Good sales trends; and Niche position in a value-priced tools and equipment retailing industry. Relatively weak market position in the industry; Expectation that sales growth will decelerate; and Very aggressive financial policy. The ratings reflect Harbor Freight Tools USA Inc.'s (HFT) vulnerable business profile characterized by its still relatively weak market position in the intensely competitive and fragmented tools and equipment retailing industry, its vulnerability to commodity prices, and our expectation that sales growth will decelerate in the near term. In our opinion, the proposed debt-financed $235 million dividend is indicative of a very aggressive financial policy, which results in increased leverage and weaker cash flow protection measures. Following a very weak performance during the fiscal year that ended July
