FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission file number 1-10233
MAGNETEK, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3917584
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10900 Wilshire Blvd., Suite 850
Los Angeles, California 90024
(Address of principal executive offices)
(Zip Code)
(310) 208-1980
(Registrant's telephone number, including area code)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 / /
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of Registrant's Common Stock, as of November 1,
2000, 22,488,467 shares.
2001 MAGNETEK FORM 10-Q
TABLE OF CONTENTS FOR THE QUARTERLY REPORT ON 10Q
FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2000
MAGNETEK, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits on form 8-K
PART I. FINANCIAL INFORMATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information 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.
In the opinion of management, the accompanying condensed consolidated financial
statements contain all adjustments necessary to fairly present the financial
position as of September 30, 2000 and the results of operations and cash flows
for the three-month periods ended September 30, 2000 and 1999. It is suggested
that these condensed consolidated financial statements be read in conjunction
with the consolidated financial statements and notes included in the Company's
latest annual report on Form 10-K. Results for the three-months ended September
30, 2000 are not necessarily indicative of results which may be experienced for
the full fiscal year.
This document contains "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995, that are subject to risks and
uncertainties which, in many cases, are beyond the control of the Company. These
include but are not limited to economic conditions in general, business
conditions in electrical and electronic equipment markets, competitive factors
such as pricing and technology, and the risk that the Company's ultimate costs
of doing business exceeds present estimates. Further information on factors
which could affect MagneTek's financial results are described in the Company's
filings with the Securities and Exchange Commission.
ITEM 1
MAGNETEK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2000 and JUNE 30, 2000
(amounts in thousands)
ASSETS September 30 June 30
(unaudited)
Current assets:
Cash $ 506 $ 343
Accounts receivable 59,391 59,468
Inventories 44,539 42,069
Prepaid expenses and other 20,184 17,887
--------- ---------
Total current assets 124,620 119,767
--------- ---------
Property, plant and equipment 82,742 87,962
Less-accumulated depreciation
and amortization 46,399 47,825
--------- ---------
36,343 40,137
--------- ---------
Net assets of discontinued operations 115,515 115,827
Goodwill 68,237 69,458
Deferred financing costs,
intangible and other assets 55,640 55,484
--------- ---------
Total Assets $ 400,355 $ 400,673
========= =========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $ 40,210 $ 47,973
Accrued liabilities 27,955 30,011
Current portion of long-term debt 1,444 1,732
--------- ---------
Total current liabilities 69,609 79,716
--------- ---------
Long-term debt, net of current portion 75,037 62,308
Other long-term obligations 40,324 41,539
Deferred income taxes 32,182 32,904
Commitments and contingencies
Stockholders equity
Common stock 225 231
Paid in capital in excess of par value 96,955 100,399
Retained earnings 111,465 108,662
Accumulated other comprehensive loss (25,442) (25,086)
--------- ---------
Total stockholders' equity 183,203 184,206
--------- ---------
Total Liabilities and
Stockholders' Equity $ 400,355 $ 400,673
========= =========
MAGNETEK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED
September 30, 2000 and 1999
(amounts in thousands except per share data)
(unaudited)
2000 1999
Cash flows from operating activities:
Net income from continuing operations $ 998 $ 434
Adjustments to reconcile income to net cash used in
operating activities:
Depreciation and amortization 3,324 3,380
Changes in operating assets and liabilities
of continuing operations (13,984) (11,716)
-------- ---------
Total adjustments (10,660) (8,336)
-------- ---------
Net cash used in operating activities (9,662) (7,902)
-------- ---------
Cash flows from investing activities:
Proceeds from sale of discontinued businesses and other assets - 253,000
Purchase of and investment in companies, net of cash acquired - (38,245)
Capital expenditures (1,282) (2,116)
Other investments - -
-------- ---------
Net cash provided by (used in) investing activities (1,282) 212,639
-------- ---------
Cash flow from financing activities:
Borrowings under bank and other long-term obligations 12,441 -
Proceeds from issuance of common stock 407 1,582
Stock repurchases (3,858) (17,248)
Repayment of bank and other long term obligations - (165,082)
Increase in deferred financing costs - (467)
-------- ---------
Net cash provided by (used in) financing activities 8,990 (181,215)
-------- ---------
Net cash provided by (used in) continuing operations (1,954) 23,522
-------- ---------
Cash flow from discontinued operations:
Income from discontinued operations 1,805 2,527
Adjustments to reconcile income to net cash provided by
discontinued operations:
Depreciation and amortization 2,662 2,909
Changes in operating assets and liabilities
of discontinued operations, including fees and
expenses of disposal (993) (17,682)
Capital expenditures (1,357) (1,310)
-------- ---------
Net cash provided by (used in) discontinued operations 2,117 (13,556)
-------- ---------
Net increase in cash $ 163 $ 9,996
Cash at the beginning of the period 343 5,890
-------- ---------
Cash at the end of the period $ 506 $ 15,856
======== =========
ITEM 1 (Continued)
MAGNETEK, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED
September 30, 2000 and 1999
(amounts in thousands except per share data)
(unaudited)
2000 1999
---------- --------
Net sales $ 71,870 $71,172
Cost of sales 54,924 56,702
---------- --------
Gross profit 16,946 14,470
Selling, general and administrative 13,723 13,020
---------- --------
Income from operations 3,223 1,450
Interest expense 1,149 321
Other expense, net 464 428
---------- --------
Income from continuing operations before
provision for income taxes 1,610 701
Provision for income taxes 612 267
---------- --------
Income from continuing operations 998 434
Discontinued operations -
Income from operations (net of taxes) 1,805 2,527
Gain on sale of discontinued businesses
(net of taxes) - 35,047
---------- --------
Net income $ 2,803 $38,008
========== ========
EARNINGS PER COMMON SHARE
Basic:
Income from continuing operations 0.04 0.01
Income from discontinued operations 0.08 0.09
Gain on sale of discontinued businesses
(net of taxes) - 1.19
---------- --------
Net income $ 0.12 $ 1.29
========== ========
Diluted:
Income from continuing operations 0.04 0.01
Income from discontinued operations 0.08 0.09
Gain on sale of discontinued businesses
(net of taxes) - 1.19
---------- --------
Net income $ 0.12 $ 1.29
========== ========
See accompanying notes
ITEM 1 (continued)
MAGNETEK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(amounts in thousands)
(unaudited)
2000 1999
-------- -------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 1,383 $ 3,738
Income taxes $ ( 337) $ 3,577
(see accompanying notes)
MAGNETEK, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(All dollar amounts are in thousands)
(unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL PERIOD - The Company uses a fifty-two, fifty-three week fiscal
year. Fiscal periods end on the Sunday nearest the end of the month.
For clarity of presentation, all periods are presented as if they ended
on the last day of the calendar period. The three-month periods ended
September 30, 2000 and 1999 contained thirteen weeks and fourteen weeks
respectively.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of MagneTek, Inc. and its subsidiaries (the
Company). All significant inter-company accounts and transactions have
been eliminated.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and the accompanying notes. Actual
results could differ from these estimates.
COMMODITY DERIVATIVE INSTRUMENTS - The Company utilizes derivative
financial instruments to reduce market fluctuations in commodity
(copper wire) and foreign currency (peso related labor costs) exposures
specific to businesses included as discontinued operations. The Company
has established policies and procedures that govern the management of
these exposures through the use of financial instruments. The contract
terms of these derivatives are within one year and settlement of
positions are typically completed through a financial settlement and
not through the physical receipt of the commodity or the currency. The
Company's policy prohibits the use of derivative financial instruments
for speculative or trading purposes.
On July 1, 2000, the Company adopted Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities and its amendments, Statements 137 and 138 ("SFAS 133"),
which establishes new accounting and reporting guidelines for
derivative instruments and hedging activities. SFAS 133 requires all
derivative instruments to be recognized as assets or liabilities in the
balance sheet and measured at fair value. Accounting for changes in the
fair value of a derivative depends on the intended use of the
derivative and the resulting designation. For derivatives designated as
cash flow hedges, changes in fair value are recognized in accumulated
other comprehensive income in the balance sheet until the hedged item
is recognized in earnings. Changes in the fair value of derivative
instruments, which are not designated as hedges, are recorded in
earnings as the changes occur.
The Company's commodity and foreign currency derivative instruments
meet the requirement of cash flow hedges and therefore changes in the
fair market value of the hedges are included within other comprehensive
income until the hedged item is recognized in earnings. Earnings
recognition from these transactions is recorded in cost of
sales when the hedge transaction affects earnings. Previous to the
adoption of SFAS 133, gains and losses were deferred until the contract
settlement. The adoption of Statement No. 133 on July 1, 2000 resulted
in the recognition of $2,256 in other comprehensive income for the
first quarter of fiscal 2001. The estimated net gain to be recognized
over the next twelve months in relation to copper and peso contracts is
projected to approximate that same level as recorded in other
comprehensive income in the first quarter. Hedging activities related
to copper and peso contracts are specific to discontinued operations
and activity in this area will terminate when these operations are
divested.
2. INVENTORIES
Inventories at September 30, 2000 and June 30, 2000 consist of the
following:
SEPTEMBER 30 JUNE 30
-------------- -------
Raw materials and stock parts $23,008 $23,729
Work-in-process 9,599 8,057
Finished goods 11,932 10,283
---------- --------
$44,539 $42,069
========== ========
3. COMMITMENTS AND CONTINGENCIES
The Company is a party to a number of product liability lawsuits, many
of which involve fires allegedly caused by defective ballasts. All of
these cases are being defended by the Company, and management believes
that its insurers will bear all liability, except for applicable
deductibles, and that none of these proceedings individually or in the
aggregate will have a material effect on the Company.
In April 1998, Ole K. Nilssen filed a lawsuit in the U.S. District
Court for the Northern District of Illinois alleging the Company is
infringing seven of his patents pertaining to electronic ballast
technology. The plaintiff seeks an unspecified amount of damages and an
injunction to preclude the Company from making, using or selling those
products allegedly infringing his patents. The Company denies that it
has infringed, or is infringing, any of the plaintiff's patents, and
has asserted several affirmative defenses. The Company also filed a
counterclaim seeking judicial declaration that it is not infringing
(and has not infringed) the patents asserted by the plaintiff, and that
such asserted patents are invalid. The Company intends to defend this
matter vigorously. At this state, it is difficult to predict the
outcome of the foregoing legal proceeding. However, management of the
Company does not believe that the financial impact of such litigation
will be material.
The Company was named as a defendant, along with 90 other companies
engaged in the electronics and related industries, in a patent
infringement lawsuit filed by the Lemelson Medical, Education &
Research Foundation Limited Partnership ("Lemelson") in the U.S.
District Court for the District of Arizona. The defendants include
manufacturers and suppliers of electronic or semiconductor products or
products incorporating semiconductor products. The complaint alleges
that the defendants are each infringing certain patents allegedly held
by Lemelson and seeks a judgment that the defendants each willfully
infringed the patents at issue, an injunction against further
infringement, trebled actual damages and attorneys' fees. The Company
is in the process of reviewing the claims to determine their validity,
and investigating its defenses to the claims, and
while no assurances regarding the eventual resolution of this matter
can be made at this time, the Company does not believe this matter will
have a material adverse effect on the Company's finances or operations.
The Company has from time to time discovered contamination by hazardous
substances at certain of its facilities. In response to such a
discovery, the Company conducts remediation activities to bring the
facility into compliance with applicable laws and regulations. The
Company's remediation activities for fiscal 2000 did not entail
material expenditures, and its remediation activities for fiscal 2001
are not expected to entail material expenditures. Future remediation of
contaminated areas could entail material expenditures, depending upon
the extent and nature of the contamination, the cleanup measures
employed and the concurrence of governmental authorities.
Prior to its purchase by the Company in 1986, Century Electric, Inc.
("Century Electric") acquired a business from Gould Inc. ("Gould") in
May 1983 which included a leasehold interest in a fractional horsepower
electric motor manufacturing facility located in McMinnville,
Tennessee. In connection with this acquisition, Gould agreed to
indemnify Century Electric from and against liabilities and expenses
arising out of the handling and cleanup of certain waste materials,
including but not limited to cleaning up any PCBs at the McMinnville
facility (the "1983 Indemnity"). Investigation has revealed the
presence of PCBs and other substances, including solvents, in portions
of the soil and in the groundwater underlying the facility and in
certain offsite soil, sediment and biota samples. Century Electric has
kept the Tennessee Department of Environment and Conservation, Division
of Superfund, apprised of test results from the investigation. The
McMinnville plant has been listed as a Tennessee Inactive Hazardous
Substance Site, a report on that site has been presented to the
Tennessee legislature, and community officials and plant employees have
been notified of the presence of contaminants as above described. In
1995, Gould completed an interim remedial measure of excavating and
disposing onsite soil containing PCBs. Gould also conducted preliminary
investigation and cleanup of certain onsite and offsite contamination.
The cost of any further investigation and cleanup of onsite and offsite
contamination cannot presently be determined. The Company recently sold
its leasehold interest in the McMinnville plant and believes that the
costs for further onsite and offsite cleanup (including ancillary
costs) are covered by the 1983 Indemnity. While the Company believes
that Gould will continue to perform substantially under its indemnity
obligations, Gould's substantial failure to perform such obligations
could have a material adverse effect on the Company.
A company obligated to indemnify MagneTek against certain environmental
liabilities, Fruit of the Loom, Inc. ("FOL"), has filed a petition for
Reorganization under Chapter 11 of the Bankruptcy Code. MagneTek
acquired the stock of Universal Manufacturing Company ("Universal")
from a predecessor of FOL. In connection with that acquisition, the
predecessor of FOL indemnified MagneTek against certain environmental
liabilities arising from Universal's pre-acquisition activities.
Environmental liabilities covered by the FOL indemnity include
completion of additional cleanup activities (if any) at MagneTek's
Bridgeport, Connecticut facility, and defense and indemnity of MagneTek
concerning offsite disposal locations where MagneTek may have a share
of potential response costs. MagneTek has filed a proof of claim in
FOL's bankruptcy proceeding for matters governed by the FOL
environmental indemnity.
The Company has 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 offsite locations. Based on the nature of
its alleged connections to those sites, the volume and the nature of
the alleged contaminants, anticipated cleanup costs, the number of
parties participating, any available indemnification rights and the
ability of other liable parties to pay their shares, the Company's
estimated share in liability (if any) at the offsite facilities is not
expected to be material. It is possible that the Company's actual
expenditures at those sites may be less or greater than currently
anticipated, and that the Company will be named as a potentially
responsible party in the future with respect to other sites.
In selling certain business operations, the Company from time to time
has agreed, subject to various conditions and limitations, to indemnify
buyers with respect to environmental liabilities associated with the
divested operations. The Company's indemnification obligations pursuant
to such agreements did not entail material expenditures for fiscal
2000, and its indemnification obligations for fiscal 2001 are not
expected to entail material expenditures. Future expenditures pursuant
to such agreements could be material, depending upon the nature of any
future asserted claims subject to indemnification.
4. DISCONTINUED OPERATIONS
The accompanying financial statements have been re-stated to conform to
discontinued operations treatment for current and historical periods.
The results of the Company's electrical product businesses (Motors,
Lighting Products and Transformers) are included within discontinued
operations.
On August 2, 1999, the Company sold its Motor business to A.O. Smith
for $253 million. The results of the Motor business as well as the
Lighting Products and Transformer businesses have been reflected as
discontinued operations in the accompanying consolidated financial
statements for fiscal year 2000. The Company recorded an after-tax gain
of $35 million in the first quarter of fiscal year 2000 based upon the
sale of its Motor business. In fiscal 2001, the Company's Lighting
Products and Transformer businesses are included in discontinued
operations. A portion of the Company's interest expense has been
allocated to discontinued operations in accordance with EITF 87-24,
"Allocation of Interest to Discontinued Operations." Taxes have been
allocated using the same overall rate incurred by the Company in the
first quarter of fiscal year 2001.
5. ACQUISITIONS
On July 23, 1999, the Company purchased the assets of Electric Motor
Systems, Inc. and EMS/Rose Automation Engineering, Inc. (The EMS Group)
for cash of approximately $38.3 million. The Company acquired assets of
approximately $19.8 million and assumed liabilities of $8.1 million.
Costs in excess of net assets acquired approximated $26.6 million and
are being amortized over forty years. The EMS Group manufactures and
purchases for re-sale, adjustable speed drives. On December 16, 1999
the Company purchased the shares of Mondel ULC, a Nova Scotia unlimited
liability company for approximately $10 million. The Company acquired
assets of approximately $2.5 million and assumed liabilities of $.3
million. Costs in excess of net assets acquired approximated $7.8
million and are also being amortized over forty years. Mondel ULC
manufactures a variety of
industrial brakes for the crane and hoist market. Both acquisitions
have been accounted for under the purchase method of accounting and,
accordingly the purchase price has been allocated to the net assets
acquired based upon their estimated fair market values. Both
acquisitions were financed from the Company's revolving credit
facility.
The Company has reached a definitive agreement to acquire J-Tec, Inc.,
a closely held corporation in Greenville, Ohio. J-Tec is a leading
power systems integrator serving the domestic telecommunications market
with approximate revenues of $25 million. Pending satisfaction of all
closing conditions, the transaction is anticipated to be consummated by
the end of November.
6. COMPREHENSIVE INCOME
During the first quarter of fiscal 2001 and 2000, total comprehensive
income was $2,447 and $39,363 respectively.
7. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share.
(in thousands, except per share amounts) FISCAL YEAR
-------------
1Q 1Q
2001 2000
------- -------
BASIC EARNINGS PER SHARE:
Income from continuing operations $ 998 $ 434
Income from discontinued operations 1,805 2,527
Gain on sale of discontinued businesses (net of taxes) - 35,047
------- -------
Net income $ 2,803 $ 38,008
Weighted average shares for basic earnings per share 22,780 29,359
BASIC EARNINGS PER SHARE:
Income from continuing operations $ 0.04 $ 0.01
Income from discontinued operations 0.08 0.09
Gain on sale of discontinued businesses (net of taxes) - 1.19
------- -------
BASIC EARNINGS PER SHARE: $ 0.12 $ 1.29
======= =======
DILUTED EARNINGS PER SHARE:
Income from continuing operations $ 998 $ 434
Income from discontinued operations 1,805 2,527
Gain on sale of discontinued businesses (net of taxes) - 35,047
------- -------
Net income $ 2,803 $ 38,008
Weighted average shares for basic earnings per share 22,780 29,359
Effect of dilutive stock options 163 203
------- -------
Weighted average shares for diluted earnings per share 22,943 29,562
DILUTED EARNINGS PER SHARE:
Income from continuig operations $ 0.04 $ 0.01
Income from discontinued operations 0.08 0.09
Gain on sale of discontinued businesses (net of taxes) - 1.19
------- -------
DILUTED EARNINGS PER SHARE: $ 0.12 $ 1.29
======= =======
ITEM 2
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS:
THREE MONTHS ENDED SEPTEMBER 30, 2000 VS. 1999
NET SALES AND GROSS PROFIT
MagneTek's net sales for the first quarter of fiscal 2001 were $71.9
million an increase of 1.0% from the first quarter of fiscal 2000 of
$71.2 million. Due to the use of a fifty-two, fifty-three week fiscal
year, the first quarter of fiscal 2001 contained thirteen weeks versus
fourteen weeks in the year earlier period. In addition, reported sales
for the Company's European operations were adversely affected by weaker
European currency. On a pro forma basis, assuming that the first
quarter of fiscal 2000 had contained thirteen weeks and that currency
translation rates were constant with the previous year, sales would
have increased twelve percent over the first quarter of fiscal 2000.
The Company's gross profit increased to $16.9 million (23.6% of net
sales) in the first quarter of fiscal 2001 from $14.5 million (20.3% of
net sales) in the first quarter of fiscal 2000. Improved gross profit
results were due to improved mix of product with higher gross margins
in the Company's power control products and the positive effect of
motion control products associated with the Company's acquisition of
the EMS/ESI Group and Mondel ULC made in fiscal 2000.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expense was $13.7 million (19.1% of
net sales) in the first quarter of fiscal 2001 compared to $13.0
million (18.3% of net sales) in the first quarter of fiscal 2000. The
increase in spending was due to SG&A expense attributable the EMS/ESI
Group and Mondel ULC (acquired in fiscal year 2000), not present in
prior year spending.
INTEREST AND OTHER EXPENSE
Interest expense was $1.1 million in the first quarter of fiscal 2001
compared to $.3 million in the first quarter of fiscal 2000. Increased
interest expense primarily reflects increased borrowings due to the
acquisition of the EMS/ESI Group, Mondel ULC and the common stock
repurchase program. Other non-operating expense of $.5 million in the
first quarter of fiscal 2001 was approximately equal to the $.4 million
in the first quarter of fiscal 2000.
NET INCOME
The Company recorded an after-tax profit from continuing operations of
$1.0 million in the first quarter of fiscal 2001 compared to an
after-tax profit of $.4 million in the first quarter of fiscal 2000.
Results for discontinued operations in the first quarter of 2001 were
an after-tax profit of $1.8 million compared to an after-tax profit
$2.5 million in fiscal 2000. The first quarter of fiscal 2000 also
included a $35.0 million gain on the sale of the Company's motor
business. The tax provision for continuing operations in the first
quarter of fiscal 2001 was $.6 million (38% effective tax rate) versus
$.3 million (38% effective tax rate) in the first quarter of fiscal
2000. The Company expects tax rates used in the first quarter of fiscal
2001 to continue throughout the year.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000 the Company had an agreement with a group of
banks to lend up to $200,000 under a revolving loan facility through
June 2002. Currently, borrowings under the Bank Loan Agreement bear
interest at the bank's prime lending rate or, at the Company's option,
the London Interbank Offered Rate plus one and one-half percent. These
rates may be reduced or increased based upon the level of certain
debt-to-cash flow ratios. As of October 1, 2000, the Company had $124
million of borrowing availability under this facility. During the first
quarter of fiscal 2001, the Company repurchased 381,400 common shares
for approximately $3.9 million in open market transactions. Through the
first quarter of fiscal 2001, the Company has cumulatively repurchased
$83 million of common stock approximating nine million common shares.
QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK
The Company is exposed to market risks in the areas of commodity
prices, foreign exchange and interest rates. To mitigate the effect of
such risks, the Company selectively utilizes specific financial
instruments. Company policy clearly prohibits the use of such financial
instruments for trading or speculative purposes. There have been no
material changes in the reported market risks since that reported in
the Company's Annual Report and 10-K dated June 30, 2000.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Part I, Item 1, Note 3.
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders of the Company was held on
November 1, 2000.
(b) The following named person were elected as directors at such
meeting:
Andrew G. Galef
Thomas G. Boren
Dewain K. Cross
Paul J. Kofmehl
Frederick D. Lawrence
Mitchell I. Quain
Robert E. Wycoff
(a) The votes cast for and withheld with respect to each nominee for
director are as follows:
NOMINEE FOR WITHHELD
Andrew G. Galef 20,605,874 132,157
Thomas G. Boren 20,599,752 138,279
Dewain K. Cross 20,567,343 170,688
Paul J. Kofmehl 20,597,944 140,087
Frederick D. Lawrence 20,604,937 133,094
Mitchell I. Quain 20,303,385 434,646
Robert E. Wycoff 20,599,573 138,458
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Change of Control Agreement dated November 1, 2000 between
Timothy Champion and MagneTek, Inc.
10.2 First Amendment to the 1997 Non-Employee Director Stock
Option Plan of MagneTek, Inc. dated as of July 26, 2000.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this
report is filed.
SIGNATURES
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.
MAGNETEK, INC.
(Registrant)
Date: November 3, 2000 /s/ DAVID P. REILAND
--------------------------------
David P. Reiland
Executive Vice President
and Chief Financial Officer
(Duly authorized officer of the
registrant and principal
financial officer)