Exhibit 99.1
Magnetek Announces Fiscal 2007 Third-Quarter Results
MENOMONEE FALLS, Wis.--(BUSINESS WIRE)--May 1, 2007--Magnetek,
Inc. (NYSE:MAG) today reported its results for its fiscal 2007 third
quarter, which ended on April 1, 2007.
In the quarter the Company recorded revenue of $23.3 million, down
from $26.6 million in the third quarter of fiscal 2006, due primarily
to lower sales of telecom power systems. Gross profit on the reduced
revenues amounted to $6.9 million (29.6% of sales) versus $7.3 million
(27.5% of sales) in the same period a year ago.
Magnetek's operating expenses, consisting of research and
development (R&D) and selling, general and administrative (SG&A)
costs, declined $2.0 million (23%) to $6.5 million from $8.5 million
in the third quarter of fiscal 2006. This reduction resulted from cuts
in corporate overhead costs made possible by the Company's
restructuring of operations, as well as executive staff downsizing,
and substantial completion of the development phases of R&D programs
related to the Company's new Quattro(TM) elevator drive systems and
E-Force(TM) wind turbine power inverters.
Income from continuing operations in the third quarter of fiscal
2007 amounted to $235,000 or $.01 per share versus a loss from
continuing operations of $1.9 million or $.08 per share in the same
period last year.
Magnetek also reported a loss of $654,000 or $.02 per share
related to discontinued operations in third quarter. This loss
primarily resulted from final settlement of the closing balance sheet
related to the divestiture of the Company's power electronics business
in the prior quarter. As a result, the Company reported a net loss of
$.01 per share in third quarter against a net loss of $.15 per share
in last year's third quarter.
Operations
Compared to the prior year, higher third-quarter revenues of the
Company's Material Handling business were more than offset by lower
sales in Telecom Power systems and to a lesser extent, Energy Delivery
systems.
The revenue decline in Telecom Power was due primarily to the
physical relocation of telecom systems manufacturing from Dallas to
Magnetek's manufacturing center in Menomonee Falls, WI, resulting in
some production inefficiencies and shipment delays. The decline was
magnified because the Company's Telecom Power group had a particularly
strong third quarter last year, shipping large orders of wireless
cells on wheels (COWs) and cells on light trucks (COLTs) to telecom
customers. Production efficiencies are improving in the current
quarter and late shipments have been eliminated.
The decline in Energy Systems revenue was primarily due to the
divestiture of the Company's residential solar power inverter product
line with the sale of its power electronics business.
During the third quarter, the Company's book-to-bill ratio was
l.05 to 1.00; and at the end of the quarter, backlog stood at $19.7
million, up from $17.7 million at the beginning of the quarter, and up
from $11.3 million at the end of last year's third quarter due to a
large order for wind turbine power inverters booked in the current
fiscal year.
As of the end of its fiscal third quarter, Magnetek had no debt
and $27.3 million in cash, including $22.6 million to pay a patent
arbitration award, if necessary, that the company is contesting in
court. Capital expenditures in the fiscal third quarter were over
$650,000, mainly related to investments in alternative energy and
telecom systems production capacity.
Management expects Magnetek to post sequentially higher revenues
and profits from operations in the current quarter.
Separately, Magnetek today announced that it has entered into an
agreement to settle litigation with Samsung-Electro-Mechanics Co.,
Ltd. (SEMCO), a Korean corporation, whereby SEMCO agrees to pay
Magnetek the total sum of $2.12 million in four semiannual
installments between June 1, 2007 and December 1, 2008 to resolve a
dispute in a development agreement. Magnetek will record the net
present value of the payments, estimated at just over $2 million, in
other income from continuing operations in its fiscal fourth quarter
which ends on July 1, 2007.
Company Webcast
This morning, at 11:00 a.m. Eastern time, Magnetek management will
host a conference call to discuss Magnetek's fiscal 2007 third-quarter
and first-nine-months results. The conference call will be carried
live and a replay of the call will be available on the "Investor
Relations" page of Magnetek's website www.magnetek.com for ninety days
or as the call and its content remain timely. A replay of the call
also will be available through Friday, May 4 by phoning 617-801-6888
(passcode 73398481).
Magnetek, Inc. (NYSE:MAG) manufactures digital power and motion
control systems used in material handling, people moving, wireless
communications and clean-energy delivery. The Company is headquartered
in Menomonee Falls, WI in the greater Milwaukee area and operates
manufacturing plants in Pittsburgh, PA and Mississauga, Ontario,
Canada as well as Menomonee Falls.
For the fiscal year ended July 2, 2006, Magnetek's revenues were
$101.6 million, including results of its communications power systems
business(a).
(a) During its fiscal 2007 second quarter, Magnetek decided to
retain its telecom power systems business as a continuing operation,
and the results of that business were reclassified from discontinued
operations to continuing operations.
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 fourth quarter and fiscal year ending July 1, 2007.
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 operating, economic and market
conditions, audit costs and findings, legal proceedings and their
effects on the Company's 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 Nine months ended
(Unaudited) (Unaudited)
--------------------- ---------------------
(13 weeks) (13 weeks) (39 weeks) (39 weeks)
April 1, April 2, April 1, April 2,
Results of Operations: 2007 2006 2007 2006
- ----------------------------------------------------------------------
Net sales $23,311 $26,582 $76,844 $76,258
Cost of sales 16,406 19,271 55,460 53,734
- ------------------------------------------------ ---------------------
Gross profit 6,905 7,311 21,384 22,524
Research and development 912 1,263 3,719 3,742
Selling, general and
administrative 5,628 7,279 22,214 21,019
- ------------------------------------------------ ---------------------
Income (loss) from
operations 365 (1,231) (4,549) (2,237)
Interest income (389) (273) (1,582) (405)
Interest expense 142 950 2,275 2,211
Other expense 70 - 395 -
- ------------------------------------------------ ---------------------
Income (loss) from
continuing operations
before provision for
income taxes 542 (1,908) (5,637) (4,043)
Provision for income taxes 307 490 956 1,169
- ------------------------------------------------ ---------------------
Income (loss) from
continuing operations 235 (2,398) (6,593) (5,212)
Loss from discontinued
operations (654) (2,032) (3,235) (1,997)
- ------------------------------------------------ ---------------------
Net loss $ (419) $(4,430) $(9,828) $(7,209)
- ------------------------------------------------ ---------------------
Per common share - basic
and diluted:
- ----------------------------------------------------------------------
Income (loss) from
continuing operations $ 0.01 $ (0.08) $ (0.22) $ (0.18)
Loss from discontinued
operations $ (0.02) $ (0.07) $ (0.11) $ (0.07)
Net loss per common share
- basic and diluted $ (0.01) $ (0.15) $ (0.33) $ (0.25)
- ----------------------------------------------------------------------
Weighted average shares
outstanding:
Basic 29,616 28,911 29,497 28,905
Diluted 30,269 28,911 29,497 28,905
Three months ended Nine months ended
(Unaudited) (Unaudited)
--------------------- ---------------------
April 1, April 2, April 1, April 2,
Other Data: 2007 2006 2007 2006
- ------------------------------------------------ ---------------------
Depreciation and
amortization $ 454 $ 454 $ 2,155 $ 1,535
Capital expenditures 651 94 926 513
April 1,
2007 July 2,
Balance Sheet Data: (Unaudited) 2006
- ----------------------------------------------------------------------
Working capital (excluding current portion of
LTD and assets and liabilities held for sale) $ 17,066 $ 12,163
Total assets 97,598 233,026
Total long-term debt (including current
portion) 33 27,455
Common stockholders' equity 27,942 42,908
Magnetek, Inc.
Consolidated Balance Sheets
(in thousands)
April 1,
2007 July 2,
(Unaudited) 2006
----------- -----------
Cash $ 4,681 $ 96
Restricted cash 22,602 22,602
Accounts receivable 15,408 14,765
Inventories 14,653 13,134
Prepaid and other 589 693
Assets held for sale - 140,549
----------- -----------
Total current assets 57,933 191,839
Property, plant & equipment, net 3,884 4,211
Goodwill 28,122 28,150
Other assets 7,659 8,826
----------- -----------
Total assets $ 97,598 $ 233,026
=========== ===========
Accounts payable $ 9,466 $ 7,862
Accrued liabilities 8,799 8,663
Accrued arbitration award 22,602 22,602
Liabilities held for sale - 75,933
Current portion of long-term debt - 27,412
----------- -----------
Total current liabilities 40,867 142,472
Long-term debt, net of current portion 33 43
Pension benefit obligations, net 25,972 45,494
Deferred income taxes 2,784 2,109
Common stock 294 287
Additional paid-in capital 133,139 129,473
Accumulated deficit (16,659) (6,831)
Accumulated other comprehensive loss (88,832) (80,021)
----------- -----------
Total stockholders' equity 27,942 42,908
Total liabilities and stockholders' equity $ 97,598 $ 233,026
=========== ===========
CONTACT: Magnetek, Inc.
Robert Murray, 213-200-7606
bmurray@magnetek.com