EXHIBIT 99.01
FOR IMMEDIATE RELEASE
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DEL GLOBAL TECHNOLOGIES ANNOUNCES FISCAL 2005 THIRD QUARTER RESULTS
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VALHALLA, NY - June 14, 2005 -- DEL GLOBAL TECHNOLOGIES CORP. (DGTC) ("Del
Global" or "the Company") today announced operating results for its fiscal 2005
third quarter and nine months ended April 30, 2005, as well as summary balance
sheet data (see attached tables). These results are for continuing operations
and exclude the results of the Del High Voltage ("DHV") division, which was sold
on October 1, 2004.
FISCAL 2005 THIRD QUARTER RESULTS
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Consolidated net sales for the third quarter of fiscal 2005 were $18.9 million
versus the $20.6 million in the same period last year.
Sales at the Medical Systems Group were $15.4 million in the third quarter of
fiscal 2005, as compared to $17.4 million in the same period last year. Lower
sales were attributable to decreased international shipments due to the strong
euro causing pricing for international products to be less attractive in
non-euro denominated markets, as well as lower domestic shipments. The Company
is obtaining international certifications for certain of its domestically
manufactured product in order to have U.S. dollar based offerings in these
non-euro denominated economies. Fiscal 2005 third quarter sales at the Power
Conversion Group ("RFI") increased to $3.5 million from $3.2 million in the same
period one year ago, reflecting stronger government sales.
Consolidated gross margin improved to 25.4% in the fiscal 2005 third quarter
from 24.4% in same period last year, led by significant gross margin improvement
at RFI and offset by slightly lower gross margins at the Medical Systems Group.
Improved gross margin at RFI was due to better procurement practices, lower
materials costs as a percentage of sales and lower waste levels. Unfavorable
product mix at the Medical Systems Group produced lower gross margin.
Selling, general and administrative expenses ("SG&A") during the third quarter
of fiscal 2005 increased to $4.9 million, or 25.8% of sales, from $3.4 million,
or 16.4% of sales, in last year's fiscal third quarter. While SG&A in the third
quarter of fiscal 2005 benefited from head count reductions, these benefits were
offset by the inclusion of approximately $1.1 million in legal and professional
expenses related to the previously disclosed strategic alternatives program,
which program was terminated in March 2005.
The Medical Systems Group posted operating income of $385,000 in the third
quarter of fiscal 2005 as compared to operating income of $1.6 million in the
same period last year. This decline was attributable to lower overall sales,
material costs related to digital products, engineering related to obtaining
C.E. marking and selling commissions for international product. Operating income
at RFI during the fiscal 2005 third quarter improved to $697,000 from $343,000
in the same period last year.
The loss from continuing operations for the third quarter of fiscal 2005 was
$1.0 million as compared to a loss from continuing operations of $709,000 in the
fiscal 2004 third quarter. The loss for the third quarter of fiscal 2005
included the aforementioned $1.1 million in legal and professional expenses
related to the strategic alternatives program. The loss for the third quarter of
fiscal 2005 also included interest expense of $297,000 versus interest expense
of $908,000 in the third quarter of fiscal 2004, and an income tax provision of
$248,000 as compared to an income tax provision of $940,000 in the comparable
prior year period.
Del Global Technologies Page 2
June 14, 2005
The net loss for the third quarter of fiscal 2005 was $1.0 million, or $0.10 per
diluted share, as compared to a net loss of $289,000, or $0.03 per diluted
share, in the same period last year. The aforementioned factors impacted the net
loss for the third quarters of fiscal 2005 and fiscal 2004. Additionally, the
net loss for the third quarter of fiscal 2004 included income from discontinued
operations of $420,000, or $0.04 per diluted share, versus no such gain or loss
in the fiscal 2005 third quarter.
Walter F. Schneider, President and Chief Executive Officer of Del Global
commented, "We are taking steps to mitigate the impact of currency exchange
rates at the Medical Systems Group. RFI, meanwhile, continues to generate
increased sales and higher gross margin. The majority of the loss for the third
quarter of fiscal 2005 was attributable to the costs and expenses incurred with
the now terminated strategic alternatives plan; we do not expect to incur such
expenses going forward. We are fully focused on advancing our stand alone
operating strategy, and strengthening our operations through new products
introductions, benchmark after-sales service and customer gains."
BACKLOG
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Consolidated backlog at April 30, 2005 was $16.6 million versus backlog at July
31, 2004 of approximately $25.9 million. The backlog at RFI decreased $1.2
million from levels at the beginning of the fiscal year while there was an $8.0
million decrease in the backlog at the Medical Systems Group. Backlog at the
Medical Systems Group reflects declines due to shipments in August and October
2004 of approximately $6.8 million under a large international tender order, as
well as a decrease in incoming order rates due to the strong euro, partially
offset by an increase in backlog at the domestic operation due to strong
bookings during the period. 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 April 30, 2005 reflected working capital of $7.6
million, shareholders' equity of $7.7 million and a stated book value of $.73
per share. As of April 30, 2005, the Company had approximately $900,000 of
excess borrowing capacity under its domestic revolving line of credit.
During the third quarter of fiscal 2005, Del Global was in compliance with the
various covenants of its domestic credit facility (the Facility"), with the
exception of the fixed charge coverage ratio. On June 9, 2005 the Company and
its lender signed the Ninth Amendment to the Facility. This Ninth Amendment
waived the event of default arising from the Company's non-compliance with the
fixed charge coverage ratio covenant. In addition the Ninth Amendment lowered
the minimum availability covenant under the line from $500,000 to $250,000. Del
Global intends to refinance the Facility and any related debt before the August
1, 2005 expiration. No assurance can be given that Del Global will be able to
refinance the Facility on terms acceptable to Del Global or at all. The failure
to refinance the Facility would have a material adverse effect on Del Global.
INVESTOR CONFERENCE CALL
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James Henderson, 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 Wednesday, June 15, 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 June 22, 2005. Please
dial (800) 642-1687 (Domestic) or (706) 645-9291 (International) and enter the
number 7120183 to listen to the replay. In addition, the conference call will be
broadcast live over the Internet via the "Presentations and Webcasts" 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 Page 3
June 14, 2005
ABOUT DEL GLOBAL TECHNOLOGIES
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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 matters; 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.
DEL GLOBAL TECHNOLOGIES CORP. INVESTOR RELATIONS:
Walter F. Schneider, President & Chief The Equity Group Inc.
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
June 14, 2005
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
April 30, May 1, April 30, May 1,
2005 2004 2005 2004
---- ---- ---- ----
NET SALES $ 18,892 $ 20,610 $ 64,259 $ 64,445
COST OF SALES 14,091 15,590 47,937 49,110
-------- -------- -------- --------
GROSS MARGIN 4,801 5,020 16,322 15,335
Selling, general and administrative 4,874 3,375 12,546 11,639
Research and development 446 413 1,268 1,144
Litigation settlement costs -- -- 300 3 199
-------- -------- -------- --------
Total operating expenses 5,320 3,788 14,114 15,982
OPERATING INCOME (LOSS) (519) 1,232 2,208 (647)
Interest expense (297) (908) (978) (1,545)
Other income 46 46 34 101
-------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING
OPERATION BEFORE INCOME TAXES
AND MINORITY INTEREST (770) 370 1,264 (2,091)
INCOME TAX PROVISION 248 940 1,557 8,479
-------- -------- -------- --------
LOSS FROM CONTINUING
OPERATIONS BEFORE MINORITY INTEREST (1,018) (570) (293) (10,570)
MINORITY INTEREST 13 139 322 485
-------- -------- -------- --------
LOSS FROM CONTINUING
OPERATIONS (1,031) (709) (615) (11,055)
Discontinued operations -- 420 199 (2,198)
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NET LOSS $ (1,031) $ (289) $ (416) $(13,253)
======== ======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE
BASIC AND DILUTED
Continued operations $ (0.10) $ (0.07) $ (0.06) $ (1.07)
-------- -------- -------- --------
Discontinued operations $ -- $ 0.04 $ 0.02 $ (0.21)
-------- -------- -------- --------
Basic and diluted, net $ (0.10) $ (0.03) $ (0.04) $ (1.28)
======== ======== ======== ========
Weighted average number of common shares outstanding:
Basic and Diluted 10,517 10,333 10,449 10,333
======== ======== ======== ========
Del Global Technologies Page 5
June 14, 2005
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY BALANCE SHEETS
(Dollars in Thousands, except per share data)
(Unaudited)
April 30, 2005 July 31, 2004
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Current Assets $ 29,415 $ 38,214
Total Assets $ 40,280 $ 49,261
Current Liabilities $ 21,844 $ 30,450
Total Liabilities $ 31,321 $ 40,097
Minority Interest in Subsidiary $ 1,299 $ 1,389
Shareholders' Equity $ 7,660 $ 7,775
Common Shares Outstanding End of Period 10,563 10,335
Book Value Per Share $ 0.73 $ 0.75
