Guarantor Financial Statements

The Company's 8.5% Notes are guaranteed by each of the Company's current and future domestic subsidiaries that guarantee the Company's obligations under its senior secured credit facilities (the “Guarantors”). The Guarantors are wholly-owned, either directly or indirectly, by the Company and jointly and severally guarantee the Company's obligation under the 8.5% Notes. None of the Company's foreign subsidiaries guarantee the 8.5% Notes.

Consolidating balance sheets related to Nortek, the Guarantors and non-Guarantor subsidiaries as of September 26, 2015 and December 31, 2014, the related consolidating statements of operations and comprehensive income (loss) for the third quarter and nine months of 2015 and 2014, and the related cash flows for the nine months of 2015 and 2014 are reflected below in order to comply with the reporting requirements for guarantor subsidiaries.

Condensed Consolidating Balance Sheet as of September 26, 2015



			Guarantor		Non-Guarantor					Nortek
	Nortek		Subsidiaries		Subsidiaries		Eliminations			Consolidated
	(Dollar amounts in millions)
ASSETS:
Current Assets:
Unrestricted cash and cash equivalents	$	4.5	$	1.6	$	21.7	$	—		$	27.8
Restricted cash	0.1		0.1		—		—			0.2
Accounts receivable, less allowances	—		286.3		61.3		—			347.6
Intercompany receivables	0.7		—		97.5		(98.2		)	—
Inventories, net	—		309.0		83.5		(6.9		)	385.6
Prepaid expenses	3.0		11.5		6.7		—			21.2
Other current assets	1.2		10.3		9.7		—			21.2
Deferred tax assets	17.1		27.1		—		(0.5		)	43.7
Total current assets	26.6		645.9		280.4		(105.6		)	847.3

Property and Equipment, at Cost:
Total property and equipment, net	11.4		156.9		53.9		—			222.2

Other Long-term Assets:
Investment in subsidiaries and long-term receivable from (to) subsidiaries	1,445.1		357.9		—		(1,803.0		)	—
Goodwill	—		464.3		40.0		—			504.3
Intangible assets, less accumulated amortization	—		582.1		51.5		(9.0		)	624.6
Deferred tax asset	14.2		—		—		(14.2		)	—
Other assets	16.1		11.4		0.8		—			28.3
Total other long-term assets	1,475.4		1,415.7		92.3		(1,826.2		)	1,157.2
Total Assets	$	1,513.4	$	2,218.5	$	426.6	$	(1,931.8	)	$	2,226.7

LIABILITIES AND STOCKHOLDERS' INVESTMENT (DEFICIT):
Current Liabilities:
Short term bank obligations	$	—	$	—	$	0.5	$	—		$	0.5
Current maturities of long-term debt	6.1		1.2		—		—			7.3
Accounts payable	4.7		134.7		132.3		—			271.7
Accrued expenses, taxes, and deferred revenue	53.6		143.7		42.8		—			240.1
Current deferred taxes	—		—		0.5		(0.5		)	—
Intercompany payables	—		98.2		—		(98.2		)	—
Total current liabilities	64.4		377.8		176.1		(98.7		)	519.6

Other Liabilities:
Deferred income taxes	—		125.3		14.5		(16.9		)	122.9
Other long-term liabilities	53.2		104.3		24.3		—			181.8
Long-term intercompany payables	—		—		102.6		(102.6		)	—
	53.2		229.6		141.4		(119.5		)	304.7

Notes, Mortgage Notes and Obligations Payable, Less Current Maturities	1,389.0		4.8		1.8		—			1,395.6

Stockholders' investment (deficit)	6.8		1,606.3		107.3		(1,713.6		)	6.8
Total Liabilities and Stockholders' Investment (Deficit)	$	1,513.4	$	2,218.5	$	426.6	$	(1,931.8	)	$	2,226.7

Condensed Consolidating Balance Sheet as of December 31, 2014



			Guarantor		Non-Guarantor					Nortek
	Nortek		Subsidiaries		Subsidiaries		Eliminations			Consolidated
	(Dollar amounts in millions)
ASSETS:
Current Assets:
Unrestricted cash and cash equivalents	$	17.5	$	5.1	$	35.8	$	—		$	58.4
Restricted cash	0.2		0.4		—		—			0.6
Accounts receivable, less allowances	—		257.3		67.6		—			324.9
Intercompany receivables	3.2		—		80.8		(84.0		)	—
Inventories, net	—		303.5		78.2		(7.4		)	374.3
Prepaid expenses	2.5		10.5		5.4		—			18.4
Other current assets	—		7.2		10.9		—			18.1
Deferred tax assets	4.1		25.1		—		(1.1		)	28.1
Total current assets	27.5		609.1		278.7		(92.5		)	822.8

Property and Equipment, at Cost:
Total property and equipment, net	11.9		163.0		63.1		—			238.0

Other Long-term Assets:
Investment in subsidiaries and long-term receivable from (to) subsidiaries	1,376.2		415.9		—		(1,792.1		)	—
Goodwill	—		434.4		39.9		—			474.3
Intangible assets, less accumulated amortization	—		596.5		55.7		(9.6		)	642.6
Deferred tax asset	13.9		—		—		(13.9		)	—
Other assets	19.1		11.4		0.9		—			31.4
Total other long-term assets	1,409.2		1,458.2		96.5		(1,815.6		)	1,148.3
Total Assets	$	1,448.6	$	2,230.3	$	438.3	$	(1,908.1	)	$	2,209.1

LIABILITIES AND STOCKHOLDERS' INVESTMENT (DEFICIT):
Current Liabilities:
Short term bank obligations	$	—	$	—	$	0.6	$	—		$	0.6
Current maturities of long-term debt	3.8		2.5		—		—			6.3
Accounts payable	2.4		157.0		129.4		—			288.8
Accrued expenses, taxes, and deferred revenue	32.7		145.7		44.0		—			222.4
Current deferred taxes	—		—		1.1		(1.1		)	—
Intercompany payables	—		84.0		—		(84.0		)	—
Total current liabilities	38.9		389.2		175.1		(85.1		)	518.1

Other Liabilities:
Deferred income taxes	—		126.4		13.8		(16.7		)	123.5
Other long-term liabilities	34.6		125.1		26.2		—			185.9
Long-term intercompany payables	—		—		119.6		(119.6		)	—
	34.6		251.5		159.6		(136.3		)	309.4

Notes, Mortgage Notes and Obligations Payable, Less Current Maturities	1,332.9		6.5		—		—			1,339.4

Stockholders' investment (deficit)	42.2		1,583.1		103.6		(1,686.7		)	42.2
Total Liabilities and Stockholders' Investment (Deficit)	$	1,448.6	$	2,230.3	$	438.3	$	(1,908.1	)	$	2,209.1

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

For the third quarter ended September 26, 2015



				Guarantor			Non-Guarantor						Nortek
	Nortek			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(Dollar amounts in millions)

Net Sales	$	—		$	530.7		$	191.9		$	(104.1	)	$	618.5
Cost of products sold	—			380.3			167.0			(104.8		)	442.5
Gross profit	—			150.4			24.9			0.7			176.0
Selling, general and administrative expense, net	12.8			109.7			18.6			—			141.1
Loss on sale of assets	—			—			2.9			—			2.9
Amortization of intangible assets	—			15.6			1.7			(0.2		)	17.1
Operating (loss) earnings	(12.8		)	25.1			1.7			0.9			14.9
Net interest expense	(22.9		)	(1.0		)	(0.1		)	—			(24.0		)
(Loss) income before charges and allocations to subsidiaries and equity in subsidiaries' (loss) earnings before income taxes	(35.7		)	24.1			1.6			0.9			(9.1		)
Charges and allocations to subsidiaries and equity in subsidiaries' (loss) earnings before income taxes	26.6			(14.3		)	(0.1		)	(12.2		)	—
(Loss) earnings before provision (benefit) for income taxes	(9.1		)	9.8			1.5			(11.3		)	(9.1		)
Provision (benefit) for income taxes	5.3			(4.6		)	(3.0		)	7.6			5.3
Net (loss) earnings	$	(14.4	)	$	14.4		$	4.5		$	(18.9	)	$	(14.4	)
Other comprehensive (loss) income, net of tax:
Currency translation adjustment	(4.0		)	—			(3.9		)	3.9			(4.0		)
Total pension liability adjustments, net of tax	0.3			—			0.1			(0.1		)	0.3
Other comprehensive (loss) income	(3.7		)	—			(3.8		)	3.8			(3.7		)

Comprehensive (loss) income	$	(18.1	)	$	14.4		$	0.7		$	(15.1	)	$	(18.1	)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

For the nine months ended September 26, 2015



				Guarantor			Non-Guarantor						Nortek
	Nortek			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(Dollar amounts in millions)

Net Sales	$	—		$	1,625.5		$	605.4		$	(335.8	)	$	1,895.1
Cost of products sold	—			1,173.9			516.6			(336.3		)	1,354.2
Gross profit	—			451.6			88.8			0.5			540.9
Selling, general and administrative expense, net	38.2			324.2			68.1			—			430.5
Loss on sale of assets	—			—			2.9			—			2.9
Impairment of long-lived assets and goodwill	—			0.2			1.0			—			1.2
Amortization of intangible assets	—			45.1			4.5			(0.6		)	49.0
Operating (loss) earnings	(38.2		)	82.1			12.3			1.1			57.3
Net interest expense	(73.2		)	(2.8		)	(0.1		)	—			(76.1		)
Loss from debt retirement	(14.8		)	—			—			—			(14.8		)
(Loss) income before charges and allocations to subsidiaries and equity in subsidiaries' (loss) earnings before income taxes	(126.2		)	79.3			12.2			1.1			(33.6		)
Charges and allocations to subsidiaries and equity in subsidiaries' (loss) earnings before income taxes	92.6			(47.1		)	(0.2		)	(45.3		)	—
(Loss) earnings before (benefit) provision for income taxes	(33.6		)	32.2			12.0			(44.2		)	(33.6		)
(Benefit) provision for income taxes	(3.0		)	4.7			2.8			(7.5		)	(3.0		)
Net (loss) earnings	$	(30.6	)	$	27.5		$	9.2		$	(36.7	)	$	(30.6	)
Other comprehensive (loss) income, net of tax:
Currency translation adjustment	(7.8		)	—			(6.8		)	6.8			(7.8		)
Total pension liability adjustments, net of tax	0.7			—			0.4			(0.4		)	0.7
Other comprehensive (loss) income	(7.1		)	—			(6.4		)	6.4			(7.1		)

Comprehensive (loss) income	$	(37.7	)	$	27.5		$	2.8		$	(30.3	)	$	(37.7	)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

For the third quarter ended September 27, 2014



				Guarantor			Non-Guarantor						Nortek
	Nortek			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(Dollar amounts in millions)

Net Sales	$	—		$	545.3		$	207.4		$	(109.8	)	$	642.9
Cost of products sold	—			387.0			176.5			(110.6		)	452.9
Gross profit	—			158.3			30.9			0.8			190.0
Selling, general and administrative expense, net	14.8			99.1			27.8			—			141.7
Amortization of intangible assets	—			13.8			1.3			(0.2		)	14.9
Operating (loss) earnings	(14.8		)	45.4			1.8			1.0			33.4
Net interest expense	(26.4		)	(0.9		)	—			—			(27.3		)
Loss from debt retirement	(0.5		)	—			—			—			(0.5		)
(Loss) earnings before charges and allocations to subsidiaries and equity in subsidiaries' earnings (loss) before income taxes	(41.7		)	44.5			1.8			1.0			5.6
Charges and allocations to subsidiaries and equity in subsidiaries' earnings (loss) before income taxes	47.3			(18.8		)	(0.3		)	(28.2		)	—
Earnings (loss) before provision (benefit) for income taxes	5.6			25.7			1.5			(27.2		)	5.6
Provision (benefit) for income taxes	1.0			8.7			2.2			(10.9		)	1.0
Net earnings (loss)	$	4.6		$	17.0		$	(0.7	)	$	(16.3	)	$	4.6
Other comprehensive (loss) income, net of tax:
Currency translation adjustment	(4.4		)	—			(3.7		)	3.7			(4.4		)
Total pension liability adjustments, net of tax	0.6			—			0.6			(0.6		)	0.6
Other comprehensive (loss) income	(3.8		)	—			(3.1		)	3.1			(3.8		)

Comprehensive income (loss)	$	0.8		$	17.0		$	(3.8	)	$	(13.2	)	$	0.8

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

For the nine months ended September 27, 2014



				Guarantor			Non-Guarantor						Nortek
	Nortek			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(Dollar amounts in millions)

Net Sales	$	—		$	1,631.4		$	640.1		$	(362.2	)	$	1,909.3
Cost of products sold	—			1,163.8			552.5			(360.9		)	1,355.4
Gross profit	—			467.6			87.6			(1.3		)	553.9
Selling, general and administrative expense, net	48.5			292.1			75.4			—			416.0
Impairment of long-lived assets and goodwill	—			70.1			10.3			—			80.4
Amortization of intangible assets	—			40.9			3.4			(0.6		)	43.7
Operating (loss) earnings	(48.5		)	64.5			(1.5		)	(0.7		)	13.8
Net interest expense	(76.1		)	(1.8		)	(0.1		)	—			(78.0		)
Loss from debt retirement	(2.3		)	—			—			—			(2.3		)
(Loss) income before charges and allocations to subsidiaries and equity in subsidiaries' (loss) earnings before income taxes	(126.9		)	62.7			(1.6		)	(0.7		)	(66.5		)
Charges and allocations to subsidiaries and equity in subsidiaries' (loss) earnings before income taxes	60.4			(58.3		)	0.2			(2.3		)	—
(Loss) earnings before (benefit) provision for income taxes	(66.5		)	4.4			(1.4		)	(3.0		)	(66.5		)
(Benefit) provision for income taxes	(16.3		)	3.9			3.9			(7.8		)	(16.3		)
Net (loss) earnings	$	(50.2	)	$	0.5		$	(5.3	)	$	4.8		$	(50.2	)
Other comprehensive (loss) income, net of tax:
Currency translation adjustment	(4.8		)	—			(4.1		)	4.1			(4.8		)
Total pension liability adjustments, net of tax	0.3			—			0.3			(0.3		)	0.3
Other comprehensive (loss) income	(4.5		)	—			(3.8		)	3.8			(4.5		)

Comprehensive (loss) income	$	(54.7	)	$	0.5		$	(9.1	)	$	8.6		$	(54.7	)

Condensed Consolidating Cash Flow Statement

For the nine months ended September 26, 2015



				Guarantor			Non-Guarantor			Nortek
	Nortek			Subsidiaries			Subsidiaries			Consolidated
	(Dollar amounts in millions)

Cash Flows from operating activities:
Net cash (used in) provided by operating activities	$	(120.3	)	$	138.9		$	2.0		$	20.6
Cash Flows from investing activities:
Capital expenditures	(1.5		)	(22.8		)	(4.8		)	(29.1		)
Net cash paid for businesses acquired and dispositions	—			(63.1		)	(1.6		)	(64.7		)
Intercompany contributions	(0.9		)	—			0.9			—
Proceeds from the sale of property and equipment	—			0.1			—			0.1
Change in restricted cash and marketable securities	0.1			0.1			—			0.2
Other, net	—			(0.6		)	0.2			(0.4		)
Net cash used in investing activities	(2.3		)	(86.3		)	(5.3		)	(93.9		)

Cash Flows from financing activities:
Proceeds from ABL and other borrowings	337.0			—			3.7			340.7
Payment of ABL and other borrowings	(289.0		)	(2.2		)	(2.0		)	(293.2		)
Redemption of the 10% Senior Notes due 2018, including redemption premium	(262.5		)	—			—			(262.5		)
Net proceeds from borrowings under the senior secured term loan facility due 2020	261.8			—			—			261.8
Fees paid in connection with debt facilities	(2.7		)	—			—			(2.7		)
Net use from equity transactions	(1.9		)	—			—			(1.9		)
Excess tax benefit on share-based awards	0.5			—			—			0.5
Long-term intercompany advances and loans	66.4			(53.9		)	(12.5		)	—
Net cash provided by (used in) financing activities	109.6			(56.1		)	(10.8		)	42.7
Net change in unrestricted cash and cash equivalents	(13.0		)	(3.5		)	(14.1		)	(30.6		)
Unrestricted cash and cash equivalents at the beginning of the period	17.5			5.1			35.8			58.4
Unrestricted cash and cash equivalents at the end of the period	$	4.5		$	1.6		$	21.7		$	27.8

Condensed Consolidating Cash Flow Statement

For the nine months ended September 27, 2014



				Guarantor			Non-Guarantor			Nortek
	Nortek			Subsidiaries			Subsidiaries			Consolidated
	(Dollar amounts in millions)

Cash Flows from operating activities:
Net cash (used in) provided by operating activities	$	(127.3	)	$	135.7		$	9.2		$	17.6
Cash Flows from investing activities:
Capital expenditures	(7.0		)	(16.7		)	(4.0		)	(27.7		)
Net cash paid for businesses acquired	(184.5		)	—			(70.4		)	(254.9		)
Intercompany dividends	—			15.5			(15.5		)	—
Intercompany contributions	(0.4		)	—			0.4			—
Proceeds from the sale of property and equipment	—			1.1			0.5			1.6
Change in restricted cash and marketable securities	0.1			0.1			0.1			0.3
Other, net	—			(1.1		)	(0.3		)	(1.4		)
Net cash used in investing activities	(191.8		)	(1.1		)	(89.2		)	(282.1		)

Cash Flows from financing activities:
Proceeds from ABL and other borrowings	140.0			—			2.4			142.4
Payment of ABL and other borrowings	(140.3		)	(2.1		)	(2.4		)	(144.8		)
Net proceeds from borrowings under the senior secured term loan facility due 2020	349.1			—			—			349.1
Redemption of the senior secured term loan facility due 2017	(93.0		)	—			—			(93.0		)
Fees paid in connection with debt facilities	(6.3		)	—			—			(6.3		)
Net use from equity transactions	(4.0		)	—			—			(4.0		)
Excess tax benefit on share-based awards	6.4			—			—			6.4
Long-term intercompany advances and loans	65.3			(134.4		)	69.1			—
Net cash provided by (used in) financing activities	317.2			(136.5		)	69.1			249.8
Net change in unrestricted cash and cash equivalents	(1.9		)	(1.9		)	(10.9		)	(14.7		)
Unrestricted cash and cash equivalents at the beginning of the period	23.2			20.0			37.7			80.9
Unrestricted cash and cash equivalents at the end of the period	$	21.3		$	18.1		$	26.8		$	66.2