##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the quarterly period ended October 28, 2006
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 0-3319
 DEL GLOBAL TECHNOLOGIES CORP.
  New York
    
    13-1784308(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 
 
 
 
 þ o
  o o þ
 o þ




---



##### 



DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
 Table of Contents
 Page No.Part I. Financial Information:Item 1. Financial Statements (Unaudited)Consolidated Statements of Operations for the Three Months ended October 28, 2006 and October 29, 2005
    
    3Consolidated Balance Sheets  October 28, 2006 and July 29, 2006
    
    4-5Consolidated Statements of Cash Flows for the Three Months Ended October 28, 2006 and October 29, 2005
    
    6Notes to Consolidated Financial Statements
    
    7-16Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    16-24Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    24-25Item 4. Controls and Procedures
    
    25Part II. Other Information:Item 1. Legal Proceedings
    
    26-27Item 6. Exhibits
    
    27Signatures
    
    28CertificationsCertificate of Amendment of the Certificate of IncorporationWaive and Fourth AmendmentCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  2




---



##### Table of Contents



PART I FINANCIAL INFORMATION
 
 ITEM 1 FINANCIAL STATEMENTS
 DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
   Three Months EndedOctober 28, 2006
    
    
    October 29, 2005NET SALES
    
    $
    19,286
    
    
    $
    16,239COST OF SALES
    
    
    15,275
    
    
    
    12,504GROSS MARGIN
    
    
    4,011
    
    
    
    3,735Selling, general and administrative
    
    
    3,342
    
    
    
    2,999Research and development
    
    
    430
    
    
    
    353Litigation settlement costs
    
    
    
    
    
    
    500Total operating expenses
    
    
    3,772
    
    
    
    3,852OPERATING INCOME (LOSS)
    
    
    239
    
    
    
    (117
    )Interest expense
    
    
    327
    
    
    
    210Other income
    
    
    (9
    )
    
    
    (13
    )NET LOSS BEFORE INCOME TAX PROVISION
AND MINORITY INTEREST
    
    
    (79
    )
    
    
    (314
    )INCOME TAX PROVISION
    
    
    408
    
    
    
    172NET LOSS BEFORE MINORITY INTEREST
    
    
    (487
    )
    
    
    (486
    )MINORITY INTEREST
    
    
    
    
    
    
    (3
    )NET LOSS
    
    $
    (487
    )
    
    $
    (483
    )LOSS PER
COMMON SHARE (BASIC AND DILUTED)Net loss per basic and diluted share
    
    $
    (0.04
    )
    
    $
    (0.05
    )Weighted average number of common
shares outstanding:Basic and Diluted
    
    
    11,645,689
    
    
    
    10,630,188
  3




---



##### Table of Contents



DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
    October 28,
    
    
    July 29,2006
    
    
    2006CURRENT ASSETSCash and cash equivalents
    
    $
    522
    
    
    $
    333Trade receivables (net of allowance
for doubtful accounts of $1,138 and $1,095
at October 28, 2006 and July 29, 2006,
respectively)
    
    
    16,593
    
    
    
    17,382Inventories
    
    
    17,732
    
    
    
    16,436Prepaid expenses and other current
assets
    
    
    928
    
    
    
    808Total current assets
    
    
    35,775
    
    
    
    34,959Fixed assets  net
    
    
    6,306
    
    
    
    6,366Deferred income tax asset-non current
    
    
    1,163
    
    
    
    1,159Goodwill
    
    
    6,437
    
    
    
    6,437Other assets
    
    
    206
    
    
    
    232Total non-current assets
    
    
    14,112
    
    
    
    14,194Total Assets
    
    $
    49,887
    
    
    $
    49,153
  4




---



##### Table of Contents



DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
    October 28,
    
    
    July 29,2006
    
    
    2006CURRENT LIABILITIESShort-term credit facilities
    
    $
    4,739
    
    
    $
    5,959Current portion of long-term
bank debt
    
    
    999
    
    
    
    1,142Current portion of long-term
subordinated debt
    
    
    2,481
    
    
    
    2,415Accounts payable  trade
    
    
    10,181
    
    
    
    11,037Accrued expenses
    
    
    8,957
    
    
    
    7,244Litigation settlement reserves
    
    
    150
    
    
    
    200Income taxes payable
    
    
    411
    
    
    
    27Total current liabilities
    
    
    27,918
    
    
    
    28,024NON-CURRENT LIABILITIESLong-term debt, less current portion
    
    
    6,453
    
    
    
    5,133Deferred income taxes
    
    
    302
    
    
    
    302Other long-term liabilities
    
    
    2,966
    
    
    
    2,880Total non-current liabilities
    
    
    9,721
    
    
    
    8,315Total liabilities
    
    
    37,639
    
    
    
    36,339Commitments and contingenciesSHAREHOLDERS EQUITYCommon stock, $.10 par value;
authorized 20,000,000 shares;
issued  12,283,294 and 12,258,294
at October 28, 2006 and July 29, 2006
respectively
    
    
    1,228
    
    
    
    1,226Additional paid-in capital
    
    
    67,740
    
    
    
    67,679Accumulated other comprehensive income
    
    
    1,418
    
    
    
    1,610Accumulated deficit
    
    
    (52,592
    )
    
    
    (52,155
    )Less common stock in treasury  622,770
shares
    
    
    (5,546
    )
    
    
    (5,546
    )Total shareholders equity
    
    
    12,248
    
    
    
    12,814TOTAL LIABILITIES AND SHAREHOLDERS
EQUITY
    
    $
    49,887
    
    
    $
    49,153
  5




---



##### Table of Contents



DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
   Three Months EndedOctober 28, 2006
    
    
    October 29, 2005CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (487
    )
    
    $
    (483
    )Adjustments to reconcile net loss to net cash
provided by (used in) operating activitiesDepreciation and amortization
    
    
    244
    
    
    
    238Imputed interest  Subordinated note
    
    
    68
    
    
    
    65Minority interest
    
    
    
    
    
    
    3Stock-based compensation expense
    
    
    46
    
    
    
    64Deferred income tax provision
    
    
    9
    
    
    
    57Non-cash litigation settlement costs
    
    
    
    
    
    
    500Payment of litigation settlement costs
    
    
    (50
    )
    
    
    (151
    )Other
    
    
    57
    
    
    
    10Changes in operating assets and liabilitiesTrade receivables
    
    
    934
    
    
    
    1,222Inventories
    
    
    (1,175
    )
    
    
    (803
    )Prepaid expenses and other current assets
    
    
    (116
    )
    
    
    (201
    )Other assets
    
    
    26
    
    
    
    (219
    )Accounts payable  trade
    
    
    (954
    )
    
    
    (1,550
    )Accrued expenses
    
    
    1,432
    
    
    
    (593
    )Income taxes payable
    
    
    400
    
    
    
    104Other long-term liabilities
    
    
    56
    
    
    
    204Net cash provided by (used in) operating activities
    
    
    490
    
    
    
    (1,533
    )CASH FLOWS FROM INVESTING ACTIVITIES:Fixed asset purchases
    
    
    (193
    )
    
    
    (130
    )Net cash used in investing activities
    
    
    (193
    )
    
    
    (130
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repayment of short-term borrowings
    
    
    (1,251
    )
    
    
    (1,219
    )Borrowings of long-term debt
    
    
    1,557
    
    
    
    2,000Repayment of long-term debt
    
    
    (433
    )
    
    
    (359
    )Proceeds from stock option exercise
    
    
    17
    
    
    
    Net cash
(used in) /provided by financing activities
    
    
    (110
    )
    
    
    422EFFECT OF EXCHANGE RATE CHANGES ON CASH
    
    
    2
    
    
    
    7NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    189
    
    
    
    (1,234
    )CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF THE PERIOD
    
    
    333
    
    
    
    1,466CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
    
    $
    522
    
    
    $
    232SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid forInterest
    
    $
    145
    
    
    $
    84Taxes
    
    
    
    
    
    
    3
  6




---



##### Table of Contents



DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   BASIS OF PRESENTATION
   REVENUE RECOGNITION
  NEW ACCOUNTING PRONOUNCEMENTS
  7




---



##### Table of Contents



Considering the Effects of Prior Year Misstatements when Quantifying Current Year
Misstatements.
 Fair Value Measurements
 8




---



##### Table of Contents



INVENTORIES
  October 28, 2006
    
    
    July 29, 2006Raw materials and purchased parts
    
    $
    14,523
    
    
    $
    13,660Work-in-process
    
    
    3,537
    
    
    
    3,747Finished goods
    
    
    3,549
    
    
    
    2,73221,609
    
    
    
    20,139Less allowance for obsolete and excess
inventories
    
    
    (3,877
    )
    
    
    (3,703
    )Total inventories
    
    $
    17,732
    
    
    $
    16,436
 PRODUCT WARRANTIES
   COMPREHENSIVE LOSS
  9




---



##### Table of Contents



Three Months EndedOctober 28, 2006
    
    
    October 29, 2005Net loss
    
    $
    (487
    )
    
    $
    (483
    )Foreign currency translation adjustments
    
    
    (192
    )
    
    
    (25
    )Comprehensive loss
    
    $
    (679
    )
    
    $
    (508
    )
 INCOME (LOSS) PER SHARE
 Three Months EndedOctober 28, 2006
    
    
    October 29, 2005Numerator:Net loss
    
    $
    (487
    )
    
    $
    (483
    )DenominatorDenominator for basic income loss per share -
Weighted average number of common shares
outstanding
    
    
    11,645,689
    
    
    
    10,630,188Effect of dilutive securities
    
    
    
    
    
    
    Denominator for diluted loss per share
    
    
    11,645,689
    
    
    
    10,630,188Loss per common share-basic and diluted
    
    $
    (0.04
    )
    
    $
    (0.05
    )
  SHORT-TERM CREDIT FACILITIES, LONG-TERM DEBT AND SUBORDINATED NOTE
  October 28,
    
    July 28,2006
    
    2006Revolving lines of credit:Domestic
    
    $
    531
    
    
    $
    2,672Foreign
    
    
    4,208
    
    
    
    3,287Total short-term credit facilities
    
    
    4,739
    
    
    
    5,959Domestic term loan
    
    $
    1,769
    
    
    $
    1,817Domestic subordinated note
    
    
    2,481
    
    
    
    2,415Foreign capital lease obligations
    
    
    2,748
    
    
    
    2,800Foreign medium-term credit facility
    
    
    1,720
    
    
    
    324Foreign Italian government loans
    
    
    1,215
    
    
    
    1,334Total long term debt
    
    
    9,933
    
    
    
    8,690Less current portion of long-term bank debt
    
    
    (999
    )
    
    
    (1,142
    )Less current portion of subordinated debt
    
    
    (2,481
    )
    
    
    (2,415
    )Long term debt, less current portion
    
    $
    6,453
    
    
    $
    5,133
  10




---



##### Table of Contents



11




---



##### Table of Contents



SEGMENT INFORMATION
  Medical
    
    
    PowerFor three months ended
    
    Systems
    
    
    ConversionOctober 28, 2006
    
    Group
    
    
    Group
    
    
    Other
    
    
    TotalNet sales to external customers
    
    $
    16,621
    
    
    $
    2,665
    
    
    
    
    
    
    $
    19,286Cost of sales
    
    
    13,462
    
    
    
    1,813
    
    
    
    
    
    
    
    15,275Gross margin
    
    
    3,159
    
    
    
    852
    
    
    
    
    
    
    
    4,011Operating expenses
    
    
    2,604
    
    
    
    544
    
    
    
    624
    
    
    
    3,772Operating income (loss)
    
    $
    555
    
    
    $
    308
    
    
    $
    (624
    )
    
    $
    239
 Medical
    
    
    PowerFor three months ended
    
    Systems
    
    
    ConversionOctober 29, 2005
    
    Group
    
    
    Group
    
    
    Other
    
    
    TotalNet Sales to Unaffiliated Customers
    
    $
    12,776
    
    
    $
    3,463
    
    
    
    
    
    
    $
    16,239Cost of sales
    
    
    10,161
    
    
    
    2,343
    
    
    
    
    
    
    
    12,504Gross margin
    
    
    2,615
    
    
    
    1,120
    
    
    
    
    
    
    
    3,735Operating expenses
    
    
    2,355
    
    
    
    567
    
    
    
    430
    
    
    
    3,352Litigation settlement costs
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    500Operating income (loss)
    
    $
    260
    
    
    $
    553
    
    
    $
    (930
    )
    
    $
    (117
    )
 12




---



##### Table of Contents



STOCK OPTION PLAN
    WeightedAverageShares
    
    
    Exercise(in 000s)
    
    
    PriceOutstanding at July 29, 2006
    
    
    1,545,996
    
    
    $
    3.93Granted
    
    
    335,000
    
    
    
    1.45Exercised
    
    
    (25,000
    )
    
    
    1.00Outstanding at October 28, 2006
    
    
    1,855,996
    
    
    $
    3.55Exercisable at October 28, 2006
    
    
    1,505,994
    
    
    $
    3.97
   13




---



##### Table of Contents



Three Months EndedOct. 28, 2006
    
    Oct. 29, 2005Proceeds from stock options exercised
    
    $
    25
    
    
    $
    Intrinsic value of stock options exercised
    
    
    13
    
    
    
    
 CONTINGENCIES
    14




---



##### Table of Contents



ACQUISITION OF MINORITY INTEREST IN VILLA
  AUTHORIZED SHARES OF THE CORPORATIONS COMMON STOCK
  15




---



##### Table of Contents



16




---



##### Table of Contents



DEL GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES
 
 Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  OVERVIEW
  CRITICAL ACCOUNTING POLICIES
  Revenue Recognition
  17




---



##### Table of Contents



Deferred Income Taxes
     Obsolete and excess inventory
  18




---



##### Table of Contents



Valuation of finished goods inventories
  CONSOLIDATED RESULTS OF OPERATIONS
      19




---



##### Table of Contents



FINANCIAL CONDITION
 LIQUIDITY AND CAPITAL RESOURCES
       20




---



##### Table of Contents



FY 2007
    
    
    FY 2008
    
    
    FY 2010
    
    
    2012 andObligations
    

Total (1)
    
    
    2Q-4Q
    
    
    and 2009
    
    
    and 2011
    
    
    beyondLong-Term Debt Obligations incl interest
    
    $
    4,704
    
    
    $
    651
    
    
    $
    2,175
    
    
    $
    1,824
    
    
    $
    54Capital Lease Obligations
    
    
    2,748
    
    
    
    347
    
    
    
    769
    
    
    
    1,632
    
    
    
    Subordinated Note
    
    
    2,481
    
    
    
    2,481
    
    
    
    
    
    
    
    
    
    
    
    Operating Lease Obligations
    
    
    517
    
    
    
    314
    
    
    
    203
    
    
    
    
    
    
    
    Total Contractual Cash Obligations
    
    $
    10,450
    
    
    $
    3,793
    
    
    $
    3,147
    
    
    $
    3,456
    
    
    $
    54
 
 (1)
    
    In addition to the long term obligations above, as of October 28, 2006 we had approximately
$0.5 million in revolving credit debt in the US and $4.2 million in Italy. The Italian credit
facilities are generally renewed on a yearly basis and the North Fork Facility, as amended,
matures in August 2008.   21




---



##### Table of Contents



22




---



##### Table of Contents



23




---



##### Table of Contents



Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  24




---



##### Table of Contents



Item 4 CONTROLS AND PROCEDURES
    25




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
     26




---



##### Table of Contents



Other
Legal Matters
 
 Item 6. EXHIBITS
 3.1*
    
    Certificate of Amendment of the Certificate of Incorporation of Del
Global Technologies Corp.10.63*
    
    Waiver and Fourth Amendment to the Loan and Security Agreement
dated as of December 6, 2006 by and among Del Global Technologies
Corp., Del Medical Imaging Corp., RFI Corporation (Borrowers) and
North Fork Business Capital Corporation.31.1*
    
    Certification of the Chief Executive Officer, James A. Risher,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Chief Financial Officer, Mark A. Zorko, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of the Chief Executive Officer, James A. Risher,
pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2*
    
    Certification of the Chief Financial Officer, Mark A. Zorko,
pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith 27




---



##### Table of Contents



SIGNATURES
  DEL GLOBAL TECHNOLOGIES CORP./s/ James A. RisherJames A. RisherChief Executive Officer/s/
Mark A. ZorkoMark A. ZorkoChief Financial Officer  28