NORTEK, INC. ANNOUNCES ITS FIRST QUARTER RESULTS

PROVIDENCE, RI, April 18, 2001—Nortek, Inc.(NYSE:NTK), a leading international designer, manufacturer and marketer of high-quality building products, today announced results for the first-quarter of 2001.


Key financials for the quarter ended March 31, 2001, included:


Richard L. Bready, Chairman and Chief Executive Officer, said, “Operating results for the first quarter of each year are normally lower due to the seasonal nature of Nortek’s businesses, particularly its Windows, Doors and Siding Group which has a heavy concentration of business in the upper Midwest and Northeast regions of the U.S. and the Air Conditioning and Heating Products Group which by its nature is a spring to fall business. This normal first-quarter softness was compounded this year by the general economic slowdown and the continued decline in the manufactured housing industry, where shipments dropped more than 40 percent in the first two months of 2001 after falling 28 percent in 2000. Additionally, unseasonably cold and wet weather conditions lasting into March impacted sales by large home improvement retailers and delayed outdoor building activities.


“Going forward, we expect U.S. home construction and remodeling to remain reasonably strong for the remainder of the year, but it is difficult at this stage to tell if Nortek will be able to offset the earnings shortfall experienced in the first quarter.


We do anticipate an improvement in our businesses as better spring and summer weather finally arrives. Internally, we will be implementing a number of cost-reduction programs, which we believe, will eventually save approximately $20 million on an annual basis. Future results, however, are still dependent on general economic conditions.”


Nortek* is a leading international manufacturer and distributor of high-quality, competitively priced building, remodeling and indoor environmental control products for the residential and commercial markets. The Company offers a broad array of products for improving the environments where people live and work. Its products include range hoods and other spot ventilation products, heating and air conditioning systems, wood and vinyl windows and doors, vinyl siding products, indoor air quality systems, and specialty electronic products.


*As used herein, the term “Nortek”refers to Nortek, Inc., together with its subsidiaries, unless the context indicates otherwise. This term is used for convenience only and is 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 the Company’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. The Company 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 Company’s reports and filings with the Securities and Exchange Commission.



NORTEK, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED SUMMARY OF OPERATIONS
(In thousands except per share amounts)


For the Three Months Ended
March 31, April 1,
2001
 2000
(Unaudited)
 
Net sales     $ 467,269   $ 491,557  
Cost of products sold    360,736    374,168  
Selling, general and administrative expenses    82,119    81,837  
Amortization of goodwill and intangible assets    5,784    5,752  
        448,639   461,757
 
Operating earnings       18,630     29,800  
Interest expense       (25,338 )   (24,310 )
Investment income       2,208     1,910  
Earnings (loss) before income taxes       (4,500 )   7,400  
Income tax (benefit) provision       (2,100 )   3,400  
Net earnings (loss)     $ (2,400 ) $ 4,000  
 
Net earnings (loss) per share of common stock:    
  Basic     $ .(22 ) $ .35  
  Diluted     $ .(22 ) $ .35  
 
Weighted average number of shares:    
  Basic       10,916     11,484  
  Diluted       10,916     11,549  
EBITDA     $ 34,309   $ 45,355  
 
Capital expenditures     $ 14,354   $ 7,667  

The accompanying notes are an integral part of this unaudited condensed consolidated summary of operations.


NORTEK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED SUMMARY OF OPERATIONS

A.

The unaudited condensed consolidated summary of operations for Nortek, Inc. and its subsidiaries ("the Company"), in the opinion of management, reflects all adjustments necessary for a fair statement of the periods presented. It is suggested that this unaudited condensed consolidated summary of operations be read in conjunction with the financial statements and the notes included in the Company's latest Annual Report on Form 10-K, and its latest Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission.

B.

The Financial Accounting Standards Board's Emerging Issues Task Force reached final consensus in 2000 with respect to the accounting for shipping and handling fees and costs and the accounting for certain sales incentives. As a result, the Company has reclassified certain amounts among net sales, cost of products sold and selling, general and administrative expenses in accordance with these pronouncements for all periods presented in the accompanying unaudited condensed consolidated summary of operations. These reclassifications did not have any effect on operating earnings, EBITDA, net earnings (loss) or diluted net earnings (loss) per share for any period presented.

C.

EBITDA from operations is operating earnings plus depreciation and amortization expense (other than amortization of deferred debt expense and debt discount).

D.

In the first quarter of 2001, the Company adopted Financial Accounting Standards Board SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities", as amended ("SFAS No. 133"). Adoption of this accounting method resulted in an approximate $800,000 charge to interest expense ($.04 per share, net of tax) for the Company's interest rate collar agreement. This amount was recorded in the Company's balance sheet as a liability at March 31, 2001 representing the fair value of the derivative instrument. The cumulative affect of adopting this accounting method as of December 31, 2000 was not material.

E.

Net sales for the Company's principal segments for the three months ended March 31, 2001 and April 1, 2000 were as follows:

Three Months Ended
March 31, 2001
 April 1, 2000
Unaudited
(In millions)
 
Residential Building Products     $ 163 .9 $ 172 .5
Air Conditioning and Heating Products    137 .4  128 .6
Windows, Doors and Siding Products    150 .1  171 .1
Other    15 .9  19 .4
          Total   $ 467 .3 $ 491 .6

 

In the first quarter of 2001, acquisitions contributed approximately $12.6 million to the increase in net sales in the Air Conditioning and Heating Products Segment.


E.

(Continued)

Operating earnings and depreciation and amortization expense for the Company's principal segments for the three months ended March 31, 2001 and April 1, 2000 were as follows:

Three Months Ended
March 31, April 1,
2001
 2000
Unaudited
(In millions)
 
Operating Earnings:            
Residential Building Products   $ 20 .8 $ 25 .1
Air Conditioning and Heating Products    9 .0  12 .7
Windows, Doors and Siding Products    (6 .2)  (4 .6)
Other, Net    (5 .0)  (3 .4)
Consolidated Operating Earnings    18 .6  29 .8
 
Unallocated:  
     Interest Expense    (25 .3)  (24 .3)
     Investment Income    2 .2  1 .9
Earnings (Loss) before Income Taxes   $ (4 .5) $ 7 .4
 
Depreciation and Amortization Expense:  
Residential Building Products   $ 5 .7 $ 5 .6
Air Conditioning and Heating Products    3 .2  3 .0
Windows, Doors and Siding Products    6 .4  6 .6
Other     .4   .4
Consolidated Depreciation and Amortization      
   Expense   $ 15 .7 $ 15 .6

F.

The following is a summary of selected balance sheet amounts and ratios at March 31, 2001 and December 31, 2000:

Balance at
March 31, 2001
 December 31, 2000
Unaudited
(Dollar amounts in thousands)
 
Unrestricted cash, equivalents and                
   marketable securities   $ 96,074   $ 140,550  
 
Short-term borrowings and current      
   maturities of indebtedness    22,434    21,497  
 
Long-term indebtedness    1,023,574    1,020,493  
 
Stockholders Investment    275,614    282,211  
 
Debt to equity ratio    3.8:1    3.7:1  

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