Eliminations			Consolidated
Operating activities
Net income	$	917,~~407~~658		$	917,~~407~~658		$	1219,~~468~~210		$	36,~~348~~129		$	(2542,~~223~~997	)	$	917,~~407~~658
Adjustments to reconcile net income to net cash used in operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation expense		—			58,~~589~~265			—			1,~~027~~523			—			69,~~616~~788
Equity in earnings of subsidiaries		(917,~~407~~658	)		(1117,~~631~~935	)		(47,~~185~~404	)		—			2542,~~223~~997			—
Provision for (benefit from) deferred taxes		—			—			13,~~997~~766			(21,~~379~~496	)		—			~~(382~~2,270	)
Other, net		—			12,~~580~~495			—			7670			—			12,~~656~~565
Unrealized (gain) loss		—			(5	)		—			1,607			—			1,602
Unrealized loss		—			—			—			1,282			—			1,282
Impairment charge		—			—			300			—			—			300
Related party non-cash transactions		—			(153	)		153			—			—			—
Changes in assets and liabilities:
Trade receivables		—			(5017,~~820~~457	)		—			~~128~~1,443			—			(5016,~~692~~014	)
Inventories		—			(1012,~~721~~378	)		—			~~690~~(360	)		—			(1012,~~031~~738	)
Prepaid expenses and other current assets		—			(~~259~~1,752	)		(37	)		~~826~~985			—			~~530~~(804	)
Trade payables		—			1812,~~799~~327			12(5	)		4(1,416	)		—			1810,~~815~~906
Accrued expenses and other liabilities		—			(23,~~839~~425	)		~~190~~123			~~796~~1,060			—			(14,~~853~~608	)
Intercompany accounts		—			3137,~~725~~285			(1016,~~600~~106	)		(21,~~125~~179	)		—			—
Net cash (used in) provided by operating activities		—			(9,328	)		(2	)		(15,002	)		—			(24,332	)
Net cash provided by (used in) operating activities		—			31,780			—			(11,959	)		—			19,821
Investing activities
Cash paid for property, plant and equipment		—			(24,~~081~~392	)		—			(~~462~~624	)		—			(25,~~543~~016	)
Proceeds from sale of property, plant and equipment		—			~~284~~333			—			—			—			~~284~~333
Net cash used in investing activities		—			(1,797	)		—			(462	)		—			(2,259	)
Restricted cash placed in escrow		—			(1,186	)		—			—			—			(1,186	)
Investment in subsidiary		—			(150	)		—			—			150			—
Net cash used in investing activities		—			(5,395	)		—			(624	)		150			(5,869	)
Financing activities
Repayments of long-term debt		—			(~~283~~426	)		—			—			—			(~~283~~426	)
Borrowings on revolving loan		—			70,050			—			—			—			70,050
Borrowings on revolver		—			93,377			—			—			—			93,377
Repayments on revolving loan		—			(59,050	)		—			—			—			(59,050	)
Repayments on revolver		—			(110,877	)		—			—			—			(110,877	)
Principal payments under capital lease obligations		—			(1125	)		—			(86	)		—			(1931	)
Net cash provided by (used in) financing activities		—			10,706			—			(8	)		—			10,698
Capital contribution		—			—			—			150			(150	)		—
Effect of exchange rate changes on cash and cash equivalents		—			—			—			1,752			—			1,752
Net cash (used in) provided by financing activities		—			(17,951	)		—			144			(150	)		(17,957	)
(Decrease) increase in cash and cash equivalents		—			(419	)		(2	)		(13,720	)		—			(14,141	)
Effect of exchange rate changes on cash		—			—			—			831			—			831
Increase (decrease) in cash and cash equivalents		—			8,434			—			(11,608	)		—			(3,174	)
Cash and cash equivalents at beginning of period		—			454			9			33,146			—			33,609
Cash and cash equivalents at end of period	$	—		$	358,888		$	79		$	1921,~~426~~538		$	—		$	1930,~~468~~435

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

ATT Holding Co. Condensed Consolidating Statement of Cash Flows For the ~~Twenty~~Thirty-~~Six~~Nine Week Period Ended ~~March~~June 2827, 2009

										Subsidiary
	ATT			Ames True			Subsidiary			Non-
	Holding Co.			Temper, Inc.			Guarantors			Guarantors			Eliminations			Consolidated
Operating activities
Net (loss) income	$	(8,071	)	$	(8,071	)	$	4,118		$	(10,979	)	$	14,932		$	(8,071	)
Net income (loss)	$	1,175		$	1,175		$	15,412		$	(6,812	)	$	(9,775	)	$	1,175
Adjustments to reconcile (net loss) income to net cash (used in) provided by operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		—			610,~~946~~234			—			~~997~~1,591			—			711,~~943~~825
Equity in loss (earnings) of subsidiaries		8,071			(3,337	)		10,198			—			(14,932	)		—
Equity in (earnings) losses of subsidiaries		(1,175	)		(13,475	)		4,875			—			9,775			—
Provision for deferred taxes		—			—			548			390			—			938
Provision for (benefit from) deferred taxes		—			677			823			(394	)		—			1,106
Other, net		—			23,~~128~~485			—			~~155~~118			—			23,~~283~~603
Unrealized loss		—			57—			—			137,~~625~~047			—			137,~~682~~047
Related party non-cash transactions		—			3,502			(3,600	)		98			—			—
Impairment charges		—			476			—			451			—			927
Impairment charges		—			476			—			—			—			476
Related party non-cash transactions		—			4,674			(5,677	)		1,003			—			—
Changes in assets and liabilities:
Trade receivables		—			(241,~~006~~472	)		—			~~(5,488~~588	)		—			(~~29,494~~884	)
Inventories		—			~~(18~~15,~~375~~625	)		—			(53,~~599~~363	)		—			~~(23~~12,~~974~~262	)
Prepaid expenses and other current assets		—			12,~~730~~537			—			(33276	)		—			12,~~697~~261
Trade payables		—			1(10,~~403~~551	)		8(6	)		~~445~~(2,036	)		—			1(12,~~856~~593	)
Accrued expenses and other liabilities		—			(57,~~294~~543	)		~~131~~3,057			~~1,750~~320			—			(34,~~413~~166	)
Intercompany accounts		—			47,~~484~~322			(1118,~~398~~481	)		611,~~914~~159			—			—
Net cash (used in) provided by operating activities		—			(38,357	)		5			2,275			—			(36,077	)
Net cash provided by operating activities		—			13,164			3			9,396			—			22,563
Investing activities
Cash paid for property, plant and equipment		—			(34,~~590~~581	)		—			(~~318~~435	)		—			(35,~~908~~016	)
Proceeds from sale of property, plant and equipment		—			3949			—			—			—			3949
Net cash used in investing activities		—			(34,~~551~~532	)		—			(~~318~~435	)		—			(34,~~869~~967	)
Financing activities
Repayments of long-term debt		—			(~~275~~414	)		—			—			—			(~~275~~414	)
Borrowings on revolving loan		—			99,590			—			—			—			99,590
Borrowings on revolver		—			120,422			—			—			—			120,422
Repayments on revolving loan		—			(57,500	)		—			—			—			(57,500	)
Repayments on revolver		—			(128,417	)		—			—			—			(128,417	)
Principal payments under capital lease obligations		—			—			—			(3	)		—			(3	)
Principal payments under capital lease obligation		—			—			—			(3	)		—			(3	)
Net cash provided by (used in) financing activities		—			41,815			—			(3	)		—			41,812
Net cash used in financing activities		—			(8,409	)		—			(3	)		—			(8,412	)
Effect of exchange rate changes on cash and cash equivalents		—			—			—			(2,652	)		—			(2,652	)
Effect of exchange rate changes on cash		—			(1	)		—			(707	)		—			(708	)
(Decrease) increase in cash and cash equivalents		—			(93	)		5			(698	)		—			(786	)
Increase in cash and cash equivalents		—			222			3			8,251			—			8,476
Cash and cash equivalents at beginning of period		—			285			5			16,869			—			17,159
Cash and cash equivalents at end of period	$	—		$	~~192~~507		$	108		$	1625,~~171~~120		$	—		$	1625,~~373~~635

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

1213. 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 condensed 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~~ 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 ~~April~~July 3, 2010 and October 3, 2009, there were 139,067 ~~and~~ and 138,567 Class B Units, respectively, 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

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

holders of Class A-1 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-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. In April 2010, all of the Class A-3 Units were converted into Class A Units pursuant to the terms of the Operating Agreement.

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, merchant and investment banking services to the Company. The Company recorded expenses of $~~817~~805 and $12,~~662~~467 for the thirteen and ~~twenty~~thirty-~~six~~nine weeks ended ~~April~~July 3, 2010, respectively, related to the annual management fee plus expenses which are included in selling, general and administrative expenses in the accompanying condensed consolidated financial statements. The management fees plus expenses for the thirteen and ~~twenty~~thirty-~~six~~nine weeks ~~ended~~ ~~March~~ended June 2827, 2009 were $~~832~~841 and $12,~~638~~479, respectively. The management fees are payable quarterly in in advance in accordance with the management agreement. The amount payable to Castle Harlan, Inc. as as of ~~April~~July 3, 2010 was $~~724~~9 which is included in trade payables in the accompanying condensed consolidated balance sheet. No amounts were outstanding as of October 3, 2009.

1314. Fair Value Measurements

~~The~~Fair ~~Company’s~~value ~~financial~~is ~~instruments~~the ~~include~~price ~~cash~~that ~~and~~would ~~cash~~be ~~equivalents,~~received ~~trade~~to ~~receivables, trade~~sell ~~accounts~~an ~~payable,~~asset ~~derivatives~~or ~~and~~paid ~~debt.~~to ~~Because~~transfer ofa liability ~~short~~on ~~term maturities,~~ the ~~carrying amounts~~measurement ofdate. ~~cash~~A ~~and~~fair ~~cash~~value ~~equivalents,~~hierarchy ~~trade~~exists ~~receivables,~~that ~~trade~~prioritizes ~~payables,~~ the ~~Revolving~~inputs ~~Loan and~~to ~~Term~~valuation ~~Note~~techniques ~~approximate~~used ~~fair value. See below for further information related~~ to ~~the~~measure fair value of into the ~~Company’s~~following ~~derivatives~~three ~~and~~categories ~~remaining~~(from ~~long-term~~highest to ~~debt.~~lowest priority):

~~The~~• ~~Company’s~~Level ~~assets~~1 ~~and~~— ~~liabilities~~Inputs that ~~are~~represent ~~measured~~quoted atprices ~~fair~~for ~~value,~~identical ~~defined~~instruments asin ~~the~~active ~~exit price~~markets. or• ~~the~~Level ~~price~~2 ~~that~~— ~~would~~Inputs bethat ~~received~~represent toquoted ~~sell~~prices ~~the~~for ~~asset~~similar orinstruments ~~paid~~in toactive ~~transfer the liability at the measurement date~~markets, onor aquoted ~~recurring~~prices ~~basis~~for ~~relate~~identical toinstruments ~~the~~in ~~Company’s~~non-active ~~derivative contracts which are mainly comprised of interest rate swaps and foreign currency forward contracts~~markets. ~~The~~Also ~~Company utilizes~~includes ~~the~~valuation ~~income~~techniques ~~approach~~whose asinputs ~~the~~are ~~present~~derived ~~value~~principally ~~technique~~from toobservable ~~fair~~market ~~value~~data ~~each~~other ~~derivative~~than ~~contract. The~~quoted ~~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~~prices, ~~the~~such ~~Company’s incremental borrowing rate was utilized~~ as ~~the~~interest ~~discount~~rates ~~rate~~or inother ~~the present~~market-corroborated ~~value calculation~~means. If• ~~the~~Level ~~derivative~~3 ~~represents~~— anInputs ~~asset~~that toare ~~the~~largely ~~Company~~unobservable, ~~the~~as ~~recorded~~little ~~value includes~~or anno ~~estimate~~market ofdata aexists ~~credit risk adjustment~~ for the ~~counterparty~~instrument being valued.

AFinancial ~~fair~~Assets ~~value~~and ~~hierarchy~~Liabilities ~~exists~~ that ~~prioritizes~~are ~~the~~Measured ~~inputs~~at toFair ~~valuation~~Value ~~techniques~~on ~~used~~a ~~to measure~~Recurring ~~fair value into the following three categories (from highest to lowest priority):~~Basis

	•		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

The Company’s financial instruments include cash and cash equivalents, trade receivables, restricted cash, trade payables, derivatives and debt. Because of short term maturities, the carrying amounts of cash and cash equivalents, trade receivables, restricted cash, trade payables, the Revolving Loan and Term Note approximate fair value. The Company’s assets and liabilities that are measured at fair value 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 the income approach as the present value

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

~~inputs~~technique ~~are~~to ~~derived~~fair ~~principally~~value ~~from~~each ~~observable~~derivative ~~market~~contract. ~~data~~The ~~other~~Company ~~than~~calculates ~~quoted~~the ~~prices,~~present ~~such~~value asof future ~~interest~~expected ~~rates~~cash orflows ~~other~~using ~~market-corroborated~~a ~~means~~discount rate commensurate with the underlying risk of the debtor. •If ~~Level~~the 3derivative —represents ~~Inputs~~a ~~that~~liability ~~are~~to ~~largely~~the ~~unobservable~~Company, the Company’s incremental borrowing rate was utilized as ~~little~~the ordiscount norate ~~market~~in ~~data~~the ~~exists~~present ~~for~~value calculation. If the derivative ~~instrument~~represents ~~being~~an ~~valued~~asset to the Company, the recorded value includes an estimate of a credit risk adjustment for the counterparty.

As of ~~April~~July 3, 2010, the Company’s ~~has two types of derivative instruments outstanding including foreign currency forward contracts and~~ interest rate swaps ~~that~~ are ~~both~~ in a liability position~~. The~~ ~~Company~~and ~~used the three month LIBOR rate of 0.29% plus a 4% credit risk spread to value the~~no foreign currency forward contracts are outstanding. The Company used the one year LIBOR rate of 0 1.9217% plus a 6% credit risk spread to value the interest rate swaps. See Note 67 for further information regarding the notional amount and duration of the interest rate swaps. ~~See Note 14 regarding the notional~~ ~~amount of the foreign currency forward contracts.~~

The ~~Company is required to categorize all financial assets and liabilities required to be measured at~~ fair value onof athe ~~recurring~~Company’s ~~basis~~derivative ~~into~~instruments ~~the~~is ~~above~~as ~~three levels.~~follows:

	April 3, 2010
	July 3, 2010
	(Level 1)		(Level 2)		(Level 3)		Total
Foreign currency forward contracts	$	—	$	117	$	—	$	117
Interest rate swaps	$	—	$	3,209	$	—	$	3,209
Interest rate swaps	$	—	$	2,921	$	—	$	2,921
Total liabilities	$	—	$	3,209	$	—	$	3,209
Total liabilities	$	—	$	3,038	$	—	$	3,038


	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 April 3, 2010~~ is as follows:

	Balance Sheet	Carrying		Fair
		July 3, 2010				October 3, 2009
	Classification	Value		Value
	Balance Sheet	Carrying		Fair		Carrying		Fair
Senior Floating Rate Notes	Liability	$	149,813	$	141,750
	Classification	Value		Value		Value		Value
Senior Subordinated Notes	Liability		150,000		146,460
Senior Floating Rate Notes	Liability	$	149,839	$	141,375	$	149,759	$	131,070
Senior Subordinated Notes	Liability		150,000		150,000		150,000		127,425

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.~~Non-Financial ~~Derivative~~Assets ~~Instruments~~ and ~~Hedging~~Liabilities ~~Activities~~that are Measured at Fair Value on a Nonrecurring Basis

~~The~~Non-financial ~~Company’s~~assets ~~cash flows~~ and ~~earnings~~liabilities ~~are~~primarily ~~subject~~include togoodwill, ~~fluctuations~~indefinite-lived ~~resulting from changes in~~intangible ~~interest~~assets ~~rates~~ and ~~foreign~~long-lived ~~currency~~assets ~~exchange~~measured ~~rates.~~at ~~The~~fair ~~Company~~value ~~manages~~for ~~the~~impairment ~~exposure~~assessments toand ~~these~~non-financial ~~market~~assets ~~risks through internally established policies~~ and ~~procedures~~liabilities ~~and,~~measured ~~when~~at ~~deemed~~fair ~~appropriate, through~~value ~~the~~in ~~use~~business ~~of derivative financial instruments~~combinations. ~~The Company’s policy does not allow~~ ~~speculation in derivative instruments~~

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

~~for~~sales ~~profit~~led orto ~~execution~~a ofreduction ~~derivative~~in ~~instrument~~Dynamic ~~contracts~~Design’s ~~for~~trade ~~which~~name ~~there~~fair ~~are~~value. noAs ~~underlying~~a result, the Company ~~exposures.~~recorded ~~Interest~~an ~~rate~~impairment ~~swaps~~charge ~~are~~in ~~entered~~the ~~into~~amount toof ~~manage~~$300 ~~interest~~within ~~rate~~the ~~risk~~U.S. ~~associated~~segment. ~~with~~The ~~the~~ Company’s ~~variable~~performed the interim impairment test using the relief-~~rate~~from-royalty ~~borrowings.~~method, ~~Foreign~~the ~~currency~~present ~~forward~~value ~~contracts~~of ~~are~~savings resulting ~~entered~~from ~~into~~owning the right to ~~manage~~manufacture or sell products under a trade name without having ~~exchange~~to ~~rate~~pay ~~risk~~a license fee for ~~portions~~its ofuse, ~~the~~utilizing ~~Company’s~~a ~~forecasted~~discount Urate of 16%.S. ~~dollar~~The ~~purchases~~impairment byis ~~the~~included ~~Canada~~in ~~segment.~~impairment ~~Accounting~~charges ~~guidance~~in ~~requires~~the ~~companies~~accompanying tocondensed ~~recognize~~consolidated ~~all~~statement ~~derivative~~of ~~instruments~~operations. asThe ~~either~~fair ~~assets~~value orof ~~liabilities~~the atDynamic ~~fair~~Design ~~value~~trade inname ~~the~~as ~~balance~~of ~~sheet.~~July 3, 2010 is as follows:

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 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.


	July 3, 2010
	(Level 1)		(Level 2)		(Level 3)		Total

Dynamic Design trade name	$	—	$	—	$	2,700	$	2,700

Total liabilities	$	—	$	—	$	2,700	$	2,700

~~Foreign currency forward contracts do not qualify for hedge accounting treatment~~15. ~~Therefore,~~Derivatives 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.

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 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 (loss). 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 7 for further information regarding the notional amounts and duration of the interest rate swaps. See Note 14 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 U.S. GAAP, the change in fair value is recognized as an unrealized gain or loss in earnings in the period of change. As of July 3, 2010, the Company had no outstanding 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 April 3, 2010 and October 3, 2009 is as follows:

April 3, 2010

Asset Derivatives

Liability Derivatives

Qualifies

Balance

Pretax Gain

Balance

Pretax Loss

Description of

for Hedge

Fair

Sheet

Recognized

Fair

Sheet

Recognized

Derivative

Designation

Value

Location

in OCI

Value

Location

in OCI

Foreign currency forward contracts

—

117

)

—

Interest rate swaps

Yes

—

2,921

)

2,921

(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.

October 3, 2009

Asset Derivatives

Liability Derivatives

Qualifies

Balance

Pretax Gain

Balance

Pretax Loss

Description of

for Hedge

Fair

Sheet

Recognized

Fair

Sheet

Recognized

Derivative

Designation

Value

Location

in AOCI

Value

Location

in AOCI

Foreign currency forward contracts

113

)

—

171

)

—

Interest rate swaps

Yes

—

2,725

)

2,725

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

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

The ~~effect~~fair value of derivative instruments onas ~~the condensed consolidated statements~~ of ~~operations~~ ~~for the thirteen week periods ended April~~July 3, 2010 and ~~March~~October 283, 2009 is as follows:

April 3, 2010

July 3, 2010

Location of pretax

Amount of pretax

Asset Derivatives

Liability Derivatives

gain or (loss)

Location of pretax

Amount of

Qualifies

Balance

Pretax Gain

Balance

Pretax Loss

Qualifies

reclassed from

gain or (loss)

pretax gain or

Description of

for Hedge

Fair

Sheet

Recognized

Fair

Sheet

Recognized

Description of

for Hedge

AOCI into

recognized in

(loss) recognized

Derivative

Designation

Value

Location

in OCI

Value

Location

in OCI

Derivative

Designation

earnings

in earnings

Interest rate swaps

Yes

—

1,050

)

1,050

Foreign currency forward contracts

—

Other expense

(307

)

Interest rate swaps

Yes

—

2,159

)

2,159

Interest rate swaps

Yes

Interest expense

(649

)

—

March 28, 2009

Location of pretax

Amount of pretax

gain or (loss)

Location of pretax

Amount of

Qualifies

reclassed from

gain or (loss)

pretax gain or

Description of

for Hedge

AOCI into

recognized in

(loss) recognized

Derivative

Designation

earnings

in earnings

Foreign currency forward contracts

—

Other expense

210

Other

—

SG&A

(38

)

Other

—

Other expense

Interest rate swaps

Yes

Interest expense

(329

)

—


(a)		The interest rate swap is included in Accrued expenses and other current liabilities.

(b)		The interest rate swaps are included in Other liabilities.

The effect of derivative instruments on the condensed consolidated statements of operations for the twenty-six week periods ended April 3, 2010 and March 28, 2009 is as follows:

October 3, 2009

Asset Derivatives

Liability Derivatives

Qualifies

Balance

Pretax Gain

Balance

Pretax Loss

Description of

for Hedge

Fair

Sheet

Recognized

Fair

Sheet

Recognized

Derivative

Designation

Value

Location

in OCI

Value

Location

in OCI

Foreign currency forward contracts

113

)

—

$171

)

$—

Interest rate swaps

Yes

—

2,725

)

2,725

April 3, 2010

Location of pretax

Amount of pretax

gain or (loss)

Location of pretax

Amount of

Qualifies

reclassed from

gain or (loss)

pretax gain or

Description of

for Hedge

AOCI into

recognized in

(loss) recognized

Derivative

Designation

earnings

in earnings

Foreign currency forward contracts

—

Other expense

(503

)

Interest rate swaps

Yes

Interest expense

(1,427

)

—


(a)		The foreign currency forward contracts are included in Prepaid expenses and other current assets.

(b)		The foreign currency forward contracts are included in Accrued expenses and other current liabilities.

(c)		The interest rate swaps are included in Other liabilities.

March 28, 2009

Location of pretax

Amount of pretax

gain or (loss)

Location of pretax

Amount of

Qualifies

reclassed from

gain or (loss)

pretax gain or

Description of

for Hedge

AOCI into

recognized in

(loss) recognized

Derivative

Designation

earnings

in earnings

Foreign currency forward contracts

—

Other expense

1,847

Other

—

SG&A

(48

)

Other

—

Other expense

(57

)

Interest rate swaps

Yes

Interest expense

(220

)

—

The effect of derivative instruments on the condensed consolidated statements of operations for the thirteen week periods ended July 3, 2010 and June 27, 2009 is as follows:

July 3, 2010

Location of pretax

Amount of pretax

gain or (loss)

Location of pretax

Amount of

Qualifies

reclassed from

gain or (loss)

pretax gain or

Description of

for Hedge

AOCI into

recognized in

(loss) recognized

Derivative

Designation

earnings

in earnings

Foreign currency forward contracts

—

$—

Other expense

(58

)

Interest rate swaps

Yes

Interest expense

(601

)

—

June 27, 2009

Location of pretax

Amount of pretax

gain or (loss)

Location of pretax

Amount of

Qualifies

reclassed from

gain or (loss)

pretax gain or

Description of

for Hedge

AOCI into

recognized in

(loss) recognized

Derivative

Designation

earnings

in earnings

Foreign currency forward contracts

—

Other expense

(221

)

Other

—

SG&A

(30

)

Other

—

Other expense

Interest rate swaps

Yes

Interest expense

(583

)

—

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

The ~~Company~~effect ~~expects $2,102~~ of ~~net~~derivative ~~pretax~~instruments ~~losses~~on ~~recognized~~the incondensed ~~accumulated~~consolidated ~~other~~statements ~~comprehensive~~of operations ~~income~~for asthe ofthirty-nine ~~April~~week periods ended July 3, 2010 toand beJune 27, ~~reclassified~~2009 ~~into~~is ~~earnings~~as ~~within the next twelve months.~~follows:

As of April 3, 2010, five foreign currency forward contracts remain outstanding with a total notional amount of $1,896.

July 3, 2010

Location of pretax

Amount of pretax

gain or (loss)

Location of pretax

Amount of

Qualifies

reclassed from

gain or (loss)

pretax gain or

Description of

for Hedge

AOCI into

recognized in

(loss) recognized

Derivative

Designation

earnings

in earnings

Foreign currency forward contracts

—

Other expense

(561

)

Interest rate swaps

Yes

Interest expense

(2,036

)

—

15. Commitments and Contingencies

June 27, 2009

Location of pretax

Amount of pretax

gain or (loss)

Location of pretax

Amount of

Qualifies

reclassed from

gain or (loss)

pretax gain or

Description of

for Hedge

AOCI into

recognized in

(loss) recognized

Derivative

Designation

earnings

in earnings

Foreign currency forward contracts

—

Other expense

1,626

Other

—

SG&A

(78

)

Other

—

Other expense

(12

)

Interest rate swaps

Yes

Interest expense

(692

)

—

The Company expects $2,145 of net pretax losses recognized in accumulated other comprehensive loss as of July 3, 2010 to be reclassified into earnings within the next twelve months.

16. 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 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~~define ~~with~~ remediation ~~efforts~~requirements. ~~The~~Due ~~Company believes remediation will be completed by December 2010. During the quarterly period ended October 3, 2009, the Company recorded a charge~~ to ~~cost~~changes ~~of goods sold for approximately $2,567 associated with the removal of the fuel oil tank and soil contamination. The change~~ in ~~the~~administrative ~~environmental liability for the Frankfort, NY site is as follows:~~

Balance as of October 3, 2009	$	2,541
Adjustments to estimates		—
Payments		1,202
Balance as of April 3, 2010	$	1,339

In April 2010, the Company was served with a complaint filed in the United States District Court for the Eastern District of Texas by Patent Group, LLC (“Patent Group”) for falsely marketing certain of products under 35 U.S.C. § 292. Patent Group claims the Company has marketed and sold certain leaf rakes marked with patent references that have expired with the intent to deceive the public and to gain a competitive advantage in the market. Patent Group is seeking monetary damages and injunctive relief. While the Company believes there are meritorious defenses to this claim, the Company is in the initial stages of investigating the matter and, accordingly, can make no prediction as to the outcome of this case.

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

proceedings the date the Company believes remediation will be completed has changed to December 2011 from December 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		1,914

Balance as of July 3, 2010	$	627

In April 2010, the Company was served with a complaint filed in the United States District Court for the Eastern District of Texas by Patent Group, LLC (“Patent Group”) for falsely marketing certain of products under 35 U.S.C. § 292. Patent Group claims the Company has marketed and sold certain leaf rakes marked with patent references that have expired with the intent to deceive the public and to gain a competitive advantage in the market. Patent Group is seeking monetary damages and injunctive relief. The Company settled this claim for $60 in June 2010.

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.

1617. 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.

1718. ~~Subsequent~~Contract ~~Events~~Termination Costs

~~The~~During the fourteen week period ended October 3, 2009, the Company ~~has~~ceased ~~evaluated~~using ~~subsequent~~the Louisville, ~~events~~Kentucky distribution center and ~~has~~recorded ~~determined~~contract ~~there~~termination costs of $1,236 associated with the building lease. Termination costs are noincluded ~~subsequent~~in ~~events~~selling, general and ~~that~~administrative ~~require~~expenses ~~recognition~~in orthe ~~disclosure~~accompanying condensed consolidated statement of operations within the U.S. segment. During the thirteen week period ended July 3, 2010, the Company adjusted the contract termination accrual due to changes in the fair value of estimated sublease rentals. The change in the contract termination accrual is as follows:


Balance as of October 3, 2009	$	1,236
Costs paid		(782	)
Exit liability expense		454
Accretion expense		43
Fair value adjustment		902

Balance as of July 3, 2010	$	1,853

19. Subsequent Events

The Company has evaluated subsequent events and has determined that except as set forth below, there are no subsequent events that require disclosure.

On June 29, 2010, Ames True Temper Australia Pty Ltd (“ATT Australia”), a wholly-owned subsidiary of ATT, entered into a Call and Put Option to Purchase Business (the “Option Agreement”) with Westmix and Michelangelo Cantone and Jewell Cantone (collectively, the “Cantones”) relating to the

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

purchase of certain assets (the “Assets”) of Westmix, an Australia-based manufacturer. The Assets consist principally of trade receivables, inventory, trade names and leases. Pursuant to the Option Agreement, ATT Australia received a call option to purchase from Westmix (the “Call Option”), and Westmix received a put option to sell to ATT Australia, the Assets for $14.05 million Australian dollars (approximately $12.7 million) (the “Purchase Price”) in cash, subject to upward or downward working capital adjustments of up to $175,000 Australian dollars (approximately $159,000).

On July 5, 2010, ATT Australia exercised the Call Option and ATT Australia, Westmix and the Cantones entered into a Business Sale Agreement (the “Sale Agreement”) pursuant to which ATT Australia agreed to acquire the Assets and assume certain trade payables and customer rebates. Simultaneously with the execution of the Sale Agreement, ATT Australia made an escrow payment of 10% of the purchase price, or $1.405 million Australian dollars (approximately $1.2 million). The escrow payment will be refunded to ATT Australia in the event the sale of the Assets is not consummated; provided that if the failure to consummate the sale of the Assets is due to a material default by ATT Australia of its obligations under the Sale Agreement, the escrow payment will be forfeited to Westmix.

The consummation of the sale of the Assets is subject to customary closing conditions, including the receipt of all requisite third party consents, the acceptance of employment offers with ATT Australia by certain Westmix employees, the absence of the loss of any key customer or key supplier and the absence of any material adverse effect. The expected closing date is August 2010.

On July 19, 2010, CHATT Holdings LLC, a Delaware limited liability company (the “Seller”), CHATT Holdings Inc., a Delaware corporation and wholly owned subsidiary of the Seller (the “Parent”), Griffon Corporation, a Delaware corporation (“Griffon”), and Clopay Acquisition Corp., a Delaware corporation and an indirect wholly owned subsidiary of Griffon (the “Buyer”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) pursuant to which the Seller agreed to sell 100% of the issued and outstanding shares of common stock of the Parent, par value $0.01 per share, to the Buyer for a purchase price of $542 million (subject to certain adjustments) (the “Purchase Price”).

Consummation of the transactions contemplated by the Purchase Agreement (the “Transaction”) is subject to customary conditions, including (i) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) the absence of certain governmental restraints and (iii) the absence of a material adverse effect on the business of the Parent and its subsidiaries.

The Buyer has obtained equity and debt financing commitments for the Transaction, the aggregate proceeds of which will be sufficient to pay the Purchase Price and all related fees and expenses. Griffon has committed to purchase equity interests in the Buyer on the terms and subject to the conditions set forth in an equity commitment letter, dated July 19, 2010, between Griffon and the Buyer (the “Equity Commitment Letter”). Griffon has provided a limited guarantee in favor of the Seller, dated July 19, 2010 (the “Limited Guarantee”), guaranteeing the performance of certain obligations of the Buyer under the Purchase Agreement subject to the terms and conditions of the Limited Guarantee.

Goldman Sachs Lending Partners LLC has committed to provide up to $650 million in senior secured credit facilities (comprised of a term loan facility of up to $500 million and a revolving credit facility of up to $150 million), on the terms and subject to the conditions set forth in a commitment letter dated July 19, 2010 (the “Debt Commitment Letter” and, together with the Equity Commitment Letter, the “Financing Commitments”).

The Purchase Agreement contains certain termination rights for the Seller and the Buyer. Upon termination of the Purchase Agreement under specified circumstances by the Seller, the Buyer will be required to pay the Seller a termination fee equal to $20 million. The Seller and the Parent have the right to specifically enforce the terms and provisions of the Purchase Agreement in specified circumstances and subject to certain limitations. If the Financing Commitments are available to be drawn down by the Buyer and a court does not grant specific performance to the Seller or the Parent, then, under certain

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

circumstances, the Seller or the Parent may institute proceedings for monetary damages, and in the event that the Seller or the Parent establishes in such proceeding that the Buyer has committed a willful breach of the Purchase Agreement, the parties have agreed that the Buyer will be required to pay the Seller or the Parent damages of not less than $20 million and up to $40 million. No adjustments to the accompanying condensed consolidated financial statements were recorded as a result of the Purchase Agreement. The closing date is expected to be on or before September 30, 2010.

On August 3, 2010, Buyer commenced cash tender offers for any and all Senior Floating Rate Notes and Senior Subordinated Notes of the Company.

On July 19, 2010, the Company paid off the remaining balance on the Term Note.

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; • 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 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~~

2729

• we may ~~not~~ be ~~able~~required to ~~acquire~~record ~~complementary~~impairment ~~lawn~~charges ~~and~~for ~~garden product manufacturers or brands; in addition~~goodwill, ~~our~~indefinite-lived ~~acquisition~~intangible ~~strategy~~assets ~~may negatively impact our operating results, divert management’s attention from operating our core business,~~ and ~~expose us to~~ other ~~risks~~long-lived assets.

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.

On July 5, 2010, the Company entered into a material definitive agreement to purchase certain assets (“the Assets”) from Australian based manufacturer, Westbarrows Mix Pty Ltd. (“Westmix”). The Assets consist principally of trade receivables, inventory, trade names and leases. The agreement to purchase the Assets of Westmix was entered into during the thirteen week period ending October 2, 2010 (Q4 2010) and is not reflected in the accompanying condensed consolidated financial statements or MD&A disclosures. See Note 19 in the accompanying condensed consolidated financial statements for further information.

On July 19, 2010, CHATT Holdings LLC, a Delaware limited liability company (the “Seller”), CHATT Holdings Inc., a Delaware corporation and wholly owned subsidiary of the Seller (the “Parent”), Griffon Corporation, a Delaware corporation (“Griffon”), and Clopay Acquisition Corp., a Delaware corporation and an indirect wholly owned subsidiary of Griffon (the “Buyer”), entered into a stock purchase agreement pursuant to which the Seller agreed to sell 100% of the issued and outstanding shares of common stock of the Parent, par value $0.01 per share, to the Buyer for a purchase price of $542 million (subject to certain adjustments). ATT is an indirect wholly owned subsidiary of each of the Seller and the Parent. The stock purchase agreement was entered into during Q4 2010 and is not reflected in the accompanying condensed consolidated financial statements or MD&A disclosures. See Note 19 in the accompanying condensed consolidated financial statements for further information.

On August 3, 2010, Buyer commenced cash tender offers for any and all Senior Floating Rate Notes and Senior Subordinated Notes of the Company.

Operations Review

Company-Wide

The table below and the following narrative compares our statements of operations for the thirteen week period ended ~~April~~July 3, 2010 (“Q2Q3 2010”) to the thirteen week period ended ~~March~~June 2827, ~~2009~~ 2009 (“Q2Q3 2009”).

(Dollars in Millions)

	Q2			Q2			Increase/(Decrease)
	Q3			Q3			Increase/(Decrease)
	2010			2009			$			%
Net sales	$	~~139~~123.4		$	~~142~~130.30		$	(26.96	)		(25.01	)%
Cost of goods sold		9780.68			~~107~~96.54			(915.96	)		(916.2	)
Gross profit		4142.85			3433.87			78.08			2026.1
Gross profit as a percentage of net sales		30.0	%		24.5	%
Gross profit percentage		34.4	%		25.9	%
Selling, general, and administrative expenses		23.8			22.5			1.3			5.8
Selling, general and administrative expenses		24.8			21.8			3.0			13.8
(Gain) loss on disposal of fixed assets		(0.1	)		0.3			(0.4	)			*
Loss on disposal of fixed assets		0.1			0.6			(0.5	)		(83.3	)
Amortization of intangible assets		0.3			0.3			—			—
Operating income		17.8			11.7			6.1			52.1
Impairment charges		0.3			0.5			(0.2	)		(40.0	)
Operating income as a percentage of net sales		12.8	%		8.2	%
Operating income		17.0			10.5			6.5			61.9
Interest expense		6.7			7.4			(0.7	)		(9.5	)
Operating income percentage		13.8	%		8.1	%
Other expense		0.7			1.1			(0.4	)		(36.4	)
Interest expense		6.6			7.1			(0.5	)		(7.0	)
Income before taxes		10.5			3.3			7.2				*
Other income		(0.8	)		(6.8	)		6.0			(88.2	)
Income tax expense		2.4			1.1			1.3				*
Income before income taxes		11.2			10.2			1.0			9.8
Net income	$	8.0		$	2.2		$	5.8				*
Income tax expense		2.9			0.9			2.0				*
Net income	$	8.3		$	9.2		$	(0.9	)		(9.8	)%

* Greater than 100%. ~~Note: Totals may not sum due to rounding.~~

Q2Note: ~~2010~~Totals ~~compared~~may tonot Q2sum ~~2009~~due to rounding.

~~Net~~Q3 ~~Sales.~~2010 ~~Overall~~compared ~~net sales decreased primarily due~~ to ~~selling~~Q3 price reductions of approximately $5.4 million and a decrease in snow tool sales of $3.6 million. Decreases were partially offset by favorable Canadian currency translation of $3.4 million and an increase in volume in other categories totaling $2.2 million. Snow tool declines resulted primarily from reduced demand in the Canada segment due to lower snowfall amounts in the 2009~~/2010 winter season.~~

~~Gross~~Net ~~Profit~~Sales. ~~Gross~~Overall ~~profit~~net ~~increased~~sales decreased primarily due to ~~favorable~~selling ~~overheard~~price ~~absorption~~reductions of approximately $34.8 9 million and ~~lower~~a ~~input~~decrease ~~costs~~in ~~including~~volume ~~steel~~of ~~and~~approximately ~~certain~~$4.7 million. ~~purchased~~Decreases ~~finished~~were partially ~~goods~~offset by favorable Canadian currency translation of $2.5 million and ~~components~~lower incentive for growth program allowances of $1.4 million.

~~Selling,~~Gross ~~General, and Administrative Expense (“SG&A”)~~Profit. ~~SG&A~~Gross profit increased primarily due to ~~higher~~favorable overhead absorption of $2.3 ~~employee~~million, lower incentive ~~compensation~~for ~~costs~~growth program allowances of $1.4 million and lower labor and material usage costs of $01.83 million.

Selling, General and Administrative (~~Gain~~“SG&A”) ~~Loss~~Expenses. onSG&A ~~Disposal~~increased primarily due to expenses associated with the acquisition of ~~Fixed~~Westmix ~~Assets~~and the pending sale of ATT of $1.3 million, higher ~~Gain~~employee orincentive ~~loss~~compensation oncosts ~~disposal~~of $1.0 million and an increase in contract termination costs of ~~fixed~~$0.9 million ~~assets~~due ~~includes~~to changes in the fair value of estimated sublease rentals ~~miscellaneous~~associated ~~sales~~with the closure of ~~equipment~~a distribution facility in fiscal 2009.

~~Amortization of Intangible Assets. Amortization expense is consistent with the prior period.~~31

Interest Expense. The average Revolving Loan balance in Q2 2010 was lower than in Q2 2009 which led to lower interest expense. Also, three interest rate swaps related to our Senior Floating Rate Notes (notional amount of $150 million) expired during the beginning of Q2 2010. The interest rate swap beginning in Q2 2010 reduced the effective interest on the Senior Floating Rate Notes to 5.97% and contributed to the decrease in interest expense in Q2 2010.

Other Expense. Other expense for Q2 2010 primarily includes an unrealized loss of $0.7 million related to a U.S. dollar bank account held by a Canadian subsidiary and an unrealized gain of $0.2 million related to foreign currency forward contracts. Other expense for Q2 2009 primarily includes unrealized losses of $1.4 million on the intercompany note and $0.6 related to foreign currency forward contracts and

an Loss ~~unrealized~~on ~~gain~~Disposal of ~~$0.1~~Fixed ~~related to the U~~Assets.S. ~~dollar~~Loss ~~bank~~on ~~account. Q2~~disposal ~~2009~~of ~~other~~fixed ~~expense~~assets ~~also~~ includes amiscellaneous disposals ~~realized gain~~ of ~~$0.8 million~~machinery ~~related~~and ~~to foreign currency forward contracts~~equipment.

~~Income~~Amortization ~~Tax~~of ~~Expense.~~Intangible ~~Income tax expense for Q2 2010 was primarily due to income tax expense for foreign subsidiaries, Canadian withholding taxes and U~~Assets.S. ~~income~~Amortization ~~tax related to foreign unremitted earnings. Due to an increase in operating income, additional accruals for foreign unremitted earnings were required for Q2 2010. Income tax~~ expense ~~for~~is Q2consistent ~~2009~~with ~~was primarily due to~~ the ~~recording~~prior ~~of additional valuation allowances and Canadian withholding taxes and interest on unrecognized tax benefits~~period. ~~As of April 3, 2010 and March 28, 2009, 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 the Company can sustain a sufficient level of profits in the applicable jurisdictions that will demonstrate the ability to realize these net deferred tax assets.

Impairment Charges. During Q3 2010, the Company reduced its forecast for Dynamic Design branded sales due to a shift in branding strategies by certain customers whereby the mix of sales was less heavily weighted with Dynamic Design branded product. The reduction in forecasted branded sales led to a reduction in Dynamic Design’s trade name fair value. As a result, the Company recorded an impairment charge in the amount of $0.3 million within the U.S. segment. The impairment charges of $0.5 million in Q3 2009 relate to the impairment of a manufacturing facility and equipment in our Other segment mainly due to the discontinuance of manufacturing certain products.

Interest Expense. Interest expense decreased due to lower average borrowings under our Amended and Restated Senior Secured Credit Facility (“Revolving Loan”) and a lower effective interest rate on our Senior Floating Rate Notes of 5.9% in Q3 2010 as compared to 6.4% in Q3 2009.

Other Income. Other income for Q3 2010 primarily includes an unrealized gain of $0.6 million related to a U.S. dollar bank account held by a Canadian subsidiary and an unrealized loss of $0.2 million related to an intercompany note with a subsidiary in our Other segment. Other income for Q3 2010 also includes a realized gain of $0.7 related to a U.S. dollar denominated intercompany note held by a Canadian subsidiary that is not long-term in nature and a realized loss of $0.2 related to U.S. dollar denominated trade receivables and payables held by a Canadian subsidiary. Other income for Q3 2009 primarily includes an unrealized gain of $7.5 million related to the Canadian intercompany note and unrealized losses of $0.6 million related to a U.S. dollar bank account held by a Canadian subsidiary and $0.5 million related to foreign currency forward contracts. Other income for Q3 2009 also includes a realized gain related to foreign currency forward contracts of $0.3 million.

Income Tax Expense. Income tax expense for Q3 2010 was primarily comprised of income tax expense for foreign subsidiaries and withholding tax and US income tax related to foreign unremitted earnings. Income tax expense for Q3 2009 was primarily comprised of additional valuation allowances related to intangible assets and US income tax related to foreign unremitted earnings. As of Q3 2010 and Q3 2009, a deferred tax asset valuation allowance was necessary for substantially all of our U.S. 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 Q2Q3 2009 segment information as a result of this reorganization. The following table presents our net sales and operating income after intercompany eliminations by segment:

(Dollars in Millions)

	Q2			Q2			Increase/(Decrease)
	Q3			Q3			Increase/(Decrease)
	2010			2009			$			%
Net sales:
United States	$	~~116~~102.86		$	~~117~~109.17		$	(07.31	)		(06.35	)%
Canada		2019.95			2419.01			(30.14	)		~~(12~~2.91	)
Other		1.63			1.2			0.41			338.3
Net sales	$	~~139~~123.4		$	~~142~~130.30		$	(26.96	)		(25.01	)%
Operating income (loss):
United States	$	1413.27		$	811.90		$	52.37			5924.65	%
Canada		3.85			30.46			02.49			~~11.8~~*
Other		(0.12	)		(01.62	)		01.50			83.3
Operating income	$	17.80		$	1110.75		$	6.15			5261.19	%


*		Greater than 100%.

Note: Totals may not sum due to rounding.

Q2Q3 2010 compared to Q2Q3 2009

United States

Net Sales. Overall net sales decreased ~~mainly~~primarily due to selling price reductions of ~~approximately~~ approximately $43.79 million ~~partially~~and ~~offset by an increase in~~ volume declines of ~~$4.4 million,~~approximately ~~including~~ $13.87 million ~~related to snow tool sales~~. ~~Snow tool sales increased due to the transition of a customer to the~~ ~~U.S. segment from the Canada segment in the period ended January 2, 2010 (Q1 2010).~~

Operating income. Operating income increased primarily due to favorable ~~overheard~~overhead absorption of $42.10 million ~~and lower input costs including steel and certain purchased finished goods and components~~.

Canada

Net Sales. Net sales ~~decreased~~increased primarily due to ~~volume~~favorable ~~declines~~currency translation of $6.2 .5 million partially offset by ~~favorable~~volume ~~currency translation of $3.4 million. Volume~~ declines of approximately $1.82 million ~~were~~and ~~due~~selling price toreductions ~~the transition~~ of aapproximately ~~customer from the Canada segment to the U~~$0.S9 million. ~~segment in Q1 2010 as discussed~~ ~~above and lower snowfall~~

30 Operating income. Operating income increased due to lower material costs and favorable exchange rates on U.S. dollar material and inventory purchases.

amounts in the 2009/2010 winter season as compared to the record snowfall amounts in the 2008/2009 winter season.

Operating income. Operating income increased due to lower raw material costs and favorable currency translation.

Other

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

Company-Wide

The table below and the following narrative compares our statements of operations for the ~~twenty~~thirty-~~six~~nine week period ended ~~April~~July 3, 2010 (“YTD 2010”) to the ~~twenty~~thirty-~~six~~nine week period ended ~~March~~June 2827, 2009 (“YTD 2009”).

(Dollars in Millions)

	YTD			YTD			Increase/(Decrease)
	2010			2009			$			%
Net sales	$	~~225~~349.81		$	~~234~~364.67		$	(815.86	)		(34.83	)%
Cost of goods sold		~~156~~237.86			~~171~~268.93			(1530.17	)		(811.84	)
Gross profit		69111.05			6296.74			615.31			1015.07
Gross profit as a percentage of net sales		30.6	%		26.7	%
Gross profit percentage		31.9	%		26.4	%
Selling, general, and administrative expenses		39.7			40.3			(0.6	)		(1.5	)
Selling, general and administrative expenses		64.5			62.1			2.4			3.9
(Gain) loss on disposal of fixed assets		(0.2	)		0.3			(0.5	)			*
Loss on disposal of fixed assets		—			0.9			(0.9	)		(100.0	)
Amortization of intangible assets		0.69			0.69			—			—
Impairment charge		—			0.5			(0.5	)		(100.0	)
Impairment charges		0.3			0.9			(0.6	)		(66.7	)
Operating income		2845.89			2131.05			714.84			3745.17
Operating income as a percentage of net sales		12.8	%		9.0	%
Operating income percentage		13.1	%		8.6	%
Interest expense		1320.51			1522.34			(12.83	)		(1110.83	)
Other expense		1.91			125.46			(104.5	)		(8480.74	)
Income (loss) before taxes		13.5			(6.8	)		20.3				*
Income before income taxes		24.7			3.4			21.3				*
Income tax expense		47.10			12.32			24.8				*
Net income (loss)	$	9.4		$	(8.1	)	$	17.5				*
Net income	$	17.7		$	1.2		$	16.5				*

* Greater than 100%. ~~Note: Totals may not sum due to rounding.~~

Note: Totals may not sum due to rounding.

YTD 2010 compared to YTD 2009

Net Sales. Overall net sales decreased primarily due to volume declines of approximately $813.62 million and selling price reductions of approximately $611.31 million, partially offset by favorable Canadian currency translation of $58.62 million. ~~Snow~~and ~~tool~~lower ~~declines~~incentive ~~resulted~~for ~~primarily~~growth ~~from reduced demand in~~program ~~the~~allowances ~~Canada~~of ~~segment due to lower snowfall amounts in the 2009/2010 winter season~~$2.3 million.

Gross Profit. Gross profit increased primarily due to favorable overhead absorption of $24.69 million, lower labor and ~~lower~~material ~~input~~usage costs ~~including~~of ~~steel~~$2.3 million and ~~certain~~lower ~~purchased~~incentive ~~finished~~for ~~goods~~growth program ~~and~~allowances ~~components~~of $2.3 million, partially offset by volume declines.

31 SG&A. SG&A increased primarily due to higher employee incentive compensation costs of $1.8 million, expenses associated with the acquisition of Westmix and the pending sale of ATT of $1.3 million and an increase in contract termination costs of $0.9 million due to changes in the fair value of estimated sublease rentals associated with the closure of a distribution facility in fiscal 2009. Increases were partially offset by lower distribution expenses of $0.8 million attributed to a facility closure in fiscal 2009 and $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.

~~Table~~ Loss on Disposal of ~~Contents~~Fixed Assets. Loss on disposal of fixed assets in YTD 2009 includes miscellaneous disposals of machinery and equipment.

Selling, General and Administrative (‘‘SG&A’’) Expenses. 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.” Decreases were partially offset by higher employee incentive compensation costs of $0.9 million. 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.

(Gain) Loss on Disposal of Fixed Assets. Gain or loss on disposal of fixed assets includes miscellaneous sales of equipment.

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

Impairment ~~Charge~~Charges. The impairment ~~charges~~charge ofin ~~$0.5 million~~YTD ~~represent~~2010 awas ~~write-down~~the result of anthe Company reducing ~~available~~its forecast for ~~sale~~Dynamic ~~asset~~Design tobranded ~~fair~~sales ~~value~~ due to ~~real~~a ~~estate~~shift ~~market~~in ~~conditions.~~branding ~~During~~strategies ~~the~~by ~~thirteen~~certain ~~week~~customers ~~period~~whereby ~~ended~~the ~~June 27,~~mix ~~2009~~of ~~the~~sales ~~asset~~was noless ~~longer~~heavily ~~met~~weighted ~~the~~with ~~available~~Dynamic ~~for~~Design ~~sale~~branded ~~criteria~~product. The ~~and~~reduction ~~was reclassified~~in asforecasted ~~held~~branded ~~for~~sales ~~use~~led to a reduction in Dynamic Design’s trade name fair value. As a result, the

~~Interest Expense. The average Revolving Loan balance in YTD 2010 was lower than YTD 2009~~34 which led to lower interest expense. Also, three interest rate swaps related to our Senior Floating Rate Notes (notional amount of $150 million) expired during the beginning of Q2 2010. The interest rate swap beginning in Q2 2010 reduced the effective interest on the Senior Floating Rate Notes to 6.17% and contributed to the decrease in interest expense in YTD 2010.

OtherTable Expense. Other expense for YTD 2010 primarily includes an unrealized loss of $1.5 million related to the U.S. dollar bank account held by a Canadian subsidiary. Other expense for YTD 2010 also includes a realized loss of $0.5 million related to foreign currency forward contracts. Other expense for YTD 2009 includes $16.3 million of unrealized loss on the intercompany note. Losses were partially offset by unrealized gains of $2.1 million related to the U.S. dollar bank account and $0.6 million related to foreign currency forward contracts. YTD 2009 also includes an unrealized gain of $1.3 million related to foreign currency forward contracts. Contents

~~Income~~Company ~~Tax~~recorded ~~Expense.~~an ~~Income~~impairment ~~tax~~charge ~~expense~~in ~~for~~the ~~YTD~~amount ~~2010 was mainly comprised~~ of ~~income~~$0.3 million ~~tax~~within ~~expense for~~the ~~foreign subsidiaries, Canadian withholding taxes and~~ U.S. ~~income tax related to foreign~~segment. ~~unremitted~~Impairment ~~earnings.~~charges ~~Income~~in ~~tax expense for~~ YTD 2009 ~~was~~include mainly comprised of additional valuation allowances and accrual of interest on unrecognized tax benefits partially offset by a reduction in current tax liabilities as a result of change in Canadian withholding tax rates$0. ~~As of April~~5 ~~3, 2010~~million ~~and~~related ~~March 28,~~to ~~2009,~~an ~~a deferred tax~~ asset ~~valuation~~previously ~~allowance~~held ~~was necessary~~ for ~~substantially~~sale ~~all~~and ~~of our U~~$0.S.5 million ~~domestic~~related ~~deferred~~to ~~tax~~the ~~assets,~~impairment ~~net~~ of ~~certain deferred tax liabilities. The Company expects to maintain~~ a ~~valuation~~manufacturing ~~allowance~~facility onand ~~these~~equipment ~~deferred~~in ~~tax~~our ~~assets until it can sustain a~~Other ~~sufficient~~segment ~~level~~mainly ofdue ~~profits~~to in the ~~applicable~~discontinuance ~~jurisdictions~~of ~~that~~manufacturing ~~will~~certain ~~demonstrate the ability to realize these net deferred tax assets~~products.

Interest Expense. Interest expense decreased due to lower average borrowings under our Revolving Loan and a lower effective interest rate on our Senior Floating Rate Notes of 6.1% in YTD 2010 as compared to 7.1% in YTD 2009.

Other Expense. Other expense for YTD 2010 primarily includes unrealized losses of $0.9 related to a U.S. dollar bank account held by a Canadian subsidiary and $0.4 related to an intercompany note with a subsidiary in our Other segment. Other expense for YTD 2010 also includes a realized gain of $0.7 related to a U.S. dollar denominated intercompany note held by a Canadian subsidiary that is not long-term in nature and a realized loss of $0.6 related to foreign currency forward contracts. Other expense for YTD 2009 primarily includes an unrealized loss of $8.8 million related to the Canadian intercompany note and an unrealized gain of $1.5 million related to a U.S. dollar bank account held by a Canadian subsidiary. Other expense for YTD 2009 also includes a realized gain related to foreign currency forward contracts of $1.5 million.

Income Tax Expense. Income tax expense for YTD 2010 was primarily comprised of income tax expense for foreign subsidiaries and withholding tax and US income tax related to foreign unremitted earnings. Income tax expense for YTD 2009 was primarily comprised of additional valuation allowances related to intangible assets, and US income tax related to foreign unremitted earnings. For YTD 2010 and YTD 2009 a deferred tax asset valuation was necessary for substantially all of our U.S. 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

As a result of the internal reorganization described above, we have recast our YTD 2009 segment information. The following table presents our net sales and operating income after intercompany eliminations by segment for YTD 2010 and YTD 2009:

(Dollars in Millions)

	YTD			YTD			Increase/(Decrease)
	2010			2009			$			%
Net sales:
United States	$	~~181~~284.84		$	~~183~~293.63		$	(1.8.9	)		(13.0	)%
Canada		4161.50			4867.45			(6.95	)		(149.36	)
Other		23.58			23.79			(0.21	)		(72.46	)
Net sales	$	~~225~~349.81		$	~~234~~364.67		$	(815.86	)		(34.83	)%
Operating income (loss):
United States	$	2034.52		$	1223.4		$	810.18			6546.32	%
Canada		812.95			910.30			(02.45	)		(425.30	)
Other		(0.68	)		(01.79	)		01.1			1457.39
Operating income	$	2845.89		$	2131.05		$	714.84			3745.17	%

* Greater than 100%. ~~Note: Totals may not sum due to rounding.~~

~~YTD~~Note: ~~2010~~Totals ~~compared~~may tonot ~~YTD~~sum ~~2009~~due to rounding.

United States

Net Sales. Overall net sales decreased primarily due to selling price reductions of approximately $59.76 million and volume declines of approximately $36.06 million (excluding snow tool sales). Volume declines were partially offset by an increase in snow tool volume of $6.87 million of which $4.3 5 million was due to the transition of a customer to the U.S. segment from the Canada segment in Q1 2010. Also during Q1 2010, the U.S. experienced heavy snowfall in certain densely populated areas which attributed to the increase in ~~volume in~~ snow tools.

Operating income. Operating income increased due to favorable overhead absorption of $35.67 million, lower depreciation expense of $12.40 million, lower distribution expenses of $0.58 million related to a facility closure in fiscal 2009 and an increase of $0.3 million in Byrd Amendment recoveries as discussed above. ~~Operating income for YTD 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 approximately $1213.3 million and selling price reductions of approximately $1.4 million, partially offset by favorable Canadian currency translation of $58.62 million. Volume declines of $4.35 million were due to the transition of a customer from the Canada segment to the U.S. segment in Q1 2010 as discussed above.

Operating income. Operating income ~~decreased~~increased due to lower ~~sales~~material ~~volume~~costs ~~related~~and tofavorable exchange ~~snow~~rates ~~tools~~on U.S. dollar material and inventory purchases.

Other

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

Operating loss. Operating loss decreased due to severance costs of $0.8 million and long-lived asset impairments of $0.5 million recorded in YTD 2009.

Liquidity and Capital Resources

Our principal liquidity requirements are to service our debt and meet our working capital and capital expenditure needs. WeIn ~~expect~~accordance towith bethe ~~able~~purchase toagreement ~~meet~~between ~~our~~Buyer ~~liquidity~~and ~~requirements~~certain ~~for~~parent atcompanies ~~least~~of ~~the~~ATT as ~~next~~discussed ~~twelve~~in ~~months~~Note ~~through~~19 ~~cash~~in ~~provided~~the byaccompanying ~~operations~~condensed ~~and~~consolidated ~~borrowings~~financial ~~available~~statements, ~~under~~Buyer ~~our~~has ~~Revolving Loan. We~~ commenced atender ~~process~~offers tofor ~~extend~~ the ~~maturity~~entire principal amount of ~~our~~both ~~Revolving~~the ~~Loan~~Senior orSubordinated toNotes ~~refinance~~and ~~borrowings~~Senior ~~prior~~Floating toRate ~~maturity~~Notes. inBuyer ~~April 2011.~~has Inalso ~~addition,~~commenced weconcurrent ~~will~~consent ~~need~~solicitations for proposed amendments to ~~refinance~~the ~~our~~indentures under which the Senior Subordinated Notes and Senior Floating Rate Notes onwere orissued. ~~before~~Also, ~~maturity~~the inRevolving ~~2012.~~Loan Weis ~~cannot~~expected ~~assure~~to be paid off and terminated at ~~you~~closing. ~~that~~The weexpected funding related to the Purchase Agreement will beprovide ~~able~~new financing up to $650 million ~~extend~~in orsenior ~~refinance~~secured ~~any~~credit facilities (comprised of ~~our~~a ~~indebtedness~~term onloan ~~commercially~~facility ~~reasonable~~of up to $500 ~~terms~~million orand ata ~~all~~revolving credit facility of up to $150 million).

33 During Q4 2010, we plan to use between $12 to $15 million in cash to complete the Westmix acquisition and provide initial working capital. The financing will be provided through our Revolving Loan.

(Dollars in Millions)

	YTD			YTD			Increase/(Decrease)
	2010			2009			$			%
Net cash used in operating activities	$	(24.3	)	$	(36.1	)	$	(11.8	)		(32.7	)%
Net cash provided by operating activities	$	19.8		$	22.6		$	(2.8	)		(12.4	)%
Net cash used in investing activities		(25.39	)		(35.90	)		(10.69	)		~~(41~~18.0	)
Net cash provided by financing activities		10.7			41.8			(31.1	)		(74.4	)
Net cash used in financing activities		(18.0	)		(8.4	)		9.6				*


*		Greater than 100%.

Cash Flows from Operating Activities

The decrease in cash ~~used~~provided inby ~~operations~~operating activities was primarily the result of aan ~~larger change~~ increase in trade ~~payables~~ inreceivables ~~YTD 2010~~ due to ~~reduced~~discontinuing ~~inventory~~a ~~levels~~cash ~~and~~discount ~~corresponding~~program ~~payables~~with ata ~~the~~significant ~~end~~customer ofand ~~fiscal~~an ~~2009,~~increase ~~partially~~in inventory mostly offset by ~~increased~~higher trade ~~receivables due to discontinuing a cash discount program with a significant customer~~payables.

Cash Flows from Investing Activities

Purchases of property, plant and equipment are generally the main investing ~~activity~~activities of the Company. We do not anticipate purchases of property, plant and equipment during fiscal 2010 to deviate significantly from historical purchase levels. The increase in cash used in investing activities is also due to the escrow payment made as part of the agreement to purchase certain assets from Westmix.

Cash Flows from Financing Activities

The ~~decrease~~increase in cash ~~provided~~used byin financing activities was primarily related to ~~lower~~an ~~net~~increase in ~~borrowings~~repayments ~~under~~on ~~our~~a lower Revolving Loan balance in YTD 2010 when compared to the same period in YTD 2009.

Debt and Other Obligations

Total indebtedness is as follows:

	April 3,			October 3,
	July 3,			October 3,
	2010			2009
Revolving Loan	$	~~28,500~~—		$	17,500
Senior Floating Rate Notes, net of unamortized discount of $187 and $241, respectively		149,813			149,759
Senior Floating Rate Notes, net of unamortized discount of $161 and $241, respectively		149,839			149,759
Senior Subordinated Notes		150,000			150,000
Term Note		~~196~~53			479
Capital lease obligations		~~145~~142			42
Total debt		~~328~~300,~~654~~034			317,780
Less:
Short-term Revolving Loan		~~(28,500~~—	)		(17,500	)
Current portion of capital lease obligations		(56	)		(10	)
Current portion of capital lease obligation		(50	)		(10	)
Current portion of long-term debt		(~~196~~53	)		(479	)
Long-term debt	$	299,~~902~~931		$	299,791

Letters of

~~(b)~~

Borrowing

Credit

(a)

Interest

Maximum

Base as of

Outstanding as

Availability

Rate as of

Borrowing

~~April~~of July 3,

as of ~~April~~July 3,

~~April~~July 3,

Expiration

~~Expiration~~

Amount

3, 2010

Date

~~Date~~

Revolving Loan

130,000

~~116~~90,~~816~~248

3,268

8586,~~048~~980

(b)

~~2.0~~

%Apr 7, 2011

~~Apr 7, 2011~~

(d)

(e)

Original

(c)

Interest

Maturity

Call Option

Principal

Interest Rate

Payments

Date

Senior Floating Rate Notes

150,000

LIBOR + 4

Jan 15, Apr 15,
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. As of July 3, 2010, there were no amounts outstanding under the Revolving Loan.

(c)		LIBOR represents the three month London Interbank Offered Rate which resets quarterly. LIBOR was .3% as of April 13, 2010. April 13, 2010 is the reset date for the July 15, 2010 interest payment.

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

(d)

(e)

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

Original

(c)

Interest

Maturity

Call Option

(f)

As of July 3, 2010, the Company was in compliance with all financial covenants under its indebtedness agreements.

Principal

Interest Rate

Payments

Date

Senior Floating Rate Notes

150,000

LIBOR + 4%

Jan 15, Apr 15, Jul 15, Oct 15

Jan 15, 2012

Jan 15, 2007

Senior Subordinated Notes

150,000

10%

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 .25% as of January 13, 2010. January 13, 2010 is the reset date for the April 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 April 3, 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.

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 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.

36 As of July 3, 2010, the interest rate swaps were recorded as a liability of $3.2 million of which $1.1 million is classified as a current liability. The change in fair value for the thirteen and thirty-nine week periods ended July 3, 2010 was recognized as a reduction to other comprehensive income of $0.3 million and $0.5 million, net of taxes, respectively.

As of April 3, 2010, the interest rate swaps were recorded as a liability of $2.9 million. The change in fair value for the thirteen and twenty-six week periods ended April 3, 2010 was recognized as a reduction of other comprehensive income of $0.7 million and $0.2 million, net of taxes, respectively.

Off-Balance Sheet Arrangements

As of ~~April~~July 3, 2010 and October 3, 2009, 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 ~~April~~July 3, 2010.

(Dollars in Thousands)

			April		October		October		October		October
			July		October		October		October		October
			2010 to		2010 to		2011 to		2012 to		2013 to
			September		September		September		September		September
	Total		2010		2011		2012		2013		2014		Thereafter
Contractual Obligations
Revolving Loan	$	~~28,500~~—	$	~~28,500~~—	$	—	$	—	$	—	$	—	$	—
Senior Floating Rate Notes		150,000		—		—		150,000		—		—		—
Senior Subordinated Notes		150,000		—		—		150,000		—		—		—
Term Note		~~196~~53		~~196~~53		—		—		—		—		—
Capital lease obligations		~~145~~142		3014		4544		3735		2530		815		—4
Interest on notes		51,131		11,925		24,487		14,719		—		—		—
Interest on Notes		48,919		9,713		24,487		14,719		—		—		—
Operating leases		7370,~~183~~771		42,~~817~~405		9,556		8,968		8,171		7,188		34,483
Pension and postretirement payments		5357,~~382~~893		21,~~280~~764		6,~~360~~152		9,~~774~~981		8,~~136~~543		78,~~849~~639		1822,~~983~~814
Medical self-insurance		5,665		3,537		2,038		90		—		—		—
Medical insurance		6,954		1,773		5,091		90		—		—		—
Open purchase orders		3824,~~329~~241		3824,~~329~~241		—		—		—		—		—
Forward purchase commitments		1,896		1,896		—		—		—		—		—
Westmix agreement		11,865		11,865		—		—		—		—		—
Other commitments		1,~~251~~338		~~717~~803		~~494~~497		1312		13		1413		—
Total contractual obligations	$	~~553~~522,~~678~~176	$	9252,~~227~~631	$	4245,~~980~~827	$	333,~~601~~805	$	16,~~345~~757	$	15,~~059~~855	$	5357,~~466~~301
Commitments
Outstanding letters of credit	$	3,268	$	3,268	$	—	$	—	$	—	$	—	$	—
Total commitments	$	3,268	$	3,268	$	—	$	—	$	—	$	—	$	—

As of ~~April~~July 3, 2010, the total amount of gross unrecognized tax benefits for uncertain tax positions was $1.85 million. We do not expect a significant tax payment related to these obligations within the next year, however, 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 ~~April~~July 3, 2010 and October 3, 2009 was as follows:

(Dollars in Thousands)

	April 3,				Increase/(Decrease)
	July 3,		October 3,		Increase/(Decrease)
	2010		~~October 3,~~ 2009		$			%
Current assets:
Cash and cash equivalents	$	1930,~~468~~435	$	33,609	$	(143,~~141~~174	)		(429.14	)%
Trade receivables, net		9358,~~491~~544		42,449		5116,~~042~~095			37.9	*
Inventories		~~101~~103,~~361~~085		90,305		1112,~~056~~780			1214.2
Prepaid expenses and other current assets		57,~~955~~429		6,315		~~(360~~1,114	)		(517.76	)
Total current assets		~~220~~199,~~275~~493		172,678		4726,~~597~~815			2715.65
Current liabilities:
Trade payables		3729,~~380~~227		18,214		1911,~~166~~013			60.5	*
Accrued interest payable		58,~~152~~864		5,392		~~(240~~3,472	)		(464.54	)
Accrued expenses and other current liabilities		2428,~~745~~960		26,642		(12,~~897~~318	)		(78.17	)
Revolving loan		~~28,500~~—		17,500		11(17,~~000~~500	)		62100.90
Current portion of long-term debt and capital lease obligations		~~252~~103		489		(~~237~~386	)		(4878.59	)
Total current liabilities		9667,~~029~~154		68,237		27(1,~~792~~083	)		40(1.76	)
Working capital	$	~~124~~132,~~246~~339	$	104,441	$	1927,~~805~~898			1926.07	%

* Greater than 100%.40

OurTable working capital as of April 3, 2010 increased compared to our working capital as of October 3, 2009 mainly due to higher trade receivables and inventory as a result of the heavy Spring selling season. The increase in working capital was partially offset by an increase in trade payables and the Revolving Loan balance as a result higher inventory levels. Contents

Our working capital as of July 3, 2010 increased compared to our working capital as of October 3, 2009 due to the zero balance outstanding under the Revolving Loan and higher trade receivables mainly as a result of discontinuing a cash discount program with a significant customer. The increases in inventory and trade payables largely offset each other.

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~~ 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~~ 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 ~~April~~July 3, 2010 was 4.3%. ~~The interest rate on the Revolving Loan at April 3, 2010 was 2.0%.~~ As of ~~April~~July 3, 2010, we had two 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~~have ~~interest~~impacted interest expense by approximately $0.2 million. As of July 3, 2010, there is a zero balance outstanding ~~million~~under the Revolving Loan.

Foreign Operations; Currency Risk

We conduct foreign operations primarily in Canada and Ireland and utilize international suppliers and manufacturers. ~~For~~As ~~the~~a ~~remainder~~result, ofwe ~~fiscal~~are ~~year~~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 July 3, 2010, wea ~~have~~hypothetical ~~hedged~~10% change in quoted foreign currency exchange rates would increase or decrease income before income taxes by $10.91 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. 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 April 3, 2010, a hypothetical 10% change in quoted foreign currency exchange rates would decrease income before income taxes by $0.8 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 ~~April~~July 3, 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.

3941

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

In Not April 2010, the Company was served with a complaint filed in the United States District Court for the Eastern District of Texas by Patent Group, LLC (“Patent Group”) for falsely marketing certain of products under 35 U.S.C. § 292. Patent Group claims the Company has marketed and sold certain leaf rakes marked with patent references that have expired with the intent to deceive the public and to gain a competitive advantage in the market. Patent Group is seeking monetary damages and injunctive relief. While the Company believes there are meritorious defenses to this claim, the Company is in the initial stages of investigating the matter and, accordingly, can make no prediction as to the outcome of this case.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. [Removed and Reserved]

Item 5. Other Information

On May 11, 2010, the Company entered into an employment agreement with Daniel Yurovich. The term of the employment agreement is one year and it will be automatically renewed for consecutive one-year periods, unless within 60 days prior to the expiration of the employment term, either party to the agreement provides notice of its election to terminate the agreement. Pursuant to the employment agreement, Mr. Yurovich will receive a base salary of $216,315. Mr. Yurovich’s base salary is subject to increase from time to time, solely at the Company’s discretion. Mr. Yurovich is eligible to receive a discretionary bonus based on the achievement of individual performance objectives and the Company’s achievement of certain objectives approved by the board of directors or compensation committee of CHATT Holdings LLC. None

In the event of a termination of Mr. Yurovich’s employment by reason of death or “permanent disability,’’ as defined in the employment agreement, by the Company for “due cause,’’ as defined in the employment agreement, or by Mr. Yurovich voluntarily, the Company will have no further obligation to Mr. Yurovich (or his estate) except for salary and benefits accrued through the termination date. In the case of a termination based on permanent disability, Mr. Yurovich will also be entitled to any benefits provided under our disability insurance policy. If Mr. Yurovich is terminated by the Company without due cause or if he terminates employment for “good reason,’’ as defined in the employment agreement, then Mr. Yurovich will be entitled to receive severance in an amount equal to his base salary and benefits for twelve months following termination, payable at regular payroll intervals.

Item 6. Exhibits

Exhibit 10.1		~~Employment~~Business ~~agreement~~Sale Agreement, dated as of ~~May~~July 115, 2010, ~~between~~by and among Ames True Temper Australia Pty Ltd, ~~Inc.~~West Barrows Mix Pty Ltd, Michelangelo Cantone and ~~Daniel~~Jewell ~~Yurovich.~~Cantone
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.

4142

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: May 14, 2010	/s/ Duane R. Greenly
Date: August 5, 2010	/s/ Duane R. Greenly
	Duane R. Greenly
	President and Chief Executive Officer (Principal Executive Officer)
Date: May 14, 2010	/s/ David M. Nuti
Date: August 5, 2010	/s/ David M. Nuti
	David M. Nuti
	Chief Financial Officer (Principal Financial Officer)

4243

AMES TRUE TEMPER, INC.

EXHIBIT INDEX

Exhibit		Description
10.1		~~Employment~~Business ~~agreement~~Sale Agreement, dated as of ~~May~~July 115, 2010, ~~between~~by and among Ames True Temper Australia Pty Ltd, ~~Inc.~~West Barrows Mix Pty Ltd, Michelangelo Cantone and ~~Daniel~~Jewell ~~Yurovich.~~Cantone
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.

4344

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Filing Compare · Ames Companies, Inc.