UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
[ X ]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended:  March 29, 2015

OR
[ ]
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

MAGNETEK, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE
 
95-3917584
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification Number)
N49 W13650 Campbell Drive
Menomonee Falls, Wisconsin  53051
(Address of principal executive offices)

(262) 783-3500
(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ]   No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [ X ]    No [    ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “accelerated filer,” “large accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):
Large accelerated filer [   ]
Accelerated filer [ ]
Non-accelerated filer [   ]
Smaller Reporting Company [ X ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [    ]    No [X]

The number of shares outstanding of Registrant’s Common Stock, as of May 1, 2015, was 3,564,584 shares.
 


FISCAL YEAR 2015 MAGNETEK FORM 10-Q

TABLE OF CONTENTS FOR THE QUARTERLY REPORT ON FORM 10-Q
FOR THE FISCAL QUARTER ENDED MARCH 29, 2015

MAGNETEK, INC.

Part I.                      Financial Information


Part II.                      Other Information





2

PART I.  FINANCIAL INFORMATION

Item 1 – Financial Statements

MAGNETEK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data, unaudited)
 
Three Months Ended
 
(13 Weeks)
March 29,
2015
 
(13 Weeks)
March 30,
2014
Net sales
$
26,612

 
$
24,113

Cost of sales
17,213

 
15,961

Gross profit
9,399

 
8,152

 
 
 
 
Operating expenses:
 

 
 

Research and development
899

 
799

Pension expense
502

 
925

Selling, general and administrative
5,490

 
4,990

Total operating expenses
6,891

 
6,714

 
 
 
 
Income from continuing operations before income taxes
2,508

 
1,438

 
 
 
 
Provision for income taxes
41

 
240

Income from continuing operations
2,467

 
1,198

 
 
 
 
Income (loss) from discontinued operations, net of tax
(163
)
 
(144
)
 
 
 
 
Net income
$
2,304

 
$
1,054

 
 
 
 
Earnings (loss) per common share - basic:
 

 
 

Income (loss) from continuing operations
$
0.69

 
$
0.37

Income (loss) from discontinued operations
(0.04
)
 
(0.05
)
Net income (loss) per common share
$
0.65

 
$
0.32

 
 
 
 
Earnings (loss) per common share - diluted:
 
 
 
Income (loss) from continuing operations
$
0.67

 
$
0.35

Income (loss) from discontinued operations
(0.04
)
 
(0.04
)
Net income (loss) per common share
$
0.63

 
$
0.31

 
 
 
 
Weighted average shares outstanding:
 

 
 

Basic
3,550

 
3,263

Diluted
3,683

 
3,392


See accompanying notes


3

MAGNETEK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands, unaudited)

 
Three Months Ended
 
(13 Weeks)
March 29,
2015
 
(13 Weeks)
March 30,
2014
Net income
$
2,304

 
$
1,054

Change in unrecognized pension liability
1,676

 
1,800

Change in currency translation adjustments
(341
)
 
(115
)
Comprehensive income
$
3,639

 
$
2,739


See accompanying notes


4

MAGNETEK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)

ASSETS
 
March 29,
2015
 
December 28,
2014
 
 
(Unaudited)
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
7,129

 
$
9,702

Restricted cash
 
262

 
262

Accounts receivable, net
 
17,476

 
16,975

Inventories
 
14,289

 
13,626

Prepaid expenses and other current assets
 
785

 
801

Total current assets
 
39,941

 
41,366

 
 
 
 
 
Property, plant and equipment
 
23,233

 
23,071

Less: accumulated depreciation
 
20,288

 
20,140

Net property, plant and equipment
 
2,945

 
2,931

 
 
 
 
 
Goodwill
 
30,307

 
30,364

Other assets
 
4,072

 
4,039

Total Assets
 
$
77,265

 
$
78,700

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 

 
 

 
 
 
 
 
Current liabilities:
 
 

 
 

Accounts payable
 
$
9,192

 
$
10,375

Accrued liabilities
 
4,374

 
6,703

Total current liabilities
 
13,566

 
17,078

 
 
 
 
 
Pension benefit obligations, net
 
26,186

 
27,360

Other long term obligations
 
828

 
845

Deferred income taxes
 
9,813

 
9,798

 
 
 
 
 
Commitments and contingencies
 


 


 
 
 
 
 
Stockholders’ equity
 
 

 
 

Common stock
 
36

 
35

Paid in capital in excess of par value
 
150,254

 
150,641

Accumulated deficit
 
(7,871
)
 
(10,175
)
Accumulated other comprehensive loss
 
(115,547
)
 
(116,882
)
Total stockholders' equity
 
26,872

 
23,619

 
 
 
 
 
Total Liabilities and Stockholders' Equity
 
$
77,265

 
$
78,700


See accompanying notes

5

MAGNETEK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands, unaudited)

 
Three Months Ended
 
(13 Weeks)
March 29,
2015
 
(13 Weeks)
March 30,
2014
Cash flows from operating activities:
 
 
 
Net income
$
2,304

 
$
1,054

 
 
 
 
Loss from discontinued operations
163

 
144

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 

 
 

Depreciation
186

 
189

Amortization of intangible assets
13

 
13

Stock based compensation expense
181

 
183

Pension expense
502

 
925

Deferred income tax provision
15

 
240

Changes in operating assets and liabilities
(4,864
)
 
(1,960
)
Net cash provided by (used in) operating activities - continuing operations
(1,500
)
 
788

Net cash provided by (used in) operating activities - discontinued operations
(299
)
 
(220
)
Net cash provided by (used in) operating activities
(1,799
)
 
568

 
 
 
 
Cash flows from investing activities:
 

 
 

Capital expenditures
(207
)
 
(171
)
Net cash provided by (used in) investing activities - continuing operations
(207
)
 
(171
)
Net cash provided by (used in) investing activities - discontinued operations
—

 
—

Net cash provided by (used in) investing activities
(207
)
 
(171
)
 
 
 
 
Cash flow from financing activities:
 

 
 

Proceeds from issuance of common stock
105

 
84

Purchase and retirement of treasury stock
(672
)
 
(20
)
Net cash provided by (used in) financing activities - continuing operations
(567
)
 
64

Net cash provided by (used in) financing activities - discontinued operations
—

 
—

Net cash provided by (used in) financing activities
(567
)
 
64

 
 
 
 
Net increase (decrease) in cash
(2,573
)
 
461

Cash at the beginning of the period
9,702

 
14,960

Cash at the end of the period
$
7,129

 
$
15,421


See accompanying notes


6

MAGNETEK, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 29, 2015
(Amounts in thousands unless otherwise noted, except per share data, unaudited)

1.
Summary of Significant Accounting Policies
 
Profile
 
Magnetek, Inc. (the “Company” or “Magnetek”) is a global provider of digital power control systems that are used to control motion and power primarily in material handling, elevator, and mining applications.  
 
Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Magnetek, Inc. and its subsidiaries.  All significant intercompany accounts and transactions have been eliminated.
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2014, filed with the Securities and Exchange Commission (the “SEC”).  In the Company's opinion, these unaudited statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company as of March 29, 2015, and the results of its operations and cash flows for the three-month periods ended March 29, 2015, and March 30, 2014. Results for the three months ended March 29, 2015, are not necessarily indicative of results that may be experienced for the full fiscal year.
 
Fiscal Year

The Company uses a 52 or 53 week fiscal year ending on the Sunday nearest December 31. Fiscal quarters are the 13 or 14 week periods ending on the Sunday nearest March 31, June 30, September 30, and December 31.  The three-month periods ended March 29, 2015 and March 30, 2014 each contained 13 weeks.

Use of Estimates
 
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 606-10, Revenue for Contracts with Customers (issued under Accounting Standards Update No. 2014-09). ASC 606-10 is currently effective for the year beginning on or around January 1, 2017, although in April 2015 the FASB proposed delaying the effective date of this guidance to on or around January 1, 2018. ASC 606-10 will replace all existing revenue recognition guidance. The Company is in the process of determining whether the adoption of ASC 606-10 will have an impact on the Company's results of operations, financial position, or cash flows.

In March 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements and Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity ("ASU 2014-08"), which changes the criteria for reporting discontinued operations. ASU 2014-08 allows only disposals representing a strategic shift in operations to be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. ASU 2014-08 will be effective for the Company in the first quarter of fiscal 2016. As this guidance is a prospective change, adoption of this standard is not expected to have a material impact on the Company's results of operations, financial position, or cash flows.




7


2.
Discontinued Operations

Certain expenses incurred related to businesses the Company no longer owns are classified as discontinued operations in the accompanying condensed consolidated financial statements. Expenses related to previously divested businesses have historically included environmental matters, asbestos claims, and product liability claims incurred in connection with indemnification agreements the Company entered into upon divestiture of those businesses.

The condensed consolidated balance sheet as of March 29, 2015, includes certain accrued liabilities which represent the Company’s best estimate of remaining contingent liabilities related to the indemnification provisions included in the sale agreements of divested businesses. While management has used its best judgment in assessing the potential liability for these items, given the uncertainty regarding future events, it is difficult to estimate the possible timing or magnitude of any payments that may be required for liabilities subject to indemnification. Any future adjustment to currently recorded contingencies related to indemnification claims or payments based upon changes in circumstances would be recorded as a gain or loss in discontinued operations.

3.
Inventories

Inventories consist of the following:
 
March 29,
2015
 
December 28,
2014
Raw materials and stock parts
$
9,203

 
$
8,710

Work-in-process
1,473

 
1,252

Finished goods
3,613

 
3,664

 
$
14,289

 
$
13,626



4.
Commitments and Contingencies
 
Litigation—Product Liability
 
The Company has been named, along with multiple other defendants, in asbestos-related lawsuits associated with business operations previously acquired by the Company, but which are no longer owned. During the Company's ownership, none of the businesses produced or sold asbestos-containing products. With respect to these claims, the Company believes that it has no such liability.  For such claims, the Company is uninsured and either contractually indemnified against liability, or contractually obligated to defend and indemnify the purchaser of these former Magnetek business operations.  The Company aggressively seeks dismissal from these proceedings. Management does not believe the asbestos proceedings, individually or in the aggregate, will have a material adverse effect on its financial position or results of operations.  Given the nature of the above issues, uncertainty of the ultimate outcome, and inability to estimate the potential loss, no amounts have been reserved for these matters.
    
Litigation-Other
In October 2010, the Company received a request for indemnification from Power-One, Inc. ("Power-One") for an Italian tax matter arising out of the sale of the Company's power electronics business to Power-One in October 2006. With a reservation of rights, the Company affirmed its obligation to indemnify Power-One for certain pre-closing taxes.  The sale included an Italian company, Magnetek, S.p.A., and its wholly owned subsidiary, Magnetek Electronics (Shenzhen) Co. Ltd. (the “Power-One China Subsidiary”). The tax authority in Arezzo, Italy, issued a notice of audit report in September 2010 wherein it asserted that the Power-One China Subsidiary had its administrative headquarters in Italy with fiscal residence in Italy and, therefore, is subject to taxation in Italy.  In November 2010, the tax authority issued a notice of tax assessment for the period of July 2003 to June 2004, alleging that taxes of approximately Euro 1.9 million (approximately US$2.1 million) were due in Italy on taxable income earned by the Power-One China Subsidiary during this period.  In addition, the assessment alleges potential penalties together with interest in the amount of approximately Euro 2.6 million (approximately US$2.8 million) for the alleged failure of the Power-One China Subsidiary to file its Italian tax return.  The Power-One China Subsidiary filed its response with the provincial tax commission of Arezzo, Italy in January 2011. The tax authority in Arezzo, Italy issued a tax inspection report in January 2011 for the periods July 2002 to June 2003 and July 2004 to December 2006

8

claiming that the Power-One China Subsidiary failed to file Italian tax returns for the reported periods. A hearing before the Tax Court was held in July 2012 on the tax assessment for the period of July 2003 to June 2004. In September 2012, the Tax Court ruled in favor of the Power-One China Subsidiary dismissing the tax assessment for the period of July 2003 to June 2004. In February 2013, the tax authority filed an appeal of the Tax Court's September 2012 ruling. The Regional Tax Commission of Florence heard the appeal of the tax assessment dismissal for the period of July 2003 to June 2004 and thereafter issued its ruling finding in favor of the tax authority. The Company believes the court’s decision was based upon erroneous interpretations of the applicable law and appealed the ruling to the Italian Supreme Court in April 2015.
In August 2012, the tax authority in Arezzo, Italy issued notices of tax assessment for the periods July 2002 to June 2003 and July 2004 to December 2006, alleging that taxes of approximately Euro 6.7 million (approximately US$7.3 million) were due in Italy on taxable income earned by the Power-One China Subsidiary together with an allegation of potential penalties in the amount of approximately Euro 2.8 million (approximately US$3.1 million) for the alleged failure of the Power-One China Subsidiary to file its Italian tax returns. The Company believes the Italian tax claims are without merit and intends to vigorously defend against them.
    
Environmental Matters-General
From time to time, Magnetek has taken action to bring certain facilities associated with previously owned businesses into compliance with applicable environmental laws and regulations. Upon the subsequent sale of certain businesses, the Company agreed to indemnify the buyers against environmental claims associated with the divested operations, subject to certain conditions and limitations. Remediation activities, including those related to the Company's indemnification obligations, did not involve material expenditures during the first three months of fiscal year 2015. 
The Company has also 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 previously utilized, owned or leased facilities and offsite locations. Its remediation activities as a potentially responsible party were not material in the first three months of fiscal year 2015. Although the materiality of future expenditures for environmental activities may be affected by the level and type of contamination, the extent and nature of cleanup activities required by governmental authorities, the nature of the Company's alleged connection to the contaminated sites, the number and financial resources of other potentially responsible parties, the availability of indemnification rights against third parties and the identification of additional contaminated sites, the Company's estimated share of liability, if any, for environmental remediation, including its indemnification obligations, is not expected to be material.
Bridgeport, Connecticut Facility
In 1986, the Company acquired the stock of Universal Manufacturing Corporation (“Universal”) from a predecessor of Fruit of the Loom (“FOL”), and the predecessor agreed to indemnify the Company against certain environmental liabilities arising from pre-acquisition activities at a facility in Bridgeport, Connecticut. Environmental liabilities covered by the indemnification agreement included completion of additional cleanup activities, if any, at the Bridgeport facility and defense and indemnification against liability for potential response costs related to offsite disposal locations. The Company's leasehold interest in the Bridgeport facility was assigned to the buyer in connection with the sale of the Company's transformer business in June 2001. FOL, the successor to the indemnification obligation, filed a petition for Reorganization under Chapter 11 of the Bankruptcy Code in 1999 and the Company filed a proof of claim in the proceeding for obligations related to the environmental indemnification agreement. The Company believes that FOL had substantially completed the clean-up obligations required by the indemnification agreement prior to the bankruptcy filing. In November 2001, the Company and FOL entered into an agreement involving the allocation of certain potential tax benefits and Magnetek withdrew its claims in the bankruptcy proceeding. The Company further believes that FOL's obligation to the state of Connecticut was not discharged in the reorganization proceeding.    
In January 2007, the Connecticut Department of Environmental Protection (“DEP”) requested parties, including the Company, to submit reports summarizing the investigations and remediation performed to date at the site and the proposed additional investigations and remediation necessary to complete those actions at the site. DEP requested additional information from the Company relating to site investigations and remediation. The Company and the DEP agreed to the scope of the work plan in November 2010.  The Company has recorded a liability of $0.4 million related to the Bridgeport facility, representing the Company's best estimate of future site investigation costs and remediation

9

costs which are expected to be incurred in the future. The liability is included in accrued liabilities in the accompanying condensed consolidated balance sheet as of March 29, 2015.
FOL's inability to satisfy its remaining obligations to the state of Connecticut related to the Bridgeport facility and any offsite disposal locations, or the discovery of additional environmental contamination at the Bridgeport facility could have a material adverse effect on the Company's financial position, cash flows or results of operations.
5.
Earnings (Loss) Per Share
 
The following table sets forth the computation of basic and diluted earnings (loss) per share for the three-month periods ended March 29, 2015, and March 30, 2014:
 
 
Three Months Ended
 
 
March 29,
2015
 
March 30,
2014
Numerator:
 
 
 
 
Income from continuing operations
 
$
2,467

 
$
1,198

Income (loss) from discontinued operations
 
(163
)
 
(144
)
Net income
 
$
2,304

 
$
1,054

 
 
 
 
 
Denominator:
 
 

 
 

Weighted average shares - basic earnings per share
 
3,550

 
3,263

Add dilutive effect of stock based compensation
 
133

 
129

Weighted average shares - diluted earnings per share
 
3,683

 
3,392

 
 
 
 
 
Income (loss) per share - basic:
 
 
 
 
Continuing operations
 
$
0.69

 
$
0.37

Discontinued operations
 
$
(0.04
)
 
$
(0.05
)
Net income per share
 
$
0.65

 
$
0.32

 
 
 
 
 
Income (loss) per share - diluted:
 
 
 
 
Continuing operations
 
$
0.67

 
$
0.35

Discontinued operations
 
$
(0.04
)
 
$
(0.04
)
Net income per share
 
$
0.63

 
$
0.31


Outstanding options to purchase 6 thousand and 37 thousand shares of common stock as of March 29, 2015, and March 30, 2014, respectively, have not been included in the Company’s computation of weighted average shares for diluted earnings per share for the three-month periods then ended because the effect would have been anti-dilutive.

10

6.Warranties
 
The Company offers warranties for certain products that it manufactures, with the warranty term generally ranging from one to two years.  Warranty reserves are established for costs expected to be incurred after the sale and delivery of products under warranty, based mainly on known product failures and historical experience.  Actual repair costs incurred for products under warranty are charged against the established reserve balance as incurred.  Changes in the warranty reserve for the three-month periods ended March 29, 2015, and March 30, 2014, are as follows: 
 
 
Three Months Ended
 
 
March 29,
2015
 
March 30,
2014
Balance, beginning of period
 
$
355

 
$
379

Changes in product warranties charged to earnings
 
151

 
(19
)
Use of reserve for warranty obligations
 
(131
)
 
(36
)
Balance, end of period
 
$
375

 
$
324

 
Warranty reserves are included in accrued liabilities in the accompanying condensed consolidated balance sheets.

7.
Pension Expense
 
Pension expense related to the Company’s defined benefit pension plan for the three-month periods ended March 29, 2015, and March 30, 2014, follows:
 
 
Three Months Ended
 
 
March 29,
2015
 
March 30,
2014
Interest cost
 
$
1,445

 
$
2,225

Expected return on plan assets
 
(2,619
)
 
(3,100
)
Recognized net actuarial losses
 
1,676

 
1,800

Total net pension expense
 
$
502

 
$
925


The Company did not make any contributions to its pension plan assets in the first three months of fiscal 2015, and current actuarial estimates indicate that no minimum required contributions will be due for the remainder of fiscal 2015.

8.
Income Taxes
 
Due to historical taxable losses, the Company provides valuation reserves against its U.S. deferred tax assets.  A portion of the Company’s deferred tax liability relates to tax-deductible amortization of goodwill that is no longer amortized for financial reporting purposes. These deferred tax liabilities are considered to have an indefinite life and are therefore ineligible to be considered as a source of future taxable income in assessing the realization of deferred tax assets.
 
The Company’s provision for income taxes for the three-month periods ended March 29, 2015, and March 30, 2014, includes $15 and $240, respectively, of deferred income tax expense related to the increase in the Company’s deferred tax liability resulting from the tax-deductible amortization of goodwill. Any remaining tax provision for each of those periods is comprised of income taxes of the Company’s foreign subsidiary in Canada.


11

9.
Bank Borrowing Arrangements
 
In November 2007, the Company entered into an agreement with Associated Bank, N.A. (“Associated Bank”) providing for a $10 million revolving credit facility (the “revolving facility”).  Borrowings under the revolving facility bear interest at the London Interbank Offering Rate (“LIBOR”) plus 1.5%, with borrowing levels determined by a borrowing base formula as defined in the agreement, which included the level of eligible accounts receivable.  The revolving facility also supports the issuance of letters of credit, places certain restrictions on the Company’s ability to pay dividends or make acquisitions, and includes covenants that require minimum operating profit levels and limit annual capital expenditures.  Borrowings under the revolving facility were originally collateralized by the Company’s accounts receivable and inventory. 

The Company has subsequently entered into several amendments to the revolving facility, mainly to extend the maturity date of the revolving facility, to broaden the security interest of Associated Bank to collateralize all assets of the Company, and to establish or modify certain covenants with which the Company must comply under the terms of the amended revolving facility.
On June 15, 2014, the Company and Associated Bank entered into the seventh amendment to the revolving facility, the purpose of which was to (i) extend the maturity date of the revolving facility to June 15, 2015; (ii) retain the commitment amount of Associated Bank at $12.5 million; (iii) establish minimum quarterly adjusted earnings before interest, taxes, depreciation and amortization requirements for the term of the agreement; and (iv) establish maximum quarterly cash amounts that can be contributed to the Company's defined benefit pension plan for the term of the agreement.
On August 20, 2014, the Company and Associated Bank entered into the eighth amendment to the revolving facility, the purpose of which was to increase the maximum quarterly cash amounts that can be contributed to the Company's defined benefit pension plan for the term of the agreement.
There were no amounts outstanding on the amended revolving facility, and the Company was in compliance with all covenants of the revolving facility, as amended, as of March 29, 2015.  

10.    Accumulated Other Comprehensive Income (Loss)

Changes in the components of accumulated other comprehensive income (loss) for the three months ended March 29, 2015, are as follows:
 
 
Defined
 
 
Foreign
Benefit
 
 
Currency
Pension Plan
Total
Balance, beginning of period
$
166

$
(117,048
)
$
(116,882
)
Other comprehensive income (loss) before reclassifications
(341
)
—

(341
)
Amounts reclassified from accumulated other comprehensive
 
 
 
        income (loss)
—

1,676

1,676

Balance, end of period
$
(175
)
$
(115,372
)
$
(115,547
)
 
 
 
 
Changes in the components of accumulated other comprehensive income (loss) for the three months ended March 30, 2014, are as follows:
 
 
Defined
 
 
Foreign
Benefit
 
 
Currency
Pension Plan
Total
Balance, beginning of period
$
587

$
(152,070
)
$
(151,483
)
Other comprehensive income (loss) before reclassifications
(115
)
—

(115
)
Amounts reclassified from accumulated other comprehensive
 
 
 
        income (loss)
—

1,800

1,800

Balance, end of period
$
472

$
(150,270
)
$
(149,798
)
 
 
 
 

12


The amounts reclassified out of accumulated other comprehensive income (loss) reported in the tables above are comprised entirely of actuarial losses related to the Company's defined benefit pension plan, and are included in the computation of periodic pension expense (see Note 7 of Notes to Condensed Consolidated Financial Statements). There is no tax effect on any of the amounts included in the table above.


Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Magnetek, Inc. (“Magnetek,” “the Company,” “we,” or “us”) is a global provider of digital power control systems that are used to control motion and power primarily in material handling, elevator, and mining applications.  Our digital power control systems serve the needs of selected niches of traditional and emerging markets that are becoming increasingly dependent on "smart" power. We believe we are North America's largest independent supplier of digital drives, radio controls, software and accessories for industrial cranes and hoists, and believe we are also one of the largest independent suppliers of digital direct current ("DC") motion control systems for elevators. Customers include most of the industrial crane and hoist companies in North America and the world's leading elevator builders. In addition, we have a growing range of products for motion control systems used in mining equipment. We are focused on providing our customers cost-effective power solutions that will improve efficiency, reduce costs, and save energy. Other trends in our served markets we believe we can capitalize on include the adoption of wireless control solutions, modernization and upgrading of installed equipment, and an increasing desire in our markets for added features, enhanced performance, and safer workplace environments. We believe that with our focus on innovation and our application expertise, combined with strong brand name recognition, broad product offerings and sales channel capabilities, we are well positioned to grow our business by gaining share in both our served markets as well as in new markets. Our operations are located in North America, predominantly in Menomonee Falls, Wisconsin, our Company headquarters.
Our product offerings for material handling applications include innovative power control systems, radio remote controls, and braking, collision avoidance, and electrification subsystems, sold primarily to original equipment manufacturers ("OEMs") of overhead cranes and hoists. While we sell primarily to OEMs of overhead cranes and hoists, we spend a great deal of effort understanding the needs of end users to gain specification. We can combine our products with engineered services to provide complete customer-specific systems solutions. A primary driver of our growth in this market is our ability to improve our customers' operations and provide them with quantifiable, and in many cases, significant returns on invested capital.
Our product offerings for elevator applications are comprised of highly integrated subsystems and drives used to control motion primarily in high-rise, high-speed elevator applications. Our products are sold mainly to elevator OEMs and we have a significant share of the available market for DC drives and subsystems used in high-rise elevators. We believe we have opportunities for growth in available elevator markets by introducing new energy-saving product offerings for both alternating current ("AC") and DC applications, expanding the breadth of our product offerings for lower performance AC applications, and using our new product offerings to expand geographically.
Our product offerings for mining applications include drives used mainly in the underground coal mining industry. We have been a leading supplier of DC digital motion control systems to underground coal mining equipment manufacturers for over 30 years. We believe that global energy needs will continue to grow significantly for the foreseeable future, and part of that need will continue to be met by traditional coal-based sources. In addition, we intend to develop and introduce new products for hard rock and surface mining applications in an effort to reduce our reliance on the coal industry.
We intend to continue to build on our competitive strengths in established material handling, elevator, and mining markets and continue to invest in research and development to expand our product portfolio aimed at penetrating growing markets for digital power-based systems. We are focused on increasing our sales and profitability primarily by pursuing organic growth opportunities in our core product lines, seeking to increase our market share, enter new markets, and expand our current business model geographically.
 
Continuing Operations
 
We focus on a variety of key indicators to monitor our business performance.  These indicators include order rates, sales growth, gross profit margin, operating profit margin, net income, earnings per share, and working capital and

13

cash flow measures.   These indicators are compared to our operating plans as well as to our actual results from prior fiscal periods, and are used to measure our success relative to our objectives.  Our Company objectives are to grow sales at least 5% on a year-over year basis, to achieve and maintain 35% gross margins and 10% operating profit margins, and to generate sufficient cash flow to fund our growth initiatives, our operations, and our obligations.

As expected, our business activity started slowly in fiscal 2015, due mainly to seasonal buying patterns of customers in material handling markets. However, as the first quarter progressed, both our incoming order and sales levels increased meaningfully. We closed the quarter with bookings of $28.6 million and sales of $26.6 million, a 10% increase over the first quarter fiscal 2014 sales of $24.1 million.

Our first quarter gross margin as a percentage of sales was 35.3%, up 150 basis points from last year's first quarter gross margin percentage of 33.8%. Our pretax income from operations was more than $2.5 million, or 9.4% of sales, in the current year first quarter, up 74% over prior year pretax income, and our earnings per share from continuing operations increased 91% to $.67 per share from $.35 per share last year. In summary, we grew both our sales and profitability substantially year-over-year.

Looking forward to the second quarter of 2015, given our quotation and incoming order rates, we expect sales to increase moderately from the recently completed first quarter levels, and we currently project both gross margins and operating profit margins to exceed our stated objectives of 35% and 10% respectively.

Macro-economic and geopolitical conditions remain quite dynamic and fragile, and it remains challenging to predict the duration or the magnitude of the current economic recovery, whether in the U.S. overall or in the specific end markets we serve. However, given current industry projections and our recent business performance, we believe we can continue to perform at a high level, growing our business and increasing our profitability by gaining market share, entering new markets, and expanding geographically. In summary, we've executed our internal growth strategy well, our business is performing at very healthy levels of profitability and cash flow, and we've made tremendous progress over time in dealing with our significant pension obligation, which has us well-positioned to continue to increase the value of our Company going forward.

Discontinued Operations

Certain expenses related to previously divested businesses have been classified as discontinued operations in the accompanying condensed consolidated financial statements and footnotes for all periods presented (see Note 2 of Notes to Condensed Consolidated Financial Statements). Expenses related to previously divested businesses include environmental matters, asbestos claims and product liability claims (see Note 4 of Notes to Condensed Consolidated Financial Statements).  All of these issues relate to businesses we no longer own and most relate to indemnification agreements that we entered into when we divested those businesses.
 
Going forward, our results of discontinued operations may include additional costs incurred related to businesses no longer owned, and may include additional costs above those currently estimated and accrued related to the fiscal 2007 divestiture of a power electronics business.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our Annual Report on Form 10-K for the fiscal year year ended December 28, 2014.


Results of Operations - Three Months Ended March 29, 2015, and March 30, 2014
 
Net Sales and Gross Profit
 
Net sales for the three months ended March 29, 2015, were $26.6 million, an increase of more than 10% compared to prior year sales of $24.1 million for the three months ended March 30, 2014. Sales of products into material handling markets increased nearly 8% while sales into elevator markets increased 18% year-over-year. Net sales by major market were as follows, in millions:

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Three Months Ended
 
March 29, 2015
 
March 30, 2014
Material handling
$
19.5

 
73
%
 
$
18.0

 
75
%
Elevator motion control
6.2

 
23
%
 
5.3

 
22
%
Energy systems
0.9

 
4
%
 
0.8

 
3
%
Total net sales
$
26.6

 
100
%
 
$
24.1

 
100
%

Gross profit for the three months ended March 29, 2015, was $9.4 million, or 35.3% of sales, versus $8.2 million, or 33.8% of sales, for the three months ended March 30, 2014.  The increase in gross profit as a percentage of sales for the three months ended March 29, 2015, as compared to the three months ended March 30, 2014, was mainly due to higher sales volume, partially offset by higher labor cost and freight expenses related to the U.S. west coast port shutdown in the current year.  

Research and Development, Pension Expense, and Selling, General and Administrative
 
Research and development (“R&D”) expense was $0.9 million, or 3.4% of sales, for the three months ended March 29, 2015, comparable to R&D expense of $0.8 million, or 3.3% of sales, for the three months ended March 30, 2014.
 
Pension expense was $0.5 million and $0.9 million for the three months ended March 29, 2015 and March 30, 2014, respectively (see Note 7 of Notes to Condensed Consolidated Financial Statements).  The decrease in pension expense was mainly due to a decrease in the interest cost component of pension expense resulting mainly from a significant year-over-year reduction in our projected pension benefit obligation.
 
Selling, general and administrative (“SG&A”) expense was $5.5 million (20.6% of sales) for the three months ended March 29, 2015, versus $5.0 million (20.7% of sales) for the three months ended March 30, 2014.  Selling expenses in the three months ended March 29, 2015, were $2.9 million, comparable to selling expenses of $2.9 million in the three months ended March 30, 2014. General and administrative (“G&A”) expense increased to $2.6 million for the three months ended March 29, 2015, compared to $2.1 million for the three months ended March 30, 2014, mainly due to higher spending on information technology and professional fees. In addition, prior year G&A expense included a favorable adjustment related to a change in our paid time off policies.
 
Income from Operations
 
Income from operations for the three months ended March 29, 2015, was $2.5 million compared to income from operations of $1.4 million for the three months ended March 30, 2014.  The increase in income from operations for the three months ended March 29, 2015, as compared to the three months ended March 30, 2014, was mainly due to higher gross profit combined with lower pension expense, partially offset by higher R&D and G&A expenses in the three months ended March 29, 2015.
 
Interest Income
 
Interest income was negligible for the three months ended March 29, 2015 and March 30, 2014.
 
Provision for Income Taxes
 
We recorded a negligible provision for income taxes for the three months ended March 29, 2015, compared to a provision for income taxes of $0.2 million for the three months ended March 30, 2014.  The income tax provision for the three months ended March 30, 2014 includes a non-cash deferred income tax provision of $0.2 million related to changes in deferred tax liabilities from goodwill amortization for tax purposes.

Income from Continuing Operations
 
We recorded income from continuing operations of $2.5 million for the three months ended March 29, 2015, or $0.67 per diluted share, compared to income from continuing operations of $1.2 million for the three months ended March 30, 2014, or $0.35 per diluted share.
 

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Income (Loss) from Discontinued Operations
 
We recorded a loss from discontinued operations of $0.2 million for the three months ended March 29, 2015, or a $0.04 loss per share on a diluted basis, compared to a loss of $0.1 million from discontinued operations, or a $0.04 loss per share on a diluted basis, for the three months ended March 30, 2014.
 
Net Income

Our net income was $2.3 million in the three months ended March 29, 2015, or $0.63 per diluted share, compared to net income of $1.1 million in the three months ended March 30, 2014, or $0.31 per share on a diluted basis. 

Liquidity and Capital Resources
 
Our unrestricted cash and cash equivalent balance decreased approximately $2.6 million during the first three months of fiscal 2015, from $9.7 million at December 28, 2014, to $7.1 million at March 29, 2015.  Restricted cash balances remained unchanged during the first three months of fiscal 2015 at $0.3 million.   The primary source of cash during the first three months of fiscal 2015 was income from continuing operations of $2.5 million, which reflects non-cash expenses aggregating $0.9 million for depreciation, amortization, pension, stock compensation, and deferred income tax provisions.

The primary use of cash in the first three months of fiscal 2015 was a $4.9 million net increase in operating assets and liabilities. Accounts receivable balances increased $0.5 million in the first three months of fiscal 2015 despite the fact that our sales volume decreased sequentially in the first quarter of 2015 compared to the fourth quarter of fiscal 2014. This increase was due mainly to the uneven demand we experienced in the first quarter, as 45% of our sales, or nearly $12 million in sales, were recorded in the month of March. Inventories increased $0.7 million in the first three months of fiscal 2015, due mainly to duplicate purchases of certain inventory items resulting from the US west coast port shutdown. In addition, accounts payable and other accrued liabilities decreased by $3.5 million during the first three months of fiscal 2015, due to payment in the first quarter of fiscal 2015 of incentive compensation amounts accrued as of December 28, 2014, and a decrease in accounts payable days outstanding. We also consumed cash of $0.3 million related to discontinued operations activities and $0.2 million for capital expenditures.  

While we may make further investments to increase capacity and improve efficiency, we do not anticipate that capital expenditures in fiscal 2015 will exceed $1.5 million.  The expected amount of capital expenditures could change depending upon changes in revenue levels, our financial condition, and the general economy.

In November 2007 we entered into an agreement with Associated Bank, N.A. (“Associated Bank”) providing for a $10 million revolving credit facility (the “revolving facility”).  Borrowings under the revolving facility bore interest at the London Interbank Offering Rate (“LIBOR”) plus 1.5%, with borrowing levels determined by a borrowing base formula as defined in the agreement, based on the level of eligible accounts receivable.  The revolving facility also supports the issuance of letters of credit, places certain restrictions on our ability to pay dividends or make acquisitions, and includes covenants which require minimum operating profit levels and limit annual capital expenditures.  Borrowings under the revolving facility were collateralized by our accounts receivable and inventory.  We have subsequently entered into several amendments to the revolving facility, for purposes of extending the maturity dates of the revolving facility, increasing the commitment amount of the facility, and broadening the security interest of Associated Bank to include all assets of the Company.

On June 15, 2014, we entered into the seventh amendment to the revolving facility with Associated Bank, the purpose of which was to (i) extend the maturity date of the revolving facility to June 15, 2015; (ii) retain the commitment amount of Associated Bank to $12.5 million; (iii) establish minimum quarterly adjusted earnings before interest, taxes, depreciation and amortization requirements for the term of the agreement; and (iv) establish maximum quarterly cash amounts that we can contribute to our defined benefit pension plan during the term of the agreement.

On August 20, 2014, we entered into the eighth amendment to the revolving facility with Associated Bank, the purpose of which was to increase the maximum quarterly cash amounts that we can contribute to our defined benefit pension plan for the term of the agreement. There were no amounts outstanding on the amended revolving facility, and we are currently in compliance with all covenants of the revolving facility, as amended, as of March 29, 2015.  


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Primarily as a result of the decline in interest rates over the past decade, the accumulated benefit obligation of our defined benefit pension plan currently exceeds plan assets.  We contributed $30 million to our pension plan in December 2006 following the divestiture of our power electronics business, and subsequently have made cash contributions to the plan aggregating $94 million from April 2008 through December 2014, funded by cash generated from operations and existing cash on hand. Also in fiscal 2014, we made an excess voluntary contribution of 250,000 shares of Company common stock to our pension plan, valued at $7.3 million at the time of contribution, in an effort to improve the funded status of the pension plan.

Based on current actuarial estimates, we are not required to make any mandatory pension cash contributions in fiscal 2015, while total future funding amounts to achieve fully funded status are estimated at approximately $25 million. Minimum required pension contributions in fiscal years 2016 through 2021 are currently projected at between $1.9 million and $3.3 million annually, again based on current actuarial projections.

The actual timing and amount of required plan contributions are dependent upon many factors, including returns on invested assets, the level of certain market interest rates, the discount rate and mortality assumptions used to determine pension obligations, voluntary contributions we may elect to make to pension plan assets, and other potential legislative and regulatory actions.

Based upon current plans and business conditions, we believe that current cash balances and internally generated cash flows will be sufficient to fund anticipated operational needs, capital expenditures, required pension plan contributions, and other commitments over the next 12 months. 

Caution Regarding Forward-Looking Statements and Risk Factors
 
This document, including documents incorporated herein by reference, contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  The words “believe,” “expect,” “estimate,” “anticipate,” “intend,” “may,” “might,” “will,” “would,” “could,” “project,” and “predict,” or similar words and phrases generally identify forward-looking statements.  Forward-looking statements are inherently subject to risks and uncertainties which in many cases are beyond our control and which cannot be predicted or quantified.  As a result, future events and actual results could differ materially from those set forth in, contemplated by, or underlying forward-looking statements.  Forward-looking statements contained in this document speak only as of the date of this document or, in the case of any document incorporated by reference from another document, the date of that document.  We do not have any obligation to publicly update or revise any forward-looking statement contained or incorporated by reference in these documents to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.
 
Our future results of operations and the other forward-looking statements contained in this filing, including this section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” involve a number of risks and uncertainties.  In particular, the statements regarding future economic conditions, our goals and strategies, new product introductions, penetration of new markets, projections of sales revenues and sales growth, manufacturing costs and operating costs, pricing of our products and raw materials required to manufacture our products, gross margin expectations, relocation and outsourcing of production capacity, capital spending, research and development expenses, the outcome of pending legal proceedings and environmental matters, payment of certain claims by insurance carriers, tax rates, sufficiency of funds to meet our needs including contributions to our defined benefit pension plan, and our plans for future operations, as well as our assumptions relating to the foregoing, are all subject to risks and uncertainties.
 
A number of factors could cause our actual results to differ materially from our expectations.  We are subject to all of the business risks facing public companies, including business cycles and trends in the general economy, financial market conditions, changes in interest rates, demand variations and volatility, potential loss of key personnel, supply chain disruptions, government legislation and regulation, and natural causes.  Additional risks and uncertainties include but are not limited to industry conditions, competitive factors such as technology and pricing pressures, business conditions in our served markets, dependence on significant customers, increased material costs, risks and costs associated with acquisitions and divestitures, environmental matters and the risk that our ultimate costs of doing business exceed present estimates.  This list of risk factors is not all-inclusive, as other factors and unanticipated events could adversely affect our financial position or results of operations.  Further information on factors that could affect our financial results can be found in our Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended December 28, 2014, under the heading “Risk Factors” as well as below in Part II, Item 1A under the heading “Risk Factors”.

17


Item 3 – Quantitative and Qualitative Disclosures about Market Risk

We did not have any debt outstanding at March 29, 2015. While we do have pension funding obligations which vary as interest rates change, those changes were not material in the three months ended March 29, 2015, from the amounts we disclosed in our Annual Report on Form 10-K for the fiscal year ended December 28, 2014.  

We did not have any outstanding hedge instruments or foreign currency contracts outstanding at March 29, 2015, or March 30, 2014.

Item 4 – Controls and Procedures
 
In connection with this Quarterly Report on Form 10-Q, under the direction of our Chief Executive Officer and Chief Financial Officer, we evaluated our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, and internal control over financial reporting and concluded that (i) our disclosure controls and procedures were effective as of March 29, 2015; and (ii) no change in internal control over financial reporting occurred during the quarter ended March 29, 2015, that has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting.

Attached as exhibits to this Quarterly Report on Form 10-Q are certifications of the Company’s Chief Executive Officer and Chief Financial Officer, which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934.  This “Controls and Procedures” section includes information concerning the controls and evaluation thereof referred to in the attached certifications, and it should be read in conjunction with the attached certifications for a more complete understanding of the topics presented.

PART II. OTHER INFORMATION

Item 1 – Legal Proceedings
 
Information about our legal proceedings is contained in Part I, Item 3, Legal Proceedings, and Note 10 in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 28, 2014, which is incorporated herein by reference, and in Note 4 of the Notes to Condensed Consolidated Financial Statements contained in our Quarterly Reports on Form 10-Q. Except as set forth in Note 4 of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, we believe that there have been no other material developments with respect to these matters during the fiscal quarter ended March 29, 2015.

Item 1A – Risk Factors
 
There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 28, 2014.
 
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds
 
There were no unregistered sales of equity securities during our fiscal quarter ended March 29, 2015.

Item 3 – Defaults upon Senior Securities
 
None.
 
Item 4 – Mine Safety Disclosures

None.
 
Item 5 – Other Information

None.
 

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Item 6 - Exhibits

(a)
 
Index to Exhibits
 
 
 
 
 
 
 
10.1

 
2014 Stock Incentive Plan of Magnetek, Inc. (the “2014 Plan”). **
 
 
10.2

 
Cooperation Agreement between the Company and D. Kyle Cerminara effective February 23, 2015 as previously disclosed on Form 8-K dated February 23, 2015. *
 
 
10.3

 
Form of Restricted Stock Award Agreement (Retention Based) pursuant to the 2014 Plan. *
 
 
10.4

 
Form of Restricted Stock Award Agreement (Performance Based) pursuant to the 2014 Plan. *
 
 
31.1

 
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. *
 
 
31.2

 
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. *
 
 
32.1

 
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
 
 
 
 
 
 
 
*
 
Filed with this Report on Form 10-Q.
 
 
**
 
Previously filed with the Company’s Proxy Statement dated April 1, 2014 for the 2014 Annual Meeting of Shareholders and incorporated herein by this reference.



19

SIGNATURES

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 thereunto duly authorized.

 
MAGNETEK, INC.
 
(Registrant)

Date:
May 13, 2015
/s/  PETER M. MCCORMICK
 
 
Peter M. McCormick
 
 
President and Chief Executive Officer
 
 
(Duly authorized officer of the Registrant
 
 
and principal executive officer)

Date:
May 13, 2015
/s/  MARTY J. SCHWENNER
 
 
Marty J. Schwenner
 
 
Vice President and Chief Financial Officer
 
 
(Duly authorized officer of the Registrant
 
 
and principal financial officer)


20




EXHIBIT 10.2
February 23, 2015

Fundamental Global Investors, LLC
c/o D. Kyle Cerminara
4201 Congress Street, Suite 140
Charlotte, North Carolina 28209

Dear Mr. Cerminara:

This letter constitutes the agreement (the “Agreement”) between Magnetek, Inc., a Delaware corporation (the “Company”), on the one hand, and Fundamental Global Investors, LLC (“Investor”) and each of the other individuals and entities set forth on the signature pages hereto (the “Investor Affiliates,” and together with Investor and the Investor Affiliates, and Affiliates of any of the foregoing that are listed as filing parties on Investor’s Schedule 13D (as defined below), the “Investor Group”), on the other hand, with respect to the matters set forth below:
1.    Board Nomination.

a.The Company agrees to request the Nominating and Corporate Governance Committee (the “Nominating Committee”) of the Board of Directors of the Company (the “Board”) to recommend, during its February 2015 meeting, that the Board approve including D. Kyle Cerminara (“Nominee”) as a nominee for election to the Board on the slate of nominees recommended by the Board in the Company’s proxy statement and on its proxy card relating to the 2015 annual meeting of stockholders of the Company (the “2015 Annual Meeting”). If the Nominating Committee makes that recommendation, then the Company agrees to request that the Board approve, during its February 2015 meeting, including Nominee as a nominee for election to the Board on the slate of nominees recommended by the Board in the Company’s proxy statement and on its proxy card relating to the 2015 Annual Meeting. If the Board approves so including Nominee, then the Company agrees to so include Nominee as such a nominee. The remaining provisions of this Agreement are conditioned on Nominee being nominated by the Board for election, and Nominee being elected to the Board, at the 2015 Annual Meeting.

b.Until the Termination Date (as defined below), the Investor Group agrees that it shall not submit any nominations for election to the Board or stockholder proposals (whether made pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise) at the 2015 Annual Meeting or any subsequent annual or special meeting of stockholders of the Company.

c.Until the Termination Date, each member of the Investor Group shall cause all Voting Securities (as defined below) (whether held of record or beneficially) that it is entitled to vote at each annual and special meeting of stockholders of the Company (i) to be present for quorum purposes, (ii) to be voted in favor of the election of each of the nominees on the slate of nominees recommended by the Board in the Company’s proxy statement and on its proxy card for such meeting, including the individuals nominated by the Board to stand for election at the 2015 Annual Meeting or any subsequent annual or special meeting of stockholders of the Company at which directors are to be elected, and (iii) subject to the fiduciary duties of the Nominee and each member of the Investor Group to the investors in the Investor Group’s funds, to be voted in accordance with the Board’s recommendation with respect to all other matters subject to a vote of stockholders of the Company at the 2015 Annual Meeting or any subsequent annual or special meeting of stockholders of the Company.

d.During Nominee’s service as a member of the Board, Nominee shall at all times receive the same compensation, reimbursements and other benefits provided by the Company to any other non-management member of the Board in the same position as Nominee and shall have the benefit of the same D&O insurance coverage, indemnification and expense advancement provisions, indemnity agreements and any other similar agreements that at any time exist or are entered into in favor of any other non-management director of the Company in his or her capacity as such.





2.Standstill. Until the Termination Date, the Investor Group agrees that, except as otherwise specifically provided in this Agreement, no member of the Investor Group shall, in any way or in any capacity, directly or indirectly, alone or in concert with others, except for such actions as Nominee may take in his capacity as a director of the Company in support of transactions and initiatives approved or undertaken by the Board:

a.make, or in any way participate in, or encourage any “solicitation” (as such term is used in the proxy rules of the Securities and Exchange Commission (the “SEC”)) of proxies or consents with respect to the election or removal of directors or any other matter or proposal;

b.initiate, propose or otherwise “solicit” (as such term is used in the proxy rules of the SEC) stockholders of the Company for the approval of any stockholder proposal, whether made pursuant to Rule 14a-8 or Rule 14a-4 under the Exchange Act or otherwise;

c.seek to call, or to request the call of, or call a special meeting of the stockholders of the Company; or, in its capacity as a stockholder, make a request for or take any action to obtain or retain any list of the Company’s stockholders or other Company records;

d.seek election or appointment to, or representation on, or nominate or propose the nomination of any candidate to, the Board, except as specifically contemplated in Section 1; or seek the removal of any member of the Board, or a change in the composition or size of the Board;

e.form or join in a partnership, limited partnership, syndicate or other group, including, without limitation, a group as defined under Section 13(d) of the Exchange Act, with respect to any Voting Securities, deposit any Voting Securities into a voting trust or subject any Voting Securities to any voting agreement (other than solely with other members of the Investor Group with respect to Voting Securities now or hereafter owned by them in accordance with the terms of this Agreement) or take any other action that would limit or otherwise restrict the ability of the Investor Group to vote or cause to be voted the Investor Voting Securities held from time to time in accordance with this Agreement;

f.with respect to the Company or the Voting Securities, (i) otherwise communicate with the Company’s stockholders or others pursuant to Rule 14a-1(l)(2)(iv) under the Exchange Act or (ii) participate in, or take any action pursuant to, any “stockholder access” proposal that may be implemented by the SEC, whether in accordance with former Rule 14a-11 or otherwise;

g.except at the request of the Board, acquire, offer or propose to acquire, or agree to acquire (except by way of stock dividends, stock splits, reverse stock splits or other distributions or offerings made available to holders of any Voting Securities generally), whether by purchase, tender or exchange offer, directly through the acquisition of control of another Person, by joining a partnership, limited partnership, syndicate or other group (as defined under Section 13(d) of the Exchange Act) or otherwise, any Voting Securities if, as a result of such acquisition, the members of the Investor Group would beneficially own in the aggregate in excess of 14.5% of the then outstanding Voting Securities;

h.except at the request of the Board, seek, propose, participate in, support, facilitate or assist any third party to seek or propose any merger, consolidation, business combination, tender or exchange offer, sale or purchase of assets, sale or purchase of securities, dissolution, liquidation, restructuring, recapitalization or similar transactions of or involving the Company or any of its Affiliates or Associates;

i.except at the request of the Board, enter into any arrangements, understanding or agreements (whether written or oral) with, or advise, finance, assist or encourage, any other Person in connection with any of the foregoing;
j.make any public statement or public disclosure regarding any intent, purpose, plan or proposal with respect to the Board, the Company, its management, policies or affairs or any of its securities or assets




or this Agreement that is inconsistent with the provisions of this Agreement, including any intent, purpose, plan or proposal that is conditioned on, or would require waiver, amendment, nullification or invalidation of, any provision of this Agreement or take any action that could require the Company to make any public disclosure relating to any such intent, purpose, plan, proposal or condition; or

k.take any action challenging the validity or enforceability of this Section 2, or request the Company or Board to agree to amend or to waive any provision of this Section 2 either publicly or in a manner that is reasonably likely to require the Company to disclose the request publicly.

3.Service as Director. During the Nominee’s service as a member of the Board, Nominee shall:

a.during the term of any service as a director of the Company: (i) comply with all policies, procedures, processes, codes, rules, standards and guidelines applicable to non-management members of the Board and (ii) keep confidential all Proprietary Information (as defined below) consistent with Board practices and policies applicable to non-management members of the Board;

b.submit to the Company a fully completed copy of the Company’s standard director & officer questionnaire and other reasonable and customary director onboarding documentation required by the Company in connection with the appointment or election of new non-management Board members, including, without limitation, information required to be or customarily disclosed for directors, candidates for directors, and their Affiliates and representatives in a proxy statement or other filings under applicable law or stock exchange rules or listing standards, information in connection with assessing eligibility, independence and other criteria applicable to directors or satisfying compliance and legal obligations, and such other information as reasonably requested by the Company;

c.periodically provide an updated questionnaire response and other customary information that the Company reasonably requests;

d.at all times while serving as a member of the Board, (i) meet all director independence standards of the NASDAQ Global Market applicable to non-management members of the Board and members of its Compensation Committee or its Nominating and Corporate Governance Committee as in effect on the date hereof; and (ii) not be in breach of Section 8 of the Clayton Act, 15 USC §19, having been given an opportunity to cure any such breach, based on the written opinion of outside legal counsel (the preceding clauses (i) and (ii), the “Conditions”); and

e.promptly advise the Nominating and Corporate Governance Committee of the Board in writing if he ceases to satisfy any of the Conditions.

4.Fiduciary Duties. Notwithstanding anything to the contrary in this Agreement,

a.Nothing in this Agreement shall obligate the Nominating Committee to recommend to the Board, or the Board to approve, including Nominee as a nominee for election to the Board on the slate of nominees recommended by the Board in the Company’s proxy statement and on its proxy card relating to the 2015 Annual Meeting.

b.Nominee, during the term of any service as a director of the Company, shall not be prohibited from acting in his capacity as a director and complying with his fiduciary duties as a director of the Company, including with respect to Nominee’s participation in Board meetings (unless there is a conflict of interest) or as expressly directed by the Board.

c.Nothing in this Agreement shall prevent or prohibit the members of the Board other than Nominee from complying with their respective fiduciary duties as directors of the Company.





5.Confidentiality.

a.The Company has provided, and may in the future provide, the Investor Group access to non-public information regarding the Company and its business, operations, strategies and objectives. Without limiting Section 2 or Section 3, the Investor Group shall, and shall cause its representatives to, keep all such non-public information, whether oral or written and regardless of the manner in which it is furnished (“Proprietary Information”), confidential and not disclose or reveal any Proprietary Information to any Person other than its representatives who need to know the Proprietary Information for the purpose of assisting or advising the Investor Group in connection with this Agreement or any of the matters addressed herein.

b.Notwithstanding the foregoing, the Investor Group may disclose Proprietary Information at such times, in such manner and to the extent such disclosure is required by applicable law, provided that the Investor Group (i) provides the Company with prior written notice of such disclosure so as to permit the Company to seek a protective order or other appropriate remedy, (ii) limits such disclosure to what is strictly required and (iii) uses reasonable best efforts to preserve the confidentiality of any such Proprietary Information so disclosed.

c.The Investor Group hereby acknowledges that it is aware that the United States securities laws restrict the purchase and sale of securities by persons who possess material nonpublic information relating to the issuer of such securities and the communication of such information to any other person when it is reasonably foreseeable that such other person is likely to purchase or sell such securities in reliance upon such information. Each Person included within the Investor Group agrees that it will comply with the Company’s insider trading policy that is applicable to non-management directors of the Company (including its trading “window” provisions), a copy of which is attached hereto as Exhibit A, as if such Person were a non-management director of the Company.

6.Public Announcements. Neither the Company nor any member of the Investor Group will make any public statements regarding this Agreement or any of the matters addressed herein (including in any press release, or any filing with the SEC, any other regulatory or governmental agency or any stock exchange) without obtaining the prior written consent of the Company and the Investor Group (which consent shall not be unreasonably withheld, conditioned or delayed), except as may, in the reasonable judgment of the party making the public statement, be required by applicable law, in which case the party required to make the public statement shall use commercially reasonable efforts to allow the other party reasonable time to comment on such public statement in advance of the issuance of such public statement; provided that the Investor Group may disclose the contents of, and file a copy of, this Agreement in any Schedule 13D or amendment thereto filed by them with the SEC with respect to their holdings of Voting Securities of the Company as is required by SEC rules (“Investor’s Schedule 13D”); provided, further, that the Investor Group shall consult with the Company prior to filing any such Schedule 13D or amendment thereto so as to permit the Company to coordinate any related filing the Company will make with the SEC. Each party hereto shall refrain from disparaging, impugning, or taking any action reasonably likely to damage the reputation of the other party or the directors or officers of the Company. The foregoing shall not apply to any compelled testimony or production of information, either by legal process or subpoena, or as part of a response to a request for information from any governmental authority with jurisdiction over the party from whom information is sought.

7.Representations of the Investor Group. Each member of the Investor Group represents and warrants that:
a.This Agreement has been duly authorized, executed and delivered by it and is a valid and binding obligation of such individual or entity, enforceable against such individual or entity in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles.





b.As of the date of this Agreement, the Investor Group, collectively, beneficially owns an aggregate of 397,291 shares of Common Stock, and such Common Stock constitutes all of the Voting Securities beneficially owned by the members of the Investor Group.

c.No member of the Investor Group (i) directly or indirectly owns, beneficially or of record, any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to the Common Stock or with a value derived in whole or in part from the value of the Common Stock, whether or not such instrument or right shall be subject to settlement in shares of Common Stock or otherwise (each, a “Derivative Instrument”), or has any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of Common Stock; (ii) is party to any proxy, contract, arrangement, understanding or relationship pursuant to which any member of the Investor Group has a right to vote any securities of the Company, and (iii) except for customary incentive or performance fees paid to Investor or its affiliates in the capacity of general partner, managing member or investment adviser of the funds and partnerships included in the Investor Group and equity awards that may be granted by the Company to Nominee, has a right to any performance-related fees (other than an asset-based fee) based on any increase or decrease in the value of the shares of Common Stock or Derivative Instruments.

d.The Investor Group has disclosed the control relationships between each member of the Investor Group in Investor’s Schedule 13D filed to date with the SEC.

e.No member of the Investor Group has any compensation arrangement with Nominee that is dependent in any way on, or tied in any way to, Nominee’s status as a director of the Company.

8.Representations of the Company. The Company hereby represents that this Agreement has been duly authorized, executed and delivered by it and is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles.

9.Termination. The date on which this Agreement, including the covenants and agreements contained in Section 2, shall terminate (the “Termination Date”) shall be (a) ten (10) days prior to the expiration of the notice period specified in the Company’s advance notice bylaw related to nominations of directors at the 2016 annual meeting of stockholders of the Company or (b) if Nominee is elected as a director of the Company at the 2015 Annual Meeting, the date on which Nominee is no longer serving on the Board if such date is later than the date described in clause (a). As a condition to Nominee’s nomination for election as a director of the Company at the 2015 Annual Meeting, Nominee shall agree for the benefit of the Company in writing, in a form reasonably acceptable to the Company to tender his resignation from the Board (i) within five (5) business days of a breach of this Agreement by any member of the Investor Group and (ii) within five (5) business days of the Nominee ceasing to satisfy any of the Conditions.

10.Definitions. As used in this Agreement, (a) the term “Person” shall be interpreted broadly to include, among others, any individual, general or limited partnership, corporation, limited liability or unlimited liability company, joint venture, estate, trust, group, association or other entity of any kind or structure; (b) the terms “Affiliate” and “Associate” shall have the meanings set forth in Rule 12b-2 under the Exchange Act and shall include Persons who become Affiliates or Associates of any Person subsequent to the date of this Agreement; (c) the term “Voting Securities” shall mean shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), and any other securities of the Company entitled to vote in the election of directors, or securities convertible into, or exercisable or exchangeable for, such Common Stock or other securities, whether or not subject to the passage of time or other contingencies; and (d) the term “business day” shall mean any day other than a Saturday, Sunday or a day on which banks in New York City are authorized or obligated by applicable law or executive order to close or are otherwise generally closed.





11.Injunctive Relief. The parties recognize and agree that if for any reason any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached, immediate and irreparable harm or injury would be caused for which money damages would not be an adequate remedy. Accordingly, each party agrees that in addition to other remedies the other party shall be entitled to an injunction without posting a bond or other undertaking restraining any violation or threatened violation of the provisions of this Agreement. In the event that any action shall be brought in equity to enforce the provisions of the Agreement, no party shall allege, and each party hereby waives the defense, that there is an adequate remedy at law.

12.Entire Agreement; Amendment. This Agreement constitutes the only agreement between the Investor Group and the Company with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written. This Agreement shall be binding upon and inure to the benefit of the parties named herein and their respective successors and permitted assigns. No party may assign or otherwise transfer either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other parties. Any purported transfer requiring consent without such consent shall be void. No amendment, modification, supplement or waiver of any provision of this Agreement shall be effective unless it is in writing and signed by the party or parties hereto affected thereby, and then only in the specific instance and for the specific purpose stated therein. Any waiver by any party hereto of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party hereto to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

13.Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. The parties further agree to replace such invalid or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the purposes of such invalid or unenforceable provision.

14.Jurisdiction. This Agreement, and any dispute arising out of, relating to or in connection with this Agreement, shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict of laws principles. Each of the parties hereto: (a) consents to the personal jurisdiction and venue in any action to enforce this Agreement in the state or federal courts located in Milwaukee, Wisconsin; (b) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court; and (c) agrees that it shall not bring any action relating to this Agreement in any court other than the state or federal courts located in Milwaukee, Wisconsin.

15.No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties hereto and is not enforceable by any other Persons.

16.Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed given when delivered in person, by overnight courier, by facsimile transmission (with receipt confirmed by telephone or by automatic transmission report) or two business days after being sent by registered or certified mail (postage prepaid, return receipt requested), as follows:

If to Company:

Magnetek, Inc.
N49 W13650 Campbell Drive
Menomonee Falls, Wisconsin 53051
Attn: Scott S. Cramer
Telephone: (262) 703-4283
Fax: (262) 783-3509





with copies (which shall not constitute notice to the Company) to:

Foley & Lardner LLP
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Patrick G. Quick
Telephone: (414) 297-5678
Fax: (414) 297-4900
If to the Investor Group:

Fundamental Global Investors, LLC
4201 Congress Street, Suite 140
Charlotte, North Carolina 28209
Attn: D. Kyle Cerminara
Telephone: (704) 323-6851
Fax: (888) 439-0009
with copies (which shall not constitute notice to the Investor Group) to:

Thompson Hine LLP
3900 Key Center
127 Public Square
Cleveland, Ohio 44114
Attn: Derek D. Bork
Telephone: (216) 566-5527
Fax: (216) 566-5800

Any party may by notice given in accordance with this Section 16 to the other parties designate updated information for notices hereunder.
17.Interpretation and Construction. Each of the parties hereto acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this Agreement, and that it has executed this Agreement with the advice of such counsel. Each party hereto and its counsel cooperated and participated in the drafting and preparation of this Agreement, and any and all drafts relating thereto exchanged among the parties shall be deemed the work product of all of the parties and may not be construed against any party by reason of its drafting or preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any party hereto that drafted or prepared it is of no application and is hereby expressly waived by each of the parties, and any controversy over interpretations of this Agreement shall be decided without regard to events of drafting or preparation.

18.Joint and Several Liability. Subject to Section 19, all representations, warranties, covenants, agreements, obligations and liabilities of the Investor Group set forth in, or arising under, this Agreement (collectively, the “Obligations”) shall be joint and several as among Investor and all entities that are Investor Affiliates; provided, however, that the Obligations of each individual shall be several and not joint.

19.Expenses. Each party hereto shall each be responsible for its own fees and expenses incurred in connection with the negotiation, execution and effectuation of this Agreement and the transactions contemplated hereby.

20.Counterparts. This Agreement may be executed by the parties hereto in separate counterparts (including by fax and .pdf), each of which when so executed shall be an original, but all such counterparts shall together constitute one and the same instrument.





[Signature Pages Follow]






















































If the terms of this Agreement are in accordance with your understandings with the Company, please sign and return the enclosed duplicate of this Agreement, whereupon this Agreement shall constitute a binding agreement among us.

Very truly yours,
MAGNETEK, INC.
By:     /s/ Scott S. Cramer         
Name:     Scott S. Cramer
Title:     Corporate Secretary













































Acknowledged and agreed to as of the date first written above:

FUNDAMENTAL GLOBAL PARTNERS, LP,
by Fundamental Global Partners GP, LLC, its general partner

By:     /s/ D. Kyle Cerminara    
Name: D. Kyle Cerminara
Title: Partner and Manager

FUNDAMENTAL GLOBAL PARTNERS MASTER FUND, LP,
by FG Partners GP, LLC, its general partner

By:     /s/ D. Kyle Cerminara    
Name: D. Kyle Cerminara
Title: Manager

FUNDAMENTAL GLOBAL PARTNERS GP, LLC

By:     /s/ D. Kyle Cerminara    
Name: D. Kyle Cerminara
Title: Partner and Manager

FG PARTNERS GP, LLC

By:     /s/ D. Kyle Cerminara    
Name: D. Kyle Cerminara
Title: Manager

FUNDAMENTAL GLOBAL INVESTORS, LLC

By:     /s/ D. Kyle Cerminara    
Name: D. Kyle Cerminara
Title: Chief Executive Officer, Partner and Manager

/s/ D. Kyle Cerminara    
D. Kyle Cerminara


/s/ Lewis M. Johnson    
Lewis M. Johnson


/s/ Joseph H. Moglia    
Joseph H. Moglia














Exhibit A
MAGNETEK, INC.
I.INSIDER TRADING POLICY AND PROCEDURES
This Insider Trading Policy provides guidelines to directors, officers and employees of Magnetek with respect to transactions in the Company’s securities. It applies to all transactions involving Magnetek’s securities, including securities, securities options and any other securities Magnetek may issue from time to time, such as preferred securities, warrants and convertible debentures, as well as to derivative securities relating to Magnetek’s securities, including exchange-traded options. It applies to all directors, officers and employees of Magnetek, consultants and independent contractors and to any other person who receives or has access to material nonpublic information (as defined below) regarding Magnetek. Any person who possesses material nonpublic information regarding Magnetek is an insider for so long as the information is not publicly known. It is possible for any employee to be an insider from time to time and to be subject, at those times, to this Policy. Anyone with material nonpublic information, members of their immediate families, and members of their households are referred to in this Policy as "insiders." Insiders are responsible for ensuring compliance with this Policy by their families and members of their household. This Policy also applies to any person who receives material nonpublic information from any insider.
Directors and corporate officers are also subject to the additional restrictions set forth in a separate memorandum distributed to each of them and which is entitled “Federal Securities Law Considerations” and covers matters under Section 16 and Rule 144 that are applicable to their securities transactions.
I.    Insider Trading Laws
Federal and state insider trading and “tipping” laws and regulations prohibit any insider from buying or selling the securities of that company or passing the information on to others who may be induced to buy or sell securities on the basis of the information. It is illegal for any insider to purchase or sell or trade Magnetek’s securities until the information becomes public or is no longer material. It is also illegal to trade in the securities of our customers, suppliers, competitors and partners if you have material nonpublic information about them that you gained in the course of your employment by Magnetek. For purposes of the insider trading laws, the term “securities” is broadly interpreted to include options and direct holdings as well as indirect holdings, such as securities held in employee benefit plans and trust funds. For purposes of this Policy, “Magnetek” means Magnetek, Inc. and all of its subsidiaries and affiliates. The term “trade” includes any transaction in Magnetek securities, including gifts and pledges.

II.    Specific Policies and Restrictions on Trading
There are times when insiders have access to information that has not been released to the public. Insiders are excluded from trading in Magnetek’s securities until that information has been released and fully absorbed by the public. For purposes of this Policy, the information shall be deemed to have been absorbed by the end of the second full trading day after the information is released. Insiders may begin trading in Magnetek securities at the opening of the market on the third trading day. If you have any question whether sufficient time has passed since an announcement by Magnetek, you should contact the General Counsel for guidance.
A.    Quarterly Blackout Periods     Insiders who have access to material information about Magnetek’s financial performance before that information is released to the public must refrain from trading Magnetek’s securities from the date that preliminary financial results are available until the information has been released and fully absorbed by the public. For purposes of this Policy, the quarterly blackout period shall begin two weeks prior to the end of the fiscal quarter Magnetek’s fiscal quarters end on the Sunday nearest December 31, March 31, June 30 and September 30. and shall end by the end of the second full trading day after




the earnings release date. Insiders may begin trading in Magnetek securities at the opening of the market on the third trading day. Notwithstanding the foregoing, occasions may arise when you become aware prior to the end of a quarter that earnings for that quarter are likely to exceed or fall below market expectations to an extent that is material. In such a case, you should refrain from trading even prior to the normal commencement of the quarterly blackout period.
B.    Event Specific Blackout Periods     Magnetek may on occasion issue interim earnings guidance or other material information by means of a press release, SEC filing on Form 8-K or other means designed to achieve widespread dissemination of the information. Once you become aware of the information that is the subject of a release you must refrain from trading the Company’s securities until it has been released and absorbed by the public. During that period you must also refrain from disclosing the existence of the blackout to any other person, including your fellow employees.
C.    Additional Restrictions in Specific Circumstances     From time to time, we may also recommend or require that insiders refrain from trading Magnetek’s securities because of material developments that have not been disclosed to the public. A blackout period may also be declared if the Chief Executive Officer and the General Counsel decide, in their judgment, that there is nonpublic material information that would make trades in Magnetek securities by certain employees suspect. In such a case, insiders who are aware of the information may not engage in any transaction involving Magnetek’s securities until advised that the restriction has been terminated or until the information has been released and fully absorbed by the public. During that period you must refrain from disclosing restrictions on trading to any other person, including your fellow employees.
D.    Employee and Director Stock Award Plans    There are a number of employee Stock Award plans that include opportunities to trade in Magnetek securities. Any time there is a blackout or restriction on trading, it impacts your ability to trade securities in a stock award plan as follows:
(1)    Stock Option Plans: This Policy does not apply to the exercise of securities options for cash, but does apply to all sales of securities acquired through the exercise of securities options.  Consequently, you may not exercise an option through a “same-day sale” or cashless transaction at any time that you are aware of material, non-public information or during any period of blackout or restriction on trading. This Policy also applies to and may allow permitted exceptions for the following types of option transactions during quarterly or specific blackout periods: (a) to the extent necessary to fund any tax withholding obligations related to the exercise of an option which is set to expire during a quarterly or specific blackout period by withholding shares deliverable under the option; and (b) in a restricted stock vesting the Company may withhold shares otherwise deliverable to you to satisfy your tax withholding obligations (commonly called “share withholding”). If you wish to act under one of these exceptions, you must request authorization from the General Counsel. Upon written authorization from the General Counsel, the transaction may be effected.

(2)    401 (k) Plan, Savings Plan, Stock Purchase Plan: This Policy applies to the acquisition or disposition of Company securities under these plans. You may purchase Company stock in the plans by means of periodic contributions to the plans pursuant to payroll deduction elections. However, you are prohibited from acquiring or disposing of Magnetek stock in your accounts under these plans while you are in possession of material, nonpublic information, and you may not make changes in the Magnetek stock fund in your accounts in these benefit plans during any period of blackout or restriction on trading. This includes transfers into and out of the Magnetek stock fund, taking a loan which decreases the balance in your Magnetek stock fund, and elections to increase or decrease the percentage of your contributions to the Magnetek stock fund.




III.    Definition of “Material Nonpublic Information”
Information is considered material if it would be expected to affect the investment or voting decisions of a reasonable shareholder or investor, or if the disclosure of the information would be expected to significantly alter the total mix of the information in the marketplace about the Company.  In simple terms, material information is any type of information which could reasonably be expected to affect the market price of securities.  Both positive and negative information may be material. 
While it is not possible to identify all information that qualifies as “material”, the following are examples of the types of information that is “material”:

•
Performance projections and strategic plans.

•
Potential mergers or acquisitions, the sale of assets or subsidiaries.

•
New major contracts, partnering agreements, new customers, suppliers, financing sources or the loss thereof.

•
Significant changes or developments in supplies or inventory, including significant product defects, recalls or product returns.

•
Significant pricing changes.

•
Stock splits, public or private securities/debt offerings, or changes in Company dividend policies or amounts.

•
Significant changes in senior management or membership of the Board of Directors.

•
Significant labor disputes or negotiations.

•
Actual or threatened major litigation or the resolution thereof.

•
A change in earnings projections or unexpected or unusual gains or losses in major operations

Chances are if you learn something that leads you to want to buy or sell securities, the information will be considered material. Thus, even speculative information can be material and information may be material even if the information alone would not convince an investor to buy securities. Furthermore, the United States Securities and Exchange Commission (“SEC”), which is the primary U.S. regulator under the federal securities laws, takes the view that the mere fact that a person knows the information is enough to bar him or her from trading, even if the reasons for the potential trade are not based on that information.
    Material information is “nonpublic” if it has not been widely disseminated to the general public through a report filed with the SEC or a press release or through a news service. 
Consult the General Counsel when in doubt.  If you are unsure whether information you possess is material or nonpublic, you must consult the General Counsel for guidance before trading in any Magnetek securities.
IV.    Penalties for Insider Trades
The SEC, the NYSE and other national securities exchanges in the United States have extensive surveillance facilities that are used to monitor trading in securities and securities options. If a securities




transaction becomes the subject of scrutiny, the transaction will be reviewed after the fact. As a result, before engaging in any transaction you should carefully consider how regulators and others might view the transaction with the benefit of hindsight. With that in mind, you should not engage in any transaction in which you may even appear to be trading while in possession of material inside information.
The consequences of insider trading violations can be severe. The SEC takes the position that these laws apply to all transactions in shares or options of companies listed for trading in the United States, whether or not the actual trades take place in the United States. Transactions that are found to be insider trades or based upon tips by insiders are subject to the following penalties:

A.Civil and Criminal Penalties     Penalties for insider trading include disgorgement of the profit made or the loss avoided by the trade and payment of civil penalties up to three times the profit made or loss avoided. Violators may also face private actions for damages, including civil lawsuits by shareholders, as well as criminal penalties, including up to 10 years in jail.  The Company and/or the supervisors of the person violating the rules may also be required to pay major civil or criminal penalties.

B.Disciplinary Action     Violation of this Policy or federal or state insider trading laws may subject a director to removal from the Board and may subject an officer or employee to disciplinary action, which may include termination of employment for cause.

C.Reporting Violations of the Policy     Any person who violates this Policy or any federal or state laws governing insider trading, or knows of any such violation by any other person, must report the violation immediately to the General Counsel.  The General Counsel, in consultation with the Chief Executive Officer and outside legal advisors, will determine what action should be taken.


V.     Prohibited Transactions
It is important for our directors, officers and employees to avoid even the appearance of speculative trading in Magnetek securities. Therefore, it is Magnetek’s policy that directors, officers and employees, and their spouses, children or other adults living in their household are prohibited from engaging in any of the following types of trades:
A.    Short Sales    Short sales of securities evidence an expectation on the part of the seller that the securities will decline in value, and therefore signal to the market that the seller has no confidence in the company or its short-term prospects.  In addition, short sales may reduce the seller’s incentive to improve a company’s performance.  For these reasons, short sales of Magnetek’s securities are prohibited by this Policy.  In addition, Section 16(c) of the Exchange Act expressly prohibits officers and directors from engaging in short sales.
B.    Publicly Traded Options    A transaction in options is, in effect, a bet on the short-term movement of securities. This might create the appearance that the director, officer or employee is trading on inside information.  Transactions in options also may focus attention on short-term performance at the expense of the Company’s long-term objectives.  The obligation to perform under an option contract can have the appearance of impropriety, even if the individual engaging in the transaction does not have any material nonpublic information at the time of the transaction. In addition, a difficult to avoid unintended violation could arise, for example, if someone who has written an option learns of material nonpublic information after writing the option but prior to its expiration. Accordingly, transactions in puts, calls or other derivative securities involving Magnetek’s securities, on an exchange or in any other organized market, are prohibited by this Policy. 




C.    Hedging Transactions    Certain forms of hedging or monetization transactions, such as zero-cost collars and forward sale contracts, allows much of the value of securities holdings to be locked in, often in exchange for all or part of the potential for upside appreciation in the securities.  These transactions allow the holder to continue to own the covered securities, but without the full risks and rewards of ownership.  When that occurs, the holder may no longer have the same objectives as other shareholders.  Therefore, such transactions involving Magnetek’s securities are prohibited by this Policy.
D.    Margin Accounts and Pledges    Securities held in a margin account may be sold by the broker without the customer’s consent if the customer fails to meet a margin call.  Similarly, securities pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan.  Because a margin sale or foreclosure sale may occur at a time when the pledgor is aware of material nonpublic information or otherwise is not permitted to trade in Company securities, directors, officers and employees are prohibited from holding Magnetek securities in a margin account or pledging Magnetek securities as collateral for a loan.
VI. 
Insiders May Not Disclose Material Nonpublic Information to Others or Make Recommendations Regarding Trading in Company Securities
Insiders may not disclose information concerning Magnetek to any other person (including family members) where such information may be used by such person to his or her advantage, a practice commonly known as “tipping.”  This Policy applies without regard to the materiality of the information. You should be discreet with your treatment of nonpublic information and should refrain from discussing it in public places where it can be overheard, such as elevators and other public spaces in the Company’s offices or in restaurants, taxis and airplanes. Likewise, you should take care to protect sensitive information from access by unauthorized persons, for example by allowing sensitive information displayed on a laptop computer to be viewed by others. To avoid even the appearance of impropriety, you should at all times refrain from giving advice or making recommendations regarding the purchase or sale of Magnetek’s securities or the securities of other companies about whom you have confidential information as a result of your employment or association with Magnetek. If you communicate information that someone else uses to trade illegally in securities, legal penalties are applicable whether or not you personally derive any benefit from the illegal trading.
VII.     Insiders May Not Participate in Chat Rooms
Insiders are prohibited from participating in chat room discussions or other Internet forums regarding Magnetek’s securities or business.
VIII. 
Only Designated Company Spokespersons Are Authorized to Disclose Material Nonpublic Information
Magnetek is required under the federal securities laws to avoid the selective disclosure of material nonpublic information.  Disclosure of material information even to family and friends violates that law. To avoid doing so, Magnetek has established procedures for releasing material information in a manner that is designed to achieve broad dissemination of the information immediately upon its release.  Only the Chief Executive Officer and the Chief Financial Officer are authorized to release information about Magnetek to the public. Any inquiries from outsiders regarding financial or other material nonpublic information about Magnetek should be forwarded to the Chief Financial Officer.
IX.    Pre-Clearance Notification Procedures
Directors and Section 16 reporters are subject to pre-clearance notification requirements before (i) buying or selling or trading securities of Magnetek, (ii) acquiring or disposing of shares or making any changes in the Magnetek stock funds of any Magnetek benefit plan, or (iii) exercising an employee or director securities option. In addition, any employee that possesses material nonpublic information about Magnetek




is subject to the pre-clearance notification requirement before taking any of the actions described in (i) through (iii) above for so long as the information remains nonpublic. If you are subject to the pre-clearance notification requirement, you must provide the General Counsel with a completed Pre-Clearance Form which contains information about (a) the type of transaction and the number of shares involved, and (b) information about the information you have, if any, that you believe might qualify as insider information. After due consideration, you will be advised of whether or not the transaction will be permitted. If the transaction is approved, but you do not execute the transaction within five business days after the transaction is reviewed, or if you become aware of new material nonpublic information before you execute the transaction, you should seek re-approval of the transaction before consummating it. This advance notification procedure is intended to assist you in preventing situations that could result in legal exposure and embarrassment to yourself and Magnetek. In the case of directors and Section 16 reporters, the procedure is intended to provide a check against transactions that could create a “short-swing profits” liability.

X.     This Policy Continues to Apply Following Termination of Employment
The Policy continues to apply to transactions in Magnetek’s securities even after termination of employment or termination of services as a director.  If you are in possession of material nonpublic information at the time of termination, you may not trade in Magnetek securities until the information has become public or is no longer material.
XI.    No Safe Harbor    
The existence of this Policy and its contemplation of blackout periods and trading restrictions should not be considered a safe harbor for trading during other periods not subject to blackout or restriction. Directors, officers and employees should use good judgment at all times in deciding whether or not it is appropriate to trade in Magnetek’s securities and bear personal responsibility for complying with this Policy. If you become aware of information that you believe is material nonpublic information, you should refrain from purchasing or selling or trading Magnetek securities even if the Company is not within a blackout period. As a consequence, you may from time to time have to forego a purchase or sale or trade of securities that you planned before you became aware of material nonpublic information, even if you may suffer an economic loss or forego anticipated profits by waiting.
XII.     This Policy Is Subject to Revision
The Company may change the terms of this Policy from time to time to respond to developments in insider trading laws and will take reasonable steps to inform all affected persons of any material change to this Policy.
XIII. 
All Employees Covered by this Policy Must Acknowledge Their Agreement to Comply with Its Terms
This Policy will be delivered to all existing directors, Section 16 reporters and employees and to all new directors, Section 16 reporters and employees at the start of their employment or relationship with Magnetek.  Employees who become insiders as a result of their possession of material nonpublic information will also receive a copy of this Policy, as amended from time to time. The recipient will be required to sign the acknowledgment below stating that he or she received a copy of the Policy and agrees to comply with its terms and giving Magnetek the authority to issue any necessary stop-transfer or other orders necessary for compliance with this Policy.











Magnetek, Inc.
 
Restricted Stock Award Agreement
(“Incentive Stock Document”)
  
FOR GOOD AND VALUABLE CONSIDERATION, MAGNETEK, INC., a Delaware corporation, hereby grants to the Grantee named below, an award of restricted $0.01 par value Common Stock (the “Restricted Stock”), upon the terms and subject to the conditions set forth in this Restricted Stock Award Agreement (the “Agreement”).  The award is granted pursuant to the 2014 Stock Incentive Plan of Magnetek, Inc., approved by the Board of Directors on February 27, 2014 and approved by the stockholders at the 2014 Annual Meeting on April 30, 2014 (the “Plan”) and is subject to the terms and conditions of the Plan, which are incorporated herein by reference.  In the event of any conflict between the provisions of this Agreement and the provisions of the Plan, the terms of the Plan shall control, except as expressly stated otherwise in this Agreement. The Committee, as defined in the Plan, shall have the authority to interpret this Agreement and may change or modify its terms, subject to the terms of the Plan.
 
Grantee:
 
 
 
Number of Shares
Awarded:
 
*Subject to restrictions in the Plan and this Agreement
 
 
 
Date of Award:
 
 
 
Vesting:
Your rights in and to the Restricted Stock shall not be vested as of the Date of the Award and shall be subject to the forfeiture provisions set forth below unless and until otherwise vested pursuant to the terms of this Agreement. Provided that you remain continuously employed by the Company through _____________ 100% of the Restricted Stock will vest on ________________. There are no other vesting requirements for these shares.
 
 
Restrictions:
Until the Restricted Stock vests, it shall not be liable for any of your debts, contracts or obligations nor is it subject to transfer, sale, pledge, encumbrance, assignment or any other means of disposition, whether voluntary, involuntary or by operation of law as a result of a judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy). Any attempted disposition of the Restricted Stock prior to vesting shall be null and void and of no effect; provided, however, that nothing in this section shall prevent a transfer by will or by the applicable laws of descent and distribution or pursuant to a “domestic relations order” as defined in the Internal Revenue Code of 1986, as amended, except as limited by the Plan.
 







 Forfeiture:
Except as otherwise provided in a change of control agreement or retention agreement between you and the Company, if any, the following forfeiture provisions shall apply to the Restricted Stock awarded to you under this Agreement:

In the event that your employment is terminated voluntarily or you have given notice of your intent to terminate your employment prior to the above vesting date, all of the Restricted Stock awarded to you under this Agreement will be forfeited.
In the event your employment is involuntarily terminated prior to the above vesting date, other than due to your death or “Disability” as defined in the Plan, all of the Restricted Stock awarded to you under this Agreement will be forfeited unless the Committee, in its sole and absolute discretion, elects to accelerate the vesting of some or all of the Restricted Stock awarded under this Agreement.
In the event that your employment is terminated in connection with a “Change of Control”, as defined in the Plan, your rights with respect to the Restricted Stock awarded pursuant to this retention-based award will be subject to the terms of Section 13(b) of the Plan.
In the event of your death or Disability prior to the above vesting date, the Restricted Stock shall vest in full or on a pro-rata basis, as determined by the Committee, as of the date of such death or Disability.
 
 
Stockholder Status;
Voting:
From and after the Grant Date, you will be recorded as a shareholder of the Company with respect to the shares of Restricted Stock (whether vested or unvested) and shall have voting rights with respect to such shares unless and until any such shares are forfeited pursuant to this Agreement or transferred back to the Company.
 
 
Dividends:
From and after the Grant Date and unless and until the Shares are forfeited pursuant to this Agreement or otherwise transferred back to the Company, you will be entitled to receive all dividends and other distributions paid with respect to the Restricted Stock, if any. Dividends payable by the Company to public stockholders in cash shall, with respect to any unvested shares of Restricted Stock, be paid in cash on or about the date such dividends are payable to public stockholders, subject to any applicable tax withholding requirements.
 
 
Transferability:
Neither the Restricted Stock award, nor any interest in the award, are transferable, except as otherwise provided in Section 15 of the Plan.
  




Payment of Withholding
Taxes:
If at any time the Company becomes obligated to withhold any amount for federal, state or local taxes imposed as a result of the grant of this Restricted Stock to you, including, without limitation, any employment tax, income tax, F.I.C.A., or state disability insurance (the date upon which the Company becomes so obligated shall be referred to herein as the “Withholding Date”), then you shall pay any such tax liability, in cash or by check with immediately available funds, to the Company on or before the Withholding Date or shall assign to the Company from the proceeds of any agreed upon sale of Restricted Stock the amount necessary to pay the tax liability. Execution of this Agreement constitutes your authorization and consent to the Company withholding the full amount of any tax liability from compensation or other amounts due and otherwise payable to you in the event that you do not pay the tax liability to the Company on or before the Withholding Date or assign to the Company sufficient proceeds from a sale of Restricted Stock to pay the tax liability and you further agree that any such withholding and payment of any tax liability by the Company to the relevant taxing authority shall constitute full satisfaction of the Company’s obligation to pay such compensation or other amounts to you.

In addition to the foregoing, all or any portion of the taxes required to be withheld by the Company in connection with the exercise, vesting, settlement or transfer of any Restricted Stock award, may, at your election, be paid by the Company by withholding shares of the Company’s capital stock otherwise issuable or subject to the Restricted Stock Award, having a fair market value equal to the amount required to be withheld or paid. Any such election is subject to such conditions or procedures as may be established by the Committee and may be subject to disapproval by the Committee.
 
 
Taxable Income and
Section 83(b) Election:
You understand that the taxable income recognized by you as a result of the award of Restricted Stock pursuant to this Agreement, and the overall tax liability and Withholding Date would be affected by your decision within 30 days of the Grant Date to make an election under Section 83(b) of the United States Internal Revenue Code (an “83(b) Election”). You understand and agree that it is your sole responsibility to decide whether to make an 83(b) Election with respect to the award of Restricted Stock and for properly making the election and filing the proper form with the relevant taxing authorities on a timely basis. You acknowledge and agree that you have not and will not rely on the Company for advice in connection with this decision and you further acknowledge that the Company has advised you to contact your own tax advisor to discuss the desirability of making an 83(b) Election with respect to this grant. You further agree that it is your responsibility to timely notify the Company of your decision and to immediately submit to the Company a signed copy of any 83(b) Election form that you file with respect to this grant of Restricted Stock and to pay applicable withholding taxes to the Company at the time that the 83(b) Election is filed.
 




 Escrow:
Until the Restricted Stock vests, the record address of the holder of record shall be “c/o the Secretary of Magnetek, Inc.” at the address of the Corporate Offices of the Company and will be held in escrow in the custody of the Secretary of the Company. After the stock vests, you are entitled, provided you have paid any and all tax liabilities, to hold the shares of common stock directly, which shares shall no longer be restricted.
 
 
No Employment Rights:
This Agreement does not confer upon you any right to continue in the employment of Magnetek, Inc. or any of its subsidiaries or affiliates, nor does it affect the Company’s right to terminate your employment, with or without cause, or confer any right upon you to participate in any welfare or benefit plan of the Company.
MAGNETEK, INC.
 
GRANTEE
 
 
 
 
By:
 By:
 
 
Peter M. McCormick
 
  Name:
 
President and Chief Executive Officer
 
  Address:
By:
 
 
 
 
Scott S. Cramer
 
 
 
Vice President, General Counsel & Corporate
Secretary
 
 
 
 
 
 










Magnetek, Inc.
 
Performance Stock Award Agreement
(“Incentive Stock Document”)
 
 
FOR GOOD AND VALUABLE CONSIDERATION, MAGNETEK, INC., a Delaware corporation, hereby grants to the Grantee named below, an award to receive shares of its $0.01 par value common stock (the “Performance Stock”), upon the terms and subject to the conditions set forth in this Performance Stock Award Agreement (the “Agreement”).  The award is granted as an award of Restricted Stock Units pursuant to the 2014 Stock Incentive Plan of Magnetek, Inc., approved by the Board of Directors on February 27, 2014 and approved by the stockholders at the 2014 Annual Meeting on April 30, 2014 (the “Plan”) and is subject to the terms and conditions of the Plan, which are incorporated herein by reference, including but not limited to Section 8 governing grants of Restricted Stock Units.  In the event of any conflict between the provisions of this Agreement and the provisions of the Plan, the terms of the Plan shall control, except as expressly stated otherwise in this Agreement. The Committee, as defined in the Plan, shall have the authority to interpret this Agreement and may change or modify its terms, subject to the terms of the Plan.
 
Grantee:
 
 
 
Number of Shares Subject to Award:
 
*Subject to restrictions in the Plan and this Agreement
 
 
 
Date of Award:
 
 
 
Vesting:
Your rights in and to the Performance Stock shall not be vested as of the Date of the Award and shall be subject to the forfeiture provisions set forth below unless and until otherwise vested pursuant to the terms of this Agreement. Provided that you remain continuously employed by the Company through the date the Compensation Committee certifies the attainment of the targets, if any, a portion or all of the Performance Stock will vest or be forfeited in accordance with the vesting schedule attached as Exhibit “A.”

Following a Change of Control, the Award shall vest in accordance with Section 13(b) of the Plan, provided that (i) the “target level of performance” applicable to this Award shall entitle you to 100% of the Performance Stock granted to you under this Award and (ii) the “time-based servicing vesting criteria” applicable to the Performance Stock Award following a Change of Control shall not be satisfied unless you remain continuously employed by the Company until December 31, 2017, except upon an involuntary termination of your employment without Cause or a voluntary termination of your employment for Good Reason within 12 months following a Change of Control or as otherwise provided in a change in control agreement or retention agreement between you and the Company, if any.





        
Issuance of Shares:




 
Promptly following the vesting of the Performance Stock, if any, the Company shall issue one Share to you for each Share subject to this Performance Stock Award which has been determined to vest by the Compensation Committee in accordance with the vesting schedule attached as “Exhibit A.” Such Shares shall be registered in your name (either in book-entry form or otherwise) promptly following such vesting.
Restrictions:
Until Shares in satisfaction of the Performance Stock are issued, the Performance Stock granted under this award shall not be subject to transfer, sale, pledge, encumbrance, assignment or any other means of disposition, whether voluntary, involuntary or by operation of law as a result of a judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy). Any attempted disposition of the Performance Stock shall be null and void and of no effect; provided, however, that nothing in this section shall prevent a transfer by will or by the applicable laws of descent and distribution or pursuant to a “domestic relations order” as defined in the Internal Revenue Code of 1986, as amended, except as limited by the Plan.
 Forfeiture:
Except as otherwise provided in a change in control agreement or retention agreement between you and the Company, if any, the following forfeiture provisions shall apply to the Performance Stock awarded to you under this Agreement:


 
 
*
In the event that your employment is terminated voluntarily or you have given notice of your intent to terminate your employment prior to the above vesting date, all of the Performance Stock awarded to you under this Agreement will be forfeited.

 
 
*
In the event your employment is involuntarily terminated prior to the above vesting date, other than due to your death or “Disability” as defined in the Plan, all of the Performance Stock awarded to you under this Agreement will be forfeited unless the Committee, in its sole and absolute discretion, elects to accelerate the vesting of some or all of the Performance Stock awarded under this Agreement.

 
 
*
In the event that your employment is terminated in connection with a “Change of Control,” as defined in the Plan, your rights with respect to the Performance Stock awarded pursuant to this performance-based award will be subject to the terms of Section 13(b) of the Plan.

 
 
*
In the event of your death or Disability prior to the above vesting date, the Performance Stock shall vest in full or on a pro-rata basis, as determined by the Committee, as of the date of such death or Disability.

 
 
 
 
Dividend
Equivalents:
During the period the Performance Stock is unvested and prior to the date that Shares are issued to you in satisfaction of this Performance Stock Award pursuant to the terms hereunder, no dividends or dividend equivalents shall be payable to you in respect of dividends or distributions payable by the Company to the stockholders of the Company on the Company’s Shares.
 
 
 
 
Transferability:
Neither the Performance Stock award nor any interest in the award are transferable, except as otherwise provided in Section 15 of the Plan.
 




Payment of Withholding
Taxes:
At the time of issuance of Shares to you in satisfaction of this Performance Stock Award following vesting, all of the income and employment taxes required to be withheld by the Company in connection with the settlement of this Performance Stock Award shall be paid to the Company by withholding Shares otherwise issuable under this award having an aggregate value (based on the opening sale price per Share on the NASDAQ Global Select Market on the date the Shares are withheld) equal to the amount of the required withholding tax.
 
 
No Employment Rights:
This Agreement does not confer upon you any right to continue in the employment of Magnetek, Inc. or any of its subsidiaries or affiliates, nor does it affect the Company’s right to terminate your employment, with or without cause, or confer any right upon you to participate in any welfare or benefit plan of the Company.
  MAGNETEK, INC.
 
GRANTEE
 
 
 
 
By:
 
 By:
 
 
Peter M. McCormick
 
  Name
 
President and Chief Executive Officer
 
  Address:
 
 
 
 
By:
 
 
 
 
Scott S. Cramer
 
 
 
Vice President, General Counsel & Corporate
Secretary
 
 
 
 
 
 
 
 
 
 








EXHIBIT 31.1
 
CERTIFICATION PURSUANT TO RULE 13a-14(a) or RULE 15d-14(a),
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
 
I, Peter M. McCormick, certify that:
 
1.
I have reviewed this quarterly report on Form 10-Q of Magnetek, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
(d)
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
(a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
 any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
/s/  Peter M. McCormick
 
 
Peter M. McCormick
 
President and Chief Executive Officer

Date: May 13, 2015







EXHIBIT 31.2
 
CERTIFICATION PURSUANT TO RULE 13a-14(a) or RULE 15d-14(a),
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
 
I, Marty J. Schwenner, certify that:
 
1.
I have reviewed this quarterly report on Form 10-Q of Magnetek, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
(d)
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an
(e)
report) that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
(a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
 any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
/s/  Marty J. Schwenner
 
 
Marty J. Schwenner
 
Vice President and
 
Chief Financial Officer

Date: May 13, 2015







EXHIBIT 32.1
 
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of Magnetek, Inc. (the “Company”) on Form 10-Q for the period ending March 29, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Peter M. McCormick, President and Chief Executive Officer of the Company, and Marty J. Schwenner, Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350 and Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
/s/  Peter M. McCormick
 
 
Peter M. McCormick
 
 
President and Chief Executive Officer
 

 
/s/  Marty J. Schwenner
 
 
Marty J. Schwenner
 
V
Vice President and Chief Financial Officer
 

Date: May 13, 2015



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