The ratings on Harbor Freight Tools USA Inc. (HFT) reflect Standard&Poor's Ratings Services' expectation that there will be no significant debt reduction in the near term because of high capital spending to support aggressive growth plans. The rating also takes into account the company's very aggressive financial policy in our view, as it has a history of debt-financed dividends to its owner. Therefore, although credit measures are currently strong for the 'B' rating category, we expect that this may be transitory as we fully anticipate future debt-financed dividends. HFT' business risk profile is "weak" (as defined in our criteria), in our view, because of its relatively weak market position in the intensely competitive and fragmented tools and equipment
