10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________

FORM 10-Q
__________

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
OR
[_]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
1-6112
(Commission File Number)
__________
NORTEK, INC.
(Exact name of registrant as specified in its charter)
__________

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]   No [_]

The total number of shares of the registrant's Common Stock:

Class	Shares Outstanding August 03, 2001
Common stock, $1.00 par value	10,408,332
Special common stock, $1.00 par value	527,512

NORTEK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

	June 30,			Dec. 31,
	2001			2000
	(Amounts in thousands)
	(Unaudited)
Assets
Current Assets:
Unrestricted
Cash and cash equivalents	$	92,936		$	132,508
Marketable securities available for sale		54,664			8,042
Restricted
Investments and marketable securities at cost, which approximates market		7,595			10,869
Short-term investments held for redemption of Senior
Subordinated Notes including redemption premium and accrued interest		215,060			--
Accounts receivable, less allowances of $10,222,000 and $9,799,000		308,546			250,568
Inventories:
Raw materials		104,694			89,859
Work in process		26,020			24,762
Finished goods		124,492			109,580
		255,206			224,201
Prepaid expenses		17,666			11,999
Other current assets		16,957			13,432
Prepaid income taxes		44,900			44,834
Total current assets		1,013,530			696,453
Property and Equipment, at Cost:
Land		17,775			18,345
Buildings and improvements		137,547			133,547
Machinery and equipment		397,578			378,078
		552,900			529,970
Less accumulated depreciation		212,159			195,193
Total property and equipment, net		340,741			334,777
Other Assets:
Goodwill, less accumulated amortization of $81,348,000 and $73,235,000		566,689			582,436
Intangible assets, less accumulated amortization of $25,311,000 and
$22,278,000		129,594			125,532
Deferred debt expense		20,683			18,916
Restricted investments and marketable securities held by pension trusts		40,369			32,436
Other		47,929			46,262
		805,264			805,582
	$	2,159,535		$	1,836,812
Liabilities and Stockholders' Investment
Current Liabilities:
9 7/8% Senior Subordinated Notes called for redemption		204,215			--
Notes payable and other short-term obligations	$	8,718		$	11,581
Current maturities of long-term debt		4,967			9,916
Accounts payable		204,615			155,381
Accrued expenses and taxes, net		172,646			157,078
Total current liabilities		595,161			333,956
Other Liabilities:
Deferred income taxes		62,169			60,950
Other		139,057			139,202
		201,226			200,152
Notes, Mortgage Notes and Obligations
Payable, Less Current Maturities		1,066,489			1,020,493
Stockholders' Investment:
Preference stock, $1 par value; authorized
7,000,000 shares, none issued		--			--
Common stock, $1 par value; authorized 40,000,000 shares;
18,774,862 and 18,752,974 shares issued		18,775			18,753
Special common stock, $1 par value; authorized 5,000,000
shares; 818,870 and 827,504 shares issued		819			828
Additional paid-in capital		209,243			208,813
Retained earnings		202,166			184,866
Accumulated other comprehensive loss		(22,660	)		(19,367	)
Less -- treasury common stock at cost, 8,377,886 and
8,377,834 shares		(109,615	)		(109,613	)
--treasury special common stock at cost, 290,121 and
290,107 shares		(2,069	)		(2,069	)
Total stockholders' investment		296,659			282,211
	$	2,159,535		$	1,836,812

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

NORTEK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

	For The
	Three Months Ended
	June 30,			July 1,
	2001			2000
	(In thousands except per share amounts)
	(Unaudited)
Net Sales	$	598,806		$	600,743
Costs and Expenses:
Cost of products sold		448,153			455,071
Selling, general and administrative expense, net		86,622			82,702
Amortization of goodwill and intangible assets		5,732			5,653
		540,507			543,426
Operating earnings		58,299			57,317
Interest expense		(25,694	)		(24,284	)
Investment income		1,995			1,467
Earnings before provision for income taxes		34,600			34,500
Provision for income taxes		14,900			15,400
Net Earnings	$	19,700		$	19,100
Net Earnings per share of common stock:
Basic	$	1.80		$	1.68
Diluted	$	1.76		$	1.67
Weighted Average Number of Shares:
Basic		10,925			11,388
Diluted		11,204			11,428

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

NORTEK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

	For The
	Six Months Ended
	June 30,			July 1,
	2001			2000
	(In thousands except per share amounts)
	(Unaudited)
Net Sales	$	1,066,075		$	1,092,300
Costs and Expenses:
Cost of products sold		808,889			829,239
Selling, general and administrative expense, net		168,741			164,539
Amortization of goodwill and intangible assets		11,516			11,405
		989,146			1,005,183
Operating earnings		76,929			87,117
Interest expense		(51,032	)		(48,594	)
Investment income		4,203			3,377
Earnings before provision for income taxes		30,100			41,900
Provision for income taxes		12,800			18,800
Net Earnings	$	17,300		$	23,100
Net Earnings per share of common stock:
Basic	$	1.58		$	2.02
Diluted	$	1.55		$	2.01
Weighted Average Number of Shares:
Basic		10,920			11,436
Diluted		11,182			11,488

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

NORTEK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

	For the
	Six Months Ended
	June 30,			July 1,
	2001			2000
	(Amounts in thousands)
	(Unaudited)
Cash Flows from operating activities:
Net earnings	$	17,300		$	23,100
Adjustments to reconcile net earnings
to cash:
Depreciation and amortization expense		31,547			30,953
Non-cash interest expense, net		2,117			1,986
Gain on sale of land		--			(1,712	)
Changes in certain assets and liabilities,
net of effects from acquisitions and
dispositions:
Accounts receivable, net		(60,623	)		(69,101	)
Inventories		(32,692	)		(36,454	)
Prepaids and other current assets		(11,735	)		(1,781	)
Accounts payable		51,609			41,517
Accrued expenses and taxes		16,891			16,545
Long-term assets, liabilities and other, net		(1,772	)		(1,033	)
Total adjustments to net earnings		(4,658	)		(19,080	)
Net cash provided by operating activities	$	12,642		$	4,020
Cash Flows from investing activities:
Capital expenditures	$	(26,894	)	$	(14,300	)
Purchase of investments and marketable
securities		(54,201	)		(4,004	)
Proceeds from the sale of investments
and marketable securities		8,118			38,439
Proceeds from the sale of fixed assets		486			5,361
Acquisition deposit held in escrow		--			(10,628	)
Funds held in escrow for the redemption, in July 2001, of the
9 7/8% Senior Subordinated Notes due 2004 including
redemption premium and accrued interest		(215,060	)		--
Change in restricted cash and investments		(4,457	)		(4,061	)
Other, net		2,165			(2,643	)
Net cash (used in) provided by investing
activities		(289,843	)		8,164
Cash Flows from financing activities:
Sale of 9 7/8% Senior Subordinated Notes due 2011		241,800			--
Change in borrowings, net		(4,490	)		(5,669	)
Purchase of Nortek Common and Special
Common Stock		--			(2,671	)
Other, net		319			6
Net cash provided by (used in) financing activities		237,629			(8,334	)
Net (decrease) increase in unrestricted
cash and cash equivalents		(39,572	)		3,850
Unrestricted cash and cash equivalents
at the beginning of the period		132,508			80,893
Unrestricted cash and cash equivalents
at the end of the period	$	92,936		$	84,743
Interest paid	$	46,753		$	46,509
Income taxes paid, net	$	1,980		$	3,292

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

NORTEK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT

FOR THE THREE MONTHS ENDED JULY 1, 2000

						Addi-							Accumulated
			Special			tional							Other
	Common		Common			Paid in		Retained		Treasury			Comprehensive			Comprehensive
	Stock		Stock			Capital		Earnings		Stock			Income(Loss)			Income(Loss)
	(Dollar amounts in thousands)
	(Unaudited)
Balance, April 1, 2000	$	18,740	$	840		$	208,808	$	147,266	$	(100,998	)	$	(13,027	)	$	--
Net earnings		--		--			--		19,100		--			--			19,100
Other comprehensive
income (loss):
Currency translation
adjustment		--		--			--		--		--			(1,150	)		(1,150	)
Unrealized decline in
the value of market-
able securities		--		--			--		--		--			(100	)		(100	)
Comprehensive income																$	17,850
4,121 shares of
special common stock
converted into 4,121
shares of common stock		4		(4	)		--		--		--			--
85,452 shares of treasury
stock acquired		--		--			--		--		(1,705	)		--
Balance, July 1, 2000	$	18,744	$	836		$	208,808	$	166,366	$	(102,703	)	$	(14,277	)

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

NORTEK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT

FOR THE THREE MONTHS ENDED JUNE 30, 2001

						Addi-							Accumulated
			Special			tional							Other
	Common		Common			Paid in		Retained		Treasury			Comprehensive			Comprehensive
	Stock		Stock			Capital		Earnings		Stock			Income(Loss)			Income(Loss)
	(Dollar amounts in thousands)
	(Unaudited)
Balance, March 31, 2001	$	18,772	$	821		$	209,113	$	182,466	$	(111,684	)	$	(23,876	)	$	--
Net earnings		--		--			--		19,700		--			--			19,700
Other comprehensive
income:
Currency translation
adjustment		--		--			--		--		--			1,202			1,202
Unrealized appreciation in
the value of market-
able securities		--		--			--		--		--			14			14
Comprehensive income																$	20,916
1,744 shares of
special common stock
converted into 1,744
shares of common stock		2		(2	)		--		--		--			--
1,087 shares of common stock
issued upon exercise of
stock options		1		--			130		--		--			--
53 shares of treasury
stock acquired		--		--			--		--		--			--
Balance, June 30, 2001	$	18,775	$	819		$	209,243	$	202,166	$	(111,684	)	$	(22,660	)

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

NORTEK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT

FOR THE SIX MONTHS ENDED JULY 1, 2000

						Addi-							Accumulated
			Special			tional							Other
	Common		Common			Paid in		Retained		Treasury			Comprehensive			Comprehensive
	Stock		Stock			Capital		Earnings		Stock			Income(Loss)			Income(Loss)
	(Dollar amounts in thousands)
	(Unaudited)
Balance, December 31, 1999	$	18,738	$	841		$	208,755	$	143,266	$	(99,961	)	$	(11,822	)	$	--
Net earnings		--		--			--		23,100		--			--			23,100
Other comprehensive
income (loss):
Currency translation
adjustment		--		--			--		--		--			(2,310	)		(2,310	)
Unrealized decline in
the value of market-
able securities		--		--			--		--		--			(145	)		(145	)
Comprehensive income																$	20,645
4,846 shares of
special common stock
converted into 4,846
shares of common stock		5		(5	)		--		--		--			--
1,500 shares of common
stock issued upon
exercise of stock options		1		--			53		--		--			--
136,465 shares of treasury
stock acquired		--		--			--		--		(2,742	)		--
Balance, July 1, 2000	$	18,744	$	836		$	208,808	$	166,366	$	(102,703	)	$	(14,277	)

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

NORTEK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT

FOR THE SIX MONTHS ENDED JUNE 30, 2001

						Addi-							Accumulated
			Special			tional							Other
	Common		Common			Paid in		Retained		Treasury			Comprehensive			Comprehensive
	Stock		Stock			Capital		Earnings		Stock			Income(Loss)			Income(Loss)
	(Dollar amounts in thousands)
	(Unaudited)
Balance, December 31, 2000	$	18,753	$	828		$	208,813	$	184,866	$	(111,682	)	$	(19,367	)	$	--
Net earnings		--		--			--		17,300		--			--			17,300
Other comprehensive
income (loss):
Currency translation
adjustment		--		--			--		--		--			(3,306	)		(3,306	)
Unrealized appreciation in
the value of market-
able securities		--		--			--		--		--			13			13
Comprehensive income																$	14,007
8,634 shares of
special common stock
converted into 8,634
shares of common stock		9		(9	)		--		--		--			--
13,254 shares of common
stock issued upon
exercise of stock options		13		--			430		--		--			--
66 shares of treasury
stock acquired		--		--			--		--		(2	)		--
Balance, June 30, 2001	$	18,775	$	819		$	209,243	$	202,166	$	(111,684	)	$	(22,660	)

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

NORTEK, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2001 AND JULY 1, 2000

(A) The unaudited condensed consolidated financial statements (the “Unaudited Financial Statements”) presented have been prepared by Nortek, Inc. and include the accounts of Nortek, Inc., and all of its significant wholly-owned subsidiaries (the “Company”) after elimination of intercompany accounts and transactions, without audit and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the interim periods presented. Although certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted, the Company believes that the disclosures included are adequate to make the information presented not misleading. It is suggested that these Unaudited Financial Statements be read in conjunction with the 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.

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

(C) In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, "Business Combinations" ("SFAS No. 141"). SFAS No. 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. This statement is effective for all business combinations initiated after June 30, 2001.

In July 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”). SFAS No. 142 applies to goodwill and intangible assets acquired after June 30, 2001, as well as previously acquired goodwill and intangible assets. Under SFAS No. 142 goodwill, as well as certain other intangible assets, determined to have an infinite life will no longer be amortized, instead these assets will be reviewed for impairment on a periodic basis. SFAS No. 142 is effective beginning January 1, 2002. Management is evaluating the impact that this statement will have on the Company’s consolidated financial statements. Goodwill amortization was approximately $8,300,000 and $4,100,000 in the first half and second quarter of 2001, respectively, and was approximately $8,100,000 and $4,100,000 in the first half and second quarter of 2000, respectively, as determined under accounting principles generally accepted in the United States currently in effect.

(D) In the first quarter of 2001, the Company adopted Statement of Financial Accounting Standards SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities”, as amended (“SFAS No. 133”) by recording an approximate $800,000 liability in its balance sheet at March 31, 2001, representing the fair value of the Company’s interest rate collar agreement. The cumulative affect of adopting this accounting method as of December 31, 2000 was not material. As a result, interest expense includes an approximate non-cash charge of $875,000 ($.05 per share, net of tax) and $75,000 in the first half and second quarter of 2001, respectively.

(E) The Securities and Exchange Commission released Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB No. 101"), on December 3, 1999. This SAB provides additional guidance on the accounting for revenue recognition including both broad conceptual discussions as well as certain industry-specific guidance. The application of this guidance, for all periods presented, was not material to the consolidated financial statements.

(F) Acquisitions are accounted for as purchases and, accordingly, have been included in the Company’s consolidated results of operations since the acquisition date. Purchase price allocations are subject to refinement until all pertinent information regarding the acquisitions is obtained. On July 3, 2000, the Company acquired Eaton-Williams Holdings Limited (“Eaton-Williams”), of Edenbridge, England. Eaton-Williams designs, manufactures, installs and services custom-made and standard air conditioning and humidification equipment. On June 15, 2001, the Company acquired Senior Air Systems (“SAS”) from a wholly-owned subsidiary of Senior Plc. SAS, of Stoke-on-Trent, England, manufactures and sells air conditioning equipment and will be integrated into the operations of Eaton-Williams. After the SAS acquisition, annual sales of Eaton-Williams are estimated to be approximately £50,000,000.

(G) In the first half and second quarter of 2001, the Company expensed approximately $2,200,000 and approximately $1,500,000, respectively, of manufacturing costs incurred in connection with the start up of a residential air conditioning facility and a vinyl fence and decking facility. Also, in the first half and second quarter of 2001 the Company expensed approximately $3,000,000 and $2,200,000, respectively, of fees and expenses associated with the Company’s material procurement strategy without realizing any benefit to date. The Company does not expect to begin to realize any benefits from the implementation of this initiative until later in the year 2001. In 2001, the Company recorded, in operating earnings, a non-taxable gain of approximately $3,200,000 ($.29 per share) and $2,400,000 ($.22 per share) in the first half and second quarter, respectively, from net death benefit insurance proceeds related to life insurance maintained on former managers. In the second quarter of 2001, the Company also incurred certain duplicative net interest expense as discussed in Note I below. In the second quarter of 2000, the Company sold a parcel of land resulting in a pre-tax gain of approximately $1,700,000 ($.10 per share, net of tax) which is included in operating earnings.

(H) The Company’s Board of Directors has authorized a number of programs to purchase shares of the Company’s Common and Special Common Stock. The most recent of these programs was announced on May 4, 2000, to purchase up to 1,000,000 shares of the Company’s Common and Special Common Stock in open market or negotiated transactions, subject to market conditions, cash availability and provisions of the Company’s outstanding debt instruments. As of August 3, 2001, the Company had purchased approximately 461,000 shares of its Common and Special Common stock for approximately $9,200,000 under this program and accounted for such purchases as treasury stock.

At August 3, 2001, approximately $109,000,000 was available for the payment of cash dividends, stock purchases or other restricted payments as defined under the terms of the Company’s most restrictive debt covenant related to such payments.

(I) In June 2001, the Company sold $250,000,000 principal amount of its 9 7/8% Senior Subordinated Notes due 2011 (“9 7/8% Notes”) at a slight discount. Net proceeds from the sale of the 9 7/8% Notes, after deducting underwriting commissions and expenses amounted to approximately $241,800,000 and a portion of such proceeds was used to redeem, on July 12, 2001, $204,822,000 principal amount of the Company’s 9 7/8% Senior Subordinated Notes due 2004 (which notes were called for redemption on June 13, 2001), and pay approximately $2,900,000 of redemption premium and approximately $7,400,000 of accrued interest. As a result of this redemption, the Company will record an extraordinary loss of approximately $5,500,000 ($.32 per share, net of tax) in the third quarter of 2001. In the second quarter of 2001, the Company incurred approximately $800,000 ($.05 per share, net of tax) of duplicative interest expense, net of interest income, since the redemption of the 9 7/8% Senior Subordinated Notes due 2004 did not occur on the same day as the financing.

(J) During the second quarter of 2001, one of the trusts related to the Company’s supplemental retirement plans loaned funds to certain officers of the Company who have fully vested retirement benefits in such plans. At June 30, 2001, approximately $17,100,000 of notes receivable bearing interest at 5.43% and maturing in 2016 and approximately $13,400,000 of notes receivable, bearing interest at 6.75% and maturing in 2015, are due from such officers of the Company and are included in restricted investments and marketable securities held by pension trusts in the accompanying unaudited condensed consolidated balance sheet.

(K) Basic earnings per share amounts have been computed using the weighted average number of common and common equivalent shares outstanding during each period. Special Common Stock is treated as the equivalent of Common Stock in determining earnings per share results. Diluted earnings per share amounts have been computed using the weighted average number of common and common equivalent shares and the dilutive potential common and special common shares outstanding during each period.

       A reconciliation between basic and diluted earnings per share from continuing operations is as follows:

	Three				Six
	Months Ended				Months Ended
	June 30,		July 1,		June 30,		July 1,
	2001		2000		2001		2000
	(In thousands except per share amounts)
Net earnings	$	19,700	$	19,100	$	17,300	$	23,100
Basic EPS:
Basic common shares		10,925		11,388		10,920		11,436
Basic EPS	$	1.80	$	1.68	$	1.58	$	2.02
Diluted EPS:
Basic common shares		10,925		11,388		10,920		11,436
Plus: Impact of stock
options		279		40		262		52
Diluted common shares		11,204		11,428		11,182		11,488
Diluted EPS	$	1.76	$	1.67	$	1.55	$	2.01

(L) The Company has three reportable segments: the Residential Building Products Segment; the Air Conditioning and Heating Products Segment; and the Windows, Doors and Siding Products Segment. In the tables below, Other includes corporate related items, results of insignificant operations, 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. The income statement impact of all purchase accounting adjustments, including goodwill and intangible asset amortization, is included in the operating earnings of the applicable segment. Intersegment net sales and eliminations were not material for any of the periods presented.

Summarized financial information for the Company’s reportable segments is presented in the tables that follow for the three months and six months ended June 30, 2001 and July 1, 2000.

	Three						Six
	Months Ended						Months Ended
	June 30,			July 1,			June 30,			July 1,
	2001			2000			2001			2000
	(Amounts in thousands)
Net Sales:
Residential building products	$	161,453		$	166,699		$	325,336		$	339,211
Air conditioning and heating products		189,194			178,441			326,536			307,087
Windows, doors and siding products		230,717			236,966			380,827			408,014
Other		17,442			18,637			33,376			37,988
	$	598,806		$	600,743		$	1,066,075		$	1,092,300
Operating Earnings (Loss):
Residential building products	$	20,987		$	23,308		$	41,771		$	48,374
Air conditioning and heating products		23,121			24,212			32,125			36,866
Windows, doors and siding products		18,903			15,787			12,718			11,234
Other, net		(4,712	)		(5,990	)		(9,685	)		(9,357	)
		58,299			57,317			76,929			87,117
Unallocated:
Interest expense		(25,694	)		(24,284	)		(51,032	)		(48,594	)
Investment income		1,995			1,467			4,203			3,377
Earnings before provision for income taxes	$	34,600		$	34,500		$	30,100		$	41,900

	Three				Six
	Months Ended				Months Ended
	June 30,		July 1,		June 30,		July 1,
	2001		2000		2001		2000
	(Amounts in thousands)
Depreciation and Amortization:
Residential building products	$	5,795	$	5,284	$	11,526	$	10,843
Air conditioning and heating products		3,106		3,017		6,344		6,014
Windows, doors and siding products		6,598		6,731		12,944		13,345
Other		369		366		733		751
	$	15,868	$	15,398	$	31,547	$	30,953

(M) The Company has recorded liabilities in connection with acquisitions related to employee terminations and other exit costs associated with management’s plans to eliminate certain activities of acquired entities. The Company recorded no additional liabilities in the first half or second quarter ended June 30, 2001. As of June 30, 2001, plans for eliminating certain activities have been finalized for all significant acquisitions. Charges to these liabilities for employee termination costs include payroll, payroll taxes and insurance benefits related to severance arrangements and were approximately $600,000 and $300,000 for the first half and second quarter ended June 30, 2001, respectively. At June 30, 2001, liabilities in connection with acquisitions related to employee terminations and other exit costs totaled approximately $900,000.

(N) The Company provides income taxes on an interim basis based upon the estimated annual effective income tax rate. Based on this method, the following reconciles the federal statutory income tax rate to the estimated effective tax rate of approximately 42.5% and 44.9% in the six months of 2001 and 2000, respectively.

	Six
	Months Ended
	June 30,			July 1,
	2001			2000
Income tax provision at the federal statutory rate		35	.0%		35	.0%
Net change from federal statutory rate:
Amortization not deductible for income tax purposes		7	.4		5	.0
Non-taxable gain on life insurance proceeds		(3	.7)		--
State income taxes, net of federal income tax effect		1	.9		1	.4
Tax effect resulting from foreign activities		2	.5		2	.2
Change in tax reserves, net		--				.9
Other, net		(	.6)			.4
		42	.5%		44	.9%

NORTEK, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2001

AND FOR THE SECOND QUARTER AND SIX MONTHS ENDED JULY 1, 2000

The Company is a diversified manufacturer of residential and commercial building products, operating within three principal segments: the Residential Building Products Segment, the Air Conditioning and Heating Products Segment, and the Windows, Doors and Siding Products Segment. In the results of operations presented below, Other includes corporate related items, results of insignificant operations and certain income and expenses not allocable to reportable segments. Through its principal segments, the Company manufactures and sells, primarily in the United States, Canada and Europe, a wide variety of products for the residential and commercial construction, manufactured housing, the do-it-yourself (“DIY”) and professional remodeling and renovation markets. (As used in this report, the terms “Company” and “Nortek” refer to Nortek, Inc., together with its subsidiaries, unless the context indicates otherwise. Such terms as “Company” and “Nortek” are used for convenience only and are not intended as a precise description of any of the separate corporations, each of which manages its own affairs.)

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

The Company acquired Eaton-Williams Holdings Limited (“Eaton-Williams”) on July 3, 2000 and Senior Air Systems (“SAS”) on June 15, 2001. These acquisitions have been accounted for under the purchase method of accounting. Accordingly, the results of Eaton-Williams and SAS, which are part of the Air Conditioning and Heating Products Segment, are included in the Company’s consolidated results since the dates of their acquisitions.

The Financial Accounting Standards Board’s Emerging Issues Task Force reached final consensus in 2000 with respect to the accounting for shipping and handling fees and costs and the accounting for certain sales incentives. As a result, the Company has reclassified certain amounts among net sales, cost of products sold and selling, general and administrative expenses in accordance with these pronouncements for all periods presented in Management’s Discussion and Analysis of the Unaudited Financial Statements. See Note B of the Notes to the unaudited condensed consolidated financial statements (the “Unaudited Financial Statements). These reclassifications did not have any effect on operating earnings, net earnings or net earnings per share for any period.

Results of Operations

The tables that follow present the unaudited net sales and operating earnings for the Company’s principal segments for the second quarter and six months ended June 30, 2001 and July 1, 2000, and the dollar amount and percentage change of such results as compared to the prior comparable period.

							Change in
	Second Quarter Ended						Second Quarter 2001
	June 30,			July 1,			as Compared to 2000
	2001			2000			$			%
	(Dollar amounts in thousands)
Net Sales:
Residential building products	$	161,453		$	166,699		$	(5,246	)		(3	.1)%
Air conditioning and
heating products		189,194			178,441			10,753			6	.0
Windows, doors and
siding products		230,717			236,966			(6,249	)		(2	.6)
Other		17,442			18,637			(1,195	)		(6	.4)
	$	598,806		$	600,743		$	(1,937	)		(0	.3)%
Operating Earnings (Loss):
Residential building products	$	20,987		$	23,308		$	(2,321	)		(10	.0)%
Air conditioning and
heating products		23,121			24,212			(1,091	)		(4	.5)
Windows, doors and
siding products		18,903			15,787			3,116			19	.7
Other		(4,712	)		(5,990	)		1,278			21	.3
	$	58,299		$	57,317		$	982			1	.7%

							Change in
	Six Months Ended						First Six Months 2001
	June 30,			July 1,			as Compared to 2000
	2001			2000			$			%
	(Dollar amounts in thousands)
Net Sales:
Residential building
products	$	325,336		$	339,211		$	(13,875	)		(4	.1)%
Air conditioning and
heating products		326,536			307,087			19,449			6	.3
Windows, doors and
siding products		380,827			408,014			(27,187	)		(6	.7)
Other		33,376			37,988			(4,612	)		(12	.1)
	$	1,066,075		$	1,092,300		$	(26,225	)		(2	.4)%
Operating Earnings (Loss):
Residential building
products	$	41,771		$	48,374		$	(6,603	)		(13	.6)%
Air conditioning and
heating products		32,125			36,866			(4,741	)		(12	.9)
Windows, doors and
siding products		12,718			11,234			1,484			13	.2
Other		(9,685	)		(9,357	)		(328	)		(3	.5)
	$	76,929		$	87,117		$	(10,188	)		(11	.7)%

The tables that follow, set forth, for the periods presented, (a) certain unaudited consolidated operating results, (b) the change in the amount and the percentage change of such results as compared to the prior comparable period, (c) the percentage which such results bear to net sales, and (d) the change of such percentages as compared to the prior comparable period. The results of operations for the second quarter and six months ended June 30, 2001 are not necessarily indicative of the results of operations to be expected for any other interim period or the full year.

							Change in
	Second Quarter Ended						Second Quarter 2001
	June 30,			July 1,			as Compared to 2000
	2001			2000			$			%
	(Dollar amounts in millions)
Net sales	$	598	.8	$	600	.7	$	(1	.9)		(0	.3)%
Cost of products sold		448	.1		455	.1		7	.0		1	.5
Selling, general and
administrative expense, net		86	.7		82	.7		(4	.0)		(4	.8)
Amortization of goodwill
and intangible assets		5	.7		5	.6		(0	.1)		(1	.8)
Operating earnings		58	.3		57	.3		1	.0		1	.7
Interest expense		(25	.7)		(24	.3)		(1	.4)		(5	.8)
Investment income		2	.0		1	.5		0	.5		33	.3
Earnings before provision
for income taxes		34	.6		34	.5		0	.1		0	.3
Provision for income taxes		14	.9		15	.4		0	.5		3	.2
Net earnings	$	19	.7	$	19	.1	$	0	.6		3	.1%

							Change in
	Percentage of Net Sales						Percentage
	Second Quarter Ended						for the Second
	June 30,			July 1,			Quarter 2001
	2001			2000			as Compared to 2000
Net sales		100	.0%		100	.0%		---	%
Cost of products sold		74	.8		75	.8		1	.0
Selling, general and
administrative expense, net		14	.5		13	.8		(0	.7)
Amortization of goodwill
and intangible assets		1	.0		0	.9		(0	.1)
Operating earnings		9	.7		9	.5		0	.2
Interest expense		(4	.2)		(4	.1)		(0	.1)
Investment income		0	.3		0	.3		--
Earnings before provision
for income taxes		5	.8		5	.7		0	.1
Provision for income taxes		2	.5		2	.5		--
Net earnings		3	.3%		3	.2%		0	.1%

							Change in
	Six Months Ended						First Six Months 2001
	June 30,			July 1,			as Compared to 2000
	2001			2000			$			%
	(Dollar amounts in millions)
Net sales	$	1,066	.1	$	1,092	.3	$	(26	.2)		(2	.4)%
Cost of products sold		808	.9		829	.3		20	.4		2	.5
Selling, general and
administrative expense, net		168	.8		164	.5		(4	.3)		(2	.6)
Amortization of goodwill
and intangible assets		11	.5		11	.4		(0	.1)		(0	.9)
Operating earnings		76	.9		87	.1		(10	.2)		(11	.7)
Interest expense		(51	.0)		(48	.6)		(2	.4)		(4	.9)
Investment income		4	.2		3	.4		0	.8		23	.5
Earnings before provision
for income taxes		30	.1		41	.9		(11	.8)		(28	.2)
Provision for income taxes		12	.8		18	.8		6	.0		31	.9
Net earnings	$	17	.3	$	23	.1	$	(5	.8)		(25	.1)%

							Change in
	Percentage of Net Sales						Percentage
	Six Months Ended						for the First
	June 30,			July 1,			Six Months 2001
	2001			2000			as Compared to 2000
Net sales		100	.0%		100	.0%		---	%
Cost of products sold		75	.9		75	.9		--
Selling, general and
administrative expense, net		15	.8		15	.1		(0	.7)
Amortization of goodwill
and intangible assets		1	.1		1	.0		(0	.1)
Operating earnings		7	.2		8	.0		(0	.8)
Interest expense		(4	.8)		(4	.5)		(0	.3)
Investment income		0	.4		0	.3		0	.1
Earnings before provision
for income taxes		2	.8		3	.8		(1	.0)
Provision for income taxes		1	.2		1	.7		0	.5
Net earnings		1	.6%		2	.1%		(0	.5)%

Net sales decreased approximately $1,900,000 or approximately 0.3% for the second quarter of 2001, as compared to the second quarter of 2000 (or increased approximately $800,000 or approximately 0.1% excluding the effect of changes in foreign currency exchange rates) and decreased approximately $26,200,000 or approximately 2.4% for the first six months of 2001 compared to the first six months of 2000 (or decreased approximately $20,500,000 or approximately 1.9% excluding the effect of changes in foreign currency exchange rates). The acquisition in July 2000 of Eaton-Williams in the Air Conditioning and Heating Products Segment contributed approximately $11,500,000 to net sales in the second quarter of 2001 as compared to 2000 and approximately $24,100,000 to net sales in the first six months of 2001 as compared to 2000. Excluding the effect of this acquisition, consolidated net sales decreased approximately $13,400,000 or approximately 2.2% for the second quarter of 2001 as compared to the second quarter of 2000 and approximately $50,300,000 or approximately 4.6% for the first six months of 2001 as compared to the first six months of 2000. Sales levels in the first six months were adversely affected by the general economic slowdown and a prolonged period of cold and wet weather, which hampered building and remodeling activity in the first quarter of 2001. In the Residential Building Products Segment, net sales decreased approximately $5,200,000 or 3.1% (approximately $3,100,000 or approximately 1.9% excluding the effect of foreign currency exchange rates) and approximately $13,900,000 or approximately 4.1% (approximately $9,600,000 or approximately 2.8% excluding the effect of foreign currency exchange rates), in the second quarter and first six months of 2001, respectively. In the Windows, Doors and Siding Products Segment net sales decreased approximately $6,200,000 or approximately 2.6% and approximately $27,200,000 or approximately 6.7% in the second quarter and first six months of 2001 as compared to 2000, respectively. The decline in sales in the Windows, Doors and Siding Products Segment was principally due to lower sales volume of siding and related accessories and certain window and door product lines, predominately occurring in the first quarter, (including the effect of the discontinuance of a line of interior door products) and was partially offset by higher sales prices of siding and related products and increased sales prices of certain window product lines. Excluding the effect of the acquisition of Eaton-Williams, net sales decreased approximately $700,000, or approximately 0.4%, in the second quarter of 2001 as compared to 2000, and approximately $4,700,000, or approximately 1.5%, in the first six months of 2001 as compared to 2000, in the Air Conditioning and Heating Products Segment, principally as a result of a decline in sales to customers serving the manufactured housing industry, in line with the overall softness being experienced in this industry, and due to unusually cool weather in the spring season in the United States. It is anticipated that the weakness in the manufactured housing industry will continue throughout 2001 and is expected to continue to have an adverse effect on this Segment’s sales as compared to 2000. The decrease in sales in the Air Conditioning and Heating Products Segment was partially offset by increased sales volume of products sold to customers serving the residential site-built and commercial markets.

Cost of products sold, as a percentage of net sales decreased from approximately 75.8% in the second quarter of 2000 to approximately 74.8% in the second quarter of 2001, and remained unchanged at approximately 75.9% in the first six months of 2001 and 2000. The effect of the acquisition of Eaton-Williams, which has a higher cost of products sold as a percentage of net sales than the overall group of businesses owned prior to the acquisition, was to contribute to the increase in the consolidated percentages of cost of products sold as a percentage of net sales. Included in cost of products sold was approximately $1,500,000 in the second quarter of 2001 and $2,200,000 in the first half of 2001 of costs incurred in the start-up of a residential HVAC manufacturing facility and a vinyl fence and decking facility. Excluding the effect of the Eaton-Williams acquisition and the costs incurred in the start-up of facilities in the second quarter and first half of 2001, cost of products sold as a percentage of net sales decreased from approximately 75.8% in the second quarter of 2000 to approximately 74.4% in the second quarter of 2001 and decreased from approximately 75.9% in the first half of 2000 to approximately 75.4% in the first half of 2001. These decreases in the percentages in the second quarter and first half of 2001 principally resulted from cost reduction measures, lower PVC resin costs, improved sales prices of vinyl siding and related products and increased sales prices of certain window product lines in the Windows, Doors and Siding Products Segment, partially offset by the effect of lower sales volume in the Residential Building Products Segment, higher cost levels of commercial HVAC products and lower sales volume to customers serving the manufactured housing industry without a proportionate decrease in costs in the Air Conditioning and Heating Products Segment. Overall, changes in the cost of products sold as a percentage of net sales for one period as compared to another period may reflect a number of factors including changes in the relative mix of products sold, the effect of changes in sales prices, material costs and changes in productivity levels.

Selling, general and administrative expense, net as a percentage of net sales, increased from approximately 13.8% in the second quarter of 2000 to approximately 14.5% in the second quarter of 2001 and from approximately 15.1% in the first six months of 2000 to approximately 15.8% in the first six months of 2001. The effect of the acquisition of Eaton-Williams, which has a higher level of selling, general and administrative expense, net as a percentage of net sales than the overall group of businesses owned prior to the acquisition, was to contribute to the increase in the consolidated percentages of selling, general and administrative expense, net to net sales. Selling, general and administrative expense, net was reduced by approximately $2,400,000 in the second quarter of 2001 and approximately $3,200,000 for the first six months of 2001 related to a non-taxable gain from net death benefit insurance proceeds related to life insurance maintained on former managers. Selling, general and administrative expense, net included approximately $2,200,000 in the second quarter of 2001 and approximately $3,000,000 in the first six months of 2001 related to the Company’s material procurement strategy for which no benefits have been realized. This strategy is expected to result in approximately $20,000,000 in annualized savings when fully implemented. Selling, general and administrative expense in the second quarter and first six months of 2000 was reduced by approximately $1,700,000 from the gain on the sale of land. Excluding the effect of the Eaton-Williams acquisition, the net life insurance proceeds, costs related to the Company’s material procurement strategy and the sale of land in 2000, selling, general and administrative expense increased from approximately 14.1% in the second quarter of 2000 to approximately 14.4% in the second quarter of 2001 and increased from approximately 15.2% in the first six months of 2000 to approximately 15.8% in the first six months of 2001. These increases in the percentages are principally as a result of lower sales volume of siding and related products and certain window and door product lines without a proportionate decrease in expense in the Windows, Doors and Siding Products Segment and lower sales volume of HVAC products to customers serving the manufactured housing industry without a proportionate decrease in expense in the Air Conditioning and Heating Products Segment.

Amortization of goodwill and intangible assets, as a percentage of net sales, increased slightly from approximately 0.9% in the second quarter of 2000 to approximately 1.0% in the second quarter of 2001 and from approximately 1.0% in the first six months of 2000 to approximately 1.1% in the first six months of 2001 principally as a result of the acquisition in July, 2000 of Eaton-Williams.

Consolidated operating earnings increased approximately $1,000,000 from approximately $57,300,000 in the second quarter of 2000 to approximately $58,300,000 in the second quarter of 2001 and decreased approximately $10,200,000 from approximately $87,100,000 in the first six months of 2000 to approximately $76,900,000 in the first six months of 2001 as a result of the factors discussed above. The acquisition of Eaton-Williams contributed approximately $700,000 and $1,000,000 for the second quarter and first six months of 2001, respectively, to the decrease in operating earnings in the Air Conditioning and Heating Products Segment.

Consolidated operating earnings have been reduced by depreciation and amortization expense (other than amortization of deferred debt expense and debt discount) of approximately $15,900,000 and $15,400,000 for the second quarter ended June 30, 2001 and July 1, 2000, respectively, and approximately $31,600,000 and $31,000,000 for the first six months ended June 30, 2001 and July 1, 2000, respectively.

Operating earnings decreased approximately $2,300,000 and $1,100,000 in the second quarter of 2001 as compared to the second quarter of 2000 in the Residential Building Products Segment and the Air Conditioning and Heating Products Segment, respectively, and increased approximately $3,100,000 in the Windows, Doors and Siding Products Segment. In the first six months of 2001 operating earnings decreased approximately $6,600,000 and $4,700,000 as compared to the first six months of 2000 in the Residential Building Products Segment and the Air Conditioning and Heating Products Segment, respectively, and increased approximately $1,500,000 in the Windows, Doors and Siding Products Segment. The decrease in the Residential Building Products Segment was principally due, in part, to decreased sales volume without a proportionate decrease in costs and expenses. The decrease in operating earnings in the Air Conditioning and Heating Products Segment, was principally due to a decline in the sales level of products sold to customers serving the manufactured housing industry due to the overall softness being experienced in this industry and costs incurred in the start up of a residential HVAC manufacturing facility as noted above, partially offset by increased earnings from higher sales levels of residential site-built products. The slowdown in the manufactured housing industry is expected to continue to adversely effect this Segment’s operating earnings during the next several quarters as compared to 2000. The increase in operating earnings in the Windows, Doors and Siding Products Segment was principally due to an increase in earnings in vinyl siding and related products, partially offset by the effect of lower sales volume and higher costs and expenses of certain window, door, fencing and other non-siding products.

Operating earnings of foreign operations, consisting primarily of the results of operations of the Company’s Canadian and European subsidiaries, were approximately 6.1% and 5.3% of operating earnings (before corporate overhead) in the second quarter of 2001 and 2000, respectively and approximately 5.4% and 5.6% of operating earnings (before corporate overhead) in the first six months of 2001 and 2000, respectively. Sales and earnings derived from international markets are subject to the risks of currency fluctuations.

Interest expense in the second quarter of 2001 increased approximately $1,400,000 or approximately 5.8% as compared to the second quarter of 2000 and approximately $2,400,000 or approximately 4.9% in the first six months of 2001 as compared to the first six months of 2000, primarily as a result of duplicative interest expense of approximately $1,100,000 in the second quarter and first six months of 2001 associated with the redemption of the Company’s 9 7/8% Senior Subordinated Notes due 2004. See Note I of the Notes to the Unaudited Financial Statements. The adoption of SFAS No. 133 which resulted in an approximate $75,000 non-cash charge to interest expense in the second quarter of 2001 and an approximate $875,000 non-cash charge to interest expense for the first six months of 2001 (see Note D of the Notes to the Unaudited Financial Statements) and increased borrowings associated with plant expansion during the second quarter and first six months ended June 30, 2001 also contributed to the increase in interest expense (see Note G of the Notes to the Unaudited Financial Statements).

Investment income increased approximately $500,000 or approximately 33.3% and approximately $800,000 or approximately 23.5% in the second quarter and first six months of 2001, respectively, as compared to the second quarter and first six months of 2000, as a result of additional interest income of approximately $300,000 earned during the second quarter of 2001 on the funds held in escrow for the redemption of the 9 7/8% Senior Subordinated Notes, due 2004 and due to higher average invested balances.

The provision for income taxes for the second quarter of 2001 was approximately $14,900,000, as compared to approximately $15,400,000 for the second quarter of 2000 and approximately $12,800,000 for the first six months of 2001 compared to approximately $18,800,000 for the first six months of 2000. The income tax rates differed from the United States Federal statutory rate of 35% principally as a result of non-deductible amortization expense (for tax purposes), non-taxable gain on life insurance policies (for tax purposes), state income tax provisions and the effect of foreign income tax on foreign source income.

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, "Business Combinations" ("SFAS No. 141"). SFAS No. 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. This statement is effective for all business combinations initiated after June 30, 2001.

In July 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”). SFAS No. 142 applies to goodwill and intangible assets acquired after June 30, 2001, as well as previously acquired goodwill and intangible assets. Under SFAS No. 142 goodwill, as well as certain other intangible assets, determined to have an infinite life will no longer be amortized, instead these assets will be reviewed for impairment on a periodic basis. SFAS No. 142 is effective beginning January 1, 2002. Management is evaluating the impact that this statement will have on the Company’s consolidated financial statements. Goodwill amortization was approximately $8,300,000 and $4,100,000 in the first half and second quarter of 2001, respectively, and was approximately $8,100,000 and $4,100,000 in the first half and second quarter of 2000, respectively, as determined under accounting principles generally accepted in the United States currently in effect.

Liquidity and Capital Resources

In June 2001, the Company sold $250,000,000 principal amount of its 9 7/8% Senior Subordinated Notes due 2011 (“9 7/8% Notes”) at a slight discount. Net proceeds from the sale of the 9 7/8% Notes, after deducting underwriting commissions and expenses amounted to approximately $241,800,000. A portion of such proceeds, approximately $215,000,000 at June 30, 2001 (the “Redemption Fund”) was held in escrow and was used to redeem on July 12, 2001, $204,822,000 principal amount of the Company’s 9 7/8% Senior Subordinated Notes due 2004 (the “Redeemed Notes”), and pay approximately $2,900,000 and $7,400,000 of redemption premium and accrued interest, respectively. At June 30, 2001, the Redemption Fund was classified as restricted short-term investments in the accompanying unaudited condensed consolidated balance sheet. (See Note I of the Notes to the Unaudited Financial Statements included elsewhere herein.)

The Company is highly leveraged and expects to continue to be highly leveraged for the foreseeable future. After giving effect to the refinancing of the 9 7/8% Senior Subordinated Notes due 2004, (“Redeemed Notes”) on July 12, 2001 the Company had consolidated debt at June 30, 2001, of approximately $1,080,174,000 consisting of (i) $13,685,000 of short-term borrowings and current maturities of long-term debt, (ii) $127,290,000 of notes, mortgage notes and other indebtedness, (iii) $209,402,000 of the 8 7/8% Senior Notes due 2008 (“8 7/8% Notes”), (iv) $308,203,000 of the 9 1/8% Senior Notes due 2007 (“9 1/8% Notes”), (v) $174,313,000 of the 9 1/4% Senior Notes due 2007 (“9 1/4% Notes”) and (vi) $247,281,000 of the 9 7/8% Senior Subordinated Notes due 2011 (“9 7/8% Notes”). After giving effect to the refinancing of the Redeemed Notes, the Company had consolidated unrestricted cash, cash equivalents and marketable securities of approximately $147,600,000 at June 30, 2001 as compared to approximately $140,550,000 at December 31, 2000 and the Company’s debt to equity ratio remained unchanged at approximately 3.7:1 at June 30, 2001 as compared to December 31, 2000.

The Company’s ability to pay interest on or to refinance its indebtedness depends on the successful integration of the operations of recent acquisitions and the Company’s future performance, which is subject to general economic, financial, competitive, legislative, regulatory and other factors 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 indentures and other agreements governing the Company and its subsidiaries’ indebtedness (including the indentures for the 8 7/8% Notes, the 9 1/8% Notes, the 9 1/4% Notes and the 9 7/8% Notes and a credit agreement for the Ply Gem credit facility) contain 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.

The Company expects to meet its cash flow requirements through fiscal 2001 from cash generated from operations, existing cash, cash equivalents and marketable securities, and financings, which may include securitization of accounts receivable and mortgage or capital lease financings.

Unrestricted cash and cash equivalents decreased from approximately $132,508,000 at December 31, 2000 to approximately $92,936,000 at June 30, 2001. Marketable securities available for sale increased from approximately $8,042,000 at December 31, 2000 to approximately $54,664,000 at June 30, 2001. The Company’s investment in marketable securities at June 30, 2001 consisted of commercial paper. The Company has classified as restricted, in the accompanying unaudited condensed consolidated balance sheet, certain investments and marketable securities that are not fully available for use in its operations including the Redemption Fund of approximately $215,000,000. At June 30, 2001, approximately $47,964,000 (of which approximately $7,595,000 is included in current assets) of the Company’s cash, investments and marketable securities has been pledged as collateral or are held in pension trusts for insurance, employee benefit and other requirements.

Capital expenditures were approximately $26,894,000 in the first six months of 2001 compared to approximately $14,300,000 in the first six months of 2000. Capital expenditures were approximately $41,334,000 (including capital leases of approximately $5,701,000), for the year ended December 31, 2000 and are expected to range between approximately $50,000,000 and $55,000,000 in 2001.

The Company’s Board of Directors has authorized a number of programs to purchase shares of the Company’s Common and Special Common Stock. The most recent of these programs was announced on May 4, 2000, and allows the Company to purchase up to 1,000,0000 shares of the Company’s Common and Special Common Stock in open market or negotiated transactions, subject to market conditions, cash availability and provisions of the Company’s outstanding debt instruments. As of August 3, 2001, the Company has purchased approximately 461,000 shares of its Common and Special Common Stock under this program for approximately $9,200,000 and accounted for such share purchases as Treasury Stock.

At August 3, 2001, approximately $109,000,000 was available for the payment of cash dividends, stock purchases or other restricted payments as defined under the terms of the Company’s most restrictive Indenture. (See Note H of the Notes to the Unaudited Financial Statements included elsewhere herein.)

After giving effect to the refinancing of the Redeemed Notes, which occurred on July 12, 2001, the Company’s working capital increased from approximately $362,497,000 at December 31, 2000 to approximately $414,955,000 at June 30, 2001 and its current ratio remained unchanged at approximately 2.1:1 at June 30, 2001 compared to December 31, 2000. Changes in the components of working capital are impacted by the seasonal nature of demand for the Company’s products. (See Inflation, Trends and General Considerations included elsewhere herein.)

Accounts receivable increased approximately $57,978,000 or approximately 23.1%, between December 31, 2000 and June 30, 2001, while net sales increased approximately $86,317,000 or approximately 16.8% in the second quarter of 2001 as compared to the fourth quarter of 2000. 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 June 30, 2001 as compared to December 31, 2000. The Company has not experienced any significant overall changes in credit terms, collection efforts, credit utilization or delinquency in accounts receivable in 2001.

Inventories increased approximately $31,005,000 or approximately 13.8%, between December 31, 2000 and June 30, 2001.

Accounts payable increased approximately $49,234,000 or approximately 31.7%, between December 31, 2000 and June 30, 2001.

Unrestricted cash and cash equivalents decreased approximately $39,572,000 from December 31, 2000 to June 30, 2001, principally as a result of the following:

	Condensed
	Consolidated
	Cash Flows (*)
Operating Activities--
Cash flow from operations, net	$	49,387,000
Increase in accounts receivable, net		(60,623,000	)
Increase in inventories		(32,692,000	)
Increase in prepaids and other current assets		(11,735,000	)
Increase in accounts payable		51,609,000
Increase in accrued expenses and taxes		18,468,000
Investing Activities--
Funds held in escrow for the redemption of the 9 7/8% Notes due 2004,
including redemption premium and accrued interest		(215,060,000	)
Purchase of investments and
marketable securities, net of sales		(46,083,000	)
Change in restricted cash		(4,457,000	)
Capital expenditures		(26,894,000	)
Financing Activities--
Sale of 9 7/8% Notes due 2011		241,800,000
Decrease in borrowings, net		(4,490,000	)
Other, net		1,198,000
	$	(39,572,000	)

(*) Prepared from the Company's Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2001. (See Nortek, Inc. and Subsidiaries Unaudited Condensed Consolidated Financial Statements included elsewhere herein.)

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

Inflation, Trends and General Considerations

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

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

Market Risk

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

There have been no significant changes in market risk from the December 31, 2000 disclosures included in the Company’s Annual Report on Form 10-K.

A. Interest Rate Risk

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

The Company’s investing strategy, to manage interest rate exposure, is to invest in short-term, highly liquid investments and marketable securities. Short-term investments primarily consist of money market accounts and corporate commercial paper with original maturities of 90 days or less.

The Company manages its borrowing exposure to changes in interest rates by optimizing the use of fixed rate debt with extended maturities. In addition, the Company has set a substantial portion of its variable rate debt by entering into an interest rate collar transaction to lock in the interest rate between a floor of 5.76% and a cap of 7%.

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 Italian Lira, British Pound and the Canadian Dollar. In the first half and second quarter of 2001, the net impact of foreign currency changes related to transactions 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 stockholders’ investment of approximately $1,202,000 in the second quarter of 2001 and a decrease in stockholders’ investment of approximately $3,306,000 in the first six months of 2001. The Company manages its exposure to foreign currency exchange risk principally by trying to minimize the Company’s net investment in foreign assets through the use of strategic short and long-term borrowings at the foreign subsidiary level. The Company generally does not enter into derivative financial instruments to manage foreign currency exposure. At June 30, 2001, the Company did not have any outstanding foreign currency hedging contracts.

C. Commodity Pricing Risk

The Company is subject to significant market risk with respect to the pricing of its principal raw materials, which include, among others, steel, copper, packaging material, plastics, resins, glass, wood and aluminum. If prices of these raw materials were to increase dramatically, the Company may not be able to pass such increases on to its customers and, as a result, gross margins could decline significantly. The Company manages its exposure to commodity pricing risk by continuing to diversify its product mix, strategic buying programs and vendor partnering. The Company generally does not enter into derivative financial instruments to manage commodity-pricing exposure. At June 30, 2001, the Company did not have any 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 resins, glass, wood and aluminum) and purchased components, the level of domestic and foreign construction and remodeling activity affecting residential and commercial markets, interest rates, employment, inflation, currency translation, consumer spending levels, operating in international economies, the rate of sales growth, price, and product and warranty liability claims. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Readers are also urged to carefully review and consider the various disclosures made by the Company, in this document, as well as the Company’s periodic reports on Forms 10-K, 10-Q and 8-K, filed with the Securities and Exchange Commission.

PART II. OTHER INFORMATION

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

At the Annual Meeting of Stockholders held on May 3, 2001 the following actions were taken by the following votes:

Proposal 1: Election of Director

				Broker
Name	For	Against	Withheld	Non-Votes
Class II (for a term
expiring at the 2004
Annual Meeting)
Director elected by the holders of Common Stock voting separately as a class --
Phillip L. Cohen	7,820,645	--	928,335	--
Director elected by holders of Common Stock and Special Common Stock voting separately as a single class --
Richard L. Bready	11,950,858	--	1,385,482	--

Proposal 2: Approval of the 2001 Equity and Cash Incentive Plan

			Broker
For	Against	Abstain	Non-Votes
9,528,604	3,766,236	41,500	--

Item 6. Exhibits and Reports on Form 8-K

(a)	Exhibits
	10.1 Third Amendment dated May 14, 2001 to Nortek Inc.
	Supplemental Executive Retirement Plan dated July 1, 1997
	(filed herewith)
	10.2 Amended and Restated Deferred Compensation Agreement
	dated as of June 1, 2001 between Richard L. Bready and the
	Company (filed herewith).
	10.3 Amended and Restated Deferred Compensation Agreement
	dated as of June 1, 2001 between Almon C. Hall, III and the
	Company (filed herewith).
	10.4 Amended and Restated Deferred Compensation Agreement
	dated as of June 1, 2001 between Richard J. Harris and the
	Company (filed herewith).
(b)	Reports on Form 8-K.
	June 6, 2001, Item 5, Other
	June 8, 2001, Item 5, Other
	June 13, 2001, Item 5, Other

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.

	NORTEK, INC.
	(Registrant)
	/s/ Almon C. Hall
	Almon C. Hall, Vice President and
	Controller and Chief Accounting Officer
August 10, 2001
(Date)

EX-10

Exhibit 10.1

EX-10

Exhibit 10.2

           AMENDED AND RESTATED AGREEMENT made as of the 1st day of June, 2001 between Nortek, Inc., (the "Company") and Richard L. Bready (the "Employee"),

W I T N E S S E T H:

          WHEREAS, the Employee and the Company entered into an agreement dated March 7, 1983 to provide financial inducements beyond the Employee’s normal compensation; and

          WHEREAS, the Employee’s services are of substantial value to the Company, and as incentive for him to render continuing services to the Company, the Company wishes to offer him additional financial inducement beyond his normal compensation; and

          WHEREAS, the Employee wishes to continue in the employ of the Company;

          NOW, THEREFORE, it is mutually agreed that the March 7, 1983 agreement shall be amended and restated to read as follows:

          1. Normal Benefits.

          Subject to the terms hereof, the Company will pay to the Employee the sum of $5,050.00 per month for a period of 180 consecutive months (“Normal Benefits”) beginning on the first day of the month coinciding with or next following the later of (a) the Employee’s attainment of age sixty-five or (b) his retirement from the employ of the Company. However, upon the attainment of age sixty-five, his retirement from the employ of the Company and upon the request of the Employee, the Board of Directors or a committee appointed by the Board of Directors (the “Committee”) may consent to (which consent shall not be unreasonably withheld), a lump-sum payout of the present value of the Normal Benefits provided for above. For the purposes of this Agreement, present value should be determined using the 30-year treasury rate for the month of October of the calendar year prior to the calendar year in which the payment is to be made.

          2. Early Benefits.

          If at any time after the Employee attains age 60 he is for any reason (including termination of service prior to age 60) no longer in the employ of the Company, he may request that the Company, by approval of the Board of Directors or the Committee, commence the benefits payable to him hereunder on the first day of any month. However, if approval is given and payment begins before he attains age 65, his benefits (“Early Benefits”) will be his Normal Benefits reduced equally over the 180 payments by 15%. The Committee shall not unreasonably withhold approval of a request for Early Benefits.

          3. Termination of Service.

          If the Employee’s service with the Company terminates for any reason prior to the earliest of (a) the date on which he attains age 65, (b) the date of his death, (c) the date on which the Company determines that he is totally and permanently disabled or (d) March 7, 1983 (the earliest such date hereinafter referred to as his “Vesting Date”), neither he nor any other person will have any rights, or be entitled to any benefits, under this Agreement, and the Agreement will be terminated. If the Employee’s service with the Company terminates for any reason on or after his Vesting Date but prior to his eligibility for Normal or Early Benefits, he or his beneficiary will nonetheless become entitled to the appropriate benefits provided herein at such time as those benefits would otherwise have been payable.

          4. Disability Benefits.

          If the employee becomes totally and permanently disabled prior to the commencement of any benefits hereunder, he will be entitled to receive Normal Benefits beginning on the first day of the month coinciding with or next following the date on which the Board of Directors of the Company determines that he has become so disabled. Such benefits will be in lieu of all other benefits hereunder. If the Employee becomes disabled after commencement of his Normal Benefits or Early Benefits, such Normal or Early Benefits will continue unchanged subject to the other provisions of this Agreement.

          5. Death Benefits.

          (a) If the Employee dies prior to commencement of any benefits hereunder, his beneficiary or beneficiaries will be entitled to Normal Benefits beginning as soon as practicable after the Employee’s death. If the Employee dies after commencement of Normal Benefits (including those payable by reason of disability), such Normal Benefits will continue unchanged (and to the extent reasonably practicable, uninterrupted), but will be paid to his beneficiary or beneficiaries, subject to the other provisions of this Agreement. In no event will (i) the sum of (A) the aggregate amount paid to all beneficiaries by reason of this paragraph 5 and (B) the amount of any benefits paid to the Employee before his death exceed (ii) the amount of benefits which would have been paid to the Employee had he lived.

          (b) The Employee may, by written notice to the Company, designate a beneficiary or beneficiaries (including a trust or trusts) to receive any benefits due under subparagraph (a) above and the proportionate share to be paid to each beneficiary if he designates more than one. If he designates only one beneficiary, he may designate a contingent beneficiary. Any installments payable will be paid to his beneficiary or beneficiaries as provided in subparagraph (a) above. If he has designated more than one beneficiary, the installments will be divided among the beneficiaries in any proportions designated by the Employee, and equally if no proportions have been designated. If more than one beneficiary has been designated, and a beneficiary dies, any remaining payments due to the deceased beneficiary will thereafter be divided equally among the surviving beneficiaries. If only one beneficiary has been designated and that beneficiary dies, any remaining installments will be paid to the contingent beneficiary. If, after the Employee has died and the Company is ready to begin payment of benefits hereunder, there is no living beneficiary or contingent beneficiary, the benefits will be paid to the Employee’s estate, provided there is one or more living individual beneficiary of such estate. If a beneficiary or contingent beneficiary who has begun to receive payments after the death of the Employee dies and there is no remaining beneficiary or contingent beneficiary, any remaining installments will be paid to such deceased beneficiary’s estate, provided that there is one or more living individual beneficiary of such estate.

          6. Change of Control.

          In the event of a “Change of Control”, the Employee shall, notwithstanding any other provision of this Agreement, be paid, immediately after the Change of Control and regardless of age, a lump-sum payment equal to the present value (computed using the interest assumption stated in paragraph 1) of the unreduced Normal Benefit that would be payable to the Employee upon retirement on or after age sixty-five under paragraph 1.

          For purposes of this Agreement, a “Change in Control”shall be deemed to have occurred if and when:

          (a) The Company ceases to be a publicly-owned corporation having at least 500 stockholders;or

          (b) there occurs any event or series of events that would be required to be reported in response to Item 1(a) of a Form 8-K filed under the Securities Exchange Act of 1934 (the “Exchange Act”); or

          (c) the Company executes an agreement of acquisition, merger, or consolidation which contemplates that after the effective date provided for in the agreement, all or substantially all of the business and/or assets of the Company will be controlled by another corporation or other entity; provided, however, that for purposes of this paragraph (c), (i) if such an agreement requires as a condition precedent approval by the Company’s shareholders of the agreement or transaction, a Change in Control shall not be deemed to have taken place unless and until such approval is secured and, (ii) if the voting shareholders of such other corporation or entity shall, immediately after such effective date, be substantially the same as the voting shareholders of the Company immediately prior to such effective date, the execution of such agreement shall not, by itself, constitute a “Change in Control”; or

          (d) any Person (excluding the Employee) becomes the beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the Common Stock (excluding Special Common Stock) of the Company; or

          (e) during any period of 24 consecutive months, commencing after the effective date of this Agreement, individuals who at the beginning of such 24-month period were directors of the Company shall cease to constitute at least a majority of the Company’s Board of Directors, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two-thirds of (i) the directors then in office who were directors at the beginning of the 24-month period, or (ii) the directors specified in clause (i) plus directors whose election has been so approved by directors specified in clause (i).

          For the purposes of this Agreement, “Person”shall have the same meaning used in Sections 13(d) or 14(d)(2) of the Securities Exchange Act of 1934.

          7. Review of Benefits.

          The amount of the benefits payable under this Agreement will be reviewed by the Board of Directors or the Committee once during every third calendar year. If the Board of Directors or the Committee determines that the benefits provided for hereunder are, for any reason, insufficient, it may increase the amounts of such benefits.

          8. Forfeiture for Competition.

          Anything to the contrary herein notwithstanding, the Employee shall not, without the written consent of the Company, act as an employee, director or partner in any business in competition with the Company or any of its subsidiaries within a period of 180 months after his termination of service with the Company. If the Employee acts in violation of the terms of this paragraph, the Company may, in the sole discretion of its Board of Directors, treat the Employee as having forfeited any benefits otherwise due under this Agreement, and no amounts shall at any time thereafter be payable to the Employee or any other person under this Agreement.

          9. Arbitration of Disputes.

          Any dispute between the Company and the Employee or any beneficiary as to the proper interpretation or application of any provision of this Agreement will be referred for decision to three arbitrators: one will be selected by the Company, one will be selected by the Employee (or the beneficiary or beneficiaries with whom the dispute exists), and the third will be selected by the other two arbitrators so selected. A decision of the majority of the arbitrators will be final and binding upon all parties.

          10. Effect on Employment Relationship.

          Except for the right to receive payment of the benefits provided for herein (subject to the terms hereof) neither this Agreement nor any modification hereof will be construed as giving to the Employee or any other person any legal or equitable rights against the Company or any subsidiary of the Company, or against any officer or director of the Company or of any subsidiary of the Company. The Agreement does not give the Employee any right to be retained as an employee of the Company or any subsidiary thereof, and the Employee will be subject to discharge to the same extent as if the Agreement had never been executed.

          11. Effect on Other Compensation.

          The benefits provided hereunder are in addition to the Employee’s regular compensation and do not affect the Employee’s right to participate in any other deferred compensation arrangement or retirement plan which is now in effect or which may be adopted by the Company in the future.

          12. Rights of Employee and Other Persons.

          Any rights accruing to the Employee or any other person under this Agreement are solely those of an unsecured general creditor of the Company. Nothing contained in the Agreement and no action taken pursuant to its provisions will create or be construed to create a trust, pledge or fiduciary relationship between the Company, the Board of Directors of the Company or the Committee and the Employee or any other person. Nothing herein will be construed to require that any fund be maintained or any amount be segregated for the Employee’s benefit.

          The rights hereunder of the Employee or any other person will not be alienable by such Employee or other person by assignment or by any other method and will not be subject to being taken by creditors in any process.

          The terms, provisions and conditions of this Agreement shall be binding upon and inure to the benefit of the Company and its successors and the Employee and his beneficiaries, administrators and executors.

          13. Severability.

          If any provision of this Agreement is held invalid or unenforceable, the other provisions will not be affected, and the Agreement will be construed and enforced as if the invalid or unenforceable provision had not been included.

          14. Governing Law.

          This Agreement will be construed, administered and enforced according to the laws of the State of Rhode Island.

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate as of the day and year first above written.

NORTEK, INC.

By:                                                  

     Richard J. Harris

     Senior Vice President-Administration

                     Employee

EX-10

Exhibit 10.3

          AMENDED AND RESTATED AGREEMENT made as of the 1st day of June, 2001 between Nortek, Inc., (the "Company") and Almon C. Hall, III (the "Employee"),

W I T N E S S E T H:

          WHEREAS, the Employee and the Company entered into an agreement dated March 7, 1983 to provide financial inducements beyond the Employee’s normal compensation;

          WHEREAS, the Employee’s services are of substantial value to the Company, and as incentive for him to render continuing services to the Company, the Company wishes to offer him additional financial inducement beyond his normal compensation; and

          WHEREAS, the Employee wishes to continue in the employ of the Company;

          NOW, THEREFORE, it is mutually agreed that the March 7, 1983 agreement shall be amended and restated to read as follows:

          1. Normal Benefits.

          Subject to the terms hereof, the Company will pay to the Employee the sum of $1,833.33 per month for a period of 180 consecutive months (“Normal Benefits”) beginning on the first day of the month coinciding with or next following the later of (a) the Employee’s attainment of age sixty-five or (b) his retirement from the employ of the Company. However, upon the attainment of age sixty-five, his retirement from the employ of the Company and upon the request of the Employee, the Board of Directors or a committee appointed by the Board of Directors (the “Committee”) may consent to (which consent shall not be unreasonably withheld), a lump-sum payout of the present value of the Normal Benefits provided for above. For the purposes of this Agreement, present value should be determined using the 30-year treasury rate for the month of October of the calendar year prior to the calendar year in which the payment is to be made.

          2. Early Benefits.

          If at any time after the Employee attains age 60 he is for any reason (including termination of service prior to age 60) no longer in the employ of the Company, he may request that the Company, by approval of the Board of Directors or the Committee, commence the benefits payable to him hereunder on the first day of any month. However, if approval is given and payment begins before he attains age 65, his benefits (“Early Benefits”) will be his Normal Benefits reduced equally over the 180 payments by 15%. The Committee shall not unreasonably withhold approval of a request for Early Benefits.

          3. Termination of Service.

          If the Employee’s service with the Company terminates for any reason prior to the earliest of (a) the date on which he attains age 65, (b) the date of his death, (c) the date on which the Company determines that he is totally and permanently disabled or (d) June 1, 2001 (the earliest such date hereinafter referred to as his “Vesting Date”), neither he nor any other person will have any rights, or be entitled to any benefits, under this Agreement, and the Agreement will be terminated. If the Employee’s service with the Company terminates for any reason on or after his Vesting Date but prior to his eligibility for Normal or Early Benefits, he or his beneficiary will nonetheless become entitled to the appropriate benefits provided herein at such time as those benefits would otherwise have been payable.

          4. Disability Benefits.

          If the employee becomes totally and permanently disabled prior to the commencement of any benefits hereunder, he will be entitled to receive Normal Benefits beginning on the first day of the month coinciding with or next following the date on which the Board of Directors of the Company determines that he has become so disabled. Such benefits will be in lieu of all other benefits hereunder. If the Employee becomes disabled after commencement of his Normal Benefits or Early Benefits, such Normal or Early Benefits will continue unchanged subject to the other provisions of this Agreement.

          5. Death Benefits.

          (a) If the Employee dies prior to commencement of any benefits hereunder, his beneficiary or beneficiaries will be entitled to Normal Benefits beginning as soon as practicable after the Employee’s death. If the Employee dies after commencement of Normal Benefits (including those payable by reason of disability), such Normal Benefits will continue unchanged (and to the extent reasonably practicable, uninterrupted), but will be paid to his beneficiary or beneficiaries, subject to the other provisions of this Agreement. In no event will (i) the sum of (A) the aggregate amount paid to all beneficiaries by reason of this paragraph 5 and (B) the amount of any benefits paid to the Employee before his death exceed (ii) the amount of benefits which would have been paid to the Employee had he lived.

          (b) The Employee may, by written notice to the Company, designate a beneficiary or beneficiaries (including a trust or trusts) to receive any benefits due under subparagraph (a) above and the proportionate share to be paid to each beneficiary if he designates more than one. If he designates only one beneficiary, he may designate a contingent beneficiary. Any installments payable will be paid to his beneficiary or beneficiaries as provided in subparagraph (a) above. If he has designated more than one beneficiary, the installments will be divided among the beneficiaries in any proportions designated by the Employee, and equally if no proportions have been designated. If more than one beneficiary has been designated, and a beneficiary dies, any remaining payments due to the deceased beneficiary will thereafter be divided equally among the surviving beneficiaries. If only one beneficiary has been designated and that beneficiary dies, any remaining installments will be paid to the contingent beneficiary. If, after the Employee has died and the Company is ready to begin payment of benefits hereunder, there is no living beneficiary or contingent beneficiary, the benefits will be paid to the Employee’s estate, provided there is one or more living individual beneficiary of such estate. If a beneficiary or contingent beneficiary who has begun to receive payments after the death of the Employee dies and there is no remaining beneficiary or contingent beneficiary, any remaining installments will be paid to such deceased beneficiary’s estate, provided that there is one or more living individual beneficiary of such estate.

          6. Change of Control.

          In the event of a “Change of Control”, the Employee shall, notwithstanding any other provision of this Agreement, be paid, immediately after the Change of Control and regardless of age, a lump-sum payment equal to the present value (computed using the interest assumption stated in paragraph 1) of the unreduced Normal Benefit that would be payable to the Employee upon retirement on or after age sixty-five under paragraph 1.

          For purposes of this Agreement, a “Change in Control”shall be deemed to have occurred if and when:

          (a) The Company ceases to be a publicly-owned corporation having at least 500 stockholders; or

          (b) there occurs any event or series of events that would be required to be reported in response to Item 1(a) of a Form 8-K filed under the Securities Exchange Act of 1934 (the “Exchange Act”); or

          (c) the Company executes an agreement of acquisition, merger, or consolidation which contemplates that after the effective date provided for in the agreement, all or substantially all of the business and/or assets of the Company will be controlled by another corporation or other entity; provided, however, that for purposes of this paragraph (c), (i) if such an agreement requires as a condition precedent approval by the Company’s shareholders of the agreement or transaction, a Change in Control shall not be deemed to have taken place unless and until such approval is secured and, (ii) if the voting shareholders of such other corporation or entity shall, immediately after such effective date, be substantially the same as the voting shareholders of the Company immediately prior to such effective date, the execution of such agreement shall not, by itself, constitute a “Change in Control”; or

          (d) any Person (excluding the Employee) becomes the beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the Common Stock (excluding Special Common Stock) of the Company; or

          (e) during any period of 24 consecutive months, commencing after the effective date of this Agreement, individuals who at the beginning of such 24-month period were directors of the Company shall cease to constitute at least a majority of the Company’s Board of Directors, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two-thirds of (i) the directors then in office who were directors at the beginning of the 24-month period, or (ii) the directors specified in clause (i) plus directors whose election has been so approved by directors specified in clause (i).

          For the purposes of this Agreement, “Person”shall have the same meaning used in Sections 13(d) or 14(d)(2) of the Securities Exchange Act of 1934.

          7. Review of Benefits.

          The amount of the benefits payable under this Agreement will be reviewed by the Board of Directors or the Committee once during every third calendar year. If the Board of Directors or the Committee determines that the benefits provided for hereunder are, for any reason, insufficient, it may increase the amounts of such benefits.

          8. Forfeiture for Competition.

          Anything to the contrary herein notwithstanding, the Employee shall not, without the written consent of the Company, act as an employee, director or partner in any business in competition with the Company or any of its subsidiaries within a period of 180 months after his termination of service with the Company. If the Employee acts in violation of the terms of this paragraph, the Company may, in the sole discretion of its Board of Directors, treat the Employee as having forfeited any benefits otherwise due under this Agreement, and no amounts shall at any time thereafter be payable to the Employee or any other person under this Agreement.

          9. Arbitration of Disputes.

          Any dispute between the Company and the Employee or any beneficiary as to the proper interpretation or application of any provision of this Agreement will be referred for decision to three arbitrators: one will be selected by the Company, one will be selected by the Employee (or the beneficiary or beneficiaries with whom the dispute exists), and the third will be selected by the other two arbitrators so selected. A decision of the majority of the arbitrators will be final and binding upon all parties.

          10. Effect on Employment Relationship.

          Except for the right to receive payment of the benefits provided for herein (subject to the terms hereof) neither this Agreement nor any modification hereof will be construed as giving to the Employee or any other person any legal or equitable rights against the Company or any subsidiary of the Company, or against any officer or director of the Company or of any subsidiary of the Company. The Agreement does not give the Employee any right to be retained as an employee of the Company or any subsidiary thereof, and the Employee will be subject to discharge to the same extent as if the Agreement had never been executed.

          11. Effect on Other Compensation.

          The benefits provided hereunder are in addition to the Employee’s regular compensation and do not affect the Employee’s right to participate in any other deferred compensation arrangement or retirement plan which is now in effect or which may be adopted by the Company in the future.

          12. Rights of Employee and Other Persons.

          Any rights accruing to the Employee or any other person under this Agreement are solely those of an unsecured general creditor of the Company. Nothing contained in the Agreement and no action taken pursuant to its provisions will create or be construed to create a trust, pledge or fiduciary relationship between the Company, the Board of Directors of the Company or the Committee and the Employee or any other person. Nothing herein will be construed to require that any fund be maintained or any amount be segregated for the Employee’s benefit.

          The rights hereunder of the Employee or any other person will not be alienable by such Employee or other person by assignment or by any other method and will not be subject to being taken by creditors in any process.

          The terms, provisions and conditions of this Agreement shall be binding upon and inure to the benefit of the Company and its successors and the Employee and his beneficiaries, administrators and executors.

          13. Severability.

          If any provision of this Agreement is held invalid or unenforceable, the other provisions will not be affected, and the Agreement will be construed and enforced as if the invalid or unenforceable provision had not been included.

          14. Governing Law.

          This Agreement will be construed, administered and enforced according to the laws of the State of Rhode Island.

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate as of the day and year first above written.

NORTEK, INC.

By:                                                  

     Richard J. Harris

     Senior Vice President-Administration

                     Employee

EX-10

Exhibit 10.4

          AMENDED AND RESTATED AGREEMENT made as of the 1st day of June, 2001 between Nortek, Inc., (the "Company") and Richard J. Harris (the "Employee"),

W I T N E S S E T H:

          WHEREAS, the Employee and the Company entered into an agreement dated March 7, 1983 to provide financial inducements beyond the Employee’s normal compensation;

          WHEREAS, the Employee’s services are of substantial value to the Company, and as incentive for him to render continuing services to the Company, the Company wishes to offer him additional financial inducement beyond his normal compensation; and

          WHEREAS, the Employee wishes to continue in the employ of the Company;

          NOW, THEREFORE, it is mutually agreed that the March 7, 1983 agreement shall be amended and restated to read as follows:

          1. Normal Benefits.

          Subject to the terms hereof, the Company will pay to the Employee the sum of $1,833.33 per month for a period of 180 consecutive months (“Normal Benefits”) beginning on the first day of the month coinciding with or next following the later of (a) the Employee’s attainment of age sixty-five or (b) his retirement from the employ of the Company. However, upon the attainment of age sixty-five, his retirement from the employ of the Company and upon the request of the Employee, the Board of Directors or a committee appointed by the Board of Directors (the “Committee”) may consent to (which consent shall not be unreasonably withheld), a lump-sum payout of the present value of the Normal Benefits provided for above. For the purposes of this Agreement, present value should be determined using the 30-year treasury rate for the month of October of the calendar year prior to the calendar year in which the payment is to be made.

          2. Early Benefits.

          If at any time after the Employee attains age 60 he is for any reason (including termination of service prior to age 60) no longer in the employ of the Company, he may request that the Company, by approval of the Board of Directors or the Committee, commence the benefits payable to him hereunder on the first day of any month. However, if approval is given and payment begins before he attains age 65, his benefits (“Early Benefits”) will be his Normal Benefits reduced equally over the 180 payments by 15%. The Committee shall not unreasonably withhold approval of a request for Early Benefits.

          3. Termination of Service.

          If the Employee’s service with the Company terminates for any reason prior to the earliest of (a) the date on which he attains age 65, (b) the date of his death, (c) the date on which the Company determines that he is totally and permanently disabled or (d) July 19, 1996 (the earliest such date hereinafter referred to as his “Vesting Date”), neither he nor any other person will have any rights, or be entitled to any benefits, under this Agreement, and the Agreement will be terminated. If the Employee’s service with the Company terminates for any reason on or after his Vesting Date but prior to his eligibility for Normal or Early Benefits, he or his beneficiary will nonetheless become entitled to the appropriate benefits provided herein at such time as those benefits would otherwise have been payable.

          4. Disability Benefits.

          If the employee becomes totally and permanently disabled prior to the commencement of any benefits hereunder, he will be entitled to receive Normal Benefits beginning on the first day of the month coinciding with or next following the date on which the Board of Directors of the Company determines that he has become so disabled. Such benefits will be in lieu of all other benefits hereunder. If the Employee becomes disabled after commencement of his Normal Benefits or Early Benefits, such Normal or Early Benefits will continue unchanged subject to the other provisions of this Agreement.

          5. Death Benefits.

          (a) If the Employee dies prior to commencement of any benefits hereunder, his beneficiary or beneficiaries will be entitled to Normal Benefits beginning as soon as practicable after the Employee’s death. If the Employee dies after commencement of Normal Benefits (including those payable by reason of disability), such Normal Benefits will continue unchanged (and to the extent reasonably practicable, uninterrupted), but will be paid to his beneficiary or beneficiaries, subject to the other provisions of this Agreement. In no event will (i) the sum of (A) the aggregate amount paid to all beneficiaries by reason of this paragraph 5 and (B) the amount of any benefits paid to the Employee before his death exceed (ii) the amount of benefits which would have been paid to the Employee had he lived.

          (b) The Employee may, by written notice to the Company, designate a beneficiary or beneficiaries (including a trust or trusts) to receive any benefits due under subparagraph (a) above and the proportionate share to be paid to each beneficiary if he designates more than one. If he designates only one beneficiary, he may designate a contingent beneficiary. Any installments payable will be paid to his beneficiary or beneficiaries as provided in subparagraph (a) above. If he has designated more than one beneficiary, the installments will be divided among the beneficiaries in any proportions designated by the Employee, and equally if no proportions have been designated. If more than one beneficiary has been designated, and a beneficiary dies, any remaining payments due to the deceased beneficiary will thereafter be divided equally among the surviving beneficiaries. If only one beneficiary has been designated and that beneficiary dies, any remaining installments will be paid to the contingent beneficiary. If, after the Employee has died and the Company is ready to begin payment of benefits hereunder, there is no living beneficiary or contingent beneficiary, the benefits will be paid to the Employee’s estate, provided there is one or more living individual beneficiary of such estate. If a beneficiary or contingent beneficiary who has begun to receive payments after the death of the Employee dies and there is no remaining beneficiary or contingent beneficiary, any remaining installments will be paid to such deceased beneficiary’s estate, provided that there is one or more living individual beneficiary of such estate.

          6. Change of Control.

          In the event of a “Change of Control”, the Employee shall, notwithstanding any other provision of this Agreement, be paid, immediately after the Change of Control and regardless of age, a lump-sum payment equal to the present value (computed using the interest assumption stated in paragraph 1) of the unreduced Normal Benefit that would be payable to the Employee upon retirement on or after age sixty-five under paragraph 1.

          For purposes of this Agreement, a “Change in Control”shall be deemed to have occurred if and when:

          (a) The Company ceases to be a publicly-owned corporation having at least 500 stockholders; or

          (b) there occurs any event or series of events that would be required to be reported in response to Item 1(a) of a Form 8-K filed under the Securities Exchange Act of 1934 (the “Exchange Act”); or

          (c) the Company executes an agreement of acquisition, merger, or consolidation which contemplates that after the effective date provided for in the agreement, all or substantially all of the business and/or assets of the Company will be controlled by another corporation or other entity; provided, however, that for purposes of this paragraph (c), (i) if such an agreement requires as a condition precedent approval by the Company’s shareholders of the agreement or transaction, a Change in Control shall not be deemed to have taken place unless and until such approval is secured and, (ii) if the voting shareholders of such other corporation or entity shall, immediately after such effective date, be substantially the same as the voting shareholders of the Company immediately prior to such effective date, the execution of such agreement shall not, by itself, constitute a “Change in Control”; or

          (d) any Person (excluding the Employee) becomes the beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the Common Stock (excluding Special Common Stock) of the Company; or

          (e) during any period of 24 consecutive months, commencing after the effective date of this Agreement, individuals who at the beginning of such 24-month period were directors of the Company shall cease to constitute at least a majority of the Company’s Board of Directors, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two-thirds of (i) the directors then in office who were directors at the beginning of the 24-month period, or (ii) the directors specified in clause (i) plus directors whose election has been so approved by directors specified in clause (i).

          For the purposes of this Agreement, “Person”shall have the same meaning used in Sections 13(d) or 14(d)(2) of the Securities Exchange Act of 1934.

          7. Review of Benefits.

          The amount of the benefits payable under this Agreement will be reviewed by the Board of Directors or the Committee once during every third calendar year. If the Board of Directors or the Committee determines that the benefits provided for hereunder are, for any reason, insufficient, it may increase the amounts of such benefits.

          8. Forfeiture for Competition.

          Anything to the contrary herein notwithstanding, the Employee shall not, without the written consent of the Company, act as an employee, director or partner in any business in competition with the Company or any of its subsidiaries within a period of 180 months after his termination of service with the Company. If the Employee acts in violation of the terms of this paragraph, the Company may, in the sole discretion of its Board of Directors, treat the Employee as having forfeited any benefits otherwise due under this Agreement, and no amounts shall at any time thereafter be payable to the Employee or any other person under this Agreement.

          9. Arbitration of Disputes.

          Any dispute between the Company and the Employee or any beneficiary as to the proper interpretation or application of any provision of this Agreement will be referred for decision to three arbitrators: one will be selected by the Company, one will be selected by the Employee (or the beneficiary or beneficiaries with whom the dispute exists), and the third will be selected by the other two arbitrators so selected. A decision of the majority of the arbitrators will be final and binding upon all parties.

          10. Effect on Employment Relationship.

          Except for the right to receive payment of the benefits provided for herein (subject to the terms hereof) neither this Agreement nor any modification hereof will be construed as giving to the Employee or any other person any legal or equitable rights against the Company or any subsidiary of the Company, or against any officer or director of the Company or of any subsidiary of the Company. The Agreement does not give the Employee any right to be retained as an employee of the Company or any subsidiary thereof, and the Employee will be subject to discharge to the same extent as if the Agreement had never been executed.

          11. Effect on Other Compensation.

          The benefits provided hereunder are in addition to the Employee’s regular compensation and do not affect the Employee’s right to participate in any other deferred compensation arrangement or retirement plan which is now in effect or which may be adopted by the Company in the future.

          12. Rights of Employee and Other Persons.

          Any rights accruing to the Employee or any other person under this Agreement are solely those of an unsecured general creditor of the Company. Nothing contained in the Agreement and no action taken pursuant to its provisions will create or be construed to create a trust, pledge or fiduciary relationship between the Company, the Board of Directors of the Company or the Committee and the Employee or any other person. Nothing herein will be construed to require that any fund be maintained or any amount be segregated for the Employee’s benefit.

          The rights hereunder of the Employee or any other person will not be alienable by such Employee or other person by assignment or by any other method and will not be subject to being taken by creditors in any process.

          The terms, provisions and conditions of this Agreement shall be binding upon and inure to the benefit of the Company and its successors and the Employee and his beneficiaries, administrators and executors.

          13. Severability.

          If any provision of this Agreement is held invalid or unenforceable, the other provisions will not be affected, and the Agreement will be construed and enforced as if the invalid or unenforceable provision had not been included.

          14. Governing Law.

          This Agreement will be construed, administered and enforced according to the laws of the State of Rhode Island.

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate as of the day and year first above written.

NORTEK, INC.

By:                                                  

     Richard L. Bready

     Chairman and Chief Executive Officer

                     Employee