UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 1, 2004
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DEL GLOBAL TECHNOLOGIES CORP.
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(Exact name of registrant as specified in charter)
New York 0-3319 13-1784308
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One Commerce Park, Valhalla, NY 10595
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (914) 686-3600
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On October 1, 2004, the registrant entered into an asset purchase agreement
with Spellman High Voltage Electronics Corporation ("Spellman"), in connection
with sale of the registrant's High Voltage Power business (the "Asset Purchase
Agreement") for a purchase price of $3,086,774 plus the assumption of
approximately $0.80 million of liabilities, which sale was consummated on
October 1, 2004 as more fully described in Item 2.01 hereof. A copy of the Asset
Purchase Agreement is attached hereto as EXHIBIT 99.01 and incorporated herein
by reference.
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On October 1, 2004, the registrant completed the sale of its High Voltage
Power business to Spellman. The sale was completed in accordance with the terms
and conditions of the Asset Purchase Agreement. In connection with the sale, the
registrant received a purchase price of $3,086,774 plus the assumption of
approximately $0.80 million of liabilities. In addition, pursuant to the Asset
Purchase Agreement, Spellman agreed to lease certain space located at the
registrant's Valhalla, New York facility by entering into a certain assignment,
assumption and amendment of lease by and among the registrant, Spellman and DP
16 LLC dated as of October 1, 2004 (the "Lease Assignment"). A copy of the Lease
Assignment is attached hereto as EXHIBIT 99.02 and incorporated herein by
reference. In a related transaction, RFI Corporation, a subsidiary of the
registrant, entered into a certain management services agreement with Spellman
regarding the license of use of certain computer software dated as of October 1,
2004. Other than the sale transaction and the management services agreement,
there exists no material relationship between Spellman and the registrant, its
affiliates or any of the registrant's directors and officers.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Not Applicable
(b) Pro Forma Financial Information.
Unaudited pro forma financial information reflecting the sale of
the registrant's High Voltage Power business begins on page 3 of
this Current Report.
(c) Exhibits.
99.01 Asset Purchase Agreement by and between the registrant
and Spellman High Voltage Electronics Corporation dated
October 1, 2004.
99.02 Lease Assignment by and among the registrant, Spellman
and DP 16 LLC dated as of October 1, 2004.
PROFORMA FINANCIAL INFORMATION
PROFORMA FINANCIAL INFORMATION
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
PROFORMA CONSOLIDATED BALANCE SHEETS
MAY 1, 2004
(Dollars in Thousands)
(Unaudited)
Historical Proforma Proforma Debt Proforma
Del Global Del High Paydown Del Global
Consolidated at Voltage Sale Adjustments Consolidated at
ASSETS May 1, 2004 May 1, 2004 May 1, 2004 May 1, 2004
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(Note 1) ( Note 2)
CURRENT ASSETS
Cash and cash equivalents $6,753 3,295 (3,295) $6,753
Trade receivables (net of allowance
for doubtful accounts of $1,408
at May 1, 2004, 17,337 (2,631) 14,706
Inventory - Net 17,132 (4,797) 12,335
Deferred income tax asset - current
Prepaid expenses and other current
assets 876 876
Total current assets 42,098 (4,133) 34,670
REFUNDABLE INCOME TAXES
FIXED ASSETS - Net 8,396 (1,200) 7,196
DEFERRED INCOME TAX ASSET-NON CURRENT 927 927
GOODWILL 1,911
INTANGIBLES - Net 120 1,911
OTHER ASSETS 1,554 120
----- 1,554
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TOTAL ASSETS $55,006 ($5,333) ($3,295) $46,378
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See notes to unaudited proforma consolidated financial statements
PROFORMA FINANCIAL INFORMATION
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
PROFORMA CONSOLIDATED BALANCE SHEETS
MAY 1, 2004
(Dollars in Thousands)
(Unaudited)
Historical Proforma Proforma Debt Proforma Del
Del Global Del High Paydown Global
Consolidated at Voltage Sale Adjustments Consolidated at
May 1, 2004 May 1, 2004 May 1, 2004 May 1, 2004
(Note 1) ( Note 2)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term credit facilities 5,294 ($ 3,295) $ 1,999
Current portion of long-term debt 806 (72) 734
Accounts payable - trade 13,075 (804) 12,271
Accrued liabilities 8,324 (258) 8,066
Litigation settlement reserves 5,586 5,586
Income taxes payable 779 779
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Total current liabilities 33,864 (1,134) (3,295) 29,435
NON-CURRENT LIABILITIES
Long-term debt 5,158 5,158
Subordinated note 1,921 1,921
Other long-term liabilities 2,690 (188) 2,502
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Total liabilities 43,633 (1,322) (3,295) 39,016
MINORITY INTEREST IN SUBSIDIARY 1,326 1,326
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, $.10 par value;
Authorized 20,000,000 shares;
Issued and outstanding - 10,976,081 at May 1,
2004 1,097 1,097
Additional paid-in capital 63,713 63,713
Accumulated other comprehensive gain 849 849
Accumulated deficit (50,066) (54,077)
Less common stock in treasury - 643,533 shares (5,546) (5,546)
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Total shareholders' equity 10,047 (4,011) (6,036)
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 55,006 $ 5,333 ($ 3,295) $ 46,378
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See notes to unaudited proforma consolidated financial statements
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED MAY 1, 2004
(Dollars in Thousands)
(Unaudited)
Historical Historical Proforma
Del Global Del High Del Global
Consolidated Voltage Consolidated
Nine Months Nine Months Nine Months
Ended Ended Ended
May 1,2004 May 1,2004 May 1,2004
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(Note 3)
NET SALES $ 75,958 $ 11,513 $ 64,445
COST OF SALES 59,129 10,019 49,110
GROSS MARGIN 16,829 1,494 15,335
Selling, general and administrative 13,865 2,038 11,827
Research and development 1,144 - 1,144
Litigation settlement costs 3,199 - 3,199
Impairment of goodwill and
other intangible assets and 1,453 1,453 0
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Total operating expenses 19,661 3,491 16,170
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OPERATING LOSS (2,832) (1,997) (835)
Interest expense 1,562 - 1,562
Other (income)expense (104) 3 (107)
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LOSS BEFORE INCOME
TAXES AND MINORITY INTEREST (4,290) (2,000) (2,290)
INCOME TAX PROVISION 8,479 - 8,479
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NET LOSS BEFORE
MINORITY INTEREST (12,769) (2,000) (10,769)
MINORITY INTEREST 484 - 484
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NET LOSS $(13,253) $ (2,000) $(11,253)
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See notes to unaudited proforma consolidated financial statements
PROFORMA FINANCIAL INFORMATION
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED AUGUST 2, 2003
(Dollars in Thousands)
(Unaudited)
Historical Historical Proforma
Del Global Del High Del Global
Consolidated Voltage Consolidated
Fiscal Year Fiscal Year Fiscal Year
Ended Ended Ended
August 2, 2003 August 2, 2003 August 2, 2003
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(Note 3)
NET SALES $ 98,619 $ 30,407 $ 68,212
COST OF SALES 77,496 24,954 52,542
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GROSS MARGIN 21,123 5,453 15,670
Selling, general and administrative 21,933 4,030 17,903
Research and development 2,218 625 1,593
Litigation settlement costs 2,126 - 2,126
Facilities reorganization costs 788 661 127
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Total operating expenses 27,065 5,315 21,750
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OPERATING INCOME (LOSS) (5,942) 138 (6,080)
Interest expense 1,388 - 1,388
Other income 633 36 597
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INCOME (LOSS) BEFORE INCOME
TAXES AND MINORITY INTEREST (6,697) 174 (6,871)
INCOME TAX PROVISION 8,233 - 8,233
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NET INCOME LOSS BEFORE
MINORITY INTEREST (14,930) 174 (15,104)
MINORITY INTEREST 115 - 115
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NET LOSS $(15,045) $ 174 $(15,219)
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See notes to unaudited proforma consolidated financial statements
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS
The Pro Forma Consolidated Balance Sheet reflects the financial position of the
Company after giving effect to the disposition of the assets and liabilities of
the Del High Voltage Division discussed in Item 2 as if the disposition took
place on May 1, 2004. The Pro Forma Consolidated Balance Sheet also reflects the
paydown of $3.3 million of revolving credit borrowings with the assumed proceeds
from the Del High Voltage sale as if the transaction had occurred as of May 1,
2004. Assumed proceeds of the transaction were calculated applying working
capital and other adjustments as defined in the Asset Purchase Agreement to the
balance sheet as of May 1, 2004. Actual transaction proceeds based on the
working capital and other adjustments in effect as of the closing date were $3.1
million.
The Pro Forma Consolidated Statements of Operations for the fiscal year ended
August 2, 2003 and the nine months ended May 1, 2004 assume that the disposition
occurred on August 4, 2002 and August 3, 2003, respectively, and are based on
the operations of the Company for the periods then ended. Such pro forma
financial statements do not reflect any reduction in interest expense resulting
from the assumed debt paydown for both periods presented because the Company's
domestic credit facilities calculate interest on a minimum floor balance of
$5.0million and both actual and proforma debt balances were below the floor
balance level.
The unaudited pro forma consolidated financial statements have been prepared by
the Company based on adjustments necessary to reflect the disposition. The
unaudited pro forma consolidated financial statements presented herein are shown
for illustrative purposes only and are not necessarily indicative of the future
financial position or future results of operations of the Company or the results
of operations that would have actually occurred had the transaction been
effective as of the periods presented.
PROFORMA CONSOLIDATED BALANCE SHEET
1) To record $3.5 million selling price, as adjusted, transaction fees accrued
and the transfer of certain Del High Voltage assets and liabilities as defined
in the Asset Purchase Agreement. The transaction results in an estimated pretax
loss on disposal of $4.0 million as of May 1, 2004 posted to accumulated
deficit. No tax provision was provided on the estimated pretax loss because the
Company has fully valued its Deferred Tax assets, and as a result has stopped
recording additional tax benefits as explained more fully in the Financial
Statement Notes to the Company's Annual Report on Form 10-K for the Fiscal Year
ended August 2, 2003.
2) To record paydown of $ 3.3 million of revolving credit debt with proceeds
from the transaction.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended May 1, 2004 and Fiscal Year Ended August 2, 2003
3) Adjustment to subtract the results of the Del High Voltage division for the
period from Consolidated operations. As stated above, no interest rate
adjustments were made based on the assumed debt paydown with transaction
proceeds, due to minimum floor balance requirement on the Company's
domestic credit facilities. The Consolidated tax provision for both periods
results reflect certain valuation allowances taken against deferred tax
assets. No tax provision was allocated to the Del High Voltage division in
the Proforma Consolidated Statement of Operations because the transaction
was structured a sale of assets, and income tax related balances arising
from Del High Voltage operations remained with the parent Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DEL GLOBAL TECHNOLOGIES CORP.
(Registrant)
Date: October 7, 2004
By: /s/ Mark A. Koch
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Mark A. Koch
Principal Accounting Officer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
99.01 Asset Purchase Agreement by and
between the registrant and Spellman
High Voltage Electronics Corporation
dated October 1, 2004.
99.02 Lease Assignment by and among the
registrant, Spellman and DP 16 LLC
dated as of October 1, 2004.
