ITEM 1. BUSINESS.
GENERAL
MagneTek, Inc. ("MagneTek" or the "Company") makes electronic and electrical products used in data processing and telecommunications, building and factory automation, lighting and other markets. MagneTek's primary product lines include power supplies, lighting ballasts and motor drives. They are sold to equipment builders for incorporation into their products, to resellers and to end-users. Founded in 1984, the Company operates 11 factories in North America, four in Europe and one in Asia, and employs approximately 8,700 people worldwide.
The Company sold its Generators business for $115 million during the fourth fiscal quarter and its Motors business for $253 million subsequent to the 1999 fiscal year end. These businesses, which together comprised 41% of the Company's total revenue in fiscal 1998, are treated for reporting purposes as discontinued operations in fiscal 1999. The Company now operates in three segments: Lighting Power Products, Power Electronic Products and Drives and Systems.
Lighting Power Products Segment
General. MagneTek is the second largest producer in North America of lighting ballasts, which are essential to start and operate fluorescent, neon and similar gas-filled electric lamps. Lighting Power Products accounted for approximately 62% of net sales in fiscal 1999. International sales accounted for 19% of the segment's total net sales in fiscal 1999; and Lithonia Lighting, a domestic lighting fixture original equipment manufacturer (an "OEM"), accounted for 10% of segment sales.
Magnetic Ballasts. Magnetic ballasts -- including high intensity discharge ("HID") and sign ballasts -- accounted for 53% (44% in the U.S. and 9% internationally) of the segment's net sales in fiscal 1999. Magnetic fluorescent ballasts are used primarily in standard fluorescent lighting fixtures in commercial buildings, hospitals, schools, hotels, factories, homes, warehouses and airports. HID ballasts accounted for 18% (14% in the U.S. and 4% internationally) of the segment's net sales in fiscal 1999. HID ballasts are used in lighting fixtures in industrial and municipal applications, such as manufacturing plants, warehouses, parking facilities, roadways, sports arenas, security areas and traffic tunnels. In the U.S. approximately 64% of the Company's magnetic fluorescent and HID ballasts are sold directly to lighting fixture OEMs. The rest are sold through GE Lighting and independent manufacturers' representatives to more than 2,000 independent distributors nationwide. In Europe, sales are made through a combination of the Company's direct sales force and sales agents, primarily to OEMs. MagneTek's principal customers for its magnetic ballasts include Lithonia, Cooper Lighting, Simkar and Genlyte. Sign and neon ballasts accounted for approximately 4% of segment sales in fiscal 1999.
Electronic Ballasts. While their initial cost to consumers is higher than magnetic ballasts, electronic fluorescent ballasts can provide cost savings through reduced energy consumption. Sales of electronic ballasts, primarily in the U.S., accounted for 33% of the segment's total net sales in fiscal 1999. The Company anticipates a continuing shift in demand toward electronic ballasts from magnetic products as more end-users focus on long-term operating efficiency and as the cost of electronic ballasts declines. Electronic ballasts are sold through the same channels as magnetic ballasts. Approximately 67% of
MagneTek's electronic ballasts are sold directly to OEMs and the remainder are sold through GE Lighting and independent representatives to more than 2,000 independent distributors. MagneTek's principal customers for its electronic ballasts include Lithonia, GE, Cooper Lighting, U.S. Industries and Genlyte.
Backlog. Backlog in the Lighting Products segment as of June 30, l999 was $25 million compared to $27 million at the end of fiscal 1998. The decrease in backlog in this segment is a reflection of customer demand for reduced lead times, the Company's increasing customer responsiveness and slightly lower demand levels than those experienced in fiscal 1998.
Competition. MagneTek's primary competitors in the lighting ballast business in the U.S. are Advance Transformer (a division of North American Philips) and Motorola, and in Europe, Schwabe, Helvar and Zumtobel. Some of these companies have substantially greater resources than MagneTek.
Power Electronic Products Segment
General. The Power Electronic Products segment accounted for 25% of the Company's net revenues in fiscal 1999. Two customers, IBM and Siemens accounted for 24% and 6%, respectively, of the segment's net sales in fiscal year 1999, and are especially important to the revenue base for the segment. The Company believes that its Italian subsidiary is the largest independent producer of power supplies for data processing and telecommunications applications for the European market. European sales accounted for 56% of the Power Electronic Products segment's net sales in fiscal 1999.
This segment manufactures both custom power supplies and special purpose power supplies, as well as magnetic components. Custom power supplies are used primarily in computers, telecommunications equipment and office machines. Special purpose power supplies are used in recreational vehicles such as campers, mobile homes and boats. MagneTek's magnetic components are used in a variety of electronic products.
Backlog. Backlog in the Power Electronic Products segment as of June 30, 1999 was $69.0 million compared to $64.7 million as of the end of fiscal 1998. The increase in backlog in this segment reflects increased penetration of current accounts and continued growth in the telecommunications market.
Drives and Systems Segment
General. MagneTek believes it is the second largest supplier of alternating-current drives in the U.S. market, with a predominant share of the overhead traveling crane and hoist market. The Drives and Systems segment accounted for 13% of the Company's net revenues in fiscal 1999. Major customers include United Technologies and American Standard. These and other customers incorporate MagneTek drives into their products or systems, which are marketed internationally, to control electric motor performance.
The Drives and Systems segment designs and builds both alternating-current (A/C) and direct-current (D/C) motor drives and reduced-voltage motor starters. Using proprietary hardware and software technology, this segment also customizes A/C drives built by Yaskawa Electric America for various commercial and industrial applications, and is Yaskawa's largest North American trading partner in this market. In addition, the segment develops and manufactures automatic voltage regulators and supplies a variety of accessories with its crane and hoist drives.
Backlog. Backlog in the Drives and Systems segment as of June 30, 1999 was $11.1 million compared to $11.0 million as of the end of fiscal 1998. No significant change occurred in the year to year backlog results.
Competitive Strengths
The Company believes that it benefits from competitive advantages in each of the following areas.
Technological Capabilities. MagneTek emphasizes its ability to combine electro-magnetic and power-electronic technologies into custom solutions for process and power control. Long a leader in providing innovative, energy efficient products, MagneTek has used its technological expertise to pioneer advances in lighting and power supply applications. To maintain and enhance its technological capabilities, MagneTek has established advanced development centers for each product segment.
Established Customer Relationships. MagneTek has extensive relationships with major original equipment manufacturers such as IBM, Siemens, Ericsson, Otis Elevator, Lithonia and GE Lighting. MagneTek believes that these long-term customer relationships result from its reputation as a reliable, high quality supplier with a well-recognized brand name in the industry. Maintenance and development of close relationships with OEMs is an important strategic priority of the Company.
Low Cost Manufacturing. MagneTek competes as a high-quality, low-cost supplier of electronic and magnetic components and subsystems that are incorporated into customers' electronic and electrical products and systems. The Company has taken steps to enhance its competitive position such as relocating production to low-cost labor areas and restructuring manufacturing operations.
Strength of Market Channels and Breadth of Product Offerings. MagneTek's distribution and OEM market channels have been developed over many years, would be difficult and expensive to duplicate, and constitute a valuable asset. MagneTek provides a broad diversity of products in each of its product lines. Since product breadth is an important consideration of customers in their selection of suppliers, MagneTek's breadth of product has been an advantage in penetrating and maintaining both OEM and distribution channels.
Restructuring and Current Strategy
Since the mid-1990s, the Company has undertaken a series of strategic initiatives to strengthen its financial position and improve its competitiveness. A number of business units have been sold, most recently the Generators and Motors businesses in 1999, resulting in proceeds over the last five years of more than $500 million in the aggregate which were applied to reduce indebtedness, repurchase the Company's stock, and make select product-line acquisitions. Most of the Company's Lighting Power Products operations were relocated to low-labor-rate areas, and significant restructuring reserves were established and charges recorded, principally in connection with the Lighting Power Products segment, in fiscal 1994, 1996 and 1999.
From 1996 through 1999, the Company implemented demand-pull techniques in many of its manufacturing plants to improve responsiveness to customers, adopted Six Sigma methods to enhance product/service quality, and installed Oracle Enterprise Resource Planning software modules to standardize and expedite data processing.
Major goals of MagneTek's restructuring and current business strategy are as follows:
Reduction of Balance Sheet Leverage. From the end of fiscal 1994 to the end of fiscal 1999, the Company reduced its Debt-to-Shareholders Equity ratio from 4.6:1 to 0.9:1, using proceeds from business divestitures and internally generated cash flow as well as through the conversion of outstanding convertible debt securities. Interest costs were reduced from $5.6 million in fiscal 1995 to $1.9 million in fiscal 1999. Subsequent to fiscal 1999 year-end, the Company repaid all borrowings under its domestic lines of credit with proceeds from the divestiture of its Motors business. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the Company's 1999 Annual Report.
Increased Emphasis on Power Electronics. In coming periods MagneTek will seek initially to establish the profitability and cash flow generating capability of its continuing operations under delevered conditions; to strengthen the Company's product offerings through internal development and selected product line additions; and ultimately to grow and diversify aggressively in the electronic power products business. Attractive growth opportunities are believed to exist in the power supplies business in North America, especially in applications where MagneTek has achieved substantial market presence in Europe. Significant opportunities also may exist in electronic lighting systems and motion controls, among other areas.
International Operations
The Company's international sales accounted for 30% of its net sales in fiscal 1999. The Company defines international sales as sales of products manufactured by its facilities outside the U.S., as well as sales of products manufactured in the U.S. to purchasers outside of the U.S. The Company has two production facilities in Mexico and employs more than 5,500 employees in that country. In Europe, the Company has four manufacturing facilities and employs approximately 1,500 people. The Company's European operations include lighting ballast and power supply production in Italy, Germany and Hungary. The Company has one ballast plant in the People's Republic of China employing approximately 100 people.
Suppliers and Raw Materials
The Company has historically manufactured many of the materials and components used in its products, including capacitors and magnet wire primarily for lighting ballasts. Based upon analyses of the costs and benefits of its historical level of vertical integration, the Company is increasing its outsourcing of certain component parts that were previously produced internally.
Virtually all materials and components purchased by the Company are available from multiple suppliers. During fiscal 1999, raw materials purchases accounted for approximately 60% of the Company's cost of sales. Production requirements depend heavily on certain electronic components, as well as steel and copper. The Company generally negotiates prices with steel vendors on an annual basis. The Company purchases copper for the Lighting Power Products segment primarily in rod form for drawing its own magnet wire. The Company seeks to mitigate its exposure to fluctuations in copper prices through short-term hedging programs as well as through forward-contract arrangements with magnet wire suppliers. The Company purchases aluminum based upon spot prices at delivery.
Research and Development
Research and development activities are conducted by the respective operating segments and are directed toward enhancement of the existing products and development of new products. Advanced technologies are being developed in the Company's three main advanced development centers in Huntsville, Alabama; New Berlin, Wisconsin; and Valdarno, Italy. Total research and development expenditures were approximately $16.4 million, $16.4 million and $14.8 million, respectively for the 1999, 1998 and 1997 fiscal years.
Trademarks and Patents
The Company holds numerous patents and believes that it holds all the patent, trademark and other intellectual property rights necessary to conduct its business.
Employees
As of September 1, 1999, the Company had approximately 1,800 salaried employees and approximately 6,900 hourly employees, of whom approximately 5,300 were covered by collective bargaining agreements with various unions. The Company believes that its relationships with its employees are favorable.
Environmental Matters
General. 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 1999 did not entail material expenditures, and its remediation activities for fiscal 2000 are not expected to entail material expenditures. Future discoveries of contaminated areas could entail material expenditures, depending upon the extent and nature of the contamination.
Century Electric (McMinnville, Tennessee). 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.
Offsite Locations. 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. Due, in part, to the existence of indemnification from the former owners of certain acquired businesses for cleanup costs at certain of these sites, 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 will be named as a potentially responsible party in the future with respect to other sites.
Indemnification Obligations From Restructuring. 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 acquired operations. The Company's indemnification obligations pursuant to such agreements did not entail material expenditures for fiscal 1999, and its indemnification obligations for fiscal 2000 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.
Cautionary Statement
This document contains "forward-looking statements" as defined on 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 exceed present estimates.
In addition, the Company's results of operations could be adversely affected by general business and legal risks, as well as the following specific risks.
Risks Associated with New Business Strategy. The sale of two significant businesses (Generators and Motors) by MagneTek during fiscal 1999 has significantly changed its size and profile as a company. While strengthening MagneTek's balance sheet and focus, these divestitures, coupled with planned stock buybacks, may impact the market for the Company's stock as a result of smaller market capitalization and decreased analyst coverage. Due to diminished size, MagneTek may also find it more difficult to raise financing in the future. While the divestitures and related corporate downsizing are expected to result in reduced expenses, these anticipated cost reductions may prove less than expected, and reduced management resources may adversely affect results of operations. Additionally, MagneTek will seek to expand its core businesses through select product line acquisitions and similar opportunistic investments. Such new acquisitions or investments could pose difficulties integrating new operations and, through the incurrence of related indebtedness, could result in decreased liquidity.
Competition and Pricing Pressures. MagneTek operates in an intensely competitive environment, and certain of its competitors are significantly larger and have substantially greater resources than the Company. Certain of such companies are seeking to employ competitive and management strategies similar to those of MagneTek. As a result, MagneTek's competitive standing may be expected to vary from time to time and among different markets. Pricing pressures in the lighting ballast business during fiscal 1999, and
continuing to the present, have adversely affected the profitability of the Lighting Power Products segment.
Dependence on Significant Customers. MagneTek's sales to its top five customers represented approximately 26% of its net sales in fiscal 1999. The loss of any such customers or significant decreases in any such customer's levels of purchases from MagneTek could have a material adverse effect on the Company's business.
Sensitivity to General Economic and Industry Conditions. MagneTek's markets are cyclical in nature and subject to general trends in the economy. Profitability and cash flow availability could be adversely affected by any prolonged economic downturn.
International Sales and Operations; Foreign Currency Exposure. International sales, including sales from domestic operations, accounted for approximately 30% of MagneTek's net sales in fiscal 1999. As a result of its international sales and operations, the Company is subject to the risk of fluctuation in currency exchange rates. Further, MagneTek's international operations are subject to risks associated with changes in local economic and political conditions, currency exchange restrictions, regulatory requirements and taxes.
Approximately 26% of MagneTek's net sales in fiscal 1999 were denominated in currencies other than the U.S. dollar, principally the Italian lira and the German mark. Commencing January 1, 1999, 11 countries in the European Union began conversion to a common legal currency, known as the "euro." Conversion to the euro is expected to have broad implications to companies doing business in Europe, including MagneTek. Such consequences may include significant changes in exposure to currency fluctuations; changes in the competitive environment among participating countries, including the potential of increased business consolidation; requirements for changes in pricing policies and changes in information technology requirements. At this time, MagneTek is unable to gauge the effect on its business of the euro conversion, including whether such effect will be positive or negative.
Year 2000 Compliance. The Year 2000 Issue is the result of computer programs being written using two digits rather than four to define the applicable year. The Company's computer programs or any hardware that has date-sensitive software or imbedded chips may recognize a date using "00" as the year 1900 rather than the year 2000. Such an occurrence could result in operating systems that either fail or miscalculate information. Should such failures occur, normal business processes could be disrupted.
The Company's plan to resolve the Year 2000 Issue includes specific phases of software/hardware review, testing and final implementation. In fiscal 1997, the Company initiated a comprehensive systems review that resulted in the purchase of an Oracle "Enterprise Resource Planning" software package. While the primary purpose of the software is to improve business processes, it also enabled the Company to address Year 2000 issues. In addition to the implementation of Oracle, some of the Company's software and hardware is being modified or replaced so that its computer systems will function properly with respect to the dates in the year 2000 and thereafter. To date, the Company has completed all review and testing phases and has completed 95% of the final implementation phase. Management believes this process will substantially address its Year 2000 issues and anticipates a completion date no later than the end of October 1999. Local area networks, voice and data lines, computer hardware at the Company's third party installation and local microprocessors have had final reviews. Certain administrative software (e.g. accounts receivable) at specific locations still remains to be fully implemented but these locations are
not felt to pose a material risk of not having implementation completed in the requisite time frames.
The Company has also enlisted a third party review of systems to evaluate its degree of preparation and readiness in this area. MagneTek has also contacted and will continue to contact critical suppliers to determine that their products and services are Year 2000 compliant. The Company has contacted its significant suppliers, none of which share information systems with the Company. The Company will continue to solicit Year 2000 compliance responses from suppliers in an effort to reduce risk. To date, the Company is not aware of any third party with a Year 2000 issue that would materially impact the Company's results of operations, liquidity or capital resources. However, the Company cannot ensure that all external agents will be Year 2000 ready. The inability of third parties to complete their Year 2000 resolution process in a timely fashion could materially impact the Company. The effect of non-compliance by external agents is not determinable. Management estimates that the total cost of the project attributable to continuing operations at $8.5 million with funding occurring from the operating cash flows of the Company. Approximately $7 million has been spent through fiscal 1999.
Management of the Company believes it has a program in place to resolve the Year 2000 Issue in a timely manner. While the Company has not completed all phases of its Year 2000 program, the remaining elements for completion are primarily restricted to the stages of implementation as opposed to review and testing of software and hardware. In the event schedules for final implementation would appear at risk with the current resources, the Company has reviewed contingency plans which include incremental support from third party agents. The Company believes that while not without risk, these actions would support completion of the program in the required time frames. Based upon work completed to date, management believes that the likelihood of a material adverse impact due to problems with systems is remote. Notwithstanding its efforts, the Company feels that disruptions in the general economy or from third parties upon which it relies for means of production or administrative services, resulting from Year 2000 issues, could adversely affect the Company in a material manner.
Environmental Matters. MagneTek has from time to time discovered contamination by hazardous substances at certain of its facilities and in selling certain business operations. The Company has agreed, in some instances, to provide indemnification against environmental liabilities associated with the acquired operations.
Raw Materials. MagneTek's raw material costs represented approximately 51% of its net sales in fiscal 1999. The principal raw materials used by the Company are copper, steel and aluminum. MagneTek attempts to hedge against the risk of fluctuation in the prices of copper and aluminum by entering into futures contracts. However, unanticipated increases in raw material requirements or price increases not covered by hedging would increase production costs and could adversely affect profitability.
ITEM 2.
ITEM 2. PROPERTIES.
MagneTek's headquarters and each of its manufacturing facilities for the continuing operations of the Company are listed below, each of which is owned by the Company unless shown as leased.
The Company believes its facilities are in satisfactory condition and are adequate for its present operations.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
Product Liability
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.
Patent
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. Due to the preliminary state of the litigation, 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.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the stockholders of the Company during the quarter ended June 30, 1999.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The following table sets forth the high and low sales prices of the Company's Common Stock during each quarter of fiscal 1998 and 1999:
The Company's Common Stock is traded on the New York Stock Exchange under the ticker symbol "MAG." As of September 10, 1999, there were 305 record holders of its Common Stock. No cash dividends have been paid on the Common Stock.
MagneTek has not paid any cash dividends on its Common Stock and does not anticipate paying cash dividends in the near future. The ability of the Company to pay dividends on its Common Stock is restricted by provisions in the Company's 1997 bank loan agreement, which provides that the Company may not declare or pay any dividend or make any distribution with respect to its capital stock except for (i) the repurchase of up to $15.0 million of the Company's Common Stock so long as no event of default exists or would result from such declaration and payment, and the ratio of the Company and certain subsidiaries' Funded Debt to Capitalization (as such terms are defined in the bank loan agreement) is not more than 0.65 to 1.00, or (ii) other distributions so long as no event of default exists or would result from such declaration and payment, and the ratio of the Company and certain subsidiaries' Funded Debt to Capitalization is not more than 0.55 to 1.00. MagneTek is currently negotiating an amendment to the loan agreement which if adopted would permit MagneTek to pay dividends or repurchase its Common Stock, provided no event of default exists or would result from such dividends or repurchase, in the amount, for periods after June 28, 1999, not to exceed (i) $60 million for the period ending on or about February 15, 2000, and (ii) $90 million thereafter.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information called for by Part II, Items 6, 7 and 8 is hereby incorporated by reference to the Management's Discussion and Analysis of Financial Condition and Results of Operations, the Financial Statements and the Report of Ernst & Young LLP, Independent Auditors, of the Company's 1999 Annual Report.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Executive Officers of the Registrant
The following table sets forth certain information regarding the current executive officers of the Company.
Mr. Galef has been the Chairman of the Board of Directors since July 1984 and the President and Chief Executive Officer of the Company since May 4, 1999. He also is the Chairman of the Nominating and Corporate Governance Committee. Mr. Galef was the Chief Executive Officer of the Company from September 1993 until June 1996. He has been President of The Spectrum Group, Inc. ("Spectrum"), a private investment and management firm, since its incorporation in California in 1978 and its Chairman and Chief Executive Officer since 1987. Prior to the formation of Spectrum, Mr. Galef was engaged in providing professional interim management services to companies with serious operating and financial problems. Mr. Galef is presently a director of Warnaco, Inc., a diversified apparel manufacturer, and its parent, The Warnaco Group, Inc., and was formerly Chairman of Aviall, Inc., a company providing aircraft engine refurbishment and related products and services, and Exide Corporation, a manufacturer of automotive and industrial batteries. Mr. Galef also currently serves as a director, and was formerly the Chairman, of Petco Animal Supplies, Inc. In addition, Mr. Galef serves as chairman or a director of other privately held Spectrum portfolio companies.
Mr. Canova has been Executive Vice President, with responsibility for the Company's Power Supplies business since October 1993. He has served as managing director of MagneTek S.p.A. in Italy since March 1991. He held the same position with Plessey S.p.A. from 1988 until March 1991 when Plessey S.p.A. was acquired by the Company. From 1969 to 1988, Mr. Canova served as general manager of Plessey S.p.A.
Mr. Dundon has been Executive Vice President, with responsibility for the Company's Lighting Products business since April 1998. From November 1986, when
Century Electric, Inc. was acquired by the Company, until April 1998, Mr. Dundon served as Senior Vice President, Motors and Controls. Prior to the acquisition Mr. Dundon had been with Gould Inc. and Century Electric since 1971, serving in various capacities.
Dr. Levran has been Senior Vice President, Technology since January 1995. He served as Vice President, Technology from July 1993 until January 1995. From 1991 to June 1993, Dr. Levran was employed by EPE Technologies, Inc., a subsidiary of Groupe Schneider, as Vice President of Engineering and Technology with worldwide engineering responsibilities. From 1981 to 1991, he held various engineering management positions with Teledyne Inet, a subsidiary of Teledyne, Inc., most recently as Vice President of Engineering. Dr. Levran received his Ph.D. in electrical engineering from the Polytechnic Institute of New York in 1981.
Mr. Reiland has been Senior Vice President since July 1996 and Chief Financial Officer of the Company since July 1988. Mr. Reiland was also an Executive Vice President of the Company from July 1993 until July 1996 and Senior Vice President from July 1989 until July 1993. He was Controller of the Company from August 1986 to October 1993, and was Vice President, Finance from July 1987 to July 1989. Prior to joining the Company, Mr. Reiland was an Audit Manager with Arthur Andersen & Co. where he served in various capacities since 1980.
Mr. Colling has been Vice President of the Company since July 1990, Treasurer of the Company since June 1989 and was assistant treasurer of the Company from July 1987 to June 1989. Prior to that, Mr. Colling was the assistant treasurer of Century Electric, where he served in various capacities since August 1981.
Mr. Kmak has been Vice President of the Company since October 1993, Controller since November 1994 and Operations Controller from October 1993 to November 1994. Mr. Kmak was the vice president, finance of the Company's Motors and Controls business from November 1986 when Century Electric was acquired by the Company until July 1992 and served as vice president, operational finance of the Company's Motors and Controls business from July 1992 until October 1993. Prior to the acquisition Mr. Kmak had been with Century Electric since 1976, serving in various capacities.
Mr. Miley joined the Company in February 1990 as Vice President, General Counsel and Secretary. Prior to that time, he was an attorney with the law firms of Sheppard, Mullin, Richter & Hampton in Los Angeles, California from March 1986 until January 1990 and Sidley & Austin in Chicago, Illinois from May 1982 until March 1986.
Mr. Hatfield joined the Company in August 1992 as Assistant Vice President, Facilities and Environmental Affairs. Prior to that he was a principal in the industrial environmental consulting firms of Patterson Schafer, Inc. from February 1989 until December 1990 and Schafer Environmental Associates, Inc. from March 1991 until July 1992. From July 1985 to February 1989, Mr. Hatfield served as Director of Environmental Affairs of the Specialty Chemicals Group at Morton Thiokol, Inc.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information called for by Part III, Items 10, 11, 12 and 13, is hereby incorporated by reference to the Company's definitive Proxy Statement to be mailed to Stockholders in September 1999, except for information regarding the Executive Officers of the Company, which is provided in response to Item 10, above.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Index to Consolidated Financial Statements, Consolidated Financial Statement Schedules and Exhibits:
All other schedules have been omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements and related notes.
The following exhibits are filed as part of this Annual Report Form 10-K, or are incorporated herein by reference. Where an exhibit is incorporated by reference, the number which precedes the description of the exhibit indicates the documents to which the cross-reference is made.
- -------------------
(1) Previously filed with the Registration Statement on Form S-3 filed on August 1, 1991, Commission File No. 33-41854, and incorporated herein by this reference.
(2) Previously filed with Form 10-K for Fiscal Year ended July 2, 1995 and incorporated herein by this reference.
(3) Previously filed with Amendment No. 1 to Registration Statement filed on May 10, 1989 and incorporated herein by this reference.
(4) Previously filed with Form 10-K for Fiscal Year ended June 30, 1987 and incorporated herein by this reference.
(5) Previously filed with Form 10-K for Fiscal Year ended June 30, 1991 and incorporated herein by this reference.
(6) Previously filed with Form 10-K for Fiscal Year ended June 30, 1992 and incorporated herein by this reference.
(7) Previously filed with Form 10-K for Fiscal Year ended June 30, 1996 and incorporated herein by this reference.
(8) Previously filed with Form 10-Q for quarter ended December 31, 1994 and incorporated herein by this reference.
(9) Previously filed with the Registration Statement on Form S-8 filed on February 10, 1998, Commission File No. 333-45935, and incorporated herein by this reference.
(10) Previously filed with Form 10-Q for quarter ended December 31, 1996 and incorporated herein by this reference.
(11) Previously filed with Form 8-K dated March 3, 1997 and incorporated herein by this reference.
(12) Previously filed with the Registration Statement on Form S-8 filed on February 10, 1998, Commission File No. 333-45939, and incorporated herein by this reference.
(13) Previously filed with Form 10-K for Fiscal Year ended June 30, 1998 and incorporated herein by this reference.
(14) Filed herewith.
(15) Previously filed with Form 10-Q for quarter ended March 31, 1997 and incorporated herein by this reference.
(16) Previously filed with Form 10-Q for quarter ended March 31, 1994 and incorporated herein by this reference.
(17) Previously filed with Form 10-Q for quarter ended March 31, 1995 and incorporated herein by this reference.
(18) Previously filed with Form 10-Q for quarter ended December 31, 1998 and incorporated herein by this reference.
(19) Previously filed with Form 10-Q for quarter ended March 31, 1993 and incorporated herein by this reference.
(20) Previously filed with Form 10-Q for quarter ended September 30, 1993 and incorporated herein by this reference.
(21) Previously filed with Form 8-K dated January 5, 1990 and incorporated herein by this reference.
(22) Previously filed with Form 10-K for fiscal year ended June 27, 1993 and incorporated herein by this reference.
(23) Previously filed with Form 10-K for Fiscal Year ended July 3, 1994 and incorporated herein by this reference.
(24) Previously filed with Amendment No. 1 to Registration Statement filed on February 14, 1986 and incorporated herein by this reference.
(25) Previously filed with Form 10-K for Fiscal Year ended June 30, 1997 and incorporated herein by this reference.
(26) Previously filed with Form 10-K for Fiscal Year ended July 3, 1988 and incorporated herein by this reference.
(27) Previously filed with the Registration Statement filed on May 3, 1985 and incorporated herein by this reference.
(28) Previously filed with Form 10-K for Fiscal Year ended June 30, 1986 and incorporated herein by this reference.
(29) Previously filed with Form 10-Q for quarter ended September 30, 1986 and incorporated herein by this reference.
(30) Previously filed with Form 8-K dated December 30, 1986 and incorporated herein by this reference.
(31) Previously filed with Form 8-K dated April 26, 1999 and incorporated herein by this reference.
(32) Previously filed with Form 8-K dated August 2, 1999 and incorporated herein by this reference.
(b) Reports on Form 8-K:
The Company filed one Report on Form 8-K during the last quarter of the 1999 fiscal year on May 10, 1999 (dated April 26, 1999) reporting the sale of its generator business to Emerson Electric Co.
(c) Refer to (a) 3 above.
(d) Refer to (a) 2 above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 in the City of Nashville, State of Tennessee, on the 27th day of September, 1999.
MagneTek, Inc. (Registrant)
/s/ ANDREW G. GALEF ------------------------------------------- Andrew G. Galef Chairman of the Board of Directors, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We have audited the consolidated financial statements of MagneTek, Inc. as of June 30, 1999 and 1998, and for each of the three years in the period ended June 30, 1999, and have issued our report thereon dated August 20, 1999 (incorporated by reference elsewhere in this Annual Report on Form 10-K). Our audits also included the financial statement schedule listed in Item 14(a) of this Annual Report on Form 10-K. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
Nashville, Tennessee August 20, 1999
S-1
Schedule II
MAGNETEK, INC.
VALUATION AND QUALIFYING ACCOUNTS
Years ended June 30, 1997, 1998 and 1999
(amounts in thousands)
(a) Represents primarily opening allowances for doubtful accounts balances of acquired companies and Foreign Translation Adjustments.
S-2