Magnetek Announces Fiscal 2007 First-Quarter Results.MENOMONEE FALLS, Wisc. -- Magnetek, Inc. (NYSE NYSE See: New York Stock Exchange :MAG) today reported its results for the first quarter of fiscal 2007, which ended on October 1, 2006(a). On October 23rd, Magnetek completed the divestiture of its Power Electronics Group (PEG), which had accounted for approximately two-thirds of the Company's reported revenue. During the first quarter of fiscal 2007, the smaller Company's continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the recorded revenue of $22.5 million, up 12% from $20.1 million in the first quarter of fiscal 2006. Gross profit amounted to $7.1 million (32% of sales), up 10% from $6.4 million (32% of sales) in the corresponding period a year ago. However, the continuing operations bore the entire corporate general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. of the Company during the quarter as none were allocated to discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . These costs, as well as interest expense on debt paid off following receipt of the divestiture proceeds in October, continued to detract from fiscal 2007 first quarter results. Consequently, the Company's continuing operations incurred an after-tax loss of $1.6 million or $.06 per share in the quarter, versus an after-tax loss of $1.2 million or $.05 per share in the prior year quarter. Discontinued operations, including PEG, accounted for an additional $1.6 million or $.05 per share loss in the fiscal 2007 first quarter, culminating in a net loss of $3.2 million or $.11 per share, versus a net loss of $1.1 million or $.04 per share in the first quarter of fiscal 2006. Subsequent to the end of the fiscal 2007 first quarter, Magnetek decided to retain its Telecom Power Systems (TPS (1) (Transactions Per Second) The number of transactions processed within one second. TPS is a better rating for the performance of hardware and software than the common MHz and GHz rating of the computer. ) business as a continuing operation. As a result, TPS' results will be reclassified from discontinued operations to continuing operations beginning in the Company's fiscal 2007 second quarter. Magnetek's annual revenue is expected to exceed $100 million annually after this reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. . Board and Management Changes At Magnetek's regular Board meeting on October 25th, Andrew G. Galef stepped down as Chairman of the Board; remains as a Magnetek director. Mitchell I. Quain, who has served as a director since 2000, was elected to succeed Mr. Galef as Chairman. Mr. Quain, 54, is currently Senior Director, ACI ACI American Concrete Institute ACI Arch Coal Inc ACI Airports Council International (formerly Airport Associations Coordinating Council) ACI Automobile Club d'Italia ACI American Competitiveness Initiative Capital and was formerly Vice Chairman of Investment Banking at ABN AMRO. He holds an MBA MBA abbr. Master of Business Administration Noun 1. MBA - a master's degree in business Master in Business, Master in Business Administration , with distinction, from the Harvard Business School Harvard Business School, officially named the Harvard Business School: George F. Baker Foundation, and also known as HBS, is one of the graduate schools of Harvard University. . He is Chairman of the Board of Overseers of The University of Pennsylvania's School of Engineering & Applied Sciences and also serves on the University's Board of Trustees board of trustees Politics The posse of thugs who oversee an institution's administration. See Board of directors. . Also at the October 25th Board meeting, Thomas G. Boren stepped down as Magnetek's President and Chief Executive Officer; he remains as a director. David P. Reiland, 52, was elected to succeed Mr. Boren. Mr. Reiland has been Magnetek's Chief Financial Officer since 1988 and Executive Vice President of the Company since 2001. He holds an undergraduate degree in financial management from California State University Enrollment  , Long Beach, and an MBA from the University of Southern
California The U.S. News & World Report ranked USC 27th among all universities in the United States in its 2008 ranking of "America's Best Colleges", also designating it as one of the "most selective universities" for admitting 8,634 of the almost 34,000 who applied for freshman admission . He is also a Certified Public Accountant Certified Public Accountant (CPA)An accountant who has met certain standards, including experience, age, and licensing, and passed exams in a particular state. . Strategic Direction and Operating Outlook Due to the divestiture of its facilities in California, Magnetek's corporate headquarters has moved from the Los Angeles area to its manufacturing center located in Menomonee Falls, Wisconsin Menomonee Falls is a village in Waukesha County, Wisconsin, United States. The population was 32,647 at the 2000 census. Employing 1500 people (As of 2005), Kohl's Department Store corporate headquarters, and Alto-Shaam's world headquarters are located in Menomonee Falls. . Going forward, the Company will focus solely on digital power and motion control systems used in material-handling, people-moving, telecommunications and energy management. In connection with its acquisition of PEG the acquiring company assumed approximately $16 million of Magnetek's debt. Net cash proceeds from the divestiture, amounting to approximately $68 million in cash, have been used to repay all of Magnetek's remaining debt (approximately $29 million); the balance will be used to fund Magnetek's pension obligations and to support ongoing operations. In the first quarter of fiscal 2007, selling, general and administrative (SG&A) expense amounted to $6.7 million. Management expects contributions to the Company's pension fund, personnel reductions and other cost cuts in the current quarter to save more than $1.5 million in G&A per quarter going forward. In addition, elimination of interest expense, which amounted to $788,000 in the first quarter, plus interest income on Magnetek's current cash balances are expected to return the Company to profitability. And the ability to apply the Company's substantial operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carry-forwards to shelter pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. should bring most of the profit to the bottom line. Magnetek as currently configured is capable of achieving double-digit revenue growth, gross profit margins of 30% or more, operating margins in the mid- to high-single digits, and consistent, positive cash flow. Although the current (December) quarter will show additional losses due primarily to restructuring costs and severance-related expenses, management expects the Company to report positive earnings and cash flow on continuing revenue growth commencing with the second half of fiscal 2007. Company Webcasts This morning, at 11:00 a.m. Eastern time, Magnetek management will host a conference call to discuss Magnetek's fiscal 2007 first-quarter results. The conference call will be broadcast live and can be accessed from the "Investor Information" page of Magnetek's website www.magnetek.com. A replay of the call will be available through November 17th by phoning 617-801-6888 (passcode: 4593944). Magnetek manufactures digital power and motion control systems used in material-handling, people-moving, telecommunications and energy management. The Company operates manufacturing facilities in Menomonee Falls, WI, Pittsburgh, PA, Dallas, TX and Mississauga, Ontario, Canada. On September 29, 2006, the Company reported revenue of $83.1 million for its 2006 fiscal year, ended on July 2, 2006 (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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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, 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. [TABLE OMITTED] [TABLE OMITTED] |
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