Magnetek Receives Conditional Approval of Pension Funding Waiver
October 25 2011 - 8:45AM
Business Wire
Magnetek, Inc. (“Magnetek” or “the Company”)(NYSE: MAG)
announced today that the Company received conditional approval of
its request for a waiver of the minimum funding requirements of the
Company’s defined benefit pension plan (the “Plan”) for the 2011
plan year. The amount of the funding waiver requested was
approximately $17 million, scheduled to be funded in quarterly
installments from April 2011 through January 2012, with a final
installment due in September 2012.
The Internal Revenue Service (“IRS”) informed the Company that
the agency is prepared to grant the waiver request subject to the
following conditions:
- The Company agrees to resume its
required quarterly contributions in a timely manner beginning April
15, 2012.
- The Company makes contributions to the
Plan sufficient to meet the minimum funding requirements for the
Plan years 2012 through 2016.
- The Company provides collateral
acceptable to the Pension Benefit Guarantee Corporation (“PBGC”)
for the full amount of the 2011 plan year waiver.
The Company has confirmed its acceptance of these conditions in
writing to the IRS, and accordingly anticipates receiving final
notification of the waiver approval in the near future. As a
result, the Company currently expects that the 2011 plan year
scheduled contributions of $17 million will be deferred and
amortized with interest over plan years 2012 through 2016.
The waiver application was filed in February 2011 and, in
accordance with the funding rules, the Company did not make its
scheduled contributions in April, July, and October 2011 in an
aggregate amount of more than $10 million. Based upon receipt of
the waiver, the Company can now also defer contributions scheduled
for January and September 2012 in an aggregate amount of nearly $7
million. The Company did make a cash contribution of $1.9 million
to the Plan in September 2011, which represented the final amount
due for plan year 2010.
“We believe this decision is in the best long-term interests of
the Company and our stakeholders, including our employees and our
pensioners. We would like to thank all of those at both the IRS and
the PBGC who worked diligently with us on this issue over the past
several months,” said Marty Schwenner, Magnetek’s chief financial
officer. “We expect the funding waiver will have a significant
favorable impact on our cash flow over the next several quarters,
as evidenced by our strong positive cash flow in our most recently
reported fourth quarter. Foremost, the funding waiver should enable
us to strengthen our balance sheet by building our cash reserves at
a time of increasing economic uncertainty. To a lesser extent, it
will also provide us with additional resources to prudently
allocate to growth opportunities in our business,” said Mr.
Schwenner.
The Company intends to issue an updated press release upon
receipt of the unconditional final waiver approval from the
IRS.
About Magnetek, Inc.
Magnetek, Inc. provides digital power and motion control systems
used in overhead material handling, elevator, and energy delivery
applications. The Company is North America’s largest supplier of
digital drive systems for industrial cranes, hoists, and monorails.
Magnetek provides Energy Engineered® drives, radio remote controls,
motors, and braking and collision avoidance subsystems to North
America’s foremost overhead material handling crane builders. The
Company is also the world’s largest independent builder of highly
integrated digital motion control systems for high-rise, high-speed
elevators. In energy delivery, Magnetek develops and markets
digital power inverters that connect renewable energy sources to
the utility grid, and is a leading independent supplier of digital
motion control systems for underground coal mining applications.
Magnetek is headquartered in Menomonee Falls, Wis., in the greater
Milwaukee area and operates manufacturing facilities in Pittsburgh,
Pa., and Canonsburg, Pa., as well as Menomonee Falls.
Special Note Regarding Online Availability of Magnetek
Releases and Filings
All Magnetek financial news releases and filings with the
Security and Exchange Commission (“SEC”) are posted to the Magnetek
website. Material and financial releases as well as SEC filings are
available at www.magnetek.com. Automatic email alerts for these
postings are available from the Investor Relations section of the
site. Corporate and general releases as well as product information
are also available at www.magnetek.com.
Special Note Regarding Forward-Looking Statements
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 transition period 2011 and fiscal year 2012. These
forward-looking statements are based on the Company's expectations
and are subject to risks and uncertainties that could cause actual
results to differ materially from those set forth in, contemplated
by, or underlying these forward-looking statements. These include,
but are not limited to, unanticipated changes related to the status
of the funding waiver, economic conditions in general, business
conditions in material handling, elevator, mining, and renewable
energy markets, operating conditions, competitive factors such as
pricing and technology, risks associated with acquisitions and
divestitures, legal proceedings, and the risk that the Company’s
ultimate costs of doing business exceed present estimates. 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.