-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P5PPtgqhVolxiop02Ihp8UilErvfk4BQqYtREaWM7zSBC1T5QmD8bgCIIRzJ9iIT HB4UdX/mDi6tt+n52GcNoA== 0000027748-00-000004.txt : 20000329 0000027748-00-000004.hdr.sgml : 20000329 ACCESSION NUMBER: 0000027748-00-000004 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000129 FILED AS OF DATE: 20000328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEL GLOBAL TECHNOLOGIES CORP CENTRAL INDEX KEY: 0000027748 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 131784308 STATE OF INCORPORATION: NY FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-03319 FILM NUMBER: 581433 BUSINESS ADDRESS: STREET 1: 1 COMMERCE PARK CITY: VALHALLA STATE: NY ZIP: 10595 BUSINESS PHONE: 9146863600 MAIL ADDRESS: STREET 1: 1 COMMERCE PARK CITY: VALHALLA STATE: NY ZIP: 10595 FORMER COMPANY: FORMER CONFORMED NAME: DEL ELECTRONICS CORP DATE OF NAME CHANGE: 19920703 10-Q/A 1 DEL GLOBAL TECHNOLOGIES CORP. SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q/A QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended January 29, 2000 Commission File Number 0-3319 DEL GLOBAL TECHNOLOGIES CORP. ----------------------------- (Exact name of registrant as specified in its charter) New York 13-1784308 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Commerce Park, Valhalla, NY 10595 - ------------------------------- ------------------- (Address of principal executive offices) (Zip Code) (914) 686-3600 -------------- (Registrant's telephone number including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the business on March 10, 2000. Common Stock - 7,814,494 DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS January 29, July 31, 2000 1999 ----------- ----------- CURRENT ASSETS Cash and cash equivalents $ 244,762 $ 320,742 Investments available-for-sale 1,290,418 1,292,852 Trade receivables - net 15,906,168 15,624,433 Cost and estimated earnings in excess of billings on uncompleted contracts 8,788,171 6,402,532 Inventory 37,693,356 36,599,587 Prepaid expenses and other current assets 1,878,514 1,216,145 ----------- ----------- Total current assets 65,801,389 61,456,291 ----------- ----------- FIXED ASSETS - Net 15,137,511 14,668,060 INVESTMENT IN AFFILIATE 1,451,348 -- INTANGIBLES - Net 788,483 879,898 GOODWILL - Net 5,091,200 5,236,965 DEFERRED CHARGES 199,281 264,464 OTHER ASSETS 1,625,251 1,598,279 ----------- ----------- TOTAL $90,094,463 $84,103,957 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 594,740 $ 516,654 Accounts payable - trade 5,709,684 6,295,586 Accrued liabilities 4,269,911 4,468,521 Deferred compensation liability 1,301,296 1,201,065 Income taxes 1,339,958 1,224,451 ----------- ----------- Total current liabilities 13,215,589 13,706,277 ----------- ----------- LONG-TERM LIABILITIES Long-term debt (less current portion) 4,729,976 1,832,287 Other 532,771 594,272 Deferred income taxes 1,936,467 1,620,417 ----------- ----------- Total liabilities 20,414,803 17,753,253 ----------- ----------- SHAREHOLDERS' EQUITY Common stock, $.10 par value; Authorized 20,000,000 shares; Issued and outstanding - 8,383,840 shares at January 29, 2000 and 8,278,646 shares at July 31, 1999 838,385 827,866 Additional paid-in capital 51,446,645 50,798,502 Retained earnings 22,326,647 19,032,506 ----------- ----------- 74,611,677 70,658,874 Less common stock in treasury - 567,846 shares at January 29, 2000 and 490,393 shares at July 31, 1999 4,932,017 4,308,170 ----------- ----------- Total shareholders' equity 69,679,660 66,350,704 ----------- ----------- TOTAL $90,094,463 $84,103,957 =========== =========== See notes to consolidated financial statements -2- DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Six Months Ended ------------------------- ------------------------- January 29, January 30, January 29, January 30, 2000 1999 2000 1999 ----------- ----------- ----------- ----------- NET SALES $17,450,349 $15,921,952 $33,162,373 $30,731,618 ----------- ----------- ----------- ----------- COSTS AND EXPENSES: Cost of sales 10,419,466 9,308,253 19,730,199 17,987,421 Research and development 1,706,689 1,522,929 3,249,843 2,954,243 Selling, general and administrative 2,700,789 2,749,659 5,303,963 5,370,821 Interest expense - net 83,095 15,831 145,132 22,712 ----------- ----------- ----------- ----------- 14,910,039 13,596,672 28,429,137 26,335,197 ----------- ----------- ----------- ----------- INCOME BEFORE PROVISION FOR INCOME TAXES 2,540,310 2,325,280 4,733,236 4,396,421 PROVISION FOR INCOME TAXES 772,147 720,836 1,439,095 1,362,890 ----------- ----------- ----------- ----------- NET INCOME $ 1,768,163 $ 1,604,444 $ 3,294,141 $ 3,033,531 =========== =========== =========== =========== NET INCOME PER COMMON SHARE AND COMMON SHARE EQUIVALENTS: BASIC $ .23 $ .21 $ .42 $ .40 =========== =========== =========== =========== DILUTED $ .22 $ .20 $ .40 $ .37 =========== =========== =========== =========== Weighted average number of common shares outstanding 7,813,017 7,648,308 7,799,511 7,648,361 =========== =========== =========== =========== Weighted average number of common shares outstanding and common share equivalents 8,163,980 8,205,600 8,167,878 8,174,078 =========== =========== =========== =========== See notes to consolidated financial statements -3- DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended -------------------------- January 29, January 30, 2000 1999 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 3,294,141 $ 3,033,531 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,146,461 843,725 Amortization 368,873 322,676 Imputed interest 22,541 10,973 Deferred income tax provision 294,990 184,374 Tax benefit from exercise of stock options and warrants 238,518 131,391 Amortization of stock-based compensation 17,518 11,215 Changes in assets and liabilities: Increase in trade receivables (281,735) (1,011,876) Increase in cost and estimated earnings in excess of billings on uncompleted contracts (2,385,639) (1,454,565) Increase in inventory (1,093,769) (4,013,448) Increase in prepaid and other current assets (728,879) (869,686) Increase in other assets (5,912) (9,983) (Decrease) increase in accounts payable - trade (585,902) 1,262,347 (Decrease) increase in accrued liabilities (360,308) 170,749 Increase in deferred compensation liability 100,231 212,006 Increase in income taxes payable 115,507 627,041 ----------- ----------- Net cash provided by (used in) operating activities 156,636 (549,530) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Net cash invested in affiliate (1,080,040) -- Net cash paid to acquire selected assets -- (509,219) Expenditures for fixed assets (1,615,912) (1,502,770) Investment in marketable securities 2,434 (170,963) Payments to former shareholders of subsidiary acquired (35,770) (60,186) ----------- ----------- Net cash used in investing activities (2,729,288) (2,243,138) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from bank borrowing 2,975,775 583,701 Payment for repurchase of shares (623,847) (692,474) Proceeds from exercise of stock options and warrants 133,924 328,500 Other 10,820 54,543 ----------- ----------- Net cash provided by financing activities 2,496,672 274,270 ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (75,980) (2,518,398) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 320,742 3,401,697 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 244,762 $ 883,299 =========== =========== See notes to consolidated financial statements -4- DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended --------------------------- January 29, January 30, 2000 1999 ----------- ----------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 109,321 $ 75,698 ============ ============ Income taxes paid $ 832,360 $ 419,469 ============ ============ SUPPLEMENTAL SCHEDULE OF INVESTING AND FINANCING ACTIVITIES: Investment in affiliate $ 1,451,348 Compensation cost of warrant issued (218,702) Investment costs in accrued expense (152,606) ------------ Net cash invested in affiliate $ 1,080,040 ============ Acquisition of selected assets $ 1,309,219 Payment due under acquisition term note (800,000) ------------ Net cash paid to acquire selected assets $ 509,219 ============ See notes to consolidated financial statements -5- DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the results of the Company's financial position as of January 29, 2000 and the results of its operations and its cash flows for the six months ended January 29, 2000 and January 30, 1999. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements as of July 31, 1999. The consolidated financial statements should be read in conjunction with the notes to the financial statements as of July 31, 1999. Certain reclassifications have been made in the prior period's financial statements to correspond to the current period's presentation. NOTE 2 The results of operations for the three and six-month periods ended January 29, 2000 are not necessarily indicative of the results to be expected for the full year. NOTE 3 INVESTMENTS Investments available-for-sale at January 29, 2000 and July 31, 1999 include $1,301,296 and $1,201,065,respectively, for the Company's President's deferred compensation and certain key executives. At January 29, 2000 and July 31, 1999, $45,085 and $213,411, respectively, were classified as cash and $1,256,211 and $1,146,009, respectively, were recorded as investments. The liabilities of $1,301,296 and $1,201,065, respectively, are recorded as deferred compensation liability. Gains and losses on the investments held to fund the deferred compensation, either recognized or unrealized, inure to the benefit or detriment of the President's or key executives' deferred compensation. At January 29, 2000 and July 31, 1999, the balance of investments available-for-sale of $34,207 and $146,843, respectively, are equity securities held by the Company for its own account. Realized and unrealized gains and losses on these securities for the periods ended January 29, 2000 and January 30, 1999 were not material and are recorded in the financial statements. NOTE 4 PERCENTAGE OF COMPLETION ACCOUNTING January 29, July 31, 2000 1999 ----------- ----------- Costs incurred on uncompleted contracts $17,331,810 $15,012,158 Estimated earnings 10,939,263 9,329,220 ----------- ----------- 28,271,073 24,341,378 Less billings to date 19,482,902 17,938,846 ----------- ----------- Costs and estimated earnings in excess of billings on uncompleted contracts $ 8,788,171 $ 6,402,532 =========== =========== The backlog of unshipped contracts being accounted for under the percentage of completion method of accounting was approximately $3.6 million at January 29, 2000. -6- NOTE 5 INVENTORY Inventory is stated at the lower of cost (first-in, first-out) or market. Inventories and their effect on cost of sales are determined by physical count for annual reporting purposes and are estimated by management for interim reporting purposes. Inventory consists of the following: January 29, July 31, 2000 1999 ----------- ----------- Finished goods $ 7,921,344 $ 5,414,095 Work-in-process 17,245,195 14,814,766 Raw material and purchased parts 12,526,817 16,370,726 ----------- ----------- Total $37,693,356 $36,599,587 =========== =========== NOTE 6 FIXED ASSETS Fixed assets consist of the following: January 29, July 31, 2000 1999 ----------- ---------- Land $ 694,046 $ 694,046 Building 2,200,742 2,161,025 Machinery and equipment 17,696,398 16,446,086 Furniture and fixtures 1,569,579 1,435,929 Leasehold improvements 2,373,106 2,180,873 Transportation equipment 30,103 30,103 ----------- ----------- 24,563,974 22,948,062 Less accumulated depreciation and amortization 9,426,463 8,280,002 ----------- ----------- Net fixed assets $15,137,511 $14,668,060 =========== =========== NOTE 7 INVESTMENT IN AFFILIATE On December 28, 1999, the Company obtained a 19% interest in Villa Sistemi Medicali S.p.A. ("Villa") located in Milan, Italy, for a six-year warrant to purchase 50,000 shares of Del Global Technologies Corp. common stock at the fair market price on the date of issuance. This warrant is valued at approximately $219,000 using the Black-Scholes method as prescribed by SFAS No. 123, "Accounting for Stock-Based Compensation." In addition, the associated transaction costs of this investment are approximately $340,000. The investment is accounted for at cost. Further, Villa management has granted to the Company an exclusive irrevocable option to purchase an additional 61% of the shares of Villa within 60 days after the Company receives certified financial statements of Villa for the year ended December 31, 1999. On January 3, 2000, the Company contributed $892,000 to the charter capital of Villa in consideration for a pledge by the Villa management of their majority ownership of the outstanding shares of Villa. On the same date, Villa management collectively contributed $108,000 to the charter capital of Villa. NOTE 8 SEGMENTS The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", during the fourth quarter of the year ended July 31, 1999. SFAS No. 131 establishes standards for reporting information about operating segments in annual financial statements and requires selected information about operating segments in interim financial statements. It also establishes standards for related disclosures about products and services, major customers and geographic areas. Operating segments are defined as components of an -7- enterprise about which separate financial information is available that is evaluated regularly by the chief decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company's chief operating decision making group is comprised of the Chief Executive Officer and the senior executives of the Company's operating segments. The Company has two reportable segments which are Medical Imaging Systems and Critical Electronic Subsystems. The Medical Imaging Systems Segment designs, manufactures and markets state-of-the-art, cost-effective medical imaging and diagnostic systems consisting of stationary and portable imaging systems, radiographic/fluoroscopic systems, mammography systems a neo- natal imaging system and dental imaging systems. The Critical Electronic Subsystems Segment designs, manufactures and markets proprietary precision power conversion and electronic noise suppression subsystems for medical as well as critical industrial applications. Selected financial data of these segments is as follows:
Medical Critical Imaging Electronic Systems Subsystems Total ----------- ----------- ----------- For the Six Months Ended January 29, 2000: Net sales to external customers $17,532,787 $15,629,586 $33,162,373 =========== =========== =========== Income before provision for income taxes $ 1,597,431 $ 3,135,805 $ 4,733,236 =========== =========== =========== Segment assets $40,203,173 $49,891,290 $90,094,463 =========== =========== ===========
Medical Critical Imaging Electronic Systems Subsystems Total ----------- ----------- ----------- For the Six Months Ended January 30, 1999: Net sales to external customers $16,179,691 $14,551,927 $30,731,618 =========== =========== =========== Income before provision for income taxes $ 1,684,027 $ 2,712,394 $ 4,396,421 =========== =========== =========== Segment assets $35,052,650 $43,962,300 $79,014,950 =========== =========== ===========
-8- SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DEL GLOBAL TECHNOLOGIES CORP. /S/LEONARD A. TRUGMAN --------------------- Leonard A. Trugman Chairman of the Board, Chief Executive Officer and President /S/MICHAEL H. TABER --------------------- Michael H. Taber Chief Financial Officer, Vice President of Finance and Secretary Dated: March 28, 2000 -13- -----END PRIVACY-ENHANCED MESSAGE-----