Del Global Technologies Reports Fiscal 2009 Third Quarter Financial Results

Business Wire, June 05, 2009

ROSELLE, Ill. -- Q3 FY 2009 Highlights

• Net sales of $17.1 million
• Expanded the Board of Directors
• Successfully Launched an Equipment Leasing Program for the U.S.

Del Global Technologies Corp. (OTCBB: DGTC) (“Del Global” or “the Company”) today announced financial results for its fiscal 2009 third quarter and nine months ended May 2, 2009.

Consolidated net sales of $17.1 million for the third quarter of fiscal 2009 reflect a decrease of $7.3 million or 30.0% from fiscal 2008 third quarter net sales of $24.4 million. The Medical Systems Group’s third quarter fiscal 2009 sales of $14.4 million were $6.5 million or 31.1% less than the prior year’s third quarter primarily due to decreased international sales volume associated with the global economic slowdown and reductions in capital expenditures and credit availability for customers. Sales at the Power Conversion Group during the third quarter of fiscal 2009 were $2.7 million, approximately $0.8 million or 23.3% less than prior year’s third quarter sales, due to delays driven by customer rescheduling activity in the current period.

Consolidated gross margin as a percent of sales was 17.3% for the third quarter of fiscal 2009, compared to 23.4% in the third quarter of fiscal 2008. The Medical Systems Group, third quarter of fiscal 2009 gross margin of 15.3% was lower than the gross margin of 20.5% in the third quarter of fiscal 2008 due primarily to lower sales volumes and plants operating with excess capacity. The Power Conversion Group’s gross margin for the third quarter of fiscal 2009 was 28.2%, versus 40.3% in the prior year third quarter, attributable to decreased sales volume.

Operating expenses for the third quarter of fiscal 2009 decreased to 21.7% of net sales from 28.3% of net sales in the same period one year ago. This reduction was the result of a $1.9 million one-time, non cash goodwill impairment charge related to the Medical Systems Group’s U.S. medical business in the third quarter of 2008, as well as a decrease of $1.1 million in selling, general and administrative expenses, primarily in the areas of litigation, general administration and marketing expenses. In addition, research and development expenses in the third quarter of fiscal 2009 of $0.4 million were $0.2 million lower than the third quarter of fiscal 2008, primarily due to the effect of favorable currency translation rates.

The operating loss for the third quarter of fiscal 2009 was $0.7 million compared to an operating loss of $1.2 million in the comparable prior year period. The operating loss at the Medical Systems Group for the third quarter of fiscal 2009 was $0.9 million compared to $2.0 million for the same period in the prior year, due to the goodwill impairment of $1.9 million recorded during the third quarter of fiscal 2008. The Power Conversion Group’s operating income in the third quarter of fiscal 2009 decreased by $0.7 million to $0.1 compared to $0.8 in the third quarter of fiscal 2008 due primarily to the decrease in sales noted above.

The net loss in the third quarter of fiscal 2009 was $0.8 million, or $0.04 per basic share, compared to a net loss of $1.6 million, or $0.07 per basic share in the comparable prior year period. For the third quarter of fiscal 2009, there were approximately 22.7 million weighted average common shares diluted outstanding (“shares outstanding”) compared to 24.2 million shares diluted outstanding in the third quarter of fiscal 2008. The decrease in diluted shares outstanding was due to the impact of warrants that expired March 28, 2009 and common shares purchased pursuant to the Company’s common stock repurchase program, which the Company’s Board of Directors suspended in January 2009.

Increased size of the Board of Directors

The Company announced on March 31, 2009 that it has increased the number of board members from four members to five when the Board nominated Scott Avila, a Partner with CRG Partners. The Company views this as an opportunity to add expertise relative to business development, executive leadership, raising capital and financial oversight to its Board.

Equipment Lease Program

The Company announced on May 7, 2009 that it has partnered with Beacon Funding Corporation to provide the Del Medical leasing program that is currently being rolled out to Del Medical dealers nationwide. The program provides a lease-to-own option that allows Del dealers to facilitate sales and provide more diversity for financing at a time when customers are trying to manage working capital more efficiently.

Office Relocation

After a search of suitable relocation alternatives, the Company found an ideal location in Roselle, Illinois. The Company was specifically looking for a facility that could support its business operations and Corporate headquarters. The Company’s Del Medical operations and Corporate headquarters were previously located in Frankin Park, Illinois. The move to the new facility will result in an annual cost saving of approximately $0.3 million.