Del Global Technologies Announces Fiscal 2006 Third 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) ("Del Global" or "the Company") today announced operating results for its fiscal 2006 third quarter ended April 29, 2006, as well as summary balance sheet data (see attached tables). FISCAL 2006 THIRD 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 third quarter of fiscal 2006 rose 10.1% to $20.8 million from $18.9 million in the same period last year. Sales at the Medical Systems Group increased 15% to $17.6 million from $15.3 million in the same period last year. The period's higher international sales reflected increased exports of medical & dental equipment as compared to the third quarter last year. Offsetting these stronger international results were lower U.S. sales, impacted by the consolidation and subsequent reorganization of two national medical distributors; each distributor was a pre-consolidation customer of Del Global. The Medical Systems Group sales Group sales Block sale (of large amounts) of securities to institutional investors. group sales The distribution of a new security issue to institutional clients. effort is addressing the impact of this consolidation through a variety of measures, including focusing on national buying contracts in the U.S. and through increased international marketing efforts. Fiscal 2006 third quarter sales at the Power Conversion Business ("RFI (Radio Frequency Interference) High-frequency electromagnetic waves that emanate from electronic devices such as chips. RFI - Radio Frequency Interference ") decreased to $3.2 million from $3.5 million in the third quarter of fiscal 2005 due to lower demand from an OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and customer. Consolidated gross margin was 21.6% in the fiscal 2006 third quarter as compared to 25.4% in same period last year. Gross margin at the Medical Systems Group declined to 19.0% from 22.4% in the prior year period due to a less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. product mix at both the U.S. and Italian locations. Gross margin at RFI also declined to 36.6% from 38.7% due to the impact of lower sales. Selling, general and administrative expenses ("SG&A") during the third quarter of fiscal 2006 declined to $3.3 million, or 15.9% of sales, from $4.9 million, or 25.8% of sales, in the same period last year. This decline was attributable to reduced legal, accounting and corporate expenses, and RFI's ability to maintain a lower selling cost structure. Consolidated 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 third quarter of fiscal 2006 improved to $.85 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 $.52 million in the prior year period. The Medical Systems Group posted operating income of $.53 million in the third quarter of fiscal 2006 versus $.39 million in 2005, while income at RFI remained stable at $.71 million compared to the prior year period. The two divisions' operating income contributions were offset by corporate costs of $.40 million. Third quarter fiscal 2006 interest expense increased to $.35 million from $.30 million in the prior year quarter due to increased borrowings and higher interest rates. Other expense of $.21 million in the third quarter of fiscal 2006, consisting of foreign 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. costs, compared to other income of $46,000 in the same period one year ago. The net loss for the third quarter of fiscal 2006 was $73,000, or $0.01 per basic and 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 a net loss of $1.0 million or $0.10 per basic and diluted share, in the same period last year. The net loss for the third quarter of fiscal 2005 included $1.1 million in professional and legal expenses related to the strategic alternatives program terminated in March 2005. 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 April 29, 2006 was $24.6 million versus backlog at July July: see month. 30, 2005 of approximately $14.6 million. Backlog at the Medical Systems Group increased by $9.6 million from July 30, 2005 levels, reflecting a $8.9 million increase at Del Global's international business due to tender orders received during the period, and a $0.7 million rise in domestic orders. Backlog at RFI increased by $0.4 million from levels at beginning of the fiscal year, reflecting lower order rates early in the year offset by a larger order from a customer at the end of the fiscal 2006 third quarter. Substantially all of the backlog should result in shipments within the next 12 months. COMMENTS Walter Wal·ter , Bruno 1876-1962. German conductor noted for his interpretations of Mozart and Mahler. Noun 1. Walter - German conductor (1876-1962) Bruno Walter F. Schneider, President and Chief Executive Officer of Del Global commented, "We are very pleased with our strong international sales, which offset a softer U.S. market caused by the consolidation of two large distributors. The $0.7 million increase in U.S. backlog from beginning of year levels reflects Del Global's progress in responding to this disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. by structuring new national buying contracts. The Medical Systems Group's international performance also stands out, as quarterly orders have increased over last year's levels, and backlog grew significantly. We are cautiously optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that these results represent progress in the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of the Medical Systems Group. RFI's results continue to yield stable operating income due to cost saving measures. We are gratified grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. by the confidence our customers place in us as evidenced by a recent large order and rising backlog levels." FINANCIAL CONDITION Del Global's balance sheet at April 29, 2006 reflected working capital of $8.2 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 $11.8 million and a stated book value of $1.02 per share. As of April 29, 2006, the Company had approximately $0.5 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. compared to $0.5 million at July 30, 2005. INVESTOR CONFERENCE CALL 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 Tuesday, June 20, 2006 at 11:00 AM. Eastern Time to discuss these results. 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 Monday, June 26, 2006. Please dial (800) 642-1687 (Domestic) or (706) 645-9291 (International) and enter the number 1853517 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 under the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " section of Del Global's web site at www.delglobal.com; click on "Presentations & Webcasts." 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. ABOUT DEL GLOBAL TECHNOLOGIES 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 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 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 determinations in various legal matters; 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 Nine Months Ended
------------------- -------------------
April 29, April 30, April 29, April 30,
--------- --------- --------- ---------
2006 2005 2006 2005
-------- -------- -------- --------
Net Sales $ 20,804 $ 18,892 $ 59,037 $ 64,259
Cost of Sales 16,302 14,091 45,586 47,937
-------- -------- -------- --------
Gross Margin 4,502 4,801 13,451 16,322
-------- -------- -------- --------
Selling, General and
Administrative 3,299 4,874 10,071 12,546
Research and Development 409 446 1,191 1,268
Litigation Settlement Costs (55) -- 445 300
-------- -------- -------- --------
Total Operating Expenses 3,653 5,320 11,707 14,114
-------- -------- -------- --------
Operating Income (loss) 849 (519) 1,744 2,208
Interest Expense (349) (297) (943) (978)
Other Income/ (Expense) (205) 46 (245) 34
-------- -------- -------- --------
Income (Loss) from Continuing
Operations Before Income Tax
Provision and Minority
Interest 295 (770) 556 1,264
Income Tax Provision 368 248 1,064 1,557
-------- -------- -------- --------
Income (Loss) From Continuing
Operations Before Minority
Interest (73) (1,018) (508) (293)
Minority Interest -- 13 108 322
-------- -------- -------- --------
Income (Loss) From Continuing
Operations (73) (1,031) (616) (615)
Discontinued Operations -- -- -- 199
-------- -------- -------- --------
Net Income (Loss) $ (73) $ (1,031) $ (616) $ (416)
-------- -------- -------- --------
Income (Loss) Per Common
Share- Basic
Continuing Operations $ (0.01) $ (0.10) $ (0.06) $ (0.06)
Discontinued Operations ---- ---- ---- 0.02
-------- -------- -------- --------
Net Income (Loss) Per Basic
Share $ (0.01) $ (0.10) $ (0.06) $ (0.04)
-------- -------- -------- --------
Income (Loss) Per Common
Share-Diluted
Continuing Operations $ (0.01) $ (0.10) $ (0.06) $ (0.06)
Discontinued Operations ---- ---- ---- 0.02
-------- -------- -------- --------
Net Income (Loss) Per Diluted
Share $ (0.01) $ (0.10) $ (0.06) $ (0.04)
-------- -------- -------- --------
Weighted Average Number of
Common Shares
Outstanding (In Thousands):
Basic 11,635 10,517 11,114 10,449
======== ======== ======== ========
Diluted 11,635 10,517 11,114 10,449
======== ======== ======== ========
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY BALANCE SHEETS
(Dollars in Thousands, except per share data)
April 29, July 30,
2006 2005
----------- -----------
(Unaudited) (Audited)
Current Assets $ 33,756 $ 31,260
Total Assets $ 47,968 $ 40,776
Current Liabilities $ 25,528 $ 21,138
Total Liabilities $ 36,139 $ 30,275
Minority Interest in Subsidiary $ --- $ 1,273
Shareholders' Equity $ 11,829 $ 9,228
Common Shares Outstanding at the End of the
Period 11,635 10,630
Book Value Per Share $ 1.02 $ 0.87
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