PROVIDENCE, RI, February 11, 1998-Nortek, Inc. (NYSE:NTK) reported major growth in 1997 today as it released its financial results for the fourth quarter and the year ended December 31, 1997, fueled by the August acquisition of Ply Gem Industries, Inc. Simultaneously Nortek announced that it had classified its Plumbing Products Group as a discontinued operation, in line with its strategy of shedding operations that fail to meet its business model.

For 1997, Nortek reported net sales from continuing operations of $1.1 billion, up 35 percent over 1996 net sales from continuing operations of $842 million and diluted earnings per share from continuing operations of $2.68, up 20 percent over 1996. Operating earnings from continuing operations for 1997 increased 36 percent to $83 million, as compared to $61 million for 1996.

Net interest expense for 1997 increased $17.9 million, to $40.3 million. The increase results from two issues of senior notes totaling $485 million during the year and debt of Ply Gem at the time of that acquisition.

Net earnings, after losses from discontinued operations of $5.2 million for 1997 and $1.7 million for 1996, were $21.2 million and $22.0 million, or $2.15 and $2.07 per share diluted, respectively. The fourth quarter of 1997 includes approximately $1.6 million, or $.16 per diluted share, net after tax loss for expected operating losses in the Plumbing Products Group during the disposal period.

Richard L. Bready, Chairman and Chief Executive Officer, stated that, "We are pleased that 1997 was marked by growth, both internal and external. With the acquisition of the Ply Gem businesses, Nortek currently has an annualized sales run rate in excess of $1.7 billion from continuing operations, although we obviously are looking carefully to see if all these operations fit our long-term strategy."

"Internally the performance of Nortek's core operations owned for all of 1997 was excellent," Bready said. "Our Residential Building Products Group, led by Broan Mfg., generated a 31-percent increase in pre-tax earnings on a slight increase in net sales, while the Air Conditioning and Heating Products Group pre-tax earnings gained over 7% on flat year-to-year sales, resulting from cooler-than-normal weather early in 1997."

"We also made substantial progress in positioning our businesses for the future as we continue to rationalize all of our businesses and evaluate their prospects in the future. The classification of the operations of the Plumbing Products Group as a discontinued operation is a result of that rationalization process. The plumbing products industry is undergoing significant restructuring and we do not believe that investing the capital required to remain competitive in that industry would be in the best interest of Nortek's shareholders. Adopting a plan of disposition for that group provides us with maximum flexibility as we proceed with restructuring and/or a sale of that business."

For the fourth quarter, Nortek reported net sales from continuing operations of $415.7 million, a 98-percent increase over 1996 fourth-quarter net sales from continuing operations of $209.4 million. Net sales from continuing operations for the fourth quarter include net sales of $201.0 million from the Ply Gem transaction.

Operating earnings from continuing operations for the fourth quarter were $27.4 million, a 56-percent increase over 1996's fourth-quarter operating earnings from continuing operations of $17.6 million. Net interest expense for the quarter increased $11.9 million, to $16.9 million.

Earnings, after provision for income taxes, from continuing operations for the quarter were $5.6 million, or $.57 per diluted share. In 1996, the Company's fourth quarter earnings from continuing operations, after provision for income taxes, were $7.8 million, or $.77 per diluted share.

Nortek's fourth-quarter results, Bready commented: "Reflect the seasonal nature of Ply Gem's major businesses, particularly windows, doors and siding. Housing construction, in general, and exterior remodeling, in particular, taper off during the winter months in many of the northern markets that Ply Gem serves. As a result, these businesses experience more pronounced weakness during the first and fourth quarters of the year. Also, during the fourth quarter we were integrating the Ply Gem businesses and our results were impacted by the time spent and the expenses incurred in evaluating the acquired businesses, realigning some operational management and transferring some production to a new plant."

Bready went on to say that Nortek "looks with well-founded optimism at 1998 and the future, based on a number of important factors not the least of which is continuing strength of the economy, demand in our expended markets, minimal inflation and low interest rates."

"Moreover, Nortek's core business growth and business rationalization, plus the Ply Gem acquisition, have significantly strengthened and expanded our market position and given us important opportunities to further strengthen and expand in the future," Bready said. "Among additional positive factors to be noted are the reduction of our exposure to cyclical trends, Ply Gem's traditional strength in its second and third quarters, and our lack of exposure to economic difficulties in Asia."

Nortek is a leading international manufacturer and distributor of high-quality, competitively priced building, remodeling and environmental control products for the residential, commercial and industrial markets. The Company offers a broad array of products for improving where people live and work, including range hoods and home ventilating products, heating and air conditioning systems, windows, doors and vinyl siding products, air quality systems, and specialty electronic, wood and decorating products.


This release contains forward-looking statements relating to future financial results. Actual financial performance may differ as a result of factors over which the Company has no control. Additional information which could affect the company's financial results is included in the Company's Securities and Exchange Commission filings, copies of which are available from Nortek at no charge.

 

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