Exhibit 99.01
DEL GLOBAL TECHNOLOGIES ANNOUNCES
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FISCAL 2005 SECOND QUARTER RESULTS
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VALHALLA, N.Y. - March 17, 2005 -- DEL GLOBAL TECHNOLOGIES CORP. (DGTC)
Q2 FY 2005 HIGHLIGHTS
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o Net Income of $368,000, or $0.04 Per Basic and $0.03 Per Diluted Share,
Versus Net Loss of $12.4 Million, or $1.20 Per Basic and Diluted Share
o Operating Income Improves to $1.8 Million from an Operating Loss of $1.9
Million
o Consolidated Gross Margins Increase to 26.2% from 24.2%
o Company Receives Court Approval for its Previously Announced RFI Settlement
Del Global Technologies Corp. (DGTC) ("Del Global" or "the Company") today
announced operating results for its fiscal 2005 second quarter and six months
ended January 29, 2005, as well as summary balance sheet data (see attached
tables). These results, except for net income and earnings per share, are for
continuing operations and exclude the results of the Del High Voltage ("DHV")
division, which was sold on October 1, 2004.
FISCAL 2005 SECOND QUARTER RESULTS
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Consolidated net sales for the second quarter of fiscal 2005 were $26.6 million
versus the $26.9 million reported in the same period last year.
Sales at the Medical Systems Group were $22.9 million in the second quarter of
fiscal 2005, as compared to $23.8 million in the same period last year. The
Medical Systems Group's Italian subsidiary experienced lower sales during the
period because the increased strength of the Euro resulted in less attractive
pricing for their products in non-Euro denominated markets. This decrease was
offset by increased shipments of digital units domestically. Fiscal 2005 second
quarter sales at the Power Conversion Group increased 18.9% to $3.7 million from
$3.1 million in the second quarter of fiscal 2004 due to stronger government
sales.
Consolidated gross margin improved to 26.2% in the fiscal 2005 second quarter
from 24.2% in same period last year. Continued improvements in procurement,
decreased material costs as a percent of sales and lower scrap levels resulted
in a 31.7% gross margin at RFI Corporation ("RFI"), the remaining component of
the Power Conversion Group in the fiscal 2005 second quarter versus 26.5% in the
prior year period. Second quarter gross margin at the Medical Systems Group
increased to 25.3% from 23.9% in the prior year's second quarter, primarily
reflecting lower margins on a large tender order in the prior year.
Selling, general and administrative expenses ("SG&A") during the second quarter
of fiscal 2005 declined to 16.5% of sales from 17.9% of sales during the same
period last year, and from 17.5% during the first quarter of fiscal 2005. These
decreases reflected headcount reductions, offset by increased corporate legal
and accounting costs related to the previously disclosed strategic alternatives
program.
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Operating income for the second quarter of fiscal 2005 increased to $1.8 million
from an operating loss of $1.9 million in the same period last year. This was
largely due to an increase in consolidated gross margins, lower SG&A expenses
and the Company incurring litigation settlement costs of approximately $3.2
million in the second quarter of 2004 related to the RFI settlement versus $0.3
million of cost in the second quarter of fiscal 2005.
The Medical Systems Group posted operating income of $2.9 million in the second
quarter of fiscal 2005, a 45% increase from operating income of $2.0 million in
the same period last year. The Power Conversion Group had operating income of
$0.3 million for the second quarter of fiscal 2005, versus an operating loss of
$2.9 million in the comparable prior year period.
Net income for the fiscal 2005 second quarter improved to $368,000, or $0.03 per
diluted share, from a net loss of $12.4 million, or $1.20 per basic and diluted
share. The net loss for the fiscal 2004 second quarter included an income tax
valuation adjustment of $7.2 million, litigation settlement costs of $3.2
million and a loss from discontinued operations of $2.5 million, or $0.24 per
diluted share.
RFI SETTLEMENT RECEIVES COURT APPROVAL
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On March 15th sentencing occurred regarding the previously announced RFI
settlement. At sentencing the Court imposed an additional fine of $0.3 million
to be paid within 30 days. Other terms of the settlement remain unchanged.
BACKLOG
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Consolidated backlog at January 29, 2005 was $18.2 million versus backlog at
July 31, 2004 of approximately $25.9 million. The backlog in the Company's Power
Conversion Group decreased by $1.1 million from levels at beginning of the
current fiscal year. There was a $6.6 million decrease in the backlog at its
Medical Systems Segment, which reflects a decline due to $8.8 million in
shipments under large tender orders at its international location and a decrease
in incoming order rates due to the strong Euro. This decrease was partially
offset by increased bookings at our domestic operations. 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 January 29, 2005 reflected working capital of $9.2
million, shareholders' equity of $9.0 million and a stated book value of $.85
per share. As of January 29, 2005, the Company had approximately $2.9 million of
excess borrowing capacity under its domestic revolving line of credit.
COMPANY PROVIDES UPDATE ON STRATEGIC ALTERNATIVES
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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. On October 4, 2004, the Company announced that it had entered into
non-binding letters of intent for the sale of both the Medical Systems Group
Segment and RFI Corporation ("RFI"), the remainder of the Power Conversion Group
Segment. After continued negotiations regarding the sale, on January 18, 2005
the Company signed a new letter of intent for the Medical Systems Group with the
same potential buyer. This new letter of intent included a $1.0 million breakup
fee, payable by the Company in the event that no later than March 4, 2005 the
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March 17, 2005
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buyer was ready, willing and able to enter into a definitive purchase agreement
that was based on the terms of the letter of intent and contained reasonable and
customary representations, warranties, terms and conditions relating to the
transactions, and the Company elected not to enter into such purchase agreement.
While no definitive purchase agreement for the sale of Medical Systems Group has
yet been executed by them, the parties continue to negotiate. Although there can
be no assurance a breakup fee will not have to be paid, the Company believes
that no such fee is payable under the terms of the letter of intent.
The Company intends to call a meeting of its shareholders to seek shareholder
approval under New York law for a plan of sale and liquidation of the Company in
the event definitive agreements are entered into for either the sale of the
Medical Systems Group and RFI or only for the sale of the Medical Systems Group.
However, the Board of Directors of the Company has not yet approved any plan of
liquidation.
In the event that the Company is unable to secure a definitive agreement for the
sale of the Medical Systems Group, it presently intends not to sell RFI. The
Company may, however, enter into a definitive agreement to sell the Medical
Systems Group without such an agreement with respect to RFI which would then be
remarketed as part of the plan of sale and liquidation. The Company's present
intent is that without the approval by the Company's shareholders of a plan of
sale and liquidation, neither the Medical Systems Group nor RFI will be sold.
There can be no assurance that these non-binding letters of intent will result
in definitive agreements or the actual sale of these segments, or that the
strategic alternatives process initiated by the Company will lead to any other
transactions. Any proceeds that may be received by stockholders of the Company
as a result of any plan of liquidation may be more 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 Monday, March 21, 2005 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 (International). A taped replay of
the call will be available through 5:00 P.M. Eastern Time on March 28, 2005.
Please dial (800) 642-1687 (Domestic) or (706) 645-9291 (International) and
enter the number 4822845 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 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.
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
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capital facilities; favorable determinations in various legal and regulatory
matters; a settlement of the Department of Defense matter; that does not include
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.
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DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Six Months Ended
January 29, January 31, January 29, January 31,
2005 2004 2005 2004
-------- -------- -------- --------
NET SALES $ 26,609 $ 26,946 $ 45,367 $ 43,835
COST OF SALES 19,641 20,415 33,846 33,520
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GROSS MARGIN 6,968 6,531 11,521 10,315
Selling, general and administrative 4,396 4,818 7,672 8,264
Research and development 449 425 822 731
Litigation settlement costs 300 3,199 300 3,199
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Total operating expenses 5,145 8,442 8,794 12,194
OPERATING INCOME (LOSS) 1,823 (1,911) 2,727 (1,879)
Interest expense (259) (327) (681) (637)
Other (expense) income (26) (16) (12) 55
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INCOME (LOSS) FROM CONTINUING
OPERATION BEFORE INCOME TAXES
AND MINORITY INTEREST 1,538 (2,254) 2,034 (2,461)
INCOME TAX PROVISION 932 7,356 1,309 7,539
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INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE MINORITY INTEREST 606 (9,610) 725 (10,000)
MINORITY INTEREST 238 279 309 346
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INCOME (LOSS) FROM CONTINUING
OPERATIONS 368 (9,889) 416 (10,346)
Discontinued operations -- (2,465) 199 (2,618)
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NET INCOME (LOSS) $ 368 $(12,354) $ 615 $(12,964)
======== ======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE-
DILUTED
Continued operations $ 0.03 $ (0.96) $ 0.03 $ (1.00)
-------- -------- -------- --------
Discontinued operations $ -- $ (0.24) $ 0.02 $ (0.25)
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Basic and diluted, net $ 0.03 $ (1.20) $ 0.05 $ (1.25)
======== ======== ======== ========
Weighted average number of common shares outstanding:
Basic 10,477 10,333 10,415 10,333
Diluted 11,416 10,333 11,407 10,333
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DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY BALANCE SHEETS
(Dollars in Thousands, except per share data)
(Unaudited)
January 29, 2005 July 31, 2004
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Current Assets $34,324 $38,214
Total Assets $45,662 $49,261
Current Liabilities $25,102 $30,450
Total Liabilities $35,041 $40,097
Minority Interest in Subsidiary $ 1,369 $ 1,389
Shareholders' Equity $ 8,952 $ 7,775
Common Shares Outstanding End of Period 10,508 10,335
Book Value Per Share $ .85 $ 0.75
CONTACT:
Del Global Technologies Corp. INVESTOR RELATIONS:
Walter F. Schneider, President & Chief Executive Officer The Equity Group Inc.
Mark Koch, Principal Accounting Officer Devin Sullivan (212) 836-9608
(914) 686-3650 Adam Prior (212) 836-9606
