Magnetek, Inc. ("Magnetek”
or the "Company”)
(NYSE: MAG) today announced it has entered into a settlement agreement
with Ole K. Nilssen ("Nilssen”)
and Geo Foundation, Ltd. ("Geo”)
in a long-standing patent dispute.
In April 2008, the United States District Court for the Northern
District of Illinois confirmed an arbitration award in favor of Nilssen
and Geo as a judgment. As a result of the judgment, the net amount due
to Nilssen and Geo from Magnetek was $22.0 million. Also in April 2008,
Magnetek filed an appeal of the judgment with the Court of Appeals for
the Seventh Circuit, and Nilssen and Geo brought a motion for
modification of the judgment to include post-award prejudgment interest
calculated by Nilssen at $5.9 million. Magnetek subsequently filed a
motion in opposition to the award of interest.
Under the terms of the settlement agreement dated June 12, 2008,
Magnetek has agreed to pay $18.75 million in full satisfaction of the
claims that Nilssen and/or Geo have to the unpaid balance of the
arbitration award as well as claims for post-award, prejudgment interest
and post-judgment interest. The settlement amount must be paid by
Magnetek no later than June 14, 2008.
Commenting on the settlement agreement, Magnetek’s
President and CEO David P. Reiland said, "While
we were disappointed with the ruling in this case, we felt it was in
Magnetek’s best interests to put this issue
behind us. Although the settlement amount is not insignificant, after
making the payment, we remain debt free with over $12 million in cash
available to fund our growth initiatives and ongoing operations.”
The Company had recorded a liability in prior periods of $25.6 million
related to the arbitration award and subsequent judgment, including
estimated interest on the award. As a result of the settlement
agreement, the Company will record the excess of the recorded liability
less the settlement amount as income from discontinued operations in its
fiscal fourth quarter.
About Magnetek, Inc.
Magnetek, Inc. (NYSE: MAG) manufactures digital power and motion control
systems used in material handling, people moving, and energy delivery.
The Company is headquartered in Menomonee Falls, WI, in the greater
Milwaukee area and operates manufacturing plants in Pittsburgh, Pa.,
Canonsburg, Pa. and Mississauga, Ontario, Canada as well as Menomonee
Falls.
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding the Company's anticipated financial
results for future periods, including the fiscal year ending June 29,
2008. These forward-looking statements are based on the Company's
expectations and are subject to risks and uncertainties that cannot be
predicted or quantified and are beyond the Company's control. Future
events and actual results could differ materially from those set forth
in, contemplated by, or underlying these forward-looking statements. Other
factors that could cause actual results to differ materially from
expectations are described in the Company's reports filed with the
Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934.
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