Exhibit 99.1
Magnetek Announces Fiscal 2006 Second-Quarter Results
CHATSWORTH, Calif.--(BUSINESS WIRE)--Feb. 2, 2006--Magnetek, Inc.
(NYSE:MAG):
-- Revenue from continuing operations reached $59.3 million, up
5% sequentially from $56.5 million in the first quarter.
-- Bookings amounted to $63.6 million, up sequentially from $56.6
million; backlog increased from $61.4 million to $63.4
million.
-- Gross profit increased sequentially to $15.3 million, a
four-year high; operating profit increased sequentially to
$1.1 million.
-- Non-cash tax items and losses of discontinued operations
resulted in a quarterly net loss of $.06 per share.
Magnetek, Inc. (NYSE:MAG) today reported its results for the
second quarter and first six months of fiscal 2006, which ended on
January 1, 2006(a).
The Company's continuing operations recorded revenue of $59.3
million, compared to $62.0 million in the second quarter of fiscal
2005, but up from $56.5 million in this year's first quarter.
Fiscal 2006 second-quarter gross profit amounted to $15.3 million,
compared to $15.6 million in the corresponding period a year ago, but
up from $14.5 million in the first quarter of fiscal 2006. Gross
profit as a percentage of sales increased from 25.2% in the fiscal
2005 second quarter to 25.8%, a four-year high.
Second-quarter income from continuing operations before interest
and taxes was $1.1 million, down from $1.4 million in the fiscal 2005
second quarter. Income from continuing operations before interest and
taxes was up sequentially from $1.0 million in the first quarter of
fiscal 2006, in spite of higher commission expense related to greater
sales volume and increased investment in Alternative Energy research
and development.
Interest expense related to the Company's recently completed debt
refinancing, as well as the non-cash tax effect of goodwill
amortization, resulted in a second-quarter net loss from continuing
operations of $0.7 million or $.02 per share. This compares with net
income from continuing operations of $1.8 million or $.06 per share in
the prior-year second quarter, which included income of $1.3 million
from the sale and licensing of intellectual property.
Including losses attributable to discontinued operations,
Magnetek's fiscal 2006 second-quarter loss amounted to $1.7 million or
$.06 per share versus net income of $0.2 million or $.01 per share in
the same period a year earlier. Excluding non-cash charges and losses
attributable to discontinued operations, Magnetek performed near
break-even for the quarter.
Second Quarter Performance
Second-quarter sales of power-electronic products declined from
the first quarter of fiscal 2006, due partly to seasonal factors
affecting consumer appliance manufacturing, which has become one of
Magnetek's largest markets. However, the Company's power-control
systems businesses grew 20% to $26.7 million from $22.2 million in the
first quarter, accounting for 45% of total revenue, up from 39% in the
first quarter.
Strength in industrial automation and elevator markets paced
Magnetek's systems sales growth. Based on advanced digital technology
developed by its power-electronics group, the Company's newest systems
for telecommunications, transportation, and alternative energy also
contributed to second-quarter revenue growth.
Magnetek's book-to-bill ratio during the second quarter was
1.07:1, up from 1.00:1 in the first quarter; and the Company's backlog
at the end of the second quarter was $63.4 million, up from $61.4
million at the end of the first quarter.
Alternative Energy Developments
During the fiscal 2006 second quarter, Magnetek entered into
agreements to supply its award-winning Aurora(TM) photovoltaic (PV)
power inverters to a number of solar equipment distributors, solar
system integrators and energy services dealers located in Italy and
Spain. These countries recently initiated solar incentive programs
intended to shift some 130 megawatts (MW) of power to solar over the
next three years. Orders under the agreements are valued at
approximately $2 million, and cover deliveries over the coming 12
months subject to demand and availability.
Subsequent to the end of the second quarter, on January 9, 2006,
Magnetek announced that its transformerless Aurora inverters have been
added to the California Energy Commission (CEC) List of Eligible
Inverters, making these inverters eligible for rebates under the CEC's
$300 million "Emerging Renewables" program. Three days later, on
January 12, the California Public Utilities Commission (CPUC) launched
the largest solar initiative in the U.S., a 10-year, $2.9 billion
program designed to increase the amount of installed solar capacity on
rooftops in the state by 3,000 MW by 2017.
Magnetek management believes that these developments will serve to
accelerate adoption of the Company's solar power inverters in Europe,
the pivotal California market and throughout North America.
Legal Matters
On October 19, a motion to confirm a $23.4 million patent
infringement award levied against Magnetek on May 3, 2005 and
Magnetek's motion to vacate the award on grounds that it was obtained
fraudulently were heard in the Federal District Court of Northern
Illinois. The presiding judge indicated that he would issue his
decision by mail, but did not indicate when that might occur. As of
the date of this release, no decision had been received by Magnetek.
However, there have been developments in other cases concerning
the validity of the plaintiff's lighting ballast patents. A trial in
the Federal District Court of Middle Tennessee involving a lighting
ballast business formerly owned by Magnetek has been postponed
indefinitely, pending U.S. Patent and Trademark Office reexamination
of the plaintiff's patents. Another trial involving a former Magnetek
competitor in the lighting ballast business has been scheduled for
February 6 in the Federal District Court of Northern Illinois.
Conference Call Webcast
This morning at 11:00 a.m. Eastern time Magnetek management will
host a conference call to discuss Magnetek's fiscal 2006
second-quarter results. The call will be carried live and a replay
will be accessible from the "Investor Information" page of Magnetek's
website: www.magnetek.com.
Magnetek, Inc. manufactures digital power control products and
systems used in applications requiring very reliable, precise,
energy-efficient power, including communications, industrial
automation, information technology, consumer products, alternative
energy, transportation and energy management. The Company reported
sales of $242 million for its 2005 fiscal year, ended on July 3,
2005(a).
(a) Magnetek's fiscal quarters end on the Sundays nearest
September 30, December 31, March 31 and June 30.
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding the Company's anticipated financial
results for its first quarter and fiscal year ending July 2, 2006.
These forward-looking statements are based on the Company's
expectations and are subject to risks and uncertainties that cannot be
predicted or quantified and are beyond the Company's control. Future
events and actual results could differ materially from those set forth
in, contemplated by, or underlying these forward-looking statements.
These risks and uncertainties include economic and market conditions,
audit-related costs and findings and legal proceedings and their
effects on the Company's expected financial results. Other factors
that could cause actual results to differ materially from expectations
are described in the Company's reports filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934.
Magnetek, Inc.
Consolidated Results of Operations
(in thousands except per share data)
Three months ended Six months ended
(Unaudited) (Unaudited)
--------------------- ---------------------
(13 weeks) (13 weeks) (26 weeks) (27 weeks)
January 1, January 2, January 1, January 2,
Results of Operations: 2006 2005 2006 2005
- -------------------------- ---------- ---------- ---------- ----------
Net sales $59,333 $61,999 $115,844 $128,207
Cost of sales 44,026 46,397 86,049 96,484
- -------------------------- ---------- ---------- ---------- ----------
Gross profit 15,307 15,602 29,795 31,723
Research and development 3,947 3,694 7,476 7,189
Selling, general and
administrative 10,281 10,557 20,218 21,083
- -------------------------- ---------- ---------- ---------- ----------
Income from operations 1,079 1,351 2,101 3,451
Interest expense 856 274 1,202 581
Other (income) expense(1) 149 (1,240) 525 (1,183)
- -------------------------- ---------- ---------- ---------- ----------
Income from continuing
operations before
provision for income
taxes 74 2,317 374 4,053
Provision for income
taxes(2) 750 540 1,700 1,175
- -------------------------- ---------- ---------- ---------- ----------
Net income (loss) from
continuing operations (676) 1,777 (1,326) 2,878
Loss from discontinued
operations (1,049) (1,615) (1,453) (2,176)
- -------------------------- ---------- ---------- ---------- ----------
Net income (loss) $(1,725) $162 $(2,779) $702
- -------------------------- ---------- ---------- ---------- ----------
Per common share - basic
and diluted:
- -------------------------- ---------- ---------- ---------- ----------
Net income (loss) from
continuing operations $(0.02) $0.06 $(0.05) $0.10
Loss from discontinued
operations $(0.04) $(0.05) $(0.05) $(0.08)
- -------------------------- ---------- ---------- ---------- ----------
Net income (loss) per
common share - basic and
diluted $(0.06) $0.01 $(0.10) $0.02
- -------------------------- ---------- ---------- ---------- ----------
Weighted average shares
outstanding:
Basic 28,890 28,520 28,888 28,511
Diluted 28,890 29,278 28,888 29,272
(1) Includes write-off of deferred financing costs of $0.4 million
in the six-month period ended January 1, 2006, related to the
refinancing of senior debt. Includes $1.3 million income from sale
and license of rights and patents in periods ended January 2,
2005.
(2) Includes $0.4 million and $0.8 million non-cash provision
related to deductible goodwill amortization in U.S. in both
three- and six-month periods respectively.
Three months ended Six months ended
(Unaudited) (Unaudited)
--------------------- ----------------------
January 1, January 2, January 1, January 2,
Other Data: 2006 2005 2006 2005
- ------------------------- ---------- ---------- ---------- -----------
Depreciation and
amortization $2,159 $2,375 $4,445 $4,834
Capital expenditures 2,019 2,279 3,182 3,912
January 1,
2006 July 3,
Balance Sheet Data: (Unaudited) 2005
- --------------------------------------------- ----------- ------------
Working capital (excluding restricted cash &
current portion of LTD) $53,144 $51,947
Total assets 248,511 229,180
Total long-term debt (including current
portion) 46,222 25,230
Common stockholders' equity 43,809 46,060
Magnetek, Inc.
Consolidated Balance Sheets
(in thousands )
January 1,
2006 July 3,
(Unaudited) 2005
----------- ---------
Cash $3,607 $6,854
Restricted cash 22,602 -
Accounts receivable 53,474 54,022
Inventories 51,523 49,950
Prepaid and other 5,194 5,713
Assets held for sale 6,265 4,727
----------- ---------
Total current assets 142,665 121,266
Property, plant & equipment, net 31,025 31,939
Goodwill 63,592 63,656
Other assets 11,229 12,319
----------- ---------
Total assets $248,511 $229,180
=========== =========
Accounts payable $34,697 $36,974
Accrued liabilities 7,657 8,523
Accrued arbitration award 22,602 22,602
Liabilities held for sale 1,963 1,220
Current portion of long-term debt 28,198 5,702
----------- ---------
Total current liabilities 95,117 75,021
Long-term debt, net of current portion 18,024 19,528
Pension benefit obligations, net 72,468 70,568
Other long-term obligations 7,959 7,627
Deferred income taxes 11,134 10,376
Common stock 287 286
Additional paid-in capital 129,034 128,664
Retained earnings 37,239 40,018
Accumulated other comprehensive loss (122,751) (122,908)
----------- ---------
Total stockholders' equity 43,809 46,060
Total liabilities and stockholders' equity $248,511 $229,180
=========== =========
CONTACT: Magnetek, Inc.
Robert Murray, 818-727-2216 (ext. 111)
bmurray@magnetek.com