Exhibit 99.1
Magnetek Announces Fiscal 2007 Results
MENOMONEE FALLS, Wis.--(BUSINESS WIRE)--Aug. 22, 2007--Magnetek,
Inc. (NYSE:MAG) today reported the results of its 2007 fiscal year and
fourth quarter ended July 1, 2007.
Fourth Quarter Results
In the fourth fiscal quarter the Company recorded revenue of $27.0
million, a 6% increase over the fourth quarter of fiscal 2006 and,
sequentially, a 16% increase over the third quarter of fiscal 2007,
which was depressed somewhat by normal seasonal factors.
Gross profit amounted to $7.5 million (28% of sales) in the fourth
quarter of fiscal 2007 versus $7.6 million (30% of sales) in the same
period a year ago and, sequentially, a 9% increase over $6.9 million
(30% of sales) in the third quarter of fiscal 2007. Production ramp-up
costs related to the Company's new E-Force(TM) wind turbine power
inverter, sales mix in the elevator motion control business, and
higher telecom power systems material costs were primarily responsible
for the decline in gross margin.
Operating expenses, consisting of research and development (R&D)
and selling, general and administrative (SG&A) costs, declined $2.6
million to $6.0 million in the fourth quarter of fiscal 2007 from the
prior-year period. This reduction resulted primarily from cuts in
administrative overhead made possible by the Company's restructuring
of operations, as well as executive staff downsizing. Operating
expenses declined $0.5 million from the third quarter of fiscal 2007,
primarily due to lower variable incentive compensation costs.
Income from continuing operations in the fourth quarter of fiscal
2007 amounted to $1.4 million or $.05 per share versus a loss from
continuing operations of $2.2 million or $.07 per share in the same
period last year. Magnetek also reported income of $0.4 million or
$.01 per share related to discontinued operations in fourth quarter of
2007, including a gain of $2.0 million from the favorable settlement
of a product development dispute, partially offset by legal and other
costs.
Including results of discontinued operations, the Company recorded
net income of $1.8 million or $.06 per share in the fourth quarter of
fiscal 2007 versus a net loss of $39.6 million or $1.37 per share in
the fourth quarter of fiscal 2006.
Fiscal Year Results
For the full year, as in fiscal 2006, Magnetek's overall
performance was heavily impacted by results of discontinued operations
as well as restructuring costs.
The Company recorded revenue of $103.8 million in fiscal 2007, up
from $101.7 million in the prior year. Gross profit amounted to $28.9
million (28% of sales) versus $30.1 million (30% of sales) in fiscal
2006. Operating expenses totaled $32.0 million in 2007 against $33.4
million in fiscal 2006. Continuing operations lost $5.2 million or
$.18 per share for the full year versus a loss of $7.4 million or $.25
per share in fiscal 2006, while discontinued operations lost $ 2.8
million or $.10 per share in fiscal 2007 versus a loss of $ 39.5
million or $1.36 per share in fiscal 2006.
Including results of discontinued operations, the Company recorded
a net loss of $8.0 million or $.27 per share in fiscal 2007 against a
net loss of $46.8 million or $1.62 per share in fiscal 2006.
Operations and Outlook
Magnetek's results improved significantly after the sale of its
power electronics business in the first half of fiscal 2007. The
Company's continuing operations earned $1.6 million or $.06 per share
in the second half of the year and generated positive cash in the
fourth fiscal quarter.
Higher Material Handling and, to a lesser extent, Elevator Systems
and Telecom Power sales in the quarter drove increases in the
Company's revenue over the fourth quarter fiscal 2006 as well as the
third quarter of fiscal 2007. Energy Systems quarterly sales declined
versus the prior year due to the sale of Magnetek's residential solar
power inverter product line, which was included with the divestiture
of its power electronics business. However, sales of energy systems
are expected to grow rapidly as the Company's new E-Force wind power
inverters begin shipping in the second quarter of fiscal 2008.
Magnetek entered fiscal 2008 in good financial condition poised
for future growth. The Company had no debt and $28.3 million in cash,
including $22.6 million reserved to pay a patent arbitration award, if
necessary, that the Company is contesting in court. Capital
expenditures during the fiscal 2007 fourth quarter were $0.6 million,
related mainly to investments in telecom systems and wind power
inverter production capacity. Capital expenditures totaled $1.6
million in fiscal 2007, while depreciation and amortization totaled
$2.6 million.
During the fourth quarter, Magnetek's book-to-bill ratio was
0.96:1.00; for the full fiscal year book-to-bill was 1.07:1.00. Order
backlog at year end stood at $19.3 million, down slightly from $19.7
million at the beginning of the fourth quarter. The current
(September) quarter tends to be relatively weak seasonally due to
factory shutdowns and summer vacations. However, in its largest
market, Material Handling, which tends to be a bellwether of the North
American industrial economy, the Company's quote activity has remained
strong and its backlog is solid.
With the divestiture of its power electronics business, Magnetek's
direct exposure to consumer markets such as housing and home
appliances ended. The Company's business is now focused solely on
digital (smart) power and motion control systems. These products are
used in commercial and industrial applications, including
infrastructure repair and modernization, wherein they increase
operating and energy efficiency, which become increasingly important
under tight economic conditions.
Therefore, while the economic outlook for fiscal 2008 remains
uncertain, Magnetek's management believes that the Company, as newly
constituted, can achieve increases in both revenue and profits in the
current fiscal year.
Company Webcast
This morning, at 11:00 a.m. Eastern time, Magnetek management will
host a conference call to discuss Magnetek's fiscal 2007 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,
August 31st by phoning 617-801-6888 (pass code 52079550).
Magnetek, Inc. (NYSE: MAG) manufactures digital power and motion
control systems used in material handling, people moving, wireless
communications and 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.
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 future periods, including the fiscal year ending June 29,
2008. 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, 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
(Unaudited) Twelve months ended
--------------------- ---------------------
(13 weeks) (13 weeks) (52 weeks) (52 weeks)
July 1, July 2, July 1, July 2,
Results of Operations: 2007 2006 2007 2006
- ----------------------------------------------------------------------
Net sales $ 26,964 $ 25,399 $ 103,808 $ 101,657
Cost of sales 19,421 17,786 74,881 71,520
- ----------------------------------------------------------------------
Gross profit 7,543 7,613 28,927 30,137
Research and development
(1) 970 1,129 4,689 4,871
Selling, general and
administrative (1) 5,072 7,536 27,286 28,555
- ----------------------------------------------------------------------
Income (loss) from
operations 1,501 (1,052) (3,048) (3,289)
Interest income (369) (282) (1,951) (687)
Interest expense 126 1,021 2,401 3,232
Other expense - - 395 -
- ----------------------------------------------------------------------
Income (loss) from
continuing operations
before provision for
income taxes 1,744 (1,791) (3,893) (5,834)
Provision for income
taxes 337 370 1,293 1,539
- ----------------------------------------------------------------------
Income (loss) from
continuing operations 1,407 (2,161) (5,186) (7,373)
Income (loss) from
discontinued operations
(2) 429 (37,479) (2,806) (39,476)
- ----------------------------------------------------------------------
Net income (loss) $ 1,836 $ (39,640) $ (7,992) $ (46,849)
- ----------------------------------------------------------------------
Per common share - basic
and diluted:
- ----------------------------------------------------------------------
Income (loss) from
continuing operations $ 0.05 $ (0.07) $ (0.18) $ (0.25)
Income (loss) from
discontinued operations $ 0.01 $ (1.30) $ (0.10) $ (1.36)
Net income (loss) per
common share - basic and
diluted $ 0.06 $ (1.37) $ (0.27) $ (1.62)
- ----------------------------------------------------------------------
Weighted average shares
outstanding:
Basic 29,841 28,938 29,435 28,931
Diluted 30,272 28,938 29,435 28,931
(1) Includes a $1.9 million charge for severance and related costs,
and an additional non-recurring $1.1 million charge for stock
compensation in the twelve-month period ended July 1, 2007.
(2) Includes the results of the Company's divested power electronics
business for all periods presented. Also includes $2.0 million of
income from the favorable settlement of litigation in a development
dispute, legal fees of $0.5 million related to the settlement, and
charges of $1.1 million and $1.6 million for legal fees, workers comp
claims and other costs related to divested businesses in the three-
and twelve-month periods ended July 1, 2007. Includes losses in the
power electronics business of $2.3 million and a loss on the disposal
of the business of $0.4 million in the twelve-month period ended July
1, 2007. Includes charges of $22.4 million for goodwill impairment,
$10.6 million for foreign currency translation adjustments, $4.5
million for inventories and $0.3 million for property, plant and
equipment in the three- and twelve-month periods ended July 2, 2006.
Three months ended Twelve months ended
(Unaudited) (Unaudited)
-------------------- -------------------
July 1, July 2, July 1, July 2,
Other Data: 2007 2006 2007 2006
- -------------------------------------------------- -------------------
Depreciation expense $ 265 $ 246 $ 1,391 $ 1,081
Amortization expense
(included in interest
expense) 108 206 1,250 906
Capital expenditures 646 473 1,572 986
July 1,
2007 July 2,
Balance Sheet Data: (Unaudited) 2006
- --------------------------------------------------
Working capital (excluding
current portion of LTD and
assets and liabilities held
for sale) $ 21,982 $ 13,269
Total assets 104,738 233,026
Total long-term debt
(including current portion) 32 27,455
Common stockholders' equity 41,473 42,908
Magnetek, Inc.
Consolidated Balance Sheets
(in thousands )
July 1, July 2,
2007 2006
--------- ---------
Cash $ 5,404 $ 96
Restricted cash 22,852 22,602
Accounts receivable 18,104 14,765
Inventories 16,201 13,134
Prepaid and other 1,900 693
Assets held for sale - 140,549
--------- ---------
Total current assets 64,461 191,839
Property, plant & equipment, net 4,302 4,211
Goodwill 28,187 28,150
Other assets 7,788 8,826
--------- ---------
Total assets $104,738 $233,026
========= =========
Accounts payable $ 12,238 $ 7,862
Accrued liabilities 7,639 7,557
Accrued arbitration award 22,602 22,602
Liabilities held for sale - 75,933
Current portion of long-term debt - 27,412
--------- ---------
Total current liabilities 42,479 141,366
Long-term debt, net of current portion 32 43
Pension benefit obligations, net 15,965 45,494
Other long term liabilities 1,709 1,106
Deferred income taxes 3,080 2,109
Common stock 301 287
Additional paid-in capital 134,449 129,473
Accumulated deficit (14,823) (6,831)
Accumulated other comprehensive loss (78,454) (80,021)
--------- ---------
Total stockholders' equity 41,473 42,908
Total liabilities and stockholders' equity $104,738 $233,026
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CONTACT: Magnetek, Inc.
Robert Murray, 213-200-7606
bmurray@magnetek.com