Boston, MA 09/08/2014 (wallstreetpr) – Magnetek Inc (NASDAQ:MAG) is said to have allocated 250,000 shares of the company’s common stock towards its defined benefit pension plan, with the aim to raise the balance of its plan to an adequate level. The company earmarked the contribution on a voluntary basis denoting less than 5% as the total assets of pension plan. The shares contributed form the newly issued portion of the company’s stock and are completely tax deductible.
Underfunded Pension Plan
Magnetek Inc (NASDAQ:MAG) contributed the shares to the pension plan under a private placement arrangement and Evercore Trust Company, N.A. was roped in to give advise on the contribution of shares. As a result of this contribution, the company has been able to improve the health of its plan, which was inadequately funded. As at the end of December’ 2013, the pension plan stood inadequately funded by $48 million and thus, the latest contribution as left the gap to $8 million.
EPS Effect
The company said in its press release that the net effect of the said contribution is expected to be around $0.07 per share on the dilutive basis for the fiscal year of 2014. As with the passage of time, the effect of the increase in outstanding shares is likely to be offset by the diminishing pension expense, therefore, the impact on earnings per share is likely to be negligible in the fiscal year of 2015. The company noted that according to actuarial assumption, the contribution of 250,000 shares towards pension plan will help reduce pension contributions by nearly $10 million for the next five years. Following the said contribution, the company now has nearly 3.5 million shares of issued and outstanding common stock as on September 5, 2014. It is to be noted that Magnetek Inc (NASDAQ:MAG) is engaged into the manufacturing of motion control systems and digital power that are utilized for handling of material, energy delivery and people moving.
