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EXHIBIT
99.1
[Note to Editors:
The following NTK Holdings release is similar to the Nortek, Inc. release on
first-quarter financial results except primarily for the impact of certain NTK
Holdings senior discount notes, senior unsecured loan facility and amounts
reported as shareholders investment.]
NTK
HOLDINGS REPORTS
1ST-QUARTER
RESULTS
PROVIDENCE, RI, May
9, 2008 - NTK Holdings, Inc.
(“NTK Holdings”),
the parent company of Nortek
Holdings, Inc. (“Nortek
Holdings”) and Nortek,
Inc. (“Nortek”),
a leading diversified global manufacturer of innovative, branded residential and
commercial ventilation, HVAC and home technology convenience and security
products, today announced first-quarter financial results. NTK Holdings reported sales of
$540 million and operating earnings of $23.4 million for the quarter ended March
29, 2008.
Key financial
highlights for the first quarter of 2008 included:
Richard L. Bready,
Chairman and Chief Executive Officer, said, “NTK Holdings continues to
manage its business well in this difficult housing market. However,
operating results were adversely impacted as the housing market continued to
weaken. Additionally, operating earnings were also impacted in the
first quarter of 2008 by higher commodity and transportation costs, which were
only partially offset by continued strategic sourcing initiatives and
improvements in manufacturing efficiency.”
As of March 29,
2008, NTK Holdings had
approximately $53 million in unrestricted cash, cash equivalents and marketable
securities and had $45 million of borrowings outstanding under its revolving
credit facility.
Mr. Bready added,
“We expect the existing home sales market and the continued instability in the
troubled mortgage market will continue to have a negative impact on consumer
spending on home remodeling and repair expenditures throughout
2008.”
NTK Holdings*, the parent
company of Nortek
Holdings* and Nortek*, is a leading
diversified global manufacturer of innovative, branded residential and
commercial ventilation, HVAC and home technology convenience and security
products. NTK
Holdings and Nortek offer a broad array of
products including: range hoods, bath fans, indoor air quality
systems, medicine cabinets and central vacuums, heating and air conditioning
systems, and home technology offerings, including audio, video, access control,
security and other products.
*As
used herein, the terms “NTK Holdings,” “Nortek Holdings” or “Nortek” refers to
NTK Holdings, Inc., together with its subsidiaries, unless the context indicates
otherwise. These terms are used for convenience only and are not intended as a
precise description of any of the separate corporations, each of which manages
its own affairs.
This
press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based on
Nortek’s current plans and expectations and involve risks and uncertainties that
could cause actual future activities and results of operations to be materially
different from those set forth in the forward-looking statements. Important
factors impacting such forward-looking statements include the availability and
cost of raw materials and purchased components, the level of construction and
remodeling activity, changes in general economic conditions, the rate of sales
growth and product liability claims. Nortek undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise. For further information, please refer to the reports
and filings of NTK Holdings and Nortek with the Securities and Exchange
Commission.
#
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NTK HOLDINGS, INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED SUMMARY
OF OPERATIONS
The accompanying notes are an integral
part of this unaudited condensed consolidated summary of
operations.
EBITDA is defined
as net earnings (loss) before interest, taxes, depreciation and amortization
expense. EBITDA is not a measure of operating performance under U.S.
generally accepted accounting principles (“GAAP”) and should not be considered
as an alternative or substitute for GAAP profitability measures such as
operating earnings (loss) from continuing operations, discontinued operations,
extraordinary items and net earnings (loss). EBITDA as an operating
performance measure has material limitations since it excludes, among other
things, the statement of operations impact of depreciation and amortization
expense, interest expense and the provision (benefit) for income taxes and
therefore does not necessarily represent an accurate measure of profitability,
particularly in situations where a company is highly leveraged or has a
disadvantageous tax structure. The Company uses a significant amount
of capital assets and depreciation and amortization expense is a necessary
element of the Company’s costs and ability to generate revenue and therefore its
exclusion from EBITDA is a material limitation. The Company has a
significant amount of debt and interest expense is a necessary element of the
Company’s costs and ability to generate revenue and therefore its exclusion from
EBITDA is a material limitation. The Company generally incurs
significant U.S. federal, state and foreign income taxes each year and the
provision (benefit) for income taxes is a necessary element of the Company’s
costs and therefore its exclusion from EBITDA is a material
limitation. As a result, EBITDA should be evaluated in conjunction
with net earnings (loss) for a more complete analysis of the Company’s
profitability, as net earnings (loss) includes the financial statement impact of
these items and is the most directly comparable GAAP operating performance
measure to EBITDA. As EBITDA is not defined by GAAP, the Company’s
definition of EBITDA may differ from and therefore may not be comparable to
similarly titled measures used by other companies, thereby limiting its
usefulness as a comparative measure. Because of the limitations that
EBITDA has as an analytical tool, investors should not consider it in isolation,
or as a substitute for analysis of the Company’s operating results as reported
under GAAP.
Company management
uses EBITDA as a supplementary non-GAAP operating performance measure to assist
with its overall evaluation of Company and subsidiary operating performance
(including the performance of subsidiary management) relative to outside peer
group companies. In addition, the Company uses EBITDA as an operating
performance measure in financial presentations to the Company’s Board of
Directors, shareholders, various banks participating in Nortek’s Credit
Facility, note holders and Bond Rating agencies, among others, as a supplemental
non-GAAP operating measure to assist them in their evaluation of the Company’s
performance. The Company is also active in mergers, acquisitions and
divestitures and uses EBITDA as an additional operating performance measure to
assess Company, subsidiary and potential acquisition target enterprise value and
to assist in the overall evaluation of Company, subsidiary and potential
acquisition target performance on an internal basis and relative to peer group
companies. The Company uses EBITDA in conjunction with traditional
GAAP operating performance measures as part of its overall assessment of
potential valuation and relative performance and therefore does not place undue
reliance on EBITDA as its only measure of operating performance.
The Company
believes EBITDA is useful for both the Company and investors as it is a commonly
used analytical measurement for comparing company profitability, which
eliminates the effects of financing, differing valuations of fixed and
intangible assets and tax structure decisions. The Company believes
that EBITDA is specifically relevant to the Company, due to the different
degrees of leverage among its competitors, the impact of purchase accounting
associated with acquisitions, which impacts comparability with its competitors
who may or may not have recently revalued their fixed and intangible assets, and
the differing tax structures and tax jurisdictions of certain of the Company’s
competitors. The Company has included EBITDA as a supplemental
operating performance measure, which should be evaluated by investors in
conjunction with the traditional GAAP performance measures discussed earlier in
this summary of operations for a complete evaluation of the Company’s operating
performance.
The following table
presents a reconciliation from net (loss) earnings, which is the most directly
comparable GAAP operating performance measure, to EBITDA for the first quarter
ended March 29, 2008 and March 31, 2007:
In the HTP segment,
net loss for the first quarter ended March 29, 2008 includes approximately $0.2
million of fees and expenses incurred in connection with a dispute with a
supplier.
In the HVAC
segment, net loss for the first quarter ended March 29, 2008 includes net
foreign exchange gains of approximately $0.3 million related to transactions,
including intercompany debt not indefinitely invested in the Company’s
subsidiaries.
In the HVAC
segment, net earnings for the first quarter ended March 31, 2007 include a
charge of approximately $1.8 million related to reserves for amounts due from
customers and net foreign exchange losses of approximately $0.2 million related
to transactions, including intercompany debt not indefinitely invested in the
Company’s subsidiaries.
EBITDA is defined
as net earnings (loss) before interest, taxes, depreciation and amortization
expense. EBITDA is not a measure of cash flow under U.S. generally
accepted accounting principles (“GAAP”) and should not be considered as an
alternative or substitute for GAAP cash flow measures such as cash flows from
operating, investing and financing activities. EBITDA does not
necessarily represent an accurate measure of cash flow performance because it
excludes, among other things, capital expenditures, working capital
requirements, significant debt service for principal and interest payments,
income tax payments and other contractual obligations, which may have a
significant adverse impact on a company’s cash flow performance thereby limiting
its usefulness when evaluating the Company’s cash flow
performance. The Company uses a significant amount of capital assets
and capital expenditures are a significant component of the Company’s annual
cash expenditures and therefore their exclusion from EBITDA is a material
limitation. The Company has significant working capital
requirements during the year due to the seasonality of its business, which
require significant cash expenditures and therefore its exclusion from EBITDA is
a material limitation. The Company has a significant amount of debt
and the Company has significant cash expenditures during the year related to
principal and interest payments and therefore their exclusion from EBITDA is a
material limitation. The Company generally pays significant U.S.
federal, state and foreign income taxes each year and therefore its exclusion
from EBITDA is a material limitation. As a result, EBITDA should be
evaluated in conjunction with net cash from operating, investing and financing
activities for a more complete analysis of the Company’s cash flow performance,
as they include the financial statement impact of these
items. Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be replaced in the
future and EBITDA does not reflect any cash requirements for
replacements. As EBITDA is not defined by GAAP, the Company’s
definition of EBITDA may differ from and therefore may not be comparable to
similarly titled measures used by other companies thereby limiting its
usefulness as a comparative measure. Because of the limitations that
EBITDA has as an analytical tool, investors should not consider it in isolation,
or as a substitute for analysis of the Company’s cash flows as reported under
GAAP.
Company management
uses EBITDA as a supplementary non-GAAP liquidity measure to allow the Company
to evaluate its operating units cash-generating ability to fund income tax
payments, corporate overhead, capital expenditures and increases in working
capital. EBITDA is also used by management to allocate resources for
growth among its businesses, to identify possible impairment charges, to
evaluate the Company’s ability to service its debt and to raise capital for
growth opportunities, including acquisitions. In addition, the
Company uses EBITDA as a liquidity measure in financial presentations to the
Company’s Board of Directors, shareholders, various banks participating in
Nortek’s Credit Facility, note holders and Bond Rating agencies, among others,
as a supplemental non-GAAP liquidity measure to assist them in their evaluation
of the Company’s cash flow performance. The Company uses EBITDA in
conjunction with traditional GAAP liquidity measures as part of its overall
assessment of cash flow ability and therefore does not place undue reliance on
EBITDA as its only measure of cash flow performance.
The Company
believes EBITDA is useful for both the Company and investors as it is a commonly
used analytical measurement for assessing a company’s cash flow ability to
service and/or incur additional indebtedness, which eliminates the impact of
certain non-cash items such as depreciation and amortization. The
Company believes that EBITDA is specifically relevant to the Company due to the
Company’s leveraged position as well as the common use of EBITDA as a liquidity
measure within the Company’s industries by lenders, investors, others in the
financial community and peer group companies. The Company has
included EBITDA as a supplemental liquidity measure, which should be evaluated
by investors in conjunction with the traditional GAAP liquidity measures
discussed earlier in this summary of operations for a complete evaluation of the
Company’s cash flow performance.
The following table
presents a reconciliation from net cash provided by (used in) operating
activities, which is the most directly comparable GAAP liquidity measure, to
EBITDA for the first quarter ended March 29, 2008 and March 31,
2007:
In the HTP segment,
EBITDA for the first quarter ended March 29, 2008 includes approximately $0.2
million of fees and expenses incurred in connection with a dispute with a
supplier.
In the HVAC
segment, EBITDA for the first quarter ended March 29, 2008 includes net foreign
exchange gains of approximately $0.3 million related to transactions, including
intercompany debt not indefinitely invested in the Company’s
subsidiaries.
In the HVAC
segment, EBITDA for the first quarter ended March 31, 2007 includes a charge of
approximately $1.8 million related to reserves for amounts due from customers
and net foreign exchange losses of approximately $0.2 million related to
transactions, including intercompany debt not indefinitely invested in the
Company’s subsidiaries.
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