-----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, ThzlhqpXygsn51tzAalO8zzUc8J96Y+B9MevGo4FSiPwoIyr1gnKA/q8g7ZbbIp9 xpJy9emc1PmGFFqYatZu+Q== 0000027748-97-000001.txt : 19970312 0000027748-97-000001.hdr.sgml : 19970312 ACCESSION NUMBER: 0000027748-97-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970201 FILED AS OF DATE: 19970311 SROS: NASD 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 SEC ACT: 1934 Act SEC FILE NUMBER: 000-03319 FILM NUMBER: 97554355 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 1 DEL GLOBAL TECHNOLOGIES CORP. SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended February 1, 1997 Commission File Number 1-10512 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 period covered by this report. Common Stock - 7,400,414 PART I Item 1. Financial Statements Consolidated Balance Sheets - February 1, 1997 and August 3, 1996 Consolidated Statements of Income for the Three Months and Six Months ended February 1, 1997 and February 3, 1996 Consolidated Statements of Cash Flows for the Six Months ended February 1, 1997 and February 3, 1996 Notes to Consolidated Financial Statements -1- DEL GLOBAL TECHNOLOGIES CORP. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS February 1, August 3, 1997 1996 ----------- ---------- CURRENT ASSETS Cash and cash equivalents $ 5,528,176 $ 5,817,800 Investments available-for-sale 640,283 545,651 Trade receivables 9,533,259 9,221,328 Inventory 25,496,375 23,819,882 Prepaid expenses and other current assets 1,999,939 1,675,039 ----------- ----------- Total current assets 43,198,032 41,079,700 ----------- ----------- FIXED ASSETS - Net 10,204,605 9,538,489 INTANGIBLES - Net 1,283,271 1,322,552 GOODWILL - Net 4,231,099 4,311,472 DEFERRED CHARGES 712,569 784,751 OTHER ASSETS 638,534 692,788 ----------- ----------- TOTAL $60,268,110 $57,729,752 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 117,420 $ 120,078 Accounts payable - trade 4,193,165 3,693,580 Accrued liabilities 3,698,788 4,070,202 Income taxes 674,846 643,545 ----------- ----------- Total current liabilities 8,684,219 8,527,405 ----------- ----------- LONG-TERM LIABILITIES Long-term debt (less current portion included above) 531,620 499,852 Other 795,709 789,589 Deferred income taxes 843,378 843,378 ----------- ----------- Total liabilities 10,854,926 10,660,224 ----------- ----------- SHAREHOLDERS' EQUITY Common stock, $.10 par value; Authorized - 10,000,000 shares; Issued and outstanding - 7,467,669 shares at February 1, 1997 and 7,440,108 shares at August 3, 1996 746,767 722,340 Additional paid-in capital 45,307,346 43,272,713 Retained earnings 3,769,066 3,411,160 ----------- ----------- 49,823,179 47,406,213 ----------- ----------- Less common stock in treasury - 67,255 shares at February 1, 1997 and 58,255 shares at August 3, 1996 409,995 336,685 ----------- ----------- Total shareholders' equity 49,413,184 47,069,528 ----------- ----------- TOTAL $60,268,110 $57,729,752 =========== =========== See notes to consolidated financial statements -2- DEL GLOBAL TECHNOLOGIES CORP. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Six Months Ended ---------------------------- ---------------------------- Feb. 1, Feb. 3, Feb. 1, Feb. 3, 1997 1996 1997 1996 ------------ ------------ ------------ ------------ NET SALES $ 12,691,871 $ 9,329,438 $ 25,003,255 $ 16,800,619 ------------ ------------ ------------ ------------ COSTS AND EXPENSES: Cost of sales 7,558,599 5,553,918 15,064,837 9,744,552 Research and development 1,115,612 789,063 2,192,439 1,431,894 Selling, general & administrative 2,434,208 1,784,151 4,759,747 3,356,117 Interest (income) or expense - net (27,840) 285,984 (47,296) 595,211 ------------ ------------ ------------ ------------ 11,080,579 8,413,116 21,969,727 15,127,774 ------------ ------------ ------------ ------------ INCOME BEFORE PROVISION FOR INCOME TAXES 1,611,292 916,322 3,033,528 1,672,845 PROVISION FOR INCOME TAXES 491,444 283,261 925,226 510,218 ------------ ------------ ------------ ------------ NET INCOME $ 1,119,848 $ 633,061 $ 2,108,302 $ 1,162,627 ============ ============ ============ ============ Per share amounts: Net income per common share and common share equivalents - primary $ .13 $ .12 $ .25 $ .22 ============ ============ ============ ============ - fully diluted $ .13 $ .11 $ .25 $ .21 ============ ============ ============ ============ Weighted average number of common shares outstanding and common share equivalents - primary 8,583,517 5,587,027 8,523,422 5,566,839 ============ ============ ============ ============ - fully diluted 8,620,692 5,597,408 8,561,147 5,572,030 ============ ============ ============ ============
See notes to consolidated financial statements -3- DEL GLOBAL TECHNOLOGIES CORP. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended --------------------------- Feb. 3, Feb. 3, 1997 1996 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 2,108,302 $ 1,162,627 Adjustments to reconcile net income to net cash provided by operating activities: Imputed Interest 33,968 33,133 Depreciation 471,697 338,919 Amortization 263,782 194,617 Changes in assets and liabilities: (Increase) decrease in trade receivables (311,931) 731,732 Increase in cost and estimated earnings in excess of billings billings on uncompleted contracts -- (8,183) Increase in inventory (1,676,493) (1,870,199) Increase in prepaid and other current assets (350,951) (503,223) Decrease in other assets 27,402 37,861 Increase in accounts payable - trade 499,585 208,502 Decrease in accrued liabilities (371,412) (346,549) Increase in income taxes payable 178,918 266,768 ----------- ----------- Net cash provided by operating activities 872,867 246,005 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for fixed assets (1,137,813) (761,231) Net cash paid on acquisition of subsidiaries (15,000) -- Investment in marketable securities - net (94,632) (119,256) Payments to former shareholders of subsidiary acquired (27,850) (26,250) ----------- ----------- Net cash used in investing activities (1,275,295) (906,737) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from (repayment of) bank borrowing 29,110 (147,554) Payment for repurchase of shares (73,310) (19,770) Proceeds from exercise of stock options and warrants 175,338 491,867 Other (18,334) (7,748) ----------- ----------- Net cash provided by financing activities 112,804 316,795 ----------- ----------- (Continued) See notes to consolidated financial statements -4- DEL GLOBAL TECHNOLOGIES CORP. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended ------------------------- Feb. 1, Feb 3, 1997 1996 ------- ------ NET DECREASE IN CASH AND CASH EQUIVALENTS $ (289,624) $(343,937) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,817,800 505,989 ----------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,528,176 $ 162,052 =========== ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 27,950 $ 569,505 =========== ========= Income taxes paid $ 747,057 $ 269,405 =========== ========= (Concluded) See notes to consolidated financial statements -5- DEL GLOBAL TECHNOLOGIES CORP. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 In the opinion of the Company's 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 February 1, 1997 and the results of its operations and its cash flows for the six months ended February 1, 1997 and February 3, 1996. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements as of August 3, 1996. The consolidated financial statements should be read in conjunction with the notes to the financial statements as of August 3, 1996. NOTE 2 The results of operations for the six month period ended February 1, 1997 are not necessarily indicative of the results to be expected for the full year. NOTE 3 Inventory is stated at a 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: Feb. 1, Aug. 3, 1997 1996 ----------- ----------- Finished goods $ 5,848,404 $ 5,463,847 Work-in-process 10,209,391 9,538,081 Raw material and purchased parts 9,438,580 8,817,954 ----------- ----------- Total $25,496,375 $23,819,882 =========== =========== NOTE 4 FIXED ASSETS Fixed assets consist of the following: Feb. 1, Aug. 3, 1997 1996 ----------- ----------- Land $ 694,046 $ 694,046 Building 2,146,025 2,146,025 Machinery and equipment 9,268,032 8,426,324 Furniture and fixtures 1,235,764 833,880 Leasehold improvements 1,085,642 1,043,996 Construction in progress 263,999 435,102 Transportation equipment 30,103 11,425 ---------- ----------- 14,723,611 13,590,798 Less accumulated depreciation and amortization 4,519,006 4,052,309 ----------- ----------- Net fixed assets $10,204,605 $ 9,538,489 =========== =========== -6- NOTE 5 Net income per common share was computed using the treasury stock method. The weighted average number of common shares and common share equivalents for the period and for all periods presented includes the effect of the 3 percent stock dividend (see Note 6) declared on November 19, 1996. NOTE 6 On November 19, 1996, the Company declared a 3 percent stock dividend to holders of record on December 4, 1996, payable December 23, 1996. NOTE 7 ACQUISITION As of March 6, 1996, the Company acquired certain selected assets of the Gendex Medical Division of Dentsply International Inc. ("Dentsply"), which have been consolidated as of that date. The new entity formed is the Gendex-Del Medical Imaging Corp. ("Gendex-Del"). Unaudited pro-forma financial information for the 3 and 6 month periods ended February 3, 1996, as if the Gendex Medical acquisition occurred at the beginning of the respective periods, is as follows: Three Months Six Months Ended Ended Feb. 3, 1996 Feb. 3, 1996 ------------ ------------ Net Sales $ 13,325,247 $25,663,032 =============== =========== Income before provision for income taxes $ 710,425 $ 1,257,247 =============== =========== Net Income $ 493,745 $ 873,782 =============== =========== Net income per common share and common share equivalents primary and fully diluted $ .09 $ .16 =============== =========== The pro forma financial information presented above is not necessarily indicative of the operating results which would have been achieved had the Company acquired Gendex Medical at the beginning of the periods presented or of the results to be achieved in the future. -7- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales for the three months ended February 1, 1997 were approximately $12.7 million compared to approximately $9.3 million, an increase of approximately 36.0 percent over the corresponding period in the prior year. Net sales for the six months ended February 1, 1997 were approximately $25.0 million as compared to approximately $16.8 million for the six months ended February 3, 1996, an increase of approximately 48.8 percent. These increases are due to the inclusion of net sales from the Gendex-Del subsidiary. Cost of sales, as a percentage of net sales for the three months ended February 1, 1997, was 59.6 percent compared to 59.5 percent for the prior corresponding period. Cost of sales, as a percentage of net sales, for the six months ended February 1, 1997 was 60.3 percent as compared to 58.0 percent for the six months ended February 3, 1996. This change was due to the change in product mix in the periods. The current year period includes the gross margins of medical imaging systems manufactured by Gendex-Del. Research and development expenses increased to approximately $1.1 million for the three months ended February 1, 1997 from approximately $789,000 for the three months ended February 3, 1996. Research and development expenses increased to approximately $2.2 million for the six months ended February 1, 1997 from approximately $1.4 million for the six months ended February 3, 1996. The increase was attributable to Gendex-Del and the increase in other research and development activities. The Company continues to invest in research and development in order to introduce new state-of-the-art products for its medical and industrial markets. Selling, general and administrative expenses were approximately $2.4 million for the three months ended February 1, 1997 as compared to approximately $1.8 million for the same period in the prior year. Selling, general and administrative expenses increased to approximately $4.8 million for the six months ended February 1, 1997 from approximately $3.4 million for the same period in the prior year. These increases are primarily attributable to the inclusion of the selling, general and administrative expenses of Gendex-Del. Net interest income was approximately $28,000 for the three months ended February 1, 1997 as compared to net interest expense of approximately $286,000 for the corresponding period in the prior year. Net interest income was approximately $47,000 for the six months ended February 1, 1997 compared to approximately $595,000 of interest expense for the corresponding prior period. Interest expense was significantly reduced as the Company paid off substantially all of its debt. Interest income resulted from the investment of some of the proceeds from the public offering of the Company's common stock, which were in money market instruments and high grade commercial paper. Income tax expense was 30.5 percent of pre-tax income for the six months ended February 1, 1997 and for the six months ended February 3, 1996. The decrease from statutory rates is primarily due to sales being made through the Company's Foreign Sales Corporation, research and development and other tax credits. Net income increased to approximately $1.1 million for the three months ended February 1, 1997, an increase of approximately 76.9 percent from approximately $633,000 for the prior corresponding period. Net income per common share for the three months ended February 1, 1997 increased to $.13 from $.12, on a primary basis, even though the weighted number of common shares outstanding and common share equivalents increased approximately 53.6 percent to 8,583,517 from 5,587,027 shares in the prior corresponding period. Net income per common share for the three months ended February 1, 1997 increased to $.13 from $.11, on a fully diluted basis, even though the weighted number of common shares outstanding and common share equivalents increased approximately 54.0 percent to 8,620,692 from 5,597,408 shares in the prior corresponding period. Net income -8- increased to approximately $2.1 million for the six months ended February 1, 1997, an increase of approximately 81.3 percent from approximately $1.2 million for the prior corresponding period. Net income per common share for the six months ended February 1, 1997 increased to $.25 from $.22, on a primary basis, even though the weighted number of common shares outstanding and common share equivalents increased approximately 53.1 percent to 8,523,422 from 5,566,839 shares in the prior corresponding period. Net income per common share for the six months ended February 1, 1997 increased to $.25 from $.21, on a fully diluted basis, even though the weighted number of common shares outstanding and common share equivalents increased approximately 53.6 percent to 8,561,147 from 5,572,030 shares in the prior corresponding period. The increases in net income for the three and six month periods ended February 1, 1997 are primarily due to higher sales to the Company's medical imaging and diagnostic product customers. The Company's growth strategy continues to be to grow internally by expanded product development and marketing and by acquisition and/or joint ventures with specific focus on cost-effective medical imaging and diagnostic products. The backlog of unshipped orders at February 1, 1997 was approximately $22.2 million. LIQUIDITY AND CAPITAL RESOURCES The Company has funded its operations and acquisitions through a combination of cash flow from operations, bank borrowing and the issuance of the Company's common stock. Working Capital. At February 1, 1997 and August 3, 1996, the Company's working capital was approximately $34.5 million and $32.6 million, respectively. On February 1, 1997 and August 3, 1996 the Company had approximately $5.5 million and $5.8 million, respectively, in cash and cash equivalents. Inventory at February 1, 1997 increased approximately $1.7 as compared to August 3, 1996. Major new orders received in the quarter ended February 1, 1997 resulted in the increase of inventory levels. Credit Facility and Borrowing. At February 1, 1997, the Company had a $14.0 million revolving credit line and a $10.0 million acquisition credit line. The available portion of the revolving credit line was approximately $13.6 million, after deducting outstanding letters of credit of approximately $262,500, and $9.6 million was available under its acquisition credit line. Capital Expenditures. The Company continues to invest in capital equipment, principally for its manufacturing operations, in order to improve its manufacturing capability and capacity. The Company has expended approximately $608,000 and $1.1 million for capital equipment for the three month and six month periods ended February 1, 1997, respectively. The Company anticipates that cash generated from operations and amounts available under its bank lending facilities will be sufficient to satisfy its current operating cash needs. -9- PART II Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults on Senior Securities None Item 4. Submission to a Vote of Security Holders At the annual meeting of stockholders of the Company held on February 13, 1997, the stockholders: (a) Elected the following directors: Natan V. Bertman, David Michael, Seymour Rubin James Tiernan and Leonard A. Trugman. Election of Directors For Withheld --------------------- --------- -------- L.A. Trugman 6,681,327 75,940 N.V. Bertman 6,409,791 347,476 D. Michael 6,682,226 75,041 S. Rubin 6,678,742 78,525 J. Tiernan 6,675,030 82,237 (b) Approved the proposal to amend the Company's Certificate of Incorporation to increase the number of authorized shares of the Company's common stock from 10,000,000 to 20,000,000 shares. For Against Abstain Broker No Vote --------- ------- ------- -------------- 6,386,948 313,972 54,575 1,772 Item 5. Other Information (i) On November 19, 1996, the Registrant declared a 3 percent stock dividend payable on December 23, 1996 to holders of record on December 4, 1996. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 3.1 - Certificate of Amendment of the Certificate of Incorporation dated February 13, 1997 Exhibit 11 - Computation of Earnings per Common Share Exhibit 27 - Financial Data Schedule (b) Report on Form 8-K: None -10- 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 Vice President - Finance, Secretary and Chief Accounting Officer Dated: March 11, 1997 -11- EX-3.(I) 2 CERT. OF AMENDMENT OF CERT. OF INCORP. CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF DEL GLOBAL TECHNOLOGIES CORP. Under Section 805 of the Business Corporation Law ---------------------------------------------- It is hereby certified that: FIRST: The name of the Corporation is DEL GLOBAL TECHNOLOGIES CORP. (the "Corporation"). SECOND: The certificate of incorporation of the Corporation was filed by the Department of State on October 26, 1954. The name under which the Corporation was formed is Del Electronics Corp. THIRD: The amendment of the certificate of incorporation of the Corporation effected by this certificate of amendment is as follows: to increase the number of authorized shares of common stock, $.10 par value, from ten million (10,000,000) shares to twenty million (20,000,000) shares, $.10 par value. FOURTH: To accomplish the foregoing amendment, paragraph "Third" of the certificate of incorporation of the Corporation is hereby amended to read as follows: THIRD: the aggregate number of shares which the Corporation shall have authority to issue is Twenty Million (20,000,000) shares of common stock, $.10 par value." FIFTH: The foregoing amendment of the certificate of incorporation of the Corporation was authorized by the Board of Directors and followed by the majority vote of the holders of all of the outstanding shares of the Corporation entitled to vote on such amendment of the certificate of incorporation. IN WITNESS WHEREOF, we have hereunto signed this certificate this 13th day of February, 1997, and affirmed that the statements made herein are true under penalties of perjury. /S/LEONARD TRUGMAN - ------------------ Leonard A. Trugman, President /S/MICHAEL TABER - ---------------- Michael Taber, Secretary EX-11 3 COMPUTATION OF EARNINGS PER COMMON SHARE EXHIBIT 11 DEL GLOBAL TECHNOLOGIES CORP. & SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE THREE MONTHS AND SIX MONTHS ENDED FEBRUARY 1, 1997
Three Months Ended Six Months Ended February 1, 1997 February 1, 1997 ----------------------- ----------------------- Fully Fully Primary Diluted Primary Diluted ---------- ---------- ---------- ---------- Net income $1,119,848 $1,119,848 $2,108,302 $2,108,302 ========== ========== ========== ========== Reconciliation of weighted average number of shares outstanding to amount used in earnings per share computation: Weighted average number of shares outstanding 7,499,879 7,499,879 7,446,246 7,446,246 Add - shares issuable from assumed exercise of options under the Treasury Stock method 1,083,638 1,120,813 1,077,176 1,114,901 ---------- ---------- ---------- ---------- Weighted average number of shares outstanding as adjusted 8,583,517 8,620,692 8,523,422 8,561,147 ========== ========== ========== ========== Net income per common share $ 0.13 $ 0.13 $ 0.25 $ 0.25 ========== ========== ========== ==========
The Company utilized the Treasury Stock method for computing net income per common share. EX-27 4 FDS -- ART. 5 FOR 10-Q
5 0000027748 DEL GLOBAL TECHNOLOGIES CORP. 1 U.S. DOLLARS 6-MOS AUG-02-1997 AUG-04-1996 FEB-01-1997 1.000 5,528,176 640,283 9,752,322 219,063 25,496,375 43,198,032 14,723,611 4,519,006 60,268,110 8,684,219 0 0 0 746,767 48,666,417 49,413,184 25,003,255 25,003,255 15,064,837 15,064,837 6,952,186 0 (47,296) 3,033,528 925,226 2,108,302 0 0 0 2,108,302 0.25 0.25
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