Exhibit 99.01
Financial Releases
Del Global Technologies Announces Operating Results and Summary Balance Sheet
Data for the Third Quarter and Nine Months Ended May 3, 2003
VALHALLA, N.Y. - June 23, 2003
FY 2003 Q3 Highlights
-- Total Net Sales of $22.9 Million Versus $26.8 Million in Q3
2002; 9 Month Sales Increase 5.3% to $74.5 Million from Prior
Year Period
-- Consolidated Gross Margin Improves Sequentially from Q2 2003;
Gross Margin Down Versus Q3 2002
-- Net Loss of $3.9 Million, or $.38 Per Share, Which Includes
$2.3 Million Charge Related to Previously Announced Potential
Settlement of Department of Defense Investigation
-- Revenue Forecast Lowered to $100 to $102 Million for Fiscal 2003, Modest
Increase from Fiscal 2002
Del Global Technologies Corp. (DGTC) ("Del Global") today announced operating
results for its Fiscal 2003 third quarter and nine-month period ended May 3,
2003, as well as summary balance sheet data as of May 3, 2003 (see attached
tables).
New Board Seated; Chairman Elected; Continued Progress Reported
As previously reported, Del Global's shareholders elected a new board of
directors at the Annual Meeting of Shareholders held on May 29, 2003. Gerald M.
Czarnecki, the newly elected Chairman of the Board, stated, "Your Board of
Directors is already actively involved in the governance of the Company and is
studying changes to improve it. The board looks forward to working with the
management team to build an organization that produces improving near term
operating results and, in the longer term, enhanced value for all shareholders."
Samuel E. Park, President and Chief Executive Officer of Del Global, commented,
"Despite slow sales in the third quarter, caused principally by geopolitical
concerns and soft U.S. demand, we continued to make progress, both in terms of
somewhat improved gross margins versus the second quarter, and as it relates to
progress in settling certain outstanding legal matters. The positive impact from
restructuring initiatives is beginning to materialize. The full impact of the
cost savings and operating synergies should be evidenced in improving financial
results in the current fourth quarter, as well as stronger results during Fiscal
2004."
Mr. Park continued, "As previously announced, Del Global has begun preliminary
discussions with the United States Attorney's Office regarding a comprehensive
settlement of an investigation by the United States Department of Defense
("DoD") at our RFI Corporation ("RFI") subsidiary. While the practices
surrounding this investigation pre-date the arrival of the current management
team in 2001, we have been diligently working to resolve this problem. We
believe that we have made substantial progress at RFI. We are guardedly
optimistic we can resolve this investigation with the Government, put this
matter behind us, and RFI can continue to provide its critical technology to the
defense industry."
Thomas V. Gilboy, Del Global's Chief Financial Officer, stated, "Consolidated
gross margin in the third quarter of Fiscal 2003 improved sequentially to 22.5%
from 21.3% in the second quarter of Fiscal 2003. This improvement was achieved
despite lower sales in the third quarter versus the second quarter, reflecting
the initial positive impact of the facilities reorganization. Consolidated gross
margins in the third quarter of Fiscal 2003 decreased less than one percentage
point from the third quarter of Fiscal 2002, despite 17% higher sales in the
comparable prior year period.
"We completed the consolidation of the high voltage operations from Hicksville
to Valhalla during the third quarter of Fiscal 2003. This consolidation had a
positive impact on this segment's operating income and consolidated gross
margins during the third quarter, and we expect that it will produce annual
savings of approximately $2 million beginning in the current fourth quarter of
Fiscal 2003. Management does not expect to incur any additional facilities
reorganization costs related to this matter."
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Mr. Gilboy continued, "Regarding the RFI matter, results for the third quarter
Fiscal 2003 include a $2.3 million charge, which is our estimate of the low end
of the range of the financial impact of this potential settlement. Since
settlement discussions are very preliminary, it is possible that the ultimate
penalty and outcome of this potential settlement could vary significantly from
our estimate and expectations."
Fiscal 2003 Third Quarter Results
Total net sales for the third quarter of Fiscal 2003 decreased to $22.9 million
from $26.8 million in the same period last year.
Medical Systems Group sales decreased to $13.4 million from $15.5 million in the
same period last year, principally due to lower sales in the Middle East
attributable to uncertainty in that region, and decreases in domestic private
label business. In addition, last year's third quarter included approximately $4
million in shipments to a Lithuanian customer, and those sales were not repeated
in the current quarter. Domestic order rates improved during May and June 2003,
while sales to the Middle East remain sluggish.
Domestic margins at the Medical Systems Group increased to 20% from 18% in last
year's third quarter, despite a 12% decrease in U.S. sales in the Fiscal 2003
third quarter. This margin improvement was due to more favorable pricing and
lower materials costs. Margins at the European operations decreased to 22% from
24% in last year's third quarter, reflecting lower shipments and resulting
unfavorable absorption of overhead costs.
Power Conversion Group sales decreased to $9.6 million from $11.4 million in the
same period last year. This decrease is due primarily to the previously
announced decision of a large customer to shift to in-house production, and a
decline in sales to the semiconductor capital equipment market. The sales to the
customer who shifted production in-house carried a lower margin, and this
business did not fit with Del Global's long-term strategy.
Margins at the Power Conversion Group decreased to 22.9% from 27.2% in the same
period last year, due primarily to a $200,000 increase in inventory reserves and
lower shipments, partially offset by lower overhead costs as a result of the
completed consolidation of the Hicksville high voltage facility to Valhalla, NY.
Power Conversion Group's third quarter margins at 22.9% were an improvement from
second quarter levels of 17%, reflecting the beginning of the reorganization
cost savings, and smaller inventory adjustments when compared to what was
recognized in the second quarter.
Mr. Park commented, "Our Medical Systems Group intends to enter select new
geographic markets, improve sales and margins and reap the benefits created by
our continuing integration of our worldwide business. In addition, we recently
announced some new digital product capabilities, which should position us to
offer a broad selection of digital products as either new systems or as upgrades
to our extensive installed base of conventional film systems.
"At our Power Conversion Group, we are focusing on high growth markets,
accelerating our design-to-market cycles and expanding into new markets via OEM
relationships. Although sales have declined versus last year, the business we
have discontinued was lower margin products and customers that were not
consistent with our long-term strategy."
The net loss for the third quarter of Fiscal 2003 was $3.9 million, or $.38 per
share, versus a net loss of $5.2 million, or $.66 per share, for the same period
one year ago. The net loss for the third quarter of Fiscal 2003 included a $2.3
million charge related to the potential DoD settlement. The net loss for the
third quarter of Fiscal 2002 included $7.2 million in costs related to the
settlement of the class action litigation.
Weighted average shares outstanding for the third quarter of 2003 increased 32%
from last year to 10.3 million as a result of the issuance of shares in the
fourth quarter of Fiscal 2002 from the settlement of the class action lawsuit.
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Financial Condition
Del Global's balance sheet at May 3, 2003 reflected working capital of $13.6
million, shareholders' equity of $26.9 million and a stated book value of $2.60
per share. Del Global's total debt as of May 3, 2003 has decreased $1.6 million
compared to last fiscal year end, while its cash balance increased. As of May 3,
2003, Del Global had approximately $5 million of borrowing available under its
U.S. revolving credit facility, and was compliant with covenants under the
facility.
Outlook
Del Global previously forecasted Fiscal 2003 sales in the range of $103 to $106
million. Based on current business conditions and third quarter sales that were
below expectations, management now estimates that sales for the Fiscal year will
approximate $100 to $102 million, representing an approximate 3% improvement
over Fiscal 2002.
Mr. Gilboy commented, "In our Power Conversion Group segment, our forecasted
sales for the fourth quarter are fully in backlog, and expectations regarding
sales are based upon our current demonstrated production rate and customer
release schedules. In our Medical Systems segment, we are experiencing some
short-term market softness, particularly in the Middle East and the domestic
market. As mentioned in our press release, Medical Systems' domestic order rates
improved during May and June 2003, while our ability to ship booked orders to
the Middle East continues to be an issue."
Investor Conference Call
Samuel Park and Thomas Gilboy will host a conference call on Tuesday, June 24,
2003 at 10:30 a.m. Eastern Time to discuss this news release. The telephone
number to join this conference call is 973/582-2866. A taped replay of the call
will be available through 5:00 p.m. Eastern Time, Thursday June 26, 2003. Please
dial 973/341-3080 and enter the number 3997657. In addition, the conference call
will be broadcast live over the Internet via the webcast section of Del Global's
Web site at www.delglobaltech.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 software. If you are unable to participate in the live call, the
conference call will be archived and can be accessed on the Company'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. Industrial
applications for which Del Global supplies power subsystems include airport
explosives detection, analytical instrumentation, semiconductor capital
equipment and energy exploration.
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. The Company cautions that
these statements are not guarantees of future performance. They involve a number
of risks and uncertainties that are difficult to predict including, but not
limited to, the ability of the Company 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, including a
settlement of the Department of Defense investigation on terms that the Company
can afford and that does not include a debarment from doing business with the
U.S. Government, 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 Nine Months Ended
May 3, April 27, May 3, April 27,
2003 2002 2003 2002
---- ---- ---- ----
NET SALES $ 22,925 $ 26,850 $ 74,515 $ 70,732
COST OF SALES 17,768 20,561 58,382 54,356
--------- --------- --------- ---------
GROSS MARGIN 5,157 6,289 16,133 16,376
Selling, general and
administrative 5,507 5,140 16,699 15,807
Research and development 702 780 1,748 1,986
Litigation settlement costs 2,126 7,236 2,126 6,978
Facilities reorganization
costs 253 - 706 77
--------- --------- --------- ---------
Total operating expenses 8,588 13,156 21,279 24,848
--------- --------- --------- ---------
OPERATING LOSS (3,431) (6,867) (5,146) (8,472)
--------- --------- --------- ---------
Interest expense, net 315 551 1,028 1,338
Other (expense) income (35) 74 437 105
--------- --------- --------- ---------
LOSS BEFORE INCOME TAXES
AND MINORITY INTEREST (3,781) (7,344) (5,737) (9,705)
--------- --------- --------- ---------
INCOME TAX PROVISION
(BENEFIT) 156 (2,247) 4,944 (3,079)
--------- --------- --------- ---------
LOSS BEFORE MINORITY INTEREST (3,937) (5,097) (10,681) (6,626)
--------- --------- --------- ---------
MINORITY INTEREST (11) 55 106 232
--------- --------- --------- ---------
NET LOSS $ (3,926) $ (5,152) $(10,787) $ (6,858)
========= ========= ========= =========
LOSS PER SHARE, BASIC AND
DILUTED $ (.38) $ (.66) $ (1.04) $ (.88)
========= ========= ========= =========
Weighted average number of
common shares outstanding,
basic and diluted 10,338 7,848 10,344 7,848
========= ========= ========= =========
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DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(unaudited)
May 3, 2003 August 3, 2002
----------------------------
Current Assets $ 41,350 $ 49,374
Total Assets $ 65,080 $ 77,697
Current Liabilities $ 27,769 $ 30,726
Total Liabilities $ 36,976 $ 39,608
Minority Interest $ 1,175 $ 948
Shareholders' Equity $ 26,929 $ 37,141
Common Shares Outstanding End of Period 10,338 10,348
Book Value Per Share $ 2.60 $ 3.59
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