Del Global Technologies Corp. (Del Global), a diagnostic imaging company, has reported consolidated net sales of $24.7 million, for the second quarter of fiscal 2009, compared with consolidated net sales of $29.8 million in the year-ago quarter. It has reported net loss of $1.8 million, or $0.08 per share, for the second quarter of fiscal 2009, compared to net income of $1.4 million, or $0.06 per share, in the year-ago quarter.
The Medical Systems Group’s second quarter fiscal 2009 sales of $21.5 million were $5.7 million or 20.9% less than the prior year’s second quarter with decreases primarily due to decreased international sales volume attributable to a favorable prior year shipment level on an expired international contract partially offset by increased domestic medical equipment shipments. Sales at the Power Conversion Group during the second quarter of fiscal 2009 were $3.2 million, about $0.5 million more than prior year’s sales. This increase was due to stronger sales bookings in the current period.
Consolidated gross margins as a percent of sales were 23.4% for the second quarter of fiscal 2009, compared with 25.1% in the second quarter of fiscal 2008. For the Medical Systems Group, gross margins of 21.3% in the second quarter of fiscal 2009 were lower than gross margins of 24.0 % in the second quarter of fiscal 2008 due primarily to increased sales in our digital products. Generally, digital products have a higher selling price than the non-digital product offerings, but they also have a higher cost resulting in lower gross margin percentages. The Power Conversion Group’s gross margins for the second quarter of fiscal 2009 were 37.9%, versus 35.9% in the prior year second quarter, reflecting increased margins in the product mix.
The total operating expenses increased $2.0 million to $6.9 million in the second quarter of fiscal 2009 from $4.9 million for the same period in the prior fiscal year. This increase was primarily due to a $2.5 million litigation settlement reserve for a legal settlement with a former employee, offset by reduced selling and administration and travel expenses during the second quarter of fiscal 2009. Research and development expenses in the second quarter of fiscal 2009 of $0.5 million were $0.2 million lower compared with the same period in the prior year, primarily due to the effect of favorable currency translation rates.
The total operating loss for the second quarter of fiscal 2009 was $(1.1) million compared with operating income of $2.6 million in the comparable prior year period. Operating income at the Medical Systems Group for the second quarter of fiscal 2009 was $2.4 million compared with $2.7 million for the same period the prior year. The Power Conversion Group generated operating income of $0.6 million in the second quarter of fiscal 2009, an increase over the comparable prior year period of $0.3 million.
For the second quarter of fiscal 2009, there were about 23.5 million weighted average common shares diluted outstanding (“shares outstanding”) as compared with 24.1 million shares outstanding diluted in the second quarter of fiscal 2008. The decrease in diluted shares outstanding was due to the impact of dilutive warrants that expired August 2, 2008, the expiration of unexercised employee stock options and the stock repurchase program.
The consolidated backlog at January 31, 2009 was $17.6 million compared with a backlog at August 2, 2008 of about $22.7 million. The Medical System’s segment experienced a decrease in second quarter backlog of $5.0 million from August 2, 2008. This decrease was due to a weak global economy, resulting in lower bookings during the first six month period of fiscal 2009. The backlog in the Power Conversion Group of $5.3 million reflects a decrease of $0.1 million from levels at the beginning of the fiscal year. Substantially all of the backlog should result in shipments within the next 12 to 15 months.
Del Global’s balance sheet at January 31, 2009 reflected working capital of $24.0 million, which included $9.7 million of cash and cash equivalents. As of January 31, 2009, Del Global did not have any outstanding borrowings under its US or Italian revolving credit facilities. In the aggregate, Del Global had about $17.0 million of borrowing availability under its domestic and Italian revolving credit facilities.
James A. Risher, Del Global’s president and chief executive officer, commented, “Our results during the fiscal 2009 second quarter reflect our ability to work through what many believe is the beginning of a general deceleration in the worldwide economy. Although economic conditions for the remainder of fiscal 2009 remain uncertain, we believe that our strong financial position, a burgeoning product portfolio, and customer relationships should help us mitigate the impact of any economic sluggishness. Our recent success in the international marketplace, specifically with the Apollo product line, leaves us optimistic that through new product introductions and strategic agreements we can continue to stimulate demand in our existing customer base while penetrating new profitable markets both in the U.S. and overseas.”