-----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, A+j01ZTyZhNSENSWUQPBtcSwQzaq/QGEiN8lO4NZNHrr+dkrzC5hdCSGpumgW7jd nuBEXXrNZUKqsRCIf/JtaQ== 0000027748-98-000002.txt : 19980616 0000027748-98-000002.hdr.sgml : 19980616 ACCESSION NUMBER: 0000027748-98-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980502 FILED AS OF DATE: 19980615 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: SEC FILE NUMBER: 000-03319 FILM NUMBER: 98648246 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 May 2, 1998 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 June 12, 1998. Common Stock - 7,602,802 PART I Item 1. FINANCIAL STATEMENTS Consolidated Balance Sheets - May 2, 1998 and August 2, 1997 Consolidated Statements of Income for the Three Months and Nine Months ended May 2, 1998 and May 3, 1997 Consolidated Statements of Cash Flows for the Nine Months ended May 2, 1998 and May 3, 1997 Notes to Consolidated Financial Statements -1- DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS May 2, August 2, 1998 1997 ----------- ----------- CURRENT ASSETS Cash and cash equivalents $ 5,942,419 $ 6,070,608 Investments available-for-sale 883,103 722,566 Trade receivables - net 13,047,854 11,211,357 Cost and estimated earnings in excess of billings on uncompleted contracts 2,886,233 1,868,002 Inventory 27,344,733 24,681,348 Prepaid expenses and other current assets 2,360,024 1,808,762 ----------- ----------- Total current assets 52,464,366 46,362,643 ----------- ----------- FIXED ASSETS - Net 11,936,275 11,159,010 INTANGIBLES - Net 984,330 1,112,991 GOODWILL - Net 4,772,291 4,135,409 DEFERRED CHARGES 418,052 507,933 OTHER ASSETS 863,695 851,824 ----------- ----------- TOTAL $71,439,009 $64,129,810 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 123,977 $ 127,999 Accounts payable - trade 5,513,939 3,936,529 Accrued liabilities 4,684,655 3,699,188 Deferred compensation liability 859,076 722,566 Income taxes 705,045 868,949 ----------- ----------- Total current liabilities 11,886,692 9,355,231 ----------- ----------- LONG-TERM LIABILITIES LONG-TERM DEBT (less current portion included above) 267,877 411,127 OTHER 731,237 725,258 DEFERRED INCOME TAXES 1,290,122 1,107,964 ----------- ----------- Total liabilities 14,175,928 11,599,580 ----------- ----------- SHAREHOLDERS' EQUITY Common stock, $.10 par value; Authorized 20,000,000 shares; Issued and outstanding - 7,832,412 shares at May 2, 1998 and 7,516,234 shares at August 2, 1997 783,240 751,622 Additional paid-in capital 47,977,393 45,909,517 Retained earnings 10,636,527 6,572,318 ----------- ----------- 59,397,160 53,233,457 ----------- ----------- Less common stock in treasury - 244,155 shares at May 2, 1998 and 104,255 at August 2, 1997 2,134,079 703,227 ----------- ----------- Total shareholders' equity 57,263,081 52,530,230 ----------- ----------- TOTAL $71,439,009 $64,129,810 =========== =========== See notes to consolidated financial statements -2- DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended ---------------------------- ---------------------------- May 2, May 3, May 2, May 3, 1998 1997 1998 1997 ------------ ------------ ------------ ------------ NET SALES $ 16,682,726 $ 14,317,165 $ 44,565,977 $ 39,320,420 ------------ ------------ ------------ ------------ COSTS AND EXPENSES: Cost of sales 9,995,579 8,944,620 26,546,139 24,009,457 Research and development 1,548,915 1,190,800 4,249,161 3,383,239 Selling, general and administrative 3,019,143 2,365,075 7,897,980 7,124,822 Interest income - net (5,530) (30,355) (104,080) (77,651) ------------ ------------ ------------ ------------ 14,558,107 12,470,140 38,589,200 34,439,867 ------------ ------------ ------------ ------------ INCOME BEFORE PROVISION FOR INCOME TAXES 2,124,619 1,847,025 5,976,777 4,880,553 PROVISION FOR INCOME TAXES 679,878 563,343 1,912,569 1,488,569 ------------ ------------ ------------ ------------ NET INCOME $ 1,444,741 $ 1,283,682 $ 4,064,208 $ 3,391,984 ============ ============ ============ ============ Per share amounts: Basic earnings per share $ .19 $ .17 $ .54 $ .46 ============ ============ ============ ============ Diluted earnings per share $ .18 $ .16 $ .50 $ .42 ============ ============ ============ ============ Weighted average number of common shares outstanding 7,541,988 7,402,899 7,484,513 7,400,921 ============ ============ ============ ============ Weighted average number of common shares outstanding and common share equivalents 8,228,828 8,067,904 8,191,038 8,070,042 ============ ============ ============ ============
See notes to consolidated financial statements -3- DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended -------------------------- May 2, May 3, 1998 1997 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 4,064,208 $ 3,391,984 Adjustments to reconcile net income to net cash provided by operating activities: Imputed interest 62,751 51,045 Depreciation 1,026,803 722,227 Amortization 405,290 390,621 Deferred income tax provision 115,602 195,337 Tax benefit from exercise of stock options and warrants 780,959 277,955 Changes in assets and liabilities: Increase in trade receivables (1,836,497) (634,698) Increase in cost and estimated earnings in excess of billings on uncompleted contracts (1,018,231) (1,301,173) Increase in inventory (2,530,225) (1,264,248) Increase in prepaid and other current assets (530,755) (383,702) Decrease (increase) in other assets 1,285 (6,124) Increase in accounts payable - trade 1,577,410 970,824 Increase (decrease) in accrued liabilities 890,941 (549,418) Increase in deferred compensation liability 136,510 126,106 Decrease in income taxes payable (163,904) (38,417) ----------- ----------- Net cash provided by operating activities excluding acquisition 2,982,147 1,948,319 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for fixed assets (1,731,275) (1,760,338) Investment in marketable securities (160,537) (170,364) Cash paid to acquire selected assets or subsidiary (899,926) (15,000) Payments to former shareholders of subsidiary acquired (56,772) (41,775) ----------- ----------- Net cash used in investing activities (2,848,510) (1,987,477) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Net repayment of bank borrowing (147,272) (38,927) Payment for repurchase of shares (1,430,852) (178,950) Proceeds from exercise of stock options and warrants 1,275,801 175,338 Other 40,497 21,666 ----------- ----------- Net cash used in financing activities (261,826) (20,873) ----------- ----------- (Continued) See notes to consolidated financial statements -4- DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended -------------------------- May 2, May 3, 1998 1997 ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS $ (128,189) $ (60,031) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,070,608 5,817,800 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,942,419 $ 5,757,769 =========== =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 62,923 $ 36,109 =========== =========== Income taxes paid $ 1,166,967 $ 1,091,188 =========== =========== SUPPLEMENTAL SCHEDULE OF INVESTING AND FINANCING ACTIVITIES: Acquisition of subsidiary $ -- $ 15,000 Acquisition of selected assets 994,455 -- Acquisition costs in accrued expenses (94,529) -- ----------- ----------- Cash paid to acquire selected assets or subsidiary $ 899,926 $ 15,000 =========== =========== 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 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 May 2, 1998 and the results of its operations and its cash flows for the nine months ended May 2, 1998 and May 3, 1997, respectively. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements as of August 2, 1997, except as stated below. The Company adopted Statement of Financial Accounting Standard 128 ("SFAS 128"), "Earnings Per Share" effective August 3, 1997. The effect of the adoption of SFAS 128 on the three months ended May 3, 1997 was to decrease the weighted average common shares from 8,467,700 to 7,402,899 and the common share equivalents from 8,400,984 to 8,067,904. The effect of the adoption for the nine months ended May 3, 1997 was to decrease the weighted average common shares from 8,504,848 to 7,400,921 and the common share equivalents from 8,507,759 to 8,070,042. Diluted earnings per share were $.16 and $.42 as compared to fully diluted earnings per share of $.15 and $.40 for the three and nine month periods ended May 3, 1997, respectively. The consolidated financial statements should be read in conjunction with the notes to the financial statements as of August 2, 1997. NOTE 2 The results of operations for the three and nine month periods ended May 2, 1998 are not necessarily indicative of the results to be expected for the full year. NOTE 3 INVESTMENTS Investments available-for-sale at May 2, 1998 and August 2, 1997 include $827,163 and $722,566, respectively, for the Company's President's deferred compensation, pursuant to the terms of his employment contract. The liabilities of $859,076 and $722,566, respectively, are recorded as deferred compensation liability. The difference of $31,913 between investments available-for-sale and the deferred compensation liability were cash assets at May 2, 1998 and were classified as such in the financial statements. Gains and losses, either recognized or unrealized, inure to the benefit or detriment of the President's deferred compensation, based upon a contractual arrangement between the President and the Company. At May 2, 1998, the balance of investments available-for-sale of $55,940 are equity securities held by the Company for its own account. Realized and unrealized gains and losses on these securities for the period ended May 2, 1998 were not material and are recorded in the financial statements. NOTE 4 PERCENTAGE OF COMPLETION ACCOUNTING Nine Months Ended May 2, August 2, May 2, 1998 1997 1998 ---------- ---------- ---------- Costs incurred on uncompleted contracts $5,612,951 $3,086,020 $2,526,931 Estimated earnings 3,453,381 1,578,126 1,875,255 ---------- ---------- ---------- 9,066,332 4,664,146 4,402,186 Less: Billings to date 6,180,099 2,796,144 3,383,955 ---------- ---------- ---------- Costs and estimated earnings in excess of billings on uncompleted contracts $2,886,233 $1,868,002 $1,018,231 ========== ========== ========== -6- The backlog of unshipped contracts being accounted for under the percentage of completion method of accounting was approximately $5,421,000 at May 2, 1998. NOTE 5 INVENTORY 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: May 2, August 2, 1998 1997 ----------- ----------- Finished goods $ 4,276,363 $ 3,859,842 Work-in-process 10,825,167 9,770,789 Raw material and purchased parts 12,243,203 11,050,717 ----------- ----------- Total $27,344,733 $24,681,348 =========== =========== NOTE 6 FIXED ASSETS Fixed assets consist of the following: May 2, August 2, 1998 1997 ----------- ----------- Land $ 694,046 $ 694,046 Building 2,146,025 2,146,025 Machinery and equipment 12,443,767 10,865,897 Furniture and fixtures 1,459,339 1,280,216 Leasehold improvements 1,276,067 1,228,992 Transportation equipment 30,103 30,103 ----------- ----------- 18,049,347 16,245,279 Less accumulated depreciation and amortization 6,113,072 5,086,269 ----------- ----------- Net fixed assets $11,936,275 $11,159,010 =========== =========== NOTE 7 ACQUISITION On March 6, 1998 the Company's Gendex-Del Medical Imaging Corp. subsidiary acquired selected assets of X-Ray Technologies, Inc., consisting principally of inventory, fixed assets and designs and technology for approximately $995,000. The newly formed XTek division is a manufacturer of cost-effective medical imaging systems for physicians, chiropractors and veterinarians. -7- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management Discussion and Analysis of Financial Condition and Results of Operations contains forward looking statements. Such statements involve various risks that may cause actual results to differ materially. These risks include, but are not limited to, the ability of the Company to grow internally or by acquisition and to integrate acquired businesses, changing industry or competitive conditions, and other risks referred to in the Company's registration statements and periodic reports filed with the Securities and Exchange Commission. OVERVIEW The Company's net sales have increased as a result of both internal growth and acquisitions. The Company has completed four acquisitions in the past five years: Dynarad (a designer and manufacturer of medical imaging systems and critical electronic subsystems) in fiscal 1993; Bertan (a designer and manufacturer of precision high voltage power supplies and instrumentation for medical and industrial applications) in fiscal 1994; Gendex-Del (a manufacturer of medical imaging systems) in fiscal 1996; and X-ray Technologies, Inc (a manufacturer of medical imaging systems) in fiscal 1998. The Company's net sales have increased from approximately $18.9 million in fiscal 1992 to approximately $54.7 million in fiscal 1997, a compounded annual growth rate of 23.6%. During the past five years the Company has grown internally and through acquisitions into a company whose predominant business is serving the medical imaging and diagnostic markets. The Company's net sales attributable to medical imaging products have increased from approximately $3.4 million or 17.7% of total net sales in fiscal 1992 to approximately $25.7 million or 59% of total net sales and approximately $35.6 million or 65.1% of total net sales in fiscal years 1996 and 1997, respectively. Management believes that recent cost containment trends in the healthcare industry have created opportunities for its cost-effective medical imaging products in domestic and international markets. Some of these trends are increased demand for lower cost medical equipment, outsourcing of systems and critical electronic subsystems by leading Original Equipment Manufacturers ("OEMs"), increased demand for certain diagnostic procedures and lower cost medical services in the global marketplace. RESULTS OF OPERATIONS Net sales for the three months ended May 2, 1998 were approximately $16.7 million as compared to approximately $14.3 million for the three months ended May 3, 1997, an increase of 16.5%. Net sales for the nine months ended May 2, 1998 were approximately $44.6 million as compared to approximately $39.3 million for the nine months ended May 3, 1997, an increase of 13.3%. These increases are primarily due to internal growth from existing operations. Cost of sales, as a percentage of net sales, for the three months ended May 2, 1998 was 59.9% compared to 62.5% for the prior corresponding period. Cost of sales, as a percentage of net sales, for the nine months ended May 2, 1998 was 59.6% compared to 61.1% for the prior corresponding period. These improvements in gross margins are due to reduced manufacturing costs from efficiencies implemented in existing operations. Research and development expenses increased to approximately $1.5 million for the three months ended May 2, 1998 from approximately $1.2 million for the three months ended May 3, 1997, an increase of 30%. Research and development expenses increased to approximately $4.2 million for the nine months ended May 2, 1998 from approximately $3.4 million for the nine months ended May 3, 1997, an increase of 25.6%. These increases were primarily due to new product development. 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. -8- Selling, general and administrative expenses were approximately $3,019,000, or 18.1% of net sales, for the three months ended May 2, 1998 as compared to approximately $2,365,000, or 16.5% of net sales, for the same period in the prior year, an increase of 27.7%. Selling, general and administrative expenses increased to approximately $7,898,000, or 17.7% of net sales for the nine months ended May 2, 1998 from approximately $7,125,000, or 18.1% of net sales over the corresponding period in the prior year, an increase of 10.9%. These increases were due to higher marketing costs, higher investor relations costs and an increase in the allowance for doubtful accounts receivable. Net interest income was approximately $5,500 for the three months ended May 2, 1998 as compared to approximately $30,000 for the corresponding period in the prior year, a decrease of 81.8%. This change was due principally to bank commitment fees on the unused portion of credit lines charged during the quarter. Net interest income was approximately $104,000 for the nine months ended May 2, 1998 as compared to approximately $78,000 for the nine months ended May 3, 1997, an increase of 34%. Income tax expense was 32% of pre-tax income for the three months and nine months ended May 2, 1998. 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 $1.4 million for the three months ended May 2, 1998, an increase of approximately 12.5% from approximately $1.3 million for the prior corresponding period. Net income per common share for the three months ended May 2, 1998 increased to $.19 from $.17 for the three months ended May 3, 1997, an increase of 11.8%. Net income per common share and common share equivalents rose to $.18 from $.16 for the three months ended May 2, 1998 and May 3, 1997, respectively, an increase of 12.5%. The number of common shares outstanding at May 2, 1998 were 7,541,988 as compared to 7,402,899 at May 3, 1997. The number of common shares and common share equivalents at May 2, 1998 increased to 8,228,828 from 8,067,904 at May 3, 1997. Net income increased to approximately $4.1 million for the nine months ended May 2, 1998, an increase of 19.8% from approximately $3.4 million for the prior corresponding period. Net income per common share for the nine months ended May 2, 1998 increased to $.54 from $.46 for the nine months ended May 3, 1997, an increase of 17.4%. Net income per common share and common share equivalents rose to $.50 from $.42 for the nine months ended May 2, 1998 and May 3, 1997, respectively, an increase of 19%. The number of common shares outstanding at May 2, 1998 were 7,484,513 as compared to 7,400,921 at May 3, 1997. The number of common shares and common share equivalents at May 2, 1998 increased to 8,191,038 from 8,070,042 at May 3, 1997. The increase in net income for the three and nine month periods ended May 2, 1998 is due to internal growth and improved gross margins. The backlog of unshipped orders at May 2, 1998 was approximately $34.5 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 May 2, 1998 and August 2, 1997, the Company's working capital was approximately $40.6 million and $37.0 million, respectively. At such dates the Company had approximately $5.9 million and $6.1 million, respectively, in cash and cash equivalents. 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. Trade receivables at May 2, 1998 increased approximately $1.8 million as compared to August 2, 1997 primarily due to increased sales levels, principally of medical imaging products. -9- Cost and estimated earnings in excess of billings on uncompleted contracts increased to approximately $2.9 million at May 2, 1998 from approximately $1.9 million at August 2, 1997 due to new contracts and additional work performed in the nine month period on long term contracts, which are accounted for under the percentage of completion method of accounting. Inventory at May 2, 1998 increased approximately $2.7 million as compared to August 2, 1997, primarily because of additional production requirements of new OEM contracts which commenced in the third quarter of fiscal 1998, the inclusion of XTek inventory and to support higher levels of medical imaging systems sales. Prepaid expenses and other current assets increased approximately $551,000 at May 2, 1998 from August 2, 1997 primarily because of higher levels of prepaid insurance, trade show deposits, printing and catalogue costs. Trade accounts payable increased approximately $1.6 million at May 2, 1998 from August 2, 1997, primarily because of the increased inventory requirements of new OEM contracts and to support higher levels of shipments of medical imaging products. Accrued liabilities increased approximately $985,000 at May 2, 1998 from August 2, 1997, because of the accrual of the annual general liability insurance renewal, funds due for unsettled stock transactions under the stock "Buy- back" program, accrued legal fees associated with the X-ray Technologies, Inc. asset acquisition and accrued compensation cost related to a change in accounting required by the adoption of SFAS 123, "Accounting for Stock-Based Compensation," for non-employee stock options and warrants. Credit Facility and Borrowing. At May 2, 1998, the Company had a $14 million revolving credit line and a $10 million acquisition credit line. The available portions of the revolving credit line and the acquisition credit line were approximately $13.8 and $9.5 million, respectively, after deducting outstanding letters of credit of approximately $200,000. Capital Expenditures. The Company continues to invest in capital equipment, principally for its manufacturing operations and inventory management systems, in order to improve its manufacturing capability and to increase capacity and inventory turns. The Company has expended approximately $1.7 million for capital equipment for the nine month period ended May 2, 1998. Shareholders' Equity. Shareholders' equity increased to approximately $57.3 million at May 2, 1998 from approximately $52.5 million at August 2, 1997, primarily due to the results of operations. Additionally, during the period 310,992 stock options and warrants were exercised, with proceeds of approximately $1.3 million and 139,900 shares of common stock were repurchased at a cost of approximately $1.4 million. Under its extended stock "Buy-back" program since April, 1997 the Company has repurchased 176,900 shares of its common stock for $1,750,737 at prices ranging from $7.88 to $12.25. The average repurchase price was $9.90. Year 2000 Compliance The Company relies on computer technology throughout its business to effectively carry out its day-to-day operations. As the millennium approaches, the Company is assessing all of its computer systems to ensure that they are "Year 2000" compliant. In this process the Company may replace or upgrade certain systems which are not Year 2000 compliant in order to meet its internal needs and those of its customers. The Company expects its Year 2000 project to be completed on a timely basis. However, there can be no assurance that the systems of other companies on which the Company may rely will also be timely converted or that such failure to convert by other companies would not have an adverse effect on the Company's systems. The cost to the Company of such changes are difficult to estimate but are not expected to have a material financial impact. -10- Effects of New Accounting Pronouncements Earnings Per Share. The Company adopted Statement of Financial Accounting Standard 128 ("SFAS 128"), "Earnings Per Share" effective August 3, 1997. The effect of the adoption of SFAS 128 on the three months ended May 3, 1997 was to decrease the weighted average common shares from 8,467,700 to 7,402,899 and the common share equivalents from 8,400,984 to 8,067,904. The effect of the adoption for the nine months ended May 3, 1997 was to decrease the weighted average common shares from 8,504,848 to 7,400,921 and the common share equivalents from 8,507,759 to 8,070,042. Diluted earnings per share were $.16 and $.42 as compared to fully diluted earnings per share of $.15 and $.40 for the three and nine month periods ended May 3, 1997, respectively. Disclosures About Segments of an Enterprise and Related Information. In June 1997, the FASB issued SFAS 131, "Disclosures About Segments of an Enterprise and Related Information." SFAS 131 requires the reporting of profit and loss, specific revenue and expense items, and assets for reportable segments. It also requires the reconciliation of total segment revenues, total segment profit and loss, total segment assets and other amounts disclosed for segments to the corresponding amounts in the general purpose financial statements. This statement is effective for financial statements issued for periods beginning after December 15, 1997. The Company has not yet determined what additional disclosures may be required in connection with adopting SFAS 131. -11- 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 None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 11 - Computation of Earnings per Common Share Exhibit 27 - Financial Data Schedule (b) Report on Form 8-K: None -12- 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: June 15, 1998 -13- EX-11 2 COMPUTATION OF EARNINGS PER COMMON SHARE EXHIBIT 11 DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE THREE MONTHS AND NINE MONTHS ENDED MAY 2, 1998
Three Months Ended Nine Months Ended May 2, 1998 May 2, 1998 ------------------------------- ------------------------------- Per Share Per Share Net Income Shares Amount Net Income Shares Amount ---------- ------ --------- ---------- ------ --------- Basic Earnings Per Share: Income available to common shareholders $1,444,741 7,541,988 $.19 $4,064,208 7,484,513 $.54 ==== ==== Effect of Dilutive Securities: Warrants 18,946 19,461 Options 667,894 687,064 ---------- --------- ---------- --------- Diluted Earnings Per Share $1,444,741 8,228,828 $.18 $4,064,208 8,191,038 $.50 ========== ========= ==== ========== ========= ====
EX-27 3 FDS - ART. 5 FOR 10-Q WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 0000027748 DEL GLOBAL TECHNOLOGIES CORP. 9-MOS AUG-01-1998 AUG-03-1997 MAY-02-1998 5,942,419 883,103 13,274,360 226,506 27,344,733 52,464,366 18,049,347 6,113,072 71,439,009 11,886,692 0 0 0 783,240 56,479,841 71,439,009 44,565,977 44,565,977 26,546,139 26,546,139 12,147,141 0 (104,080) 5,976,777 1,912,569 4,064,208 0 0 0 4,064,208 .54 .50
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