**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**Form
      10-Q**


(Mark
      One)


[X]  QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934







**For
      the quarterly period ended March 31, 2007**





OR





[
      ]  TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934


For
      the
      transition period from __________ to __________


Commission
      file number: **333-133866**





**NTK
                Holdings, Inc.**(exact
                name of registrant as specified in its charter)**Delaware**
            **20-1934298**(State
                or other jurisdiction of incorporation or organization)
            (IRS
                Employer Identification Number)**50
                Kennedy Plaza**
              **Providence,
                Rhode Island**
            **02903-2360**(Address
                of principal executive offices)
            (zip
                code)Registrant’s
                Telephone Number, Including Area Code:
              **(401)
                751-1600**Securities
                registered pursuant to Section 12(b) of the Act:**None**











Indicate
      by check mark whether 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
      [_]  No
      [X]





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer in Rule 12b-2 of the Exchange Act). (Check
      one):





Large
                accelerated filer [_]
            Accelerated
                Filer [_]
            Non-accelerated
                filer [X]





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).  Yes
      [_]  No
      [X]





The
      aggregate market value of voting stock held by non-affiliates is
      zero.





The
      number of shares of Common Stock outstanding as of May 11, 2007 was
      3,000.








**PART
      I - FINANCIAL INFORMATION**





**ITEM
      1. FINANCIAL STATEMENTS**





**NTK
      HOLDINGS, INC. AND SUBSIDIARIES**


**UNAUDITED
      CONDENSED CONSOLIDATED BALANCE SHEET**


*(Dollar
      amounts in millions, except share data)*







**March
                  31,**
              
              **December
                  31,****2007**
              
              **2006****Assets****Current
                  Assets:**Unrestricted
                  cash and cash equivalents
              
              $
              43.2
              
              $
              57.4Restricted
                  cash
              
              
              1.2
              
              
              1.2Accounts
                      receivable, less allowances of $11.5 and $9.4
              
              
              338.1
              
              
              328.9Inventories:Raw materials
              
              
              87.9
              
              
              83.1Work in process
              
              
              34.5
              
              
              28.7Finished goods
              
              
              188.4
              
              
              166.8310.8
              
              
              278.6Prepaid
                  expenses
              
              
              14.4
              
              
              13.7Other
                  current
                  assets
              
              
              24.3
              
              
              24.4Prepaid
                  income taxes
              
              
              23.7
              
              
              21.2Total current assets
              
              
              755.7
              
              
              725.4**Property
                  and Equipment, at Cost:**Land
              
              
              9.6
              
              
              9.5Buildings
                  and
                  improvements
              
              
              102.7
              
              
              101.9Machinery
                  and
                  equipment
              
              
              183.0
              
              
              177.2295.3
              
              
              288.6Less
                  accumulated depreciation
              
              
              73.2
              
              
              66.1Total property and equipment, net
              
              
              222.1
              
              
              222.5**Other
                  Assets:**Goodwill
              
              
              1,493.5
              
              
              1,481.4Intangible
                      assets, less accumulated amortization of $58.5 and
                      $52.4
              
              
              144.9
              
              
              150.4Deferred
                  debt
                  expense
              
              
              40.0
              
              
              41.7Restricted
                  investments and marketable securities
              
              
              2.0
              
              
              3.3Other
                  assets
              
              
              11.3
              
              
              11.21,691.7
              
              
              1,688.0**Total
                  Assets**
              
              $
              2,669.5
              
              $
              2,635.9**Liabilities
                  and Stockholder’s Investment****Current
                  Liabilities:**Notes
                  payable
                  and other short-term obligations
              
              $
              50.7
              
              $
              23.3Current
                  maturities of long-term debt
              
              
              17.8
              
              
              20.0Accounts
                  payable
              
              
              223.6
              
              
              188.2Accrued
                  expenses and taxes, net
              
              
              237.5
              
              
              283.7Total current liabilities
              
              
              529.6
              
              
              515.2**Other
                  Liabilities:**Deferred
                  income taxes
              
              
              32.8
              
              
              35.9Other
              
              
              139.5
              
              
              128.8172.3
              
              
              164.7**Notes,
                      Mortgage Notes and Obligations**Payable, Less Current
                      Maturities
              
              
              1,895.3
              
              
              1,883.2**Stockholder’s
                  Investment:**Common
                    stock,
                    $0.01 par value, authorized 3,000 shares; 3,000 issuedand outstanding at March 31, 2007 and December 31, 2006
              
              
              ---
              
              
              ---Additional
                  paid-in capital
              
              
              21.4
              
              
              21.3Retained
                  earnings
              
              
              37.9
              
              
              39.9Accumulated
                  other comprehensive income
              
              
              13.0
              
              
              11.6Total stockholder's investment
              
              
              72.3
              
              
              72.8**Total
                  Liabilities and Stockholder's Investment**
              
              $
              2,669.5
              
              $
              2,635.9


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






**NTK
      HOLDINGS, INC. AND SUBSIDIARIES**


**UNAUDITED
      CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS**





**For
                  the first quarter ended****March
                  31, 2007**
              
              **April
                  1, 2006***(Dollar
                  amounts in millions)***Net
                  Sales**
              
              $
              552.5
              
              $
              534.5**Costs
                  and Expenses:**Cost of products sold
              
              
              384.6
              
              
              370.5Selling, general and administrative expense, net
              
              
              117.1
              
              
              95.3Amortization of intangible assets
              
              
              6.0
              
              
              4.2507.7
              
              
              470.0Operating
                  earnings
              
              
              44.8
              
              
              64.5Interest
                  expense
              
              
              (42.3
              )
              
              (36.1
              )Investment
                  income
              
              
              0.4
              
              
              0.7Earnings
                  before provision for income taxes
              
              
              2.9
              
              
              29.1Provision
                  for
                  income taxes
              
              
              1.7
              
              
              11.3**Net
                  earnings**
              
              $
              1.2
              
              $
              17.8


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






**NTK
      HOLDINGS, INC. AND SUBSIDIARIES**


**UNAUDITED
      CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS**





**For
                  the first quarter ended****March
                  31, 2007**
              
              **April
                  1, 2006***(Dollar
                  amounts in millions)***Cash
                  Flows from operating activities:**Net
                  earnings
              
              $
              1.2
              
              $
              17.8**Adjustments
                      to reconcile net earnings to net cash (used in)**provided by
                      operating activities:Depreciation
                          and amortization expense
              
              
              14.6
              
              
              12.2Non-cash
                  interest expense, net
              
              
              14.5
              
              
              8.7Non-cash
                  stock-based compensation expense
              
              
              0.1
              
              
              0.1Loss
                  on
                  property and equipment
              
              
              ---
              
              
              0.1Deferred
                  federal income tax provision
              
              
              1.3
              
              
              3.5**Changes
                      in certain assets and liabilities, net of**effects from
                      acquisitions and dispositions:Accounts
                  receivable, net
              
              
              (7.0
              )
              
              (23.4
              )Inventories
              
              
              (30.1
              )
              
              (10.2
              )Prepaids
                  and
                  other current assets
              
              
              (1.1
              )
              
              0.8Accounts
                  payable
              
              
              34.1
              
              
              16.9Accrued
                  expenses and taxes
              
              
              (41.7
              )
              
              (16.6
              )Long-term
                  deferred compensation
              
              
              ---
              
              
              0.8Long-term
                  assets, liabilities and other, net
              
              
              0.8
              
              
              (0.7
              )Total adjustments to net earnings
              
              
              (14.5
              )
              
              (7.8
              )Net cash (used in) provided by operating activities
              
              
              (13.3
              )
              
              10.0**Cash
                  Flows from investing activities:**Capital
                  expenditures
              
              
              (6.8
              )
              
              (12.1
              )Net
                  cash paid
                  for businesses acquired
              
              
              (16.8
              )
              
              (7.9
              )Proceeds
                  from
                  the sale of property and equipment
              
              
              ---
              
              
              0.1Change
                  in
                  restricted cash and marketable securities
              
              
              1.3
              
              
              ---Other,
                  net
              
              
              (0.3
              )
              
              (1.4
              )Net
                  cash used in investing activities
              
              
              (22.6
              )
              
              (21.3
              )**Cash
                  Flows from financing activities:**Increase
                  in
                  borrowings
              
              
              28.5
              
              
              9.4Payment
                  of
                  borrowings
              
              
              (6.8
              )
              
              (5.0
              )Other,
                  net
              
              
              ---
              
              
              (0.1
              )Net cash provided by financing activities
              
              
              21.7
              
              
              4.3Net
                  change in
                  unrestricted cash and cash equivalents
              
              
              (14.2
              )
              
              (7.0
              )Unrestricted
                  cash and cash equivalents at the beginning of the period
              
              
              57.4
              
              
              77.2Unrestricted
                  cash and cash equivalents at the end of the period
              
              $
              43.2
              
              $
              70.2**Supplemental
                  disclosure of cash flow information:**Interest
                  paid
              
              $
              45.1
              
              $
              39.8Income
                  taxes
                  paid, net
              
              $
              2.8
              
              $
              2.4


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





**NTK
      HOLDINGS, INC. AND SUBSIDIARIES**


**UNAUDITED
      CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER’S
      INVESTMENT**


**FOR
      THE FIRST QUARTER ENDED APRIL 1, 2006**


*(Dollar
      amounts in millions)*





**Accumulated****Additional**
              
              
              
              **Other****Paid-in**
              
              **Retained**
              
              **Comprehensive**
              
              **Comprehensive****Capital**
              
              **Earnings**
              
              **Income**
              
              **Income****Balance,
                  December 31, 2005**
              
              $
              130.2
              
              $
              52.8
              
              $
              7.5
              
              $
              ---Net
                  earnings
              
              
              ---
              
              
              17.8
              
              
              ---
              
              
              17.8Other
                  comprehensive income:Currency translation adjustment
              
              
              ---
              
              
              ---
              
              
              0.6
              
              
              0.6Comprehensive
                  income
              
              
              
              
              
              
              
              
              
              
              $
              18.4Stock-based
                  compensation
              
              
              0.1
              
              
              ---
              
              
              ---**Balance,
                  April 1, 2006**
              
              $
              130.3
              
              $
              70.6
              
              $
              8.1


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





**NTK
      HOLDINGS, INC. AND SUBSIDIARIES**


**UNAUDITED
      CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER’S
      INVESTMENT**


**FOR
      THE FIRST QUARTER ENDED MARCH 31, 2007**


*(Dollar
      amounts in millions)*


**Accumulated****Additional**
              
              
              
              **Other****Paid-in**
              
              **Retained**
              
              **Comprehensive**
              
              **Comprehensive****Capital**
              
              **Earnings**
              
              **Income**
              
              **Income****Balance,
                  December 31, 2006**
              
              $
              21.3
              
              $
              39.9
              
              $
              11.6
              
              $
              ---Net
                  earnings
              
              
              ---
              
              
              1.2
              
              
              ---
              
              
              1.2Other
                  comprehensive income:Currency translation adjustment
              
              
              ---
              
              
              ---
              
              
              1.4
              
              
              1.4Comprehensive
                  income
              
              
              
              
              
              
              
              
              
              
              $
              2.6Adoption
                  of
                  FIN 48 (see Note F)
              
              
              ---
              
              
              (3.2
              )
              
              ---Stock-based
                  compensation
              
              
              0.1
              
              
              ---
              
              
              ---**Balance,
                  March 31, 2007**
              
              $
              21.4
              
              $
              37.9
              
              $
              13.0




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








**NTK
      HOLDINGS, INC. AND SUBSIDIARIES**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


MARCH
      31, 2007 AND APRIL
      1, 2006





(A) The
      unaudited condensed consolidated financial statements presented herein (the
      “Unaudited Financial Statements”) reflect the financial position, results of
      operations and cash flows of NTK Holdings, Inc. (the “Company” or “NTK
      Holdings”) and all of its wholly-owned subsidiaries. The Unaudited Financial
      Statements include the accounts of NTK Holdings, as appropriate, and all of
      its
      wholly-owned subsidiaries, 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 U.S.
      generally accepted accounting principles have been omitted, the Company believes
      that the disclosures included are adequate to make the information presented
      not
      misleading. 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, its most recent filing on Form S-1 and its
      latest Current Reports on Form 8-K as filed with the Securities and Exchange
      Commission (“SEC”).





On
      May
      5, 2006, the Company filed a registration statement on Form S-1 (most recently
      amended on September 15, 2006) with the SEC for an initial public offering
      of
      shares of its common stock (the “Offering”). Although the Company has not
      withdrawn its registration statement on Form S-1, there can be no assurance
      that
      the Company will complete the Offering in the foreseeable future.





**Stock-Based
      Compensation of Employees, Officers and Directors**





The
      Company follows the modified-prospective transition method of accounting for
      stock-based compensation in accordance with SFAS No. 123R. Under the
      modified-prospective transition method, the Company is required to recognize
      compensation cost for share-based payments to employees based on their
      grant-date fair value. Measurement and attribution of compensation cost for
      awards that were granted prior to, but not vested as of the date SFAS No. 123R
      was adopted, are based on the same estimate of the grant-date fair value and
      the
      same attribution method used previously under SFAS No. 123.





At
      March 31, 2007, c ertain
      employees and consultants held approximately 23,079 C-1 units and approximately
      45,751 C-2 units, which represent equity interests in THL-Nortek Investors,
      LLC
      (“Investors LLC”) that function similar to stock awards. The C-1 units vest pro
      rata on a quarterly basis over a three-year period and approximately 18,626
      and
      16,720 were vested at March 31, 2007 and December 31, 2006, respectively. The
      total fair value of the C-1 units is approximately $1.1 million and
      approximately $0.3 million remains to be amortized at March 31, 2007. The C-2
      units only vest in the event that certain performance-based criteria, as
      defined, are met. At March 31, 2007 and December 31, 2006, there was
      approximately $1.6 million of unamortized stock-based employee compensation
      with
      respect to the C-2 units, which will be recognized in the event that it becomes
      probable that the C-2 units or any portion thereof will vest. The C-1 and C-2
      units were valued using the Black-Scholes option pricing model to determine
      the
      freely-traded call option value based upon information from comparable public
      companies, which was then adjusted to reflect the discount period, the minority
      interest factor and the lack of marketability factor to arrive at the final
      valuations.





The
      Company recorded stock-based compensation charges in selling, general and
      administrative expense, net of approximately $0.1 million for each of the first
      quarters ended March 31, 2007 and April 1, 2006, respectively, in accordance
      with SFAS No. 123R.




**Income
      Taxes**





In
      June
      2006, the Financial Accounting Standards Board (“FASB”) issued FASB
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes (an
      interpretation of FASB Statement No. 109)”, (“FIN 48”). FIN 48 clarifies the
      criteria that an individual tax position must satisfy for some or all of the
      benefits of that position to be recognized in a company’s financial statements.
      FIN 48 prescribes a recognition threshold of “more-likely-than-not” and a
      measurement attribute for all tax positions taken or expected to be taken on
      a
      tax return in order for those tax positions to be recognized in the financial
      statements. The Company adopted FIN 48 on January 1, 2007 (see Note F).





**Goodwill**





The
      following table presents a summary of the activity in goodwill for the first
      quarter ended March 31, 2007:





*(Amounts in millions)***Balance
                at December 31, 2006**
            **$**
            **1,481.4**Acquisitions
                during the first quarter ended March 31, 2007
            
            8.4Adoption
                of FIN 48 (see Note F)
            
            3.8Purchase
                accounting adjustments
            
            (0.2
            )Impact
                of foreign currency translation
            
            0.1**Balance
                at March 31, 2007**
            **$**
            **1,493.5**





The
      Company has classified as goodwill the cost in excess of fair value of the
      net
      assets (including tax attributes) of companies acquired in purchase transactions
      (see Note C).
      Approximately $8.4 million and $62.3 million of goodwill associated with certain
      companies acquired during the first quarter ended March 31, 2007 and the year
      ended December 31, 2006, respectively, will be deductible for income tax
      purposes. Purchase
      accounting adjustments relate principally to final revisions resulting from
      the
      completion of fair value adjustments and adjustments to deferred income taxes
      that impact goodwill.





**New
      Accounting Pronouncements**





In
      September 2006, the FASB issued Statement of Financial Accounting Standard
      (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157
      defines fair value, establishes a framework for measuring fair value in
      accordance with U.S. generally accepted accounting principles, and expands
      disclosures about fair value measurements. The provisions of SFAS No. 157 are
      effective for the Company beginning January 1, 2008, including interim periods
      within the year ending December 31, 2008. Earlier adoption is encouraged. The
      Company is currently evaluating the impact of adopting SFAS No. 157 on its
      consolidated financial statements.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - Including an Amendment of FASB
      Statement No. 115” (“SFAS No. 159”). SFAS No. 159 permits entities to choose to
      measure many financial instruments and certain other items at fair value and
      is
      effective for fiscal years beginning after November 15, 2007, or January 1,
      2008
      for the Company. Early adoption is permitted as of the beginning of the previous
      fiscal year provided that the entity makes that choice in the first 120 days
      of
      that fiscal year and also elects to apply the provisions of SFAS No. 157. The
      Company is currently evaluating the impact of adopting SFAS No. 159 on its
      consolidated financial statements.





(B)
            On
                May 10, 2006, NTK Holdings borrowed an aggregate principal amount
                of
                $205.0 million under a senior unsecured loan facility. The proceeds
                of
                this borrowing were utilized to (1) pay a cash dividend of approximately
                $174.9 million to Investors LLC which, in turn, made a distribution
                to the
                holders of its Class A and Class B membership interests, including
                affiliates of Thomas H. Lee Partners, L.P. and certain members of
                the
                Company’s management, (2) contribute capital of approximately $25.9
                million to Nortek Holdings, which was used by Nortek Holdings, together
                with a dividend of approximately $28.1 million from Nortek to make
                a
                distribution of approximately $54.0 million to participants under
                the 2004
                Nortek Holdings, Inc. Deferred Compensation Plan (including certain
                of the
                Company’s executive officers) and (3) pay related fees and expenses. As a
                result of these distributions, the holders of the Class A membership
                interests in Investors LLC and the participants in the 2004 Nortek
                Holdings, Inc. Deferred Compensation Plan are not entitled to any
                further
                distributions.





On
      May
      10, 2007, the senior unsecured loan facility was not repaid and was extended
      until March 1, 2014. As a result of this extension, the Company paid a 2%
      rollover fee of approximately $4.5 million on May 10, 2007. The senior unsecured
      loan facility bears interest at LIBOR plus a spread, which spread increases
      over
      time, subject to a cap on the overall interest rate of 11% per annum. At March
      31, 2007, the senior unsecured loan facility had an interest rate of
      approximately 8.9%. NTK Holdings has the option to pay interest in cash (“Cash
      Option”) or by adding interest to the principal amount of the loans under the
      senior unsecured loan facility (“PIK Option”). If the Company exercises the PIK
      Option with respect to any interest period, an amount equal to the unpaid
      interest accrued will be added to the principal amount of the senior unsecured
      loan facility and such accrued interest will be deemed to have been paid.
      Following an increase in the principal amount of the senior unsecured loan
      facility as a result of the payment through the PIK Option, the senior unsecured
      loan facility will bear interest on such increased principal amount. The Company
      must elect the form of interest payment for each interest period. Since the
      initial borrowing on May 10, 2006, the Company has elected the PIK option to
      increase the principal amount of the senior unsecured loan facility for the
      interest accrued during the applicable interest periods. As a result of
      exercising this PIK Option, the Company recorded approximately $4.7 million
      of
      accrued interest for the first quarter ended March 31, 2007, as additional
      indebtedness relating to the senior unsecured loan facility. At March 31, 2007
      and December 31, 2006, the outstanding principal balance on the senior unsecured
      loan facility was approximately $220.7 million and $216.0 million, respectively.
      The senior unsecured loan facility is not guaranteed by any of the NTK Holdings’
subsidiaries and is not secured by any assets of NTK Holdings or any of its
      subsidiaries.





At
      March 31, 2007, Nortek had approximately $34.0 million outstanding and
      approximately $133.2 million of additional borrowing capacity under the U.S.
      revolving portion of its senior secured credit facility, with approximately
      $22.8 million in outstanding letters of credit. Borrowings under the revolving
      portion of the senior secured credit facility are used for
      general working capital purposes. Under
      the Canadian revolving portion of its senior secured credit facility the Company
      had no outstanding borrowings and approximately $10.0 million of additional
      borrowing capacity. The letters of credit have been issued under Nortek’s revolving credit facility as
      additional security for (1) approximately $17.2 million relating to certain
      of
      the Company’s insurance programs, (2) approximately $3.9 million relating to
      leases outstanding for certain of the Company’s manufacturing facilities and (3)
      approximately $1.7 million relating to certain of the subsidiaries’ purchases
      and other requirements. Letters of credit reduce borrowing availability under
      Nortek’s revolving credit facility on a dollar for dollar basis. Subsequent to
      March 31, 2007, Nortek borrowed an additional $60.0 million under the U.S.
      revolving portion of its senior secured credit facility.





At
      March 31, 2007, the Company had approximately $47.6 million available for the
      payment of cash dividends, stock purchases or other restricted payments
      (“Restricted Payments”) under the terms of the indenture governing the Company’s
      10 3/4% Senior Discount Notes’ and the agreement governing the Company’s senior
      unsecured loan facility. Restricted Payments to NTK Holdings and Nortek Holdings
      from Nortek are limited by the terms of Nortek’s most restrictive loan
      agreement, Nortek’s senior secured credit facility. The amount available for
      such payments under Nortek’s senior secured credit facility was approximately
      $156.5 million at March 31, 2007.





(C)
            On
                March 2, 2007, the Company, through its wholly-owned subsidiary,
                Linear
                LLC (“Linear”), acquired the stock of LiteTouch, Inc. for approximately
                $10.6 million (utilizing approximately $8.1 million of cash and issuing
                unsecured 6% subordinated notes totaling $2.5 million due March 2009)
                plus
                contingent consideration, which may be payable in future years. LiteTouch
                is located in Salt Lake City, UT and designs, manufactures and sells
                automated lighting controls for a variety of uses including residential,
                commercial, new construction and retro-fit
                applications.





On
      December 12, 2006, the Company, through Linear, acquired the stock of Gefen,
      Inc. (“Gefen”) for approximately $24.0 million (utilizing approximately $21.5
      million of cash and issuing unsecured 6% subordinated notes totaling $2.5
      million due December 2008) plus contingent consideration, which may be payable
      in future years. Gefen is located in Woodland Hills, CA and designs
      and sells audio and video products which extend, switch, distribute and convert
      signals in a variety of formats, including high definition, for both the
      residential and commercial markets.





On
      November 11, 2006, the Company, through its wholly-owned subsidiary,
      Broan-NuTone LLC (“Broan”), acquired the stock of Zephyr Corporation (“Zephyr”)
      and Pacific Zephyr Range Hood, Inc. (“Pacific”) for approximately $26.4 million
      (utilizing approximately $22.4 million of cash and issuing unsecured 6%
      subordinated notes totaling $4.0 million due November 2009). Zephyr and Pacific
      are both located in San Francisco, CA. Zephyr designs and sells upscale range
      hoods, while Pacific designs, sells and installs range hoods and other kitchen
      products for Asian cooking markets in the United States.





On
      July
      18, 2006, the Company, through Linear, acquired the stock of Magenta Research,
      Ltd. (“Magenta”) for approximately $14.4 million (utilizing approximately $11.9
      million of cash, of which approximately $10.0 million was borrowed under
      Nortek’s revolving credit facility and is still outstanding at March 31, 2007,
      and issuing unsecured 6% subordinated notes totaling $2.5 million due July
      2008)
      plus contingent consideration, which may be payable in future years. Magenta
      is
      located in New Milford, CT and designs and sells products that distribute audio
      and video signals over Category 5 and fiber optic cable to multiple display
      screens.





On
      June
      26, 2006, the Company, through Linear, acquired the stock of Secure Wireless,
      Inc. (“Secure Wireless”) and Advanced Bridging Technologies, Inc. (“ABT”)
      through two mergers for an initial purchase price of approximately $10.5
      million, plus contingent consideration of approximately $18.1 million that
      was
      earned by Secure Wireless in 2006 and was paid in April 2007. Additional
      contingent consideration may be payable in future years. Secure Wireless designs
      and sells wireless security products for the residential and commercial markets
      while ABT designs and sells innovative radio frequency control products and
      accessories. Both Secure Wireless and ABT are located in Carlsbad, CA.





On
      April 14, 2006, the Company, through two newly formed subsidiaries of its HVAC
      segment, acquired the assets and certain liabilities of Huntair, Inc.
      (“Huntair”) and Cleanpak International, LLC (“Cleanpak”), for an initial
      purchase price of approximately $48.4 million (utilizing approximately $38.4
      million of cash and issuing unsecured 6% subordinated notes totaling $10.0
      million due April 2008) plus contingent consideration of approximately $30.0
      million which was earned in 2006 and was paid in April 2007. Both Huntair and
      Cleanpak are located near Portland, OR and manufacture, market and distribute
      custom air handlers and related products for commercial and cleanroom
      applications.





On
      February 22, 2006, the Company, through Linear, acquired the assets and certain
      liabilities of Furman Sound, Inc. (“Furman”) for approximately $3.3 million.
      Furman is located in Petaluma, CA and designs and sells audio and video signal
      processors and innovative power conditioning and surge protection
      products.





On
      January 25, 2006, the Company, through its wholly-owned subsidiary, Mammoth
      China Ltd. (“Mammoth China”), increased its ownership interests in Mammoth
      (Zhejiang) EG Air Conditioning Ltd. (“MEG”) and Shanghai Mammoth Air
      Conditioning Co., Ltd. (“MSH”) to sixty-percent for approximately $2.4 million.
      The majority ownership transaction relating to MSH was finalized with the
      Chinese authorities in May 2006. Prior to January 25, 2006, Mammoth China had
      a
      forty-percent minority interest in MEG and a fifty-percent interest in
      MSH.





Acquisitions
      contributed approximately $53.7 million, $10.2 million and $2.7 million to
      net
      sales, operating earnings and depreciation and amortization expense,
      respectively, for the first quarter ended March 31, 2007. With the exception
      of
      Zephyr and Pacific, which are included in the Residential Ventilation Products
      segment, and Huntair, Cleanpak, MEG and MSH, which are included in the Air
      Conditioning and Heating Products segment, all acquisitions are included in
      the
      Home Technology Products segment in the Company’s segment reporting (see Note
      E).





As
      described above, $48.1 million of contingent consideration was paid in April
      2007 related to the Secure Wireless and the Huntair and Cleanpak acquisitions.
      Contingent consideration of approximately $7.5 million related to the
      acquisition of OmniMount, which was accrued for at December 31, 2006, was also
      paid in the first quarter of 2007. The estimated total maximum potential amount
      of contingent consideration that may be paid in the future for all completed
      acquisitions is approximately $81.2 million.





Acquisitions
      are accounted for as purchases and accordingly have been included in the
      Company’s consolidated results of operations since the acquisition date. For
      recent acquisitions, the Company has made preliminary estimates of the fair
      value of the assets and liabilities of the acquired companies, including
      intangible assets and property and equipment, as of the date of acquisition,
      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 appraisals of intangible assets and property and equipment and
      finalizing the integration plans for certain of the acquired companies, which
      are expected to be completed by the first half of 2007.





On
      April 10, 2007, the Company, through Linear, acquired the assets and certain
      liabilities of c.p. All Star Corporation (“All Star”) for an initial purchase
      price of approximately $3.0 million (utilizing approximately $2.5 million of
      cash and issuing unsecured 6% subordinated notes totaling $0.5 million due
      April
      2009). All Star is located in Downington, PA and is a leading manufacturer
      and
      distributor of residential, commercial and industrial gate operators, garage
      door openers, radio controls and accessory products for the garage door and
      fence industry.




Pro
      forma results related to these acquisitions have not been presented, as the
      effect is not significant to the Company’s consolidated operating
      results.





(D) Operating
      results for the first quarter ended March 31, 2007 and April 1, 2006 include
      a
      non-cash foreign exchange gain of approximately $0.2 million (of which
      approximately $0.1 million is included in the RVP segment) and $0.1 million,
      respectively, related to intercompany debt not indefinitely invested in the
      Company’s subsidiaries.





The
      Company has a management agreement with an affiliate of Thomas H. Lee Partners,
      L.P. providing for certain financial and strategic advisory and consultancy
      services. Nortek expensed approximately $0.4 million and $0.6 million for the
      first quarter ended March 31, 2007 and April 1, 2006, respectively, related
      to
      this management agreement in the accompanying Unaudited Condensed Consolidated
      Statement of Operations.





(E) The
      Company is a leading diversified manufacturer of innovative, branded residential
      and commercial products, which is organized within three reporting segments:
      the
      Residential Ventilation Products (“RVP”) segment, the Home Technology Products
      (“HTP”) segment and the Air Conditioning and Heating Products (“HVAC”) segment.
      The HVAC segment combines the results of the Company’s residential and
      commercial heating, ventilating and air conditioning businesses. In the tables
      below, Unallocated includes corporate related items, intersegment eliminations
      and certain income and expense items not allocated to reportable
      segments.





The
      Company evaluates segment performance based on operating earnings before
      allocations of corporate overhead costs. Intersegment net sales and intersegment
      eliminations were not material for any of the periods presented. The financial
      statement impact of all purchase accounting adjustments, including intangible
      asset amortization and goodwill, is reflected in the applicable operating
      segment, which are the Company’s reporting units.





Unaudited
      net sales, operating earnings and pre-tax earnings for the Company’s segments
      for the first quarter ended March 31, 2007 and April 1, 2006 were as follows:





**For
                  the first quarter ended****March
                  31, 2007**
              
              **April
                  1, 2006***(Dollar
                  amounts in millions)***Net
                  sales:**Residential
                  ventilation products
              
              $
              208.7
              
              $
              211.6Home
                  technology products
              
              
              123.2
              
              
              107.5Air
                  conditioning and heating products
              
              
              220.6
              
              
              215.4Consolidated net sales
              
              $
              552.5
              
              $
              534.5**Operating
                  earnings:**Residential
                  ventilation products (1)
              
              $
              25.2
              
              $
              36.1Home
                  technology products
              
              
              16.5
              
              
              17.3Air
                  conditioning and heating products (2)
              
              
              9.8
              
              
              17.9Subtotal
              
              
              51.5
              
              
              71.3**Unallocated:**Stock-based
                  compensation charges
              
              
              (0.1
              )
              
              (0.1
              )Foreign
                  exchange gain on intercompany debt
              
              
              0.1
              
              
              0.1Unallocated,
                  net
              
              
              (6.7
              )
              
              (6.8
              )Consolidated operating earnings
              
              
              44.8
              
              
              64.5Interest
                  expense
              
              
              (42.3
              )
              
              (36.1
              )Investment
                  income
              
              
              0.4
              
              
              0.7Earnings before provision for income taxes
              
              $
              2.9
              
              $
              29.1


(1)
            The
                operating
                results of the RVP segment for the first quarter ended March 31,
                2007
                include an approximate $0.6 million charge related to the closure
                of the
                Company’s NuTone, Inc. Cincinnati, OH facility (see Note H) and a non-cash
                foreign exchange gain of approximately $0.1 million related to
                intercompany debt not indefinitely invested in the Company’s subsidiaries.
                The operating results of the RVP segment for the first quarter ended
                April
                1, 2006 include an increase in warranty expense of approximately
                $1.5
                million related to a product safety
                upgrade.





(2)
            The
                operating
                results of the HVAC segment for the first quarter ended March 31,
                2007
                include a charge of approximately $1.8 million related to a reserve
                for
                amounts due from a customer.





Unaudited
      depreciation expense, amortization expense and capital expenditures for the
      Company’s segments for the first quarter ended March 31, 2007 and April 1, 2006
      were as follows:





**For
                  the first quarter ended****March
                  31, 2007**
              
              **April
                  1, 2006***(Dollar
                  amounts in millions)***Depreciation
                  Expense:**Residential
                  ventilation products
              
              $
              3.0
              
              $
              3.2Home
                  technology products
              
              
              1.3
              
              
              0.9Air
                  conditioning and heating products
              
              
              4.1
              
              
              3.7Other
              
              
              0.2
              
              
              0.1Consolidated depreciation expense
              
              $
              8.6
              
              $
              7.9**Amortization
                  expense:**Residential
                  ventilation products
              
              $
              1.3
              
              $
              1.5Home
                  technology products (1)
              
              
              2.7
              
              
              2.1Air
                  conditioning and heating products
              
              
              1.9
              
              
              0.6Other
              
              
              0.1
              
              
              0.1Consolidated amortization expense
              
              $
              6.0
              
              $
              4.3**Capital
                  Expenditures:**Residential
                  ventilation products
              
              $
              2.4
              
              $
              4.6Home
                  technology products
              
              
              1.2
              
              
              1.9Air
                  conditioning and heating products
              
              
              3.2
              
              
              5.5Other
              
              
              ---
              
              
              0.1Consolidated capital expenditures
              
              $
              6.8
              
              $
              12.1


(1)
            Includes
                amortization of approximately $0.1 million for the first quarter
                ended
                April 1, 2006 of excess purchase price allocated to inventory recorded
                as
                a non-cash charge to cost of products sold.





(F)
            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 58.6% and 38.8% for the periods
                presented:





**For
                the first quarter ended****March
                31, 2007**
            
            **April
                1, 2006**Income
                tax provision at the federal statutory rate
            
            
            35.0
            %
            
            35.0
            %Net
                change from federal statutory rate:Interest
                related to uncertain tax positions, net of federal income tax
                effect
            
            
            17.2
            
            
            ---State
                income tax provision, net of federalincome
                tax effect
            
            
            3.1
            
            
            2.1Tax
                effect resulting from foreign activities
            
            
            2.3
            
            
            1.0Non-deductible
                expenses
            
            
            0.9
            
            
            0.7Other,
                net
            
            
            0.1
            
            
            ---Income
                tax provision at estimated effective rate
            
            
            58.6
            %
            
            38.8
            %





As
      indicated in Note A, the Company adopted the provisions of FIN 48 effective
      January 1, 2007. As a result of the adoption of this standard, the Company
      recorded a charge to retained earnings of approximately $3.2 million and also
      increased goodwill related to pre-acquisition tax uncertainties by approximately
      $3.8 million.





As
      of
      January 1, 2007, after the adoption of FIN 48, the Company has provided a
      liability of approximately $33.0 million for unrecognized tax benefits related
      to various federal, foreign and state income tax matters. Of this amount, the
      amount that would impact the Company’s effective tax rate, if recognized, is
      approximately $7.1 million. The difference between the total amount of
      unrecognized tax benefits and the amount that would impact the effective tax
      rate consists of items that are offset by deferred tax assets of approximately
      $2.1 million, goodwill adjustments of approximately $17.2 million, and the
      federal tax benefit of state income tax items of approximately $6.6 million.
      The
      reserve for income taxes has increased by approximately $0.5 million in the
      first quarter ended March 31, 2007.





During
      the first quarter ended March 31, 2007, the Company made payments of
      approximately $0.7 million related to amounts covered by the liability for
      uncertain tax positions. The Company expects that approximately $5.2 million
      of
      the total amount of unrecognized tax benefits will be recognized during 2007
      as
      a reduction of goodwill as a result of the expiration of the statutes of
      limitation for various items.





The
      Company has been notified that its federal tax returns for the periods from
      January 1, 2004 to August 27, 2004 and from August 28, 2004 to December 31,
      2004
      and the year ended December 31, 2005 will be audited by the Internal Revenue
      Service. The Company and its subsidiaries’ foreign and state income tax returns
      are generally subject to audit for the periods from January 10, 2003 to December
      31, 2003, from January 1, 2004 to August 27, 2004 and from August 28, 2004
      to
      December 31, 2004 and for the years ended December 31, 2002, 2005 and
      2006.





As
      of
      January 1, 2007, the Company has accrued approximately $4.7 million of interest
      related to uncertain tax positions. As of March 31, 2007, the total amount
      of
      accrued interest and penalties is approximately $5.5 million. The Company
      accounts for interest and penalties related to uncertain tax positions as part
      of its provision for federal and state income taxes.





(G) At
      March 31, 2007, the Company’s former subsidiary, Ply Gem, has guaranteed
      approximately $21.0 million of third party obligations relating to rental
      payments through June 30, 2016 under a facility leased by a former subsidiary,
      which was sold on September 21, 2001. The Company has indemnified these
      guarantees in connection with the sale of Ply Gem on February 12, 2004 and
      has
      recorded an estimated liability related to this indemnified guarantee of
      approximately $0.9 million at March 31, 2007 in accordance with Interpretation
      No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees,
      Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). The buyer
      of the former subsidiary has provided certain indemnifications and other rights
      to Nortek for any payments that it might be required to make pursuant to this
      guarantee. Should the buyer of the former subsidiary cease making payments
      then
      the Company may be required to make payments on its
      indemnification.





The
      Company has indemnified third parties for certain matters in a number of
      transactions involving dispositions of former subsidiaries. The Company has
      recorded liabilities in relation to these indemnifications, including the
      indemnified guarantee noted above, of approximately $11.8 million and $12.0
      million at March 31, 2007 and December 31, 2006, respectively. Approximately
      $5.2 million of short-term liabilities and approximately $6.6 million of
      long-term liabilities are recorded in accrued expenses and other long-term
      liabilities, respectively, in the accompanying unaudited condensed consolidated
      balance sheet at March 31, 2007 related to these indemnifications.





The
      Company sells a number of products and offers a number of warranties including
      in some instances, extended warranties for which the Company receives proceeds.
      The specific terms and conditions of these warranties vary depending on the
      product sold and the 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 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 first quarter ended March 31, 2007 and April 1, 2006 are as
      follows:








**For
                the first quarter ended****March
                31, 2007**
            
            **April
                1, 2006***(Amounts
                in millions)*Balance,
                beginning of period
            
            $
            41.2
            
            $
            34.8Warranties
                provided during period
            
            
            5.5
            
            
            7.3Settlements
                made during period
            
            
            (5.6
            )
            
            (4.2
            )Changes
                in liability estimate, including expirations and
                acquisitions
            
            
            0.4
            
            
            0.3Balance,
                end of period
            
            $
            41.5
            
            $
            38.2





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 and adjustment or replacement
      of
      component parts of units sold, which include product recalls. 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.





Certain
      sole source suppliers of various fabricated material components and
      sub-assemblies (“material components”) to the Company’s kitchen range hood
      subsidiaries based in Italy and Poland experienced financial difficulties in
      January 2007. The Company is working and will continue to work closely with
      these suppliers to help them in meeting the supply needs of these subsidiaries
      for the foreseeable future. The Company has not experienced any significant
      difficulties in its production or shipments to its customers as a result of
      these suppliers’ difficulties in maintaining its production as of May 11, 2007.
      However, there can be no assurance that the Company will be able to continue
      to
      prevent a disruption in the supply of such material components or be able to
      find alternative suppliers. Should these suppliers be unable to continue in
      operation and the Company is unable to find alternative suppliers for a lengthy
      period of time, the Company could experience a material adverse effect on its
      operations. The Company recorded approximately $16.0 million of estimated losses
      in the RVP segment in the fourth quarter of 2006 in selling, general and
      administrative expense, net resulting from the unlikelihood that these suppliers
      will be able to repay advances from our subsidiaries based in Italy and Poland
      and amounts due under other arrangements. While the Company has recorded its
      best estimate of the losses related to these suppliers, the actual losses may
      be
      different than the amounts recorded at December 31, 2006. There were no
      additional material losses recorded in the first quarter ended March 31, 2007
      related to these suppliers.





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, results of operations or liquidity of the
      Company. It is possible, however, that future results of operations for any
      particular future period could be materially affected by changes in the
      Company’s assumptions or strategies related to these contingencies or changes
      that are not within the Company’s control.





(H)
            The
                Company records restructuring costs primarily in connection with
                operations acquired or facility closings whichmanagement
                plans to eliminate in order to improve future operating results of
                the
                Company.





Within
      the RVP segment, the Company, in the first quarter of 2007, recorded liabilities
      of approximately $0.6 million in the accompanying unaudited condensed
      consolidated balance sheet related to the closure of its NuTone Cincinnati,
      OH
      facility and the relocation of such operations to certain other subsidiaries
      of
      the Company within this segment. It is estimated that in total approximately
      $2.1 million, including the $0.6 million noted above, will be expensed in
      selling, general and administrative expense, net in conjunction with the closure
      of this facility and approximately 74 employees will be terminated. It is
      currently anticipated that the closure of the NuTone facility and related
      payments will occur in or around July 2007. Prior to August 2006, this facility
      supported manufacturing, warehousing and distribution activities for NuTone.
      The
      facility to be closed is owned by the Company and is currently under agreement
      to be sold.





The
      following table sets forth restructuring activity in accordance with SFAS No.
      146, “Accounting for Costs Associated with Exit or Disposal Activities (“SFAS
      No. 146”) in the accompanying unaudited condensed consolidated balance sheet at
      March 31, 2007 and the accompanying unaudited condensed statement of operations
      for the first quarter ended March 31, 2007. These costs are included in cost
      of
      goods sold and selling, general and administrative expense, net in the
      accompanying unaudited condensed consolidated statement of operations of the
      Company.





**Employee
                Separation****Expenses**
            
            **Other**
            
            **Total**
              **Restructuring**
              **Costs***(Dollar
                amounts in millions)***Balance
                at December 31, 2006**
            
            **$**
            **---**
            
            **$**
            **0.1**
            
            **$**
            **0.1**Provision
            
            
            0.6
            
            
            0.1
            
            
            0.7Payments
                and asset write downs
            
            
            ---
            
            
            (0.1
            )
            
            (0.1
            )**Balance
                at March 31, 2007**
            
            **$**
            **0.6**
            
            **$**
            **0.1**
            
            **$**
            **0.7**





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.




On
        or
        about April 30, 2007 after meeting and negotiating with the bargaining committee
        of the Teamsters Local 970 representing approximately 127 union employees
        of the
        Company’s wholly-owned subsidiary Mammoth, Inc.'s (“Mammoth”) manufacturing
        plant located in Chaska, Minnesota, it was decided to shut down manufacturing
        operations at the Chaska plant and relocate such operations to other
        manufacturing facilities within the Commercial HVAC Group. Mammoth is
        negotiating with the union over the severance benefits associated with the
        shutdown. It is anticipated that the manufacturing operations at Chaska will
        cease by the end of July 2007. The costs of the shutdown, including severance,
        relocation expenses, facility lease costs and asset write-offs are estimated
        to
        be between $3.0 million and $3.7 million.


(I) The
      Company and its subsidiaries have various pension plans, supplemental retirement
      plans for certain officers, profit sharing and other post-retirement benefit
      plans requiring contributions to qualified trusts and union administered
      funds.





Pension
      and profit sharing expense charged to operations aggregated approximately $2.4
      million and $2.3 million for the first quarter ended March 31, 2007 and April
      1,
      2006, respectively. The Company’s policy is to generally fund currently at least
      the minimum required annual contribution of its various qualified defined
      benefit plans. At December 31, 2006, as previously disclosed in the Company’s
      latest annual report on Form 10-K as filed with the SEC, it was estimated that
      approximately $9.6 million would be contributed to the Company’s defined benefit
      pension plans in 2007. However, at March 31, 2007, the Company revised its
      estimated contributions to its defined benefit pension plans to approximately
      $9.8 million, of which approximately $2.0 million has been made. It is estimated
      that approximately $2.3 million will be paid in the second quarter of 2007,
      approximately $3.2 million will be paid in the third quarter of 2007 and
      approximately $2.3 million will be paid in the fourth quarter of
      2007.





The
      Company’s unaudited net periodic benefit cost for its defined benefit plans for
      the first quarter ended March 31, 2007 and April 1, 2006 consists of the
      following components:





**For
                the first quarter ended****March
                31, 2007**
            
            **April
                1, 2006***(Dollar
                amounts in millions)*Service
                cost
            
            $
            0.1
            
            $
            0.3Interest
                cost
            
            
            2.4
            
            
            2.3Expected
                return on plan assets
            
            
            (2.5
            )
            
            (2.3
            )Net
                periodic benefit cost
            
            $
            ---
            
            $
            0.3





The
      Company’s unaudited net periodic benefit cost for its subsidiary’s
      Post-Retirement Health Benefit Plan for the first quarter ended March 31, 2007
      and April 1, 2006 consists of the following components:





**For
                the first quarter ended****March
                31, 2007**
            
            **April
                1, 2006***(Dollar
                amounts in millions)*Service
                cost
            
            $
            ---
            
            $
            0.1Interest
                cost
            
            
            0.1
            
            
            0.3Amortization
                of prior service cost
            
            
            (0.1
            )
            
            (1.0
            )Net
                periodic post-retirement health income
            
            $
            ---
            
            $
            (0.6
            )







**NTK
      HOLDINGS, INC. AND SUBSIDIARIES**


MANAGEMENT'S
      DISCUSSION
      AND ANALYSIS


**OF
      THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS**


FOR
      THE FIRST QUARTER
      ENDED MARCH 31, 2007


AND
      THE FIRST QUARTER
      ENDED APRIL 1, 2006






**ITEM
      2.** **MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**





NTK
      Holdings, Inc. and its wholly-owned subsidiaries (individually and collectively
      the “Company” or “NTK Holdings”) are leading diversified manufacturers of
      innovative, branded residential and commercial products, operating within three
      reporting segments:





·
            the
                Residential Ventilation Products, or RVP, segment,


·
            the
                Home Technology Products, or HTP, segment, and


·
            the
                Air Conditioning and Heating Products, or HVAC, segment.





Through
      these segments, the Company manufactures and sells, primarily in the United
      States, Canada and Europe, a wide variety of products for the professional
      remodeling and replacement markets, the residential and commercial construction
      markets, the manufactured housing market and the do-it-yourself (“DIY”) market.





As
      used
      in this report, the terms “Company” and “NTK Holdings” refer to NTK Holdings,
      Inc., together with its subsidiaries, unless the context indicates otherwise.
      Such terms as “Company” and “NTK Holdings” 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 Ventilation Products segment manufactures and sells room and whole
      house ventilation products and other products primarily for the professional
      remodeling and replacement markets, the residential new construction market
      and
      the DIY market. The principal products sold by this segment
      include:





·
            kitchen
                range hoods,


·
            exhaust
                fans (such as bath fans and fan, heater and light combination units),
                and


·
            indoor
                air quality products.





The
      Home Technology Products segment manufactures and sells a broad array of
      products designed to provide convenience and security for residential and light
      commercial applications. The principal products sold by this segment
      include:





·
            audio
                / video distribution and control
                equipment,


·
            speakers
                and subwoofers,


·
            security
                and access control products,


·
            power
                conditioners and surge protectors,


·
            audio
                / video wall mounts and fixtures,


·
            lighting
                controls, and


·
            structured
                wiring.





The
      Air
      Conditioning and Heating Products segment manufactures and sells heating,
      ventilating and air conditioning systems for site-built residential and
      manufactured housing structures, custom-designed commercial applications and
      standard light commercial products. The principal products sold by this segment
      include:





·
            split
                system air conditioners and heat
                pumps,


·
            furnaces
                and related equipment,


·
            air
                handlers, and


·
            large
                custom roof top cooling and heating
                products.





In
      the
      results of operations presented below, Unallocated includes corporate related
      items, intersegment eliminations and certain income and expense not allocated
      to
      its segments.





***Financial
      Statement Presentation***





The
      unaudited condensed consolidated financial statements presented herein (the
      “Unaudited Financial Statements”) reflect the financial position, results of
      operations and cash flows of NTK Holdings, Inc. and all of its wholly-owned
      subsidiaries.




***Acquisitions***





The
      Company has made the following acquisitions since January 1, 2006:





Acquired
                Company
            Date
                of
              Acquisition
            Primary
                Business
              of
                Acquired Company
            Reporting
              Segmentc.p.
                All Star Corporation
            April
                10, 2007
            Manufacture
                and distribution of residential, commercial and industrial gate operators,
                garage door openers, radio controls and accessory products for the
                garage
                door and fence industry.
            HTPLiteTouch,
                Inc.
            March
                2, 2007
            Design,
                manufacture and sale of automated lighting controls for a variety
                of uses
                including residential, commercial, new construction and retro-fit
                applications.
            HTPGefen,
                Inc.
            December
                12, 2006
            Design
                and sale of audio and video products which extend, switch, distribute
                and
                convert signals in a variety of formats, including high definition,
                for
                both the residential and commercial markets.
            HTPZephyr
                Corporation
            November
                11, 2006
            Design
                and sale of upscale range hoods.
            RVPPacific
                Zephyr Range Hood, Inc.
            November
                11, 2006
            Design,
                sale and installation of range hoods and other kitchen products for
                Asian
                cooking markets in the United States.
            RVPMagenta
                Research, Ltd.
            July
                18, 2006
            Design
                and sale ofproducts
                that distribute audio and video signals over Category 5 and fiber
                optic
                cable to multiple display screens.
            HTPSecure
                Wireless, Inc.
            June
                26, 2006
            Design
                and sale of wireless security products for the residential and commercial
                markets.
            HTPAdvanced
                Bridging Technologies, Inc.
            June
                26, 2006
            Design
                and sale of innovative radio frequency control products and
                accessories.
            HTPHuntair,
                Inc.
            April
                14, 2006
            Design,
                manufacture and sale of custom air handlers and related products
                for
                commercial and clean room applications.
            HVACCleanpak
                International, LLC
            April
                14, 2006
            Design,
                manufacture and sale of custom air handlers and related products
                for
                commercial and clean room applications.
            HVACFurman
                Sound, Inc.
            February
                22, 2006
            Design
                and sale of audio and video signal processors and innovative power
                conditioning and surge protection products.
            HTPMammoth
                (Zhejiang) EG Air Conditioning Ltd. (1)
            January
                25, 2006
            Design,
                manufacture and sale of commercial HVAC products, including water
                source
                heat pumps.
            HVACShanghai
                Mammoth Air Conditioning Co., Ltd. (1)
            January
                25, 2006
            Design,
                manufacture and sale of commercial HVAC products, including water
                source
                heat pumps.
            HVAC





(1)  Increase
      in ownership to 60%





These
      acquisitions have been accounted for under the purchase method of accounting
      and
      accordingly, the results of these acquisitions are included in the Company’s Unaudited
      Financial Statements since the date of their acquisition.





***Critical
      Accounting Policies***





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, Accounts Receivable and Related
                Expenses


·
            Inventory
                Valuation


·
            Prepaid
                Income Tax Assets and Deferred Tax
                Liabilities


·
            Goodwill
                and Other Long-Lived Assets


·
            Pensions
                and Post-Retirement Health Benefits


·
            Insurance
                Liabilities, and


·
            Contingencies





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
      following table presents the financial information for the Company’s reporting
      segments for the first quarter ended March 31, 2007 and April 1,
      2006:




**For
                  the first quarter ended**
              
              **Net
                  Change****March
                  31, 2007**
              
              **April
                  1, 2006**
              
              $
              
              %*(Dollar
                  amounts in millions)***Net
                  sales:**Residential
                  ventilation products
              
              $
              208.7
              
              $
              211.6
              
              $
              (2.9
              )
              
              (1.4
              )%Home
                  technology products
              
              
              123.2
              
              
              107.5
              
              
              15.7
              
              
              14.6Air
                  conditioning and heating products
              
              
              220.6
              
              
              215.4
              
              
              5.2
              
              
              2.4Consolidated net sales
              
              $
              552.5
              
              $
              534.5
              
              $
              18.0
              
              
              3.4
              %**Operating
                  earnings:**Residential
                  ventilation products (1)
              
              $
              25.2
              
              $
              36.1
              
              $
              (10.9
              )
              
              (30.2
              )%Home
                  technology products
              
              
              16.5
              
              
              17.3
              
              
              (0.8
              )
              
              (4.6
              )Air
                  conditioning and heating products (2)
              
              
              9.8
              
              
              17.9
              
              
              (8.1
              )
              
              (45.3
              )Subtotal
              
              
              51.5
              
              
              71.3
              
              
              (19.8
              )
              
              (27.8
              )**Unallocated:**Stock-based
                  compensation charges
              
              
              (0.1
              )
              
              (0.1
              )
              
              ---
              
              
              ---Foreign
                  exchange gain on intercompany debt
              
              
              0.1
              
              
              0.1
              
              
              ---
              
              
              ---Unallocated,
                  net
              
              
              (6.7
              )
              
              (6.8
              )
              
              0.1
              
              
              1.5Consolidated operating earnings
              
              $
              44.8
              
              $
              64.5
              
              $
              (19.7
              )
              
              (30.5
              )%**Depreciation
                  and amortization expense:**Residential
                  ventilation products
              
              $
              4.3
              
              $
              4.7
              
              $
              (0.4
              )
              
              (8.5
              )%Home
                  technology products (3)
              
              
              4.0
              
              
              3.0
              
              
              1.0
              
              
              33.3Air
                  conditioning and heating products
              
              
              6.0
              
              
              4.3
              
              
              1.7
              
              
              39.5Unallocated
              
              
              0.3
              
              
              0.2
              
              
              0.1
              
              
              50.0$
              14.6
              
              $
              12.2
              
              $
              2.4
              
              
              19.7
              %**Operating
                  earnings margin:**Residential
                  ventilation products (1)
              
              
              12.1
              %
              
              17.1
              %Home
                  technology products
              
              
              13.4
              
              
              16.1Air
                  conditioning and heating products (2)
              
              
              4.4
              
              
              8.3Consolidated
              
              
              8.1
              %
              
              12.1
              %**Depreciation
                    and amortization**expense as a % of net
                    sales:Residential
                  ventilation products
              
              
              2.1
              %
              
              2.2
              %Home
                  technology products (3)
              
              
              3.2
              
              
              2.8Air
                  conditioning and heating products
              
              
              2.7
              
              
              2.0Consolidated
              
              
              2.6
              %
              
              2.3
              %


(1)
            The
                operating
                results of the RVP segment for the first quarter ended March 31,
                2007
                include an approximate $0.6 million charge related to the closure
                of the
                Company’s NuTone, Inc. Cincinnati, OH facility (see Note H of the Notes to
                the Unaudited Financial Statements included elsewhere herein) and
                a
                non-cash foreign exchange gain of approximately $0.1 million related
                to
                intercompany debt not indefinitely invested in the Company’s subsidiaries.
                The operating results of the RVP segment for the first quarter ended
                April
                1, 2006 include an increase in warranty expense of approximately
                $1.5
                million related to a product safety
                upgrade.





(2)
            The
                operating
                results of the HVAC segment for the first quarter ended March 31,
                2007
                include a charge of approximately $1.8 million related to a reserve
                for
                amounts due from a customer.





(3)     
      Includes amortization of approximately $0.1 million for the first quarter ended
      April 1, 2006 of excess purchase price allocated to inventory recorded as a
      non-cash charge to cost of products sold.





The
      following table presents the financial information for the first quarter ended
      March 31, 2007 and April 1, 2006. The results of operations for the first
      quarter ended March 31, 2007 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
                  first quarter 2007****as
                  compared to the****For
                  the first quarter ended**
              
              **first
                  quarter 2006****March
                  31, 2007**
              
              **April
                  1, 2006**
              
              $
              
              %*(Dollar
                  amounts in millions)*Net
                  sales
              
              $
              552.5
              
              $
              534.5
              
              $
              18.0
              
              
              3.4
              %Cost
                  of
                  products sold
              
              
              384.6
              
              
              370.5
              
              
              (14.1
              )
              
              (3.8
              )Selling,
                  general and administrative expense, net
              
              
              117.1
              
              
              95.3
              
              
              (21.8
              )
              
              (22.9
              )Amortization
                  of intangible assets
              
              
              6.0
              
              
              4.2
              
              
              (1.8
              )
              
              (42.9
              )Operating
                  earnings
              
              
              44.8
              
              
              64.5
              
              
              (19.7
              )
              
              (30.5
              )Interest
                  expense
              
              
              (42.3
              )
              
              (36.1
              )
              
              (6.2
              )
              
              (17.2
              )Investment
                  income
              
              
              0.4
              
              
              0.7
              
              
              (0.3
              )
              
              (42.9
              )Earnings
                  before provision for income taxes
              
              
              2.9
              
              
              29.1
              
              
              (26.2
              )
              
              (90.0
              )Provision
                  for
                  income taxes
              
              
              1.7
              
              
              11.3
              
              
              9.6
              
              
              85.0Net
                  earnings
              
              $
              1.2
              
              $
              17.8
              
              $
              (16.6
              )
              
              (93.3
              )%




**Change
                  in percentage for****Percentage
                  of net sales**
              
              **the
                  first quarter 2007****first
                  quarter ended**
              
              **as
                  compared to the****March
                  31, 2007**
              
              **April
                  1, 2006**
              
              **first
                  quarter 2006**Net
                  sales
              
              
              100.0
              %
              
              100.0
              %
              
              
              
              
              ---
              %Cost
                  of
                  products sold
              
              
              69.6
              
              
              69.3
              
              
              
              
              
              (0.3
              )Selling,
                  general and administrative expense, net
              
              
              21.2
              
              
              17.8
              
              
              
              
              
              (3.4
              )Amortization
                  of intangible assets
              
              
              1.1
              
              
              0.8
              
              
              
              
              
              (0.3
              )Operating
                  earnings
              
              
              8.1
              
              
              12.1
              
              
              
              
              
              (4.0
              )Interest
                  expense
              
              
              (7.7
              )
              
              (6.8
              )
              
              
              
              
              (0.9
              )Investment
                  income
              
              
              0.1
              
              
              0.1
              
              
              
              
              
              ---Earnings
                  before provision for income taxes
              
              
              0.5
              
              
              5.4
              
              
              
              
              
              (4.9
              )Provision
                  for
                  income taxes
              
              
              0.3
              
              
              2.1
              
              
              
              
              
              1.8Net
                  earnings
              
              
              0.2
              %
              
              3.3
              %
              
              
              
              
              (3.1
              )%


The
      Company’s reporting segments have a significant number of different products
      across a wide range of price points and numerous distribution channels that
      do
      not always allow meaningful quantitative analysis to be performed with respect
      to the effect on net sales of changes in units sold or the price per unit sold.
      However, whenever the underlying causes of material increases or decreases
      in
      consolidated net sales can be adequately analyzed and quantified, the Company
      attempts to make appropriate disclosure of such reasons, including changes
      in
      price, volume and the mix of products sold.





The
      operating results of the Company were impacted in the first quarter of 2007
      by
      weak industry demand in the residential HVAC market and a lower level of housing
      activity. Higher material costs, which were partially offset by continued
      strategic sourcing initiatives as well as sales price increases, also impacted
      the first quarter of 2007.





*Net
      Sales.* Consolidated
      net sales increased approximately $18.0 million or 3.4% for the first quarter
      ended March 31, 2007 as compared to the first quarter ended April 1, 2006 as
      discussed further in the following paragraphs.





In
      the
      RVP segment, net sales decreased approximately $2.9 million or 1.4% for the
      first quarter ended March 31, 2007 as compared to the first quarter ended April
      1, 2006. Net sales in the RVP segment for the first quarter ended March 31,
      2007
      reflects an increase of approximately $3.3 million attributable to the effect
      of
      changes in foreign currency exchange rates and includes approximately $7.0
      million attributable to acquisitions.





The
      remaining decrease in net sales in the RVP segment for the first quarter ended
      March 31, 2007 as compared to the first quarter ended April 1, 2006 reflects
      primarily lower sales volume of bathroom exhaust fans in the RVP segment’s
      domestic subsidiaries, partially offset by price increases in the first quarter
      of 2007, as well as higher average unit sales prices, of kitchen range hoods
      and
      bath fans. Higher average unit sales prices of kitchen range hoods and bath
      fans
      reflect, in part, the impact of the sale of new products with higher price
      points and an increase in the relative percentage of products sold with higher
      sales price points as compared to 2006. Kitchen range hoods and bath fans are
      the largest product category sold in the RVP segment, accounting for
      approximately 81.5% of the total RVP segment’s net sales for the first quarter
      ended March 31, 2007. Excluding the effect of acquisitions and foreign currency
      exchange rates, sales of range hoods and bathroom exhaust fans decreased
      approximately 6.3% for the RVP segment’s domestic subsidiaries and increased
      approximately 1.2% for the RVP segment’s foreign subsidiaries in the first
      quarter ended March 31, 2007 as compared to the first quarter ended April 1,
      2006.





In
      the
      HTP segment, net sales increased approximately $15.7 million or 14.6% for the
      first quarter ended March 31, 2007 as compared to the first quarter ended April
      1, 2006. The increase in net sales in the HTP segment for the first quarter
      ended March 31, 2007 includes approximately $17.1 million attributable to
      acquisitions and an increase of approximately $0.2 million attributable to
      the
      effect of changes in foreign currency exchange rates. The
      remaining decrease in net sales in the HTP segment is due to the decline in
      sales of certain security and access control products, partially offset by
      increased sales volume of audio and video distribution equipment and
      speakers.





In
      the
      HVAC segment, net sales increased approximately $5.2 million or 2.4% for the
      first quarter ended March 31, 2007 as compared to the first quarter ended April
      1, 2006. Net sales in the HVAC segment for the first quarter ended March 31,
      2007 include an increase of approximately $29.6 million attributable to
      acquisitions and an increase of approximately $2.3 million attributable to
      the
      effect of changes in foreign currency exchange rates. The remaining decrease
      in
      net sales in the HVAC segment for the first quarter ended March 31, 2007 as
      compared to the first quarter ended April 1, 2006 includes lower sales volume
      for products sold to both residential site-built and manufactured housing
      customers, partially offset by higher sales volume of HVAC products sold to
      commercial customers. Net sales in the HVAC segment for HVAC products sold
      to
      commercial customers constituted the largest category of product sold to a
      particular group of customers within the HVAC segment. Sales of products to
      residential site-built customers decreased approximately 32.7% over the first
      quarter ended April 1, 2006. The Company’s net sales to customers serving the
      manufactured housing markets, principally consisting of air conditioners and
      furnaces, constituted approximately 4.0% and 6.4% of the Company’s consolidated
      net sales for the first quarter ended March 31, 2007 and April 1, 2006,
      respectively.





Foreign
      net sales, which are attributed based on the location of the Company’s
      subsidiary responsible for the sale, were approximately 22.0% and 18.6% of
      consolidated net sales for the first quarter ended March 31, 2007 and April
      1,
      2006, respectively. Net sales from the Company’s Canadian subsidiaries were
      approximately 8.6% and 8.5% of consolidated net sales for the first quarter
      ended March 31, 2007 and April 1, 2006, respectively. Net sales from the
      Company’s Canadian subsidiaries include net sales from the Company’s RVP and
      HVAC segments. Net sales from the Company’s European subsidiaries were
      approximately 11.4% and 9.1% of consolidated net sales for the first quarter
      ended March 31, 2007 and April 1, 2006, respectively. Net sales from the
      Company’s European subsidiaries include net sales primarily from the Company’s
      RVP and HVAC segments and to a lesser extent the Company’s HTP
      segment.





*Cost
      of Products Sold.* Consolidated
      cost of products sold was approximately $384.6 million for the first quarter
      ended March 31, 2007 as compared to approximately $370.5 million for the first
      quarter ended April 1, 2006. Cost of products sold, as a percentage of net
      sales, increased from approximately 69.3% for the first quarter ended April
      1,
      2006 and decreased from approximately 70.0% for the fourth quarter ended
      December 31, 2006 to approximately 69.6% for the first quarter ended March
      31,
      2007, primarily as a result of the factors that follow.





Overall,
      consolidated material costs were approximately 45.0%, 44.0% and 43.8% of net
      sales for the first quarter ended March 31, 2007, the fourth quarter ended
      December 31, 2006 and the first quarter ended April 1, 2006, respectively.
      As
      compared to the first quarter of 2006, the Company experienced higher material
      costs related to purchases of steel, copper, aluminum and related purchased
      components, including fans/blowers and motors. However, as compared to the
      fourth quarter of 2006, the Company saw a favorable change in material costs
      related to purchases of aluminum, copper and related purchased components,
      including motors. Cost increases during the first quarter of 2007 as compared
      to
      the first quarter of 2006 were partially offset by continued strategic sourcing
      initiatives and improvements in manufacturing efficiency, as well as sales
      price
      increases.





The
      Company continues to experience increases in freight costs due primarily to
      rising energy prices. The Company tries to mitigate these increases by obtaining
      favorable shipping rates for lower cost “full truckload” shipments and higher
      dollars per shipment based on increased volumes, as well as through cost
      reduction measures. These cost reduction measures reduce the overall effect
      of
      increased freight costs on cost of goods sold as a percentage of net sales.





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.





In
      the
      RVP segment, cost of products sold for the first quarter ended March 31, 2007
      was approximately $145.5 million as compared to approximately $144.6 million
      for
      the first quarter ended April 1, 2006. Cost of products sold as a percentage
      of
      the RVP segment’s net sales was approximately 69.7%, 74.3% and 68.3% for the
      first quarter ended March 31, 2007, the fourth quarter ended December 31, 2006
      and the first quarter ended April 1, 2006, respectively. Cost of products sold
      in the RVP segment for the first quarter ended March 31, 2007 includes (1)
      an
      increase of approximately $2.8 million related to the effect of changes in
      foreign currency exchange rates and (2) approximately $4.4 million of cost
      of
      products sold from acquisitions. Cost of products sold in the RVP segment for
      the first quarter ended April 1, 2006 includes increased warranty expense of
      approximately $1.5 million related to a product safety upgrade. The increase
      in
      the percentage of cost of products sold to net sales for the first quarter
      ended
      March 31, 2007 over the same period of 2006 reflects increased material costs
      and a decline in sales volume of kitchen range hoods and bath fans without
      a
      proportionate decrease in costs. The decrease in the percentage of cost of
      products sold to net sales for the first quarter ended March 31, 2007 as
      compared to the fourth quarter ended December 31, 2006 primarily reflects a
      decrease in material costs for purchased components such as motors.





In
      the
      HTP segment, cost of products sold for the first quarter ended March 31, 2007
      was approximately $65.8 million as compared to approximately $56.7 million
      for
      the first quarter ended April 1, 2006. Cost of products sold as a percentage
      of
      the HTP segment’s net sales was approximately 53.4%, 49.4% and 52.7% for the
      first quarter ended March 31, 2007, the fourth quarter ended December 31, 2006
      and the first quarter ended April 1, 2006, respectively. Cost of products sold
      in the HTP segment for the first quarter ended March 31, 2007 reflects (1)
      approximately $9.2 million of cost of products sold contributed from
      acquisitions and (2) an increase of approximately $0.1 million related to the
      effect of changes in foreign currency exchange rates. Cost of products sold
      in
      the HTP segment for the first quarter ended April 1, 2006 includes a non-cash
      charge of approximately $0.1 million related to the amortization of purchase
      price allocated to inventory. The increase in the percentage of cost of products
      sold to net sales for the first quarter ended March 31, 2007 as compared to
      the
      first quarter ended April 1, 2006 and the fourth quarter ended December 31,
      2006
      reflects increased material costs, including purchased components and sourced
      products, as well as a decline in sales volume of certain security and access
      control devices without a proportionate decrease in costs.





In
      the
      HVAC segment, cost of products sold for the first quarter ended March 31, 2007
      was approximately $173.3 million as compared to approximately $169.2 million
      for
      the first quarter ended April 1, 2006. Cost of products sold as a percentage
      of
      the HVAC segment’s net sales was approximately 78.6%, 79.4% and 78.6% for the
      first quarter ended March 31, 2007, the fourth quarter ended December 31, 2006
      and the first quarter ended April 1, 2006, respectively. Cost of products sold
      in the HVAC segment for the first quarter ended March 31, 2007 includes (1)
      an
      increase of approximately $17.9 million attributable to acquisitions and (2)
      an
      increase of approximately $1.9 million related to the effect of changes in
      foreign currency exchange rates as compared to the first quarter of 2006. The
      decrease in cost of products sold as a percentage of net sales for the first
      quarter ended March 31, 2007 as compared to the fourth quarter ended December
      31, 2006 reflects the effect of higher sales volume for products sold to
      residential site-built customers and to a lesser extent lower material costs
      related primarily to purchases of copper and aluminum.





*Selling,
      General and Administrative Expense, Net.* Consolidated
      selling, general and administrative expense, net (“SG&A”) was approximately
      $117.1 million for the first quarter ended March 31, 2007 as compared to
      approximately $95.3 million for the first quarter ended April 1, 2006. SG&A
      as a percentage of net sales increased from approximately 17.8% for the first
      quarter ended April 1, 2006 to approximately 21.2% for the first quarter ended
      March 31, 2007.





SG&A
      for the first quarter ended March 31, 2007 also includes (1) approximately
      $9.9
      million from acquisitions in all three of the Company’s segments, (2) an
      increase of approximately $3.1 million of displays expense in the RVP segment,
      (3) a charge of approximately $1.8 million related to a reserve for amounts
      due
      from a customer in the HVAC segment, (4) an increase of approximately $1.0
      million (of which approximately $0.4 million is included in the RVP segment,
      approximately $0.2 million is included in the HTP segment and approximately
      $0.4
      million is included in the HVAC segment) related to the effect of changes in
      foreign currency exchange rates, (5) approximately $0.6 million of severance
      charges related to the closure of the Company’s NuTone facility within the RVP
      segment (see Note H of the Notes to the Unaudited Financial Statements included
      elsewhere herein), (6) a non-cash foreign exchange gain of approximately $0.2
      million, of which approximately $0.1 million is included in the RVP segment,
      related to intercompany debt not indefinitely invested in the Company’s
      subsidiaries and (7) approximately $0.1 million of stock-based compensation
      expense, which is recorded in Unallocated.





SG&A
      for the first quarter ended April 1, 2006 includes (1) approximately $0.1
      million of stock-based compensation expense, which is recorded in Unallocated
      and (2) a non-cash foreign exchange gain of approximately $0.1 million, all
      of
      which is included in Unallocated, related to intercompany debt not indefinitely
      invested in the Company’s subsidiaries.





*Amortization
      of Intangible Assets.* Amortization
      of intangible assets, as a percentage of net sales, increased from approximately
      0.8% for the first quarter ended April 1, 2006 to approximately 1.1% for the
      first quarter ended March 31, 2007. The increase is principally due to the
      impact of acquisitions, which contributed approximately $2.1 million to the
      increase.





*Depreciation
      Expense.* Depreciation
      expense increased approximately $0.7 million from approximately $7.9 million
      for
      the first quarter ended April 1, 2006 to approximately $8.6 million for the
      first quarter ended March 31, 2007. This increase is primarily attributable
      to
      the impact of acquisitions, which represented approximately $0.6 million of
      the
      increase, and to a lesser extent capital expenditures.





*Operating
      Earnings.* Consolidated
      operating earnings decreased by approximately $19.7 million from approximately
      $64.5 million for the first quarter ended April 1, 2006 to approximately $44.8
      million for the first quarter ended March 31, 2007. The decrease in consolidated
      operating earnings is primarily due to the factors discussed above and that
      follow. Operating earnings, as a percentage of net sales, decreased from
      approximately 12.1% for the first quarter ended April 1, 2006 to approximately
      8.1% for the first quarter ended March 31, 2007.





Operating
      earnings of the RVP segment for the first quarter ended March 31, 2007 were
      approximately $25.2 million as compared to approximately $36.1 million for
      the
      fist quarter ended April 1, 2006. Operating earnings of the RVP segment for
      the
      first quarter ended March 31, 2007 as compared to the same period of 2006
      reflects (1) approximately $0.6 million of severance charges related to the
      closure of the Company’s NuTone facility, (2) an increase of approximately $3.1
      million of displays expense, (3) an increase in earnings of approximately $0.1
      million from the effect of foreign currency exchange rates, (4) approximately
      $0.2 million of decreased depreciation expense of property and equipment and
      approximately $0.2 million of decreased amortization of intangible assets,
      (5)
      an increase of approximately $0.3 million attributable to acquisitions and
      (6) a
      non-cash foreign exchange gain of approximately $0.1 million related to
      intercompany debt not indefinitely invested in the Company’s subsidiaries.
      Operating earnings of the RVP segment for the first quarter ended April 1,
      2006
      reflects increased warranty expense of approximately $1.5 million related to
      a
      product safety upgrade. The decrease in operating earnings in the RVP segment
      for the first quarter ended March 31, 2007 as compared to the same period in
      2006 is a result of the factors noted previously including lower sales volume
      of
      kitchen range hoods and bath fan, partially offset by price increases in the
      first quarter of 2007.





Operating
      earnings of the HTP segment for the first quarter ended March 31, 2007 were
      approximately $16.5 million as compared to approximately $17.3 million for
      the
      first quarter ended April 1, 2006. Operating earnings of the HTP segment for
      the
      first quarter ended March 31, 2007 reflects (1) approximately $2.8 million
      of
      operating earnings contributed by acquisitions, (2) approximately $0.4 million
      of increased depreciation expense of property and equipment and approximately
      $0.7 million of increased amortization of intangible assets, primarily
      attributable to acquisitions, both of which are included in the impact of
      acquisitions noted above and (3) a decrease in earnings of approximately $0.1
      million from the effect of foreign currency exchange rates. Operating earnings
      of the HTP segment for the first quarter ended April 1, 2006 reflects a non-cash
      charge of approximately $0.1 million related to the amortization of purchase
      price allocated to inventory. The decrease in operating earnings in the HTP
      segment for the first quarter ended March 31, 2007 over the same period in
      2006
      is primarily a result of lower sales volume of certain security and access
      control devices and increased material costs in cost of products sold, offset
      by
      the effect of acquisitions and increased net sales volume of audio and video
      distribution equipment and speakers.





Operating
      earnings of the HVAC segment were approximately $9.8 million for the first
      quarter ended March 31, 2007 as compared to approximately $17.9 million for
      the
      first quarter ended April 1, 2006. Operating earnings of the HVAC segment for
      the first quarter ended March 31, 2007 reflect (1) approximately $7.1 million
      of
      operating earnings contributed by acquisitions, (2) a charge of approximately
      $1.8 million related to a reserve for amounts due from a customer and (3)
      approximately $0.4 million of increased depreciation expense of property and
      equipment and approximately $1.3 million of increased amortization of intangible
      assets primarily attributable to acquisitions, both of which are included in
      the
      impact of acquisitions noted above. Operating earnings in the HVAC segment
      for
      the first quarter ended March 31, 2007 decreased over the first quarter ended
      April 1, 2006 as a result of decreased sales volume for products sold to both
      residential site-built and manufactured housing customers and increased material
      costs related to purchases of steel, copper and aluminum, offset by acquisitions
      and higher sales levels of HVAC products sold to commercial customers.





Operating
      earnings of foreign operations, consisting primarily of the results of
      operations of the Company’s Canadian and European subsidiaries, were
      approximately 17.6% and 11.0% of operating earnings (before unallocated and
      corporate expenses) for the first quarter ended March 31, 2007 and April 1,
      2006, respectively. Sales and earnings derived from international markets are
      subject to, among others, the risks of currency fluctuations.





*Interest
      Expense.* Interest
      expense increased approximately $6.2 million or approximately 17.2% during
      the
      first quarter ended March 31, 2007 as compared to the first quarter ended April
      1, 2006. During the first quarter ended March 31, 2007, the Company experienced
      increases in interest expense primarily as a result of (1) approximately $0.6
      million from increased borrowings and interest rates related primarily to
      Nortek’s senior secured credit facility, (2) approximately $4.7 million of debt
      accretion relating to the PIK option on the Company’s senior unsecured loan
      facility issued in May 2006, (3) approximately $0.8 million of additional
      interest expense as compared to the first quarter ended April 1, 2006 related
      to
      the accretion of NTK Holdings’ 10 3/4% Senior Discount Notes, (4) an increase of
      approximately $0.5 million related to increased borrowings at the Company’s
      subsidiaries, primarily as a result of acquisitions and (5) an increase of
      approximately $0.3 million related to the amortization of deferred financing
      costs. These increases were partially offset by a decrease of approximately
      $0.7
      million in interest expense related to the amortization of the Nortek Holdings
      deferred compensation plan, which was fully paid in May 2006.





*Investment
      Income.* Investment
      income was approximately $0.4 million and $0.7 million for the first quarter
      ended March 31, 2007 and April 1, 2006, respectively.





*Provision
      for Income Taxes.* The
      provision for income taxes was approximately $1.7 million for the first quarter
      ended March 31, 2007 as compared to approximately $11.3 million for the first
      quarter ended April 1, 2006. The increase in the effective income tax rates
      between quarters is primarily due to the inclusion of discrete interest on
      uncertain tax provisions in the first quarter of 2007 in accordance with the
      provisions of FIN 48. The effective income tax rates of 58.6% and 38.8% for
      the
      first quarter ended March 31, 2007 and April 1, 2006, respectively, differed
      from the United States Federal statutory rate of 35% principally as a result
      of
      the effect of non-deductible expenses, the impact of interest, foreign tax
      rates
      on foreign earnings and state income tax provisions (see Note F of the Notes
      to
      the Unaudited Financial Statements included elsewhere herein).





*Net
      Earnings.* Consolidated net earnings decreased by approximately $16.6 million from
      approximately $17.8 million for the first quarter ended April 1, 2006 to
      approximately $1.2 million for the first quarter ended March 31, 2007. This
      decrease was primarily due to the factors discussed above which included a
      decrease of approximately $19.7 million in consolidated operating earnings,
      an
      increase of approximately $6.2 million in interest expense and a decrease of
      approximately $0.3 million in investment income, offset by a decrease of
      approximately $9.6 million in the provision for income taxes.





*EBITDA.* The
      Company uses EBITDA as both an operating performance and liquidity measure.
      Operating performance measure disclosures with respect to EBITDA are provided
      below. Refer to the Liquidity and Capital Resources section for liquidity
      measure disclosures with respect to EBITDA and a reconciliation from net cash
      flows from operating activities to EBITDA.





EBITDA
      is defined as net earnings (loss) before interest, taxes, depreciation and
      amortization expense. EBITDA is not a measure of operating performance under
      U.S. generally accepted accounting principles (“GAAP”) and should not be
      considered as an alternative or substitute for GAAP profitability measures
      such
      as operating earnings (loss) from continuing operations, discontinued
      operations, extraordinary items and net earnings (loss). EBITDA as an operating
      performance measure has material limitations since it excludes, among other
      things, the statement of operations impact of depreciation and amortization
      expense, interest expense and the provision (benefit) for income taxes and
      therefore does not necessarily represent an accurate measure of profitability,
      particularly in situations where a company is highly leveraged or has a
      disadvantageous tax structure. The Company uses a significant amount of capital
      assets and therefore, depreciation and amortization expense is a necessary
      element of the Company’s costs and ability to generate revenue and therefore its
      exclusion from EBITDA is a material limitation. The Company has a significant
      amount of debt and therefore, interest expense is a necessary element of the
      Company’s costs and ability to generate revenue and therefore its exclusion from
      EBITDA is a material limitation. The Company generally incurs significant U.S.
      federal, state and foreign income taxes each year and the provision (benefit)
      for income taxes is a necessary element of the Company’s costs and therefore its
      exclusion from EBITDA is a material limitation. As a result, EBITDA should
      be
      evaluated in conjunction with net earnings (loss) for a more complete analysis
      of the Company’s profitability, as net earnings (loss) includes the financial
      statement impact of these items and is the most directly comparable GAAP
      operating performance measure to EBITDA. As EBITDA is not defined by GAAP,
      the
      Company’s definition of EBITDA may differ from and therefore may not be
      comparable to similarly titled measures used by other companies, thereby
      limiting its usefulness as a comparative measure. Because of the limitations
      that EBITDA has as an analytical tool, investors should not consider it in
      isolation, or as a substitute for analysis of the Company’s operating results as
      reported under GAAP.





Company
      management uses EBITDA as a supplementary non-GAAP operating performance measure
      to assist with its overall evaluation of Company and subsidiary operating
      performance (including the performance of subsidiary management) relative to
      outside peer group companies. In addition, the Company uses EBITDA as an
      operating performance measure in financial presentations to the Company’s Board
      of Directors, shareholders, various banks participating in Nortek’s Credit
      Facility, note holders and Bond Rating agencies, among others, as a supplemental
      non-GAAP operating measure to assist them in their evaluation of the Company’s
      performance. The Company is also active in mergers, acquisitions and
      divestitures and uses EBITDA as an additional operating performance measure
      to
      assess Company, subsidiary and potential acquisition target enterprise value
      and
      to assist in the overall evaluation of Company, subsidiary and potential
      acquisition target performance on an internal basis and relative to peer group
      companies. The Company uses EBITDA in conjunction with traditional GAAP
      operating performance measures as part of its overall assessment of potential
      valuation and relative performance and therefore does not place undue reliance
      on EBITDA as its only measure of operating performance.





The
      Company believes EBITDA is useful for both the Company and investors as it
      is a
      commonly used analytical measurement for comparing company profitability, which
      eliminates the effects of financing, differing valuations of fixed and
      intangible assets and tax structure decisions. The Company believes that EBITDA
      is specifically relevant to the Company, due to the different degrees of
      leverage among its competitors, the impact of purchase accounting associated
      with acquisitions, which impacts comparability with its competitors who may
      or
      may not have recently revalued their fixed and intangible assets, and the
      differing tax structures and tax jurisdictions of certain of the Company’s
      competitors. The Company has included EBITDA as a supplemental operating
      performance measure, which should be evaluated by investors in conjunction
      with
      the traditional GAAP performance measures discussed earlier in this Results
      of
      Operations section for a complete evaluation of the Company’s operating
      performance.





The
      following table presents a reconciliation from net earnings, which is the most
      directly comparable GAAP operating performance measure, to EBITDA for the first
      quarter ended March 31, 2007 and April 1, 2006:




**For
                  the first quarter ended****March
                  31, 2007**
              
              **April
                  1, 2006***(Dollar
                  amounts in millions)*Net
                  earnings
                  (1)
              
              $
              1.2
              
              $
              17.8Provision for income taxes
              
              
              1.7
              
              
              11.3Interest expense (2)
              
              
              42.3
              
              
              36.1Investment income
              
              
              (0.4
              )
              
              (0.7
              )Depreciation expense
              
              
              8.6
              
              
              7.9Amortization expense
              
              
              6.0
              
              
              4.3EBITDA
              
              $
              59.4
              
              $
              76.7


(1)  In
      the
      RVP segment, net earnings include an approximate $0.6 million charge related
      to
      the closure of the Company’s NuTone, Inc. Cincinnati, Ohio facility and a
      non-cash foreign exchange gain of approximately $0.1 million related to
      intercompany debt not indefinitely invested in the Company’s
      subsidiaries recorded in the first quarter ended March 31, 2007
      and warranty expense of approximately $1.5 million related to a product
      safety upgrade recorded in the first quarter ended April 1, 2006. In the HVAC
      segment, net earnings include a charge of approximately $1.8 million related
      to
      a reserve for amounts due from a customer recorded in the first
      quarter ended March 31, 2007. In Unallocated, net earnings include approximately
      $0.1 million of stock based compensation charges recorded in each of the first
      quarters of 2007 and 2006, respectively (see Notes A, D and H of the Notes
      to
      the Unaudited Financial Statements included elsewhere herein) .





(2)  Interest
      expense for the first quarter of 2007 includes cash interest of approximately
      $27.8 million and non-cash interest of approximately $14.5 million. Interest
      expense for the first quarter of 2006 includes cash interest of approximately
      $27.4 million and non-cash interest of approximately $8.7 million.





**Liquidity
      and Capital Resources**





Certain
      sole source suppliers of various fabricated material components and
      sub-assemblies (“material components”) to the Company’s kitchen range hood
      subsidiaries based in Italy and Poland experienced financial difficulties in
      January 2007. The Company is working and will continue to work closely with
      these suppliers to help them in meeting the supply needs of these subsidiaries
      for the foreseeable future. The Company has not experienced any significant
      difficulties in its production or shipments to its customers as a result of
      these suppliers’ difficulties in maintaining its production as of May 11, 2007.
      However, there can be no assurance that the Company will be able to continue
      to
      prevent a disruption in the supply of such material components or be able to
      find alternative suppliers. Should these suppliers be unable to continue in
      operation and the Company is unable to find alternative suppliers for a lengthy
      period of time, the Company could experience a material adverse effect on its
      operations. These subsidiaries based in Italy and Poland accounted for
      approximately 7.1% of the Company’s consolidated net sales and 1.9%, of
      consolidated operating earnings, before unallocated, for the first quarter
      ended
      March 31, 2007 and accounted for approximately 6.4% of the Company’s
      consolidated net sales and 4.5% of consolidated operating earnings, before
      unallocated, for the first quarter ended April 1, 2006 and approximately 7.1%
      and 6.5% of consolidated assets at March 31, 2007 and December 31, 2006,
      respectively. The Company recorded approximately $16.0 million of estimated
      losses in the RVP segment in the fourth quarter of 2006 in selling, general
      and
      administrative expense, net resulting from the unlikelihood that these suppliers
      will be able to repay advances from our subsidiaries based in Italy and Poland
      and amounts due under other arrangements. While the Company has recorded its
      best estimate of the losses related to these suppliers, the actual losses may
      be
      different than the amounts recorded at December 31, 2006. There were no
      additional material losses recorded in the first quarter ended March 31, 2007
      related to these suppliers.





On
      May
      5, 2006, the Company filed a registration statement on Form S-1 (most recently
      amended on September 15, 2006) with the SEC for an initial public offering
      of
      shares of its common stock (the “Offering”). Although the Company has not
      withdrawn its registration statement on Form S-1, there can be no assurance
      that
      the Company will complete the Offering in the foreseeable future.





The
      Company regularly acquires companies, typically utilizing cash and proceeds
      from
      additional indebtedness to finance these acquisitions. Companies acquired and
      the payment of contingent consideration during the first quarter ended March
      31,
      2007 and the impact on cash flows were as follows:





·
            On
                March 2, 2007, the Company, through its wholly-owned subsidiary,
                Linear
                LLC (“Linear”) acquired the stock of LiteTouch, Inc. for approximately
                $10.6 million (utilizing approximately $8.1 million of cash and issuing
                unsecured 6% subordinated notes totaling $2.5 million due March 2009).


·
            On
                June 26, 2006, the Company, through Linear, acquired the stock of
                Secure
                Wireless and ABT through two mergers for an initial purchase price
                of
                approximately $10.5 million, plus contingent consideration of
                approximately $18.1 million that was earned by Secure Wireless in
                2006 and
                was paid in April 2007. Additional contingent consideration may be
                payable
                in future years.


·
            On
                April 14, 2006, the Company, through two newly formed subsidiaries
                of its
                HVAC segment, acquired the assets and certain liabilities of Huntair
                and
                Cleanpak, for an initial purchase price of approximately $48.4 million
                (utilizing approximately $38.4 million of cash and issuing unsecured
                6%
                subordinated notes totaling $10.0 million due April 2008) plus contingent
                consideration of approximately $30.0 million which was earned in
                2006 and
                was paid in April 2007.


·
            Contingent
                consideration of approximately $7.5 million related to the acquisition
                of
                OmniMount, which was accrued for at December 31, 2006, was paid in
                the
                first quarter of 2007.





On
      April 10, 2007, the Company, through Linear, acquired the assets and certain
      liabilities of c.p. All Star Corporation (“All Star”) for an initial purchase
      price of approximately $3.0 million (utilizing approximately $2.5 million of
      cash and issuing unsecured 6% subordinated notes totaling $0.5 million due
      April
      2009). All Star is located in Downington, PA and is a leading manufacturer
      of
      residential, commercial and industrial gate operator, garage door opener, radio
      control and accessory products for the garage door and fence industry.




As
      described above,
      $48.1 million of contingent consideration was paid in April 2007 related to
      the
      Secure Wireless and the Huntair and Cleanpak acquisitions. Contingent
      consideration of approximately $7.5 million related to the acquisition of
      OmniMount, which was accrued for at December 31, 2006, was also paid in the
      first quarter of 2007. The estimated total maximum potential amount of
      contingent consideration that may be paid in the future for all completed
      acquisitions is approximately $81.2 million (see Note C of the Notes to the
      Unaudited Financial Statements included elsewhere herein).





The
      Company had consolidated debt at March 31, 2007, of approximately $1,963.8
      million consisting of (i) $68.5 million of short-term borrowings and current
      maturities of long-term debt, (ii) $51.1 million of long-term notes, mortgage
      notes and other indebtedness, (iii) $10.0 million of Nortek’s 9 7/8% Senior
      Subordinated Notes due 2011, (iv) $625.0 million of Nortek’s 8 1/2% Senior
      Subordinated Notes due 2014, (v) $675.5 million of long-term debt outstanding
      under Nortek’s senior secured credit facility, (vi) $313.0 million of the
      Company’s 10 3/4% Senior Discount Notes and (vii) $220.7 million under the
      Company’s unsecured term loan facility.





During
      the first quarter ended March 31, 2007, the Company had a net increase in its
      consolidated debt of approximately $37.3 million resulting from:





*(Amounts
                in millions)*Net
                borrowings under the revolving portion of Nortek’s senior secured credit
                facility
            
            $
            24.0Debt
                accretion related to the 10 3/4% Senior Discount Notes
            
            
            8.1Debt
                accretion relating to the PIK option on the senior unsecured loan
                facility
            
            
            4.7Additional
                borrowings related primarily to the Company’s foreign
                subsidiaries
            
            
            4.5Issuance
                of unsecured notes related to the acquisitions noted above
            
            
            2.5Foreign
                currency translation
            
            
            0.3Principal
                payments
            
            
            (6.8
            )Net
                change in consolidated debt
            
            $
            37.3





The
      Company’s debt to equity ratio was approximately 27.2:1 at March 31, 2007 as
      compared to approximately 26.5:1 at December 31, 2006. The increase in the
      ratio
      was primarily due to an increase in indebtedness as noted above and a decrease
      in stockholder’s investment, primarily as a result of the adoption of FIN 48 in
      the first quarter of 2007 (see Note F of the Notes to the Unaudited Financial
      Statements included elsewhere herein), partially offset by the effect of net
      earnings of approximately $1.2 million for the first quarter ended March 31,
      2007.





At
      May
      11, 2007, Nortek had approximately $94.0 million outstanding and approximately
      $73.3 million of additional borrowing capacity under the U.S. revolving portion
      of its senior secured credit facility, with approximately $22.7 million in
      outstanding letters of credit. Borrowings under the revolving portion of the
      senior secured credit facility are used for general working capital purposes.
      Under the Canadian revolving portion of its senior secured credit facility
      the
      Company had no outstanding borrowings and approximately $10.0 million of
      additional borrowing capacity. The letters of credit have been issued under
      Nortek’s revolving credit facility as additional security for (1) approximately
      $17.2 million relating to certain of the Company’s insurance programs, (2)
      approximately $3.9 million relating to leases outstanding for certain of the
      Company’s manufacturing facilities and (3) approximately $1.6 million relating
      to certain of the subsidiaries’ purchases and other requirements. Letters of
      credit reduce borrowing availability under Nortek’s revolving credit facility on
      a dollar for dollar basis.





The
      indentures and other agreements governing the Company and its subsidiaries’
indebtedness (including the credit agreement for Nortek’s 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
      March 31, 2007, the Company had approximately $47.6 million available for the
      payment of cash dividends, stock purchases or other restricted payments
      (“Restricted Payments”) under the terms of the indenture governing the Company’s
      10 3/4% Senior Discount Notes’ and the agreement governing the Company’s senior
      unsecured loan facility. Restricted Payments to NTK Holdings and Nortek Holdings
      from Nortek are limited by the terms of Nortek’s most restrictive loan
      agreement, Nortek’s senior secured credit facility. The amount available for
      such payments under Nortek’s senior secured credit facility was approximately
      $156.5 million at March 31, 2007.





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.





The
      Company expects to meet its cash flow requirements for fiscal 2007, including
      debt repayments and acquisitions, from cash from operations, existing cash
      and
      cash equivalents and the use of Nortek’s senior secured credit facility.





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, 2006.





Unrestricted
      cash and cash equivalents decreased from approximately $57.4 million at December
      31, 2006 to approximately $43.2 million at March 31, 2007. The Company has
      classified as restricted, in the accompanying unaudited condensed consolidated
      balance sheet, certain cash and cash equivalents that are not fully available
      for use in its operations. At March 31, 2007, approximately $3.2 million (of
      which approximately $2.0 million is included in long-term assets) of cash and
      cash equivalents are held primarily as collateral to fund future capital
      expenditures within the Company’s segments, as well as to fund certain benefit
      obligations relating to supplemental executive retirement plans.





The
      Company’s combined short-term and long-term warranty liabilities increased from
      approximately $41.2 million at December 31, 2006 to approximately $41.5 million
      at March 31, 2007, and warranty expense decreased from approximately $7.3
      million for the first quarter ended April 1, 2006 to approximately $5.5 million
      for the first quarter ended March 31, 2007. The decrease in warranty expense
      for
      the first quarter ended March 31, 2007 as compared to the same period of 2006
      is
      primarily as a result of approximately $1.5 million recorded in the first
      quarter of 2006 in the RVP segment related to a product safety upgrade. The
      Company provides for estimated warranty liabilities at the time of sale and
      periodically assesses the adequacy of its recorded warranty liabilities and
      adjusts the amounts as necessary.





Capital
      expenditures were approximately $6.8 million for the first quarter ended March
      31, 2007 as compared to approximately $12.1 million for the first quarter ended
      April 1, 2006. Capital expenditures were approximately $42.3 million for the
      year ended December 31, 2006 and are expected to be between approximately $35.0
      million and $40.0 million in 2007. Under Nortek’s amended senior secured credit
      facility, capital expenditures are limited to approximately $67.0 million in
      2007.





The
      Company’s working capital increased from approximately $210.2 million at
      December 31, 2006 to approximately $226.1 million at March 31, 2007, while
      the
      current ratio remained unchanged from December 31, 2006 to March 31, 2007 at
      1.4:1. This increase in working capital for the first quarter ended March 31,
      2007 was primarily a result of seasonal increases in accounts receivable and
      inventory and a decrease in accrued expenses, partially offset by increases
      in
      accounts payable and in short-term borrowings under the revolving portion of
      Nortek’s senior secured credit facility.




Accounts
      receivable increased approximately $9.2 million, or approximately 2.8%, between
      December 31, 2006 and March 31, 2007, while net sales increased approximately
      $11.4 million, or approximately 2.1%, in the first quarter of 2007 as compared
      to the fourth quarter of 2006. This increase in accounts receivable is primarily
      a result of increased sales level, and to a lesser extent, acquisitions.
      Acquisitions contributed approximately $9.8 million to the increase in net
      sales
      in the first quarter of 2007 as compared to the fourth quarter of 2006 and
      approximately $1.0 million to the increase in accounts receivable at March
      31,
      2007. 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 March 31, 2007 as compared to December 31, 2006. Accounts
      receivable from customers related to foreign operations increased approximately
      7.3% to $102.0 million at March 31, 2007 from December 31, 2006. The Company
      did
      not experience any significant overall changes in credit terms, collection
      efforts, credit utilization or delinquency in accounts receivable in the first
      quarter of 2007, except for a delay in the timing of collection on certain
      large
      commercial HVAC jobs.





Inventories
      increased approximately $32.2 million, or approximately 11.6%, between December
      31, 2006 and March 31, 2007 to support future sales levels, as well as increased
      material costs principally for copper and aluminum, primarily in the HVAC
      segment, and to a lesser extent acquisitions. Acquisitions contributed
      approximately $1.8 million to the increase at March 31, 2007.





Accounts
      payable increased approximately $35.4 million, or 18.8%, between December 31,
      2006 and March 31, 2007 due primarily to increased inventory levels and timing
      of payments. Acquisitions contributed approximately $0.7 million to the increase
      in accounts payable at March 31, 2007.





Accrued
      expenses and taxes decreased approximately $46.2 million, or approximately
      16.3%, between December 31, 2006 and March 31, 2007 primarily as a result of
      $17.3 million of lower accrued interest relating to the difference in the timing
      of interest payments during the first quarter of 2007 as compared to amounts
      accrued and the $7.5 million payout of OmniMount’s contingent consideration as
      noted previously. Acquisitions contributed approximately $8.4 million to accrued
      expenses and taxes, net at March 31, 2007.





Changes
      in certain working capital accounts, as noted above, between December 31, 2006
      and March 31, 2007, differ from the changes reflected in the Company’s Unaudited
      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.





Net
      cash flows from operating activities for the first quarter ended March 31,
      2007
      decreased by approximately $23.3 million to approximately $13.3 million of
      net
      cash used in operating activities from approximately $10.0 million of net cash
      provided by operating activities for the first quarter ended April 1, 2006,
      primarily due to a decrease in net earnings, as well as, the use of cash for
      working capital needs. Net cash flows used in investing activities for the
      first
      quarter ended March 31, 2007 increased by approximately $1.3 million to net
      cash
      used in investing activities of approximately $22.6 million from approximately
      $21.3 million for the first quarter ended April 1, 2006, primarily due to an
      increase in payments for acquisitions of approximately $8.9 million, partially
      offset by decreased capital expenditures of approximately $5.3 million. Net
      cash
      flows provided by financing activities for the first quarter ended March 31,
      2007 increased by approximately $17.4 million to net cash provided by financing
      activities of approximately $21.7 million from approximately $4.3 million for
      the first quarter ended April 1, 2006 resulting directly from an increase in
      net
      borrowing proceeds. As discussed earlier, the Company generally uses cash flows
      from operations, and where necessary debt financing, to finance its capital
      expenditures and strategic acquisitions and to meet the service requirements
      of
      its existing indebtedness.





Unrestricted
      cash and cash equivalents decreased approximately $14.2 million and
      approximately $7.0 million from December 31, 2006 to March 31, 2007 and from
      December 31, 2005 to April 1, 2006, respectively, principally as a result of
      the
      following:


**Condensed
                  Consolidated****Cash
                  Flows (1)****For
                  the first quarter ended****March
                  31, 2007**
              
              **April
                  1, 2006***(Dollar
                  amounts in millions)***Operating
                  Activities:**Cash flow from operations, net
              
              $
              31.7
              
              $
              42.4Change in accounts receivable, net
              
              
              (7.0
              )
              
              (23.4
              )Change in inventories
              
              
              (30.1
              )
              
              (10.2
              )Change in prepaids and other current assets
              
              
              (1.1
              )
              
              0.8Change in accounts payable
              
              
              34.1
              
              
              16.9Change in accrued expenses and taxes
              
              
              (41.7
              )
              
              (16.6
              )Change in long-term deferred compensation
              
              
              ---
              
              
              0.8**Investing
                  Activities:**Capital expenditures
              
              
              (6.8
              )
              
              (12.1
              )Net cash paid for businesses acquired
              
              
              (16.8
              )
              
              (7.9
              )Proceeds from the sale of property and equipment
              
              
              ---
              
              
              0.1Change in restricted cash and marketable securities
              
              
              1.3
              
              
              ---**Financing
                  Activities:**Change in borrowings, net
              
              
              21.7
              
              
              4.4Other,
                  net
              
              
              0.5
              
              
              (2.2
              )$
              (14.2
              )
              $
              (7.0
              )


(1)
            Summarized
                from the Company’s Unaudited Condensed Consolidated Statement of Cash
                Flows for the first quarter ended March 31, 2007 and April 1, 2006
                (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.




The
      Company uses EBITDA as both a liquidity and an operating performance measure.
      Liquidity measure disclosures with respect to EBITDA are provided below. Refer
      to the Results of Operations section for operating performance measure
      disclosures with respect to EBITDA and a reconciliation from net earnings (loss)
      to EBITDA.





EBITDA
      is defined as net earnings (loss) before interest, taxes, depreciation and
      amortization expense. EBITDA is not a measure of cash flow under U.S. generally
      accepted accounting principles (“GAAP”) and should not be considered as an
      alternative or substitute for GAAP cash flow measures such as cash flows from
      operating, investing and financing activities. EBITDA does not necessarily
      represent an accurate measure of cash flow performance because it excludes,
      among other things, capital expenditures, working capital requirements,
      significant debt service for principal and interest payments, income tax
      payments and other contractual obligations, which may have a significant adverse
      impact on a company’s cash flow performance thereby limiting its usefulness when
      evaluating the Company’s cash flow performance. The Company uses a significant
      amount of capital assets and capital expenditures are a significant component
      of
      the Company’s annual cash expenditures and therefore their exclusion from EBITDA
      is a material limitation. The Company has significant working capital
      requirements during the year due to the seasonality of its business, which
      require significant cash expenditures and therefore its exclusion from EBITDA
      is
      a material limitation. The Company has a significant amount of debt and the
      Company has significant cash expenditures during the year related to principal
      and interest payments and therefore their exclusion from EBITDA is a material
      limitation. The Company generally pays significant U.S. federal, state and
      foreign income taxes each year and therefore its exclusion from EBITDA is a
      material limitation. As a result, EBITDA should be evaluated in conjunction
      with
      net cash from operating, investing and financing activities for a more complete
      analysis of the Company’s cash flow performance, as they include the financial
      statement impact of these items. Although depreciation and amortization are
      non-cash charges, the assets being depreciated and amortized will often have
      to
      be replaced in the future and EBITDA does not reflect any cash requirements
      for
      replacements. As EBITDA is not defined by GAAP, the Company’s definition of
      EBITDA may differ from and therefore may not be comparable to similarly titled
      measures used by other companies thereby limiting its usefulness as a
      comparative measure. Because of the limitations that EBITDA has as an analytical
      tool, investors should not consider it in isolation, or as a substitute for
      analysis of the Company’s cash flows as reported under GAAP.





Company
      management uses EBITDA as a supplementary non-GAAP liquidity measure to allow
      the Company to evaluate its operating units’ cash-generating ability to fund
      income tax payments, corporate overhead, debt service, capital expenditures
      and
      increases in working capital. EBITDA is also used by management to allocate
      resources for growth among its businesses, to identify possible impairment
      charges, to evaluate the Company’s ability to service its debt and to raise
      capital for growth opportunities, including acquisitions. In addition, the
      Company uses EBITDA as a liquidity measure in financial presentations to the
      Company’s Board of Directors, shareholders, various banks participating in
      Nortek’s Credit Facility, note holders and Bond Rating agencies, among others,
      as a supplemental non-GAAP liquidity measure to assist them in their evaluation
      of the Company’s cash flow performance. The Company uses EBITDA in conjunction
      with traditional GAAP liquidity measures as part of its overall assessment
      of
      cash flow ability and therefore does not place undue reliance on EBITDA as
      its
      only measure of cash flow performance.





The
      Company believes EBITDA is useful for both the Company and investors as it
      is a
      commonly used analytical measurement for assessing a company’s cash flow ability
      to service and/or incur additional indebtedness, which eliminates the impact
      of
      certain non-cash items such as depreciation and amortization. The Company
      believes that EBITDA is specifically relevant to the Company due to the
      Company’s leveraged position as well as the common use of EBITDA as a liquidity
      measure within the Company’s industries by lenders, investors, others in the
      financial community and peer group companies. The Company has included EBITDA
      as
      a supplemental liquidity measure, which should be evaluated by investors in
      conjunction with the traditional GAAP liquidity measures discussed earlier
      in
      this Liquidity and Capital Resources section for a complete evaluation of the
      Company’s cash flow performance.




The
      following table presents a reconciliation from net cash used in operating
      activities, which is the most directly comparable GAAP liquidity measure, to
      EBITDA for the first quarter ended March 31, 2007 and April 1,
      2006:





**For
                  the first quarter ended****March
                  31, 2007**
              
              **April
                  1, 2006***(Dollar
                  amounts in millions)*Net cash (used in) provided by operating activities
              
              $
              (13.3
              )
              $
              10.0Cash
                      used by
                      working capital and other long-term asset and liability
                      changes
              
              
              45.0
              
              
              32.4Deferred federal income tax provision
              
              
              (1.3
              )
              
              (3.5
              )Loss on property and equipment
              
              
              ---
              
              
              (0.1
              )Non-cash interest expense, net
              
              
              (14.5
              )
              
              (8.7
              )Non-cash stock-based compensation expense
              
              
              (0.1
              )
              
              (0.1
              )Provision for income taxes
              
              
              1.7
              
              
              11.3Interest expense (1)
              
              
              42.3
              
              
              36.1Investment income
              
              
              (0.4
              )
              
              (0.7
              )EBITDA
                  (2)
              
              $
              59.4
              
              $
              76.7


(1) Interest
      expense for the first quarter of 2007 includes cash interest of approximately
      $27.8 million and non-cash interest of approximately $14.5 million. Interest
      expense for the first quarter of 2006 includes cash interest of approximately
      $27.4 million and non-cash interest of approximately $8.7 million.





(2) In
      the RVP segment, EBITDA includes an approximate $0.6 million charge related
      to
      the closure of the Company’s NuTone, Inc. Cincinnati, Ohio facility and a
      non-cash foreign exchange gain of approximately $0.1 million related to
      intercompany debt not indefinitely invested in the Company’s
      subsidiaries recorded in the first quarter ended March 31, 2007
      and warranty expense of approximately $1.5 million related to a product
      safety upgrade recorded in the first quarter ended April 1, 2006. In the HVAC
      segment, EBITDA includes a charge of approximately $1.8 million related to
      a
      reserve for amounts due from a customer recorded in the first quarter
      ended March 31, 2007.





**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. During
      the first quarter of 2007, the Company’s performance was impacted by weak
      industry demand in the residential HVAC market, as well as, lower levels of
      housing activity.




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.





Although
      the Company is subject to the effects of changing prices, the impact of
      inflation has not been a significant factor in results of operations for the
      periods presented. In some circumstances, market conditions or customer
      expectations may prevent the Company from increasing the prices of its products
      to offset the inflationary pressures that may increase costs in the future.
      During 2007, the
      Company continued to experience higher material costs related primarily to
      purchases of copper, aluminum and related purchased components, as well as
      increased transportation and energy costs, these cost increases were partially
      offset by continued strategic sourcing initiatives and improvements in
      manufacturing efficiency, as well as sales price increases.





At
      March 31, 2007, approximately 6.7% of the Company’s workforce was subject to
      various collective bargaining agreements.





On
      June
      8, 2005, the Company's collective bargaining agreement with the United
      Automobile Aerospace & Agricultural Implement Workers of America and its
      Local No. 2029 expired. That bargaining unit covered approximately 4.4% of
      the
      Company's employees (414 employees), which were located at the Cincinnati,
      OH
      location of the Company's subsidiary NuTone. On or about June 8, 2005, the
      Company presented its final proposal to the union bargaining committee but
      such
      proposal was not accepted by the union members. On July 16, 2005, the Company
      locked out the union employees at the NuTone Cincinnati, OH facility. On
      September 6, 2005, the Company notified the union bargaining committee that
      negotiations had reached an impasse and that it was unilaterally implementing
      the terms of its final offer. Among other things, this implemented final offer
      does not provide the NuTone union members with post-retirement medical and
      life
      insurance benefits. In late June 2006, the Company informed the union that
      the
      Company would close the manufacturing operations at the Cincinnati, OH facility
      on or about August 30, 2006. NuTone’s operating results are included in the RVP
      segment.





On
      July
      27, 2006 the union members ratified a Closedown Agreement providing for the
      closedown and permanent layoff of all bargaining unit employees employed at
      the
      NuTone plant effective August 30, 2006, and the release by the union of any
      claims it may have against the Company. During the first quarter ended March
      31,
      2007, the Company recorded approximately $0.6 million of additional
      restructuring expenses related to the closedown of this facility and anticipates
      recording an additional $1.5 million of expenses through July 2007 (see Note
      H
      of the Notes to the Unaudited Financial Statements included elsewhere
      herein).




On
      or
      about April 30, 2007 after meeting and negotiating with the bargaining committee
      of the Teamsters Local 970 representing approximately 127 union employees of
      the
      Company’s wholly-owned subsidiary Mammoth, Inc.'s (“Mammoth”) manufacturing
      plant located in Chaska, Minnesota, it was decided to shut down manufacturing
      operations at the Chaska plant and relocate such operations to other
      manufacturing facilities within the Commercial HVAC Group. Mammoth is
      negotiating with the union over the severance benefits associated with the
      shutdown. It is anticipated that the manufacturing operations at Chaska will
      cease by the end of July 2007. The costs of the shutdown, including severance,
      relocation expenses, facility lease costs and asset write-offs are estimated
      to
      be between $3.0 million and $3.7 million.




A
      work stoppage at
      one of the Company’s facilities that lasts for a significant period of time
      could cause the Company to lose sales, incur increased costs and adversely
      affect its ability to meet customers’ needs. A plant shutdown or a substantial
      modification to a collective bargaining agreement could result in material
      gains
      or losses or the recognition of an asset impairment. As agreements expire and
      until negotiations are completed, the Company does not know whether it will
      be
      able to negotiate collective bargaining agreements on the same or more favorable
      terms as the current agreements or at all and without production interruptions,
      including labor stoppages.





**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 periodically mitigate 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, 2006
      disclosures included in the Company’s annual report on Form 10-K as filed with
      the SEC.





**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. At March 31, 2007, the fair value of the Company’s unrestricted and
      restricted investments and marketable securities was not materially different
      from their cost basis.





The
      Company manages its borrowing exposure to changes in interest rates by
      optimizing the use of fixed rate debt with extended maturities. At March 31,
      2007, approximately 51.5% of the carrying values of the Company’s long-term debt
      were at fixed interest rates.





**B.**  **Foreign
      Currency Risk**





The
      Company’s results of operations are affected by fluctuations in the value of the
      U.S. dollar as compared to the value of currencies in foreign markets primarily
      related to changes in the Euro, the Canadian Dollar and the British Pound.
      In
      the first quarter of 2007, the net impact of foreign currency changes was not
      material to the Company’s financial condition or results of operations. The
      impact of foreign currency changes related to translation resulted in an
      increase in stockholder’s investment of approximately $1.4 million for the first
      quarter ended March 31, 2007. The Company manages its exposure to foreign
      currency exchange risk principally by trying to minimize the Company’s net
      investment in foreign assets, including, the use of strategic short and
      long-term borrowings at the foreign subsidiary level. Consistent with this
      strategy, notes payable and other short- term obligations at March 31, 2007
      consist primarily of short-term borrowings by certain of the Company’s foreign
      subsidiaries. The Company generally does not enter into derivative financial
      instruments to manage foreign currency exposure. At March 31, 2007, 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, glass 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 March 31, 2007, the Company did not have any
      material outstanding commodity forward contracts.





**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 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 SEC.





**Item
      3.**  **Quantitative
      and Qualitative Disclosures about Market Risk**





Quantitative
      and qualitative disclosure about market risk is set forth in Management’s
      Discussion and Analysis of Financial Condition and Results of Operations -
      Market Risk.





**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.







**PART
      II. OTHER INFORMATION**






**Item
      4.**  **Submission
      of Matters to a Vote of Security Holders**





None





**Item
      5.**  **Other
      Information**





None





**Item
      6.**  **Exhibits**




The
      items marked with an asterisk are filed herewith.





*
            31.1
            Certificate
                of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.*
            31.2
            Certificate
                of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.*
            32.1
            Certificate
                of Chief Executive Officer Pursuant to Section 1350, Chapter 63 of
                Title
                18, United States Code, as Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.*
            32.2
            Certificate
                of Chief Financial Officer Pursuant to Section 1350, Chapter 63 of
                Title
                18, United States Code, as Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.








SIGNATURE








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.








NTK
      HOLDINGS, INC.


(Registrant)








/s/
      Almon C. Hall


Almon
      C. Hall,


Vice
      President and Chief


Financial
      Officer

















May
      14,
      2007