Del Global Technologies Announces Operating Results for Its Fiscal 2002 Third Quarter and Nine Months Ended April 27, 2002.Business Editors 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.--(BUSINESS WIRE)--June 11, 2002 Del Global Technologies Corp. (DGTC) Provides Summary Balance Sheet Data as of April 27, 2002 Highlights - Sales Rise 4% to $26.9 Million - Gross Margin Stable at 23% From FY 2002 6-Month Period - Net Loss of $5.2 Million, or ($.66) Per Share, Primarily Related to Unusual, Non-Cash Charges and Other Fees - Operating Income of $934,000, Excluding Unusual Non-Cash Charges and Other Fees - Closes $10 Million Senior Revolving Credit Facility with Transamerica Business Capital - Company Reiterates Revenue Projection for FY 2002 of $97-$100 Million - Anticipates Revenues for FY 2003 of $108-$112 Million With Stable to Improving Gross Margins Del Global Technologies Corp. (DGTC) ("Del") today announced operating results for its Fiscal 2002 third quarter and nine month period ended April 27, 2002, as well as summary balance sheet data as of April 27, 2002. The Company also finalized See finalization. its agreement with Transamerica Business Capital for a new $10 million senior 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. Samuel Samuel, two books of the Bible, originally a single work, called First and Second Samuel in modern Bibles, and First and Second Kingdoms in the Septuagint. They are considered part of "Deuteronomistic history," in which the book of Deuteronomy functions as the E. Park, President and Chief Executive Officer of Del, commented, "This new credit facility strengthens Del's financial foundation. We view this agreement as both a recognition of what Del's new management team has accomplished this past year, as well as a validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. of the Company's business model and prospects." Commenting on the third quarter financial results, Mr. Park stated, "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 in the third quarter reached our previously announced projections, due primarily to higher sales at Del Medical Imaging. As previously announced, the net loss for the third quarter of Fiscal 2002 was primarily the result of a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of approximately $7.0 million and approximately $200,000 in associated legal fees related to the finalization Writing the table of contents (TOC) on a recordable CD or DVD disc. The finalization process ensures that the disc can be played back on most CD and DVD players. See disc-at-once. of the class action 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, as well as unusually high audit and specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. accounting fees of approximately $500,000. Absent these charges and fees, 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 2002 would have been approximately $934,000." Mr. Park continued, "Del has now recorded all major charges in connection with the class action litigation settlement. This closes an unfortunate chapter in the Company's history. We can now focus on growing a business that, we believe, has great potential." Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs Gilboy, Del's Chief Financial Officer, said, "The unusually high audit and specialized accounting fees incurred in the third quarter of Fiscal 2002 are expected to be substantially reduced in the fourth quarter ending August 3, 2002 and then normalize normalize to convert a set of data by, for example, converting them to logarithms or reciprocals so that their previous non-normal distribution is converted to a normal one. to approximately $350,000 per year beginning in the first quarter of Fiscal 2003." Operating Results for Fiscal 2002 Third Quarter Ended April 27, 2002 Mr. Gilboy noted that, although the Company announced full year Fiscal 2001 financial results in April 2002, this is the first reporting of financial results for the third quarter of Fiscal 2001. Net sales for the third quarter of Fiscal 2002 rose 4% to $26.9 million versus $25.9 million in the prior year's third quarter, due exclusively to a $3 million sales increase at Del's Medical Imaging business, which was offset by lower sales at Del's Power Conversion Group. The quarterly sales increase at Del's Medical Imaging business resulted from increased sales from international and domestic operations. Sales at Del's Power Conversion Group declined due to a weak economy, especially with respect to the technology sector, where orders have not recovered to historical levels. This sales decline is also consistent with Del's ongoing efforts to shift its focus to higher margin products and projects, and to eliminate those products and projects deemed to be unprofitable or with limited market acceptance. The year-to-year comparison is affected by the Power Conversion Group's transfer of the portable X-ray X-ray 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. product from Dynarad (which had been part of the Power Conversion Group) to Del Medical Imaging, which represented approximately $800,000 of sales in the third quarter of last year. Del has begun shipping subsystems pursuant to the recently announced $10 million in contracts under the EDS (Electronic Data Systems, Plano, TX, www.eds.com) Founded in 1962 by H. Ross Perot (independent candidate for the President of the U.S. in 1992), EDS is the largest outsourcing and data processing services organization in the country. bomb scanner (1) See also antivirus program. (2) An optical device that reads a printed page or transparency and converts it into a graphics image for the computer. The scanner does not recognize or differentiate in any manner the content of the material it is scanning. program. The Company expects greater contributions from that business during the balance of calendar 2002 and beyond. Consolidated gross margin in the third quarter of Fiscal 2002 was stable at approximately 23%, the same as in the first six months of Fiscal 2002. Despite sales gains at Del's Medical Imaging operations, Del's overall gross margin percentage declined for the current quarter when compared to Q3 results in fiscal 2001, 23% versus 26%. Lower sales volume at the Power Conversion Group, and higher materials costs at the Medical Imaging operations pushed margins lower. On a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. basis, despite flat year-over-year sales, consolidated gross margin is ahead of last year through nine months, 23% versus 22%. While Del continues to focus on enhancing gross margin at the Power Conversion Group by phasing out smaller, less profitable orders in favor of upon the side of; favorable to; for the advantage of. See also: favor more profitable, custom designed products, consolidated gross margin is expected to remain essentially flat in the short term as sales at the Power Conversion Group are expected to comprise a lower total percentage of overall sales for the near term. As discussed, Del incurred a non-cash charge of approximately $7.0 million and approximately $200,000 in associated legal fees related to the class action litigation settlement. In addition, the Company recognized unusually high audit and specialized accounting fees of approximately $500,000. As a result, the net loss for the third quarter of Fiscal 2002 was $5.2 million, or ($.66) per share, versus a net loss of $2,000, or $0.00 per share, in the third quarter of Fiscal 2001. Financial Condition At April 27, 2002 Del's balance sheet at April 27, 2002 reflected a current ratio of approximately 1.7:1, working capital of $20.4 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 $42.2 million and a book value of $5.37 per share. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma book value, after taking into account the issuance of 2.5 million shares associated with the class action settlement, would be approximately $4.08 per share. Status of Financial Statements Since the appointment of Del's new management team in February February: see month. 2001, the Company has announced operating results for Fiscal 2001; has filed audited financial statements for Fiscal year 2001 on a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. with the SEC; filed Form 10-Qs Form 10-Q See 10-Q. for the first and second quarters of Fiscal 2002; and today announced operating results for the third quarter of Fiscal 2002, as well as balance sheet data at April 27, 2002. The Company anticipates that it will file a Form 10-Q for the third quarter of Fiscal 2002, on time, on Tuesday, June 11, 2002. As disclosed in Del's April 1, 2002 press release, during the fourth calendar quarter of 2002 the Company expects to file a Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for Fiscal 2002. This filing will include operating results for Fiscal 2002 and 2001, and the Company will attempt to include operating results for Fiscal 2000, and a restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of operating results for Fiscal 1998 through 1999. No assurance can be given that the Company will be successful in this effort to complete financial statements for the Fiscal 2000 period, or the restatement of past periods. Outlook for Fiscal Year 2002 and Fiscal Year 2003 Mr. Park stated, "We are reiterating our sales projection of between $97 and $100 million for Fiscal 2002. Del's 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. at May 28, 2002 is approximately $36 million. Regarding Fiscal 2003, we expect sales of between $108 and $112 million. We expect substantially lower S, G & A costs related to lower accounting fees and the absence of the unusual charges we incurred in Fiscal 2002, including those related to the class action litigation settlement. We intend to provide a more detailed outlook for Fiscal 2003 later this calendar year." Investor Conference Call Samuel Park and Thomas Gilboy will host a conference call today at 11:00 A.M. Eastern Daylight Savings Time, to discuss this news release. The telephone number to join this conference call is (973) 321-1100. A taped replay of the call will be available through 5:00 P.M. Eastern Daylight Savings Time, June 12, 2002. Please dial (877) 519-4471 or (973) 341-3080 and enter the number 3317334. 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's web site at www.delglobaltech.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 the Company'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:
pertaining to or emanating from analysis. analytical control control of confounding by analysis of the results of a trial or test. instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. , semiconductor capital equipment and energy exploration. 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. The Company cautions that these statements are not guarantees of future performance. They involve a number of risks and uncertainties that are difficult to predict including, but not limited to, the ability of the Company to implement its business plan, management changes, 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 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 AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
Three Months Ended
April 27, 2002 April 28, 2001
-------------- --------------
Net Sales $ 26,850 $ 25,857
Cost of Sales 20,561 19,093
--------- ---------
Gross Margin 6,289 6,764
Selling, general and administrative 5,140 3,994
Research and development 780 718
Litigation settlement costs 7,236 1,578
Facilities reorganization costs - 52
-------- ---------
Total operating expenses 13,156 6,342
-------- ---------
Operating (Loss) Income (6,867) 422
Interest expense, net (551) (266)
Other income (expense) 74 (115)
(Loss) Income Before Income
Tax Benefit And Minority Interest (7,344) 41
Income tax (benefit) (2,247) 16
(Loss) Income Before Minority Interest (5,097) 25
Minority interest 55 27
Net Loss $ (5,152) $ (2)
========= =========
Basic and Diluted Net Loss Per Share $ (0.66) $ --
========= =========
Basic shares outstanding 7,848 7,848
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DEL GLOBAL TECHNOLOGIES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
Nine Months Ended
April 27, 2002 April 28, 2001
-------------- --------------
Net Sales $ 70,732 $ 71,213
Cost of Sales 54,356 55,643
--------- ---------
Gross Margin 16,376 15,570
Selling, general and administrative 15,807 12,316
Research and development 1,986 2,229
Litigation settlement costs 6,978 2,596
Facilities reorganization costs 77 52
--------- --------
Total operating expenses 24,848 17,193
--------- --------
Operating Loss (8,472) (1,623)
Interest expense, net (1,338) (757)
Other income (expense) 105 (180)
Loss Before Income Tax
Benefit And Minority Interest (9,705) (2,560)
Income tax benefit (3,079) (966)
Loss Before Minority Interest (6,626) (1,594)
Minority interest 232 250
Net Loss $ (6,858) $ (1,844)
========== ========
Basic and Diluted Net Loss Per Share $ (0.88) $ (0.24)
========== ========
Basic shares outstanding 7,848 7,848
========== ========
DEL GLOBAL TECHNOLOGIES AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands except per share amounts)
April 27, 2002 July 28, 2001
-------------- -------------
Current Assets $ 49,395 $ 53,369
Total Assets $ 79,979 $ 81,658
Current Liabilities $ 29,023 $ 31,100
Total Liabilities $ 36,944 $ 39,249
Minority Interest $ 859 $ 618
Shareholders' Equity $ 42,176 $ 41,791
Common Shares
Outstanding End of Period (000) (1) 7,848 7,848
Book Value Per Share $ 5.37 $ 5.33
Pro Forma After Issuance of 2.5 Million Shares
Related to Litigation Settlement
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Common Shares Outstanding (000) (1) 10,348
Book Value Per Share $ 4.08
(1) Net of treasury stock
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