|UNITED STATES                     
|----------------------------------
|SECURITIES AND EXCHANGE COMMISSION
|Washington, D.C. 20549            

__________

FORM 10-Q__________

|                                                         |  |                                                                                         
|-------------------------------------------------------- |  | ----------------------------------------------------------------------------------------
|[X]                                                      |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|                                                         |  |                                                                                         
|For the quarterly period ended October 4, 2003          
|                                                         |  |                                                                                         
|OR                                                      
|                                                         |  |                                                                                         
|[_]                                                      |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                         |  |                                                                                         
|For the transition period from ___________ to __________
|                                                         |  |                                                                                         
|1-6112                                                  
|(Commission File Number)                                
|__________                                              
|                                                         |  |                                                                                         
|NORTEK, INC.                                            
|(Exact name of registrant as specified in its charter)  
|__________                                              

|                                                     |  |                    
|---------------------------------------------------- |  | -------------------
|Delaware                                             |  | 05-0314991         
|(State or other jurisdiction of                      |  | (I.R.S. Employer   
|incorporation or organization)                       |  | Identification No.)
|                                                     |  |                    
|50 Kennedy Plaza, Providence, RI                     |  | 02903-2360         
|(Address of principal executive offices)             |  | (Zip Code)         
|                                                    
|(401) 751-1600                                      
|(Registrants telephone number, including area code)
|__________                                          

|Indicate by check
      mark whether the registrant (1) has filed all reports required to be filed
      by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
      preceding 12 months (or for such shorter period that the registrant was
      required to file such reports) and (2) has been subject to such filing
      requirements for the past 90 days.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Yes [X]   No [_]                                                                                                                                                                                                                                                                                                                                                                     

|Indicate by check
      mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
|------------------------------------------------------------------------------------------------------------------
|Yes [X]   No [_]                                                                                                  

|The number of shares of Common Stock outstanding as of November 13, 2003 was 100.
|---------------------------------------------------------------------------------

|NORTEK, INC. AND SUBSIDIARIES       
|------------------------------------
|CONDENSED CONSOLIDATED BALANCE SHEET

|                                                         | October 4, | December 31,
|-------------------------------------------------------- | ---------- | ------------
|
|(Amounts in thousands)                                  
|(Unaudited)                                             
|
|Assets                                                   |            |             
|Current Assets:                                          |            |             
|Unrestricted:                                            |            |             
|Cash and cash equivalents                                |            |             
|Restricted:                                              |            |             
|Cash, investments and marketable securities at cost,     |            |             
|which approximates market                                |            |             
|Accounts receivable, less allowances                     |            |             
|of $15,094,000 and $13,132,000                           |            |             
|Inventories:                                             |            |             
|Raw materials                                            |            |             
|Work in process                                          |            |             
|Finished goods                                           |            |             
|
|                                                         |            |             
|
|
|Prepaid expenses                                         |            |             
|Other current assets                                     |            |             
|Prepaid income taxes                                     |            |             
|
|Total current assets                                     |            |             
|
|
|Property and Equipment, at Cost:                         |            |             
|Land                                                     |            |             
|Buildings and improvements                               |            |             
|Machinery and equipment                                  |            |             
|
|                                                         |            |             
|Less accumulated depreciation                            |            |             
|
|Total property and equipment, net                        |            |             
|
|
|Other Assets:                                            |            |             
|Goodwill                                                 |            |             
|Intangible assets, less accumulated amortization         |            |             
|of $8,938,000 and $34,010,000                            |            |             
|Deferred debt expense                                    |            |             
|Restricted investments and marketable securities held    |            |             
|by pension trusts                                        |            |             
|Other                                                    |            |             
|
|                                                         |            |             
|
|                                                         |            |             
|
|
|Liabilities and Stockholder's Investment                 |            |             
|Current Liabilities:                                     |            |             
|Notes payable and other short-term obligations           |            |             
|Current maturities of long-term debt                     |            |             
|Accounts payable                                         |            |             
|Accrued expenses and taxes, net                          |            |             
|
|Total current liabilities                                |            |             
|
|
|Other Liabilities:                                       |            |             
|Deferred income taxes                                    |            |             
|Other                                                    |            |             
|
|                                                         |            |             
|
|
|Notes, Mortgage Notes and Obligations                    |            |             
|Payable, Less Current Maturities                         |            |             
|
|
|Stockholder's Investment:                                |            |             
|Common stock, $.01 par value; authorized 100 shares,     |            |             
|100 shares issued and outstanding at October 4, 2003 and |            |             
|December 31, 2002                                        |            |             
|Additional paid-in capital                               |            |             
|Retained earnings                                        |            |             
|Accumulated other comprehensive income (loss)            |            |             
|
|Total stockholder's investment                           |            |             
|
|                                                         |            |             
|

The
accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.

|NORTEK, INC. AND SUBSIDIARIES                 
|----------------------------------------------
|CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

|                                                       | For The
|------------------------------------------------------ | -------
|
|
|
|
|
|(Amounts in thousands)                                
|(Unaudited)                                           
|
|Net Sales                                              |        
|
|Costs and Expenses:                                    |        
|Cost of products sold                                  |        
|Selling, general and administrative expenses, net      |        
|Amortization of intangible assets                      |        
|Expenses and charges arising from the Recapitalization |        
|
|                                                       |        
|
|
|Operating earnings                                     |        
|Interest expense                                       |        
|Investment income                                      |        
|
|Earnings from continuing operations before provision   |        
|for income taxes                                       |        
|Provision for income taxes                             |        
|
|Earnings from continuing operations                    |        
|Earnings from discontinued operations                  |        
|
|Net earnings                                           |        
|

The
accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.

|NORTEK, INC. AND SUBSIDIARIES                 
|----------------------------------------------
|CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

|                                            | For the Periods
|------------------------------------------- | ---------------
|
|
|
|
|(Amounts in thousands)                     
|(Unaudited)                                
|
|Net Sales                                   |                
|
|
|Costs and Expenses:                         |                
|Cost of products sold                       |                
|Selling, general and administrative expense |                
|Amortization of intangible assets           |                
|Expenses and charges arising from the       |                
|Recapitalization                            |                
|
|                                            |                
|
|
|Operating earnings (loss)                   |                
|Interest expense                            |                
|Investment income                           |                
|
|Earnings (loss) from continuing operations  |                
|before provision (benefit) for income taxes |                
|Provision (benefit) for income taxes        |                
|
|Earnings (loss) from continuing operations  |                
|Earnings from discontinued operations       |                
|
|Net earnings (loss)                         |                
|

The
accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.

|NORTEK, INC. AND SUBSIDIARIES                 
|----------------------------------------------
|CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

|                                                          | For the Periods
|--------------------------------------------------------- | ---------------
|
|
|
|
|(Amounts in thousands)                                   
|(Unaudited)                                              
|
|Cash Flows from operating activities:                     |                
|Net earnings (loss) from continuing operations            |                
|Earnings from discontinued operations                     |                
|
|Net earnings (loss)                                       |                
|
|
|Adjustments to reconcile net earnings (loss)              |                
|to cash:                                                  |                
|Depreciation and amortization expense                     |                
|Non-cash write-off of inventory                           |                
|Non-cash interest expense, net (including $4,100,000 from |                
|post-Recapitalization amortization of the Bridge Facility |                
|commitment fees and expenses)                             |                
|Gain on the sale of a discontinued business               |                
|Deferred federal income tax provision (credit)            |                
|Effect of the Recapitalization, net                       |                
|Changes in certain assets and liabilities, net of         |                
|effects from acquisitions and dispositions:               |                
|Accounts receivable, net                                  |                
|Inventories                                               |                
|Prepaids and other current assets                         |                
|Net assets of discontinued operations                     |                
|Accounts payable                                          |                
|Accrued expenses and taxes                                |                
|Long-term assets, liabilities and other, net              |                
|
|Total adjustments to net earnings (loss)                  |                
|
|Net cash provided by (used in) operating activities       |                
|
|
|Cash Flows from investing activities:                     |                
|Capital expenditures                                      |                
|Net cash paid for businesses acquired                     |                
|Purchase of investments and marketable securities         |                
|Proceeds from the sale of investments and                 |                
|marketable securities                                     |                
|Proceeds from the sale of a discontinued business         |                
|Change in restricted cash and investments                 |                
|Other, net                                                |                
|
|Net cash used in investing activities                     |                
|
|Cash Flows from financing activities:                     |                
|Change in borrowings, net                                 |                
|Dividend paid to Nortek Holdings                          |                
|Contribution of capital from Nortek Holdings              |                
|Net cash transfers to Nortek Holdings                     |                
|Other, net                                                |                
|
|Net cash used in financing activities                     |                
|
|Net decrease in unrestricted cash and                     |                
|cash equivalents                                          |                
|Unrestricted cash and cash equivalents at the             |                
|beginning of the period                                   |                
|
|Unrestricted cash and cash equivalents at the             |                
|end of the period                                         |                
|
|
|Supplemental disclosure of cash flow                      |                
|information:                                              |                
|
|Interest paid                                             |                
|
|Income taxes paid, net                                    |                
|
|
|Non-cash items:                                           |                
|
|Capital lease additions                                   |                
|

The
accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.

|NORTEK, INC. AND SUBSIDIARIES                               
|------------------------------------------------------------
|CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS INVESTMENT
|FOR THE THREE MONTHS ENDED SEPTEMBER 28, 2002               

|                                       |  |  | Addi- |        |  | Accumulated |    
|-------------------------------------- |  |  | ----- | ------ |  | ----------- | ---
|
|
|
|(Amounts in thousands)                
|(Unaudited)                           
|
|Balance, June 29, 2002                 |  |  | $     | 18,870 |  | $           | 802
|Net earnings                           |  |  |       | --     |  |             | -- 
|Other comprehensive income (loss):     |  | 
|Currency translation adjustment        |  |  |       | --     |  |             | -- 
|Unrealized decline in the fair         |  | 
|value of marketable securities         |  |  |       | --     |  |             | -- 
|                                      
|Comprehensive income                   |  |  | $     | 14,187 | 
|                                      
|3,259 shares of special common stock   |  | 
|converted into 3,259 shares            |  | 
|of common stock                        |  |  |       | 3      |  |             | (3 
|The effect of directors' stock options |  |  |       | --     |  |             | -- 
|                                      
|Balance, September 28, 2002            |  |  | $     | 18,873 |  | $           | 799
|                                      

The
accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.

|NORTEK, INC. AND SUBSIDIARIES                               
|------------------------------------------------------------
|CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS INVESTMENT
|FOR THE NINE MONTHS ENDED SEPTEMBER 28, 2002                

|                                       |  |  | Addi- |        |  | Accumulated |    
|-------------------------------------- |  |  | ----- | ------ |  | ----------- | ---
|
|
|
|(Amounts in thousands)                
|(Unaudited)                           
|
|Balance, December 31, 2001             |  |  | $     | 18,829 |  | $           | 814
|Net earnings                           |  |  |       | --     |  |             | -- 
|Other comprehensive income (loss):     |  | 
|Currency translation adjustment        |  |  |       | --     |  |             | -- 
|Unrealized decline in the fair         |  | 
|value of marketable securities         |  |  |       | --     |  |             | -- 
|                                      
|Comprehensive income                   |  |  | $     | 58,037 | 
|                                      
|15,464 shares of special common stock  |  | 
|converted into 15,464 shares           |  | 
|of common stock                        |  |  |       | 15     |  |             | (15
|28,213 shares of common stock          |  | 
|issued upon exercise of stock options  |  |  |       | 29     |  |             | 590
|The effect of directors' stock options |  |  |       | --     |  |             | -- 
|33 shares of treasury stock acquired   |  |  |       | --     |  |             | -- 
|                                      
|Balance, September 28, 2002            |  |  | $     | 18,873 |  | $           | 799
|                                      

The
accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.

|NORTEK, INC. AND SUBSIDIARIES                               
|------------------------------------------------------------
|CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S INVESTMENT
|FOR THE PERIOD FROM JANUARY 1, 2003 TO JANUARY 9, 2003      

|                                                   |  | Addi- |   | Accumulated |  
|-------------------------------------------------- |  | ----- | - | ----------- | -
|
|
|
|(Amounts in thousands)                            
|(Unaudited)                                       
|
|Balance, December 31, 2002                         |  |       | $ | --          |  
|Net loss                                           |  |       |   | --          |  
|Other comprehensive income:                        |  |      
|Currency translation adjustment                    |  |       |   | --          |  
|Minimum pension liability, net of                  |  |      
|tax of $9,906,000                                  |  |       |   | --          |  
|                                                  
|Comprehensive loss                                 |  |       | $ | (45,406     | )
|                                                  
|Dividend to Nortek Holdings, Inc.                  |  |       |   | --          |  
|Contribution of capital from Nortek Holdings, Inc. |  |       |   | --          |  
|                                                  
|Subtotal                                           |  |       | $ | --          |  
|Effect of the Recapitalization                     |  |       |   | --          |  
|                                                  
|Balance, January 9, 2003                           |  |       | $ | --          |  
|                                                  

The
accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.

|NORTEK, INC. AND SUBSIDIARIES                               
|------------------------------------------------------------
|CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S INVESTMENT
|FOR THE THREE MONTHS ENDED OCTOBER 4, 2003                  

|                                                   |  | Addi- |   | Accumulated |  
|-------------------------------------------------- |  | ----- | - | ----------- | -
|
|
|
|(Amounts in thousands)                            
|(Unaudited)                                       
|
|Balance, July 5, 2003                              |  |       | $ | --          |  
|Net earnings                                       |  |       |   | --          |  
|Other comprehensive income (loss):                 |  |      
|Currency translation adjustment                    |  |       |   | --          |  
|Unrealized decline in the fair value of            |  |      
|marketable securities                              |  |       |   | (36         | )
|                                                  
|Comprehensive income                               |  |       | $ | 30,610      |  
|                                                  
|Contribution of capital from Nortek Holdings, Inc. |  |       |   | 1,000       |  
|Amortization of compensatory stock options         |  |       |   | --          |  
|                                                  
|Balance, October 4, 2003                           |  |       | $ | --          |  
|                                                  

The
accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.

|NORTEK, INC. AND SUBSIDIARIES                               
|------------------------------------------------------------
|CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S INVESTMENT
|FOR THE PERIOD FROM JANUARY 10, 2003 TO OCTOBER 4, 2003     

|                                                   |  | Addi- |   | Accumulated | 
|-------------------------------------------------- |  | ----- | - | ----------- | 
|
|
|
|(Amounts in thousands)                            
|(Unaudited)                                       
|
|Balance, January 9, 2003                           |  |       | $ | --          | 
|Net earnings                                       |  |       |   | --          | 
|Other comprehensive income (loss):                 |  |      
|Currency translation adjustment                    |  |       |   | --          | 
|Unrealized decline in the fair value               |  |      
|of marketable securities                           |  |       |   | --          | 
|                                                  
|Comprehensive income                               |  |       | $ | 75,993      | 
|                                                  
|Contribution of capital from Nortek Holdings, Inc. |  |       |   | 1,000       | 
|Amortization of compensatory stock options         |  |       |   | --          | 
|                                                  
|Balance, October 4, 2003                           |  |       | $ | --          | 
|                                                  

The
accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.

|NORTEK, INC. AND SUBSIDIARIES            
|-----------------------------------------
|NOTES TO UNAUDITED CONDENSED CONSOLIDATED
|FINANCIAL STATEMENTS                     
|OCTOBER 4, 2003 AND SEPTEMBER 28, 2002   

|(A) | The
unaudited  condensed  consolidated  financial  statements  (the  "Unaudited
Financial  Statements")  presented  have been  prepared by Nortek,  Inc. and include
the accounts of Nortek,  Inc.,  and all of its  wholly-owned  subsidiaries  (the
"Company" or "Nortek")  after  elimination of  intercompany  accounts
and  transactions,  without  audit and,  in the opinion of  management,  reflect  all
adjustments  of a normal  recurring  nature  necessary  for a fair  statement of the
interim  periods  presented.  Although  certain  information and footnote  disclosures
normally  included in financial  statements  prepared in accordance  with  accounting
principles  generally  accepted  in the United  States  have been  omitted,  the Company
believes that the  disclosures  included are adequate to make the  information  presented
not  misleading.  In 2002, the Company sold certain subsidiaries of its wholly-owned
subsidiary,  Ply Gem Industries,  Inc.  ("Ply Gem"). The sale of these
subsidiaries and their related  operating  results have been excluded from  earnings
(loss) from continuing  operations and are classified as discontinued  operations for all
periods  presented (see Note H).  Certain  amounts in the prior year's  Unaudited
Financial  Statements  have been  reclassified  to  conform  to  the  current  year
presentation.  It is  suggested  that  these  Unaudited  Financial  Statements be read in
conjunction  with the  consolidated  financial  statements and the notes  included in the
Company's  latest annual  report on Form 10-K and its latest  Current  Reports on Form
8-K  as filed with the Securities and Exchange Commission ("SEC") (see Note B).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
November 20, 2002,  the Company  reorganized  into a holding  company  structure  and
each  outstanding  share of capital  stock of the Company was  converted  into an
identical  share of capital stock of Nortek  Holdings,  Inc. ("Nortek
Holdings"),  a Delaware corporation formed in 2002, with Nortek Holdings becoming
the successor  company and the Company becoming a wholly-owned  subsidiary of Nortek
Holdings (the "Nortek  Holdings  Reorganization").  On January 9,  2003,
Nortek  Holdings,  the  parent  company of Nortek,  was  acquired by certain  affiliates
and designees of Kelso & Company L.P.  ("Kelso")  and certain  members of  the
Company's  management  (the  "Management  Investors")  in  accordance  with the
Agreement and Plan of  Recapitalization  by and among Nortek,  Inc.,  Nortek Holdings,
Inc. and K Holdings,  Inc. ("K Holdings")  dated as of June 20, 2002, as
amended,  (the  "Recapitalization  Agreement")  in a  transaction  valued at
approximately  $1.6 billion,  including all of the Company's  indebtedness (the
"Recapitalization")  (see  Note B).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Beginning
on January 9, 2003,  the Company and Nortek  Holdings  accounted for the
Recapitalization  as a  purchase in accordance  with the provisions of Statement of
Financial  Accounting  Standards  ("SFAS") No.  141,  "Business
Combinations"  ("SFAS No.  141"),  which  resulted in a new  valuation for
the assets and  liabilities  of  Nortek  Holdings  and its  subsidiaries  based  upon
fair  values  as of the date of the  Recapitalization.  As allowed under SEC Staff
Accounting  Bulletin No. 54, "Push Down Basis of Accounting  Required in Certain
Limited  Circumstances",  the Company has reflected all applicable purchase
accounting  adjustments recorded by Nortek Holdings in the Company's condensed
consolidated  financial statements for  all SEC filings covering periods subsequent to
the  Recapitalization  ("Push Down Accounting").  Push Down  Accounting
requires  the  Company to  establish a new basis for its assets and  liabilities  based
on the  amount  paid for its  ownership  at  January  9,  2003.  Accordingly,  Nortek
Holdings'  ownership  basis  (including  the fair value of options  rolled over by the
Management  Investors) is reflected in Nortek's  condensed  consolidated  financial
statements beginning upon completion of the Recapitalization.  In order  to apply  Push
Down  Accounting,  Nortek  Holdings'  purchase  price of  approximately  $468,737,000
was  allocated  to  the  assets  and  liabilities  based  on  their  relative  fair
values  and  approximately  $440,837,000  was reflected in the  Company's  Stockholder's
Investment as the value of Nortek  Holdings'  ownership  in  the  Company  upon
completion  of  the  Recapitalization.  Immediately  prior  to  the  Recapitalization,
the Company's Stockholder's Investment was approximately  $156,702,000.  Purchase price
allocations  are subject to refinement  until all  pertinent  information  is obtained.
As of January 10,  2003, the Company  preliminarily  allocated the excess  purchase price
over the net assets acquired in the  Recapitalization based on its estimates of the fair
value of assets and liabilities as follows:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                 | Excess purchase price of the
|------------------------------------------------ | ----------------------------
|
|
|Inventories                                      |                             
|Property, plant and equipment                    |                             
|Intangible assets                                |                             
|Goodwill                                         |                             
|Indebtedness                                     |                             
|Prepaid and deferred income taxes                |                             
|Pension and post retirement health care benefits |                             
|Other                                            |                             
|
|Total                                            |                             
|

| | During
the period  from  January 10,  2003  to  October  4,  2003,  the  Company  reflected
approximately  $6,000,000 of excess  purchase price  allocated  to  inventory  as  a
non-cash  charge  to cost  of  goods  sold.  There  was  no  additional  non-cash  charge
to cost  of  goods  sold  in  the  three  months  ended  October 4, 2003  arising from
excess  purchase  price  from  the  Recapitalization  allocated  to  inventory.  During
the three  months  ended  October  4,  2003  and  the  period  from  January  10,  2003
to  October  4,  2003,  the  Company  reflected  approximately  $3,400,000  and
$9,700,000,  respectively,  of  lower  depreciation  expense in cost  of sales,
approximately  $1,600,000  and  $4,600,000,  respectively,  of  additional  amortization
expense of  intangible  assets and approximately  $1,500,000  and  $4,300,000,
respectively,  of  lower  interest  expense  from  the  amortization  of  premium
allocated  to  indebtedness  as  compared  to  the  Company's  historical  basis  of
accounting  prior to the Recapitalization.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company has  estimated  the fair  value  of  its  assets  and  liabilities,  including
intangible  assets  and  property,  plant  and  equipment,  as  of  the
Recapitalization,  utilizing  information  available  at the  time  that  the  Company's
Unaudited  Financial  Statements  were prepared  and these  estimates  are subject to
refinement  until  all  pertinent  information  has been obtained.  The  Company  is  in
the  process  of  obtaining  outside  third  party  appraisals of its intangible  assets
and property, plant and equipment.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
impact  of  these  fair  value  estimates has been  reflected in the  Company's
condensed consolidated  statement  of  operations  for  the  periods  ended  October  4,
2003.  Should  the  intangible  asset  or  property,  plant  and  equipment  appraisals
result in differences in  the  average  amortizable  or  depreciable  lives of  these
assets  or in the fair  value  amount of the  estimates,  the following  estimated
changes  in  annual  operating  earnings would occur:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                     | Increase (decrease) in operating earnings
|------------------------------------ | -----------------------------------------
|
|
|
|If lives are one year greater        |                                          
|If lives are one year less           |                                          
|If fair value is $10,000,000 greater |                                          
|If fair value is $10,000,000 less    |                                          

| | The
combined  periods  from  January 1, 2003 to January 9, 2003 and from  January  10, 2003
to October 4,  2003  contain  277 days while the first nine months of 2002  contained
271 days.  Accordingly,  operating  results for 2003 include  approximately  $1,000,000
of  additional  interest  expense as compared to 2002  since the  Company  accrues
interest  expense  based on the number of days  contained  in each  reporting  period.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(B) | On
January 8, 2003, at a special meeting of stockholders of Nortek  Holdings,  the
stockholders  approved  the following  amendments to the certificate of incorporation
(the  "Stockholder  Approval"),  which were  required in order to complete the
Recapitalization:
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A new  class of common  stock,  Class A Common  Stock,  par value  $1.00 per  share,  of Nortek
                    Holdings was created consisting of 19,000,000 authorized shares.At the time that the amendment to the  certificate  of  incorporation  became  effective,  each
                    share of common  stock,  par value $1.00 per share and special  common  stock,  par value $1.00
                    per  share  outstanding,  was  reclassified  into  one  share  of a new  class  of  mandatorily
                    redeemable  common stock,  Class B Common Stock,  par value $1.00 per share, of Nortek Holdings
                    consisting of 14,000,000 authorized shares.Class B Common  Stock was  required to be  immediately  redeemed for $46 per share in cash upon
                    completion of the Recapitalization.The authorized  number of shares of Series B Preference  Stock,  par value $1.00 per share, was
                    increased to 19,000,000 authorized shares.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Following
the  Stockholder  Approval,  common  stock and  special  common  stock  held by the
Management  Investors  were  exchanged for an equal number of newly created  shares of
Series B Preference  Stock.  In  addition,  certain  options to purchase  shares of
common and special  common stock held by the Management  Investors  were  exchanged  for
fully  vested  options to purchase an equal  number of shares of the newly  created
Class A Common  Stock.  The  remaining  outstanding  options,  including  some held by
Management  Investors,  were  cancelled in exchange  for the right to receive a single
lump sum cash payment  equal to  the product of the number of shares of common  stock or
special  common  stock  underlying  the option and  the amount by which the  redemption
price of $46 per share  exceeded the per share  exercise price of the  option.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
January 9, 2003,  in  connection  with the  Recapitalization,  Kelso  purchased  newly
issued shares of  Series B Preference  Stock for  approximately  $355,923,000  and
purchased  shares of Series B Preference  Stock held by the Management  Investors for
approximately  $18,077,000.  Newly issued Class A Common Stock  of  approximately
$3,262,000  was purchased by designated  third  parties.  Shares of Series B Preference
Stock held by the  Management  Investors  that were not  purchased by Kelso were
converted  into an equal  number of shares of Class A Common Stock.  In addition,  the
Company  declared and  distributed  to Nortek  Holdings  a  dividend  of  approximately
$120,000,000  and  distributed  approximately  $27,900,000  for  reimbursement of fees
and expenses of Kelso,  which were paid out of the Company's  unrestricted  cash and
cash  equivalents on hand and were permissible  under the most  restrictive  covenants
with respect to the  indentures  of the  Company's 8 7/8% Senior  Notes due 2008,  9 1/4%
Senior  Notes due 2007, 9 1/8% Senior  Notes due 2007 and 9 7/8% Senior Subordinated
Notes due 2011 (the "Existing Notes").
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Nortek
Holdings  used the proceeds from the purchase by Kelso and  designated  third parties of
the newly  issued  Series B Preference  Stock and Class A Common Stock and the dividend
from Nortek to redeem Nortek  Holdings'  Class B Common  Stock and to cash out  options
to  purchase  common and  special  common  stock  totaling  approximately  $479,185,000.
Kelso also purchased  from certain  Management  Investors  392,978  shares of Series B
Preference Stock for approximately $18,077,000.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
connection with the  Recapitalization,  K Holdings received a bridge financing letter
from a lender for  a senior  unsecured  term loan facility not to exceed  $955,000,000
(the "Bridge  Facility").  The Bridge  Facility was intended to be used to
fund,  if  necessary,  any change in control  offers the Company might  have made in
connection with the  Recapitalization.  The Company did not use this Bridge Facility
because  the structure of the  Recapitalization  did not require the Company to make any
change of control  offers.  The  commitment  letter  expired on January 31, 2003.  As a
result,  the Company's  consolidated  interest  expense for the period  from  January 10,
2003 to October 4, 2003  includes  approximately  $4,100,000  of  interest expense from
the  amortization of the Bridge Facility  commitment fees and related  expenses.  In  the
third  quarter of 2003,  the  Company did not incur any interest  expense
related to this commitment letter.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
January 2003,  Nortek Holdings filed for the  deregistration of its shares of common and
special common  stock under the  Securities  Exchange Act of 1934.  Nortek  Holdings'
shares of common and special common  stock are no longer publicly  traded.  The Company
will continue to file periodic  reports with the SEC as  required by the respective
indentures of the Company's Existing Notes.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Under
the terms of one of the Company's  supplemental  executive  retirement  plans
("SERP"),  the Company  was required to make one-time cash payments to
participants  in such plan in  satisfaction of obligations  under that plan when the
Recapitalization  was  completed.  Accordingly,  the Company made a distribution  of
approximately  $75,100,000  to the  participants  in the plan from  funds  included  in
the  Company's  Consolidated  Balance  Sheet at  December  31,  2002 and  classified  in
long-term  assets in  restricted  investments and marketable  securities  held by pension
trusts and transferred to one of the  participants  a life insurance  policy with
approximately  $10,300,000 of cash surrender  value to satisfy a portion of  the SERP's
obligation to such  participant.  The  termination  and  settlement of the  obligation of
this  SERP resulted in a curtailment loss on January 9, 2003 (see Note F).
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
total amount of transaction  fees and related costs incurred by the Company and Kelso
associated with  the  Recapitalization  was  approximately  $47,348,000,  including the
$27,900,000  noted above, of which  approximately  $10,500,000  of advisory  fees and
expenses was paid to Kelso.  A portion of these fees and  expenses  was  recorded by the
Company in selling,  general and  administrative  expense,  since they were  obligations
of the Company  prior to the  Recapitalization.  Approximately  $12,848,000  was
recorded as  expense  on January  9, 2003  since  these  fees and  expenses  became
obligations  of the  Company  upon  consummation  of the  Recapitalization  (see Note F).
Approximately  $6,600,000 of expense was previously  recorded by the Company in the year
ended  December 31,  2002,  of which  $1,000,000  and  $6,200,000  was  recorded in the
third quarter and first nine months of 2002, respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following  reflects  the  pro  forma  effect  of  the  Recapitalization  for  the
periods  presented  through  January 9, 2003:
| | -----------------------------------------------------------------------------------------------------------------------------------

|                       | For the Period | For the Three | For the Nine | For the
|---------------------- | -------------- | ------------- | ------------ | -------
|
|
|(Amounts in thousands)
|
|Net sales              |                |               | $            | 33,775 
|Operating earnings     |                |               |              | 832    
|Earnings (loss) from   |                |              
|continuing operations  |                |               |              | (1,126 

| | The
unaudited pro forma condensed  consolidated  summary of operations for the periods
presented has been  prepared  by  adjusting  the  Company's  historical  summary  of
operations  to  give  effect  to  the  Recapitalization  as if it had  occurred on
January 1, 2002.  Fees,  expenses and charges  resulting  from  the  Recapitalization,
including the $6,600,000 noted above,  have been excluded from the above pro forma
financial  data since this pro forma data  assumes that the  Recapitalization  occurred
on January 1, 2002  (see Note F). The  information  contained in this unaudited pro forma
condensed  consolidated  summary of  operations  has been prepared  utilizing
information  available at the time that the Company's  Unaudited  Financial  Statements
were prepared and is subject to refinement until all pertinent  information has been
obtained.  The unaudited pro forma  condensed  consolidated  summary of operations
reflects the Company's  estimate  of the  effect  of  fair  value  adjustments  for
inventory,  property,  plant  and  equipment,  intangible  assets,  pension,  debt and
financing  costs and their related  deferred tax  attributes.  The  excess of the
purchase  price over the  historical  basis of net assets and these fair value
adjustments  was recorded as goodwill.  Property,  plant and equipment,  intangible
assets and certain other assets and  liabilities  and related  tax  attributes  have been
adjusted  to fair value in the  Company's  condensed  consolidated  balance sheet on
October 4, 2003 based on Company estimates.  Certain pertinent  information  related to
the fair value of these items has not yet been  obtained or  completed.  Pertinent
information  not yet obtained or completed  includes,  among other items,  third party
appraisals of intangible  assets  and property, plant and equipment and their related
deferred tax attributes.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(C) | SFAS
No.  143,  "Accounting  for Asset  Retirement  Obligations"  ("SFAS  No.
143")  addresses  financial  accounting and reporting for  obligations  associated
with the retirement of tangible  long-lived  assets  and the associated  asset retirement
costs.  SFAS No. 143 requires that the fair value of a liability for  an asset
retirement  obligation  be  recognized  in the period in which it is  incurred  if a
reasonable  estimate of fair value can be made.  The  associated  asset  retirement
costs are  capitalized as part of  the carrying amount of the long-lived  asset.  SFAS
No. 143 is effective for financial  statements  issued  for fiscal years  beginning
after June 15, 2002 with early adoption  permitted.  The Company adopted SFAS  No. 143 on
January 1, 2003.  Adoption  of this  accounting  standard  was not  material  to the
Company's  Unaudited Financial Statements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | SFAS
No. 145,  "Rescission  of FASB  Statements  No. 4, 44 and 64,  Amendment of FASB
Statement No. 13 and  Technical  Corrections"  ("SFAS No.  145"),  was
issued in April 2002 and addresses the reporting of gains  and losses  resulting from the
extinguishment  of debt,  accounting for  sale-leaseback  transactions and  rescinds or
amends other  existing  authoritative  pronouncements.  SFAS No. 145 requires that any
gain or  loss on  extinguishment  of debt  that  does not  meet the  criteria  of APB 30
for  classification  as an  extraordinary  item shall not be  classified  as
extraordinary  and shall be included  in  earnings  from  continuing  operations.  The
provisions  of this  statement  related  to the  extinguishment  of debt are  effective
for  financial  statements  issued in fiscal  years  beginning  after May 15,  2002 with
early  application  encouraged.  The  Company  adopted  SFAS No.  145 on  January  1,
2003 and  adoption  of this  accounting standard was not material to the results
presented in the Unaudited Financial Statements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Effective
January 1, 2003, the Company adopted SFAS No. 146,  "Accounting for Costs
Associated with Exit  or Disposal  Activities"  ("SFAS No.  146"),  which
addresses  the  accounting  and  reporting  for costs  associated  with exit or disposal
activities,  nullifies  Emerging  Issues Task Force  ("EITF") Issue No.  94-3,
"Liability  Recognition  for  Certain  Employee  Termination  Benefits  and Other
Costs to Exit an  Activity  (including  Certain  Costs  Incurred  in  a
Restructuring)"  ("EITF  94-3")  and  substantially  nullifies  EITF
Issue No.  88-10,  "Costs  Associated  with Lease  Modification  or
Termination"  ("EITF  88-10").  SFAS No. 146 requires that a liability for
a cost associated  with an exit or disposal  activity  be  recognized  when the
liability is incurred.  Under EITF 94-3, a liability for an exit cost as defined  in EITF
94-3 was  recognized  at the date of an entity's  commitment  to an exit plan.  The
provisions of  SFAS No. 146 are effective for exit or disposal  activities  that are
initiated  after  December 31, 2002.  The  adoption  of SFAS  No.  146 did not have a
material  effect  on the  Company's  Unaudited  Financial  Statements (see Note N).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
December 31, 2002, the Financial  Accounting  Standards Board ("FASB") issued
SFAS No. 148, "Accounting  for  Stock-Based  Compensation - Transition  and
Disclosure"  ("SFAS No. 148").  SFAS No. 148 amends SFAS  No. 123,
"Accounting for Stock-Based  Compensation"  ("SFAS No. 123") to
provide  alternative  methods of  transition  to SFAS No. 123's fair value  method of
accounting  for  stock-based  employee  compensation.  SFAS No. 148 also  amends the
disclosure  provisions  of SFAS No. 123 and APB  Opinion  No. 28,  "Interim
Financial  Reporting".  The Company  accounts for stock-based  compensation in
accordance with APB No. 25,  "Accounting  for Stock  Issued to  Employees"
("APB No.  25").  The Company  has  provided  the  required  disclosures under
SFAS No. 148 (see Note L).
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
November  2002,  the FASB  issued  Interpretation  No.  45,  "Guarantor's
Accounting  and  Disclosure  Requirements for Guarantees,  Including  Indirect
Guarantees of Indebtedness of Others" ("FIN 45"). Along  with new
disclosure  requirements,  FIN 45 requires  guarantors to recognize,  at the inception of
certain  guarantees,  a liability for the fair value of the obligation  undertaken in
issuing the  guarantee.  This  differs  from the  prior  practice  to record a  liability
only when a loss is  probable  and  reasonably  estimable.  The  recognition and
measurement  provisions of FIN 45 are applicable on a prospective  basis  to guarantees
issued or modified after December 31, 2002. The Company  adopted the disclosure
provisions  of FIN 45 as of December 31, 2002 and adopted the entire  interpretation  on
January 1, 2003.  Adoption of  FIN 45 was not material to the Company's Unaudited
Financial Statements (see Note M).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
January 2003, the FASB issued  Interpretation  No. 46,  "Consolidation  of Variable
Interest Entities -  an  Interpretation  of ARB  No.  51"  ("FIN  46").
FIN 46  clarifies  the  application  of  ARB  No.  51,  "Consolidated  Financial
Statements,"  to certain  entities  in which  equity  investors  do not have the
characteristics  of a  controlling  financial  interest or do not have  sufficient
equity at risk for the  entity to finance its activities  without  additional
subordinated  financial support from other parties.  The consolidation  requirements of
FIN 46 apply to the Company  immediately for variable interest entities  created after
January 31, 2003 and for existing  variable  interest  entities no later than the end of
the  first annual  reporting  period  beginning  after December 15, 2003.  The Company is
currently  evaluating  the impact of adopting FIN 46 on its consolidated financial
statements.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
April 2003,  the FASB issued SFAS No. 149,  "Amendment of Statement 133 on
Derivative  Instruments  and  Hedging  Activities" ("SFAS No. 149"), which
clarifies the financial  accounting and reporting  proscribed  by SFAS No. 133,
"Accounting  for Derivative  Instruments  and Hedging  Activities"  ("SFAS
No. 133") for  derivative  instruments,  including certain derivative  instruments
embedded in other contracts.  Certain  provisions  of SFAS No. 149 related to
implementation  issues of SFAS No. 133 are already  effective  and  other provisions
related to forward purchases or sales are effective for both existing  contracts and new
contracts  entered into after June 30, 2003.  The Company has previously  adopted SFAS
No. 133,  including  the  implementation  issues  addressed in SFAS No. 149, and the
adoption of the new provisions of SFAS No.  149 on July 1, 2003 did not have a material
impact on the Company's Unaudited Financial Statements.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
May  2003,  the  FASB  issued  SFAS  No.  150,  "Accounting  for  Certain  Financial
Instruments  with  Characteristics  of Both  Liabilities  and Equity"  ("SFAS
No. 150"),  which  addresses the accounting and  reporting for the  classification
and measurement of certain financial  instruments with  characteristics  of both
liabilities and equity.  SFAS No. 150 is effective for all financial  instruments
entered into or  modified  after May 31, 2003 and for all existing  financial
instruments  beginning in the first  interim  period  after  June 15,  2003,  except for
mandatorily  redeemable  financial  instruments  of  nonpublic  entities,  which are
subject to the  provisions for the first fiscal period  beginning  after December 15,
2004.  The Company  adopted  SFAS No. 150 on July 1, 2003.  Adoption of this  accounting
standard did not  have a material impact on the Company's Unaudited Financial Statements.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(D) | The
period from January 10, 2003 to October 4, 2003  includes  approximately  $4,100,000  of
interest  expense from  the  amortization  of the Bridge Facility  commitment  entered
into as part of the  Recapitalization  (see  Note B).  Interest  expense  for the third
quarter  and first  nine  months of 2002  includes  a non-cash  reduction in interest
expense of  approximately  $400,000  and  $1,200,000,  respectively  related to the
Company's former interest rate collar agreement, which was terminated in August 2002.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(E) | On
January 17, 2003,  the Company  acquired Elan Home Systems  L.L.C.  ("Elan")
for an aggregate  purchase  price  of  approximately  $18,900,000  including  a
$1,500,000  note  payable  to  the  sellers.  Elan  manufactures  and  sells  consumer
electronic  equipment  that  controls  whole-house  entertainment,  communication  and
automation  systems for new  residential  construction  and retrofit  markets.  For the
year ended December 31, 2002, Elan reported net sales of approximately  $21,300,000
(unaudited).  On July  11, 2003, the Company acquired  SpeakerCraft,  Inc.
("SPC") for approximately  $58,100,000 in cash. SPC is  a leading  designer and
supplier of  architectural  loudspeakers  and audio  products used in  residential
custom  applications.  For the year ended  December  31, 2002,  SPC  reported  net sales
of  approximately  $34,800,000 (unaudited).  Acquisitions contributed  approximately
$16,867,000 and $27,996,000 to net sales  for the three  months  ended  October 4, 2003
and for the period from January 10, 2003 to October 4, 2003,  respectively,  and
contributed  approximately  $2,783,000  and  $4,342,000 to operating  earnings for the
three  months  ended  October  4, 2003 and for the  period  from  January  10,  2003 to
October  4, 2003,  respectively.  Elan and SPC are included in the  Residential  Building
Products  Segment in the Company's  segment  reporting.  Pro forma  results  related to
these  acquisitions  have not been  presented,  as the  effect is not significant to the
Company's consolidated operating results.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Acquisitions
are  accounted  for as  purchases  and,  accordingly,  have been  included in the
Company's  consolidated  results of operations since the acquisition date.  Purchase
price allocations are subject to  refinement until all pertinent information regarding
the acquisitions is obtained.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(F) | For
the nine days ended January 9, 2003,  the Company  incurred  certain  charges in
connection  with the  Recapitalization.  These charges were as follows:
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            
|--------------------------------------------
|Curtailment loss upon termination of a SERP 
|Recapitalization fees, expenses and other   
|Compensation expense from the settlement and
|cancellation of stock options               
|
|                                            
|

| | The
operating  results of the Air  Conditioning  and Heating  Products  Segment for the three
months ended  October 4, 2003 and the period from January 10, 2003 to October 4, 2003
include  approximately  $2,300,000  and  $3,700,000,  respectively,  of  severance  and
other  costs  associated  with the  closure of certain  manufacturing  facilities.  The
operating  results of the Air  Conditioning  and Heating  Products Segment  for the three
months  ended  October 4, 2003 and the period from January 10, 2003 to October 4, 2003
also  include approximately $400,000 and $1,000,000,  respectively,  of expenses
associated with the start-up of  a new  manufacturing  facility.  The operating  results
of the Windows,  Doors and Siding Products Segment  for the period from January 10, 2003
to October 4, 2003 include  approximately  $600,000 of severance  and  other costs
associated with the closure of certain  manufacturing  facilities.  The operating
results of  the  Windows,  Doors and Siding  Products  segment for the period from
January 10, 2003 to October 4, 2003  also include  approximately  $1,300,000  of costs
and expenses for  expanded  distribution  including  new  customers.  There  were no
additional  costs and  expenses  incurred  related  to the  closure of certain
manufacturing  facilities or the expanded  distribution in the Windows,  Doors and Siding
Products Segment  in the third quarter of 2003.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the  second  quarter  of 2002,  approximately  $4,400,000  was  charged to  operating
earnings  and is  included in selling,  general and  administrative  expenses  relating
to an incentive earned by certain of  the Company's  officers under the Company's  1999
Equity  Performance  Plan. In addition,  as discussed in  Note B, the Company has
recorded expenses of approximately  $1,000,000 and $6,200,000 in selling,  general  and
administrative expenses in the third quarter and first nine months of 2002,
respectively,  related to  fees and expenses  associated  with the  Recapitalization  of
the Company.  In the third  quarter of 2002,  the  Company  incurred  approximately
$2,100,000  in  connection  with  its  re-audit  of  the  Company's  Consolidated
Financial  Statements for each of the three years in the period ended December 31, 2001
(see  Notes B and H). In the third  quarter of 2002,  the Company  incurred
approximately  $1,600,000 of direct  expenses and third party fees  associated  with the
Company's  strategic  sourcing  initiative  which are  recorded in Other in the Company's
segment reporting.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(G) | At
November  13,  2003,  there  was  approximately  $22,300,000  available  for the payment
of cash  dividends,  stock  purchases or  other  restricted  payments  as  defined  under
the  terms  of the  Company's most restrictive debt covenant related to such payments.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(H) | On
April 2, 2002,  Ply Gem sold the capital stock of its subsidiary  Hoover  Treated Wood
Products,  Inc.  ("Hoover").  On November 22,  2002,  Ply Gem sold the capital
stock of its  subsidiary  Richwood  Building  Products,  Inc.  ("Richwood").
The  sale  of  these  subsidiaries  and  their  related  operating  results  have  been
excluded  from  earnings  from  continuing  operations  and  are  classified as
discontinued operations for all periods presented.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following is a summary of the results of discontinued  operations for the three and nine
months ended September 28, 2002:
| | -----------------------------------------------------------------------------------------------------------------------------

|                                             | Three Months | Nine Months
|-------------------------------------------- | ------------ | -----------
|
|
|(Amounts in thousands)                      
|(Unaudited)                                 
|
|Net Sales                                    |              |            
|
|
|Earnings before income taxes                 |              |            
|Provision for income taxes                   |              |            
|
|Earnings from discontinued operations        |              |            
|Gain on sale of discontinued operations, net |              |            
|of provision for income taxes of $1,200,000  |              |            
|
|Earnings from discontinued operations        |              |            
|
|
|Depreciation and amortization expense        |              |            
|

|(I) | On
October  9,  2003,  the  Company  announced  that  it  is  exploring  strategic
alternatives  for  its  Windows,  Doors  and  Siding  Products  (WDS)  Segment,
including  its  possible  sale.  The  Company  has  retained  financial  advisors  to
assist  in  exploring  strategic  alternatives  for  the WDS  Segment.  There  can  be
no  assurance  that  any  transaction  will  result  from  the  exploration  process.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(J) | The
Company  has  three  reportable  segments:  the  Residential  Building  Products
Segment;  the  Air  Conditioning  and  Heating  Products  Segment;  and  the  Windows,
Doors  and  Siding  Products  Segment.  In  the  tables  below,  Other  includes
corporate  related  items,  intersegment  eliminations  and  certain  income  and
expense  items  not  allocated  to  reportable  segments.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
April 2,  2002,  the  Company  sold  the  capital  stock  of  Hoover.  On  November  22,
2002,  the  Company  sold  the  capital  stock  of  Richwood.  The  results  of
Richwood,  which  were  previously  part  of the  Windows,  Doors  and  Siding  Products
Segment  and  Hoover,  which  were  previously  part  of the  Other  Segment,  have  been
excluded  from  earnings  from  continuing  operations  and  classified  separately  as
discontinued  operations  for  all  periods  presented  (see  Note  H).  Accordingly  the
segment  information  presented  below  excludes  Richwood  and  Hoover  for  all
periods.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company  evaluates  segment  performance  based  on  operating  earnings  before
allocations  of  corporate  overhead  costs.  The  income  statement  impact  of  all
purchase  accounting  adjustments,  including  goodwill  and  intangible  asset
amortization,  is  included  in  the  operating  earnings  of  the  applicable  segment.
Intersegment  net  sales  and  eliminations  were  not  material  for  any  of  the
periods  presented.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Net
sales,  operating  earnings  and  pre-tax  earnings  from  continuing  operations  for
the  Company's  segments  for  the  three  months  ended  October  4,  2003  and
September  28,  2002  were  as  follows:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                       | Three Months Ended
|------------------------------------------------------ | ------------------
|
|
|
|(Amounts in thousands)                                
|(Unaudited)                                           
|
|Net sales:                                             |                   
|Residential building products                          |                   
|Air conditioning and heating products                  |                   
|Windows, doors and siding products                     |                   
|
|Consolidated net sales                                 |                   
|
|
|Operating earnings:                                    |                   
|Residential building products                          |                   
|Air conditioning and heating products *                |                   
|Windows, doors and siding products                     |                   
|
|Subtotal                                               |                   
|Unallocated:                                           |                   
|Expenses and charges arising from the Recapitalization |                   
|Re-audit fees and expenses                             |                   
|Strategic sourcing expense                             |                   
|Other, net                                             |                   
|
|Consolidated operating earnings                        |                   
|Interest expense                                       |                   
|Investment income                                      |                   
|
|Earnings before provision for income taxes             |                   
|

| | * | The
operating  results of the Air  Conditioning  and Heating  Products Segment for the three
months ended  October 4, 2003  include  approximately  $2,300,000  of  severance  and
other costs  associated  with the  closure of certain  manufacturing  facilities and
approximately  $400,000 of expenses associated with the  start-up of a new manufacturing
facility.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Depreciation
and  amortization  expense,  the non-cash  inventory  write-off of a portion  of
allocated  purchase price and capital  expenditures  from  continuing  operations for the
Company's  segments for the  three months ended October 4, 2003 and September 28, 2002
were as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                   | Three Months Ended
|-------------------------------------------------- | ------------------
|
|
|
|(Amounts in thousands)                            
|(Unaudited)                                       
|
|Non-cash inventory write-off of a portion          |                   
|of allocated purchase price:                       |                   
|Residential building products                      |                   
|Air conditioning and heating products              |                   
|Windows, doors and siding products                 |                   
|
|Consolidated inventory non-cash charge             |                   
|
|
|Depreciation and Amortization Expense:             |                   
|Residential building products                      |                   
|Air conditioning and heating products              |                   
|Windows, doors and siding products                 |                   
|Other                                              |                   
|
|Consolidated depreciation and amortization expense |                   
|
|
|Capital Expenditures:                              |                   
|Residential building products                      |                   
|Air conditioning and heating products              |                   
|Windows, doors and siding products                 |                   
|Other                                              |                   
|
|Consolidated capital expenditures                  |                   
|

| | Net
sales,  operating  earnings  (loss) and pre-tax  earnings  (loss) from  continuing
operations for the  Company's segments for the periods presented below were as follows:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                       | For the Periods
|------------------------------------------------------ | ---------------
|
|
|
|
|(Amounts in thousands)                                
|(Unaudited)                                           
|
|Net sales:                                             |                
|Residential building products                          |                
|Air conditioning and heating products                  |                
|Windows, doors and siding products                     |                
|
|Consolidated net sales                                 |                
|
|
|Operating earnings (loss):                             |                
|Residential building products                          |                
|Air conditioning and heating products *                |                
|Windows, doors and siding products *                   |                
|
|Subtotal                                               |                
|Unallocated:                                           |                
|Expenses and charges arising from the Recapitalization |                
|Re-audit fees and expenses                             |                
|1999 equity performance plan incentive                 |                
|Strategic sourcing expense                             |                
|Other, net                                             |                
|
|Consolidated operating earnings (loss)                 |                
|Interest expense                                       |                
|Investment income                                      |                
|
|Earnings (loss) before provision (benefit)             |                
|for income taxes                                       |                
|

| | * | The
operating  results of the Air  Conditioning  and Heating  Products  Segment for the
period from  January 10, 2003 to October 4, 2003 include  approximately  $3,700,000  of
severance and other costs  associated  with the closure of certain  manufacturing
facilities and  approximately  $1,000,000 of  expenses  associated with the start-up of a
new  manufacturing  facility.  The operating  results of  the Windows,  Doors and Siding
Products  Segment for the period from January 10, 2003 to October 4,  2003 include
approximately  $600,000 of severance  and other costs  associated  with the closure of
certain  manufacturing  facilities and  approximately  $1,300,000 of costs and expenses
for expanded  distribution including new customers.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Depreciation
and  amortization  expense,  the non-cash  inventory  write-off of a portion  of
allocated  purchase price and capital  expenditures  from  continuing  operations for the
Company's  segments for the  periods presented below were as follows:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                   | For the Periods
|-------------------------------------------------- | ---------------
|
|
|
|
|(Amounts in thousands)                            
|(Unaudited)                                       
|
|Non-cash inventory write-off of a portion          |                
|of allocated purchase price:                       |                
|Residential building products                      |                
|Air conditioning and heating products              |                
|Windows, doors and siding products                 |                
|
|Consolidated inventory non-cash charge             |                
|
|
|Depreciation and Amortization Expense:             |                
|Residential building products                      |                
|Air conditioning and heating products              |                
|Windows, doors and siding products                 |                
|Other                                              |                
|
|Consolidated depreciation and amortization expense |                
|
|
|Capital Expenditures:                              |                
|Residential building products                      |                
|Air conditioning and heating products              |                
|Windows, doors and siding products                 |                
|Other                                              |                
|
|Consolidated capital expenditures                  |                
|

|(K) | The
Company  provides  income taxes on  an  interim  basis  based  upon  the  estimated
annual effective income tax  rate.  The  following  reconciles  the  federal  statutory
income tax rate to  the  estimated  effective  tax rate of  approximately  40.9%,  27.1%
and 42.0%  for the periods presented:
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                              | For the Periods
|--------------------------------------------- | ---------------
|
|
|
|
|
|Income tax provision (benefit) at the federal |                
|statutory rate                                |                
|Net change from federal statutory rate:       |                
|State income tax provision,  net of federal   |                
|income tax effect                             |                
|Change in tax reserves, net                   |                
|Tax effect resulting from foreign activities  |                
|Tax effect of the Recapitalization            |                
|Non-deductible expenses                       |                
|Other, net                                    |                
|
|Income tax provision (benefit) at estimated   |                
|effective rate                                |                
|

|(L) | The
Company  accounts for stock options  granted to employees using the intrinsic value
method pursuant to  the  provisions  of APB Opinion No. 25, under which no  compensation
cost has been  recognized  since the  options were granted with  exercise  prices equal
to the fair market value of the common stock at the date  of grant.  Accordingly,  the
table below  presents  pro forma  information  as if the fair value method of  SFAS No.
123 had been  applied for each of those  periods.  The Company  estimates  the fair value
of each  option  grant as of the date of the grant  using the  Black-Scholes
option-pricing  model  based upon the  indicated assumptions.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Upon
completion of the  Recapitalization  on January 9, 2003, all existing options became
fully vested and  all  options  for  shares  of  common  stock  and  special  common
stock of  Nortek  Holdings,  that were  rolled-over by the Management  Investors,  were
exchanged for stock options to purchase an equal number of  shares of Class A Common
Stock of Nortek  Holdings at the same price per share.  Accordingly,  the period  from
January 1, 2003 to January 9, 2003 in the table that follows  includes the pro forma
employee  stock  compensation  expense,  net of  tax,  associated  with  the  accelerated
vesting  of all of the  existing  unvested options in connection with the
Recapitalization.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
pro forma employee  stock  compensation  expense,  net of tax, for the period from
January 10, 2003 to  October 4, 2003 in the table that follows  represents the pro forma
impact of approximately  443,000 Class  A stock options issued by Nortek Holdings  during
the period in accordance with the assumptions  indicated  therein.  Approximately
847,000  of Class B stock  options  issued by Nortek  Holdings  during the period  have
not been included in the  calculation as the vesting is  performance-based  and it is
uncertain when,  if ever, these options will vest.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                           | For the Three Months Ended
|------------------------------------------ | --------------------------
|
|
|(Amounts in thousands except percentages) 
|(Unaudited)                               
|
|Pro forma had SFAS No. 123 been applied:   |                           
|Net earnings from continuing               |                           
|operations, as reported                    |                           
|Pro forma employee stock                   |                           
|compensation, net of tax                   |                           
|
|Pro forma net earnings from                |                           
|continuing operations                      |                           
|
|
|Net earnings, as reported                  |                           
|Pro forma employee stock                   |                           
|compensation, net of tax                   |                           
|
|Pro forma net earnings                     |                           
|
|
|Pro forma weighted average                 |                           
|fair value of options as of the grant date |                           
|
|
|Assumptions  for options  entered  into    |                           
|during the period:                         |                           
|
|Risk-free interest rate                    |                           
|                                           |                           
|
|Expected life                              |                           
|
|Expected volatility                        |                           
|
|Expected dividend yield                    |                           

|                                           | For the Periods
|------------------------------------------ | ---------------
|
|
|
|
|(Amounts in thousands except percentages) 
|(Unaudited)                               
|
|Pro forma had SFAS No. 123 been applied:   |                
|Net earnings (loss) from continuing        |                
|operations, as reported                    |                
|Pro forma employee stock                   |                
|compensation, net of tax                   |                
|
|Pro forma net earnings (loss) from         |                
|continuing operations                      |                
|
|
|Net earnings (loss), as reported           |                
|Pro forma employee stock                   |                
|compensation, net of tax                   |                
|
|Pro forma net earnings (loss)              |                
|
|Pro forma weighted average                 |                
|fair value of options as of the grant date |                
|
|
|Assumptions  for options  entered  into    |                
|during the period:                         |                
|
|Risk-free interest rate                    |                
|                                           |                
|
|Expected life                              |                
|
|Expected volatility                        |                
|
|Expected dividend yield                    |                

|(M) | The
Company and its  subsidiaries  have  guaranteed  certain  obligations  of various  third
parties that  aggregate  approximately  $34,900,000 at October 4, 2003.  Approximately
$28,200,000 relates to Ply Gem's  guarantee  of rental  payments  through  June 30, 2016
under a facility  leased by SNE  Enterprises,  Inc.  ("SNE"),  which was sold
on September  21, 2001.  The buyer of SNE has provided  certain  indemnifications  and
other  rights  to Ply Gem for any  payments  that it  might  be  required  to make
pursuant  to this  guarantee.  Should the buyer of SNE cease making  payments  then Ply
Gem may be required to make  payments  on its  guarantee.  Approximately  $2,400,000
relates to Ply Gem's  guarantee of lease  payments  through  approximately  March 18,
2008 for truck leases  entered into by SNE.  Should the buyer of SNE cease making
payments  on this  lease,  Ply Gem  may be  required  to make  payments  on its
guarantee.  Approximately  $4,300,000  relates to  guarantees  of the  remaining
principal  and interest  balances of mortgages of a  third-party  on  certain  buildings,
one of which  houses the  Company's  corporate  headquarters.  These  guarantees  expire
on  December  31,  2020 and are payable in the event of  non-payment  of the  mortgage.
These  guarantees are  collateralized  by the buildings to which the mortgages relate and
any liability to  the Company would first be reduced by the  Company's  pro-rata  share
of proceeds  received on the sale of  the  buildings.  The  Company  does  not
anticipate  incurring  any  loss  under  these  guarantees  and  accordingly has not
recorded any liabilities at October 4, 2003 in the  accompanying  unaudited  condensed
consolidated  balance sheet in accordance  with  accounting  principles  generally
accepted in the United  States.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company has  indemnified  third  parties for  certain  matters in a number of
transactions  involving  dispositions  of  former  subsidiaries.  The  Company  has
recorded  liabilities  related  to  these  indemnifications of approximately $22,700,000
at October 4, 2003.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company  sells a number of products and offers a number of  warranties  including  in
some  instances,  extended  warranties.  The  specific  terms and  conditions  of these
warranties  vary  depending  on the  product  sold and  country  in which the  product is
sold.  The  Company  estimates  the costs that may be  incurred  under its  warranties,
with the exception of extended  warranties,  and records a liability for  such costs at
the time of sale.  Proceeds  received from extended  warranties  are amortized over the
life  of the  warranty  and  reviewed to ensure  that the  liability  recorded  is equal
to or greater  than the  estimated  future  costs.  Factors  that affect the  Company's
warranty  liability  include the number of  units  sold,  historical  and  anticipated
rates of  warranty  claims,  cost per  claim  and new  product  introduction.  The
Company  periodically  assesses  the  adequacy  of its  recorded  warranty  claims and
adjusts the amounts as necessary.  Changes in the Company's  combined  short-term  and
long-term  warranty  liabilities during the periods presented are as follows:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                         | For the Three Months Ended
|---------------------------------------- | --------------------------
|
|
|(Amounts in thousands)                  
|(Unaudited)                             
|
|Balance, beginning of period             |                           
|Warranties provided during period        |                           
|Settlements made during period           |                           
|Changes in liability estimate, including |                           
|acquisitions                             |                           
|
|Balance, end of period                   |                           
|

|                                         | For the Periods
|---------------------------------------- | ---------------
|
|
|
|
|(Amounts in thousands)                  
|(Unaudited)                             
|
|Balance, beginning of period             |                
|Warranties provided during period        |                
|Settlements made during period           |                
|Changes in liability estimate, including |                
|acquisitions                             |                
|
|Balance, end of period                   |                
|

| | The
Company is subject to other  contingencies,  including legal proceedings and claims
arising out of its  businesses that cover a wide range of matters,  including,  among
others,  environmental matters, contract  and  employment  claims,  product  liability,
warranty and  modification,  adjustment or  replacement  of  component  parts of units
sold.  Product  liability,  environmental  and  other  legal  proceedings  also  include
matters with respect to businesses  previously  owned. The Company has used various
substances in  its products and  manufacturing  operations which have been or may be
deemed to be hazardous or dangerous,  and the extent of its potential  liability,  if
any, under  environmental,  product liability and workers'  compensation statutes,
rules,  regulations and case law is unclear.  Further, due to the lack of adequate
information  and the  potential  impact of  present  regulations  and any  future
regulations,  there are  certain circumstances in which no range of potential exposure
may be reasonably estimated.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
former  subsidiary  of the Company is a  defendant  in a number of lawsuits  alleging
damage  caused by  alleged  defects in certain  pressure  treated wood products.  A
subsidiary of the Company has indemnified  the buyer of the former  subsidiary for all
known  liabilities  and future claims relating to such matters  and  retained  the rights
to all  potential  reimbursements  related to  insurance  coverage.  Many of the
lawsuits have been resolved by dismissal or settlement  with amounts being paid out of
insurance  proceeds  or other third party  recoveries.  The Company and the former
subsidiary  continue to  vigorously  defend  the remaining  suits.  Certain  defense and
indemnity  costs are being paid out of insurance  proceeds and  proceeds  from a
settlement  with  suppliers  of material  used in the  production  of the  treated  wood
products.  The  Company  and the former  subsidiary  have  engaged in  coverage
litigation  with  certain  insurers and have settled  coverage  claims with several of
the  insurers.  The Company  believes that the  remaining  coverage  disputes will be
resolved on a  satisfactory  basis and  additional  coverage will be  available.  In
reaching  this  belief,  the Company  analyzed  insurance  coverage  and the status of
the  coverage  litigation,  considered  the  history  of  settlements  with  primary  and
excess  insurers  and  consulted with counsel.  The Company has recorded  liabilities of
approximately  $6,910,000 and $8,440,000  at  October 4, 2003 and  December  31,  2002,
respectively,  for the  estimated  costs to  resolve  these  outstanding  matters.  The
Company has also recorded  receivables at October 4, 2003 and December 31, 2002  of
approximately  $4,286,000 and $5,011,000,  respectively,  for the estimated recoveries
which are deemed  probable of collection related primarily to insurance litigation
matters discussed above.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | While
it is  impossible  to  ascertain  the  ultimate  legal  and  financial  liability  with
respect  to  contingent  liabilities,  including  lawsuits,  the Company  believes  that
the  aggregate  amount of such  liabilities,  if any,  in excess of amounts  provided  or
covered by  insurance,  will not have a material  adverse  effect on the  consolidated
financial  position or results of operations  of the Company.  It is  possible,  however,
that  future  results  of  operations  for any  particular  future  period  could  be
materially  affected  by changes in our  assumptions  or  strategies  related  to these
contingencies  or  changes out of the Company's control.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(N) | The
Company records  restructuring  costs  primarily in connection  with  operations
acquired or facility  closings  which  management  plans to  eliminate  in order to
improve  future  operating  results  of the  Company.  During  the  fourth  quarter  of
2002,  the  Company  provided  approximately  $1,000,000  for  liabilities  related to
restructuring  and closing costs of certain  subsidiaries  within its Residential
Building  Products  Segment.  During the period  from  January  10,  2003 to October 4,
2003,  the Company  recognized  restructuring  charges  primarily  associated with plant
closings in the Air  Conditioning and  Heating Products and Windows, Doors and Siding
Products Segments.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Within
the Air  Conditioning  and Heating Products  Segment,  the Company,  in the second
quarter of 2003,  initiated  restructuring  activities related to the closure of two
facilities in St. Louis,  Missouri,  in  order to  relocate  the  operations  to other
facilities  by the end of the first  quarter  of 2004.  The  restructuring  is  expected
to  result in the  termination  of  approximately  500  employees  at the two  facilities
which  will  be  closed.  Approximately  48  employees  have  been  terminated  to  date.
The  facilities  currently  support  manufacturing,  warehousing and  distribution
activities of the segment's  residential  HVAC products.  During the third quarter and
first nine months of 2003, the Company  provided  approximately  $2,300,000  and
$3,700,000,  respectively,  in cost of goods sold  related to  liabilities  incurred as a
result of the  restructuring  and expects to provide an additional  estimated  $4,800,000
of  costs  through  early 2004.  The  facilities  to be closed are owned by the Company
and are expected to be  sold in 2004.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Within
the Windows,  Doors and Siding Products  Segment,  the Company incurred  approximately
$600,000 in  the first  nine  months of 2003 of  severance  and other  costs  associated
with the  closure  of certain  manufacturing  facilities  and  expects  to incur
additional  future  restructuring  costs  of less  than  $100,000  related to
restructuring  plans which began to be implemented in the first quarter of 2003. The
facilities  to be closed are owned by the  Company and are  expected to be sold in 2004.
As of October 4,  2003,  these  facilities  have been  classified as assets held for sale
within other current assets in the  accompanying condensed consolidated balance sheet.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following  table  sets  forth  restructuring  activity  in  the  accompanying  unaudited
condensed  consolidated  statement  of  operations  for the periods  presented.  These
costs are  included in cost of  goods sold and  selling,  general and  administrative
expenses in the  accompanying  unaudited  condensed  consolidated statement of operations
of the Company.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               | Employee |  | Total
|------------------------------ | -------- |  | -----
|
|
|(Amounts in thousands)        
|(Unaudited)                   
|
|Balance at December 31, 2001   |          |  | $    
|Payments and asset write downs |          |  |      
|
|Balance at March 30, 2002      |          |  |      
|Other adjustments              |          |  |      
|
|Balance at June 29, 2002       |          |  |      
|Other adjustments              |          |  |      
|
|Balance at September 28, 2002  |          |  | $    
|
|
|Balance at December 31, 2002   |          |  | $    
|Other adjustments              |          |  |      
|
|Balance at January 9, 2003     |          |  |      
|Provision                      |          |  |      
|Payments and asset write downs |          |  |      
|
|Balance at April 5, 2003       |          |  |      
|Provision                      |          |  |      
|Payments and asset write downs |          |  |      
|
|Balance at July 5, 2003        |          |  |      
|Provision                      |          |  |      
|Payments and asset write downs |          |  |      
|Other adjustments              |          |  |      
|
|Balance at October 4, 2003     |          |  | $    
|

| | Employee
separation  expenses are  comprised of severance,  vacation,  outplacement  and retention
bonus  payments.  Other  restructuring  costs include  expenses  associated with
terminating  other  contractual  arrangements,  costs to prepare  facilities  for
closure,  costs to move  equipment  and products to other  facilities and write-offs
related to equipment sales and disposals  attributable to a restructuring  which
occurred prior to December 31, 2002.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NORTEK, INC. AND SUBSIDIARIES                                       
|--------------------------------------------------------------------
|MANAGEMENT'S DISCUSSION AND ANALYSIS                                
|OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        
|FOR THE THIRD QUARTER AND FIRST NINE MONTHS ENDED OCTOBER 4, 2003   
|AND THE THIRD QUARTER AND FIRST NINE MONTHS ENDED SEPTEMBER 28, 2002

|The
Company is a diversified  manufacturer of residential and commercial building products,
operating within three  principal segments:  the Residential  Building Products Segment,
the Air Conditioning and Heating Products Segment  and the Windows,  Doors and Siding
Products Segment.  In the results of operations  presented below, Other includes
corporate  related  items,  intersegment  eliminations  and certain  income and expense
not allocated to reportable  segments.  Through its principal  segments,  the Company
manufactures  and sells,  primarily in the United States,  Canada and Europe,  a wide
variety of products  for the  residential  and  commercial  construction,  manufactured
housing and the  do-it-yourself  ("DIY") and  professional  remodeling  and
renovation  markets.  (As used in this  report,  the terms  "Company"  and
"Nortek"  refer to Nortek,  Inc.,  together  with its  subsidiaries,  unless
the  context  indicates  otherwise.  Such terms as  "Company"  and
"Nortek"  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.)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
Residential  Building  Products  Segment  manufactures  and  distributes  built-in
products  primarily for the  residential new construction and DIY and professional
remodeling and renovation  markets.  The principal  products  sold by the segment
include  kitchen  range hoods,  built-in  exhaust fans (such as bath fans and fan,
heater and  light  combination  units) and indoor air quality  products.  The Air
Conditioning  and Heating  Products  Segment  manufactures and sells heating,
ventilating and air conditioning  systems ("HVAC") for custom-designed
commercial  applications and for  residential,  light commercial and  manufactured
structures.  The Windows,  Doors and Siding  Products Segment,  principally manufactures
and distributes:  (i) vinyl siding,  skirting,  soffit and accessories,  (ii) vinyl and
aluminum clad windows,  (iii) vinyl patio and steel entry doors and  sunrooms,  (iv)
vinyl  fencing,  railing and decking,  (v) composite  decking and railing and (vi)
aluminum trim coil,  soffit and  accessories  for  use in the residential construction
and DIY and professional renovation markets.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On
November 20, 2002,  the Company  reorganized  into a holding  company  structure and each
outstanding  share of  capital  stock of the Company was  converted  into an identical
share of capital  stock of Nortek  Holdings,  Inc.  ("Nortek  Holdings"),  a
Delaware  corporation  formed in 2002, with Nortek Holdings becoming the successor
company  and the Company becoming a wholly-owned  subsidiary of Nortek Holdings (the
"Nortek Holdings  Reorganization").  On  January 9, 2003, Nortek Holdings,  the
parent company of Nortek,  was acquired by certain  affiliates and designees  of Kelso & Company
L.P. ("Kelso") and certain members of the Company's  management (the
"Management  Investors") in  accordance with the Agreement and Plan of
Recapitalization by and among Nortek,  Inc., Nortek Holdings,  Inc. and K  Holdings,
Inc. ("K  Holdings")  dated as of June 20, 2002, as amended,  (the
"Recapitalization  Agreement")  in a  transaction  valued  at  approximately
$1.6  billion,  including  all  of  the  Company's  indebtedness  (the
"Recapitalization").  (See  Liquidity  and Capital  Resources  and Note B of
the Notes to the  unaudited  condensed  consolidated financial statements (the
"Unaudited Financial Statements") included elsewhere herein.)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Beginning
on January 9, 2003, the Company and Nortek Holdings accounted for the  Recapitalization
as a purchase in  accordance  with the  provisions  of Statement  of  Financial
Accounting  Standards  ("SFAS")  No. 141,  "Business  Combinations"
("SFAS No.  141"),  which  resulted  in a new  valuation  for the assets and
liabilities  of Nortek  Holdings  and its  subsidiaries  based upon fair values as of the
date of the  Recapitalization.  As allowed  under  SEC Staff Accounting  Bulletin No. 54,
"Push Down Basis of Accounting  Required in Certain Limited  Circumstances",
the Company has  reflected  all  applicable  purchase  accounting  adjustments  recorded
by Nortek  Holdings in the  Company's  condensed  consolidated  financial  statements for
all SEC filings  covering  periods  subsequent to the  Recapitalization  ("Push Down
Accounting").  Push Down  Accounting  requires  the Company to establish a new basis
for its assets  and  liabilities  based on the  amount  paid for its  ownership  at
January 9, 2003.  Accordingly,  Nortek Holdings'  ownership basis (including the fair
value of options rolled over by the Management  Investors) is  reflected  in  Nortek's
condensed  consolidated  financial  statements  beginning  upon  completion  of  the
Recapitalization.  In order to apply  Push  Down  Accounting,  Nortek  Holdings'
purchase  price of  approximately  $468,737,000  was allocated to the assets and
liabilities  based on their  relative fair values and  approximately  $440,837,000 was
reflected in the Company's  Stockholder's  Investment as the value of Nortek  Holdings'
ownership  in the Company upon completion of the Recapitalization.  Immediately prior to
the  Recapitalization,  the Company's  Stockholder's  Investment was  approximately
$156,702,000.  Purchase price  allocations  are subject to refinement  until all
pertinent  information  is obtained.  As of January 10, 2003,  the Company  preliminarily
allocated the  excess  purchase  price over the net assets  acquired in the
Recapitalization  based on its  estimates of the fair  value of assets and liabilities as
follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                 | Excess purchase price of the
|------------------------------------------------ | ----------------------------
|
|
|Inventories                                      |                             
|Property, plant and equipment                    |                             
|Intangible assets                                |                             
|Goodwill                                         |                             
|Indebtedness                                     |                             
|Prepaid and deferred income taxes                |                             
|Pension and post retirement health care benefits |                             
|Other                                            |                             
|
|Total                                            |                             
|

|During
the period from  January 10, 2003 to October 4, 2003,  the Company  reflected
approximately  $6,000,000  of  excess purchase price  allocated to inventory as a
non-cash  charge to cost of goods sold.  There was no additional  non-cash  charge to
cost of goods sold in the three  months  ended  October 4, 2003  arising  from excess
purchase  price from the  Recapitalization  allocated to  inventory.  During the three
months ended  October 4, 2003 and the  period from January 10, 2003 to October 4, 2003,
the Company  reflected  approximately  $3,400,000 and  $9,700,000,  respectively,  of
lower  depreciation  expense  in  cost  of  sales,  approximately  $1,600,000  and
$4,600,000,  respectively,  of  additional  amortization  expense  of  intangible  assets
and  approximately  $1,500,000  and  $4,300,000,  respectively,  of lower interest
expense from the amortization of premium allocated to indebtedness as  compared to the
Company's historical basis of accounting prior to the Recapitalization.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
Company has estimated the fair value of its assets and liabilities,  including
intangible assets and property,  plant and equipment,  as of the  Recapitalization,
utilizing  information available at the time that the Company's  Unaudited  Financial
Statements  were prepared and these  estimates are subject to refinement  until all
pertinent  information  has been obtained.  The Company is in the process of obtaining
outside third party  appraisals of its  intangible assets and property, plant and
equipment.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
impact of these fair value estimates has been reflected in the Company's  condensed
consolidated  statement of  operations  for the periods ended October 4, 2003.  Should
the  intangible  asset or property,  plant and equipment  appraisals  result in
differences in the average  amortizable or depreciable  lives of these assets or in the
fair  value amount of the estimates, the following estimated changes in annual operating
earnings would occur:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                     | Increase (decrease) in operating earnings
|------------------------------------ | -----------------------------------------
|
|
|
|If lives are one year greater        |                                          
|If lives are one year less           |                                          
|
|If fair value is $10,000,000 greater |                                          
|If fair value is $10,000,000 less    |                                          

|The
combined  periods from January 1, 2003 to January 9, 2003 and from January 10, 2003 to
October 4, 2003 contain  277 days while the first nine months of 2002 contained 271 days.
Accordingly,  operating  results for 2003 include  approximately  $1,000,000 of
additional  interest  expense as compared to 2002 since the Company  accrues  interest
expense based on the number of days contained in each reporting period.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On
January 17,  2003,  the Company  acquired  Elan Home Systems L.L.C.  ("Elan").
On July  11,  2003,  the  Company  acquired  SpeakerCraft,  Inc.  ("SPC").  The
acquisitions  of  Elan  and  SPC  have  been  accounted  for under the purchase  method
of  accounting.  Accordingly,  the  results  of  Elan and SPC are  included in the
Company's  consolidated  results  since  the  date  of  their  acquisitions.  (See  Note
E  of  the  Notes to the Unaudited Financial  Statements  included elsewhere herein.)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On
April  2,  2002,  the  Company's  wholly-owned  subsidiary,  Ply  Gem  Industries,  Inc.
("Ply  Gem")  sold  the  capital  stock  of  its  subsidiary  Hoover  Treated
Wood Products,  Inc.  ("Hoover") and  on  November  22,  2002,  Ply Gem  sold
the  capital  stock  of its  subsidiary  Richwood  Building Products,  Inc.
("Richwood").  The  results of Richwood,  which were  previously  part  of  the
Windows,  Doors  and  Siding  Products  Segment  and  Hoover,  which  were  previously
part of the Other Segment,  have  been excluded from earnings from  continuing
operations  and  classified  separately  as  discontinued  operations  for  all  periods
presented.  Accordingly  the  segment  information that follows  excludes  Richwood  and
Hoover for all  periods.  (See Note H of  the  Notes  to  the  Unaudited  Financial
Statements included elsewhere herein.)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
Company's  discussion  and  analysis of  its  financial  condition  and  results  of
operations  are  based  upon  the  Company's  Unaudited Financial  Statements,  which
have  been prepared in accordance  with accounting  principles  generally accepted in the
United  States.  Certain  of  the  Company's  accounting  policies require the
application  of judgment  in  selecting  the  appropriate  assumptions  for  calculating
financial  estimates.  By  their  nature,  these  judgments are subject to an inherent
degree  of  uncertainty.  The  Company  periodically  evaluates the  judgments and
estimates  used  for  its  critical  accounting  policies  to  ensure  that such
judgments  and  estimates  are  reasonable for its interim and year-end  reporting
requirements.  These  judgments  and  estimates  are  based on the  Company's  historical
experience,  current  trends and  information  available  from other  sources,  as
appropriate.  If  different  conditions  result  from those  assumptions  used in the
Company's  judgments,  the results  could be  materially  different  from  the  Company's
estimates.  The  Company's  critical  accounting policies include:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Revenue Recognition and Related ExpensesInventory ValuationPrepaid Income Tax Assets and Deferred Tax LiabilitiesGoodwillPensions and Post Retirement Health BenefitsInsurance LiabilitiesContingencies
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Further
detail  regarding  the  Company's  critical  accounting  policies  can be found  in  the
consolidated  financial  statements  and  the  notes  included  in the  Company's  latest
annual  report on Form 10-K as filed  with the Securities and Exchange  Commission
("SEC").
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
"Results of  Operations"  and "Liquidity  and  Capital  Resources"
sections  which  follow  contain  various  tables  that  are  intended  to  assist  the
reader  in  reconciling  current  results with the prior  period.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

##### Results of Operations

|The
tables  that  follow  present  the  unaudited  net  sales  from  continuing  operations,
operating  earnings  from  continuing  operations and  depreciation and  amortization
expense  from  continuing  operations  for  the  Company's  principal  segments  for  the
third  quarter  ended  October 4, 2003 and September 28, 2002,  the  dollar amount and
percentage  change of such  results as compared to the prior  comparable  period  and the
percentage  to net sales of  operating  earnings  and  depreciation  and  amortization
expense for the third  quarter  ended  October  4,  2003 and  September  28,  2002:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                       | Third Quarter Ended | 
|------------------------------------------------------ | ------------------- | 
|
|
|
|
|(Dollar amounts in thousands)                         
|
|Net sales:                                             |                     | 
|Residential Building Products                          |                     | 
|Air Conditioning and Heating Products                  |                     | 
|Windows, Doors and Siding Products                     |                     | 
|
|Consolidated net sales                                 |                     | 
|
|
|Operating earnings:                                    |                     | 
|Residential Building Products **                       |                     | 
|Air Conditioning and Heating Products                  |                     | 
|Windows, Doors and Siding Products                     |                     | 
|
|Subtotal                                               |                     | 
|Unallocated:                                           |                     | 
|Expenses and charges arising from the Recapitalization |                     | 
|Re-audit fees and expenses                             |                     | 
|Strategic sourcing expense                             |                     | 
|Other, net                                             |                     | 
|
|Consolidated operating earnings                        |                     | 
|
|
|Depreciation and amortization expense:                 |                     | 
|Residential Building Products                          |                     | 
|Air Conditioning and Heating Products                  |                     | 
|Windows, Doors and Siding Products                     |                     | 
|Other                                                  |                     | 
|
|                                                       |                     | 
|
|
|Operating earnings margin:                             |                     | 
|Residential Building Products                          |                     | 
|Air Conditioning and Heating Products                  |                     | 
|Windows, Doors and Siding Products                     |                     | 
|Consolidated                                           |                     | 
|
|Depreciation and amortization                          |                     | 
|expense as a % of net sales:                           |                     | 
|Residential Building Products                          |                     | 
|Air Conditioning and Heating Products                  |                     | 
|Windows, Doors and Siding Products                     |                     | 
|Consolidated                                           |                     | 

| | * | not
meaningful
| | - | --------------

| | ** | During
the three  months  ended  October 4, 2003, the Company reflected approximately
$323,000 of excess purchase price allocated to inventory as a non-cash charge to
cost of products  sold in the  Residential  Building Products Segment.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
combined  first nine months of 2003 pre- and  post-Recapitalization  periods  have been
compared to the first  nine months of 2002 for  purposes of  management's  discussion
and  analysis  of the  results of  operations.  Any  references,  below,  to the first
nine months of 2003 shall refer to the combined  periods.  Material  fluctuations  in
operations resulting from the effect of purchase accounting have been highlighted.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                       | Pre-Recapitalization | Post-Recapitalization | Combined Nine
|-------------------------------------- | -------------------- | --------------------- | -------------
|
|
|(Dollar amounts in thousands)         
|
|Net sales:                             |                      |                       |              
|Residential Building Products          |                      |                       | $            
|Air Conditioning and Heating Products  |                      |                       |              
|Windows, Doors and Siding Products     |                      |                       |              
|
|Consolidated net sales                 |                      |                       | $            
|
|
|Operating earnings (loss) *:           |                      |                      
|Residential Building Products          |                      |                       | $            
|Air Conditioning and Heating Products  |                      |                       |              
|Windows, Doors and Siding Products     |                      |                       |              
|
|Subtotal                               |                      |                       | $            
|Unallocated:                           |                      |                      
|Expenses and charges arising from the  |                      |                      
|Recapitalization                       |                      |                       |              
|Strategic sourcing expense             |                      |                       |              
|Other, net                             |                      |                       |              
|
|Consolidated operating earnings (loss) |                      |                       | $            
|
|
|Depreciation and amortization expense: |                      |                      
|Residential Building Products          |                      |                       | $            
|Air Conditioning and Heating Products  |                      |                       |              
|Windows, Doors and Siding Products     |                      |                       |              
|Other                                  |                      |                       |              
|
|                                       |                      |                       | $            
|
|
|Operating earnings (loss) margin:      |                      |                      
|Residential Building Products          |                      |                       |              
|Air Conditioning and Heating Products  |                      |                       |              
|Windows, Doors and Siding Products     |                      |                       |              
|Consolidated                           |                      |                       |              
|
|Depreciation and amortization          |                      |                      
|expense as a % of net sales:           |                      |                      
|Residential Building Products          |                      |                       |              
|Air Conditioning and Heating Products  |                      |                       |              
|Windows, Doors and Siding Products     |                      |                       |              
|Consolidated                           |                      |                       |              

| | * | During
the period from January 10, 2003 to October 4, 2003, the Company  reflected
approximately  $6,685,000 of  excess  purchase  price  allocated  to inventory as a
non-cash  charge to cost of products  sold.  Approximately  $4,653,000 was allocated to
the Residential Building Products Segment,  approximately  $645,000 was allocated to  the
Air Conditioning and Heating  Products  Segment and  approximately  $1,387,000 was
allocated to the Windows,  Doors and Siding Products Segment.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
tables  that follow  present the  unaudited  net sales from  continuing  operations,
operating  earnings  from  continuing  operations and  depreciation  and  amortization
expense from  continuing  operations for the Company's  principal  segments for the
combined  period ended  October 4, 2003 and the nine months ended  September  28, 2002,
the  dollar  amount and  percentage  change of such  results as  compared  to the prior
comparable  period and the  percentage to net sales of operating  earnings and
depreciation  and  amortization  expense for the combined period  ended October 4, 2003
and the nine months ended September 28, 2002:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                       |  | Change in Earnings in the
|-------------------------------------- |  | -------------------------
|
|
|
|(Dollar amounts in thousands)         
|
|Net sales:                             |  |                          
|Residential Building Products          |  |                          
|Air Conditioning and Heating Products  |  |                          
|Windows, Doors and Siding Products     |  |                          
|
|Consolidated net sales                 |  |                          
|
|
|Operating earnings:                    |  |                          
|Residential Building Products          |  |                          
|Air Conditioning and Heating Products  |  |                          
|Windows, Doors and Siding Products     |  |                          
|
|Subtotal                               |  |                          
|Unallocated:                           |  |                          
|Expenses and charges arising from the  |  |                          
|Recapitalization                       |  |                          
|Re-audit fees and expenses             |  |                          
|1999 equity incentive plan             |  |                          
|Strategic sourcing expense             |  |                          
|Other, net                             |  |                          
|
|Consolidated operating earnings        |  |                          
|
|
|Depreciation and amortization expense: |  |                          
|Residential Building Products          |  |                          
|Air Conditioning and Heating Products  |  |                          
|Windows, Doors and Siding Products     |  |                          
|Other                                  |  |                          
|
|                                       |  |                          
|
|
|Operating earnings margin:             |  |                          
|Residential Building Products          |  |                          
|Air Conditioning and Heating Products  |  |                          
|Windows, Doors and Siding Products     |  |                          
|Consolidated                           |  |                          
|
|Depreciation and amortization          |  |                          
|expense as a % of net sales:           |  |                          
|Residential Building Products          |  |                          
|Air Conditioning and Heating Products  |  |                          
|Windows, Doors and Siding Products     |  |                          
|Consolidated                           |  |                          

| | (1) | The
nine month  period  ended  October 4, 2003  represents  the  combined  pre- and
post-Recapitalization  periods  of  January  1, 2003  through  January  9, 2003 and
January  10,  2003  through  October  4, 2003,  respectively.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | * | not
meaningful
| | - | --------------

|The
tables  that  follow set forth,  for the  periods  presented,  (a)  certain  unaudited
consolidated  operating  results,  (b)  the  change  in the  amount  and  the  percentage
change of such  results as  compared  to the  prior comparable  period, (c) the
percentage  which such  results  bear to net sales,  and  (d)  the  change  of  such
percentages  as  compared  to the  prior  comparable  period.  The  results  of
operations  for the  third  quarter  ended  October  4,  2003  are  not  necessarily
indicative  of the  results  of  operations  to be  expected  for  any  other  interim
period or the full year.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            | Third Quarter Ended | 
|------------------------------------------- | ------------------- | 
|
|
|
|
|(Dollar amounts in millions)               
|
|Net sales                                   |                     | 
|Cost of products sold                       |                     | 
|Selling, general and administrative expense |                     | 
|Amortization of intangible assets           |                     | 
|Expenses and charges arising from the       |                     | 
|Recapitalization                            |                     | 
|
|Operating earnings                          |                     | 
|Interest expense                            |                     | 
|Investment income                           |                     | 
|
|Earnings from continuing operations before  |                     | 
|provision for income taxes                  |                     | 
|Provision for income taxes                  |                     | 
|
|Earnings from continuing operations         |                     | 
|Earnings from discontinued operations       |                     | 
|
|Net earnings                                |                     | 
|

|                                            | Percentage of Net Sales | 
|------------------------------------------- | ----------------------- | 
|
|
|
|
|
|
|Net sales                                   |                         | 
|Cost of products sold                       |                         | 
|Selling, general and administrative expense |                         | 
|Amortization of intangible assets           |                         | 
|Expenses and charges arising from the       |                         | 
|Recapitalization                            |                         | 
|
|Operating earnings                          |                         | 
|Interest expense                            |                         | 
|Investment income                           |                         | 
|
|Earnings from continuing operations before  |                         | 
|provision for income taxes                  |                         | 
|Provision for income taxes                  |                         | 
|
|Earnings from continuing operations         |                         | 
|Earnings from discontinued operations       |                         | 
|
|Net earnings                                |                         | 
|

| | * | not
meaningful
| | - | --------------

|The
combined  first nine months of 2003 pre- and  post-Recapitalization  periods  have been
compared  to the first  nine months of 2002 for  purposes of  management's  discussion
and  analysis  of the  results of  operations.  Any  references,  below,  to the first
nine  months of 2003 shall refer to the combined  periods.  Material  fluctuations  in
operations resulting from the effect of purchase accounting have been highlighted.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                  | Pre- | Post- |  
|------------------------------------------------- | ---- | ----- | -
|
|
|
|(Dollar amounts in millions)                     
|
|Net sales                                         |      |       | $
|Cost of products sold                             |      |       |  
|Selling, general and administrative expenses, net |      |       |  
|Amortization of intangible assets                 |      |       |  
|Expenses and charges arising from the             |      |      
|Recapitalization                                  |      |       |  
|
|Operating earnings (loss)                         |      |       |  
|Interest expense                                  |      |       |  
|Investment income                                 |      |       |  
|
|Earnings (loss) before provision (benefit) for    |      |      
|income taxes                                      |      |       |  
|Provision (benefit) for income taxes              |      |       |  
|
|Net earnings (loss)                               |      |       | $
|

|                                                  | Percentage of Net Sales
|------------------------------------------------- | -----------------------
|
|
|
|
|
|Net sales                                         |                        
|Cost of products sold                             |                        
|Selling, general and administrative expenses, net |                        
|Amortization of intangible assets                 |                        
|Expenses and charges arising from the             |                        
|Recapitalization                                  |                        
|
|Operating earnings (loss)                         |                        
|Interest expense                                  |                        
|Investment income                                 |                        
|
|Earnings (loss) before provision (benefit) for    |                        
|income taxes                                      |                        
|Provision (benefit) for income taxes              |                        
|
|Net earnings (loss)                               |                        
|

|The
tables  that  follow set forth,  for the  periods  presented,  (a)  certain  unaudited
consolidated  operating  results,  (b) the  change  in the  amount  and the  percentage
change of such  results  as  compared  to the prior  comparable  period,  (c) the
percentage  which  such  results  bear to net  sales,  and  (d)  the  change  of such
percentages  as compared  to the prior  comparable  period.  The  results of  operations
for the first nine months  ended  October 4, 2003 are not  necessarily  indicative  of
the results of  operations to be expected for any other  interim period or the full year.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                  |  | Change in Earnings in the
|------------------------------------------------- |  | -------------------------
|
|
|
|(Dollar amounts in millions)                     
|
|Net sales                                         |  |                          
|Cost of products sold                             |  |                          
|Selling, general and administrative expenses, net |  |                          
|Amortization of intangible assets                 |  |                          
|Expenses and charges arising from the             |  |                          
|Recapitalization                                  |  |                          
|
|Operating earnings                                |  |                          
|Interest expense                                  |  |                          
|Investment income                                 |  |                          
|
|Earnings from continuing operations               |  |                          
|before provision for income taxes                 |  |                          
|Provision for income taxes                        |  |                          
|
|Earnings (loss) from continuing operations        |  |                          
|Earnings from discontinued operations             |  |                          
|
|Net earnings (loss)                               |  |                          
|

|                                                  | Percentage of Net Sales | Change in Percentage
|------------------------------------------------- | ----------------------- | --------------------
|
|
|
|
|Net sales                                         |                         |                     
|Cost of products sold                             |                         |                     
|Selling, general and administrative expenses, net |                         |                     
|Amortization of intangible assets                 |                         |                     
|Expense and charges arising from the              |                         |                     
|Recapitalization                                  |                         |                     
|
|Operating earnings                                |                         |                     
|Interest expense                                  |                         |                     
|Investment income                                 |                         |                     
|
|Earnings from continuing operations               |                         |                     
|before provision for income taxes                 |                         |                     
|Provision for income taxes                        |                         |                     
|
|Earnings (loss) from continuing operations        |                         |                     
|Earnings from discontinued operations             |                         |                     
|
|Net earnings (loss)                               |                         |                     
|

| | (1) | The
nine month period ended October 4, 2003 represents the combined pre- and
post-Recapitalization periods  of January 1, 2003 through January 9, 2003 and January 10,
2003 through October 4, 2003, respectively.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | * | not
meaningful
| | - | --------------

|Combined
consolidated  net sales  increased  approximately  $50,500,000  or 10.0% for the third
quarter of 2003 as  compared to the third quarter of 2002 and increased  approximately
$117,100,000  or 8.1% for the first nine months  of 2003 as compared  to the first nine
months of 2002.  The effect of changes in foreign  currency  exchange  rates  accounted
for  approximately  $10,100,000  of the  increase  in net  sales  in  the  third  quarter
of  2003  and  approximately  $29,500,000 of the increase in net sales in the first nine
months of 2003.  Net sales  increased for  the third  quarter of 2003 as compared  to the
third  quarter of 2002 as a result of the  acquisitions  of Elan and  SPC, price
increases and higher net sales volume.  The  acquisitions of Elan in January of 2003 and
SPC in July of  2003  contributed  approximately  $16,900,000  and  $28,000,000  of the
total  increase  in net sales for the third  quarter  and first nine months of 2003,
respectively,  as  compared  to 2002.  Excluding  the effect of changes in  foreign
currency  exchange  rates  and  the  acquisitions  of Elan  and  SPC,  consolidated  net
sales  increased  approximately  $23,500,000  or 4.7% from the third  quarter  of 2003 as
compared  to the third  quarter of 2002 as  follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                     | Third Quarter Net Sales
|---------------------------------------------------- | -----------------------
|
|
|Net sales for the third quarter 2003                 |                        
|Net sales for the third quarter 2002                 |                        
|
|Net increase                                         |                        
|Effect of changes in foreign currency exchange rates |                        
|Effect of the acquisitions of Elan and SPC           |                        
|
|Increase                                             |                        
|

|This
increase is summarized by segment as follows:
|--------------------------------------------------

|                                      | Increase in net sales in the
|------------------------------------- | ----------------------------
|
|
|
|Residential Building Products         |                             
|Air Conditioning and Heating Products |                             
|Windows, Doors and Siding Products    |                             
|
|                                      |                             
|

|Net
sales  increased  for the first nine months of 2003 as compared to the first nine months
of 2002 as a result of  the  acquisitions  of Elan and SPC,  price  increases and higher
net sales volume.  Excluding the effect of changes  in  foreign  currency  exchange
rates and the  acquisitions  of Elan and SPC,  consolidated  net  sales  increased
approximately  $59,600,000  or 4.1% from the first nine months of 2003 as compared to the
first nine months of 2002  as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                        | First Nine Months Net Sales
|------------------------------------------------------- | ---------------------------
|
|
|Net sales for the period Jan. 1, 2003 to Jan. 9, 2003   |                            
|Net sales for the period Jan. 10, 2003 to Oct. 4, 2003  |                            
|
|Total combined net sales                                |                            
|Net sales for the period Jan. 1, 2002 to Sept. 28, 2002 |                            
|
|Net increase                                            |                            
|Effect of changes in foreign currency exchange rates    |                            
|Effect of the acquisitions of Elan and SPC              |                            
|
|Increase                                                |                            
|

|This
increase is summarized by segment as follows:
|--------------------------------------------------

|                                      | Increase in net sales in the
|------------------------------------- | ----------------------------
|
|
|
|Residential Building Products         |                             
|Air Conditioning and Heating Products |                             
|Windows, Doors and Siding Products    |                             
|
|                                      |                             
|

|Overall,
increases  in sales  levels in the third  quarter  and first  nine  months of 2003
reflect  the  ongoing  stability of the housing  construction and remodeling  markets and
our expanded  branding effort in our line of air  conditioning and heating  products,
partially offset by the general slowdown in commercial  construction  activity  and the
continued  softness in the  manufactured  housing  market.  The nine months ended October
4, 2003 includes  277 days while the nine months ended  September 28, 2002 includes 271
days.  For the third quarter ended October 4,  2003 and the  third  quarter  ended
September  28,  2002,  the  Company's  net  sales  to  customers  serving  the
manufactured housing markets,  principally  consisting of air conditioners,  furnaces and
vinyl siding and skirting  products,  constituted  approximately  7.2% and 9.2%,
respectively,  of the Company's  consolidated net sales. For  the first nine months ended
October 4, 2003 and the first nine months ended  September 28, 2002,  the Company's net
sales  to  customers  serving  the  manufactured  housing  markets,  constituted
approximately  7.3%  and  9.0%,  respectively,  of the  Company's  consolidated  net
sales.  The  increase  in net sales  volume in the  Residential  Building  Products
Segment in the third quarter and first nine months of 2003 as compared to the third
quarter and  first nine months of 2002 was, in part,  the result of new  products and the
ongoing  stability in the  residential  housing  construction  and remodeling  markets.
Increased sales volume of bathroom  exhaust fans,  range hoods and  garage door openers
was also a factor in the  increase in this  segment in the third  quarter and first nine
months  of 2003. The increase in net sales in the Air  Conditioning  and Heating
Products Segment in the third quarter and  first  nine  months of 2003 as  compared  to
2002 was due to  continued  growth  principally  from  this  segment's  brand-name
strategy  resulting in increased  sales volume of HVAC products to the  residential  site
built market.  In the  third  quarter  and  first  nine  months  of 2003,  the  Segment
benefited  from the  introduction  of our  Westinghouse® and  Maytag® brands  and
from the  ongoing  success  of  existing  brands.  These  increases  were  partially
offset  by the  general  slowdown  in  commercial  construction  activity,  which
reduced  the level of  shipments of the Company's  commercial  HVAC products and lower
sales to the  manufactured  housing  market in this  segment as  continued  softness is
being  experienced  by this  industry.  The trend of lower  levels of orders and
shipments of commercial  HVAC products,  particularly  in the office building and
telecommunications  markets,  is  expected to continue  into 2004.  The  increase in net
sales in the third  quarter and first nine months of 2003 as  compared to 2002 in the
Windows,  Doors and Siding Products  Segment was principally due to continued  stability
in  new residential  construction and remodeling activity,  increased sales prices of
vinyl siding products,  increased  volume of vinyl fence,  decking and railing  products
and  increased  volume of windows  primarily by the Segment's  Canadian  operations.
These increases were partially  offset by  approximately  $1,200,000 of charges to net
sales  related to expanded distribution, including new customers, that occurred in the
first quarter of 2003.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Cost
of products  sold, as a percentage of net sales,  decreased from  approximately  72.5% in
the third quarter of  2002 to approximately  70.8% in the third quarter of 2003 and
increased from approximately  72.0% in the first nine  months  of 2002 to  approximately
72.3% in the first  nine  months of 2003.  Cost of  products  sold for the third  quarter
of 2003 includes  approximately  $8,400,000 of cost of products sold from the
acquisitions of Elan and SPC,  an increase of  approximately  $7,500,000  related to the
effect of changes in foreign  currency  exchange rates, a  non-cash  charge of
approximately  $300,000  related to the  amortization  of excess  purchase price
allocated to  inventory and approximately  $3,400,000 of lower  depreciation  expense as
a result of the fair value adjustment to  property,  plant and equipment  related to the
Recapitalization.  Excluding the effect of the acquisitions of Elan  and SPC (which have a
lower cost of sales as a percentage of net sales than the overall  group of  businesses
owned  prior to the  acquisition),  changes in foreign  currency  exchange  rates,  the
write-off of excess purchase price  allocated to inventory and lower depreciation
expense as a result of the fair value adjustment to property,  plant  and equipment,
cost of products sold was approximately  $380,300,000 or approximately 72.0% as a
percentage of net  sales during the third quarter of 2003 as compared to 72.5% in the
third quarter of 2002 as follows:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                 | Third Quarter
|-------------------------------------------------------------------------------- | -------------
|
|
|
|
|Cost of products sold for the third quarter 2003                                 |              
|Effect of the acquisitions of Elan and SPC                                       |              
|Effect of changes in foreign currency exchange rates                             |              
|Effect of excess purchase price allocated to inventory                           |              
|Effect of the  reduction  in  depreciation  expense on  property  and  equipment |              
|resulting from fair value adjustments                                            |              
|
|                                                                                 |              
|

|Cost
of products  sold for the first nine months of 2003  includes  approximately  $14,400,000
of cost of products  sold from the  acquisitions  of Elan and SPC,  an increase of
approximately  $23,100,000  related to the effect of  changes  in  foreign  currency
exchange  rates,  a  non-cash  charge of  approximately  $6,700,000  related to the
amortization  of excess purchase price allocated to inventory and  approximately
$9,700,000 of lower  depreciation  expense as a result of the fair value  adjustment  to
property,  plant and  equipment.  Excluding the effect of the  acquisitions  of Elan and
SPC (which  have a lower  cost of sales as a  percentage  of net sales  than the  overall
group of businesses owned prior to the  acquisitions),  changes in foreign currency
exchange rates, the write-off of  excess  purchase  price  allocated  to  inventory  and
lower  depreciation  expense  as a result of the fair  value  adjustment  to  property,
plant  and  equipment,  cost  of  products  sold  was  approximately  $1,099,000,000  or
approximately  72.7% as a percentage  of net sales during the first nine months of 2003
as compared to 72.0% in the  first nine months of 2002 as follows:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                   | First Nine Months
|------------------------------------------------------------------ | -----------------
|
|
|
|
|Cost of products sold for the period Jan. 1, 2003 to Jan. 9, 2003  |                  
|Cost of products sold for the period Jan. 10, 2003 to Oct. 4, 2003 |                  
|
|Total combined cost of products sold                               |                  
|Effect of the acquisitions of Elan and SPC                         |                  
|Effect of changes in foreign currency exchange rates               |                  
|Effect of the write-off of excess purchase price for inventory     |                  
|Effect of the  reduction  in  depreciation  expense on             |                  
|property  and  equipment resulting from fair value adjustments     |                  
|
|                                                                   |                  
|

|Material  costs  were  approximately
44.7% and 46.0% of net sales for the third  quarter of 2003  compared  to the
third quarter of 2002,  respectively,  and approximately  45.1% and 44.6% of net sales for the first nine months of
2003 compared to the first nine months of 2002,  respectively.  Material costs as a percent of net sales  increased
in the first nine months of 2003  compared to the first nine months of 2002  primarily  due to the  increase in the
cost of PVC resin  beginning in the second half of 2002.  PVC resin costs have  increased  since the second half of
2002.  Continued  strength in the new home  construction  and  remodeling  markets has increased the demand for PVC
resin.  A number of  manufacturers  of other  products  (including  building  products  that the  Company  does not
manufacture  or sell) compete with the Company for the available  supply of PVC resin.  The  manufacturing  process
for PVC resin  suppliers,  utilizes  ethylene,  which is refined  from  either oil or natural  gas.  As a result of
these and  other  factors,  the  price of PVC resin is  subject  to  volatility.  PVC resin is used by the  Company
primarily in the Windows,  Doors and Siding  Products  Segment.  This increase in material  costs in the first nine
months of 2003 as compared to 2002 was  partially  offset by reductions  realized in the cost of certain  purchased
materials and component  parts, in part, due to strategic  sourcing  initiatives.  Cost reductions due to strategic
sourcing  initiatives and favorable  steel prices were primarily  responsible for the decrease in material costs as
a  percentage  of net  sales in the  third  quarter  of 2003 as  compared  to 2002.  Manufacturing  cost  reduction
measures  implemented  in 2002 and the first nine  months of 2003  partially  offset the effect of the  increase in
cost of products  sold as a  percentage  of net sales in the first nine  months of 2003  compared to the first nine
months of 2002 and combined  with net sales  increases  contributed  to the decrease in cost of products  sold as a
percentage  of net sales in the third  quarter  of 2003  compared  to the third  quarter of 2002.  Increased  sales
volume of HVAC products to residential site built customers in the Air  Conditioning and Heating Products  Segment,
without a  proportionate  increase in cost  partially  offset the effect of the increase in cost of goods sold as a
percentage  of net sales in the first nine  months of 2003 and was a factor in the  decrease  in costs in the third
quarter.  In the  third  quarter  and first  nine  months  of 2003,  approximately  $2,300,000  and  $3,700,000  of
severance  and other  costs  associated  with the  closure  of  certain  manufacturing  facilities  within  the Air
Conditioning  and Heating  Products  Segment are included in cost of products  sold.  Cost of products sold for the
Air  Conditioning  and  Heating  Products  Segment  for the  third  quarter  and first  nine  months  also  include
approximately  $400,000  and  $1,000,000,  respectively,  of  expenses  associated  with  the  start-up  of  a  new
manufacturing  facility.  Overall,  changes  in the cost of  products  sold as a  percentage  of net  sales for one
period as  compared to another  period may reflect a number of factors  including  changes in the  relative  mix of
products sold, the effect of changes in sales prices, material costs and changes in productivity levels.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Selling,
general and administrative  expense ("SG&A") was $84,400,000 in the third
quarter of 2003 and $83,400,000  in the third quarter of 2002.  SG&A as a percentage
of net sales  decreased from  approximately  16.5% in the third  quarter of 2002 to
approximately  15.2% in the third  quarter of 2003.  SG&A in the third quarter of
2003 includes  approximately  $100,000 of direct expenses and third party fees associated
with the Company's  strategic  sourcing  initiative,  approximately  $5,700,000  of  SG&A
from  the  acquisitions  of  Elan  and  SPC  and an  increase  of  approximately
$1,500,000  related to the effect of changes in foreign currency  exchange rates.  SG&A
in the third  quarter of 2002 includes  approximately  $1,600,000  of direct  expenses
and third party fees  associated  with the  Company's  strategic sourcing  initiative and
approximately  $2,100,000 of fees and expenses incurred in connection  with the Company's
re-audit of its  Consolidated  Financial  Statements  for each of the three years in the
period  ended  December  31,  2001.  The direct  expenses  and third party fees
associated  with the  Company's  strategic  sourcing  initiative  and the fees and
expenses  related to the re-audit of the  Company's  Consolidated  Financial  Statements
are set forth  separately  in the segment  data.  Excluding  the effect of (a) expenses
related to the  Company's  strategic  sourcing  initiative in the third quarter of 2003
and 2002, (b) the  acquisitions of Elan and  SPC (which have a higher  level of SG&A
as a percentage  of net sales than the overall  group of  businesses  owned  prior to the
acquisitions),  (c) the fees and expenses  incurred in connection  with the Company's
re-audit of its  Consolidated  Financial  Statements  for each of the three years in the
period ended December 31, 2001 in the third  quarter of 2002 and (d) the effect of
changes in  foreign  currency  exchange  rates in the third  quarter of 2003,  SG&A
was  approximately  $77,100,000 or  approximately  14.6% as a percentage of net sales
during the third quarter  of 2003 as compared to  approximately $79,700,000 or
approximately 15.8% in the third quarter of 2002 as follows:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                     | Three Months Ended
|---------------------------------------------------- | ------------------
|
|
|
|
|
|SG&A                                                 |                   
|Strategic sourcing initiative fees and expenses      |                   
|Effect of the acquisitions of Elan and SPC           |                   
|Effect of re-audit fees and expenses                 |                   
|Effect of changes in foreign currency exchange rates |                   
|
|                                                     |                   
|

|Combined
SG&A was  approximately  $249,500,000  in the first nine months of 2003 as compared to
$244,000,000 in the  first nine months of 2002.  SG&A as a  percentage  of net sales
decreased  from  approximately  16.8% in the first  nine  months of 2002 to
approximately  15.9% in the first nine  months of 2003.  SG&A in the first nine  months
of  2003  includes  approximately  $1,900,000  of direct  expenses and third party fees
associated  with the Company's  strategic  sourcing  initiative,  approximately
$9,300,000  of SG&A from the  acquisitions  of Elan and SPC and an  increase of
approximately  $4,600,000  related to the effect of changes in foreign currency  exchange
rates.  SG&A in the first  nine  months of 2002  includes  approximately  $1,600,000  of
direct  expenses  and third  party fees  associated  with the  Company's  strategic
sourcing  initiative,  approximately  $2,100,000  of fees and  expenses  incurred in
connection with the Company's re-audit of its Consolidated  Financial  Statements for
each of the three  years in the period ended December 31, 2001 and a $4,400,000  charge
relating to an incentive  earned by certain of  the Company's  officers  under the
Company's  1999 Equity  Performance  Plan.  The direct  expenses and third party  fees
associated  with the  Company's  strategic  sourcing  initiative, the fees and
expenses  related  to the  re-audit  of the  Company's  Consolidated  Financial
Statements and the charge relating to an incentive earned by certain of the Companys officers
under the Companys 1999 Equity Performance Plan are set forth  separately  in the  segment  data.  Excluding  the effect of
(a) expenses  related to the  Company's  strategic  sourcing  initiative in the first
nine  months of 2003 and 2002,  (b) the  acquisitions  of Elan and SPC (which have a
higher level of SG&A as a percentage  of net sales than the overall  group of  businesses
owned  prior to the  acquisitions), (c) the fees and  expenses  incurred in connection
with the Company's re-audit of its Consolidated  Financial  Statements for each of the
three  years in the period ended  December 31, 2001 in the third quarter of 2002, (d) the
$4,400,000  charge  relating to  an incentive earned by certain of the Company's
officers under the Company's 1999 Equity  Performance Plan in 2002 and (e) the effect of
changes  in foreign  currency  exchange  rates in the first  nine  months of 2003,  SG&A was
approximately  $233,700,000 or approximately 15.5% as a percentage of net sales
during the first nine months of  2003 as compared to approximately $235,900,000 or
approximately 16.3% in the first nine months of 2002 as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                     | For the Periods Ended
|---------------------------------------------------- | ---------------------
|
|
|
|
|SG&A for the Pre-Recapitalization                    |                      
|Period                                               |                      
|SG&A for the Post-Recapitalization                   |                      
|Period                                               |                      
|
|Total combined SG&A                                  |                      
|Strategic sourcing initiative fees and expenses      |                      
|Effect of the acquisitions of Elan and SPC           |                      
|Effect of re-audit fees and expenses                 |                      
|Effect of 1999 Equity Performance Plan               |                      
|Effect of changes in foreign currency exchange rates |                      
|
|                                                     |                      
|

|The decrease in the  percentage  for
both periods is principally  due, in part, to lower  compensation  and benefit
expenses  of  certain  members  of  management  subsequent  to the  Recapitalization  and  higher  sales  without a
proportionate  increase in expense in the Windows,  Doors and Siding Products  Segment and the Air Conditioning and
Heating  Products  segment in the third quarter and in the first nine months in the Residential  Building  Products
Segment.  These  decreases were partially  offset by increased  expense levels  associated with the Companys brand
name  strategy  of HVAC  products sold to the  residential  site  built  market.  In the  first  nine  months  of 2003,
approximately  $600,000 of  severance  and other  costs,  incurred in the first half of 2003,  associated  with the
closure of a  manufacturing  facility  within the  Windows,  Doors and Siding  Products  Segment  are  included  in
selling,  general and  administrative  expense.  There were no additional costs and expenses  incurred in the third
quarter of 2003  related to the closure of the  manufacturing  facility in the Windows,  Doors and Siding  Products
Segment.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Amortization
of intangible  assets,  as a percentage of net sales,  increased from  approximately
0.3% in both the  third quarter and first nine months of 2002 to  approximately  0.6% in
both the third quarter and first nine months  of 2003  principally as a result of
approximately  $1,600,000 and $4,600,000 of increased  amortization in relation  to the
increase  from the  estimated  amount of fair value  adjustments  to  intangible  assets
arising  from the  Recapitalization  in the third quarter and first nine months of 2003,
respectively.  This  increased  amortization  is  based  on  preliminary  estimates  of
the  Company's  intangible  assets  and  their  lives  at the date of the
Recapitalization  (see Note A of the Notes to the  Unaudited Financial Statements  included  elsewhere  herein).
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Expenses
and charges  arising from the  Recapitalization  were $1,000,000 or 0.2%, as a percentage
of net sales, in  the third quarter of 2002 and were  $87,700,000  or 5.6%, as a
percentage of net sales,  and $6,200,000 or 0.4%, as  a percentage  of net sales,  in the
first nine months of 2003 and 2002,  respectively.  See  Liquidity  and Capital
Resources and Notes B, F and J of the Notes to the Unaudited  Financial  Statements
included elsewhere herein, for  further discussion of these expenses and charges.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Consolidated
operating  earnings  increased by  approximately  $21,500,000 from  approximately
$53,000,000 in the  third quarter of 2002 to  approximately  $74,500,000  in the third
quarter of 2003 and decreased by  approximately  $63,100,000 from  approximately
$151,900,000 in the first nine months of 2002 to approximately  $88,800,000 in the  first
nine months of 2003 as a result of the factors discussed above.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Consolidated
operating  earnings  have  been  reduced  by  depreciation  and  amortization  expense
(other  than  amortization  of deferred debt expense and debt premium and discount) of
approximately  $9,725,000 and $10,658,000  for the third quarter of 2003 and 2002,
respectively,  and approximately  $29,330,000 and $32,605,000 for the first  nine months
of 2003 and 2002,  respectively.  Consolidated  operating earnings for the third quarter
and first nine  months of 2003 includes approximately $1,600,000 and $4,600,000,
respectively,  of additional amortization expense  of intangible assets,  approximately
$300,000 and $6,700,000,  respectively,  of write-off of excess purchase price  allocated
to inventory,  and $3,400,000 and $9,700,000,  respectively,  of lower depreciation
expense of property,  plant and equipment as a result of the fair value adjustments
arising from the Recapitalization.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Excluding
the effect of (a)  approximately  $1,000,000 of fees and expenses in the third quarter of
2002 associated  with the  Recapitalization of the Company,  (b) the $2,100,000 of fees
and expenses incurred in connection with the  Company's  re-audit  of its  Consolidated
Financial  Statements  for each of the three  years in the period  ended  December 31,
2001,  recorded in the third  quarter of 2002,  (c)  approximately  $100,000 and
$1,600,000 of direct  expenses and third party fees associated with the Company's
strategic  sourcing  initiative  incurred in the third  quarter of 2003 and 2002,
respectively,  (d)  approximately  $2,700,000 of operating  earnings  contributed by the
acquisitions  of Elan and SPC in 2003, (e) $3,400,000 of lower  depreciation  expense as
a result of the fair value  adjustment to property,  plant and  equipment,  (f)
approximately  $1,600,000 of increased  amortization  from the  estimated amount of fair
value adjustment to intangible assets,  (g) the non-cash charge of approximately
$300,000  related to the  write-off of excess  purchase  price  allocated to  inventory,
and (h)  approximately  $900,000 of  increased  operating  earnings from the effect of
changes in foreign  currency  exchange rates in the third quarter  of 2003,  operating
earnings  increased  approximately  $11,800,000  from  approximately  $57,700,000 in the
third  quarter of 2002 to $69,500,000 in the third quarter of 2003 as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                               | Three Months Ended
|-------------------------------------------------------------- | ------------------
|
|
|
|Operating Earnings for the third quarter of 2003 and 2002      |                   
|Fees and expenses arising from the Recapitalization            |                   
|Effect of re-audit fees and expenses                           |                   
|Strategic sourcing initiative fees and expenses                |                   
|Effect of the acquisitions of Elan and SPC                     |                   
|Effect of the reduction in  depreciation  expense on property  |                   
|and equipment resulting from fair value adjustments            |                   
|Amortization expense on fair value of intangible assets        |                   
|Effect of the write-off of excess purchase price for inventory |                   
|Effect of changes in foreign currency exchange rates           |                   
|
|                                                               |                   
|                                                              
|Operating earnings for the third quarter of 2002               |                   
|
|Increase                                                       |                   
|

|This
increase is summarized by segment as follows:
|--------------------------------------------------

|                                      | Increase in
|------------------------------------- | -----------
|
|
|
|Residential Building Products         |            
|Air Conditioning and Heating Products |            
|Windows, Doors and Siding Products    |            
|
|Subtotal                              |            
|Other                                 |            
|
|                                      |            
|

|Excluding
the effect of (a)  approximately  $87,700,000 of fees and expenses  associated with the
Recapitalization  of the  Company in the first nine months of 2003 and  approximately
$6,200,000  of fees and  expenses in the first  nine months of 2002 associated with the
Recapitalization  of the Company,  (b) the effect of the incentive  earned  by certain of
the Company's officers under the Company's 1999 Equity  Performance Plan of approximately
$4,400,000  in the second  quarter of 2002, (c) the effect of the fees and expenses
incurred in connection  with the Company's  re-audit of its  Consolidated  Financial
Statements  for each of the three years in the period ended  December 31,  2001 of
approximately  $2,100,000 in the third quarter of 2002,  (d)  approximately  $1,900,000
and $1,600,000 of  direct expenses and third party fees associated with the Company's
strategic sourcing  initiative  incurred in the  first nine months of 2003 and 2002,
respectively,  (e) approximately  $4,300,000 of operating earnings contributed  by the
acquisitions of Elan and SPC in 2003, (f) the non-cash charge of  approximately
$6,700,000  related to the  write-off of excess  purchase  price  allocated to inventory,
(g)  $9,700,000 of lower  depreciation  expense as a  result of the fair value adjustment
to property,  plant and equipment,  (h)  approximately  $4,600,000 of increased
amortization  from the  estimated  amount of fair value  adjustment  to  intangible
assets  and (i)  approximately  $1,600,000 of increased  operating  earnings from the
effect of changes in foreign  currency  exchange rates in the  first nine months of 2003,
operating earnings increased  approximately  $7,900,000 from approximately  $166,200,000
in the first nine months of 2002 to $174,100,000 in the first nine months of 2003 as
follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                    | For the Periods Ended
|------------------------------------------------------------------- | ---------------------
|
|
|Operating earnings for the Pre-Recapitalization Period              |                      
|Operating earnings for the Post-Recapitalization Period             |                      
|
|Total combined operating earnings                                   |                      
|Fees and expenses arising from the Recapitalization                 |                      
|Effect of 1999 Equity Performance Plan                              |                      
|Effect of re-audit fees and expenses                                |                      
|Strategic sourcing initiative fees and expenses                     |                      
|Effect of the acquisitions of Elan and SPC                          |                      
|Effect of the write-off of excess purchase price for inventory      |                      
|Effect of the  reduction in  depreciation  expense on property  and |                      
|equipment resulting from fair value adjustments                     |                      
|Amortization expense on fair value of intangible assets             |                      
|Effect of changes in foreign currency exchange rates                |                      
|
|                                                                    |                      
|                                                                   
|Operating earnings for the period Jan. 1, 2002 to Sept. 28, 2002    |                      
|                                                                   
|Increase                                                            |                      
|                                                                   

|This
increase is summarized by segment as follows:
|--------------------------------------------------

|                                      | Increase (decrease) in
|------------------------------------- | ----------------------
|
|
|
|Residential Building Products         |                       
|Air Conditioning and Heating Products |                       
|Windows, Doors and Siding Products    |                       
|
|Subtotal                              |                       
|Other                                 |                       
|
|                                      |                       
|

|The increase in operating  earnings
in the  Residential  Building  Products  Segment in the third quarter and first
nine months of 2003 was primarily as a result of increased  sales  volume,  principally  bathroom  exhaust fans and
kitchen range hoods, due to the continued  stability of new home construction and remodeling  markets and increased
sales of garage door  openers.  The decrease in operating  earnings in the Air  Conditioning  and Heating  Products
Segment  in the first nine  months of 2003 was  principally  due to a decrease  in  operating  earnings  of certain
product  lines due to the  general  slowdown in the  commercial  construction  and  manufactured  housing  markets,
partially  offset by  increased  sales  volume of HVAC  products to customers  serving the  residential  site built
market without a proportionate  increase in costs and expenses.  Operating  earnings for the Air  Conditioning  and
Heating  Products  Segment  increased  in the  third  quarter  of 2003 as  compared  to the third  quarter  of 2002
primarily due to strategic sourcing  initiatives,  cost reduction  measures  implemented in 2002 and the first nine
months of 2003 and  favorable  steel  prices.  Increased  sales volume of HVAC  products to  customers  serving the
residential  site built  market  without a  proportionate  increase in costs and  expenses was also a factor in the
increase in  operating  earnings in this segment in the third  quarter of 2003 as compared to the third  quarter of
2002. The operating  results of the Air  Conditioning  and Heating Products Segment for the third quarter and first
nine months of 2003 include  approximately  $2,300,000 and $3,700,000,  respectively,  of severance and other costs
associated with the closure of certain  manufacturing  facilities.  The operating  results of the Air  Conditioning
and Heating  Products  Segment for the three months  ended  October 4, 2003 and the period from January 10, 2003 to
October 4, 2003 also include approximately $400,000 and $1,000,000,  respectively,  of expenses associated with the
start-up of a new  manufacturing  facility.  The  decrease in operating  earnings in the Windows,  Doors and Siding
Products  Segment in the first nine  months of 2003 was  primarily  as a result of an  increase  in raw  materials,
primarily  PVC  resin,  partially  offset by  higher  sales  prices of vinyl  siding  products  and  cost-reduction
measures,  as compared to 2002,  which  helped  mitigate  the impact of the PVC resin.  Operating  earnings for the
Windows,  Doors and  Siding  Products  Segment  increased  in the third  quarter of 2003 as  compared  to the third
quarter of 2002 primarily due to increased sales prices of vinyl siding products,  strategic  sourcing  initiatives
and cost  reduction  measures.  The  operating  results of this  Segment for the first nine months of 2003  include
approximately  $600,000  of  severance  and other  costs  associated  with the  closure  of  certain  manufacturing
facilities  and  expects  to  incur  additional  future  restructuring  costs  of less  than  $100,000  related  to
restructuring  plans which began to be  implemented  in the first quarter of 2003.  The facilities to be closed are
owned by the Company and are expected to be sold in 2004.  The operating  results of the Windows,  Doors and Siding
Products  segment  also  include  approximately  $1,300,000  of charges  and  expenses  for  expanded  distribution
including new  customers in the first nine months of 2003.  There were no  additional  costs and expenses  incurred
related to the closure of certain manufacturing  facilities or the expanded distribution in the Windows,  Doors and
Siding Products Segment in the third quarter of 2003.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Operating
earnings of foreign  operations,  consisting  primarily of the results of  operations  of
the  Company's  Canadian and European  subsidiaries,  were  approximately  11.4% and 6.7%
of operating  earnings (before  corporate  overhead)  in the third  quarter  of 2003 and
2002,  respectively,  and  approximately  8.0% and 6.8% of  operating  earnings (before
corporate  overhead) in the first nine months of 2003 and 2002,  respectively.  Sales and
earnings  derived from international markets are subject to, among others, the risks of
currency fluctuations.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Interest
expense  in the third  quarter  of 2003  decreased  approximately  $1,200,000  or
approximately  5.0% as  compared to the third  quarter of 2002 and  increased
approximately  $900,000 or  approximately  1.2% in the first  nine months of 2003 as
compared to the first nine  months of 2002.  The  increase in interest  expense in the
first  nine months of 2003 is primarily due to  approximately  $4,100,000 of interest
expense from the amortization of the  Bridge  Facility  commitment  fees and  related
expenses.  Interest  expense in the third  quarter  and first nine  months of 2002
includes a non-cash  reduction  in  interest  expense of  approximately  $400,000  and
$1,200,000,  respectively,  related to the Company's  interest rate collar  agreement,
which was terminated in August 2002. The  combined  periods  from January 1, 2003 to
January 9, 2003 and from January 10, 2003 to October 4, 2003 contain 277  days while the
first nine months of 2002  contained  271 days,  accordingly,  operating  results  for
2003  include  approximately  $1,000,000 of additional  interest  expense as compared to
2002 since the Company  accrues  interest  expense  based on the number of days
contained in each  reporting  period.  The  increase in interest  expense was  partially
offset by  approximately  $1,500,000  and $4,300,000 in the third quarter and first nine
months of 2003,  respectively,  of lower interest  expense from the  amortization of
premium arising from the fair value  adjustment  on the date of the  Recapitalization
allocated to  indebtedness as compared to the Company's  historical  basis of  accounting
prior to the  Recapitalization  and  reflects  the  effect  of a net  reduction  in debt.
In the third  quarter  and  first  nine  months  of 2002,  interest  expense  included
approximately  $850,000  and  $2,550,000,  respectively,  of non-cash  amortization  of
deferred  debt  expense and  original  issue  discount  related to the  Company's  8 7/8%
Senior  Notes due 2008,  9 1/4% Senior  Notes due 2007,  9 1/8% Senior  Notes due 2007
and 9 7/8%  Senior  Subordinated  Notes due 2011 (the  "Existing  Notes").
See Liquidity and Capital Resources and Notes A, B and D of the Notes to the Unaudited  Financial Statements included
elsewhere herein.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Investment
income  decreased  approximately  $1,500,000  or 83.3% in the third  quarter of 2003 as
compared to the  third  quarter  of 2002 and  decreased  approximately  $4,300,000  or
78.2% in the  first  nine  months  of 2003 as  compared  to the first  nine  months of
2002  primarily  as a result of lower  average  invested  balances  in 2003  primarily as
a result of the funds  utilized in the  Recapitalization and for acquisitions.  Included in investment  income
in the third  quarter  and first  nine  months of 2002 was  approximately  $700,000  and
$2,000,000,  respectively,  related  to  restricted  investments and marketable
securities held by pension trusts  (including  related party amounts) which  funds were
distributed to participants on the date of the Recapitalization.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
income tax provision from  continuing  operations was  approximately  $21,900,000 for the
third quarter of 2003  as compared to approximately  $14,200,000 for the third quarter of
2002 and was  approximately  $19,100,000 for the  first nine months of 2003 as compared
to  approximately  $35,700,000  for the first nine months of 2002. The income  tax rates
in both 2003 and 2002 differed from the United States  Federal  statutory  rate of 35%
principally  as a  result of the effect of  non-deductible  expenses,  foreign income tax
on foreign  source income,  state income tax  provisions,  and in  2003  due to the
Recapitalization.  (See  Notes  A,  B and K of the  Notes  to the  Unaudited  Financial
Statements included elsewhere herein.)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Earnings
from  discontinued  operations  for the third quarter and first nine months ended
September 28, 2002 were  approximately  $100,000 and $5,700,000,  respectively.  The
table that follows  presents a summary of the operating  results of  discontinued
operations  for the third quarter and first nine months ended  September  28, 2002.  (See
Note H of the Notes to the Unaudited Financial Statements included elsewhere herein.)
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                             | Three Months Ended | Nine Months Ended
|-------------------------------------------- | ------------------ | -----------------
|
|(Amounts in thousands)                      
|(Unaudited)                                 
|
|Net Sales                                    |                    |                  
|
|Earnings before income taxes                 |                    |                  
|Provision for income taxes                   |                    |                  
|
|Earnings from discontinued operations        |                    |                  
|Gain on sale of discontinued operations, net |                    |                  
|of provision for income taxes of $1,200,000  |                    |                  
|
|Earnings from discontinued operations        |                    |                  
|
|
|Depreciation and amortization expense        |                    |                  
|

|SFAS
No.  143,  "Accounting  for  Asset  Retirement  Obligations"  ("SFAS  No.
143")  addresses  financial  accounting  and  reporting  for obligations  associated
with  the  retirement  of  tangible  long-lived assets  and  the  associated  asset
retirement  costs.  SFAS  No. 143  requires  that the  fair  value of a  liability  for
an  asset  retirement  obligation  be  recognized  in the  period  in which it  is
incurred  if  a  reasonable  estimate  of  fair  value  can  be  made.  The  associated
asset  retirement  costs  are  capitalized  as part of the  carrying  amount  of  the
long-lived  asset.  SFAS  No.  143 is  effective  for  financial  statements  issued  for
fiscal  years  beginning  after  June  15,  2002  with  early  adoption  permitted.  The
Company  adopted  SFAS  No.  143  on  January 1,  2003.  Adoption  of  this  accounting
standard  was not  material  to the Company's  Unaudited  Financial Statements.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|SFAS
No.  145,  "Rescission  of FASB  Statements  No. 4,  44  and  64,  Amendment  of
FASB  Statement  No. 13 and  Technical  Corrections"  ("SFAS  No.  145"),
was  issued  in  April  2002 and  addresses  the reporting of  gains and losses
resulting  from the  extinguishment of  debt,  accounting  for  sale-leaseback
transactions  and  rescinds  or  amends  other  existing  authoritative  pronouncements.
SFAS  No.  145 requires  that any gain  or loss  on  extinguishment  of debt  that does
not meet  the  criteria of APB 30 for  classification  as  an  extraordinary  item  shall
not  be  classified  as  extraordinary  and shall be  included in  earnings  from
continuing  operations.  The  provisions  of  this  statement  related  to  the
extinguishment  of debt are  effective  for  financial  statements  issued  in  fiscal
years  beginning  after  May  15,  2002  with  early  application  encouraged.  The
Company  adopted  SFAS  No.  145  on  January  1,  2003  and  adoption  of  this
accounting  standard  was  not  material  to  the  results  presented  in  the  Unaudited
Financial  Statements.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Effective
January 1, 2003,  the  Company  adopted  SFAS  No.  146,  "Accounting  for  Costs
Associated with Exit  or  Disposal  Activities"  ("SFAS  No.  146"),
which  addresses  the  accounting  and  reporting  for  costs  associated  with  exit  or
disposal  activities,  nullifies  Emerging  Issues  Task Force  ("EITF")  Issue
No.  94-3,  "Liability  Recognition  for  Certain  Employee  Termination  Benefits
and  Other  Costs  to  Exit  an  Activity  (including  Certain  Costs  Incurred  in  a
Restructuring)"  ("EITF  94-3")  and  substantially  nullifies  EITF
Issue  No.  88-10,  "Costs  Associated  with Lease  Modification or
Termination"  ("EITF  88-10").  SFAS  No.  146  requires  that a
liability  for a cost  associated with  an  exit  or  disposal  activity  be  recognized
when  the  liability  is  incurred.  Under  EITF  94-3,  a  liability  for an  exit  cost
as  defined  in  EITF  94-3  was  recognized  at the date of an  entity's  commitment  to
an  exit  plan.  The  provisions  of  SFAS No. 146 are  effective  for  exit  or
disposal  activities  that  are  initiated  after  December  31,  2002.  The adoption of
SFAS  No.  146 did not have  a  material  effect  on the  Company's  Unaudited  Financial
Statements.  (See  Note N of the  Notes to the  Unaudited  Financial  Statements  included
elsewhere herein.)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On
December 31,  2002,  the  Financial  Accounting  Standards  Board  ("FASB")
issued  SFAS  No.  148,  "Accounting  for  Stock-Based  Compensation -  Transition
and  Disclosure"  ("SFAS  No.  148").  SFAS  No.  148  amends  SFAS  No.
123,  "Accounting  for  Stock-Based  Compensation"  ("SFAS  No.
123")  to  provide  alternative  methods  of  transition  to  SFAS No.  123's  fair
value  method  of  accounting  for  stock-based  employee  compensation.  SFAS  No.  148
also  amends  the  disclosure  provisions  of  SFAS  No.  123  and  APB  Opinion  No.
28,  "Interim  Financial  Reporting".  The  Company  accounts  for  stock-based
compensation  in accordance  with APB No.  25,  "Accounting  for Stock  Issued to
Employees"  ("APB  No.  25").  The Company has  provided  the  required
disclosures  under SFAS No.  148.  (See  Note  L  of  the  Notes  to  the  Unaudited
Financial  Statements  included elsewhere herein.)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In
November  2002, the FASB  issued  Interpretation  No.  45,  "Guarantor's  Accounting
and  Disclosure  Requirements  for  Guarantees,  Including  Indirect  Guarantees  of
Indebtedness  of  Others"  ("FIN  45").  Along  with  new  disclosure
requirements,  FIN  45  requires  guarantors  to  recognize,  at  the  inception  of
certain  guarantees,  a  liability  for the  fair  value of the  obligation  undertaken
in  issuing  the  guarantee.  This  differs  from  the  prior  practice to record a
liability  only when a loss  is probable and  reasonably  estimable.  The  recognition
and  measurement  provisions  of  FIN 45 are  applicable on a  prospective  basis  to
guarantees  issued  or  modified  after  December  31,  2002.  The  Company  adopted  the
disclosure  provisions  of FIN 45 as of  December  31,  2002  and  adopted  the  entire
interpretation  on  January  1,  2003.  Adoption  of FIN  45 was not  material to the
Company's  Unaudited  Financial  Statements.  (See  Note M of the  Notes to the  Unaudited
Financial  Statements  included  elsewhere herein.)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In
January  2003,  the FASB  issued  Interpretation  No.  46,  "Consolidation  of
Variable  Interest Entities  - an  Interpretation of ARB  No.  51"  ("FIN
46").  FIN  46  clarifies  the  application  of ARB No. 51,  "Consolidated
Financial  Statements,"  to  certain  entities  in  which  equity  investors  do not
have the  characteristics  of  a  controlling  financial  interest  or  do  not  have
sufficient  equity  at risk  for the  entity to  finance  its  activities  without
additional  subordinated  financial  support  from  other  parties.  The  consolidation
requirements  of  FIN  46  apply  to  the  Company  immediately  for  variable  interest
entities  created  after  January 31,  2003  and  for  existing  variable  interest
entities  no  later  than  the end of  the first annual  reporting  period  beginning
after  December  15,  2003.  The  Company  is  currently  evaluating  the  impact  of
adopting  FIN  46  on  its  consolidated  financial  statements.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In
April  2003,  the  FASB  issued  SFAS  No.  149,  "Amendment  of  Statement  133  on
Derivative  Instruments  and  Hedging  Activities"  ("SFAS  No.  149"),
which clarifies the  financial  accounting  and  reporting  proscribed  by  SFAS No.
133,  "Accounting  for Derivative  Instruments  and  Hedging  Activities"
("SFAS  No.  133")  for  derivative  instruments,  including  certain
derivative  instruments  embedded  in  other  contracts.  Certain  provisions  of SFAS
No. 149  related  to  implementation  issues of SFAS No.  133 are  already  effective
and  other  provisions  related  to  forward  purchases  or  sales  are  effective  for
both  existing  contracts  and new  contracts  entered  into after  June 30,  2003.  The
Company has  previously  adopted  SFAS  No.  133,  including  the  implementation  issues
addressed  in SFAS No. 149,  and  the  adoption  of  the  new  provisions of SFAS No.
149 on  July  1,  2003  did  not have a material  impact  on the Company's  Unaudited
Financial Statements.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In
May  2003,  the  FASB  issued  SFAS  No.  150,  "Accounting  for  Certain  Financial
Instruments with  Characteristics  of  Both  Liabilities  and  Equity"  ("SFAS
No.  150"),  which  addresses  the  accounting  and  reporting  for  the
classification  and  measurement  of  certain  financial  instruments with
characteristics  of  both  liabilities  and  equity.  SFAS No.  150 is  effective  for
all  financial  instruments  entered  into  or  modified  after May 31,  2003  and for
all  existing  financial  instruments  beginning  in  the  first  interim  period  after
June  15,  2003,  except  for  mandatorily  redeemable  financial  instruments  of
nonpublic  entities,  which  are  subject  to  the  provisions  for  the  first  fiscal
period  beginning  after  December  15,  2004.  The  Company  adopted  SFAS  No.  150 on
July  1,  2003.  Adoption  of  this  accounting  standard  did  not have a material
impact  to the Company's  Unaudited  Financial Statements.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

##### Liquidity and Capital
Resources

|On
January  8,  2003,  at a  special  meeting  of  stockholders  of  Nortek  Holdings,  the
stockholders  approved  the  following  amendments  to  the  certificate  of
incorporation  (the  "Stockholder  Approval"),  which  were  required  in
order  to  complete  the  Recapitalization:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A  new  class
                of     common
                stock,  Class
                A      Common
                Stock,    par
                value   $1.00
                per    share,
                of     Nortek
                Holdings  was
                created
                consisting
                of
                19,000,000
                authorized
                shares.At  the  time
                that      the
                amendment  to
                the
                certificate
                of
                incorporation
                became
                effective,
                each    share
                of     common
                stock,    par
                value   $1.00
                per     share
                and   special
                common
                stock,    par
                value   $1.00
                per     share
                outstanding,
                was
                reclassified
                into      one
                share   of  a
                new  class of
                mandatorily
                redeemable
                common
                stock,  Class
                B      Common
                Stock,    par
                value   $1.00
                per    share,
                of     Nortek
                Holdings
                consisting
                of
                14,000,000
                authorized
                shares.Class B
                Common  Stock
                was  required
                to         be
                immediately
                redeemed  for
                $46       per
                share      in
                cash     upon
                completion
                of        the
                Recapitalization.The
                authorized
                number     of
                shares     of
                Series      B
                Preference
                Stock,    par
                value   $1.00
                per    share,
                was
                increased  to
                19,000,000
                authorized
                shares.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Following
the  Stockholder  Approval,  common stock and  special  common  stock held  by  the
Management  Investors  were  exchanged  for  an  equal  number  of  newly  created
shares  of  Series  B  Preference  Stock.  In  addition,  certain  options  to  purchase
shares  of common  and  special  common  stock  held  by  the  Management  Investors
were  exchanged  for  fully  vested  options  to  purchase  an  equal  number  of  shares
of  the  newly  created  Class  A  Common  Stock.  The  remaining  outstanding  options,
including  some  held  by  Management  Investors,  were  cancelled  in  exchange  for the
right  to  receive  a single  lump  sum cash  payment  equal to  the  product  of the
number  of shares  of common  stock  or  special  common  stock  underlying  the  option
and  the  amount  by  which  the  redemption  price  of  $46  per share  exceeded the per
share  exercise  price  of  the option.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On
January  9,  2003,  in  connection  with  the  Recapitalization,  Kelso  purchased  newly
issued  shares  of  Series  B  Preference  Stock  for  approximately  $355,923,000  and
purchased  shares  of  Series B  Preference  Stock  held  by  the  Management  Investors
for  approximately  $18,077,000.  Newly  issued  Class  A  Common  Stock  of
approximately  $3,262,000  was  purchased  by  designated  third  parties.  Shares  of
Series  B  Preference  Stock  held  by  the  Management  Investors  that were not
purchased by  Kelso were  converted  into  an equal  number  of shares  of  Class A
Common  Stock.  In  addition,  the  Company  declared  and  distributed  to  Nortek
Holdings  a  dividend  of  approximately  $120,000,000  and  distributed  approximately
$27,900,000  for  reimbursement  of fees  and  expenses  of  Kelso,  which  were  paid
out  of  the  Company's  unrestricted  cash and  cash  equivalents  on  hand  and  were
permissible  under the most  restrictive  covenants with  respect  to the  indentures  of
the  Company's  8  7/8%  Senior  Notes due  2008,  9  1/4%  Senior  Notes  due  2007,  9
1/8% Senior  Notes  due 2007 and 9 7/8%  Senior  Subordinated  Notes  due  2011  (the
"Existing  Notes").
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Nortek
Holdings  used  the  proceeds  from the purchase  by  Kelso  and  designated  third
parties of the newly  issued  Series B Preference  Stock  and  Class A  Common  Stock
and  the  dividend  from  Nortek  to  redeem  Nortek  Holdings'  Class  B  Common  Stock
and to  cash  out  options  to  purchase  common and  special  common  stock  totaling
approximately  $479,185,000.  Kelso  also  purchased  from  certain  Management
Investors  392,978  shares of Series B  Preference  Stock  for  approximately $18,077,000.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In
connection  with  the  Recapitalization,  K  Holdings  received a bridge  financing
letter  from  a  lender  for  a  senior  unsecured  term  loan  facility  not  to  exceed
$955,000,000  (the  "Bridge  Facility").  The  Bridge  Facility  was  intended
to  be  used  to  fund,  if  necessary,  any  change  in  control  offers the Company
might  have  made  in  connection  with  the  Recapitalization.  The  Company  did not
use  this  Bridge  Facility  because  the  structure  of  the  Recapitalization  did  not
require  the  Company  to  make any  change of control  offers.  The  commitment  letter
expired  on January  31,  2003.  As  a  result,  the Company's  consolidated  interest
expense  for  the  period  from  January  10,  2003  to  October  4,  2003  includes
approximately  $4,100,000  of  interest  expense  from  the  amortization  of the Bridge
Facility  commitment  fees  and  related  expenses.  In  the third  quarter of 2003,  the
Company  did not incur  any interest expense  related  to this  commitment letter.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In
January  2003,  Nortek  Holdings  filed  for  the  deregistration  of  its  shares  of
common  and  special  common stock under  the  Securities  Exchange  Act  of  1934.
Nortek  Holdings'  shares of common  and  special  common  stock  are  no  longer
publicly  traded.  The  Company  will  continue  to file  periodic  reports  with  the
SEC  as  required by the  respective  indentures  of  the  Company's Existing Notes.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Under
the  terms of one of  the Company's  supplemental  executive  retirement plans
("SERP"),  the  Company was  required  to make  one-time  cash  payments  to
participants  in such  plan  in  satisfaction  of  obligations  under  that  plan  when
the  Recapitalization  was  completed.  Accordingly,  the  Company  made  a  distribution
of  approximately  $75,100,000  to the  participants in the  plan  from  funds  included
in  the  Company's  Consolidated  Balance Sheet  at  December  31,  2002 and  classified
in  long-term  assets  in  restricted  investments  and marketable  securities  held by
pension  trusts and  transferred  to  one of the  participants  a  life insurance  policy
with  approximately  $10,300,000  of cash surrender  value to  satisfy  a  portion  of
the  SERP's  obligation  to such  participant.  The  termination  and settlement  of the
obligation  of this  SERP  resulted  in  a  curtailment  loss  on  January  9,  2003.
(See  Notes B and F of the  Notes  to the Unaudited  Financial  Statements  included
elsewhere herein.)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
total  amount  of  transaction  fees  and  related  costs  incurred by  the  Company  and
Kelso  associated  with  the  Recapitalization  was  approximately  $47,348,000,
including  the  $27,900,000  noted  above,  of  which  approximately  $10,500,000  of
advisory  fees  and  expenses  was paid to Kelso  & Company  L.P.  A portion  of these
fees and  expenses  was  recorded  by  the  Company  in  selling,  general and
administrative  expense,  since  they  were  obligations  of the Company  prior  to  the
Recapitalization.  Approximately  $12,848,000  was  recorded as expense on  January  9,
2003  since  these  fees  and  expenses  became  obligations  of the  Company  upon
consummation  of  the  Recapitalization.  Approximately  $6,600,000  of expense  was
previously  recorded  by the Company in  the  year  ended  December  31,  2002,  of
which  $1,000,000  and  $6,200,000  was  recorded  in the third  quarter  and  first
nine  months  of  2002,  respectively.  (See  Notes  B and  F of  the  Notes  to  the
Unaudited  Financial  Statements  included  elsewhere herein.)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
Company  is  highly  leveraged  and  expects  to  continue  to  be  highly  leveraged
for  the  foreseeable  future.  The  Company  had  consolidated  debt at  October  4,
2003,  of  approximately  $1,014,210,000  (including  approximately  $11,440,000  of
unamortized  debt  premium)  consisting of (i)  $8,893,000  of  short-term  borrowings
and  current  maturities  of  long-term  debt,  (ii)  $48,877,000 of  notes,  mortgage
notes and  other  indebtedness,  (iii)  $212,812,000  of  8  7/8%  Senior  Notes  due
2008 ("8  7/8%  Notes"),  (iv)  $314,701,000  of  9  1/8%  Senior  Notes  due
2007 ("9  1/8%  Notes"),  (v)  $178,338,000  of  9  1/4%  Senior  Notes  due
2007 ("9  1/4%  Notes")  and  (vi)  $250,589,000  of  9  7/8%  Senior
Subordinated  Notes  due 2011 ("9 7/8% Notes").
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
indentures  and  other  agreements  governing  the  Company  and  its  subsidiaries'
indebtedness  (including  the  indentures  for the 8 7/8%  Notes,  the  9  1/8%  Notes,
the 9 1/4%  Notes and the  9 7/8%  Notes,  as well as,  the  credit  agreement  for  the
Senior  Secured  Credit  Facility)  contain  certain  restrictive  financial  and
operating  covenants  including  covenants  that  restrict  the  ability  of  the
Company  and  its  subsidiaries  to  complete  acquisitions,  pay  dividends,  incur
indebtedness,  make  investments,  sell  assets  and  take  certain  other  corporate
actions.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|At
November  13,  2003,  there  was  approximately  $22,300,000  available  for  the
payment  of  cash  dividends,  stock purchases  or  other  restricted  payments  as
defined  under  the terms of the  Company's  most  restrictive  debt  covenant  related
to  such  payments.  (See  Note  G of  the Notes to the  Unaudited  Financial  Statements
included elsewhere herein.)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|At
October  4,  2003,  the  Company  had  consolidated  unrestricted  cash and cash
equivalents  of  approximately  $121,026,000  as  compared  to  approximately
$294,804,000  at  December  31,  2002.  There  were  no  marketable  securities  at
October  4,  2003  and  December  31,  2002.  Purchases  of  marketable  securities  in
the  first  nine  months of  2003  of  approximately  $30,015,000  matured before
October  4,  2003  and were  invested  in  short-term  investments  with  maturities
less  than  90-days.  The  decrease  in  unrestricted  cash  was  primarily  due  to  the
dividend  and  payment  of  fees  and  expenses  associated  with  the  Recapitalization
(see Note  B  of  the  Notes  to  the  Unaudited  Financial  Statements  included
elsewhere  herein)  and  seasonal  increases  in  working  capital.  The  Company's  debt
to  equity  ratio  was  approximately  2.0:1 at  October  4,  2003  as  compared  to
approximately  3.1:1  at  December  31,  2002.  The  change  in  the  ratio  was
primarily  due  to  an  increase  in  stockholder's  investment,  primarily as a  result
of  the  Recapitalization,  which  contributed  approximately  $284,135,000  to equity
and  was  partially  offset by a  fair  market  value  adjustment  with  a  net  increase
in  indebtedness  of  approximately  $18,000,000.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
Company's  ability  to  pay  interest  on  or  to  refinance its  indebtedness  depends
on  the  Company's  future  performance,  working  capital levels and  capital  structure
which  are  subject  to  general  economic,  financial,  competitive,  legislative,
regulatory  and  other  factors  which  may  be  beyond its  control.  There  can  be no
assurance  that  the Company  will  generate  sufficient  cash  flow from  the  operation
of  its  subsidiaries  or  that  future  financings  will be  available  on  acceptable
terms  or  in  amounts  sufficient  to  enable  the  Company  to  service  or  refinance
its  indebtedness,  or  to  make  necessary  capital  expenditures.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
Company  has  evaluated  and  expects to continue to  evaluate  possible  acquisition
transactions  and  possible  dispositions  of  certain  of  its  businesses  on  an
ongoing  basis  and  at  any  given  time  may  be  engaged  in  discussions  or
negotiations  with  respect  to  possible  acquisitions  or dispositions.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|EBITDA
from  operations  is  operating  earnings  (loss)  from continuing  operations  plus
depreciation  and  amortization  expense  (other  than  amortization  of  deferred  debt
expense  and  debt  premium  and  discount)  and the non-cash  write-off  of  the
portion  of  the  excess  purchase  price  from  acquisitions  allocated  to
inventories.  For the three  months ended  October  4,  2003  and  September  28,  2002
the  Company  had  consolidated  earnings  (loss)  before  depreciation,  amortization,
non-cash  write-off  of  the  portion  of  the  excess  purchase  price  from
acquisitions  allocated  to  inventories,  interest,  net  and  income  taxes
("EBITDA")  of  approximately  $84,568,000  and  $63,599,000,  respectively.
For  the  periods  January  10,  2003  through  October  4,  2003,  January  1,  2003
through  January  9,  2003  and  the  nine  months  ended  September  28,  2002,  the
Company  had  consolidated  EBITDA  of  approximately  $210,709,000,  $(85,865,000)  and
$184,480,000,  respectively.  Adjusted  EBITDA  excludes  expenses  and  charges  arising
from  the  Recapitalization.  For  the  three  months  ended  October  4,  2003  and
September  28,  2002,  the  Company  had  Adjusted  EBITDA  of  approximately
$84,568,000  and  $64,599,000,  respectively.  For  the  periods  January  10,  2003
through  October  4,  2003,  January  1, 2003  through  January  9,  2003  and the nine
months  ended  September  28,  2002,  the  Company  had  Adjusted  EBITDA  of
approximately  $210,709,000,  $1,835,000  and  $190,680,000,  respectively.  EBITDA  is
presented  as  it  is  a  common  analytical  measurement  utilized  by  investors  to
assess  the  Company's  performance.  The Company's  common stock  is  no  longer
publicly  traded.  In  accordance  with the  indentures of the  Company's  Existing
Notes,  the  Company is required to  continue  to file  periodic  reports  with  the
SEC.  Numerous  covenants  contained  in  the  indentures  to the Existing  Notes
require  financial  measurements  involving  a  cash flow  measure  similar  to  EBITDA.
In  addition,  EBITDA is  presented  as it  allows  noteholders  to  assess  the
Company's  ability  to  service  and  incur  indebtedness.  We  also  believe  that
EBITDA,  when  considered with other  information,  is  useful to  investors  to  analyze
current  results  since  it  reflects  operating results  before  depreciation,
amortization  and  other  non-cash  items,  which  items  are  based  on  historical
cost  and  varying  depreciable lives.  Since  each  of  the  Company's  segments,  its
competitors  and  other  investment  opportunities  available  to  noteholders  all  have
differing  historical  cost  structures,  EBITDA  is  another  measurement  available  to
investors,  particularly  noteholders,  to  make  investment  decisions.  EBITDA  should
not  be  considered  as  an  alternative  to  earnings  (loss)  from  continuing
operations,  net  earnings  (loss)  or  cash  flow  measures as  determined  in
accordance  with accounting  principles  generally  accepted  in  the  United  States.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
following  table  presents  a  reconciliation  from  net  earnings  (loss)  to  EBITDA
and  Adjusted  EBITDA  for  the  periods  presented:
|-----------------------------------------------------------------------------------------------------------------------------------------------

|                                                       | Three Months Ended
|------------------------------------------------------ | ------------------
|
|
|(Amounts in thousands)                                
|(Unaudited)                                           
|
|Net earnings                                           |                   
|Earnings from discontinued operations                  |                   
|Provision for income taxes                             |                   
|Investment income                                      |                   
|Interest expense                                       |                   
|
|Operating earnings                                     |                   
|Depreciation expense                                   |                   
|Amortization of intangible assets                      |                   
|Non cash charge of purchase price allocated to         |                   
|inventory                                              |                   
|
|EBITDA                                                 |                   
|Expenses and charges arising from the Recapitalization |                   
|
|Adjusted EBITDA                                        |                   
|

|                                               | For the Periods
|---------------------------------------------- | ---------------
|
|
|
|
|(Amounts in thousands)                        
|(Unaudited)                                   
|
|Net earnings (loss)                            |                
|Earnings from discontinued operations          |                
|Provision (benefit) for income taxes           |                
|Investment income                              |                
|Interest expense                               |                
|
|Operating earnings (loss)                      |                
|Depreciation expense                           |                
|Amortization of intangible assets              |                
|Non cash charge of purchase price allocated to |                
|inventory                                      |                
|
|EBITDA                                         |                
|Expenses and charges arising from the          |                
|Recapitalization                               |                
|
|Adjusted EBITDA                                |                
|

|The
Company  expects  to meet  its  cash  flow  requirements  through  fiscal  2003  from
cash  generated  from  operations,  existing cash and cash equivalents,  and,  if
necessary,  the  utilization  of  the  Company's  Senior Secured Credit Facility  and
mortgage,  capital  lease  or  other  financings.  As  of  October  4,  2003,
approximately  $27,900,000  of letters of  credit  had  been  issued  as  additional
security  for  approximately  $27,300,000  of  industrial  revenue bonds and capital
leases  outstanding  (included  in notes,  mortgage  notes and  obligations  payable  in
the  accompanying  condensed  consolidated  balance sheet at October 4,  2003),  relating
to  several  of  the  Company's  manufacturing  facilities  and  approximately
$6,900,000  of  letters of  credit  have been  issued  as  additional  security  for
certain  of the  Company's  insurance programs.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In
connection  with  the  provisions  of  SFAS No.  141 and Push  Down  Accounting,  the
Company  has  recorded  all  pension  liabilities  for  the  Company's  defined  benefit
retirement  plans at their  fair  values  based  upon  the  accumulated  projected
benefit obligations  determined  by  third  party  actuarial  consultants.  As a result,
on  January  9,  2003,  the  amount  of  the  Company's  accumulated  projected  benefit
obligation  was  increased by approximately  $6,813,000 as  compared  to the amount
recorded  in its  consolidated  balance  sheet prior to the  Recapitalization.  In
addition,  as  discussed  previously,  the  Company  settled  all  obligations  related
to the  Company's  SERP in  connection  with  the  Recapitalization.  Accordingly,  as
of  January  10,  2003,  the  Company  has  recorded  accrued pension  liabilities of
approximately  $60,000,000,  which  represent  the estimated  combined  under  funding of
the Company's  various pension  plans.  The  Company's  policy is to make  annual
contributions  to  the  various  pension  plans  in  such  amounts  and at  such  times
so as to meet at  least  the  minimum  funding  requirements  of  the  Employee
Retirement  Income Security Act  of 1974.  The  amount  of  under  funding  will  change
in  future  periods  for  a  variety  of  factors  including,  among  others,  the
actual  performance  of the  various  pension plan's  investments  and  changes,  if
any,  in  actuarial  assumptions  resulting  from  changing  external  economic
conditions.  Consistent  with  many  pension  plans in  the United States,  the Company's
various  pension  plans  have  been  negatively  impacted  by  the  performance  of  the
United  States  equity  markets  over the  past  several  years and the  decline  in
yields available in fixed income markets.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In
connection  with  the  provisions  of  SFAS No.  141 and Push  Down  Accounting,  the
Company  has  recorded  all  post  retirement  health  benefit  plan  liabilities  at
their fair  values  based  upon the  accumulated  projected  benefit  obligations
determined  by  third  party  actuarial  consultants.  As a result,  on  January  9,
2003,  the  amount  of  the  Company's  accumulated  projected benefit  obligation  was
increased  by  approximately  $17,231,000 as compared to  the amount  recorded in its
consolidated  balance  sheet  prior  to  the  Recapitalization.  Accordingly,  as  of
January  10,  2003,  the  Company  has  recorded  accrued post retirement  health
liabilities  of  approximately  $35,000,000,  which  represents  the  current  discounted
amount  of  the  remaining  estimated  amounts  to be paid  out  under  the  Company's
various  post  retirement  health  benefit  plans.  The  Company's  policy  is to fund
the  costs  associated  with  its  various  post  retirement  health  benefit plans as
they  become  due and there are no  investments  or other  assets  associated  with
these  plans.  Consistent  with  many  post  retirement  health  benefit  plans in the
United States, the Company's  liabilities  under  these  plans have been  negatively
impacted by rising  medical  costs in the  United  States and the  decline in yields
available in fixed income markets.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
Company  and its  subsidiaries  have  entered into a number of operating  lease
obligations,  purchase  obligations  and  have  guaranteed  certain  obligations of
various  third  parties.  No  significant  changes  in  these  obligations  have
occurred  since  December 31,  2002.  See  the  Company's  annual  report  on  Form
10-K,  as filed with the SEC, at December  31,  2002  for  amounts  outstanding  at
December 31, 2002.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Unrestricted
cash and  cash  equivalents  decreased  from  approximately  $294,804,000  at  December
31,  2002  to  approximately  $121,026,000 at October 4,  2003.  The  Company  has
classified  as  restricted in the accompanying  condensed  consolidated  balance  sheet
certain  investments  and  marketable  securities  that are not fully  available  for use
in  its  operations.  At  October  4,  2003,  approximately  $2,839,000  (of  which
$1,538,000  is  included  in  current  assets)  of  cash,  investments  and  marketable
securities is held  primarily  as  collateral  for  insurance and letter  of credit
requirements.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Capital
expenditures were  approximately  $22,602,000  (of  which  approximately  $7,587,000
were  non-cash  capital lease  additions)  in the first  nine  months of  2003  compared
to  approximately  $16,009,000  in the first nine  months of  2002.  Capital
expenditures  were  approximately  $28,500,000  for the  year  ended  December 31, 2002
and are expected  to  be  between  $40,000,000  and  $45,000,000 in 2003.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
Company's  working  capital  and  current  ratio  decreased  from  approximately
$451,085,000  and  2.5:1,  respectively,  at  December  31,  2002 to  approximately
$351,506,000  and  2.0:1,  respectively,  at  October  4,  2003  principally  as a result
of changes in unrestricted cash and cash equivalents and the  factors  described below.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Accounts
receivable  increased  approximately  $75,405,000  or  approximately  33.4%,  between
December  31, 2002 and  October 4, 2003,  while net  sales  increased  approximately
$118,324,000  or  approximately  27.1% in  the third  quarter of 2003 as compared to  the
fourth  quarter  of  2002.  The  acquisition  of Elan in the first quarter  of  2003
contributed  $3,253,000  and  $7,210,000  to the  increase  in accounts  receivable  and
net  sales,  respectively  and the  acquisition  of SPC in the third  quarter  of 2003
contributed  $6,177,000  and  $9,657,000  to  the  increase  in  accounts  receivable
and  net  sales,  respectively.  The  rate  of  change  in  accounts  receivable  in
certain  periods  may be different  than the rate of change  in sales in such periods
principally due  to the timing of net sales.  Increases or  decreases  in net  sales
near the end of  any  period  generally  result  in  significant  changes  in  the
amount  of  accounts  receivable  on the  date of the  balance  sheet at the end of such
period,  as was the  situation  on October 4, 2003  as  compared to December  31,  2002.
The  Company  has  not  experienced  any  significant  overall  changes  in  credit
terms,  collection  efforts,  credit  utilization  or  delinquency  in accounts
receivable in 2003.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Inventories
increased  approximately  $35,441,000  or  approximately  20.2%,  between  December 31,
2002 and October 4,  2003.  Approximately  $7,216,000  of  the  increase  was  as a
result  of  the  net  remaining  fair market  value  adjustment  of  inventories  at
October  4,  2003  arising  from  the  Recapitalization.  In  addition,  the  acquisition
of Elan  and  SPC contributed  approximately $4,678,000  and  $5,686,000,  respectively,
to  the  increase in inventories.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Accounts
payable increased  approximately  $23,689,000  or  approximately  18.7%,  between
December 31, 2002 and October 4,  2003.  The  acquisition  of Elan  and SPC  contributed
approximately  $637,000  and  $1,788,000,  respectively,  to  this  increase.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Changes
in  certain  working  capital  accounts,  as  noted  above,  between  December  31,  2002
and  October 4, 2003,  differ from the changes  reflected in the  Company's  Condensed
Consolidated  Statement  of Cash Flows for such  period  as  a  result  of  the  specific
items  mentioned  in  the  three  preceding  paragraphs  and  from  other  non-cash
items,  including  among  others,  the  effect of  changes  in  foreign  currency
exchange rates.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Unrestricted
cash and  cash  equivalents  decreased  approximately  $154,501,000  from  December  31,
2002 to  January  9,  2003  and  decreased  approximately  $19,277,000  from  January
10,  2003  to  October 4, 2003,  principally as a result  of the following:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                       | Condensed Consolidated Cash Flows (*)
|------------------------------------------------------ | -------------------------------------
|
|
|
|Operating Activities:                                  |                                      
|Cash flow from operations, net                         |                                      
|(Increase) decrease in accounts receivable, net        |                                      
|Increase in inventories                                |                                      
|Decrease in prepaids and other current assets          |                                      
|Increase in accounts payable                           |                                      
|(Decrease) increase in accrued expenses and taxes      |                                      
|Investing Activities:                                  |                                      
|Net cash paid for acquisitions                         |                                      
|Capital expenditures                                   |                                      
|Decrease (increase) in restricted cash and investments |                                      
|Financing Activities:                                  |                                      
|Decrease in borrowings, net                            |                                      
|Capital contribution from Nortek Holdings              |                                      
|Dividend paid and transfers to Nortek Holdings         |                                      
|Other, net                                             |                                      
|
|                                                       |                                      
|

| | (*) | Summarized
from the Company's Condensed  Consolidated  Statement of Cash Flows for the period
January 1, 2003  to  January 9, 2003 and the period  January  10,  2003 to  October  4,
2003.  (See the  Unaudited  Financial  Statements included elsewhere herein.)
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
impact of changes in foreign  currency  exchange rates on cash was not material and has
been included in Other,  net.
|-------------------------------------------------------------------------------------------------------------------------

##### Inflation, Trends and
General Considerations

|The
Company has evaluated and expects to continue to evaluate  possible  acquisition
transactions and the possible  dispositions  of certain of its  businesses on an ongoing
basis and at any given time may be engaged in discussions  or negotiations with respect
to possible acquisitions or dispositions.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
Company's  performance is dependent to a significant  extent upon the levels of new
residential  construction,  residential  replacement  and  remodeling  and
non-residential  construction,  all of which are  affected  by such  factors as interest
rates, inflation, consumer confidence and unemployment.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
demand for the  Company's  products is  seasonal,  particularly  in the  Northeast  and
Midwest  regions of the  United  States  where  inclement  weather  during the winter
months  usually  reduces  the level of  building  and  remodeling  activity in both the
home  improvement and new construction  markets.  The Company's lower sales levels
usually  occur  during  the first and fourth  quarters.  Since a high  percentage  of the
Company's  manufacturing  overhead and operating  expenses are relatively fixed
throughout the year,  operating income and net earnings tend  to be lower in quarters
with lower sales levels.  In addition,  the demand for cash to fund the working  capital
of  the Company's subsidiaries is greater from late in the first quarter until early in
the fourth quarter.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

##### Market Risk

|As
discussed  more  specifically  below,  the  Company is exposed to market  risks  related
to changes in interest  rates,  foreign  currencies  and commodity  pricing.  The Company
does not use  derivative  financial  instruments,  except on a limited  basis,  to hedge
certain  economic  exposures.  The  Company  does not enter into  derivative  financial
instruments or other financial instruments for trading purposes.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|There
have been no  significant  changes in market  risk from the  December  31, 2002
disclosures  included in the  Company's annual report on Form 10-K.
|---------------------------------------------------------------------------------------------------------------------------------------------------------

##### A.  Interest Rate Risk

|The
Company is exposed to market  risk from  changes  in  interest  rates  primarily  through
its  investing  and  borrowing  activities.  In addition,  the  Company's  ability to
finance  future  acquisition  transactions  may be  impacted if the Company is unable to
obtain appropriate financing at acceptable interest rates.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
Company's  investing  strategy,  to manage  interest rate exposure,  is to invest in
short-term,  highly liquid  investments  and  marketable  securities.  Short-term
investments  primarily  consist of federal  agency  discount  notes, treasury bills and
bank issued money market instruments with original maturities of 90 days or less.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
Company  manages its borrowing  exposure to changes in interest  rates by optimizing the
use of fixed rate debt  with  extended  maturities.  There have been no  significant
changes in interest  rate risk from the  December 31,  2002 disclosures included in the
Company's annual report on Form 10-K.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

##### B.  Foreign Currency Risk

|Sales
and earnings derived from international  markets and net assets within international
markets are subject to,  among others,  the risks of currency  fluctuations  primarily
related to changes in the Euro, the Canadian  Dollar  and the  British  Pound.  In the
first nine  months of 2003,  the net impact of foreign  currency  changes  was not
material to the  Company's  financial  condition  or results of  operations,  but may not
be  indicative  of future  results.  The impact of foreign  currency  changes related to
translation  resulted in an increase in stockholder's  investment of  approximately
$1,096,000  and  $13,499,000  for the periods  January 1, 2003 to January 9, 2003 and
January 10, 2003 to October 4, 2003,  respectively.  The Company manages its exposure to
foreign currency  exchange  risk  principally  by trying to  minimize  the  Company's
net  investment  in foreign  assets  through  the use of  strategic short and long-term
borrowings at the foreign  subsidiary  level.  The Company  generally does not enter
into derivative  financial  instruments to manage foreign  currency  exposure.  At
October 4, 2003, the Company did  not have any significant outstanding foreign currency
hedging contracts.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

##### C.  Commodity Pricing Risk

|The
Company is subject to  significant  market risk with  respect to the pricing of its
principal  raw  materials,  which include,  among others,  steel, copper,  packaging
material,  plastics,  resins, glass, wood and aluminum. If  prices of these raw materials
were to increase  dramatically,  the Company may not be able to pass such  increases  on
to its  customers  and,  as a result,  gross  margins  could  decline  significantly.
The  Company  manages its  exposure to commodity  pricing risk by  continuing  to
diversify  its product mix,  strategic  buying  programs and  vendor partnering.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
Company  generally does not enter into derivative  financial  instruments to manage
commodity pricing exposure.  At October 4, 2003, the Company did not have any material
outstanding commodity forward contracts.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On
March 5, 2002, the United States  government  imposed  tariffs and quotas on a wide range
of steel imports for a  three-year  period.  Many of the  Company's  products  are made
from  steel or contain  steel  parts and the import  tariffs  impact  certain  of  these
purchases  made by the  Company.  While  the  Company  enters  into  contracts
periodically  which set the price of steel  purchases,  not all purchases are covered by
contract and the contracts  do not extend  through the period the quotas and tariffs are
imposed.  Price changes  resulting from the imposition  of these quotas and tariffs began
to have an  unfavorable  impact on gross  profit,  net earnings and cash flows of  the
Company over the second half of 2002.  (See  discussion  in Results of  Operations - Cost
of products  sold and  operating earnings contained elsewhere herein.)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

##### Forward-Looking Statements

|This
document contains  forward-looking  statements within the meaning of the Private
Securities  Litigation Reform  Act of 1995.  When used in this  discussion  and
throughout  this  document,  words,  such as "intends",  "plans",
"estimates",  "believes",  "anticipates"  and
"expects"  or  similar  expressions  are  intended  to  identify
forward-looking  statements.  These  statements  are based on the  Company's  current
plans and  expectations  and  involve risks and uncertainties,  over which the Company
has no control,  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  that  could  cause  actual  future  activities  and  operating
results to differ  include  the  availability and cost of certain raw materials,
(including,  among others,  steel,  copper,  packaging  materials,  plastics,  resins,
glass,  wood and  aluminum)  and  purchased  components,  the  level of  domestic  and
foreign  construction and remodeling  activity affecting  residential and commercial
markets,  interest rates,  employment,  inflation,  foreign currency  fluctuations,
consumer spending levels,  exposure to foreign economies,  the rate of  sales growth,
price, and product and warranty liability claims.  Readers are cautioned not to place
undue reliance  on  these  forward-looking  statements,  which  speak  only  as of the
date  hereof.  The  Company  undertakes  no  obligation  to update  publicly any
forward-looking  statements,  whether as a result of new  information,  future  events or
otherwise.  All subsequent  written and oral  forward-looking  statements  attributable
to the Company or  persons acting on its behalf are expressly  qualified in their
entirety by these  cautionary  statements.  Readers  are also urged to carefully review
and consider the various disclosures made by the Company,  in this document,  as  well as
the  Company's  periodic  reports on Forms  10-K,  10-Q and 8-K,  filed with the
Securities  and  Exchange  Commission ("SEC").
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

##### Item 4.  Controls and
Procedures

|As
of the end of the period covered by this report,  the Company  carried out an evaluation,
under the supervision  and with the  participation  of the Company's  management,
including the  Company's  Chairman and Chief  Executive  Officer  along  with the
Company's  Vice  President  and  Chief  Financial  Officer  and the  Company's  Corporate
Disclosure and Controls  Committee,  of the  effectiveness of the Company's  disclosure
controls and procedures as  defined in Rule  13a-15e  and 15d-15e  under the  Securities
Exchange  Act of 1934,  as  amended.  Based upon that  evaluation,  the Company's
Chairman and Chief Executive  Officer along with the Company's Vice President and Chief
Financial Officer  concluded that as of the end of such period,  the Company's
disclosure  controls and procedures  are  effective  to ensure that  information
relating  to the Company  (including  its  consolidated  subsidiaries)  required to be
disclosed in the  Company's  periodic SEC filings is recorded,  processed,  summarized
and reported  within the time  periods  specified  by the SEC's rules and forms.  There
have been no  significant  changes in the  Company's  internal  control over financial
reporting that occurred  during the period covered by this report that  have materially
affected,  or that are reasonably likely to materially affect the Company's  internal
control over  financial reporting.
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|PART
II. OTHER INFORMATION
|--------------------------

|Item 6. Exhibits and Reports on Form 8-K
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|SIGNATURE                                                                                   
|--------------------------------------------------------------------------------------------
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|Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
|caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 
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|November 14, 2003                                                                           
|(Date)