Del Global Technologies Announces Fiscal 2007 Second Quarter Financial Results.Company to Conduct Conference Call on Thursday, March 8, 2007 FRANKLIN PARK Franklin Park, village (1990 pop. 18,485), Cook co., NE Ill., a suburb of Chicago; inc. 1892. It is chiefly residential. , Ill. -- Del Global Technologies Corp.: Q2 FY 2007 Business and Other Financial Highlights * Sales rose 21.8% to $26.8 Million * 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. of $2.5 million * Net income of $1.1 million, or $0.09 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 * Backlog at January 27, 2007 up 23.7% to $27.7 million from $22.4 million at July 29, 2006 * Company generates $5.6 million in cash from operations in the first half of fiscal 2007 * Rights Offering oversubscribed Refers to connecting more users to a system than can be fully supported if all of them were using it at the same time. Networks and servers are almost always designed with some amount of oversubscription, counting on the fact that everybody does not need the service simultaneously. Del Global Technologies Corp. (DGTC) ("Del Global" or "the Company") today announced financial results for its fiscal 2007 second quarter ended January 27, 2007. 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 2007 increased 21.8% to $26.8 million from $22.0 million in the second quarter of fiscal 2006, due primarily to higher sales at the Medical Systems Group. Net sales at the Medical Systems Group rose 25.6% to $23.9 million from $19.0 million in the comparable prior year period. Sales were favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by increased sales to the Russian market, an Italian government financed sale of medical equipment to Ethiopia, stronger than expected dental systems sales, and increased sales of higher-priced digital products. Sales at the Power Conversion Group ("RFI (Radio Frequency Interference) High-frequency electromagnetic waves that emanate from electronic devices such as chips. RFI - Radio Frequency Interference ") were essentially flat at $2.9 million versus $3.0 million in the prior year period. Consolidated gross margin improved to 25.2% during the second quarter of fiscal 2007 from 23.7% in the second quarter of fiscal 2006. This increase was primarily due to reduced warranty expenses totaling $0.4 million associated with reserves at the Medical Systems Group reflecting the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of the warranty period on several specific customer contracts. Gross margin at the Medical Systems Group during the second quarter of fiscal 2007 improved to 24.5% from 22.6% in the prior year's second quarter due to the reduced warranty expense noted above, partially offset by lower margins associated with increased sales of digital products. While digital products generally have a higher selling price than the non-digital product offerings, they also have a higher cost of sales resulting in lower gross margin percentages. Gross margin at RFI improved to 31.2% from the prior year's second quarter gross margin of 30.9%. Selling, general and administrative expenses ("SG&A") for the current second quarter declined to 13.6% of net sales from 17.2% of net sales in the prior year's second quarter, primarily as a result of increased sales volume without a corresponding increase in costs. Likewise, total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. declined to 15.7% of net sales from 19.1% of sales in the same period one year ago, also due to higher total sales without a corresponding increase in costs. Operating income for the current year second quarter was $2.5 million, a $1.5 million improvement from operating income of $1.0 million in the second quarter of fiscal 2006. The Medical Systems Group posted a second quarter fiscal 2007 operating income of $2.6 million as compared to $1.3 million in the same period one year ago, while RFI generated operating income of $0.3 million as compared to $0.4 million one year ago. Interest expense for the second quarter of fiscal 2007 was slightly lower than the prior year's second quarter due to lower borrowing balances compared to the prior year. The Company has not provided for a U.S. income tax benefit in the second quarter of fiscal 2007. With the exception of tax provisions and adjustments recorded at Villa, Del Global's Italian subsidiary, the Company recorded no adjustments to its current or net deferred tax accounts during the current and prior year's second quarter. Reflecting the above, Del Global recorded net income in the second quarter of fiscal 2007 of $1.1 million, or $0.09 per diluted share on approximately 12.0 million weighted average common shares outstanding ("shares outstanding"), as compared to net loss of $0.1 million, or $0.01 per diluted share on approximately 11.1 million shares outstanding, during the second quarter of fiscal 2006. BACKLOG Consolidated backlog at January 27, 2007 rose 23.7% to approximately $27.7 million from approximately $22.4 million at July 29, 2006. Backlog at the Medical Systems Group rose by $5.2 million from July 29, 2006 levels, reflecting strong international bookings during the six month period ended January 27, 2007. RFI also increased its backlog by $0.1 million from the beginning of the fiscal year. Substantially all of the backlog should result in shipments within the next 12 months. FINANCIAL CONDITION Del Global's balance sheet at January 27, 2007 reflected working capital of $10.3 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 $13.6 million, and a net book value of $1.16 per share. As of January 27, 2007, Del Global had approximately $2.1 million of excess borrowing availability under its domestic revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility compared to $0.5 million at July 29, 2006. In addition, as of January 27, 2007, Del Global's Villa subsidiary had an aggregate of approximately $9.5 million of excess borrowing availability under its various short-term credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities . Terms of the Italian credit facilities do not permit the use of borrowing availability to directly finance operating activities at Del Global's U.S. subsidiaries. COMMENTS James A. Risher, Del Global's President and Chief Executive Officer commented, "We are making continued progress towards building greater value for our shareholders, through both immediate and long-term initiatives, and look forward to our future with confidence. We achieved operating profitability and increased backlog at both of our business segments in the second quarter, and are focused on further penetrating penetrating breaching the tissues of the body. new domestic and international markets. Del Global generated approximately $5.6 million of cash from operations during the first half of fiscal 2007 compared to $1.4 million in the prior fiscal year period. Del Global's ability to generate operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. reflects the success to date of our various business initiatives, and will serve as an important component of our strategy going forward." RIGHTS OFFERING Under the terms of the Company's previously announced rights offering, the Company distributed to shareholders of record as of February 5, 2007, non-transferable subscription rights to purchase one share of the Company's common stock for each share owned at that date at a subscription price of $1.05 per share. An aggregate of 12,027,378 shares of Del Global's common stock at a subscription price of $1.05 per share was offered. The offering was oversubscribed by shareholders. Proceeds from the rights offering of approximately $12.6 million will be used for debt repayment, anticipated working capital needs, and general corporate purposes. A portion of the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). may also be used to acquire or invest in businesses, products and technologies that Company management believes are complementary to the Company's business. However, the Company has no definitive agreements nor is it in serious discussions to acquire or invest in any business, product or technology. The subscription agent for the rights offering will return to shareholders any excess payments related to over-subscriptions promptly once the results of the rights offering are finalized See finalization. . INVESTOR CONFERENCE CALL Del Global will host a conference call on Thursday, March 8, 2007 at 3:00 pm Eastern Time / 2:00 pm Central 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 11:59 P.M. Eastern Time on March 22, 2007. Please dial (800) 642-1687 (Domestic) or (706) 645-9291(International) and enter the number 1381014 to listen to the replay. In addition, the conference call will be broadcast live over the Internet 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 high performance diagnostic imaging systems for medical, dental and veterinary applications through the Del Medical Systems Group. Through its U.S. based Del Medical Imaging Corp. and Milan, Italy based Villa Sistemi Medicali S.p.A. subsidiaries the Company offers a broad portfolio of general radiographic radiographic (rā´dēōgraf´ik), adj relating to the process of radiography, the finished product, or its use. , radiographic/fluoroscopic, portable x-ray and digital radiographic systems to the global marketplace. Through its RFI subsidiary, Del Global manufactures proprietary high-voltage power conversion subsystems including 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. The company's web site is www.delglobal.com. 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 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. [TABLE OMITTED] [TABLE OMITTED] |
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