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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 6, 1994
MAGNETEK, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-10233 95-3917584
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(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
11150 Santa Monica Boulevard, 15th Floor, Los Angeles, CA 90025
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Registrant's telephone number, including area code (310) 473-6681
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Not applicable
(former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
MagneTek, Inc. issued a public announcement today regarding its
restructuring plans. Such public announcement is an Exhibit to this Form 8-K
and is incorporated into this Item 5 by reference.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MAGNETEK, INC.
Dated: January 7, 1994 By: /s/ David P. Reiland
_________________________________
David P. Reiland
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Page No.
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99 Press Release issued on January 6, 1994 5
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NEWS RELEASE
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For Release: January 6, 1994
Contact: Robert W. Murray
310/444-7250
MAGNETEK ANNOUNCES RESTRUCTURING PLAN
o PROGRAM WILL FOCUS COMPANY ON ENERGY-SAVING PRODUCTS
o PROCEEDS FROM DIVESTITURES WILL BE USED TO CUT DEBT
o RESTRUCTURING CHARGE WILL RESULT IN 2ND QUARTER LOSS
o 3RD QUARTER RETURN TO PROFITABILITY EXPECTED
Los Angeles, January 6, 1994 -- The Board of Directors of MagneTek, Inc. (NYSE,
MAG) has approved a restructuring plan designed to divest non-core businesses
and reduce debt, resulting in a financially strong company that is well
positioned in the rapidly growing marketplace for energy-efficient electrical
equipment.
FOCUS ON CORE BUSINESSES
Expected to be completed by the end of calendar 1994, the restructuring
plan will simplify the Company's product mix and marketing channels, allowing it
to focus all of its management and development resources on its major lines of
business. They are: LIGHTING PRODUCTS, ELECTRIC MOTORS AND GENERATORS,
ADJUSTABLE SPEED DRIVES, DISTRIBUTION TRANSFORMERS AND COMMERCIAL POWER
SUPPLIES.
Completion of the plan will result in an electrical equipment company with
premium product lines designed to save energy or improve power quality. Due to
environmental as well as economic considerations, market demand for such
products is growing rapidly and on a global scale.
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DIVESTITURE CANDIDATES
Six business groups accounting for approximately 29 percent of the
Company's fiscal 1993 revenues of $1.5 billion, are candidates for divestiture.
They are:
o ELECTRICAL SERVICES GROUP, including a high-voltage electric coil
manufacturing plant and 16 service centers in North America, as well as a field
service unit in Europe, engaged in the renovation of electro-mechanical
equipment.
o UTILITY AND POWER PRODUCTS GROUP, including two large factories
manufacturing medium-power transformers up to 100 MVA (Megawatts) and large
custom motors up to 10,000 hp.
o COMPONENT TRANSFORMER AND CONVERTER GROUP, consisting of three
manufacturing facilities, two in the U.S. and one in Europe, which produce 0.1
to 2,000-watt transformers and AC-DC power converters.
o POWER TECHNOLOGY SYSTEMS GROUP, including four facilities in the U.S. and
two in Europe which build and service uninterruptible power supplies, military
power converters and airport ground support systems.
o CONTROLS GROUP, consisting of three U.S. sites manufacturing motion,
position and pressure transducers, liquid level controls, industrial brakes and
cable carriers.
o INSULATION GROUP, including four North American locations that fabricate
and distribute fiberglass tape and other electrical insulation products.
According to Andrew G. Galef, MagneTek's Chairman and CEO, all
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of these business groups are profitable, commanding substantial shares of their
respective markets. They will be accounted for as continuing operations until
sold, and are expected to be sold in transactions favorable to MagneTek and the
on-going development of the respective businesses.
MagneTek has engaged an investment banking firm to assist in the
implementation of its restructuring plan.
DEBT REDUCTION
MagneTek's restructuring plan also contemplates a reduction in the
Company's leverage. Proceeds from divestitures, coupled with working capital
reductions and cost-cutting measures, are expected to generate substantial
positive cash flows which will be used to pay down debt. In addition,
conversion of the Company's 8-percent Convertible Subordinated Notes, callable
in September, 1994, would shift $75 million from debt to equity.
In accordance with generally accepted accounting principles, MagneTek must
recognize any anticipated losses on divestitures immediately, but cannot reflect
anticipated gains on divestitures until the sales are consummated. Therefore,
the Company will record a one-time restructuring charge covering anticipated
losses on the divestiture of operations whose sale prices are not expected to
equal or exceed book value, as well as certain costs related to utilization and
consolidation of facilities and inventories.
EARNINGS EFFECT
The restructuring charge, which is not expected to exceed $60 million, is
being included in the Company's second fiscal quarter,
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ended December 31, 1993, results of which will be announced later this month.
Consequently, MagneTek will report a material loss for the quarter, since any
gains on divestitures can only be reflected when and if they are realized. The
gains currently anticipated by MagneTek, if realized, would exceed the second-
quarter restructuring charge, providing an overall net gain for the Company.
According to Mr. Galef, the Company expects to return to profitability in
the current (third) fiscal quarter and to achieve steady improvements in
operating results thereafter.
MagneTek is a leading manufacturer of Energy Engineered-TM- electrical
equipment employing 15,000 people. Listed on the New York Stock Exchange, the
Company reported sales of $1.5 billion for the fiscal year ended June 30, 1993.
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