SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTIONS 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE FISCAL YEAR ENDED MARCH 31, 2000
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
MAGNETEK FLEXCARE PLUS RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
MAGNETEK, INC.
26 CENTURY BOULEVARD
NASHVILLE, TN 37214
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
MagneTek FlexCare Plus Retirement Savings Plan
YEARS ENDED MARCH 31, 2000 AND 1999 WITH REPORT OF INDEPENDENT AUDITORS
MagneTek FlexCare Plus Retirement Savings Plan
Audited Financial Statements and Supplemental Schedule
Years ended March 31, 2000 and 1999
CONTENTS
Report of Independent Auditors...........................................................................1
Audited Financial Statements
Statements of Net Assets Available for Benefits..........................................................2
Statements of Changes in Net Assets Available for Benefits...............................................3
Notes to Financial Statements............................................................................4
Supplemental Schedule
Schedule of Assets Held for Investment Purposes at End of Year..........................................11
Report of Independent Auditors
The Savings Plan Committee
MagneTek, Inc.
We have audited the accompanying statements of net assets available for benefits
of the MagneTek FlexCare Plus Retirement Savings Plan as of March 31, 2000 and
1999, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
March 31, 2000 and 1999, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
held for investment purposes at end of year as of March 31, 2000 is presented
for the purpose of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
Ernst & Young LLP
Nashville, Tennessee
September 21, 2000
1
MagneTek FlexCare Plus Retirement Savings Plan
Statements of Net Assets Available for Benefits
MARCH 31
2000 1999
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ASSETS
Investments, at fair value $ 65,821,648 $ 110,915,285
Accrued income 1,418 -
--------------------------------------------
Net assets available for benefits $ 65,823,066 $ 110,915,285
============================================
SEE ACCOMPANYING NOTES.
2
MagneTek FlexCare Plus Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED MARCH 31
2000 1999
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ADDITIONS
Investment income:
Net appreciation in fair value of investments $ 9,038,235 $ 4,802,748
Interest and dividend income 143,388 2,639,474
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9,181,623 7,442,222
Contributions:
Participant 3,738,347 6,401,719
Employer 527,613 991,472
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4,265,960 7,393,191
Total additions 13,447,583 14,835,413
DEDUCTIONS
Benefits paid to participants 13,298,215 14,329,822
Administrative expenses 45,418 129,797
Transfers out of Plan 45,196,169 -
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58,539,802 14,459,619
Net increase (decrease) (45,092,219) 375,794
Net assets available for benefits:
Beginning of year 110,915,285 110,539,491
-----------------------------------
End of year $ 65,823,066 $ 110,915,285
====================================
SEE ACCOMPANYING NOTES.
3
MagneTek FlexCare Plus Retirement Savings Plan
Notes to Financial Statements
March 31, 2000
1. DESCRIPTION OF PLAN
The following description of the MagneTek FlexCare Plus Retirement Savings Plan
(the "Plan") provides only general information. Participants should refer to the
Summary Plan Description for a more complete description of the Plan's
provisions.
GENERAL
The Plan is a defined contribution plan covering all employees of MagneTek, Inc.
(the "Company"). The Plan allows eligible employees to participate following
thirty calendar days of active, continuous employment. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
CONTRIBUTIONS
Each year, participants may contribute up to 16 percent of eligible pre-tax
annual compensation as a basic contribution and up to an additional 10 percent
of eligible after-tax annual compensation as a supplemental contribution, as
defined in the Plan. Total contributions may not exceed 20 percent of eligible
compensation. Participants may also contribute amounts representing
distributions from other qualified defined benefit or defined contribution
plans. Participants' contributions to the Plan are fully vested and
nonforfeitable at all times.
The Company contributes 50 percent of the first 1 percent of the participant's
basic contribution and 20 percent of the next 5 percent of the participant's
basic contribution up to a maximum of 6 percent of pre-tax compensation or $600.
Additional amounts may be contributed at the option of the Company's board of
directors. Upon enrollment, a participant may direct employee contributions to
any of the Plan's fund options and may change these investment options at any
time.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions and
allocations of the Company's contributions and plan earnings, and is charged
with an allocation of administrative fees. Allocations are based on participant
earnings or account balances, as defined. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's account.
4
MagneTek FlexCare Plus Retirement Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon.
Vesting in the Company contribution portion of their accounts plus actual
earnings is based on completed years of service as follows:
VESTED
YEARS OF SERVICE PERCENTAGE
---------------------------------------
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
All employees are fully vested upon attaining age 65, death, or disability, or
upon the termination or discontinuation of the Plan.
FORFEITURES
Forfeited balances of terminated participants' nonvested accounts are used to
restore accounts for employees who are rehired, to pay Plan fees and expenses or
to increase supplemental Company contributions, if any. At March 31, 2000 and
1999, forfeited nonvested accounts totaled $658,797 and $585,647, respectively.
PAYMENT OF BENEFITS
Participants may withdraw all or part of their after-tax contributions or
earnings thereon only once in any 12-month period. In the event of financial
hardship, there are provisions, subject to limitations, which will permit an
active participant to withdraw before-tax contributions.
5
MagneTek FlexCare Plus Retirement Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
PAYMENT OF BENEFITS (CONTINUED)
If a participant's employment is terminated due to death, disability, or
retirement, the participant or his/her beneficiary is entitled to a distribution
of the entire balance in his/her account.
If a participant's employment is terminated for a reason other than those stated
above, the participant forfeits the nonvested portion of the employer
contributions to his or her account.
PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $250 up to a
maximum equal to the lesser of $50,000 or 50% of their vested account balances.
Loan repayment terms may be for a period not to exceed five years. The loans are
secured by the balance in the participant's account and bear interest at a rate
commensurate with local prevailing rates as determined by the plan
administrator. Principal and interest are paid ratably through payroll
deductions.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become fully vested in their accounts.
ADMINISTRATIVE FEES AND EXPENSES
The Plan pays administrative fees to Merrill Lynch Trust Company ("the
Trustee"). Other administrative expenses, such as legal and accounting expenses,
are paid by the Company.
6
MagneTek FlexCare Plus Retirement Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared on the accrual basis of accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments in the common/collective trust funds are stated at fair
value as determined by the quoted redemption price on the last business day of
the plan year as established by the Trustee. Equity securities, which are traded
on security exchanges, and mutual funds are stated at fair value based on quoted
market prices. Participant loans are valued at their outstanding balances, which
approximate fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain amounts in the 1999 financial statements have been reclassified to
conform to the 2000 presentation. These reclassifications had no effect on the
net assets available for benefits previously reported.
7
MagneTek FlexCare Plus Retirement Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS
During 2000 and 1999, the Plan's investments (including investments
purchased, sold as well as held during the year) appreciated in fair value as
determined by quoted market prices by $9,038,235 and $4,802,748,
respectively, as follows:
YEAR ENDED MARCH 31
2000 1999
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Common/Collective Trust Funds $4,715,178 $ 3,685,656
Mutual Funds 3,869,265 4,535,313
MagneTek Stock Fund 453,792 (3,418,221)
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$9,038,235 $ 4,802,748
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Investments that represent 5% or more of fair value of the Plan's net assets
are as follows:
MARCH 31
2000 1999
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MERRILL LYNCH TRUST COMPANY:
Income Accumulation Fund $18,635,395 $40,934,767
S&P Midcap Stock Fund 6,312,348 8,216,183
S&P 500 Stock Fund 14,421,635 21,596,772
Fidelity Magellan Fund 16,148,294 22,586,933
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue
Service dated July 25, 1996, stating that the Plan is qualified under Section
401(a) of the Internal Revenue Code (the "Code") and, therefore, the related
trust is exempt from taxation. The Plan has been restated since receiving the
determination letter. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan
Administrator believes the Plan is being operated in compliance with the
applicable requirements of the Code and therefore, believes that the Plan is
qualified and the related trust is tax exempt.
8
MagneTek FlexCare Plus Retirement Savings Plan
Notes to Financial Statements (continued)
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
Transactions with parties-in-interest include purchases and sales of assets
through the Trustee, the Plan's investment in MagneTek common stock and fees
paid to the Trustee.
6. PLAN TRANSFERS
During the year, the Company sold certain of its operations to Emerson
Electric, Inc. and A.O. Smith, Inc. In connection with those sales the
buyers assumed obligations of the Plan related to those employees that
were employed by the operations that were sold. Accordingly, the Plan
transferred approximately $8.2 million and $37 million to benefit plans
sponsored by Emerson Electric, Inc. and A.O. Smith, Inc. during July 1999
and October 1999, respectively. As a result, total transfers, including
loans, from the Plan to plans sponsored by the buyers totaled
approximately $45.2 million.
In addition to the operations that were sold as previously discussed, the
Company intends to divest all of its remaining electrical equipment product
lines. These product lines represent a significant portion of the Company's
overall operations. While these sales have not yet occurred, it is
anticipated that Plan assets related to the employees of the operations being
sold will be transferred to the purchasers of those operations within the
coming twelve months. The amount of Plan assets that will ultimately be
transferred will be determined upon the sale of the electrical equipment
product lines.
9
SUPPLEMENTAL SCHEDULE
MagneTek FlexCare Plus Retirement Savings Plan
EIN: 95-3917584 Plan: 003
Schedule H, Line 4i
Schedule of Assets Held for Investment Purposes at End of Year
March 31, 2000
(b) (c)
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF INVESTMENT, INCLUDING MATURITY DATE, (e)
(a) LESSOR OR SIMILAR PARTY RATE OF INTEREST, COLLATERAL, PAR OR MATURITY VALUE CURRENT VALUE
- ---------- ----------------------------------- ---------------------------------------------------- --------------
* Merrill Lynch Trust Company Income Accumulation Fund $18,635,395
* Merrill Lynch Trust Company S&P Midcap Stock Fund 6,312,348
* Merrill Lynch Trust Company S&P 500 Stock Fund 14,421,635
* Merrill Lynch Trust Company Lifepath Income Fund 580,933
* Merrill Lynch Trust Company Lifepath 2010 Fund 1,664,540
* Merrill Lynch Trust Company Lifepath 2020 Fund 2,116,876
* Merrill Lynch Trust Company Lifepath 2030 Fund 1,272,560
* Merrill Lynch Trust Company Lifepath 2040 Fund 1,266,167
* Merrill Lynch Trust Company PIMCO Total Return Fund 243,360
* Merrill Lynch Trust Company Fidelity Magellan Fund 16,148,294
* Merrill Lynch Trust Company MagneTek Stock Fund 2,224,321
* Merrill Lynch Trust Company Hotchkis & Wiley International Fund 297,678
* Merrill Lynch Trust Company Interest bearing cash 41,168
Participant Loans Interest rate ranges from 8.75% to 9.75% 596,373
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$65,821,648
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*Indicates party-in-interest to the Plan
Note: Column (d) is not presented since all investments are participant
directed.
11
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Plan Administrative Committee has duly caused this annual report to be signed
by the undersigned thereunto duly authorized:
MAGNETEK FLEXCARE PLUS
RETIREMENT SAVINGS PLAN
By: /s/ John P. Colling, Jr.
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John P. Colling, Jr.
Date: September 27, 2000