Amy showed me one of Stella's CD cases and said, "Look, /kEts/!"
I said, "Ah yes, Cats!" and she responded, "No, *kets*".
Which is how it's pronounced in German, since it typically turns English /æ/ into /E/.
I suppose this means that /æ/ and /E/ are separate phonemes for Amy. (I wonder whether she'd consider /æ/ and /a/ separate, though—whether she'd hear, for example, "cats" and "Katz'" as distinct or would consider them essentially the same. The distinction isn't phonemic in either language, after all, unlike /æ/ vs. /E/.)