DEL GLOBAL TECHNOLOGIES ANNOUNCES FISCAL 2005 FIRST QUARTER RESULTS
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Q1 FY 2005 HIGHLIGHTS VERSUS Q1 FY 2004
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Valhalla, N.Y. - Dec. 13, 2004 -- Del Global Technologies Corp. (DGTC):
o Net Sales from Continuing Operations up 11.1% to $18.8 Million
o Consolidated Gross Margins Increase to 24.3% from 22.4%
o Operating Income from Continuing Operations Improves to $904,000 from
$33,000
o Net Income of $247,000, or $.02 Per Diluted Share, Versus Net Loss of
$609,000, or ($0.06) Per Diluted Share
Del Global Technologies Corp. (DGTC) ("Del Global" or "the Company") today
announced operating results for its fiscal 2005 first quarter ended October 30,
2004, as well as summary balance sheet data (see attached tables). Results
presented herein, except for net income and earnings per share, are for
continuing operations and exclude the results of the DHV division, which was
sold on October 1, 2004.
FISCAL 2005 FIRST QUARTER RESULTS
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Consolidated net sales for the first quarter of fiscal 2005 increased 11.1% to
$18.8 million from $16.9 million in the same period last year, due to higher
sales at both the Medical Systems Group and Power Conversion Group. Sales at the
Medical Systems Group rose 12.2% to $15.4 million in the first quarter of fiscal
2005 from $13.7 million in the same period last year. This increase was due
primarily to higher international sales, which offset lower domestic sales due
to delayed shipments of digital units. International sales for the first quarter
of fiscal 2005 were also impacted by favorable exchange rate effects from the
translation of Villa's financial statements from euros to dollars of
approximately $700,000. Fiscal 2005 first quarter sales at the Power Conversion
Group increased 6.2% to $3.4 million from $3.2 million in the first quarter of
fiscal 2004.
Consolidated gross margin improved to 24.3% in the fiscal 2005 first quarter
from 22.4% in same period last year. Improvements in procurement, decreased
material costs as a percent of sales and lower scrap levels resulted in fiscal
2005 first quarter gross margin at the Power Conversion Group of 29% versus
15.7% in the prior year period. First quarter gross margin at the Medical
Systems Group declined to 23.2% from 24.0% in the prior year first quarter due
to a less favorable product mix.
Selling, general and administrative expenses ("SG&A") during the first quarter
of fiscal 2005 declined to 17.5% of sales from 20.4% of sales during the same
period last year. These decreases were the result of reduced corporate legal and
accounting costs, and reduced selling costs at the Power Conversion Group.
Operating income for the first quarter of fiscal 2005 increased to $904,000 from
operating income of $33,000 in the same period last year. Operating income at
the Medical Systems Group for the first quarter of fiscal 2005 was $1,196,000
DEL GLOBAL TECHNOLOGIES Page 2
DECEMBER 13, 2004
versus $906,000 in the same period last year, while the Power Conversion Group
had operating income of $448,000 for the first quarter of fiscal 2005, versus an
operating loss of $73,000 in the comparable prior year period. Unallocated
corporate costs for the current period and prior period were $740,000 and
$800,000, respectively.
Net income for the fiscal 2005 first quarter improved to $247,000, or $0.02 per
diluted share, from a net loss of $609,000, or $0.06 per diluted share. Net
income for the fiscal 2005 first quarter included income from discontinued
operations of $199,000, or $0.02 per diluted share, related to the previously
disclosed sale of the Del High Voltage ("DHV") division on October 1, 2004. The
net loss for the fiscal 2004 first quarter included a loss from discontinued
operations of $153,000, or $0.01 per diluted share.
BACKLOG
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Consolidated backlog at October 30, 2004 was $24.0 million versus backlog at
July 31, 2004 of approximately $25.9 million. The backlog in the Company's Power
Conversion Group decreased by $300,000 from levels at beginning of the current
fiscal year while there was a $1.6 million decrease in the backlog at its
Medical Systems Segment reflecting shipments under a previously announced
Romanian order. Substantially all of the backlog should result in shipments
within the next 12 months.
FINANCIAL CONDITION
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Del Global's balance sheet at October 30, 2004 reflected working capital of $7.3
million, shareholders' equity of $7.8 million and a stated book value of $0.75
per share. As of October 30, 2004, the Company had approximately $2.9 million of
excess borrowing capacity under its domestic revolving line of credit. During
the first quarter of fiscal 2005, the company paid a $5.0 million fine to the US
Government, pursuant to the previously disclosed RFI settlement.
CORPORATE OVERVIEW
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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, and has entered into non-binding letters of intent for the sale of
both the Medical Systems Group Segment and the remainder of the Power Conversion
Group Segment. The Company intends to seek stockholder approval under New York
law for the sale of the Medical Systems Group Segment in the event a definitive
agreement is entered into for such sale. There can be no assurance that these
non-binding letters of intent will result in the consummation of the sale of
these segments or that the strategic alternatives process initiated by the
Company will lead to any other transactions. The Company may seek stockholder
approval of a plan of liquidation; however, the Board of Directors of the
Company has not yet approved any plan of liquidation. Any proceeds that may be
received by stockholders of the Company as a result of any plan of liquidation
may be greater or less than the current market price of the Common Stock of the
Company.
INVESTOR CONFERENCE CALL
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Suzanne M. Hopgood, Chairman of the Board, Walter F. Schneider, President and
Chief Executive Officer, and Mark A. Koch, Principal Accounting Officer, will
host a conference call on Tuesday, December 14, 2004 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. A taped replay of the call will
be available through 5:00 P.M. Eastern Time on December 21, 2004. Please dial
(800) 642-1687 (Domestic) or (706) 645-9291 (International) and enter the number
2856875 to listen to the replay. In addition, the conference call will be
broadcast live over the Internet 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 and install any
DEL GLOBAL TECHNOLOGIES Page 3
DECEMBER 13, 2004
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 Web site
for approximately five business days.
Del Global Technologies Corp. is primarily engaged in the design, manufacture
and marketing of cost-effective medical imaging and diagnostic systems
consisting of stationary and portable x-ray 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 within the meaning of the Private Securities
Litigation Reform Act 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 and regulatory
matters; court approval of the settlement agreement with the US Government
regarding the Department of Defense matter; the ability of Del Global to avoid a
debarment from doing business with the U.S. Government; market and operating
risks 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.
CONTACT:
DEL GLOBAL TECHNOLOGIES CORP. INVESTOR RELATIONS:
Walter F. Schneider, President & The Equity Group Inc.
Chief Executive Officer Devin Sullivan (212) 836-9608
Mark Koch, Principal Accounting Officer Adam Prior (212) 836-9606
(914) 686-3650
DEL GLOBAL TECHNOLOGIES Page 4
DECEMBER 13, 2004
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
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OCTOBER 30, NOVEMBER 1,
2004 2003
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NET SALES $ 18,758 $ 16,889
COST OF SALES 14,205 13,105
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GROSS MARGIN 4,553 3,784
Selling, general and administrative 3,276 3,445
Research and development 373 306
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Total operating expenses 3,649 3,751
OPERATING INCOME 904 33
Interest expense 422 310
Other (income) (14) (71)
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INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAX
PROVISION AND MINORITY INTEREST 496 (206)
INCOME TAX PROVISION 377 183
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NET INCOME (LOSS)
BEFORE MINORITY INTEREST 119 (389)
MINORITY INTEREST 71 67
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INCOME (LOSS) FROM CONTINUING OPERATIONS 48 (456)
DISCONTINUED OPERATIONS 199 (153)
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NET INCOME (LOSS) $ 247 $ (609)
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NET INCOME(LOSS) PER COMMON SHARE
Continuing operations $ -- $ (0.05)
Discontinued operations $ 0.02 $ (0.01)
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Basic and diluted, net $ 0.02 $ (0.06)
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Weighted average number of common shares outstanding:
Basic 10,351,746 10,332,548
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Diluted 11,397,939 10,332,548
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DEL GLOBAL TECHNOLOGIES Page 5
DECEMBER 13, 2004
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
OCTOBER 30, 2004 JULY 31, 2004
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Current Assets $28,872 $38,214
Total Assets $39,778 $49,261
Current Liabilities $21,536 $30,450
Total Liabilities $30,958 $40,097
Minority Interest in Subsidiary $ 989 $ 1,389
Shareholders' Equity $ 7,831 $ 7,775
Common Shares Outstanding End of Period 10,375 10,335
Book Value Per Share $ 0.75 $ 0.75
