Magnetek, Inc. reported its results for the first quarter of fiscal 2007, which ended on October 1, 2006. On October 23rd, Magnetek completed the divestiture of its Power Electronics Group (PEG), which had accounted for approximately two-thirds of the company's reported revenue. During the first quarter of fiscal 2007, the smaller company's continuing operations recorded revenue of $22.5 million, up 12% from $20.1 million in the first quarter of fiscal 2006. Gross profit amounted to $7.1 million (32% of sales), up 10% from $6.4 million (32% of sales) in the corresponding period a year ago. However, the continuing operations bore the entire corporate general and administrative costs of the company during the quarter as none were allocated to discontinued operations.
These costs, as well as interest expense on debt paid off following receipt of the divestiture proceeds in October, continued to detract from fiscal 2007 first quarter results. Consequently, the company's continuing operations incurred an after-tax loss of $1.6 million or $.06 per share in the quarter, versus an after-tax loss of $1.2 million or $.05 per share in the prior year quarter. Discontinued operations, including PEG, accounted for an additional $1.6 million or $.05 per share loss in the fiscal 2007 first quarter, culminating in a net loss of $3.2 million or $.11 per share, versus a net loss of $1.1 million or $.04 per share in the first quarter of fiscal 2006.
Subsequent to the end of the fiscal 2007 first quarter, Magnetek decided to retain its Telecom Power Systems (TPS) business as a continuing operation. As a result, TPS' results will be reclassified from discontinued operations to continuing operations beginning in the company's fiscal 2007 second quarter. Magnetek's annual revenue is expected to exceed $100 million annually after this reclassification.
The company also announced that Andrew G. Galef stepped down as Chairman of the Board (he remains as a Magnetek director). Mitchell I. Quain, who has served as a director since 2000, was elected to succeed Galef as Chairman. Quain, 54, is currently Senior Director, ACI Capital and was formerly Vice Chairman of Investment Banking at ABN AMRO. He holds an MBA, with distinction, from the Harvard Business School. He is Chairman of the Board of Overseers of The University of Pennsylvania's School of Engineering & Applied Sciences and also serves on the University's Board of Trustees.
