**SECURITIES AND EXCHANGE COMMISSION**

 

**Washington,D. C. 20549**

 

**FORM 10-Q**

 

| **(Mark One)**                                            |   |                                                                                            |
|-----------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|
| **ý**                                                |   | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE  SECURITIES EXCHANGE ACT OF 1934**   |
|                                                      |   |                                                                                            |
| **For the quarterly period  ended:  March 31, 2003** |
|                                                      |   | **OR**                                                                                          |
| **o**                                                     |   | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)  OF THE  SECURITIES EXCHANGE ACT OF 1934** |
|                                                      |
| **For  the transition period from**                       |
|                                                      |
| **Commission  file number 1-10233**                       |

 

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| **MAGNETEK, INC.**                                                  |
|---------------------------------------------------------------------|
| (Exact name of  registrant as specified in its charter)             |
|                                                                |   |   |
| **Delaware**                                                        |   | **95-3917584** |
| (State or other  jurisdiction of  incorporation or organization)    |   | (I.R.S. Employer  Identification Number) |
|                                                                |
| **10900  Wilshire Blvd., Suite 850  Los Angeles, California 90024** |
| (Address of principal  executive offices)                           |
| (Zip Code)                                                          |
| **(310)  208-1980**                                                 |
| (Registrant’s telephone  number, including area code)          |

 

 

(Former name, formeraddress and former fiscal year,if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.

Yes  ý  No  o

 

Indicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12b-2 of the Exchange Act).  Yes  ý  No  o

 

APPLICABLE ONLY TOCORPORATE ISSUERS:

 

The number of shares outstanding of Registrant’s Common Stock, as ofMay 5, 2003 was 23,535,507 shares.

 

 

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2003 MAGNETEK FORM 10-Q

 

TABLE OF CONTENTS FOR THEQUARTERLY REPORT ON FORM 10Q

FOR THE FISCAL QUARTERENDED MARCH 31, 2003

 

MAGNETEK, INC.

 
| **Part I.**                                                              | **Financial Information**                                                                   |
|--------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|
|                                                                     |                                                                                        |
| Item  1.                                                                 | Financial  Statements                                                                       |
| Item 2.                                                                  | Management’s Discussion and  Analysis of Results of Operations and Financial Condition |
| Item  3.                                                                 | Quantitative  and Qualitative Disclosures about Market Risk                                 |
| Item 4.                                                                  | Controls and Procedures                                                                     |
|                                                                     |                                                                                        |
| **Part II.**                                                             | **Other Information**                                                                       |
|                                                                     |                                                                                        |
| Item 1.                                                                  | Legal Proceedings                                                                           |
| Item 6.                                                                  | Exhibits and Reports on  Form 8-K                                                           |
|                                                                     |                                                                                        |
| Signatures                                                               |
|                                                                     |
| Certification Pursuant to Section 302 of  the Sarbanes-Oxley Act of 2002 |

 

2

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PART I.  FINANCIALINFORMATION

 

The accompanying unaudited condensed consolidated financial statementshave been prepared in accordance with accounting principles generally acceptedin the United States for interim financial information and with theinstructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of theinformation and footnotes required by accounting principles for completefinancial statements.

 

In the opinion of management, the accompanying condensed consolidatedfinancial statements contain all adjustments necessary to fairly present thefinancial position as of March 31, 2003 and the results of operations and cashflows for the three-month and nine-month periods ended March 31, 2003 and2002.  It is suggested that thesecondensed consolidated financial statements be read in conjunction with theconsolidated financial statements and notes included in the Company’s latestAnnual Report on Form 10-K.  Results forthe three-months and nine-months ended March 31, 2003 are not necessarilyindicative of results that may be experienced for the full fiscal year.

 

This document contains “forward-looking statements” within the meaningof the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are inherentlysubject to risks and uncertainties which in many cases are beyond the controlof the Company and which cannot be predicted or quantified.  As a result, future events and actualresults could differ materially from those set forth in, contemplated by, orunderlying forward-looking statements. Such risks and uncertainties include but are not limited to economicconditions in general, sensitivity to industry conditions, competitive factorssuch as technology and pricing pressures, business conditions in thetelecommunications and electronic equipment markets, international sales andoperations, dependence on significant customers, increased material costs,risks and costs associated with acquisitions and divestitures, environmentalmatters and the risk that the Company’s ultimate costs of doing business exceedpresent estimates.  Further informationon factors that could affect Magnetek’s financial results can be found in theCompany’s filings with the Securities and Exchange Commission.

 

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ITEM 1

 

MAGNETEK, INC.

CONDENSED CONSOLIDATEDINCOME STATEMENTS

FOR THE THREE MONTHSENDED

March 31, 2003 and 2002

(amounts in thousands,except per share data)

(unaudited)

 
|                                             |   | **2003** |   | **2002** |   |
|--------------------------------------------------|--------|----------|--------|----------|--------|
| Net sales                                        |   | $        | 53,223 |     | $      | 44,444 |   |
| Cost of sales                                    |   | 42,893   |   | 33,917   |   |
|                                             |   |     |   |     |   |
| Gross profit                                     |   | 10,330   |   | 10,527   |   |
| Research and  development                        |   | 2,998    |   | 2,472    |   |
| Selling, general  and administrative             |   | 10,161   |   | 7,499    |   |
|                                             |   |     |   |     |   |
| Income (loss)  from operations                   |   | (2,829   | )      | 556      |   |
| Interest and  other expense                      |   | 3,889    |   | 68       |   |
|                                             |   |     |   |     |   |
| Income (loss)  before provision for income taxes |   | (6,718   | )      | 488      |   |
| Provision  (benefit) for income taxes            |   | (1,308   | )      | 186      |   |
| Net income  (loss)                               |   | $        | (5,410 | )        | $      | 302 |   |
|                                             |   |     |   |     |   |
| Earnings (loss)  per common share                |   |     |   |     |   |
|                                             |   |     |   |     |   |
| Basic and  diluted:                              |   |     |   |     |   |
| Net income  (loss)                               |   | $        | (0.23  | )        | $      | 0.01 |   |

 

See accompanying notes

 

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MAGNETEK, INC.

CONDENSED CONSOLIDATEDINCOME STATEMENTS

FOR THE NINE MONTHS ENDED

March 31, 2003 and 2002

(amounts in thousands,except per share data)

(unaudited)

 
|                                            |   | **2003** |    | **2002** |   |
|-------------------------------------------------|--------|----------|---------|----------|--------|
| Net sales                                       |   | $        | 147,317 |     | $      | 143,987 |   |
| Cost of sales                                   |   | 120,961  |    | 110,689  |   |
|                                            |   |     |    |     |   |
| Gross profit                                    |   | 26,356   |    | 33,298   |   |
| Research and development                        |   | 8,456    |    | 7,237    |   |
| Selling, general and administrative             |   | 29,576   |    | 23,237   |   |
| Gain from termination of retiree medical plan   |   | (27,771  | )       | —   |   |
| Goodwill and fixed asset impairment             |   | 34,019   |    | —   |   |
|                                            |   |     |    |     |   |
| Income (loss) from operations                   |   | (17,924  | )       | 2,824    |   |
| Interest and other (income) expense             |   | 4,308    |    | (158     | )      |
|                                            |   |     |    |     |   |
| Income (loss) before provision for income taxes |   | (22,232  | )       | 2,982    |   |
| Provision for income taxes                      |   | 7,620    |    | 1,134    |   |
| Net income (loss)                               |   | $        | (29,852 | )        | $      | 1,848 |   |
|                                            |   |     |    |     |   |
| Earnings (loss) per common share                |   |     |    |     |   |
|                                            |   |     |    |     |   |
| Basic and diluted:                              |   |     |    |     |   |
| Net income (loss)                               |   | $        | (1.27   | )        | $      | 0.08 |   |

 

See accompanying notes

 

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MAGNETEK,INC.

CONDENSED CONSOLIDATEDBALANCE SHEETS

MARCH 31, 2003 and JUNE30, 2002

(amounts in thousands)

 
|                                              |   | **March 31**    |    | **June 30**  |   |
|---------------------------------------------------|--------|-----------------|---------|--------------|--------|
|                                              |   | **(unaudited)** |    |         |   |
| ASSETS                                            |   |            |    |         |   |
| Current assets:                                   |   |            |    |         |   |
| Cash                                              |   | $               | 1,712   |         | $      | 4,816 |   |
| Accounts receivable, net                          |   | 42,199          |    | 41,532       |   |
| Inventories                                       |   | 48,411          |    | 45,338       |   |
| Prepaid expenses and other                        |   | 10,987          |    | 8,767        |   |
| Total current assets                              |   | 103,309         |    | 100,453      |   |
|                                              |   |            |    |         |   |
| Property, plant and equipment                     |   | 103,865         |    | 93,167       |   |
|                                              |   |            |    |         |   |
| Less-accumulated depreciation and amortization    |   | 72,395          |    | 61,194       |   |
| Net property, plant and equipment                 |   | 31,470          |    | 31,973       |   |
|                                              |   |            |    |         |   |
| Goodwill                                          |   | 61,778          |    | 95,533       |   |
| Prepaid pension and other assets                  |   | 73,768          |    | 76,932       |   |
| Total Assets                                      |   | $               | 270,325 |         | $      | 304,891 |   |
|                                              |   |            |    |         |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY         |   |            |    |         |   |
|                                              |   |            |    |         |   |
| Current liabilities:                              |   |            |    |         |   |
| Accounts payable                                  |   | $               | 32,105  |         | $      | 25,386 |   |
| Accrued liabilities                               |   | 17,783          |    | 18,559       |   |
| Current portion of long-term debt                 |   | 5,101           |    | 407          |   |
| Total current liabilities                         |   | 54,989          |    | 44,352       |   |
|                                              |   |            |    |         |   |
| Long-term debt, net of current portion            |   | 9,624           |    | 3,717        |   |
|                                              |   |            |    |         |   |
| Other long-term obligations                       |   | 80,892          |    | 114,003      |   |
|                                              |   |            |    |         |   |
| Deferred income taxes                             |   | 8,102           |    | –– |   |
|                                              |   |            |    |         |   |
| Stockholders’ equity                         |   |            |    |         |   |
| Common stock                                      |   | 236             |    | 236          |   |
| Paid in capital in excess of par value            |   | 106,464         |    | 106,216      |   |
| Retained earnings                                 |   | 85,951          |    | 115,803      |   |
| Accumulated other comprehensive loss              |   | (75,933         | )       | (79,436      | )      |
| Total stockholders’ equity                   |   | 116,718         |    | 142,819      |   |
|                                              |   |            |    |         |   |
| Total Liabilities and   Stockholders’ Equity |   | $               | 270,325 |         | $      | 304,891 |   |

 

See accompanying notes

 

6

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MAGNETEK, INC.

CONSOLIDATED STATEMENTSOF CASH FLOW

FOR THE NINE MONTHS ENDED

March 31, 2003 and 2002

(amounts in thousands)

(unaudited)

 
|                                                                                  |   | **2003** |    | **2002** |   |
|---------------------------------------------------------------------------------------|--------|----------|---------|----------|--------|
| Cash flows from operating activities:                                                 |   |     |    |     |   |
| Net income (loss)                                                                     |   | $        | (29,852 | )        | $      | 1,848 |   |
| Adjustments to reconcile net income (loss) to net cash used in  operating activities: |   |     |    |     |   |
| Depreciation and amortization                                                         |   | 6,938    |    | 6,553    |   |
| Gain from termination of retiree medical, net of tax                                  |   | (17,218  | )       | —   |   |
| Goodwill and fixed asset impairment                                                   |   | 34,019   |    | —   |   |
| Changes in operating assets and liabilities                                           |   | 1,520    |    | (21,507  | )      |
| Total adjustments                                                                     |   | 25,259   |    | (14,954  | )      |
| Net cash used in operating activities                                                 |   | (4,593   | )       | (13,106  | )      |
| Cash flows from investing activities:                                                 |   |     |    |     |   |
| Purchase of and investment in companies, net of cash acquired                         |   | (4,523   | )       | —   |   |
| Proceeds from sale of discontinued businesses and other assets                        |   | —   |    | 24,414   |   |
| Capital expenditures                                                                  |   | (4,672   | )       | (5,363   | )      |
| Net cash provided by (used in) investing activities                                   |   | (9,195   | )       | 19,051   |   |
| Cash flow from financing activities:                                                  |   |     |    |     |   |
| Borrowings under bank and other long term obligations                                 |   | 10,601   |    | 2,911    |   |
| Proceeds from issuance of common stock                                                |   | 248      |    | 915      |   |
| Stock repurchases                                                                     |   | —   |    | (3,916   | )      |
| Repayment of bank and other long term obligations                                     |   | —   |    | (6,159   | )      |
| Increase in deferred financing costs                                                  |   | (165     | )       | —   |   |
| Net cash provided by (used in) financing activities                                   |   | 10,684   |    | (6,249   | )      |
|                                                                                  |   |     |    |     |   |
| Net decrease in cash                                                                  |   | $        | (3,104  | )        | $      | (304 | ) |
| Cash at the beginning of the period                                                   |   | 4,816    |    | 5,310    |   |
| Cash at the end of the period                                                         |   | $        | 1,712   |     | $      | 5,006 |   |
|                                                                                  |   |     |    |     |   |
| Supplemental disclosures of cash flow information:                                    |   |     |    |     |   |
| Cash paid during the period for:                                                      |   |     |    |     |   |
| Interest                                                                              |   | $        | 857     |     | $      | 327 |   |
| Income taxes                                                                          |   | $        | 602     |     | $      | 5,977 |   |

 

See accompanying notes

 

7

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MAGNETEK, INC.

NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2003

(All dollar amounts arein thousands)

(unaudited)

 

1.             Basisof Presentation

 

The accompanying unaudited condensed consolidatedfinancial statements have been prepared in accordance with accountingprinciples generally accepted in the United States for interim financialreporting.  Accordingly, they do notinclude all of the information and footnotes required by generally acceptedaccounting principles for fiscal year end financial statements.  For further information, refer to thefinancial statements and footnotes thereto included in the Company’s Form 10-Kfor the year ended June 30, 2002 filed with the Securities and ExchangeCommission.

 

The Company uses a fifty-two, fifty-three week fiscalyear ending on the Sunday nearest to June 30. Fiscal quarters are the thirteen or fourteen week periods ending on theSunday nearest September 30, December 31, March 31 and June 30.  For clarity of presentation, all periods arepresented as if they ended on the last day of the calendar period.  The three-month and nine-month periods endedMarch 31, 2003 and 2002 each contained thirteen and thirty-nine weeks respectively.

 

2.             Summaryof Significant Accounting Policies

 

Principles ofConsolidation – The consolidated financial statements includethe accounts of Magnetek, Inc. and its subsidiaries (the “Company”).  All significant intercompany accounts andtransactions have been eliminated.

 

Use of Estimates– The preparation of financial statements in conformity with accountingprinciples generally accepted in the United States requires management to makeestimates and assumptions that affect the amounts reported in the financialstatements and the accompanying notes. Management estimates are used in, but not limited to, accounting foraccounts receivable allowances, inventory allowances, depreciation andamortization, asset impairment, pension benefits, contingencies and taxes.  Due to inherent uncertainties in makingestimates, actual circumstances could differ from our estimates resulting in amaterial effect on the Company’s financial position or results of operations.

 

Revenue Recognition– The Company’s policy is to record and recognize sales only upon shipment.

 

Inventories– Inventories are stated at the lower of cost (first-in, first-out method) ormarket.

 

Property, Plant andEquipment – Additions and improvement are capitalized atcost, whereas expenditures for maintenance and repair are charged to expense asincurred.  Depreciation is provided forover the estimated useful lives of the respective assets (ranging from three toforty years) principally using the straight-line method.

 

8

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Goodwill– The Company adopted Statement of Financial Accounting Standards (“SFAS”) No.142, “Goodwill and Other Intangible Assets”, effective July 1, 2001.  Under SFAS No. 142, goodwill is no longeramortized but is subject to annual impairment tests, or interim impairmenttests if certain indicators arise. During the second quarter of fiscal 2003, the Company performed interimtests for impairment of goodwill (see Note 7 of “Notes to CondensedConsolidated Financial Statements”).

 

Stock-Based Compensation– The Company has elected to continue to use the intrinsic-value method ofaccounting as prescribed by Accounting Principles Board (APB) No. 25“Accounting for Stock Issued to Employees” in accounting for stock based awardsto employees.  Under APB 25, the Companyrecognizes no compensation expense with respect to such awards when theexercise price is equal to or greater than the market price at the date ofgrant.  Accordingly, no stock-basedemployee compensation cost is reflected in reported results of operations forall periods presented.

 

The Company adopted the interim disclosure provisionsof SFAS No. 148, “Accounting for Stock-Based Compensation – Transition andDisclosure – an Amendment of FASB Statement no. 123”, effective January 1, 2003(see “Recent Accounting Pronouncements”). The following table illustrates the effect on net income and earningsper share if the Company had applied the fair value recognition provisions ofSFAS No. 123, “Accounting for Stock-Based Compensation”, to stock-basedemployee compensation:

 
|                                                                                                                                          |   | **Three  Months  Ended March 31** |   | **Nine  Months Ended  Ended March 31** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|----------------------------------------|--------|
|                                                                                                                                          |   | **2003**                          |   | **2002**                               |   | **2003** |   | **2002** |   |
| Net income  (loss)                                                                                                                            |   | $                                 | (5,410 | )                                      | $      | 302 |   | $ | (29,852 | ) | $ | 1,848 |   |
|                                                                                                                                          |   |                              |   |                                   |   |   |   |   |   |
| Deduct: Total  stock-based employee compensation expense determined under fair value based  method for all awards, net of related tax effects |   | (493                              | )      | (1,286                                 | )      | (1,965 | ) | (3,466 | ) |
| Pro forma net  loss                                                                                                                           |   | $                                 | (5,903 | )                                      | $      | (984 | ) | $ | (31,817 | ) | $ | (1,618 | ) |
|                                                                                                                                          |   |                              |   |                                   |   |   |   |   |   |
| Earnings (loss)  per share as reported:                                                                                                       |   |                              |   |                                   |   |   |   |   |   |
| Basic and  diluted                                                                                                                            |   | $                                 | (0.23  | )                                      | $      | 0.01 |   | $ | (1.27 | ) | $ | 0.08 |   |
|                                                                                                                                          |   |                              |   |                                   |   |   |   |   |   |
| Pro forma loss  per share:                                                                                                                    |   |                              |   |                                   |   |   |   |   |   |
| Basic and  diluted                                                                                                                            |   | $                                 | (0.25  | )                                      | $      | (0.04 | ) | $ | (1.35 | ) | $ | (0.07 | ) |

 

Pension Benefits– The valuation of the Company’s pension plan requires the use of assumptionsand estimates that are used to develop actuarial valuations of expenses, assetsand liabilities.  These assumptionsinclude discount rates, investment returns, projected salary increases andmortality rates.  Changes in assumptionsand

 

9

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future interest rates and investment returns couldpotentially have a material impact on the Company’s expenses and relatedfunding requirements.

 

Derivative FinancialInstruments – The Company uses derivative financialinstruments to reduce financial market risks. These instruments are used tohedge foreign currency and interest rate market exposures. The Company does notuse derivative financial instruments for speculative or trading purposes. Theaccounting policies for these instruments are based on the Company’sdesignation of such instruments as hedging transactions. The criteria theCompany uses for designating an instrument as a hedge include the instrument’seffectiveness in risk reduction and the matching of the derivative to theunderlying transaction. The resulting gains or losses are accounted for as partof the transactions being hedged, except for losses not expected to berecovered upon the completion of the hedge transaction, which are expensed.

 

Recent AccountingPronouncements – In July 2002, the Financial AccountingStandards Board (FASB) issued SFAS No. 146, “Accounting for Costs Associatedwith Exit or Disposal Activities”, which nullified Emerging Issues Task Force(EITF) Issue 94-3, “Liability Recognition for Certain Employee TerminationBenefits and Other Costs to Exit an Activity (including Certain Costs Incurredin a Restructuring)”.  SFAS No. 146requires that a liability for a cost associated with an exit or disposal activitybe recognized when the liability is incurred. Under EITF 94-3, a liability for an exit cost was recognized at the dateof an entity’s commitment to an exit plan. The provisions of this Statement are effective for exit or disposalactivities that are initiated after December 31, 2002.  The Company does not expect the adoption ofSFAS 146 to have a material impact on its results of operations or financialposition.

 

In November 2002, the FASB issued Interpretation No.(FIN) 45, "Guarantor's Accounting and Disclosure Requirements forGuarantees, Including Indirect Guarantees of Indebtedness of Others".  FIN 45 requires guarantors to recognize, atfair value, obligations to perform under certain guarantees, and is effectivefor guarantees issued or modified on or after January 1, 2003.  FIN 45 did not have a material impact on theCompany's results of operations or financial position.

 

In December 2002, the FASB issued SFAS No. 148,“Accounting for Stock-Based Compensation - Transition and Disclosure”, whichamends SFAS No. 123, “Accounting for Stock-Based Compensation”. SFAS 148provides alternative methods of transition for a voluntary change to the fairvalue based method of accounting for stock-based employee compensation andrequires more prominent and more frequent disclosures in the financialstatements of the effects of stock-based compensation. The provisions of SFAS148 are effective for fiscal years ending after December 15, 2002 and theinterim disclosure provisions are effective for the current period.

 

3.             Inventories

 

Inventories at March 31, 2003 and June 30, 2002consist of the following:

 
|                           |   | **March 31** |   | **June 30** |   |
|--------------------------------|--------|--------------|--------|-------------|--------|
| Raw materials  and stock parts |   | $            | 27,160 |        | $      | 29,201 |   |
| Work-in-process                |   | 15,552       |   | 10,747      |   |
| Finished goods                 |   | 5,699        |   | 5,390       |   |
|                           |   | $            | 48,411 |        | $      | 45,338 |   |

 

10

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4.             Commitmentsand Contingencies

 

The Company is a party to a number of productliability lawsuits, many of which involve fires allegedly caused by defectivelighting ballasts. All of these cases are being defended by the Company, andmanagement believes that its insurers will bear all liability, except forapplicable deductibles, and that none of these proceedings individually or inthe aggregate will have a material effect on the Company.  In June 2001 the Company sold its Lightingbusiness.  Pursuant to the terms of thesale agreement, the Company’s liability for such claims asserted subsequent toDecember 2003 will terminate, regardless of whether or not the ballasts weremanufactured by the Company.

 

The Company is frequently named, along with numerousother defendants, in asbestos-related lawsuits. While the outcome ofthese cases cannot be predicted with certainty, the Company is aggressivelydefending against such claims and seeking to be dismissed as a defendant.  The Company has never produced asbestos-containingproducts and is either contractually indemnified against liability forasbestos-related claims or believes that it has no liability for such claims,all of which arise from business operations the Company acquired but no longerowns.  The Company does not believe theproceedings, individually or in the aggregate, will have a material adverseeffect on its financial position or results of operations.

 

In April 1998, Ole K. Nilssen filed a lawsuit inthe U.S. District Court for the Northern District of Illinois alleginginfringement by the Company of seven of his patents pertaining to electronicballast technology. Mr. Nilssen sought unspecified damages and injunctiverelief to preclude the Company from making, using or selling products allegedlyinfringing his patents. The Company denied that its products infringed anyvalid patent and filed a response asserting its affirmative defenses, as wellas a counterclaim for a judicial declaration that its products did not infringethe patents asserted by Nilssen and also that the asserted patents wereinvalid. The Company vigorously defended the lawsuit.  In April 2003, the lawsuits were dismissed with prejudice and theparties agreed to submit limited issues to binding arbitration. Although theCompany will continue to assert what it believes are strong defenses atarbitration, an unfavorable decision could have a material adverse effect on the Company’s financial positionor results of operations.

 

Beginning in 1997, the Company entered into a numberof swap transactions with Bank of America (“B of A”) to reduce its exposure tofluctuations in interest rates on its outstanding debt.  One swap transaction included a provisionthat allowed B of A, at its sole option, to extend the transaction for afive-year period upon expiration (the “swaption”). Prior to August 1999, theCompany paid off a large amount of its outstanding debt and the existinghedging strategy was no longer appropriate. Beginning in August 1999, the Company, with B of A’s assistance, beganunwinding the swap transactions and in December 1999, it unwound the lastremaining swap, which was subject to the swaption.  On June 26, 2002, the Company received notice that B of A intendedto exercise the swaption, although at that point the underlying swap had beenterminated for two and a half years. Between December 1999 and June 2002, theCompany had no contact from B of A (which was also the agent bank under itscredit agreement) regarding the alleged survival of the swaption. As a resultof the significant decline in interest rates between December 1999 and June2002, the  value of a swaption hadincreased significantly in B

 

11

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of A’s favor. A dispute arose between the Company and B of A regarding whether theswaption was also terminated in December 1999 along with the underlying swapand whether a right to extend a terminated contractual agreement evenexists.  In December 2002, the Companyfiled a lawsuit in Los Angeles Superior Court against Bank of America.  Bank of America removed the case to the U.S.District Court for the Central District of California.  In April 2003, the Company and B of Areached an agreement whereby Magnetek would pay B of A $3.275 million.  A corresponding charge to income wasrecorded in the quarter ended March 31, 2003 and is reflected as other expensein the accompanying condensed consolidated income statement.

 

From time to time, the Company discovered theexistence of hazardous substances at certain facilities associated with previously owned businesses and responded asnecessary to bring the facilities into compliance with applicable laws andregulations. Upon sale of the businesses, the Company agreed, in some cases, toindemnify the buyers against environmental claims associated with the divestedoperations, subject to various conditions and limitations. Remediationactivities, including those related to the Company’s indemnificationobligations, did not involve material expenditures during the third quarter offiscal 2003.

 

The Company has also been identified by the UnitedStates Environmental Protection Agency and certain state agencies as apotentially responsible party for cleanup costs associated with alleged pastwaste disposal practices at several previously owned facilities and offsitelocations. Its remediation activities as a potentially responsible party werenot material in the third quarter of fiscal 2003. Although the materiality offuture expenditures for environmental activities may be affected by the leveland type of contamination, the extent and nature of cleanup activities requiredby governmental authorities, the nature of the Company’s alleged connection tothe contaminated sites, the number and financial resources of other potentiallyresponsible parties, the availability of indemnification rights against thirdparties and the identification of additional contaminated sites, the Company’sestimated share of liability, if any, for environmental remediation, includingits indemnification obligations, is not expected to be material.

 

Prior to the Company’s purchase of CenturyElectric, Inc. (“Century Electric”) in 1986, Century Electric acquired abusiness from Gould Inc. (“Gould”) in May 1983 that included aleasehold interest in a fractional horsepower electric motor manufacturingfacility located in McMinnville, Tennessee. Gould agreed to indemnify CenturyElectric from and against liabilities and expenses arising out of the handlingand cleanup of certain waste materials, including but not limited to cleaningup any polychlorinated biphenyls (“PCBs”) at the McMinnville facility (the“1983 Indemnity”).  The presence of PCBsand other substances, including solvents, in the soil and in the groundwaterunderlying the facility and in certain offsite soil, sediment and biota sampleshas been identified. The McMinnville plant is listed as a Tennessee InactiveHazardous Waste Substance Site and plant employees were notified of the presence of contaminants atthe  facility. Gould has completed aninterim remedial excavation and disposal of onsite soil containing PCBs and apreliminary investigation and cleanup of certain onsite and offsitecontamination. The Company believes the cost of further investigation andremediation (including ancillary costs) are covered by the 1983 Indemnity. TheCompany sold its leasehold interest in the McMinnville plant in August 1999 andwhile the Company believes that Gould will continue to perform substantiallyunder its indemnity obligations, Gould’s substantial

 

12

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failure to perform such obligations could have amaterial adverse effect on the Company’s financial position or results ofoperations.

 

The Company acquired the stock of Universal ManufacturingCompany (“Universal”) from a predecessor of Fruit of the Loom (“FOL”), and thepredecessor agreed to indemnify the Company against certain environmentalliabilities arising from pre-acquisition activities. Environmentalliabilities covered by the indemnification agreement include completion ofadditional cleanup activities, if any, at the Bridgeport, Connecticut facility(sold in connection with the sale of the transformer business in June 2001) anddefense and indemnification against liability related to offsite disposallocations where Magnetek may have a share of potential response costs. In 1999FOL filed a petition for Reorganization under Chapter 11 of the Bankruptcy Codeand the Company filed a proof of claim in the proceeding for obligationsrelated to the environmental indemnification agreement. In November 2001, theCompany and FOL entered into an agreement involving the allocation of certainpotential tax credits and Magnetek withdrew its claims in the bankruptcyproceeding.  Although the Companybelieves that FOL has substantially completed the obligations required by theindemnification agreement, its ability to set aside any remaining obligationsto the states of Connecticut and New Jersey through bankruptcy, or thediscovery of additional environmental contamination at the Bridgeport facility,could have a material adverse effect on the Company’s financial position orresults of operations.

 

5.             ComprehensiveIncome (Loss)

 

For the fiscal quarters and nine months to date endedMarch 31, 2003 and 2002, comprehensive income (loss) consisted of thefollowing:

 

Fiscal Quarter

 
|                             |   | **2003** |   | **2002** |   |
|----------------------------------|--------|----------|--------|----------|--------|
| Net income  (loss)               |   | $        | (5,410 | )        | $      | 302 |   |
| Currency  translation adjustment |   | 1,754    |   | 347      |   |
| Comprehensive  income (loss)     |   | $        | (3,656 | )        | $      | 649 |   |

 

Nine Months to Date

 
|                             |   | **2003** |    | **2002** |   |
|----------------------------------|--------|----------|---------|----------|--------|
| Net income  (loss)               |   | $        | (29,852 | )        | $      | 1,848 |   |
| Currency  translation adjustment |   | 3,503    |    | 2,069    |   |
| Comprehensive  income (loss)     |   | $        | (26,349 | )        | $      | 3,917 |   |

 

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6.             Earnings(Loss) Per Share

 

The following table sets forth the computation ofbasic and diluted earnings (loss) per share.

 
|                                                    |   | **Three  Months  Ended March 31** |   | **Nine  Months Ended  Ended March 31** |   |
|---------------------------------------------------------|--------|-----------------------------------|--------|----------------------------------------|--------|
|                                                    |   | **2003**                          |   | **2002**                               |   | **2003** |   | **2002** |   |
| **Basic earnings  (loss) per share:**                   |   |                              |   |                                   |   |   |   |   |   |
| Net income (loss)                                       |   | $                                 | (5,410 | )                                      | $      | 302 |   | $ | (29,852 | ) | $ | 1,848 |   |
|                                                    |   |                              |   |                                   |   |   |   |   |   |
| Weighted average shares for basic  earnings per share   |   | 23,525                            |   | 22,455                                 |   | 23,519 |   | 22,505 |   |
|                                                    |   |                              |   |                                   |   |   |   |   |   |
| **Basic earnings  (loss) per share**                    |   | $                                 | (0.23  | )                                      | $      | 0.01 |   | $ | (1.27 | ) | $ | 0.08 |   |
|                                                    |   |                              |   |                                   |   |   |   |   |   |
| **Diluted earnings  (loss) per share:**                 |   |                              |   |                                   |   |   |   |   |   |
| Net income (loss)                                       |   | $                                 | (5,410 | )                                      | $      | 302 |   | $ | (29,852 | ) | $ | 1,848 |   |
|                                                    |   |                              |   |                                   |   |   |   |   |   |
| Weighted average shares for basic  earnings per share   |   | 23,525                            |   | 22,455                                 |   | 23,519 |   | 22,505 |   |
| Effect of dilutive stock options                        |   | —                            |   | 395                                    |   | — |   | 341 |   |
| Weighted average shares for diluted  earnings per share |   | 23,525                            |   | 22,850                                 |   | 23,519 |   | 22,846 |   |
|                                                    |   |                              |   |                                   |   |   |   |   |   |
| **Diluted earnings  (loss) per share**                  |   | $                                 | (0.23  | )                                      | $      | 0.01 |   | $ | (1.27 | ) | $ | 0.08 |   |

 

7.             Goodwill

 

The changes in the carrying value of goodwill byreporting unit, net of accumulated amortization of $9,720, are as follows:

 
|                                              |   | **Telecom  Power** |   | **Power  Electronics** |   | **Industrial  Controls** |   | **Total** |   |
|---------------------------------------------------|--------|--------------------|--------|------------------------|--------|--------------------------|--------|-----------|--------|
| **Balance at June  30, 2002**                     |   | $                  | 36,301 |                   | $      | 33,509                   |   | $         | 25,723 |   | $ | 95,533 |   |
|                                              |   |               |   |                   |   |                     |   |      |   |
| Acquisitions during period                        |   | —             |   | —                 |   | 1,693                    |   | 1,693     |   |
|                                              |   |               |   |                   |   |                     |   |      |   |
| Purchase price adjustments and  reclassifications |   | (2,859             | )      | —                 |   | —                   |   | (2,859    | )      |
|                                              |   |               |   |                   |   |                     |   |      |   |
| Currency translation                              |   | —             |   | 864                    |   | (11                      | )      | 853       |   |
|                                              |   |               |   |                   |   |                     |   |      |   |
| Impairment of goodwill                            |   | (33,442            | )      | —                 |   | —                   |   | (33,442   | )      |
|                                              |   |               |   |                   |   |                     |   |      |   |
| **Balance at March  31, 2003**                    |   | $                  | — |                   | $      | 34,373                   |   | $         | 27,405 |   | $ | 61,778 |   |

 

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As a result of the decline in the Company’s marketcapitalization in the first quarter of fiscal 2003, the continuing decline inthe telecommunications (telecom) market, and anticipated reduced demand oftelecom power system spending in the future, the Company determined that therewere indicators of impairment in the carrying value of goodwill related toacquisitions made within the past two fiscal years in the telecomindustry.   Accordingly, during thesecond quarter of fiscal 2003, the Company performed an interim test forgoodwill impairment in accordance with SFAS No. 142.  At the end of the first quarter of fiscal 2003, the Company hadgoodwill of $95.5 million resulting from acquisitions. Upon completing theinterim impairment tests, the Company recorded a goodwill impairment charge of$33.4 million related to the telecom acquisitions.

 

8.             Acquisitions

 

During the third quarter of fiscal 2003, the Companypurchased all of the outstanding shares of MXT Holdings, Inc. for approximately$4.5 million in cash, subject to post closing adjustments.  MXT Holdings, Inc. is a holding companywhose wholly owned subsidiary, Maxtec International Corp. is engaged in thedevelopment, manufacture and sale of wireless remote controls andanti-collision systems for overhead cranes, hoists, monorail systems,conveyors, locomotives and other material handling applications under the nameTelemotive Industrial Controls (“Telemotive”). Telemotive reported revenue of approximately $10.0 million in its mostrecently completed fiscal year. Acquisition costs in excess of net assets acquired, approximately $1.7million, were recorded as goodwill.  Theacquisition was financed from the Company’s revolving credit facility.

 

MANAGEMENT’S DISCUSSION ANDANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

Critical AccountingPolicies

 

The following discussion and analysis of our financialcondition and results of operations are based upon our condensed consolidatedfinancial statements.  In preparingfinancial statements in conformity with accounting principles generallyaccepted in the United States, we must make estimates and assumptions thataffect the reported amount of assets and liabilities, revenues and expenses,and related disclosure of contingent assets and liabilities at the date of ourfinancial statements.  Actual resultscould differ from those estimates.  Foradditional information regarding our critical accounting policies andsignificant assumptions, refer to Note 2 of Notes to Condensed ConsolidatedFinancial Statements, or to the footnotes included in our Form 10-K for theyear ended June 30, 2002 filed with the Securities and Exchange Commission. Therehave been no significant changes in critical accounting policies since June 30,2002.

 

Three Months Ended March31, 2003 and 2002

 

Net Sales and GrossProfit

 

Net sales for the third quarter of fiscal 2003 were$53.2 million, an increase of 19.8% from the third quarter of fiscal 2002 salesof $44.4 million.  The revenue increaseis due to higher sales of power supplies, particularly into consumer productmarkets, as well as the acquisition of Telemotive, which offset lower sales inindustrial

 

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controls markets. We expect our fourth quarter revenue to remain relatively flat with thethird quarter, as we expect continuing softness in the general economy and thetelecommunications market in particular.

 

Our current year third quarter gross profit was $10.3million, or 19.4% of sales, versus $10.5 million, or 23.7% of sales in thethird quarter of fiscal 2002. The continued strength in the Euro relative tothe U.S. dollar compressed gross profits on sales from our European subsidiarydenominated in U.S. dollars, negatively impacting power supply grossprofits.  Additionally, softness in theindustrial controls business and lower margins in telecom power and related servicerevenue negatively impacted margins.

 

Research and Development,Selling, General and Administrative

 

R&D expense was $3.0 million, or 5.6% of sales, inthe third quarter of fiscal 2003 compared to $2.5 million, or 5.6% of sales, infiscal 2002. We maintained our spending in new product development aimed atcustom product markets and diverse consumer markets.  We continue to invest in new power-electronic platforms andapplications and expand the breadth of existing product lines.

 

Selling, general and administrative (SG&A) expensewas $10.2 million (19.1% of sales) in the third quarter of fiscal 2003 versus$7.5 million (16.9% of sales) in the third quarter of fiscal 2002.  This increase was due to the acquisition ofTelemotive, volume-related selling expenses, and increased pension, legal andadvertising expenses.  Our third quarterfiscal 2003 selling expenses were $4.4 million versus $3.7 million in the thirdquarter of fiscal 2002, due to the acquisition of Telemotive, and higherspending to improve our sales capabilities, increase brand awareness anddevelop our domestic OEM and distribution sales channels.  Our third quarter fiscal 2003 pensionexpense was $0.4 million compared to a prior year third quarter income amountof $0.2 million.  We expect this higherlevel of pension expense to continue throughout fiscal 2003.

 

Interest and OtherExpense 

 

Net interest expense was $0.6 million in the thirdquarter of fiscal 2003 compared to net interest expense of $0.1 million in thethird quarter of fiscal 2002.  Theincrease in net interest expense is attributable to increased borrowings underdomestic and European credit facilities and expenses related to the amendmentin March 2003 to our revolving loan facility agreement.  Other expense in the third quarter of fiscal2003 includes a $3.3 million charge for settlement of our litigation with Bankof America (see Note 4 of “Notes to Condensed Consolidated FinancialStatements”).

 

Net Income (Loss)

 

Net loss for the third quarter of fiscal 2003 was $5.4million, compared to net income of $0.3 million in the third quarter of fiscal2002.  The tax benefit in the thirdquarter of fiscal 2003 was $1.3 million (19.5% effective rate) versus a taxprovision of $0.2 million (38% effective rate) in the third quarter of fiscal2002.  As a result of the deferred taxasset position on our balance sheet, we do not expect to record tax benefitsfor future pretax losses.

 

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Nine Months Ended March31, 2003 and 2002

 

Net Sales and GrossProfit

 

Our net sales for the first nine months of fiscal 2003were $147.3 million, a 2.3% increase from sales of $144.0 million for the firstnine months of fiscal 2002.  Currentyear revenue was negatively impacted by weakness in the general economy as wellas continued weakness in certain served markets, notably telecommunications andinformation technology.

 

Our fiscal 2003 gross profit for the first nine monthswas $26.4 million, or 17.9% of sales, versus $33.3 million, or 23.1% of salesin the first nine months of fiscal 2002. The fiscal 2003 gross profit reflects a charge of $4.7 million to writedown the value of telecom-related inventory based upon past and expected futuredemand.  Excluding this charge grossprofit would have been $31.1 million, or 21.1% of sales. Lower sales andmargins in telecom power and related service revenue also negatively impactedgross profit.  Additionally, thestrength in the Euro relative to the U.S. dollar compressed gross profits onsales from our European subsidiary denominated in U.S. dollars, negativelyimpacting power supply gross profits.

 

Research and Development,Selling, General and Administrative

 

Research and development (R&D) expense was $8.5million, or 5.8% of sales, in the first nine months of fiscal 2003 compared to$7.2 million, or 5.0% of sales, in the first nine months of fiscal 2002. Weincreased spending in new product development aimed at diverse consumermarkets, our fastest growing product area. We continue to invest in new power-electronic platforms and applicationsand expand the breadth of existing product lines.

 

Selling, general and administrative (SG&A) expensewas $29.6 million (20.1% of sales) for the first nine months of fiscal 2003versus $23.2 million (16.1% of sales) for the first nine months of fiscal2002.  This increase was due to theacquisition of Telemotive, increased headcount in sales and marketing, andincreased pension, insurance, advertising and legal expenses. Fiscal 2003selling expenses were $12.7 million for the first nine months versus $10.7 millionin the first nine months of fiscal 2002, due to higher spending to improve oursales capabilities, increase brand awareness and develop our domestic OEM anddistribution sales channels. Pension expense was $1.1 million for the firstnine months of fiscal 2003 compared to pension income of $0.7 million for thesame period in fiscal 2002.  We expectthis higher level of pension expense to continue throughout fiscal 2003.

 

Gain from Termination ofRetiree Medical Plan

 

Fiscal 2003 results for the first nine months includea nonrecurring pre-tax gain of $27.8 million related to the termination in thefirst quarter of our retiree medical plan. The financial impact in future fiscal quarters subsequent to the firstquarter of fiscal 2003 will be a reduction of income from operations ofapproximately $0.4 million, due to elimination of the amortization creditassociated with the related liability. However, we will realize a positive quarterly cash impact ofapproximately the same amount.

 

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Goodwill and Fixed AssetImpairment 

 

During the second quarter of fiscal 2003, wedetermined that there were indicators of impairment in the carrying value ofgoodwill, based on the decline in our market capitalization and the continuingdecline in the telecommunications industry. We performed an interim impairment test in accordance with SFAS 142based on updated forecasts of operating results and cash flows, and we recordeda $33.4 million goodwill impairment charge in the second quarter of fiscal2003.  The charge relates exclusively toour telecommunications business and effectively reduces the carrying value ofgoodwill for that business to zero.

 

We also performed an impairment review of ourlong-lived assets in accordance with SFAS 144. Based upon utilization and current market values of certain fixedassets, notably in our telecommunications business, we recorded a $0.6 millionimpairment charge in the second quarter of fiscal 2003 to reduce the carryingvalue of those assets.

 

Interest and OtherExpense (Income)

 

Net interest expense was $1.0 million for the firstnine months of fiscal 2003 compared to net interest expense of $0.1 million forthe same period in fiscal 2002. The increase in net interest expense is attributableto increased borrowings under domestic and European credit facilities andexpenses related to the amendment in March 2003 to our revolving loan facilityagreement.  Other expense in the thirdquarter of fiscal 2003 includes a $3.3 million charge for settlement of ourlitigation with Bank of America. Other income in the third quarter of fiscal2002 includes $0.2 million related to the sale of the Company’s standard drivesbusiness.

 

Net Income (Loss)

 

Net loss for the first nine months of fiscal 2003 was$29.9 million, including the impact of the nonrecurring gain, goodwill and fixed asset impairment charges andlitigation settlement charges, compared to net income of $1.8 million for thefirst nine months of fiscal 2002. Excluding the impact of the nonrecurring gain, all telecom-related assetwrite downs and impairment charges, and the litigation settlement charge, ournet loss would have been $4.8 million. The tax provision for the first nine months of fiscal 2003 was $7.6million versus $1.1 million for the same period of fiscal 2002. Although we hada pretax operating loss of $22.2 million for the first nine months of fiscal2003, we also recorded a tax provision during the same period, associatedmainly with the $27.8 million nonrecurring gain recorded in the first quarterof fiscal 2003. There was no tax benefit associated with the $33.4 milliongoodwill impairment charge recorded in the second quarter of fiscal 2003, asthe goodwill to which the charge related is not deductible for income tax purposes.  As a result of the deferred tax assetposition on our balance sheet, we do not expect to record tax benefits forfuture pretax losses.

 

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Liquidity and CapitalResources

 

As a result of non-cash charges recorded during thesecond fiscal quarter in accordance with SFAS Nos. 142 and 144, as well asprojected operating performance, in March 2003 the Company and its lendersunder the Company's domestic revolving loan facility executed an amendment to therevolving loan facility agreement to address the violation or potentialviolation of certain financial covenants. The amendment reduced the bank’s lending commitment to $16 million from$40 million, increased certain fees and interest rates and adjusted certainfinancial covenants through the Company’s fiscal year end on June 30,2003.  The amendment also containsrestrictions on disbursements for, among other things, dividend payments, stockrepurchases and acquisitions.  The loanfacility agreement also supports the issuance of letters of credit and expireson December 17, 2003.  Our Europeansubsidiary maintains borrowing arrangements with local banks, primarily tosupport working capital needs.

 

During the quarter ended March 31, 2003 the Companyacquired MXT Holdings, Inc. for a cash purchase price of approximately $4.5million (see Note 8 of “Notes to Condensed Consolidated FinancialStatements”).  The purchase was fundedwith proceeds from the domestic revolving loan facility.  As of March 31, 2003, long-term borrowings(including current portion) were $14.7 million compared to $4.1 million as ofJune 30, 2002.  The increase relatedprimarily to the purchase of Telemotive and year-to-date operating losses incurredmainly in the Telecommunications Systems business.  As of March 31, 2003, borrowings under the domestic revolvingloan facility were $4.7 million; borrowings under European credit lines were$6.4 million with the remaining $3.6 million in long-term borrowingsrepresenting capital leases and notes payable in Europe.  In April 2003, the Company made a payment toBank of America in connection with the settlement of litigation (See Note 4 of“Notes to Condensed Consolidated Financial Statements”) with proceeds from therevolving loan facility.  As of May 6,2003 there were approximately $4 million in available borrowings under thedomestic loan facility and approximately $3 million in available borrowingsunder European credit lines, as well as $1.7 million in available cashbalances.

 

We intend to replace our existing revolving loanfacility agreement with an asset based lending arrangement and are currentlyworking with potential lenders toward that end.  We are also evaluating additional financing in Europe that wouldbe secured by our owned European land and facility that could provide up to $10million in additional borrowing capacity.

 

Capital expenditures in the third fiscal quarter of2003 were $2.0 million with $4.7 million in capital expenditures for the firstnine months of fiscal 2003.  Weanticipate that our capital expenditures for the fiscal year will be less than$7.0 million.

 

As a result of the decline in stock market equityvalues and interest rates over the past nine months, the amount by which theaccumulated benefit obligation of our defined benefit pension plan exceeds planassets has continued to increase during fiscal 2003.  As a result, in accordance with accounting rules an additionalminimum pension liability will be recorded in the Company’s balance sheet as ofour fiscal year end at June 30, 2003. The amount of additional minimum pension liability depends primarily ontrust asset values and interest

 

19

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rates at June 30, 2003, however current projectionsindicate an amount of approximately $30 million.  The amount and timing of future contributions to the plan aredependent upon values in equity and fixed income markets as well as interestrates.  No contributions are currentlymandated under pension funding regulations, however, we intend to make acontribution of approximately $2.5 million in September 2003.  This contribution may be made in cash,Company stock, or a combination of the two. Based upon this contribution and current contribution credits availableto the Company under pension funding regulations, actuarial projectionsindicate no mandatory contributions would be required through calendar2007.  However, we may elect to makecontributions to the plan prior to that time, and, depending upon changes inasset values and interest rates, required contributions in periods subsequentto 2007 could be significant.

 

Based upon current plans and business conditions,management believes that borrowing capacity under our revolving loan facilitiesand borrowings secured by our European land and facility, as well as internallygenerated cash flows will be sufficient to fund anticipated working capitalneeds, capital expenditures and other near-term commitments.

 

ITEM 3

 

QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKETRISK

 

The Company is exposed to market risks in the areas offoreign exchange and interest rates.  Toreduce the effect of such risks, the Company selectively utilizes derivativefinancial instruments.  Theseinstruments are used to hedge foreign currency and interest rate marketexposures.  The Company does not use,and Company policy prohibits the use of, derivative financial instruments forspeculative or trading purposes.

 

ITEM 4

 

CONTROLS AND PROCEDURES

 

Evaluation of DisclosureControls and Procedures

 

Pursuant to Securities Exchange Act Rule 13a-14,within 90 days prior to the date of filing of this Report, an evaluation of theCompany’s disclosure controls and procedures was performed by management, withthe participation of the Company's Chief Executive Officer and the ChiefFinancial Officer.  Based on thisevaluation, the Chief Executive Officer and Chief Financial Officer concludedthat the Company's disclosure controls and procedures are effective in timely alertingthem to material information relating to the Company (including ourconsolidated subsidiaries) required to be included in our  periodic SEC filings.

 

Changes in InternalControls

 

In the quarter ended March 31, 2003, there were nosignificant changes in the Company’s internal controls or in other factors thatcould significantly affect these controls subsequent to the date of theirevaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 

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PART II                 OTHER INFORMATION

 

ITEM 1.                  LegalProceedings

 

See Part I, Item 1, Note 4.

 

ITEM 6.                  Exhibitsand Reports on Form 8-K

 

(a)                                  Indexto Exhibits

 

3.2                                 By-lawsof the Company, as amended and restated.

 

99.1                           Certificationpursuant to 18 U.S.C. Section 1350.

 

99.2                           Certificationpursuant to 18 U.S.C. Section 1350.

 

(b)                                 Reportson Form 8-K

 

Form 8-K dated January27, 2003, Press release announcing revaluation of assets based on impairmenttests.

Form 8-K dated February6, 2003, Press release announcing results for the second quarter and the firsthalf of fiscal year 2003.

 

 

SIGNATURES

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 
|               |   | MAGNETEK, INC.                                                                |
|--------------------|--------|-------------------------------------------------------------------------------|
|               |   | (Registrant)                                                                  |
|               |   |                                                                          |
| Date: May 14, 2003 |   | /s/ DAVID P. REILAND                                                          |   |
|               |   | David P. Reiland                                                              |
|               |   | Executive Vice President  and Chief Financial Officer                         |
|               |   | (Duly authorized officer of the  registrant and principal  financial officer) |

 

21

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**CERTIFICATION**

I, Andrew G. Galef,  certifythat:

 

1.             I have reviewedthis quarterly report on Form 10-Q of Magnetek, Inc.;

 

2.             Based on myknowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this quarterly report;

 

3.             Based on my knowledge,the financial statements, and other financial information included in thisquarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this quarterly report;

 

4.             The registrant’sother certifying officers and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

a)             designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

 

b)            evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

c)             presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate;

 

5.             The registrant’sother certifying officers and I have disclosed, based on our most recentevaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

a)             allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b)            anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

 

6.             The registrant’sother certifying officers and I have indicated in this quarterly report whetheror not there were significant changes in internal controls or in other factorsthat could significantly affect internal controls subsequent to the date of ourmost recent evaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

 
| Date: May 14, 2003 |                                  |
|--------------------|---------------------------------------|
|               | /s/ ANDREW G. GALEF                   |   |
|               | Andrew G. Galef                       |
|               | Chairman of the Board,                |
|               | President and Chief Executive Officer |

 

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**CERTIFICATION**

I, David P. Reiland, certify that:

 

1.             I have reviewedthis quarterly report on Form 10-Q of Magnetek, Inc.;

 

2.             Based on my knowledge,this quarterly report does not contain any untrue statement of a material factor omit to state a material fact necessary to make the statements made, inlight of the circumstances under which such statements were made, notmisleading with respect to the period covered by this quarterly report;

 

3.             Based on myknowledge, the financial statements, and other financial information includedin this quarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this quarterly report;

 

4.             The registrant’sother certifying officers and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

a)             designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

 

b)            evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

c)             presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate;

 

5.             The registrant’sother certifying officers and I have disclosed, based on our most recentevaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

a)             allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b)            anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

 

6.             The registrant’sother certifying officers and I have indicated in this quarterly report whetheror not there were significant changes in internal controls or in other factorsthat could significantly affect internal controls subsequent to the date of ourmost recent evaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

 
| Date: May 14,  2003 |                                                  |
|---------------------|-------------------------------------------------------|
|                | /s/ DAVID P. REILAND                                  |   |
|                | David P. Reiland                                      |
|                | Executive Vice President and Chief Financial  Officer |

 

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