Document and Entity Information
Document and Entity Information Document - shares | 6 Months Ended | |
Jun. 28, 2015 | Aug. 01, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | MAGNETEK, INC. | |
Entity Central Index Key | 751,085 | |
Current Fiscal Year End Date | --01-03 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Jun. 28, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 3,568,227 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 28, 2015 | Jun. 29, 2014 | Jun. 28, 2015 | Jun. 29, 2014 | |
Income Statement [Abstract] | ||||
Net sales | $ 28,348 | $ 27,009 | $ 54,960 | $ 51,122 |
Cost of sales | 17,937 | 17,294 | 35,150 | 33,255 |
Gross profit | 10,411 | 9,715 | 19,810 | 17,867 |
Operating expenses: | ||||
Research and development | 800 | 790 | 1,699 | 1,589 |
Pension expense | 502 | 925 | 1,004 | 1,850 |
Selling, general and administrative | 5,884 | 5,250 | 11,374 | 10,240 |
Total operating expenses | 7,186 | 6,965 | 14,077 | 13,679 |
Income from continuing operations before income taxes | 3,225 | 2,750 | 5,733 | 4,188 |
Provision for income taxes | 41 | 240 | 82 | 480 |
Income from continuing operations | 3,184 | 2,510 | 5,651 | 3,708 |
Income (loss) from discontinued operations, net of tax | (146) | (213) | (309) | (357) |
Net income | $ 3,038 | $ 2,297 | $ 5,342 | $ 3,351 |
Earnings per common share - basic: | ||||
Income from continuing operations (in dollars per share) | $ 0.89 | $ 0.77 | $ 1.59 | $ 1.14 |
Income (loss) from discontinued operations (in dollars per share) | (0.04) | (0.07) | (0.09) | (0.11) |
Net income per common share (in dollars per share) | 0.85 | 0.70 | 1.50 | 1.03 |
Earnings per common share - diluted: | ||||
Income from continuing operations (in dollars per share) | 0.87 | 0.74 | 1.54 | 1.10 |
Income (loss) from discontinued operations (in dollars per share) | (0.04) | (0.06) | (0.09) | (0.11) |
Net income per common share (in dollars per share) | $ 0.83 | $ 0.68 | $ 1.45 | $ 0.99 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 3,566 | 3,267 | 3,558 | 3,265 |
Diluted (in shares) | 3,679 | 3,372 | 3,678 | 3,375 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 28, 2015 | Jun. 29, 2014 | Jun. 28, 2015 | Jun. 29, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 3,038 | $ 2,297 | $ 5,342 | $ 3,351 |
Change in unrecognized pension liability | 1,675 | 1,800 | 3,351 | 3,600 |
Change in currency translation adjustments | 175 | 194 | (166) | 79 |
Comprehensive income | $ 4,888 | $ 4,291 | $ 8,527 | $ 7,030 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 28, 2015 | Dec. 28, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 13,072 | $ 9,702 |
Restricted cash | 262 | 262 |
Accounts receivable, net | 17,515 | 16,975 |
Inventories | 14,234 | 13,626 |
Prepaid expenses and other current assets | 546 | 801 |
Total current assets | 45,629 | 41,366 |
Property, plant and equipment | 23,741 | 23,071 |
Less: accumulated depreciation | 20,488 | 20,140 |
Net property, plant and equipment | 3,253 | 2,931 |
Goodwill | 30,323 | 30,364 |
Other assets | 4,010 | 4,039 |
Total Assets | 83,215 | 78,700 |
Current liabilities: | ||
Accounts payable | 9,989 | 10,375 |
Accrued liabilities | 5,524 | 6,703 |
Total current liabilities | 15,513 | 17,078 |
Pension benefit obligations, net | 25,012 | 27,360 |
Other long term obligations | 780 | 845 |
Deferred income taxes | $ 9,828 | $ 9,798 |
Commitments and contingencies | ||
Stockholders’ deficit | ||
Common stock | $ 36 | $ 35 |
Paid in capital in excess of par value | 150,576 | 150,641 |
Retained earnings | (4,833) | (10,175) |
Accumulated other comprehensive loss | (113,697) | (116,882) |
Total stockholders' deficit | 32,082 | 23,619 |
Total Liabilities and Stockholders' Deficit | $ 83,215 | $ 78,700 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 28, 2015 | Jun. 29, 2014 | |
Cash flows from operating activities | ||
Net income | $ 5,342 | $ 3,351 |
(Income) loss from discontinued operations | 309 | 357 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation | 372 | 378 |
Amortization of intangible assets | 27 | 27 |
Stock based compensation expense | 389 | 231 |
Pension expense | 1,004 | 1,850 |
Deferred income tax provision | 30 | 480 |
Changes in operating assets and liabilities | (2,400) | (813) |
Cash contribution to pension fund | 0 | (4,102) |
Net cash provided by (used in) operating activities - continuing operations | 5,073 | 1,759 |
Net cash provided by (used in) operating activities - discontinued operations | (551) | (579) |
Net cash provided by (used in) operating activities | 4,522 | 1,180 |
Cash flows from investing activities: | ||
Capital expenditures | (698) | (359) |
Net cash provided by (used in) investing activities - continuing operations | (698) | (359) |
Net cash provided by (used in) investing activities - discontinued operations | 0 | 0 |
Net cash provided by (used in) investing activities | (698) | (359) |
Cash flow from financing activities: | ||
Proceeds from issuance of common stock | 218 | 147 |
Purchase and retirement of treasury stock | (672) | (20) |
Principal payments under capital lease obligations | 0 | 0 |
Net cash provided by (used in) financing activities - continuing operations | (454) | 127 |
Net cash provided by (used in) financing activities - discontinued operations | 0 | 0 |
Net cash provided by (used in) financing activities | (454) | 127 |
Net increase (decrease) in cash | 3,370 | 948 |
Cash at the beginning of the period | 9,702 | $ 14,960 |
Cash at the end of the period | $ 13,072 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 28, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Profile Magnetek, Inc. (the “Company” or “Magnetek”) is a global provider of digital power control systems that are used to control motion and power primarily in material handling, elevator, and mining applications. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Magnetek, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2014 , filed with the Securities and Exchange Commission (the “SEC”). In the Company's opinion, these unaudited statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company as of June 28, 2015 , and the results of its operations and cash flows for the three - and six -month periods ended June 28, 2015 , and June 29, 2014 . Results for the six months ended June 28, 2015 , are not necessarily indicative of results that may be experienced for the full fiscal year. Fiscal Year The Company uses a 52 or 53 week fiscal year ending on the Sunday nearest December 31. Fiscal quarters are the 13 or 14 week periods ending on the Sunday nearest March 31, June 30, September 30, and December 31. The three - and six -month periods ended June 28, 2015 and June 29, 2014 each contained 13 weeks and 26 weeks, respectively. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board issued Accounting Standards Codification ("ASC") 606-10, Revenue for Contracts with Customers (issued under Accounting Standards Update No. 2014-09). ASC 606-10 will be effective for fiscal years beginning after December 15, 2017, and will replace all existing revenue recognition guidance. The Company is in the process of determining whether the adoption of ASC 606-10 will have an impact on the Company's results of operations, financial position, or cash flows. In March 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements and Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity ("ASU 2014-08"), which changes the criteria for reporting discontinued operations. ASU 2014-08 allows only disposals representing a strategic shift in operations to be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. ASU 2014-08 will be effective for the Company in the first quarter of fiscal 2016. As this guidance is a prospective change, adoption of this standard is not expected to have a material impact on the Company's results of operations, financial position, or cash flows. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 28, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations Certain expenses incurred related to businesses the Company no longer owns are classified as discontinued operations in the accompanying condensed consolidated financial statements. Expenses related to previously divested businesses have historically included environmental matters, asbestos claims, and product liability claims incurred in connection with indemnification agreements the Company entered into upon divestiture of those businesses. The condensed consolidated balance sheet as of June 28, 2015 , includes certain accrued liabilities which represent the Company’s best estimate of remaining contingent liabilities related to the indemnification provisions included in the sale agreements of divested businesses. While management has used its best judgment in assessing the potential liability for these items, given the uncertainty regarding future events, it is difficult to estimate the possible timing or magnitude of any payments that may be required for liabilities subject to indemnification. Any future adjustment to currently recorded contingencies related to indemnification claims or payments based upon changes in circumstances would be recorded as a gain or loss in discontinued operations. |
Inventories
Inventories | 6 Months Ended |
Jun. 28, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following: June 28, December 28, Raw materials and stock parts $ 9,209 $ 8,710 Work-in-process 1,198 1,252 Finished goods 3,827 3,664 $ 14,234 $ 13,626 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 28, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation—Product Liability The Company has been named, along with multiple other defendants, in asbestos-related lawsuits associated with business operations previously acquired by the Company, but which are no longer owned. During the Company's ownership, none of the businesses produced or sold asbestos-containing products. With respect to these claims, the Company believes that it has no such liability. For such claims, the Company is uninsured and either contractually indemnified against liability, or contractually obligated to defend and indemnify the purchaser of these former Magnetek business operations. The Company aggressively seeks dismissal from these proceedings. Management does not believe the asbestos proceedings, individually or in the aggregate, will have a material adverse effect on its financial position or results of operations. Given the nature of the above issues, uncertainty of the ultimate outcome, and inability to estimate the potential loss, no amounts have been reserved for these matters. Litigation-Other In October 2010, the Company received a request for indemnification from Power-One, Inc. ("Power-One") for an Italian tax matter arising out of the sale of the Company's power electronics business to Power-One in October 2006. With a reservation of rights, the Company affirmed its obligation to indemnify Power-One for certain pre-closing taxes. The sale included an Italian company, Magnetek, S.p.A., and its wholly owned subsidiary, Magnetek Electronics (Shenzhen) Co. Ltd. (the “Power-One China Subsidiary”). The tax authority in Arezzo, Italy, issued a notice of audit report in September 2010 wherein it asserted that the Power-One China Subsidiary had its administrative headquarters in Italy with fiscal residence in Italy and, therefore, is subject to taxation in Italy. In November 2010, the tax authority issued a notice of tax assessment for the period of July 2003 to June 2004, alleging that taxes of approximately Euro 1.9 million (approximately US $2.1 million ) were due in Italy on taxable income earned by the Power-One China Subsidiary during this period. In addition, the assessment alleges potential penalties together with interest in the amount of approximately Euro 2.6 million (approximately US $2.9 million ) for the alleged failure of the Power-One China Subsidiary to file its Italian tax return. The Power-One China Subsidiary filed its response with the provincial tax commission of Arezzo, Italy in January 2011. The tax authority in Arezzo, Italy issued a tax inspection report in January 2011 for the periods July 2002 to June 2003 and July 2004 to December 2006 claiming that the Power-One China Subsidiary failed to file Italian tax returns for the reported periods. A hearing before the Tax Court was held in July 2012 on the tax assessment for the period of July 2003 to June 2004. In September 2012, the Tax Court ruled in favor of the Power-One China Subsidiary dismissing the tax assessment for the period of July 2003 to June 2004. In February 2013, the tax authority filed an appeal of the Tax Court's September 2012 ruling. The Regional Tax Commission of Florence heard the appeal of the tax assessment dismissal for the period of July 2003 to June 2004 and thereafter issued its ruling finding in favor of the tax authority. The Company believes the court’s decision was based upon erroneous interpretations of the applicable law and appealed the ruling to the Italian Supreme Court in April 2015. In August 2012, the tax authority in Arezzo, Italy issued notices of tax assessment for the periods July 2002 to June 2003 and July 2004 to December 2006, alleging that taxes of approximately Euro 6.7 million (approximately US $7.4 million ) were due in Italy on taxable income earned by the Power-One China Subsidiary together with an allegation of potential penalties in the amount of approximately Euro 2.8 million (approximately US $3.1 million ) for the alleged failure of the Power-One China Subsidiary to file its Italian tax returns. On June 3, 2015, the Tax Court ruled in favor of the Power-One China Subsidiary dismissing the tax assessments for the periods of July 2002 to June 2003 and July 2004 to December 2006. On July 27, 2015, the tax authority filed an appeal of the Tax Court's ruling of June 3, 2015. Environmental Matters-General From time to time, Magnetek has taken action to bring certain facilities associated with previously owned businesses into compliance with applicable environmental laws and regulations. Upon the subsequent sale of certain businesses, the Company agreed to indemnify the buyers against environmental claims associated with the divested operations, subject to certain conditions and limitations. Remediation activities, including those related to the Company's indemnification obligations, did not involve material expenditures during the first six months of fiscal year 2015. The Company has also been identified by the United States Environmental Protection Agency and certain state agencies as a potentially responsible party for cleanup costs associated with alleged past waste disposal practices at several previously utilized, owned or leased facilities and offsite locations. Its remediation activities as a potentially responsible party were not material in the first six months of fiscal year 2015. Although the materiality of future expenditures for environmental activities may be affected by the level and type of contamination, the extent and nature of cleanup activities required by governmental authorities, the nature of the Company's alleged connection to the contaminated sites, the number and financial resources of other potentially responsible parties, the availability of indemnification rights against third parties and the identification of additional contaminated sites, the Company's estimated share of liability, if any, for environmental remediation, including its indemnification obligations, is not expected to be material. Bridgeport, Connecticut Facility In 1986, the Company acquired the stock of Universal Manufacturing Corporation (“Universal”) from a predecessor of Fruit of the Loom (“FOL”), and the predecessor agreed to indemnify the Company against certain environmental liabilities arising from pre-acquisition activities at a facility in Bridgeport, Connecticut. Environmental liabilities covered by the indemnification agreement included completion of additional cleanup activities, if any, at the Bridgeport facility and defense and indemnification against liability for potential response costs related to offsite disposal locations. The Company's leasehold interest in the Bridgeport facility was assigned to the buyer in connection with the sale of the Company's transformer business in June 2001. FOL, the successor to the indemnification obligation, filed a petition for Reorganization under Chapter 11 of the Bankruptcy Code in 1999 and the Company filed a proof of claim in the proceeding for obligations related to the environmental indemnification agreement. The Company believes that FOL had substantially completed the clean-up obligations required by the indemnification agreement prior to the bankruptcy filing. In November 2001, the Company and FOL entered into an agreement involving the allocation of certain potential tax benefits and Magnetek withdrew its claims in the bankruptcy proceeding. The Company further believes that FOL's obligation to the state of Connecticut was not discharged in the reorganization proceeding. In January 2007, the Connecticut Department of Environmental Protection (“DEP”) requested parties, including the Company, to submit reports summarizing the investigations and remediation performed to date at the site and the proposed additional investigations and remediation necessary to complete those actions at the site. DEP requested additional information from the Company relating to site investigations and remediation. The Company and the DEP agreed to the scope of the work plan in November 2010. The Company has recorded a liability of $0.4 million related to the Bridgeport facility, representing the Company's best estimate of future site investigation costs and remediation costs which are expected to be incurred in the future. The liability is included in accrued liabilities in the accompanying condensed consolidated balance sheet as of June 28, 2015 . FOL's inability to satisfy its remaining obligations to the state of Connecticut related to the Bridgeport facility and any offsite disposal locations, or the discovery of additional environmental contamination at the Bridgeport facility could have a material adverse effect on the Company's financial position, cash flows or results of operations. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 6 Months Ended |
Jun. 28, 2015 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share The following table sets forth the computation of basic and diluted earnings (loss) per share for the three - and six -month periods ended June 28, 2015 , and June 29, 2014 : Three Months Ended Six Months Ended June 28, June 29, June 28, June 29, Numerator: Income from continuing operations $ 3,184 $ 2,510 $ 5,651 $ 3,708 Income (loss) from discontinued operations (146 ) (213 ) (309 ) (357 ) Net income $ 3,038 $ 2,297 $ 5,342 $ 3,351 Denominator: Weighted average shares - basic earnings per share 3,566 3,267 3,558 3,265 Add dilutive effect of stock based compensation 113 105 120 110 Weighted average shares - diluted earnings per share 3,679 3,372 3,678 3,375 Income (loss) per share - basic: Continuing operations $ 0.89 $ 0.77 $ 1.59 $ 1.14 Discontinued operations $ (0.04 ) $ (0.07 ) $ (0.09 ) $ (0.11 ) Net income per share $ 0.85 $ 0.70 $ 1.50 $ 1.03 Income (loss) per share - diluted: Continuing operations $ 0.87 $ 0.74 $ 1.54 $ 1.10 Discontinued operations $ (0.04 ) $ (0.06 ) $ (0.09 ) $ (0.11 ) Net income per share $ 0.83 $ 0.68 $ 1.45 $ 0.99 Outstanding options to purchase 12 thousand and 74 thousand shares of common stock as of June 28, 2015 , and June 29, 2014 , respectively, have not been included in the Company’s computation of weighted average shares for diluted earnings per share for the three-month periods then ended because the effect would have been anti-dilutive. Similarly, outstanding options to purchase 6 thousand and 69 thousand shares of common stock as of June 28, 2015 , and June 29, 2014 , respectively, have not been included in the Company's computation of weighted average shares for diluted earnings per share for the six -month periods then ended because the effect would have been anti-dilutive. |
Warranties
Warranties | 6 Months Ended |
Jun. 28, 2015 | |
Product Warranties Disclosures [Abstract] | |
Warranties | Warranties The Company offers warranties for certain products that it manufactures, with the warranty term generally ranging from one to two years . Warranty reserves are established for costs expected to be incurred after the sale and delivery of products under warranty, based mainly on known product failures and historical experience. Actual repair costs incurred for products under warranty are charged against the established reserve balance as incurred. Changes in the warranty reserve for the three - and six -month periods ended June 28, 2015 , and June 29, 2014 , are as follows: Three Months Ended Six Months Ended June 28, June 29, June 28, June 29, Balance, beginning of period $ 375 $ 324 $ 355 $ 379 Changes in product warranties charged to earnings 48 120 199 101 Use of reserve for warranty obligations (80 ) (116 ) (211 ) (152 ) Balance, end of period $ 343 $ 328 $ 343 $ 328 Warranty reserves are included in accrued liabilities in the accompanying condensed consolidated balance sheets. |
Pension Expense
Pension Expense | 6 Months Ended |
Jun. 28, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Pension Expense | Pension Expense Pension expense related to the Company’s defined benefit pension plan for the three - and six -month periods ended June 28, 2015 , and June 29, 2014 , follows: Three Months Ended Six Months Ended June 28, June 29, June 28, June 29, Interest cost $ 1,445 $ 2,225 $ 2,890 $ 4,450 Expected return on plan assets (2,618 ) (3,100 ) (5,237 ) (6,200 ) Recognized net actuarial losses 1,675 1,800 3,351 3,600 Total net pension expense $ 502 $ 925 $ 1,004 $ 1,850 The Company did not make any contributions to its pension plan assets in the first six months of fiscal 2015, and current actuarial estimates indicate that no minimum required contributions will be due for the remainder of fiscal 2015. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 28, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Due to historical taxable losses, the Company provides valuation reserves against its U.S. deferred tax assets. A portion of the Company’s deferred tax liability relates to tax-deductible amortization of goodwill that is no longer amortized for financial reporting purposes. These deferred tax liabilities are considered to have an indefinite life and are therefore ineligible to be considered as a source of future taxable income in assessing the realization of deferred tax assets. The Company’s provision for income taxes for the three -month periods ended June 28, 2015 , and June 29, 2014 , includes $15 and $240 , respectively, of deferred income tax expense related to the increase in the Company’s deferred tax liability resulting from the tax-deductible amortization of goodwill. The Company’s provision for income taxes for the six -month periods ended June 28, 2015 , and June 29, 2014 , includes $30 and $480 , respectively, of deferred income tax expense related to the increase in the Company’s deferred tax liability resulting from the tax-deductible amortization of goodwill, with the remaining tax provision for each of those periods comprised mainly of income taxes of the Company’s foreign subsidiary in Canada. |
Bank Borrowing Arrangements
Bank Borrowing Arrangements | 6 Months Ended |
Jun. 28, 2015 | |
Debt Disclosure [Abstract] | |
Bank Borrowing Arrangements | Bank Borrowing Arrangements In November 2007, the Company entered into an agreement with Associated Bank, N.A. (“Associated Bank”) providing for a $10 million revolving credit facility (the “revolving facility”). Borrowings under the revolving facility bore interest at the London Interbank Offering Rate (“ LIBOR ”) plus 1.5% , with borrowing levels determined by a borrowing base formula as defined in the agreement, which included the level of eligible accounts receivable. The revolving facility also supports the issuance of letters of credit, places certain restrictions on the Company’s ability to pay dividends or make acquisitions, and includes covenants that require minimum operating profit levels and limit annual capital expenditures. Borrowings under the revolving facility were originally collateralized by the Company’s accounts receivable and inventory. The Company has subsequently entered into several amendments to the revolving facility, mainly to extend the maturity date of the revolving facility, to broaden the security interest of Associated Bank to collateralize all assets of the Company, and to establish or modify certain covenants with which the Company must comply under the terms of the amended revolving facility. On June 14, 2015, the Company and Associated Bank entered into the ninth amendment to the revolving facility. The ninth amendment primarily (i) extended the maturity date of the Credit Agreement to June 12, 2016; (ii) retained the commitment amount of Associated Bank at $12.5 million ; (iii) lowered the interest rate from LIBOR plus 2.75% to LIBOR plus 2.25%; and (iv) established a maximum cash amount that can be contributed to the Company’s defined benefit pension plan for the term of the agreement. There were no amounts outstanding on the amended revolving facility, and the Company was in compliance with all covenants of the revolving facility, as amended, as of June 28, 2015 . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 28, 2015 | |
Statement of Comprehensive Income [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Changes in the components of accumulated other comprehensive income (loss) for the three months ended June 28, 2015 , are as follows: Defined Foreign Benefit Currency Pension Plan Total Balance, beginning of period $ (175 ) $ (115,372 ) $ (115,547 ) Other comprehensive income (loss) before reclassifications 175 — 175 Amounts reclassified from accumulated other comprehensive income (loss) — 1,675 1,675 Balance, end of period $ — $ (113,697 ) $ (113,697 ) Changes in the components of accumulated other comprehensive income (loss) for the three months ended June 29, 2014 , are as follows: Defined Foreign Benefit Currency Pension Plan Total Balance, beginning of period $ 472 $ (150,270 ) $ (149,798 ) Other comprehensive income (loss) before reclassifications 194 — 194 Amounts reclassified from accumulated other comprehensive income (loss) — 1,800 1,800 Balance, end of period $ 666 $ (148,470 ) $ (147,804 ) Changes in the components of accumulated other comprehensive income (loss) for the six months ended June 28, 2015 , are as follows: Defined Foreign Benefit Currency Pension Plan Total Balance, beginning of period $ 166 $ (117,048 ) $ (116,882 ) Other comprehensive income (loss) before reclassifications (166 ) — (166 ) Amounts reclassified from accumulated other comprehensive income (loss) — 3,351 3,351 Balance, end of period $ — $ (113,697 ) $ (113,697 ) Changes in the components of accumulated other comprehensive income (loss) for the six months ended June 29, 2014 , are as follows: Defined Foreign Benefit Currency Pension Plan Total Balance, beginning of period $ 587 $ (152,070 ) $ (151,483 ) Other comprehensive income (loss) before reclassifications 79 — 79 Amounts reclassified from accumulated other comprehensive income (loss) — 3,600 3,600 Balance, end of period $ 666 $ (148,470 ) $ (147,804 ) The amounts reclassified out of accumulated other comprehensive income (loss) reported in the tables above are comprised entirely of actuarial losses related to the Company's defined benefit pension plan, and are included in the computation of periodic pension expense (see Note 7 of Notes to Condensed Consolidated Financial Statements). There is no tax effect on any of the amounts included in the table above. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 28, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Subsequent to the end of the second quarter, on July 27, 2015, Magnetek and Columbus McKinnon Corporation (“Columbus McKinnon”), a leading designer, manufacturer and marketer of material handling products, announced that they have entered into a definitive agreement for Columbus McKinnon to acquire all of the outstanding shares of Magnetek for $50 per share for a total value of $188.9 million . The consummation of the transaction is subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 28, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Magnetek, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2014 , filed with the Securities and Exchange Commission (the “SEC”). In the Company's opinion, these unaudited statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company as of June 28, 2015 , and the results of its operations and cash flows for the three - and six -month periods ended June 28, 2015 , and June 29, 2014 . Results for the six months ended June 28, 2015 , are not necessarily indicative of results that may be experienced for the full fiscal year. |
Fiscal Year | Fiscal Year The Company uses a 52 or 53 week fiscal year ending on the Sunday nearest December 31. Fiscal quarters are the 13 or 14 week periods ending on the Sunday nearest March 31, June 30, September 30, and December 31. The three - and six -month periods ended June 28, 2015 and June 29, 2014 each contained 13 weeks and 26 weeks, respectively. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board issued Accounting Standards Codification ("ASC") 606-10, Revenue for Contracts with Customers (issued under Accounting Standards Update No. 2014-09). ASC 606-10 will be effective for fiscal years beginning after December 15, 2017, and will replace all existing revenue recognition guidance. The Company is in the process of determining whether the adoption of ASC 606-10 will have an impact on the Company's results of operations, financial position, or cash flows. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 28, 2015 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventories consist of the following: June 28, December 28, Raw materials and stock parts $ 9,209 $ 8,710 Work-in-process 1,198 1,252 Finished goods 3,827 3,664 $ 14,234 $ 13,626 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 28, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share Reconciliation | The following table sets forth the computation of basic and diluted earnings (loss) per share for the three - and six -month periods ended June 28, 2015 , and June 29, 2014 : Three Months Ended Six Months Ended June 28, June 29, June 28, June 29, Numerator: Income from continuing operations $ 3,184 $ 2,510 $ 5,651 $ 3,708 Income (loss) from discontinued operations (146 ) (213 ) (309 ) (357 ) Net income $ 3,038 $ 2,297 $ 5,342 $ 3,351 Denominator: Weighted average shares - basic earnings per share 3,566 3,267 3,558 3,265 Add dilutive effect of stock based compensation 113 105 120 110 Weighted average shares - diluted earnings per share 3,679 3,372 3,678 3,375 Income (loss) per share - basic: Continuing operations $ 0.89 $ 0.77 $ 1.59 $ 1.14 Discontinued operations $ (0.04 ) $ (0.07 ) $ (0.09 ) $ (0.11 ) Net income per share $ 0.85 $ 0.70 $ 1.50 $ 1.03 Income (loss) per share - diluted: Continuing operations $ 0.87 $ 0.74 $ 1.54 $ 1.10 Discontinued operations $ (0.04 ) $ (0.06 ) $ (0.09 ) $ (0.11 ) Net income per share $ 0.83 $ 0.68 $ 1.45 $ 0.99 |
Warranties (Tables)
Warranties (Tables) | 6 Months Ended |
Jun. 28, 2015 | |
Product Warranties Disclosures [Abstract] | |
Changes in the warranty reserve | Changes in the warranty reserve for the three - and six -month periods ended June 28, 2015 , and June 29, 2014 , are as follows: Three Months Ended Six Months Ended June 28, June 29, June 28, June 29, Balance, beginning of period $ 375 $ 324 $ 355 $ 379 Changes in product warranties charged to earnings 48 120 199 101 Use of reserve for warranty obligations (80 ) (116 ) (211 ) (152 ) Balance, end of period $ 343 $ 328 $ 343 $ 328 |
Pension Expense (Tables)
Pension Expense (Tables) | 6 Months Ended |
Jun. 28, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Pension expense related to the defined benefit pension plan | Pension expense related to the Company’s defined benefit pension plan for the three - and six -month periods ended June 28, 2015 , and June 29, 2014 , follows: Three Months Ended Six Months Ended June 28, June 29, June 28, June 29, Interest cost $ 1,445 $ 2,225 $ 2,890 $ 4,450 Expected return on plan assets (2,618 ) (3,100 ) (5,237 ) (6,200 ) Recognized net actuarial losses 1,675 1,800 3,351 3,600 Total net pension expense $ 502 $ 925 $ 1,004 $ 1,850 |
Accumulated Other Comprehensi22
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 28, 2015 | |
Statement of Comprehensive Income [Abstract] | |
Changes in the components of accumulated other comprehensive income (loss) | Changes in the components of accumulated other comprehensive income (loss) for the three months ended June 28, 2015 , are as follows: Defined Foreign Benefit Currency Pension Plan Total Balance, beginning of period $ (175 ) $ (115,372 ) $ (115,547 ) Other comprehensive income (loss) before reclassifications 175 — 175 Amounts reclassified from accumulated other comprehensive income (loss) — 1,675 1,675 Balance, end of period $ — $ (113,697 ) $ (113,697 ) Changes in the components of accumulated other comprehensive income (loss) for the six months ended June 29, 2014 , are as follows: Defined Foreign Benefit Currency Pension Plan Total Balance, beginning of period $ 587 $ (152,070 ) $ (151,483 ) Other comprehensive income (loss) before reclassifications 79 — 79 Amounts reclassified from accumulated other comprehensive income (loss) — 3,600 3,600 Balance, end of period $ 666 $ (148,470 ) $ (147,804 ) Changes in the components of accumulated other comprehensive income (loss) for the six months ended June 28, 2015 , are as follows: Defined Foreign Benefit Currency Pension Plan Total Balance, beginning of period $ 166 $ (117,048 ) $ (116,882 ) Other comprehensive income (loss) before reclassifications (166 ) — (166 ) Amounts reclassified from accumulated other comprehensive income (loss) — 3,351 3,351 Balance, end of period $ — $ (113,697 ) $ (113,697 ) Changes in the components of accumulated other comprehensive income (loss) for the three months ended June 29, 2014 , are as follows: Defined Foreign Benefit Currency Pension Plan Total Balance, beginning of period $ 472 $ (150,270 ) $ (149,798 ) Other comprehensive income (loss) before reclassifications 194 — 194 Amounts reclassified from accumulated other comprehensive income (loss) — 1,800 1,800 Balance, end of period $ 666 $ (148,470 ) $ (147,804 ) |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 28, 2015 | Jun. 29, 2014 | Jun. 28, 2015 | Jun. 29, 2014 | |
Significant Accounting Policies [Line Items] | ||||
Operating Cycle | 91 days | 91 days | 273 days | 273 days |
Minimum [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Normal Operating Cycle | 91 days | |||
Maximum [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Normal Operating Cycle | 98 days |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 28, 2015 | Dec. 28, 2014 |
Inventory Disclosure [Abstract] | ||
Raw materials and stock parts | $ 9,209 | $ 8,710 |
Work-in-process | 1,198 | 1,252 |
Finished goods | 3,827 | 3,664 |
Inventories | $ 14,234 | $ 13,626 |
Commitments and Contingencies (
Commitments and Contingencies (Details) € in Millions, $ in Millions | Aug. 02, 2012EUR (€) | Aug. 02, 2012USD ($) | Nov. 30, 2010EUR (€) | Nov. 30, 2010USD ($) | Jun. 28, 2015USD ($) |
Foreign Tax Authority [Member] | |||||
Loss Contingencies [Line Items] | |||||
Alleged taxes owed | € 6.7 | $ 7.4 | € 1.9 | $ 2.1 | |
Alleged taxes owed including penalties and interest | € 2.8 | $ 3.1 | € 2.6 | $ 2.9 | |
Connecticut Department of Environmental Protection [Member] | |||||
Loss Contingencies [Line Items] | |||||
Liabilitiy recorded | $ 0.4 |
Earnings (Loss) Per Share - Rec
Earnings (Loss) Per Share - Reconciliation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 28, 2015 | Jun. 29, 2014 | Jun. 28, 2015 | Jun. 29, 2014 | |
Numerator: | ||||
Income from continuing operations | $ 3,184 | $ 2,510 | $ 5,651 | $ 3,708 |
Income (loss) from discontinued operations | (146) | (213) | (309) | (357) |
Net income | $ 3,038 | $ 2,297 | $ 5,342 | $ 3,351 |
Denominator: | ||||
Weighted average shares - basic earnings per share | 3,566 | 3,267 | 3,558 | 3,265 |
Add dilutive effective of stock based compensation | 113 | 105 | 120 | 110 |
Weighted average shares - diluted earnings per share | 3,679 | 3,372 | 3,678 | 3,375 |
Income (loss) per share - basic: | ||||
Continuing operations (in dollars per share) | $ 0.89 | $ 0.77 | $ 1.59 | $ 1.14 |
Discontinued operations (in dollars per share) | (0.04) | (0.07) | (0.09) | (0.11) |
Net income per common share (in dollars per share) | 0.85 | 0.70 | 1.50 | 1.03 |
Income (loss) per share - diluted: | ||||
Continuing operations (in dollars per share) | 0.87 | 0.74 | 1.54 | 1.10 |
Discontinued operations (in dollars per share) | (0.04) | (0.06) | (0.09) | (0.11) |
Net income per common share (in dollars per share) | $ 0.83 | $ 0.68 | $ 1.45 | $ 0.99 |
Earnings (Loss) Per Share - Ant
Earnings (Loss) Per Share - Antidilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 28, 2015 | Jun. 29, 2014 | Jun. 28, 2015 | Jun. 29, 2014 | |
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Outstanding options not included in the Company’s computation of weighted average shares for diluted earnings per share because the effect would have been anti-dilutive | 12 | 74 | 6 | 69 |
Warranties (Details)
Warranties (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 28, 2015 | Jun. 29, 2014 | Jun. 28, 2015 | Jun. 29, 2014 | |
Product Warranties Disclosures [Abstract] | ||||
Warranty term, minimum | 1 year | |||
Warranty term, maximum | 2 years | |||
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Balance, beginning of fiscal year | $ 375 | $ 324 | $ 355 | $ 379 |
Changes in product warranties charged to earnings | 48 | 120 | 199 | 101 |
Use of reserve for warranty obligations | (80) | (116) | (211) | (152) |
Balance, end of period | $ 343 | $ 328 | $ 343 | $ 328 |
Pension Expense (Details)
Pension Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 28, 2015 | Jun. 29, 2014 | Jun. 28, 2015 | Jun. 29, 2014 | |
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ||||
Pension contributions | $ 0 | $ 4,102 | ||
Pension [Member] | ||||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ||||
Interest cost | $ 1,445 | $ 2,225 | 2,890 | 4,450 |
Expected return on plan assets | (2,618) | (3,100) | (5,237) | (6,200) |
Recognized net actuarial losses | 1,675 | 1,800 | 3,351 | 3,600 |
Total net pension expense | $ 502 | $ 925 | $ 1,004 | $ 1,850 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 28, 2015 | Jun. 29, 2014 | Jun. 28, 2015 | Jun. 29, 2014 | |
Income Tax Disclosure [Abstract] | ||||
The Company’s provision for income taxes includes deferred income tax expense related to the increase in the Company’s deferred tax liability resulting from the tax-deductible amortization of goodwill | $ 15 | $ 240 | $ 30 | $ 480 |
Bank Borrowing Arrangements (De
Bank Borrowing Arrangements (Details) - Revolving Credit Facility [Member] - USD ($) | 1 Months Ended | ||
Nov. 30, 2007 | Jun. 28, 2015 | Jun. 15, 2014 | |
Line of Credit Facility [Line Items] | |||
Borrowing capacity on revolving credit facility | $ 10,000,000 | $ 12,500,000 | |
Description of variable rate basis | LIBOR | ||
Amount outstanding | $ 0 | ||
LIBOR [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.50% |
Accumulated Other Comprehensi32
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 28, 2015 | Jun. 29, 2014 | Jun. 28, 2015 | Jun. 29, 2014 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Balance, beginning of period | $ (115,547) | $ (149,798) | $ (116,882) | |
Other comprehensive income (loss) before reclassifications | 175 | 194 | (166) | $ 79 |
Amounts reclassified from accumulated other comprehensive income (loss) | 1,675 | 1,800 | 3,351 | 3,600 |
Balance, end of period | (113,697) | (147,804) | (113,697) | (147,804) |
Foreign Currency [Member] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Balance, beginning of period | (175) | 472 | 166 | |
Other comprehensive income (loss) before reclassifications | 175 | 194 | (166) | 79 |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Balance, end of period | 0 | 666 | 0 | 666 |
Defined Benefit Pension Plan [Member] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Balance, beginning of period | (115,372) | (150,270) | (117,048) | |
Other comprehensive income (loss) before reclassifications | 0 | 0 | 0 | 0 |
Amounts reclassified from accumulated other comprehensive income (loss) | 1,675 | 1,800 | 3,351 | 3,600 |
Balance, end of period | $ (113,697) | $ (148,470) | $ (113,697) | $ (148,470) |
Subsequent Events (Details)
Subsequent Events (Details) - Jul. 27, 2015 - Columbus McKinnon Corporation [Member] - Subsequent Event [Member] - USD ($) $ / shares in Units, $ in Millions | Total |
Subsequent Event [Line Items] | |
Share price (usd per share) | $ 50 |
Value of shares sold | $ 188.9 |
Uncategorized Items - mag-20150
Label | Element | Value |
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | us-gaap_AccumulatedOtherComprehensiveIncomeLossNetOfTax | $ (148,470) |
Accumulated Other Comprehensive Income (Loss), Net of Tax | us-gaap_AccumulatedOtherComprehensiveIncomeLossNetOfTax | (152,070) |
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | us-gaap_AccumulatedOtherComprehensiveIncomeLossNetOfTax | 587 |
Accumulated Other Comprehensive Income (Loss), Net of Tax | us-gaap_AccumulatedOtherComprehensiveIncomeLossNetOfTax | $ 666 |