Mag Silver Corporation (NYSE:MAG)

AMHERST, N.Y. and MENOMONEE FALLS, Wis., July 27, 2015 (GLOBE NEWSWIRE) -- Columbus McKinnon Corporation (CMCO), a leading designer, manufacturer and marketer of material handling products, and Magnetek, Inc. (MAG) announced today that they have entered into a definitive agreement for Columbus McKinnon to acquire all of the outstanding shares of Magnetek for $50 per share for a total value of $188.9 million. Magnetek designs and manufactures digital power and motion control solutions for material handling, elevators and mining applications.

The transaction combines complementary strengths to create more competitive and comprehensive material handling solutions for customers. The agreement has been approved unanimously by the Boards of Directors of both companies and Magnetek's Board of Directors has unanimously recommended that its shareholders tender into the offer, which is anticipated to commence on or before August 5, 2015, by a wholly-owned subsidiary of Columbus McKinnon. All of the members of Magnetek's Board of Directors and executive officers, together with Fundamental Global Investors, LLC, have entered into agreement to tender the shares beneficially owned by them into the offer.

Magnetek is North America's largest independent supplier of digital drives, radio controls, software, and accessories for industrial cranes and hoists, and also the largest independent supplier of digital direct current ("DC") motion control systems for elevators. Customers include most of the industrial crane and hoist companies in North America, including Columbus McKinnon, and the world's leading elevator builders and mining equipment manufacturers.

"The accretive combination of Magnetek's technology and "smart power" with our broad line of lifting and positioning mechanical products creates a total solution for our customers," noted Timothy T. Tevens, President and CEO of Columbus McKinnon.

Mr. Tevens continued, "We believe Magnetek's technology will enable the industrial world to continue to advance productivity and safety beyond what mechanical solutions alone can offer. Strategically, this acquisition provides an ideal adjacent capability for us to continue to supply our customers with best in class material handling solutions.

"We see many opportunities for revenue synergies by advancing Magnetek's power control technology globally through our multiple sales channels and introducing it into key vertical markets. In addition, we can offer more complete material handling solutions to shared key vertical markets including Automotive, Heavy OEM, Mining, as well as Energy."

Headquartered in Menomonee Falls, Wis., Magnetek has approximately 340 employees. Trailing twelve month sales as of the end of its first quarter of fiscal 2015 were $112.2 million, of which approximately 10% was international. Nearly 75% of revenue was related to material handling. Sales were up 10% in Magnetek's first quarter of 2015, while income from continuing operations increased 74% compared with the prior-year period. Operating margin for the period was 9.4% of sales.

Peter M. McCormick, Magnetek's President and Chief Executive Officer, said, "Our technology and products are a perfect complement for Columbus McKinnon's products and this compelling combination provides a platform to accelerate growth for both Magnetek and Columbus McKinnon. Our companies have a strong commitment to quality and service and have excellent reputations in the markets we serve with very similar corporate cultures. Importantly, our strong and dedicated team will contribute to what I believe is a formula for success."

Mr. McCormick will remain with the Company following the acquisition and continue to lead the Magnetek business and help integrate the two companies.

First Quarter 2014 Results

• Net sales for the first quarter of 2014 is $24.1 million, decreasing 4% from the 2013 first quarter of $25.1 million, mainly due to lower sales into elevator and mining markets.
• Net income is $.31 per diluted share in the first quarter of 2014 versus net income of $.14 per diluted share in the first quarter of fiscal 2013.

“Challenging conditions persisted in most of our served markets during the first quarter, particularly in mining markets. We also experienced moderating demand in our served elevator markets due to customer inventory adjustments as well as seasonal factors in material handling markets, all of which resulted in a year-over-year decline in sales. However, our profitability improved significantly over last year, as we executed efficiently, drove our gross margins higher, and benefitted from reduced pension expense,” said Peter McCormick, Magnetek’s president and chief executive officer.

Business Outlook

“Market conditions were quite soft early in 2014, but our business activity picked up strongly later in the quarter, and we booked about 45% of our first quarter orders during the month of March. Material handling markets are seasonally slower in the March quarter, so we would expect sales in the second quarter to increase modestly from the $18 million level of the first quarter. While sales into elevator markets were just over $5 million in the first quarter, bookings were nearly $6 million, so we should also see an uptick in elevator sales in the second quarter. Conditions in mining markets remain extremely challenging, and we expect mining to remain difficult throughout 2014,” said Mr. McCormick. “We’re cautiously optimistic that the first quarter was the low point for us in terms of sales levels, and that the momentum we experienced late in the first quarter can continue into the second quarter and the remainder of the year,” continued Mr. McCormick.

“Our stated strategy for some time now has been to enhance the value of the Company by focusing on organic growth opportunities, consistently generating cash, and reducing our pension obligation. Over the past several years, we’ve been very successful with cash generation, and have deployed that cash through investments in our business and contributions to our pension plan. We’re finally seeing the benefit of years of significant contributions to our pension plan in the form of a lower pension obligation and reduced pension expense, which has enhanced the value of the Company,” continued Mr. McCormick. “What we haven’t seen in our business in recent quarters is robust organic growth, which we believe has largely been a function of end market conditions characterized by a continuing reluctance to invest. We’re continuing efforts to enter new markets and geographies, but some of these growth initiatives have a longer-term horizon. We’ve responded by taking actions to align our cost structure with our sales volume to better assure achievement of consistent profitability and cash flow. In summary, we believe our strategy to enhance value remains sound, and our profitability and cash flow are healthy even at current volumes. We began to see signs of improvement in market conditions near the end of the first quarter, and we believe we are well-positioned to achieve our growth objectives over time as end market conditions continue to improve going forward,” concluded Mr. McCormick.

Fourth Quarter 2013 Results

• Net sales of $25.2 million decreased 15% from last year’s fourth quarter, mainly due to lower sales into material handling markets. Q4 bookings of $26.3 million increased 6% over last year.
• Q4 net income from continuing operations was $0.7 million, or $.22 per share, compared to $0.8 million, or $.25 per share last year.

“We experienced continuing softness in our end markets during the fourth quarter, particularly in material handling markets, which we believe peaked at least in the near-term in the second half of 2012. The year-over-year decrease in material handling sales is representative of continuing economic uncertainties, which resulted in a lack of larger project business for us throughout much of 2013. Despite the sales decline, gross margins exceeded 34%, our continuing operations remained firmly profitable, and we continued to make solid progress in reducing our pension obligation,” said Peter McCormick, Magnetek’s president and chief executive officer.

“We continued to focus on organic growth, asset management, and cash flow during 2013. Conditions in our end markets were not conducive to growth, and we experienced uneven demand throughout the year. In response to the continuing slow growth environment, we implemented a number of actions in terms of pricing, repositioning, and cost reductions during our third quarter to better assure acceptable levels of profit at existing sales volumes. We also improved our asset management as the year progressed, and generated sufficient cash to fund near-term growth initiatives and meet our pension obligations,” said Mr. McCormick. “Regarding our pension, we contributed nearly $25 million to plan assets during the year in an effort to improve the funded status of the plan, and we made meaningful progress toward that goal during fiscal 2013, aided by asset returns and interest rates increases in addition to our contributions. The improvement in our pension should favorably impact our earnings and cash flow going forward,” continued Mr. McCormick.

Operations and Outlook

Total bookings for the fourth quarter of fiscal 2013 were $26.3 million, resulting in a book-to-bill ratio for the quarter of 104%. Total Company order backlog was $12.8 million at December 29, 2013, comparable to the prior year order backlog of $13.1 million.

“Our level of business activity throughout fiscal 2013 was lower than during 2012, particularly in material handling and mining markets. In addition, our sales mix in 2013 didn’t include as many large scale projects. We expect these conditions to continue through the first half of 2014, although we have seen our quotation log for larger projects increase over the past couple of months,” said Mr. McCormick. “Our growth initiatives in 2014 are centered on a combination of innovative product offerings, market share gains, and entry into new markets. One area of growth for us has been our radio controls business, where our sales increased 15% year-over-year,” continued Mr. McCormick. “In addition, we launched a new line of regenerative drives for the material handling industry, which will provide end-users of these products with not only high performance but further energy savings. We’re targeting expansion of our share of AC controls for the elevator market, and in the mining area, we’ve made investments to expand into Asia and to reduce our dependence on the coal industry, but those efforts are typically longer-term in nature. Looking ahead, we continue to believe that we have great opportunity to enhance shareholder value through a combination of reliable profitability, consistent cash flow generation, and a further reduction in our pension obligation,” concluded Mr. McCormick.

THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated effective as of December 19, 2013, amends and supplements that certain Credit Agreement dated as of November 6, 2007, as amended to date (as so amended, the "Credit Agreement"), by and between ASSOCIATED BANK, NATIONAL ASSOCIATION, a national banking association (the "Bank"), and MAGNETEK, INC., a Delaware corporation (the "Company").
RECITAL
The Company and the Bank desire to amend and supplement the Credit Agreement as provided below.
AGREEMENTS
In consideration of the Recital and the promises and agreements set forth in the Credit Agreement, as amended hereby, the parties agree as follows:
1.    Definitions and References. Capitalized terms not otherwise defined herein have the meanings assigned in the Credit Agreement. All references to the Credit Agreement contained in the Collateral Documents and the other Loan Documents, as amended or amended and restated, shall, upon the execution of this Amendment, mean the Credit Agreement as amended by this Amendment.

2.    Amendment to Credit Agreement. Section 6.10 of the Credit Agreement is amended in its entirety to read as follows:

6.10.    Maximum Pension Payments. Make cash contributions to the defined benefit retirement plan maintained by the Company, except for payments during the following periods not exceeding the amounts (measured on a cash basis) for such periods:  Full link

Third Quarter 2013 Results

• Magnetek recorded revenue of $26.0 million, a 3% decrease from $26.9 million the third quarter of 2012.
• The company reported earnings from continuing operations of $0.38 per share, compared to $0.51 per share for the same quarter of 2012.

Operations and Outlook

Total third quarter 2013 bookings were $25.4 million, resulting in a book-to-bill ratio for the quarter of 98%. Total Company order backlog was $12.0 million at September 29, 2013, down from $12.5 million at June 30, 2013.

“The level of business activity in certain of our markets is simply not as strong as it was last year, particularly in material handling, our largest served market. In addition, conditions in mining markets have been challenging for some time. However, we are encouraged by opportunities we see in other areas. For example, we continue to see growth in sales of our wireless radio products as this technology becomes more widely adopted,” said Mr. McCormick. “We’re currently expecting slow economic growth for the remainder of 2013 and into the first half of 2014. In anticipation of a continuing slow growth environment, we recently implemented a number of actions in terms of pricing, repositioning, and cost reductions during the third quarter to better assure acceptable levels of profit at current volume levels. We’ve also made improvements in our asset management throughout the year, and are generating sufficient cash to fund near-term growth initiatives and meet our pension obligations. We’re currently forecasting our operating results for the fourth quarter of 2013 to increase moderately from the results of the recently completed third quarter, mainly due to seasonal factors in served material handling markets,” continued Mr. McCormick.

“Mid- to longer-term, we continue to believe that we have great opportunity to enhance shareholder value through a combination of reliable profitability, consistently strong cash flow generation, and a reduction in our pension obligation. In fact, we’ve made tremendous progress improving the funded status of our pension plan, mainly from the sizable contributions we’ve made to plan assets for a number of years now. Since June of 2009, we’ve contributed more than $50 million to our pension assets, funded entirely by cash flow from operations. In addition, recent increasing interest rates have further reduced our obligation, which should favorably impact our cash flow, earnings, and shareholder value going forward,” concluded Mr. McCormick.

Second Quarter 2013 Results

• In the second quarter of fiscal 2013, Magnetek recorded revenue of $27.0 million, a 7% decrease from the second quarter of fiscal 2012.
• Income from continuing operations after provision for income taxes in the second quarter of fiscal 2013 was $1.2 million, or $.36 per diluted share, compared to after-tax income from continuing operations of $2.3 million, or $.70 per diluted share, in the same period last year.

Operations and Outlook 

Total second quarter 2013 bookings were $25.9 million, resulting in a book-to-bill ratio for the quarter of 96%. Total Company order backlog was $12.5 million at June 30, 2013, down from $13.6 million at March 31, 2013.

“Business conditions in our end markets remain mixed, and we’re currently expecting slow economic growth for the remainder of 2013. Our growth rate has flattened a bit compared to last year, primarily in material handling, our largest served market. Quotation levels remain high, but as with last quarter, the mix of orders booked this year doesn’t reflect as many large scale projects as we received last year. In addition, conditions in mining markets were quite challenging in the first half of 2013. We believe we have seen signs of the bottom in the coal market, but it may take another quarter or two until we see improving order levels for mining equipment. Conditions in our served elevator markets remain fairly strong, and we’ve seen strong year-over-year growth in sales of our wireless radio products, so again, conditions are mixed,” said Mr. McCormick. “While sales into our traditional markets aren’t growing at the same rate as last year, we do expect momentum to pick up somewhat in the second half of 2013. Mid- to longer-term, we continue to believe that we have great opportunity to enhance shareholder value through a combination of steady growth in sales and profits, consistently strong cash flow generation, and a reduction in our pension obligation,” concluded Mr. McCormick.

First Quarter 2013 Results

• In the first quarter of fiscal 2013, Magnetek recorded revenue of $25.1 million, a 13% decrease from the first quarter of fiscal 2012.
• As a result of the lower sales volume, first quarter earnings per share from continuing operations decreased to $.16 per share compared to prior year earnings from continuing operations of $.68 per share.

“Challenging conditions in mining markets, combined with moderating demand and seasonal factors in material handling markets, resulted in both a sequential and a year-over-year decline in both sales and profitability. In response, we focused our actions during the quarter on controlling our payroll and other discretionary costs. Despite the lower sales levels, our continuing operations remained profitable, and our first quarter adjusted EBITDA achievement was more than 10% of sales,” said Peter McCormick, Magnetek’s president and chief executive officer.

Operations and Outlook 

Total first quarter 2013 bookings were $25.3 million, resulting in a book-to-bill ratio for the quarter of 101%. Total Company order backlog was $13.6 million at March 31, 2013, up from $13.1 million at December 30, 2012.

“Overall business conditions remain mixed, and accordingly, we are expecting slow economic growth in 2013. Market conditions in our business have remained somewhat soft to date in 2013. Our quotation levels are high, but the mix of our orders booked doesn’t reflect as many large scale projects as we’ve received in recent periods, mainly in material handling markets. In addition, conditions in mining markets remain challenging, and we expect that to continue in the near-term. Offsetting that, conditions in our served elevator markets remain stable, and we’ve seen strong year-over-year growth in sales of our wireless radio control products, so again, conditions are mixed,” said Mr. McCormick. “As a result, while we are experiencing some near-term softness in our business, we do expect momentum to pick up somewhat in the second half of 2013, particularly with some of these larger quoted projects. Mid- to longer-term, we continue to believe that we have tremendous opportunity to enhance shareholder value through a combination of growth in sales and profits, effective asset management, and a reduction in our pension obligation,” concluded Mr. McCormick.

Historically the Company’s June quarter has been seasonally stronger from a sales standpoint, particularly in material handling markets. Accordingly, the Company currently expects a moderate sequential increase in its sales for the second quarter of 2013 from the recently completed first quarter. Operating profit for the second quarter of fiscal 2013 is also expected to increase moderately sequentially, mainly due to the expected increase in sales volume.

MENOMONEE FALLS, Wis.--(BUSINESS WIRE)--Magnetek, Inc. (“Magnetek” or “the Company”)(NASDAQ: MAG) today confirmed that it has received an unsolicited, highly conditional expression of interest from Blott Asset Management, L.L.C. (“Blott”), Talanta Investment Group, LLC (“Talanta”) and its investors to acquire the Company.

Following receipt of the expression of interest, Magnetek’s board of directors met to evaluate the offer. As part of this evaluation, the board considered the offer in light of Magnetek’s business and strategic plans and long-term prospects, which were summarized in a presentation that was publicly filed on March 18, 2013. As noted in that presentation, Magnetek anticipates a substantial reduction in liabilities over the next three to five years which it believes could lead to substantial equity appreciation. The board of Magnetek has endorsed this view. In light of the Company’s plans and long-term prospects, the Magnetek board unanimously concluded that it would not be in the best interests of the Company’s stockholders and Magnetek to pursue a transaction with Blott and Talanta on the basis outlined in their expression of interest.

On March 29, 2013, representatives of Magnetek communicated this decision to representatives of Blott and Talanta.

“While it is the fiduciary duty of the board to review credible offers, the board unanimously concluded that Magnetek’s business and strategic plans and long-term prospects as a stand-alone company would support a substantially better return to our stockholders than that represented by this expression of interest,” said Mitchell Quain, Magnetek’s chairman of the board. “As presented to the board, the expression of interest refers only to a ‘price in the range of $15.00 per share’, which is less than a $1.00 premium to the $14.05 closing price of Magnetek’s common stock on April 2, 2013. Furthermore, the expression of interest appears to be based on a number of conditions and speculative assumptions including that a number of members of management and large stockholders would exchange their Magnetek common stock for shares in a newly formed company rather than receiving cash. We believe that pursuing this highly conditional expression of interest would distract us from achieving our business objectives and building the long-term value of the Company.”

The Reporting Persons have been long-term Shareholders since 2009 and have acquired shares in the belief that the Shares were undervalued. The Reporting Persons have conducted significant analysis with respect to the Issuer over several years, a summary of which is set forth in Schedule C attached hereto.

The Reporting Persons have concluded that the Company has a legitimate business model, qualified management, outstanding products and employees, with favorable long-term opportunities for profitable growth. Accordingly, the Reporting Persons have formed a ?group?, as defined in Section 13(d)(3) and 13d-5(b)(1) of the Securities and Exchange Act, for the purpose of providing to the Issuers board of directors an expression of interest to finance a going-private transaction for $15.00 per share, more than 30% premium to the Issuers volume weighted average share price for the 60 and 90 days prior to delivery of the proposal. The proposal was delivered to the Issuers board of directors on March 6th, 2013 and is incorporated by reference in Schedule D attached hereto.

The Reporting Persons want the Issuer to form an independent committee of its board to consider the acquisition proposal delivered to directors on March 6th, 2013. The all-cash purchase price, supported by debt financing letters delivered by qualified lenders and co-investors, is superior to current market value and represents a 30% premium to the Issuers volume weighted average share price for the 60 and 90 days prior to deliveryof the proposal.

MENOMONEE FALLS, Wis.--(BUSINESS WIRE)--Magnetek, Inc. (“Magnetek” or “the Company,” NASDAQ: MAG) today announced that it is expanding international distribution of its radio control products in China. The Company has signed a distribution agreement with Beijing Asiastars Electronic Technologies Co., LTD (AET). Under terms of the agreement, AET will serve as the exclusive distributor of Magnetek’s radio control products to the material handling and mobile hydraulic industries in the People’s Republic of China. Founded in 2005 and headquartered in Beijing, China, AET supplies electronic technology to material handling and mobile hydraulic equipment manufacturers and end users through its network of sales offices and resellers. Magnetek and AET will introduce Magnetek’s radio control products to the Chinese marketplace at Bauma China, the International Trade Fair for Construction Machinery, Building Material Machines, Construction Vehicles and Equipment, taking place Nov. 27-30, 2012 in the Shanghai New International Expo Centre (SNIEC)

“We are extremely pleased to announce this international distribution agreement with AET. We believe radio control products provide an important growth opportunity for Magnetek, and expansion of our distribution channel to reach new customers outside North America is a key strategic growth initiative,” said Peter McCormick, president and chief executive officer for Magnetek. “This fast-growing market provides significant opportunity as Chinese manufacturers recognize the benefits of using radio control to improve productivity and safety.”

Second Quarter 2012 Results

• In the second quarter of fiscal 2012, Magnetek recorded revenue of $29.0 million, a slight sequential increase from the first quarter of fiscal 2012, but a 7% decrease from the prior year quarter.
• Income from continuing operations after provision for income taxes in the second quarter was $2.3 million, or $.70 per diluted share, compared to after-tax income from continuing operations of $1.5 million, or $.48 per diluted share, in the same period last year.

Operations and Outlook 

Second quarter 2012 bookings were $28.1 million compared to bookings of $25.7 million in the comparable quarter last year. Total Company order backlog was $17.0 million at July 1, 2012.

“Demand levels remain firm in our largest served market, material handling, as evidenced by second quarter bookings of more than $21 million. Continuing softness in incoming orders in renewable energy markets negatively impacted our book-to-bill ratio for the quarter,” said Mr. McCormick. “We continue to market our utility-scale solar inverter, however receipt of any orders in the second half of 2012 likely will not result in meaningful revenue until 2013 due to lengthy project lead times. At the same time, shipments of wind inverters through the first six months of 2012 have depleted most of our renewable energy backlog. Accordingly, we’re currently expecting a fairly steep decline in renewable energy sales in the third quarter. In response, we’ve taken actions to reduce our cost structure given the expected reduction in revenue. Further, we believe we can offset part of the decline with higher sales of products for material handling applications. Also note that sales of our industrial products have higher gross margins than our renewable energy product offerings, so our sales mix should be more favorable. In summary, while we’re projecting sequentially lower sales and profitability in the third quarter, we still expect to generate healthy levels of profit and cash flow, prior to pension contributions, in the third quarter,” concluded Mr. McCormick.

Pension Update 

As previously disclosed, Magnetek has an underfunded defined benefit pension plan that was frozen in 2003. Based mainly on the number of participants and decreasing interest rates over the past several years, the Company’s annual pension expense and required minimum contributions to the pension plan have been significant for the past several years.

In its Transition Report on Form 10-K for the six-month transition period ended January 1, 2012, the Company disclosed that its estimated minimum contributions to its pension plan for fiscal years 2013 and 2014 aggregated $52 million. Federal legislation signed into law on July 6, 2012, allows pension plan sponsors to use an adjusted 25-year average corporate bond rate versus the current two-year average. Use of the 25-year average rate is expected to result in higher interest rate assumptions in valuing plan liabilities and in determining funding obligations, which in turn will result in lower minimum required contributions for plan sponsors in the near term. As a result of these legislative changes, the Company now estimates that its fiscal 2013 minimum required pension contributions will decrease to $19 million from the previously expected amount of $26 million. In addition, fiscal 2014 minimum required contributions are currently estimated at $24 million from the previously estimated amount of $26 million.

ERLANGER, Ky. and GOPPINGEN, Germany, March 22, 2012 (GLOBE NEWSWIRE) -- The owners of MAG IAS, LLC and MAG Europe GmbH (together the "MAG Group") have appointed Goldman Sachs to assist in evaluating strategic alternatives for MAG Group, including the potential sale of the group or parts thereof. According to MAG, the global automotive business will remain together as one unit across Europe, the Americas and Asia.

MAG is a global market leader in the machine tool industry, providing products, services and systems for the aerospace, automotive and truck, heavy equipment, oil and gas, rail, solar energy, wind turbine production and general machining industries.

Second Quarter 2011 Results

• In the second and final quarter of transition period 2011, Magnetek recorded revenue of $29.5 million, a 13% increase from the prior year second quarter and a 1% sequential increase from the first quarter of transition period 2011
• Earnings per share from continuing operations increased $.30, or 68%, to $.74 per share compared to prior year second quarter earnings from continuing operations of $.44 per share.

In the second and final quarter of transition period 2011, Magnetek recorded revenue of $29.5 million, a 13% increase from the prior year second quarter and a 1% sequential increase from the first quarter of transition period 2011. The increase in sales from the prior year quarter reflects sales growth of products for material handling and mining markets. As a result of the increased sales volume and a favorable shift in the Company’s sales mix, second quarter earnings per share from continuing operations increased $.30, or 68%, to $.74 per share compared to prior year second quarter earnings from continuing operations of $.44 per share.

“We’re very pleased with the performance of our business during the second quarter, highlighted by strong year-over-year growth in sales, gross profit, operating profit, and cash flow. Most of our end markets showed signs of continuing steady expansion during the second quarter, particularly on the industrial side of our business. Second quarter sales into material handling markets increased 35% year-over-year to nearly $20 million, while sales into mining markets increased more than 50% over last year’s second quarter to more than $2.5 million,” said Peter McCormick, Magnetek’s president and chief executive officer. “Manufacturing continues to be an area of strength in the U.S. economy and we expect that trend to continue during 2012. We continue to believe we are well positioned to outpace overall economic growth rates with our continuing focus on market share gains, new product introductions, and new market penetration,” said Mr. McCormick.

Transition Period 2011

On August 9, 2011, the Company announced a change in its fiscal year-end from the Sunday nearest to June 30 of each calendar year to the Sunday nearest December 31, with the change to a calendar year reporting cycle beginning January 2, 2012. As a result, the Company recently completed transition period 2011, a six month fiscal period from July 4, 2011, through January 1, 2012.

Operations and Outlook

Total bookings for the second quarter of transition period 2011 were $26.0 million, resulting in a book-to-bill ratio for the quarter of 88%. Total Company order backlog was $17.9 million at January 1, 2012.

“Demand levels remain very healthy in our traditional served industrial markets, particularly for products with material handling and mining applications. We did experience some softness in incoming orders in the recently completed quarter. However, that occurred almost exclusively during the two week holiday period in December, and order rates have subsequently rebounded in early 2012,” said Mr. McCormick. “Going forward, our strategic initiatives include prudently growing our business through a combination of gains in market share, introduction of new products, and entry into new markets, including geographic expansion. New products include our utility-scale solar power inverter, an AC version of our Quattro regenerative elevator drive, and recently introduced AC mining products,” continued Mr. McCormick. “Potential new markets include the North American utility scale solar market. Challenging conditions have persisted in the wind market for some time. As a result, we view the solar market as offering better growth opportunities, particularly at the large-scale end of the market. We also recognize the need to diversify our customer base and product offering if we are to compete more effectively in the renewable space. At the same time, we’re also using our more established product offerings to gain further entry into the mobile hydraulic market, and potentially into traditional energy markets. To enhance our geographic growth opportunities, we’ve entered into agreements with distributors and sales representatives in parts of the world where we historically have not had a strong presence, including emerging markets in South America and Asia. We continue to manage our cost structure and our asset base effectively, optimizing both profitability and cash flow. In summary, our business has good momentum in the near-term, and we’re confident in our ability to execute well and grow our business in the long-term,” concluded Mr. McCormick.

Historically the Company’s March quarter has been seasonally weaker from a sales standpoint, particularly in material handling markets. However, given firm demand in many of the Company’s served markets in early fiscal 2012, the Company currently expects only a slight sequential decrease in its sales for the first quarter of fiscal 2012 from the recently completed second quarter of transition period 2011. Operating profit for the first quarter of fiscal 2012 may also decline moderately sequentially, mainly due to an expected increase in pension expense.