Exhibit 99.1
FOR IMMEDIATE RELEASE
DEL GLOBAL TECHNOLOGIES ANNOUNCES FISCAL 2006 SECOND QUARTER RESULTS
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VALHALLA, NY - March 15 2006 -- Del Global Technologies Corp. (DGTC) ("Del
Global" or "the Company") today announced operating results for its fiscal 2006
second quarter ended January 28, 2006, 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, sold on October 1, 2004.
DHV results are treated as discontinued operations.
FISCAL 2006 SECOND QUARTER RESULTS
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Consolidated net sales for the second quarter of fiscal 2006 were $22.0 million
versus the $26.6 million in the same period last year. Sales at the Medical
Systems Group decreased to $19.0 million from $22.9 million in the same period
last year. Medical Systems Group U.S. sales were impacted by the consolidation
of two medical national distribution organizations. The resultant consolidation
and reorganization at these distributors resulted in lower sales to the combined
entity. International sales declined due primarily to the effect of a $4.4
million order that was realized in the fiscal 2005 second quarter; there were no
orders of similar magnitude realized in the fiscal 2006 second quarter. However,
as discussed below, increased international bookings at the Medical Systems
Group during the second quarter of fiscal 2006 have increased backlog at this
segment by $4.1 million. Fiscal 2006 second quarter sales at the Power
Conversion Group ("RFI") decreased to $3.0 million from $3.7 million in the
second quarter of fiscal 2005 due to lower demand from two major customers.
Consolidated gross margin decreased to 23.7% in the fiscal 2006 second quarter
from 26.2% in same period last year. Gross margin at the Medical Systems Group
declined to 22.6% from 25.3% in the prior year period due to an unfavorable
product mix and lower sales at both the U.S. and Italian locations. Gross margin
at RFI also declined slightly due to the impact of lower sales.
Selling, general and administrative expenses ("SG&A") during the second quarter
of fiscal 2006 declined to $3.8 million from $4.4 million in the same period
last year, due to reduced legal and corporate expenses, and lower selling costs
at RFI. However, these costs increased as a percentage of sales to 17.2% in the
second quarter of fiscal 2006 from 16.5% in the same period last year.
Consolidated operating income for the second quarter of fiscal 2006 was $1.0
million versus $1.8 million for the prior year period. The Medical Systems Group
posted operating income of $1.31 million in the second quarter of fiscal 2006 as
compared to $2.87 million in the same period last year. Operating income at RFI
improved during the fiscal 2006 second quarter to $382,000 from $258,000 in the
same period last year due to lower operating costs.
The Company's consolidated provision for income taxes, as a percentage of pre
tax income in the second quarter of fiscal 2006 was substantially higher than
the provision in the comparable prior year period. While the Company recorded no
income tax provisions for its U.S. operations, such provisions were realized for
the pretax income generated by its Italian subsidiary, Villa Sistemi Medicali
S.p.A.. On a percentage basis, the provision for income taxes reflects the
relative contributions of the US versus Italian operations to pretax operating
results.
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Lower sales and operating income, combined with this higher provision for income
taxes, resulted in a net loss for the second quarter of fiscal 2006 of $60,000
or $0.01 per diluted share, compared to net income of $368,000, or $0.03 per
diluted share, in the same period last year.
BACKLOG
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Consolidated backlog at January 28, 2006 was $17.1 million versus backlog at
July 30, 2005 of approximately $14.6 million. Backlog at the Medical Systems
Group increased by $4.1 million from July 30, 2005 levels, primarily reflecting
strong international bookings during the quarter. Backlog at the Power
Conversion Group decreased by $1.6 million from levels at beginning of the
fiscal year, reflecting lower government demand. Substantially all of the
backlog should result in shipments within the next 12 months.
COMMENTS
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Walter F. Schneider, President and Chief Executive Officer of Del Global
commented, "The Medical Systems Group's performance in the US was lower than we
expected, due to a consolidation-related disruption of the U.S. distribution
network. While we address this U.S. sales issue, we are pleased to note the
higher backlog at the Medical Systems Group, which indicates that our
international efforts are yielding results. During the quarter we also acquired
the remaining minority position of Villa in order to better integrate its
respected brands more completely into the Medical Systems Group global sales
effort. While RFI's sales declined, the cost savings measures we have put in
place resulted in higher operating income. These cost savings inititaves should
yield even greater results once a positive sales trend at RFI is
re-estabslished."
FINANCIAL CONDITION
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Del Global's balance sheet at January 28, 2006 reflected working capital of $8.4
million, shareholders' equity of $11.8 million and a stated book value of $1.01
per share. As of January 28, 2006, the Company had approximately $0.8 million of
excess borrowing capacity under its domestic revolving line of credit compared
to $0.5 million at July 30, 2005.
INVESTOR CONFERENCE CALL
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Walter F. Schneider, President and Chief Executive Officer, and Mark A. Koch,
Principal Accounting Officer, will host a conference call on Wednesday, March
15, 2006 at 4:00 PM. Eastern Time to discuss these results. 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 Monday, March 20, 2006. Please dial (800) 642-1687 (Domestic) or
(706) 645-9291 (International) and enter the number 3395828 to listen to the
replay. In addition, the conference call will be broadcast live over the
Internet under the "Investor Relations" section of Del Global's web site at
WWW.DELGLOBAL.COM; click on "Presentations & Webcasts." 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.
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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 The Equity Group Inc.
& Chief Executive Officer Devin Sullivan (212) 836-9608
Mark Koch, Principal Accounting Officer Maura Gedid (212) 836-9605
(914) 686-3650
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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
JAN. 28, JAN. 29, JAN. 28, JAN. 29,
2006 2005 2006 2005
-------- -------- -------- --------
NET SALES $ 21,994 $ 26,609 $ 38,233 $ 45,367
COST OF SALES 16,780 19,641 29,284 33,846
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GROSS MARGIN 5,214 6,968 8,949 11,521
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Selling, general and administrative 3,773 4,396 6,772 7,672
Research and development 429 449 782 822
Litigation settlement costs -- 300 500 300
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Total operating expenses 4,202 5,145 8,054 8,794
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OPERATING INCOME 1,012 1,823 895 2,727
Interest expense (384) (259) (594) (681)
Other income/(expense) (53) (26) (40) (12)
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INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAX
PROVISION AND MINORITY INTEREST 575 1,538 261 2,034
Income tax provision 524 932 696 1,309
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INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE MINORITY INTEREST 51 606 (435) 725
Minority interest 111 238 108 309
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INCOME (LOSS) FROM CONTINUING
OPERATIONS (60) 368 (543) 416
Discontinued operations -- -- -- 199
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NET INCOME(LOSS) $ (60) $ 368 $ (543) $ 615
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INCOME(LOSS)PER COMMON SHARE-BASIC
Continuing operations $ (0.01) $ 0.04 $ (0.05) $ 0.04
Discontinued operations -- -- -- 0.02
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Net income(loss) per basic share $ (0.01) $ 0.04 $ (0.05) $ 0.06
======== ======== ======== ========
INCOME (LOSS) PER COMMON SHARE-DILUTED
Continuing operations $ (0.01) $ 0.03 $ (0.05) $ 0.03
Discontinued operations -- -- -- 0.02
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Net income(loss)per diluted share $ (0.01) $ 0.03 $ (0.05) $ 0.05
======== ======== ======== ========
Weighted average number of common
shares outstanding (in thousands):
Basic 11,077 10,477 10,854 10,415
Diluted 11,077 11,416 10,854 11,407
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DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
January 28, 2006 July 30, 2005
Current Assets $ 34,158 $ 31,260
Total Assets $ 48,434 $ 40,776
Current Liabilities $ 25,731 $ 21,138
Total Liabilities $ 36,680 $ 30,275
Minority Interest in Subsidiary $ -- $ 1,273
Shareholders' Equity $ 11,756 $ 9,228
Common Shares Outstanding End of Period 11,602 10,335
Book Value Per Share $ 1.01 $ 0.89
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