Linens 'n Things Reports Third Quarter 2006 Financial Results.

CLIFTON, N.J. -- Linens Holding Co. ("LNT" or the "Company"), a leading home furnishings specialty retailer known as "Linens 'n Things," today reported its financial results for the third quarter ended September 30, 2006.

The Company reported total net sales of $658.2 million for the quarter, a 4.6% increase over the same quarter in 2005. This increase in net sales resulted from the opening of new store locations and an increase in comparable store sales for the quarter of 0.2%.

The Company defines EBITDA as earnings before interest, income taxes, depreciation and amortization. As part of its reporting, it also presents Adjusted EBITDA, which excludes the impact of transaction expenses from the February 2006 acquisition of Linens 'n Things, Inc. and other non-recurring or non-cash expenses, and normalizes occupancy costs for certain purchase accounting and rent-related adjustments. For the quarter, the Company generated Adjusted EBITDA of $21.3 million compared to Adjusted EBITDA of $30.6 million in the third quarter of 2005. Adjusted EBITDA decreased from the third quarter of 2005 as the increase in net sales during this year's third quarter was more than offset by increased expenses associated with new stores and by higher freight costs. EBITDA for the third quarter of 2006 was $15.2 million compared to EBITDA of $25.3 million in the third quarter of 2005.

The Company generated a net loss for the third quarter of 2006 of $27.4 million compared with net earnings of $1.0 million in the third quarter of 2005.

"While we continue to reposition the business for longer-term success, we believe signs of improved fundamentals emerged with our third quarter performance. Comparable store sales have stabilized in a flat range for the past two quarters after several consecutive quarters of declining same store sales," said Robert DiNicola, Chairman and Chief Executive Officer. "We will continue to focus our efforts to improve the depth of ownership of key products, create a cleaner and crisper store merchandise presentation, and enhance our marketing efficiencies as we head into the upcoming holiday selling season," added Mr. DiNicola.

For the third quarter, the Company used cash in operating activities of $59.8 million, ending the quarter with a short-term borrowing position of $225.9 million and excess availability under its revolving credit facility of $180.4 million. Utilization of cash in the third quarter primarily reflects the customary seasonal build up of inventories to support the upcoming fourth quarter holiday season. At September 30, 2006, the Company had $652.0 million of total long-term debt outstanding. For the third quarter of 2006, the Company had capital expenditures of $15.9 million.

Net sales for the thirty-nine week period ended September 30, 2006 increased 5.0% to $1,862.6 million, as compared with net sales of $1,773.5 million for the same period last year. Comparable store sales for the thirty-nine week period ended September 30, 2006 decreased 1.0%.

Net loss for the thirty-nine week period ended September 30, 2006 was $132.0 million as compared with a net loss of $9.0 million for the same period last year.

During the third quarter of 2006, the Company opened eight stores and closed two stores as compared with opening fourteen stores and closing three stores during the third quarter of 2005. Store square footage increased approximately 5.7% to 18.6 million at September 30, 2006 compared with 17.6 million at October 1, 2005.

The Company will host a conference call to report the third quarter 2006 financial results on November 14, 2006 at 12:00 pm ET. To listen to this call, dial: 1-888-694-4702, conference ID 8041005. Following the completion of the call, a replay will be available through December 5, 2006 by dialing 1-877-519-4471, passcode 8041005. A webcast of the call will be available on www.lnt.com through December 5, 2006.

Linens 'n Things, with 2005 sales of approximately $2.7 billion, is one of the leading, national large format retailers of home textiles, housewares and home accessories. As of September 30, 2006, Linens 'n Things operated 561 stores in 47 states and six provinces across the United States and Canada. More information about Linens 'n Things can be found online at www.lnt.com.

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business that is not historical information. As a general matter, forward-looking statements are those focused upon future or anticipated events or trends and expectations and beliefs relating to matters that are not historical in nature. The words "believe," "expect," "plan," "intend," "estimate" or "anticipate" and similar expressions, as well as future or conditional verbs such as "will," "should," "would" and "could," often identify forward-looking statements. The Company believes there is a reasonable basis for our expectations and beliefs, but they are inherently uncertain, and we may not realize our expectations and our beliefs may not prove correct. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. The Company's actual results and future financial condition may differ materially from those described or implied by any such forward-looking statements as a result of many factors that may be outside the Company's control. Such factors include, without limitation: general economic conditions; changes in the retailing environment and consumer spending habits; inclement weather and natural disasters; competition from existing and potential competitors; the amount of merchandise markdowns; loss or retirement of key members of management; increases in the costs of borrowings and unavailability of additional debt or equity capital; impact of our substantial indebtedness on our operating income and our ability to grow; the cost of labor; labor disputes; increased healthcare benefit costs; and other costs and expenses. This list of factors is not intended to be exhaustive.

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Net loss reconciliation to EBITDA and Adjusted EBITDA

LNT defines EBITDA as net income before interest expense (net), income tax expense, depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA adjusted to exclude the additional items described in the table below.

The Company presents EBITDA and Adjusted EBITDA because it considers them as useful analytical tools for measuring its ability to service its debt and generate cash for other purposes. EBITDA and Adjusted EBITDA are not measurements of the Company's financial performance under Generally Accepted Accounting Principles ("GAAP") and should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP or an alternative to cash flow from operating activities as a measure of the Company's profitability or liquidity. Adjusted EBITDA is presented as additional information because management uses Adjusted EBITDA to evaluate the operating performance of the Company. Management also believes that Adjusted EBITDA is a meaningful measurement that is commonly used by investors, security analysts and others to measure the Company's operating performance. EBITDA and Adjusted EBITDA may differ from other similarly titled measures of other companies, limiting its usefulness as a comparative measure.

For the thirteen weeks and thirty-nine weeks ended September 30, 2006 and October 1, 2005, the following table presents EBITDA reconciled to the Company's net (loss) income for such periods and Adjusted EBITDA reconciled to EBITDA for such periods.

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