Del Global Technologies Announces Fiscal 2005 Second Quarter Results.VALHALLA Valhalla or Walhalla (both: vălhäl`ə, –hăl`ə), in Norse mythology, Odin's hall for slain heroes. This martial paradise was one of the most beautiful halls of Asgard. , N.Y. -- Del Global Technologies Corp. (DGTC) Q2 FY 2005 Highlights --Net Income of $368,000, or $0.04 Per Basic and $0.03 Per Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. Share, Versus Net Loss of $12.4 Million, or $1.20 Per Basic and Diluted Share --Operating Income Improves to $1.8 Million from an Operating Loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $1.9 Million --Consolidated Gross Margins Increase to 26.2% from 24.2% --Company Receives Court Approval for its Previously Announced RFI (Radio Frequency Interference) High-frequency electromagnetic waves that emanate from electronic devices such as chips. RFI - Radio Frequency Interference Settlement Del Global Technologies Corp. (DGTC) ("Del Global" or "the Company") today announced operating results for its fiscal 2005 second quarter and six months ended January 29, 2005, as well as summary balance sheet data (see attached tables). These results, except for net income and earnings per share, are for continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the and exclude the results of the Del High Voltage The term high voltage characterizes electrical circuits, in which the voltage used is the cause of particular safety concerns and insulation requirements. High voltage is used in electrical power distribution, in cathode ray tubes, to generate X-rays and particle beams, to ("DHV DHV deer herpesvirus. ") division, which was sold on October 1, 2004. FISCAL 2005 SECOND QUARTER RESULTS Consolidated net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the second quarter of fiscal 2005 were $26.6 million versus the $26.9 million reported in the same period last year. Sales at the Medical Systems Group were $22.9 million in the second quarter of fiscal 2005, as compared to $23.8 million in the same period last year. The Medical Systems Group's Italian subsidiary experienced lower sales during the period because the increased strength of the Euro resulted in less attractive pricing for their products in non-Euro denominated markets. This decrease was offset by increased shipments of digital units domestically. Fiscal 2005 second quarter sales at the Power Conversion Group increased 18.9% to $3.7 million from $3.1 million in the second quarter of fiscal 2004 due to stronger government sales. Consolidated gross margin improved to 26.2% in the fiscal 2005 second quarter from 24.2% in same period last year. Continued improvements in procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. , decreased material costs as a percent of sales and lower scrap levels resulted in a 31.7% gross margin at RFI Corporation ("RFI"), the remaining component of the Power Conversion Group in the fiscal 2005 second quarter versus 26.5% in the prior year period. Second quarter gross margin at the Medical Systems Group increased to 25.3% from 23.9% in the prior year's second quarter, primarily reflecting lower margins on a large tender order in the prior year. Selling, general and administrative expenses ("SG&A") during the second quarter of fiscal 2005 declined to 16.5% of sales from 17.9% of sales during the same period last year, and from 17.5% during the first quarter of fiscal 2005. These decreases reflected headcount reductions, offset by increased corporate legal and accounting costs related to the previously disclosed strategic alternatives program. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the second quarter of fiscal 2005 increased to $1.8 million from an operating loss of $1.9 million in the same period last year. This was largely due to an increase in consolidated gross margins, lower SG&A expenses and the Company incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlement costs of approximately $3.2 million in the second quarter of 2004 related to the RFI settlement versus $0.3 million of cost in the second quarter of fiscal 2005. The Medical Systems Group posted operating income of $2.9 million in the second quarter of fiscal 2005, a 45% increase from operating income of $2.0 million in the same period last year. The Power Conversion Group had operating income of $0.3 million for the second quarter of fiscal 2005, versus an operating loss of $2.9 million in the comparable prior year period. Net income for the fiscal 2005 second quarter improved to $368,000, or $0.03 per diluted share, from a net loss of $12.4 million, or $1.20 per basic and diluted share. The net loss for the fiscal 2004 second quarter included an income tax valuation adjustment of $7.2 million, litigation settlement costs of $3.2 million and a loss from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $2.5 million, or $0.24 per diluted share. RFI SETTLEMENT RECEIVES COURT APPROVAL On March 15th sentencing occurred regarding the previously announced RFI settlement. At sentencing the Court imposed an additional fine of $0.3 million to be paid within 30 days. Other terms of the settlement remain unchanged. BACKLOG Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. Consolidated backlog at January 29, 2005 was $18.2 million versus backlog at July 31, 2004 of approximately $25.9 million. The backlog in the Company's Power Conversion Group decreased by $1.1 million from levels at beginning of the current fiscal year. There was a $6.6 million decrease in the backlog at its Medical Systems Segment, which reflects a decline due to $8.8 million in shipments under large tender orders at its international location and a decrease in incoming order rates due to the strong Euro. This decrease was partially offset by increased bookings at our domestic operations. Substantially all of the backlog should result in shipments within the next 12 months. FINANCIAL CONDITION Del Global's balance sheet at January 29, 2005 reflected working capital of $9.2 million, shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of $9.0 million and a stated book value of $.85 per share. As of January 29, 2005, the Company had approximately $2.9 million of excess borrowing capacity under its domestic revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. . COMPANY PROVIDES UPDATE ON STRATEGIC ALTERNATIVES As previously announced, Del Global completed the sale of DHV for a purchase price of $3.1 million, plus the assumption of approximately $800,000 of liabilities. On October 4, 2004, the Company announced that it had entered into non-binding letters of intent for the sale of both the Medical Systems Group Segment and RFI Corporation ("RFI"), the remainder of the Power Conversion Group Segment. After continued negotiations regarding the sale, on January 18, 2005 the Company signed a new letter of intent for the Medical Systems Group with the same potential buyer. This new letter of intent included a $1.0 million breakup fee breakup fee A provision in a takeover agreement that requires a firm to pay the investment banker a large sum of money if another firm takes over the target company. A breakup fee tends to discourage other firms from making bids for the target. , payable by the Company in the event that no later than March 4, 2005 the buyer was ready, willing and able to enter into a definitive purchase agreement that was based on the terms of the letter of intent and contained reasonable and customary reasonable and customary (R&C) plan, n a dental benefits plan that determines benefits based only on “reasonable and customary” fee criteria. See also usual fee; customary fee; reasonable fee. representations, warranties, terms and conditions relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the transactions, and the Company elected not to enter into such purchase agreement. While no definitive purchase agreement for the sale of Medical Systems Group has yet been executed by them, the parties continue to negotiate. Although there can be no assurance a breakup fee will not have to be paid, the Company believes that no such fee is payable under the terms of the letter of intent. The Company intends to call a meeting of its shareholders to seek shareholder approval under New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of law for a plan of sale and liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of the Company in the event definitive agreements are entered into for either the sale of the Medical Systems Group and RFI or only for the sale of the Medical Systems Group. However, the Board of Directors of the Company has not yet approved any plan of liquidation. In the event that the Company is unable to secure a definitive agreement for the sale of the Medical Systems Group, it presently intends not to sell RFI. The Company may, however, enter into a definitive agreement to sell the Medical Systems Group without such an agreement with respect to RFI which would then be remarketed as part of the plan of sale and liquidation. The Company's present intent is that without the approval by the Company's shareholders of a plan of sale and liquidation, neither the Medical Systems Group nor RFI will be sold. There can be no assurance that these non-binding letters of intent will result in definitive agreements or the actual sale of these segments, or that the strategic alternatives process initiated by the Company will lead to any other transactions. Any proceeds that may be received by stockholders of the Company as a result of any plan of liquidation may be more or less than the current market price of the Common Stock of the Company. INVESTOR CONFERENCE CALL Suzanne M. Hopgood, Chairman of the Board, Walter F. Schneider, President and Chief Executive Officer, and Mark A. Koch Koch , Robert 1843-1910. German bacteriologist who discovered the cholera bacillus and the bacterial cause of anthrax. He won a 1905 Nobel Prize for developing tuberculin. Koch named after Robert Koch, a German bacteriologist. , Principal Accounting Officer, will host a conference call on Monday, March 21, 2005 at 4:00 P.M. Eastern Time to discuss this news release. The telephone number to join this conference call is (888) 737-9832 (Domestic) or (706) 679-0770 (International). A taped replay of the call will be available through 5:00 P.M. Eastern Time on March 28, 2005. Please dial (800) 642-1687 (Domestic) or (706) 645-9291 (International) and enter the number 4822845 to listen to the replay. In addition, the conference call will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the via the Webcast section of Del Global's web site at www.delglobal.com. To listen to the live call on the Internet, go to the web site at least 15 minutes early to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. If you are unable to participate in the live call, the conference call will be archived and can be accessed on Del Global's website for approximately five business days. Del Global Technologies Corp. is primarily engaged in the design, manufacture and marketing of cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. medical imaging and diagnostic systems consisting of stationary Stationary can mean:
Electromagnetic radiation of extremely short wavelength (100 nanometres to 0.001 nanometre) produced by the deceleration of charged particles or the transitions of electrons in atoms. systems, radiographic/fluoroscopic systems, dental imaging systems and proprietary high-voltage power conversion subsystems for medical and other critical industrial applications. Through its RFI subsidiary, Del Global manufactures electronic filters, high voltage capacitors, pulse modulators, transformers and reactors, and a variety of other products designed for industrial, medical, military and other commercial applications. Statements about future results made in this release may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based on current expectations and the current economic environment. Del Global cautions that these statements are not guarantees of future performance. These statements involve a number of risks and uncertainties that are difficult to predict, including, but not limited to: the ability of Del Global to implement its business plan; retention of management; changing industry and competitive conditions; obtaining anticipated operating efficiencies; securing necessary capital facilities; favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. determinations in various legal and regulatory matters; a settlement of the Department of Defense matter; that does not include a debarment de·bar tr.v. de·barred, de·bar·ring, de·bars 1. To exclude or shut out; bar. 2. To forbid, hinder, or prevent. from doing business with the U.S. Government; market and operating risks Operating risk The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk. from foreign currency exchange exposures; and favorable general economic conditions. Actual results could differ materially from those expressed or implied in the forward-looking statements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the Company's filings with the Securities and Exchange Commission.
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
January 29, January 31, January 29, January 31,
2005 2004 2005 2004
NET SALES $ 26,609 $ 26,946 $ 45,367 $43,835
COST OF SALES 19,641 20,415 33,846 33,520
GROSS MARGIN 6,968 6,531 11,521 10,315
Selling, general
and
administrative 4,396 4,818 7,672 8,264
Research and
development 449 425 822 731
Litigation
settlement
costs 300 3,199 300 3,199
Total operating
expenses 5,145 8,442 8,794 12,194
OPERATING INCOME
(LOSS) 1,823 (1,911) 2,727 (1,879)
Interest expense (259) (327) (681) (637)
Other (expense)
income (26) (16) (12) 55
INCOME (LOSS)
FROM CONTINUING
OPERATION BEFORE
INCOME TAXES
AND MINORITY
INTEREST 1,538 (2,254) 2,034 (2,461)
INCOME TAX
PROVISION 932 7,356 1,309 7,539
INCOME (LOSS)
FROM CONTINUING
OPERATIONS
BEFORE MINORITY
INTEREST 606 (9,610) 725 (10,000)
MINORITY
INTEREST 238 279 309 346
INCOME (LOSS)
FROM CONTINUING
OPERATIONS 368 (9,889) 416 (10,346)
Discontinued
operations - (2,465) 199 (2,618)
NET INCOME (LOSS) $ 368 $(12,354) $ 615 $(12,964)
NET INCOME (LOSS)
PER COMMON
SHARE- DILUTED
Continued
operations $ 0.03 $ (0.96) $ 0.03 $ (1.00)
Discontinued
operations $ -- $ (0.24) $ 0.02 $ (0.25)
Basic and
diluted, net $ 0.03 $ (1.20) $ 0.05 $ (1.25)
Weighted average
number of
common shares
outstanding:
Basic 10,477 10,333 10,415 10,333
Diluted 11,416 10,333 11,407 10,333
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY BALANCE SHEETS
(Dollars in Thousands, except per share data)
(Unaudited)
January 29, July 31,
2005 2004
Current Assets $34,324 $38,214
Total Assets $45,662 $49,261
Current Liabilities $25,102 $30,450
Total Liabilities $35,041 $40,097
Minority Interest in Subsidiary $ 1,369 $ 1,389
Shareholders' Equity $ 8,952 $ 7,775
Common Shares Outstanding End of Period 10,508 10,335
Book Value Per Share $ .85 $ 0.75
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