Exhibit 99.1
DEL
GLobal
Technologies
Corp.
FOR IMMEDIATE RELEASE
DEL GLOBAL TECHNOLOGIES REPORTS FISCAL 2007 THIRD QUARTER FINANCIAL RESULTS
COMPANY TO CONDUCT CONFERENCE CALL ON JUNE 8, 2007
Q3 FY 2007 HIGHLIGHTS
o Net sales rose 30.4% to $27.1 Million
o Operating income up 138.0% to $2.0 million
o Net income of $1.1 million, or $0.06 per diluted share
o Consolidated backlog at April 28, 2007 increased to $39.8 million
FRANKLIN PARK, IL - JUNE 6, 2007 -- DEL GLOBAL TECHNOLOGIES CORP. (OTCBB: DGTC)
("Del Global" or "the Company") today announced financial results for its fiscal
2007 third quarter ended April 28, 2007.
Consolidated net sales for the third quarter of fiscal 2007 increased 30.4% to
$27.1 million from $20.8 million in the third quarter of fiscal 2006, due
primarily to higher sales at the Medical Systems Group. Net sales at the Medical
Systems Group rose 31.4% to $23.2 million from $17.6 million in the comparable
prior year period. Sales were favorably impacted by increased international
sales, stronger than expected dental systems sales, and increased sales of
higher-priced digital products. Sales at the Power Conversion Group ("RFI") rose
24.5% to $3.9 million from $3.2 million in the prior year period.
Consolidated gross margin improved to 22.2% of sales during the third quarter of
fiscal 2007 from 21.6% of sales in the third quarter of fiscal 2006, due
primarily to the impact of higher sales volume. Gross margin at the Medical
Systems Group during the third quarter of fiscal 2007 improved to 19.6% from
19.0% in the prior year's third quarter, due primarily to higher sales volume,
partially offset by lower margins associated with increased sales of digital
products. While digital products generally have a higher selling price than the
non-digital product offerings, they also have a higher cost of sales resulting
in lower gross margin percentages. Gross margin at RFI improved to 37.7% in the
fiscal 2007 third quarter from 36.6% in the fiscal 2006 third quarter.
Selling, general and administrative expenses ("SG&A") for the third quarter
declined to 12.8% of net sales from 15.9% of net sales in the prior year's third
quarter, as higher net sales offset a modest increase in expenses on a dollar
basis. Higher research and development expense in the third quarter of fiscal
2007 reflected investments associated with developing new digital medical,
chiropractic, veterinary and dental equipment. Total operating expenses declined
to 14.8% of net sales from 17.6% of net sales in the same period one year ago.
Operating income for the fiscal 2007 third quarter was $2.0 million, a $1.2
million increase from the comparable prior year period. Operating income at
the Medical Systems Group rose 137.1% to $1.3 million from $0.5 million in the
third quarter of fiscal 2006. RFI generated operating income of $0.9 million as
compared to $0.7 million in the same period one year ago, and unallocated
corporate expenses of $0.2 million in the third quarter of fiscal 2007 decreased
by $0.2 million from the same period a year ago.
Net interest expense for the third quarter of fiscal 2007 declined by $0.1
million due to lower borrowing balances compared to the prior year period, as
well as income earned on the net proceeds generated by the previously announced
Rights Offering, which was completed on March 12, 2007. Del Global sold
approximately 12.0 million shares of its common stock at $1.05 per share in the
Rights Offering, generating total net proceeds of $12.4 million.
Del Global Technologies Corp. Page 2
June 6, 2007
The Company has not provided for a U.S. income tax benefit in the third quarter
of fiscal 2007. With the exception of tax provisions and adjustments recorded at
Villa, Del Global's Italian subsidiary, the Company recorded no adjustments to
its current or net deferred tax accounts during the current and prior year's
third quarter.
Del Global reported net income in the third quarter of fiscal 2007 of $1.1
million, or $0.06 per diluted share on approximately 17.6 million weighted
average common shares outstanding ("shares outstanding"), as compared to a net
loss of $0.1 million, or $0.01 per diluted share on approximately 11.6 million
shares outstanding, in the third quarter of fiscal 2006. The higher number of
outstanding shares in the fiscal 2007 third quarter was due primarily to the
impact of shares issued in the Rights Offering.
BACKLOG
Consolidated backlog at April 28, 2007 rose 77.7% to $39.8 million from $22.4
million at July 29, 2006. Backlog at the Medical Systems Group rose by $18.5
million from July 29, 2006 levels, reflecting strong international bookings
during the nine-month period ended April 28, 2007. RFI's backlog declined by
$1.1 million from the beginning of the fiscal year, due to the shipping of
orders affected by procurement delays in the first and second quarters of fiscal
2007. Substantially all of the backlog should result in shipments within the
next 12 months.
FINANCIAL CONDITION
Del Global's balance sheet at April 28, 2007 reflected working capital of $22.7
million, which included $6.1 million of cash and cash equivalents, shareholders'
equity of $27.8 million, and a net book value of $1.15 per share. As of April
28, 2007, Del Global had approximately $5.0 million of excess borrowing
availability under its domestic revolving credit facility compared to $1.0
million at July 29, 2006. As of April 28, 2007, Del Global's Villa subsidiary
had an aggregate of approximately $10.8 million of excess borrowing availability
under its various short-term credit facilities. Terms of the Italian credit
facilities do not permit the use of borrowing availability to directly finance
operating activities at Del Global's U.S. subsidiaries.
On June 1, 2007, the Company entered into an Amended and Restated Loan Agreement
with its domestic bank, North Fork Business Capital Corporation. The terms of
the Original Loan Agreement were amended to provide for an increase in the
revolving credit facility from $6 million to $7.5 million and to provide for a
line of $1.5 million to be utilized for the purchase of new equipment, resulting
in a total credit facility of $9 million, plus various changes to financial and
other covenants.
COMMENTS
James A. Risher, Del Global's President and Chief Executive Officer commented,
"We are very pleased with the progress we are continuing to make in
strengthening our operations and enhancing shareholder value. We achieved
improvements in sales and profits, increased total backlog, and bolstered our
competitive position by making the necessary investments in our products,
people, and infrastructure. Sales growth in the Medical Systems Group was
particularly strong during the quarter, in part reflecting our success in
winning some large domestic and international tenders. While we continue to
aggressively pursue these opportunities there are no assurances that we can
achieve this same level of success in future quarters. We have also improved Del
Global's financial position, as evidenced by positive operating cash flow
through the first nine months of fiscal 2007, an increased cash position, and
improved debt profile. Recently, we took an important step in increasing the
liquidity of Del Global's common stock and elevating the Company's profile in
the investment community with the May 11th listing on the OTC Bulletin Board."
Del Global Technologies Corp. Page 3
June 6, 2007
RFI
As previously disclosed, on May 24, 2007 RFI was served with a subpoena to
testify before a grand jury from the United States District Court, Eastern
District of New York to provide items and records from its Bay Shore, New York
offices regarding U.S. Department of Defense contracts and a search warrant from
the United States District Court, Eastern District of New York was issued and
executed with respect to such offices. Del Global believes it is in full
compliance with the quality standards its customers require and is fully
cooperating with investigators to assist them with their review. RFI is
continuing to ship products to the U.S. Government as well as its commercial
customers.
INVESTOR CONFERENCE CALL
Del Global will host a conference call on Friday, June 8, 2007 at 11:00 am
Eastern Time / 10:00 am Central 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
11:59 P.M. Eastern Time on June 29, 2007. Please dial (800) 642-1687 (Domestic)
or (706) 645-9291 (International) and enter the number 3372943 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.
ABOUT DEL GLOBAL TECHNOLOGIES
Del Global Technologies Corp. is primarily engaged in the design, manufacture
and marketing of high performance diagnostic imaging systems for medical, dental
and veterinary applications through the Del Medical Systems Group. Through its
U.S. based Del Medical Imaging Corp. and Milan, Italy based Villa Sistemi
Medicali S.p.A. subsidiaries the Company offers a broad portfolio of general
radiographic, radiographic/fluoroscopic, portable x-ray and digital radiographic
systems to the global marketplace. Through its RFI subsidiary, Del Global
manufactures proprietary high-voltage power conversion subsystems including
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. The company's web site is
www.delglobal.com.
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.: MEDIA RELATIONS:
James A. Risher M. Thomas Boon
Chief Executive Officer VP Global Sales and Marketing
(847) 288-7065 (847) 288-7023
Mark A. Zorko THE EQUITY GROUP INC.
Chief Financial Officer Devin Sullivan
(847) 288-7003 Senior Vice President
(212) 836-9608
Del Global Technologies Corp. Page 4
June 6, 2007
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Nine Months Ended
April 28, April 29, April 28, April 29,
2007 2006 2007 2006
--------- --------- --------- ---------
Net Sales $ 27,122 $ 20,804 $ 73,179 $ 59,037
Cost of Sales 21,097 16,302 56,408 45,586
-------- -------- -------- --------
Gross Margin 6,025 4,502 16,771 13,451
-------- -------- -------- --------
Selling, General and Administrative 3,465 3,299 10,455 10,071
Research and Development 540 409 1,508 1,191
Litigation Settlement Costs -- (55) -- 445
-------- -------- -------- --------
Total Operating Expenses 4,005 3,653 11,963 11,707
-------- -------- -------- --------
Operating Income 2,020 849 4,808 1,744
Interest Income 44 -- 44 --
Interest Expense (241) (349) (929) (943)
Other Expense (34) (205) (62) (245)
-------- -------- -------- --------
Net Income Before Income Tax Provision and
Minority Interest 1,789 295 3,861 556
Income Tax Provision 733 368 2,210 1,064
-------- -------- -------- --------
Net Income (Loss) Before Minority Interest 1,056 (73) 1,651 (508)
Minority Interest Expense -- -- -- 108
-------- -------- -------- --------
Net Income (Loss) $ 1,056 $ (73) $ 1,651 $ (616)
======== ======== ======== ========
Net Income (Loss) Per Basic Share $ 0.06 $ (0.01) $ 0.12 $ (0.06)
======== ======== ======== ========
Net Income (Loss) Per Diluted Share $ 0.06 $ (0.01) $ 0.12 $ (0.06)
======== ======== ======== ========
Weighted Average Number of Common Shares
Outstanding:
Basic 17,222 11,635 13,509 11,114
======== ======== ======== ========
Diluted 17,577 11,635 13,808 11,114
======== ======== ======== ========
Del Global Technologies Corp. Page 5
June 6, 2007
DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
April 28, 2007 July 29, 2006
-------------- -------------
Current Assets $49,943 $34,959
Total Assets $64,026 $49,153
Current Liabilities $27,263 $28,024
Total Liabilities $36,271 $36,339
Shareholders' Equity $27,755 $12,814
Common Shares Outstanding at the End of the Period $24,057 $11,636
Book Value Per Share $ 1.15 $ 1.10
