UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





(Mark
One)





ý QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the
quarterly period ended May 2,
2009





or





 ̈ 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.(Exact
      name of registrant as specified in its
charter)





New
      York
              13-1784308(State
      or other jurisdiction of incorporation or organization)
              (I.R.S.
      Employer Identification No.)





50B
      N. Gary Avenue Roselle, IL
            60172(Address
      of principal executive offices)
            (Zip
      Code)





847-288-7000(Registrant’s
      telephone number, including area code)11550
      West King Street, Franklin Park, IL 60131(Former
      name, former address and former fiscal year, if changed since last
      report)





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 ý     No
 ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


Yes  ̈     No
 ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.  (Check one):





Large
      accelerated filer  ̈
                Accelerated
      filer  ̈Non-accelerated
      filer  ̈ (Do
      not check if a smaller reporting company)
                Smaller
      reporting company ý





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).   Yes  ̈   No
ý





The number
of shares of Registrant’s common stock outstanding as of June 1, 2009 was
22,718,306.







DEL
GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES







Table
of Contents




Page
      No.PART
      I
                  FINANCIAL
      INFORMATIONItem
      1.   FINANCIAL STATEMENTS
                  3Consolidated
      Statements of Operations for the Three Months and Nine Months Ended May 2,
      2009
                    and
      April 26, 2008
                  3Consolidated
      Balance Sheets - May 2, 2009 and August 2, 2008
                  4-5Consolidated
      Statements of Cash Flows for the Nine Months ended May 2, 2009 and April
      26, 2008
                  6Notes
      to Consolidated Financial Statements
                  7-14Item
      2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS
                  15-23Item
      3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK
                  24Item
      4.   CONTROLS AND PROCEDURES
                  24PART
      II
                  OTHER
      INFORMATIONItem
      1.    LEGAL PROCEEDINGS
                  24-26Item
      1A. RISK FACTORS
                  26Item
      6.    EXHIBITS
                  27SIGNATURES
                  28EX-31.1
      (EX-31.1):  CertificationEX-31.2
      (EX-31.2):  CertificationEX-32.1
      (EX-32.1):  CertificationEX-32.2
      (EX-32.2):  Certification










PART
I - FINANCIAL INFORMATION




Item
      1
            FINANCIAL
      STATEMENTS




DEL GLOBAL
TECHNOLOGIES CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS


(UNAUDITED)


(DOLLARS
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)




Three
      Months Ended
                                          
                                          
                                          Nine
      Months EndedMay 2,
                                              2009
                                          
                                          
                                          April 26,
                                              2008
                                          
                                          
                                          May 2,
                                              2009
                                          
                                          
                                          April 26,
                                              2008NET
      SALES
                                          
                                          $
                                          17,104
                                          
                                          
                                          $
                                          24,450
                                          
                                          
                                          $
                                          64,131
                                          
                                          
                                          $
                                          81,059COST
      OF SALES
                                          
                                          
                                          14,141
                                          
                                          
                                          
                                          18,735
                                          
                                          
                                          
                                          50,061
                                          
                                          
                                          
                                          61,424GROSS
      MARGIN
                                          
                                          
                                          2,963
                                          
                                          
                                          
                                          5,715
                                          
                                          
                                          
                                          14,070
                                          
                                          
                                          
                                          19,635Selling,
      general and administrative
                                          
                                          
                                          3,211
                                          
                                          
                                          
                                          4,335
                                          
                                          
                                          
                                          10,917
                                          
                                          
                                          
                                          12,240Research
      and development
                                          
                                          
                                          457
                                          
                                          
                                          
                                          677
                                          
                                          
                                          
                                          1,452
                                          
                                          
                                          
                                          1,814Litigation
      settlement
                                          
                                          
                                          36
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          3,736
                                          
                                          
                                          
                                          60Goodwill
      impairment
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,911
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,911Total
      operating expenses
                                          
                                          
                                          3,704
                                          
                                          
                                          
                                          6,923
                                          
                                          
                                          
                                          16,105
                                          
                                          
                                          
                                          16,025OPERATING
      INCOME (LOSS)
                                          
                                          
                                          (741
                                          )
                                          
                                          
                                          (1,208
                                          )
                                          
                                          
                                          (2,035
                                          )
                                          
                                          
                                          3,610Interest
      expense, net of interest income of  $11 and $55for
      the three and nine
                                            months
      ended in 2009, respectively; $26 and $115 for the three and
      nine
                                            months
      ended in 2008
                                          
                                          
                                          (92
                                          )
                                          
                                          
                                          (80
                                          )
                                          
                                          
                                          (192
                                          )
                                          
                                          
                                          (229
                                          )Other
      income (expense)
                                          
                                          
                                          167
                                          
                                          
                                          
                                          (26
                                          )
                                          
                                          
                                          99
                                          
                                          
                                          
                                          29INCOME
      (LOSS) BEFORE INCOME TAX PROVISION
                                          
                                          
                                          (666
                                          )
                                          
                                          
                                          (1,314
                                          )
                                          
                                          
                                          (2,128
                                          )
                                          
                                          
                                          3,410INCOME
      TAX PROVISION
                                          
                                          
                                          149
                                          
                                          
                                          
                                          324
                                          
                                          
                                          
                                          1,096
                                          
                                          
                                          
                                          2,515NET
      INCOME (LOSS)
                                          
                                          $
                                          (815
                                          )
                                          
                                          $
                                          (1,638
                                          )
                                          
                                          $
                                          (3,224
                                          )
                                          
                                          $
                                          895NET
      INCOME (LOSS) PER BASIC SHARE
                                          
                                          $
                                          (0.04
                                          )
                                          
                                          $
                                          (0.07
                                          )
                                          
                                          $
                                          (0.14
                                          )
                                          
                                          $
                                          0.04Weighted
      average shares outstanding
                                          
                                          
                                          22,718,306
                                          
                                          
                                          
                                          24,197,755
                                          
                                          
                                          
                                          23,474,821
                                          
                                          
                                          
                                          24,179,577NET
      INCOME (LOSS) PER DILUTED SHARE
                                          
                                          $
                                          (0.04
                                          )
                                          
                                          $
                                          (0.07
                                          )
                                          
                                          $
                                          (0.14
                                          )
                                          
                                          $
                                          0.04Weighted
      average shares outstanding
                                          
                                          
                                          22,718,306
                                          
                                          
                                          
                                          24,197,755
                                          
                                          
                                          
                                          23,474,821
                                          
                                          
                                          
                                          24,715,789





The
accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.




3




DEL GLOBAL
TECHNOLOGIES CORP. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


(UNAUDITED)


(DOLLARS
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)




ASSETS




May
      2,
                    2009
                
                
                August
      2,
                    2008CURRENT
      ASSETS:Cash
      and cash equivalents
                
                $
                4,005
                
                
                $
                7,828Trade
      receivables net of allowance for doubtful accounts of $1,391
                  and
      $1,400 at May 2, 2009 and August 2, 2008, respectively
                
                
                17,089
                
                
                
                25,218Inventories
      net of allowance for excess and obsolete of $4,162
                  and$4,435
      at May 2, 2009 and August 2, 2008, respectively
                
                
                17,320
                
                
                
                18,439Prepaid
      expenses and other current assets
                
                
                1,735
                
                
                
                2,085Total
      current assets
                
                
                40,149
                
                
                
                53,570NON-CURRENT
      ASSETS:Property
      plant and equipment, net
                
                
                6,167
                
                
                
                7,377Deferred
      income taxes
                
                
                617
                
                
                
                770Goodwill
                
                
                4,526
                
                
                
                4,526Other
      assets
                
                
                81
                
                
                
                110Total
      non-current assets
                
                
                11,391
                
                
                
                12,783TOTAL
      ASSETS
                
                $
                51,540
                
                
                $
                66,353





The
accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.




4




DEL GLOBAL
TECHNOLOGIES CORP. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


(UNAUDITED)


(DOLLARS
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)




LIABILITIES
AND SHAREHOLDERS’ EQUITY




May
      2,
                    2009
                
                
                August
      2,
                    2008CURRENT
      LIABILITIES:Revolving
      loan
                
                $
                2,629
                
                
                $
                -Current
      portion of long-term debt
                
                
                1,549
                
                
                
                1,797Accounts
      payable – trade
                
                
                8,416
                
                
                
                12,191Accrued
      expenses
                
                
                5,467
                
                
                
                8,378Total
      current liabilities
                
                
                18,061
                
                
                
                22,366NON-CURRENT
      LIABILITIES:Long-term
      debt, less current portion
                
                
                2,555
                
                
                
                4,504Other
      long-term liabilities
                
                
                2,414
                
                
                
                3,320Total
      non-current liabilities
                
                
                4,969
                
                
                
                7,824Total
      liabilities
                
                
                23,030
                
                
                
                30,190SHAREHOLDERS'
      EQUITY:Common
      stock, $.10 par value;Authorized
      50,000,000; issued 24,900,629  and 24,897,723 at
                  May
      2, 2009 and August 2, 2008, respectively
                
                
                2,490
                
                
                
                2,490Additional
      paid-in capital
                
                
                80,652
                
                
                
                80,398Treasury
      shares – 2,182,323 shares and 654,464 outstanding shares,
                  at
      cost at May 2, 2009 and August 2, 2008, respectively
                
                
                (7,176
                )
                
                
                (5,615
                )Accumulated
      other comprehensive income
                
                
                1,130
                
                
                
                4,252Accumulated
      deficit
                
                
                (48,586
                )
                
                
                (45,362
                )Total
      shareholders' equity
                
                
                28,510
                
                
                
                36,163TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
                
                $
                51,540
                
                
                $
                66,353





The
accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.




5




DEL GLOBAL
TECHNOLOGIES CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(UNAUDITED)




(DOLLARS
IN THOUSANDS)




Nine
      Months EndedMay
      2,
                      2009
                  
                  
                  April
      26,
                      2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income (loss)
                  
                  $
                  (3,224
                  )
                  
                  $
                  895Adjustments
      to reconcile net income (loss) to net cash used inoperating
      activities:Depreciation
      and amortization
                  
                  
                  818
                  
                  
                  
                  736Deferred
      income tax provision
                  
                  
                  33
                  
                  
                  
                  209Stock
      based compensation expense
                  
                  
                  254
                  
                  
                  
                  382Goodwill
      impairment
                  
                  
                  -
                  
                  
                  
                  1,911Other
                  
                  
                  -
                  
                  
                  
                  9Changes
      in operating assets and liabilities:Trade
      receivables
                  
                  
                  5,326
                  
                  
                  
                  (814
                  )Inventories
                  
                  
                  (851
                  )
                  
                  
                  3,258Prepaid
      expenses and other current assets
                  
                  
                  152
                  
                  
                  
                  213Other
      assets
                  
                  
                  24
                  
                  
                  
                  51Accounts
      payable – trade
                  
                  
                  (2,656
                  )
                  
                  
                  (5,732
                  )Accrued
      expenses
                  
                  
                  (1,860
                  )
                  
                  
                  48Payment
      of accrued litigation settlement costs
                  
                  
                  (60
                  )
                  
                  
                  -Income
      taxes payable
                  
                  
                  -
                  
                  
                  
                  (779
                  )Other
      long-term liabilities
                  
                  
                  (420
                  )
                  
                  
                  (390
                  )Net
      cash used in operating activities
                  
                  
                  (2,464
                  )
                  
                  
                  (3
                  )CASH
      FLOWS FROM INVESTING ACTIVITIES:Property
      plant and equipment purchases
                  
                  
                  (425
                  )
                  
                  
                  (736
                  )Net
      cash used in investing activities
                  
                  
                  (425
                  )
                  
                  
                  (736
                  )CASH
      FLOWS FROM FINANCING ACTIVITIES:Borrowings
      of short-term credit facilities
                  
                  
                  2,629
                  
                  
                  
                  -Repayment
      of long-term debt
                  
                  
                  (1,255
                  )
                  
                  
                  (950
                  )Proceeds
      from stock option exercises
                  
                  
                  -
                  
                  
                  
                  44Proceeds
      from warrant exercises
                  
                  
                  -
                  
                  
                  
                  101Purchase
      of treasury shares
                  
                  
                  (1,561
                  )
                  
                  
                  -Net
      cash used in financing activities
                  
                  
                  (187
                  )
                  
                  
                  (805
                  )EFFECT
      OF EXCHANGE RATE CHANGES ON CASH
                  
                  
                  (747
                  )
                  
                  
                  425CASH
      AND CASH EQUIVALENTS DECREASE FOR THE PERIOD
                  
                  
                  (3,823
                  )
                  
                  
                  (1,119
                  )CASH
      AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD
                  
                  
                  7,828
                  
                  
                  
                  7,860CASH
      AND CASH EQUIVALENTS, END OF THE PERIOD
                  
                  $
                  4,005
                  
                  
                  $
                  6,741SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Cash
      paid forInterest
                  
                  $
                  213
                  
                  
                  $
                  305Taxes
                  
                  
                  1,095
                  
                  
                  
                  3,073





The
accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.




6




DEL
GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)




(DOLLARS
AND EURO'S IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)




NOTE
1 - BASIS OF PRESENTATION




The
accompanying unaudited consolidated financial statements of Del Global
Technologies Corp. and its subsidiaries (the “Company”) have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X.   Accordingly, they do not include
all of the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial
statements.  In the opinion of management, all adjustments (consisting
only of normal recurring adjustments) considered necessary for a fair
presentation of the results for the interim periods have been
included.  Results of operations for the interim periods are not
necessarily indicative of the results that may be expected for the full
year.  These consolidated financial statements should be read in
conjunction with the financial statements and the notes thereto included in the
Company’s annual report on Form 10-K filed with the Securities and Exchange
Commission (the “SEC”) for the fiscal year ended August 2,
2008.  Certain prior year’s amounts have been reclassified to conform
to the current period presentation.




The
Company’s fiscal year-end is based on a 52/53-week cycle ending on the Saturday
nearest to July 31.  Results of the Company’s subsidiary, Villa
Sistemi Medicali S.p.A. (“Villa”), are consolidated into Del Global’s
consolidated financial statements based on a fiscal year that ends on June 30
and are reported on a one-month lag.




REVENUE
RECOGNITION




The
Company recognizes revenue upon shipment, provided there is persuasive evidence
of an arrangement, there are no uncertainties concerning acceptance, the sales
price is fixed, collection of the receivable is probable and only perfunctory
obligations related to the arrangement need to be completed.  The
Company maintains a sales return allowance, based upon historical patterns, to
cover estimated normal course of business returns, including defective or out of
specification product.  The Company’s products are covered primarily
by one year warranty plans and in some cases optional extended warranties for up
to five years are offered.  The Company establishes allowances for
warranties on an aggregate basis for specifically identified, as well as
anticipated, warranty claims based on contractual terms, product conditions and
actual warranty experience by product line.  The Company recognizes
service revenue when repairs or out of warranty repairs are
completed.  The Company has a Food & Drug Administration
obligation to continue to provide repair service for certain medical systems for
up to seven years past the warranty period.  These repairs are billed
to the customers at market rates.




NEW
ACCOUNTING PRONOUNCEMENTS




In June
2009, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 165,
“Subsequent Events” (“SFAS 165”).  SFAS 165 establishes general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued.  The
effective date of SFAS 165 is interim or annual financial periods ending after
June 15, 2009.  The Company does not expect that the adoption of SFAS
165 to have a material effect on its consolidated financial
statements.




In March
2008, the Financial Accounting Standards Board (the “FASB”) issued Statement of
Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of SFAS No. 133.  The
Statement requires enhanced disclosures about an entity’s derivative and hedging
activities.  The Statement is effective for fiscal years and interim
periods beginning after November 15, 2008.  The Company has evaluated
the requirements of SFAS 161, and determined that it does not have a material
impact.




7


In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51 (“SFAS 160”). SFAS
160 requires identification and presentation of ownership interests in
subsidiaries held by parties other than the Company in the consolidated
financial statements within the equity section but separate from the equity
owned by Del Global.  SFAS 160 also requires that (1) the amount of
consolidated net income attributable to the parent and to the noncontrolling
interest be clearly identified and presented on the face of the consolidated
statement of operations, (2) changes in ownership interest be accounted for
similarly, as equity transactions and (3) when a subsidiary is deconsolidated,
any retained noncontrolling equity investment in the former subsidiary and the
gain or loss on the deconsolidation of the subsidiary be measured at fair value.
This statement is effective for the Company on August 2, 2009. The Company is
currently evaluating the requirements of SFAS 160 but does not expect it to have
a material impact.




In
December 2007, the FASB issued SFAS No. 141R, Business Combinations (“SFAS
141R”).  SFAS 141R states that acquisition-related costs are to be
recognized separately from the acquisition and expensed as incurred with
restructuring costs being expensed in periods after the acquisition date. SFAS
141R also states that business combinations will result in all assets and
liabilities of the acquired business being recorded at their fair
values.  The Company is required to adopt SFAS No. 141R effective
August 2, 2009. The impact of the adoption of SFAS No. 141R will depend on the
nature and extent of business combinations occurring on or after the effective
date.




In
September 2006, the FASB issued SFAS No 157, “Fair Value Measurements,” (“SFAS
157”) which defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles, and expands disclosures about fair
value measurements.  SFAS No. 157 does not require any new fair value
measurements, but provides guidance on how to measure fair value by providing a
fair value hierarchy used to classify the source of the information. In February
2008, the FASB issued FASB Staff Position No. 157-2, which delays the effective
date of SFAS No. 157 for nonfinancial assets and liabilities, which are not
measured at fair value on a recurring basis (at least annually) until fiscal
years beginning after November 15, 2008. This statement is effective for the
Company on August 2, 2009. The Company is currently evaluating the requirements
SFAS No. 157 for nonfinancial assets and liabilities and does not expect it to
have a material impact.




In
February 2007, the FASB released SFAS No. 159, “Fair Value Option for Financial
Assets and Financial Liabilities” (“SFAS 159”).  This statement
permits entities to choose to measure many financial instruments and certain
other items at fair value.   The Company is currently evaluating
the requirements SFAS No. 159, “Fair Value Option for Financial Assets and
Financial Liabilities” and does not expect it to have a material impact on the
financial statements.




NOTE
2 - INVENTORIES




Inventories
are stated at the lower of cost or market.  Cost is determined using
the first-in, first-out (“FIFO”) method.  Inventories and their effect
on cost of sales are determined by physical count for annual reporting purposes
and are evaluated using perpetual inventory records for interim reporting
periods. For certain subsidiaries during interim periods, the Company estimates
the amount of labor and overhead costs related to finished goods
inventories.  As of May 2, 2009, finished goods represented
approximately 22.0% of the gross carrying value of our total gross
inventory.  The Company believes the estimation methodologies used to
be appropriate and are consistently applied.




Inventories
at May 2, 2009 and August 2, 2008 is as follows:




May
      2,
                  2009
              
              
              August
      2,
                  2008Raw
      materials and purchased parts
              
              $
              14,001
              
              
              $
              13,920Work-in-process
              
              
              2,823
              
              
              
              2,526Finished
      goods
              
              
              4,657
              
              
              
              6,42821,481
              
              
              
              22,874Less
      allowance for obsolete and excess inventories
              
              
              (4,161
              )
              
              
              (4,435
              )Total
      inventories
              
              $
              17,320
              
              
              $
              18,439





8


NOTE
3 - PRODUCT WARRANTIES




The
Company’s products are covered primarily by one-year warranty plans and in some
cases optional extended contracts may be offered covering products for periods
up to five years, depending upon the product and contractual terms of
sale.  The Company establishes allowances for warranties on an
aggregate basis for specifically identified, as well as anticipated, warranty
claims based on contractual terms, product conditions and actual warranty
experience by product line.




The
activity in the warranty reserve accounts in the first three and nine months of
fiscal 2009 and 2008 is as follows:




Three
      Months Ended
                
                
                Nine
      Months EndedMay
      2, 2009
                
                
                April
      26, 2008
                
                
                May
      2, 2009
                
                
                April
      26, 2008Balance
      at beginning of period
                
                $
                838
                
                
                $
                1,330
                
                
                $
                1,077
                
                
                $
                1,065Provision
      for anticipated warranty claims
                
                
                35
                
                
                
                109
                
                
                
                121
                
                
                
                474Costs
      incurred related to warranty claims
                
                
                (66
                )
                
                
                (90
                )
                
                
                (368
                )
                
                
                (268
                )Effect
      of foreign currency fluctuation
                
                
                (31
                )
                
                
                24
                
                
                
                (54
                )
                
                
                102Balance
      at end of period
                
                $
                776
                
                
                $
                1,373
                
                
                $
                776
                
                
                $
                1,373





The
liability related to warranties is included in accrued expenses on the
accompanying Consolidated Balance Sheets.




NOTE
4 - COMPREHENSIVE INCOME (LOSS)




Comprehensive
income for the Company includes foreign currency translation adjustments and net
income reported in the Company’s Consolidated Statements of
Operations.




Comprehensive
income for the fiscal 2009 and 2008 periods presented was as
follows:




Three
      Months Ended
                
                
                Nine
      Months EndedMay
      2, 2009
                
                
                April
      26, 2008
                
                
                May
      2, 2009
                
                
                April
      26, 2008Net
      income (loss)
                
                $
                (815
                )
                
                $
                (1,638
                )
                
                $
                (3,224
                )
                
                $
                895Foreign
      currency translation adjustments
                
                
                (684
                )
                
                
                1,206
                
                
                
                (3,122
                )
                
                
                2,411Comprehensive
      income (loss)
                
                $
                (1,499
                )
                
                $
                (432
                )
                
                $
                (6,346
                )
                
                $
                3,306





NOTE
5 - INCOME (LOSS) PER SHARE




Common
shares outstanding exclude 2,182,323 and 654,464 shares of treasury stock for
the periods ended May 2, 2009 and April 26, 2008, respectively.  The
computation of dilutive securities includes the assumed conversion of warrants
and employee stock options to purchase Company stock if such conversion is
dilutive.




Three
      Months Ended
              
              
              Nine
      Months EndedMay
      2, 2009
              
              
              April
      26, 2008
              
              
              May
      2, 2009
              
              
              April
      26, 2008Numerator:Net
      income (loss)
              
              $
              (815
              )
              
              $
              (1,638
              )
              
              $
              (3,224
              )
              
              $
              895Denominator:
      (shares in thousands)Weighted
      average number of common shares outstanding used for basic
      income
                per
      share
              
              
              22,718
              
              
              
              24,198
              
              
              
              23,475
              
              
              
              24,180Effect
      of dilutive securities
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              536Denominator
      for diluted income per share
              
              
              22,718
              
              
              
              24,198
              
              
              
              23,475
              
              
              
              24,716Income
      (loss) per common share:Basic
              
              $
              (0.04
              )
              
              $
              (0.07
              )
              
              $
              (0.14
              )
              
              $
              0.04Diluted
              
              $
              (0.04
              )
              
              $
              (0.07
              )
              
              $
              (0.14
              )
              
              $
              0.04





9





Antidilutive
securities excluded from above computations:





Three
      Months Ended
              
              
              Nine
      Months EndedMay
      2, 2009
              
              
              April
      26, 2008
              
              
              May
      2, 2009
              
              
              April
      26, 2008Employee
      stock options
              
              
              2,248
              
              
              
              1,357
              
              
              
              2,248
              
              
              
              1,140Warrants
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -





NOTE
6 - SHORT-TERM CREDIT FACILITIES AND LONG-TERM DEBT




Short-term
credit facilities are summarized as follows:




Revolving
lines of credit




May
      2,
                  2009
              
              
              August
      2,
                  2008Domestic
              
              $
              2,500
              
              
              $
              -Foreign
              
              
              129
              
              
              
              -$
              2,629
              
              
              $
              -





Long term
debt at May 2, 2009 and August 2, 2008 is summarized as follows:




May
      2,
                  2009
              
              
              August
      2,
                  2008Foreign
      capital lease obligations
              
              $
              1,923
              
              
              $
              2,639Foreign
      credit facilities
              
              
              1,689
              
              
              
              2,703Foreign
      Italian government loans
              
              
              492
              
              
              
              959Total
      long term debt
              
              
              4,104
              
              
              
              6,301Less
      current portion of long-term bank debt
              
              
              (1,549
              )
              
              
              (1,797
              )Long
      term debt, less current portion
              
              $
              2,555
              
              
              $
              4,504





On August
1, 2005, the Company entered into a three-year revolving credit and term loan
facility with North Fork Business Capital (the North Fork Facility) and repaid
the prior facility.  In March 2007, the Company used a portion of the
proceeds from a Rights Offering to pay all outstanding balances under this
facility as well as $2,505 of subordinated notes then outstanding and $146 in
related interest.




On June 1,
2007, the North Fork Facility was amended and restated.  As restated,
the North Fork Facility provides for a $7,500 formula based revolving credit
facility based on the Company’s eligible accounts receivable and inventory as
defined in the credit agreement and a capital expenditure loan facility up to
$1,500.  Interest on the revolving credit and capital expenditure
borrowings is payable at prime plus 0.5% or alternatively at a LIBOR rate plus
2.5%.  Other changes to the terms and conditions of the original loan
agreement include an extension through May 24, 2010, the modification of
covenants, removal of the Villa stock as loan collateral and the removal of
daily collateral reporting which was part of the previous asset-based facility
requirements.




As of May
2, 2009 and August 2, 2008, the Company had approximately $6,500 and $9,000 of
availability respectively under the North Fork Facility.  This
difference in borrowing availability is due to the draw of $2,500 against the
line of credit during the third quarter ended May 2, 2009.




10


There are
certain covenants, including tangible net worth that the Company must meet. As
of May 2, 2009 and August 2, 2008, the Company was in compliance with all
covenants under the North Fork Facility.




The North
Fork Facility is subject to commitment fees of 0.5% per annum on the
daily-unused portion of the facility, payable monthly.  The Company
granted a security interest to the lender on its U.S. credit facility in
substantially all of its accounts receivable, inventory, property, plant and
equipment, other assets and intellectual property in the U.S.




On
November 26, 2008, the Company requested and was granted consent by Capital One
Leverage Finance Corp., who acquired Northfork Business Capital during fiscal
year 2008, to repurchase up to 2,424,616 shares, or up to
$3,000 (approximately 10%), of Del Global’s outstanding shares of common
stock, par value $0.10, from its shareholders provided none of the funds used to
fund the proposed repurchase are proceeds of loans and that no less than $2,000
of the funds used to repurchase said shares are from proceeds of cash dividends
paid by Villa.  Terms of the common stock repurchase program are
detailed below.




The
Company received a dividend from its Villa subsidiary in December 2008 of
approximately $1,812, which was used to repurchase the Company’s outstanding
common stock pursuant to the common stock repurchase program.  On
various dates in December 2008 the Company repurchased a total of 1,527,859
common shares then outstanding at a total cost of approximately
$1,600.  In January 2009, the Company’s Board of Directors suspended
the common stock repurchase program.




In
addition, on November 26, 2008 the Company requested and was granted consent by
Capital One Leverage Finance Corp. to relocate the Company’s chief executive
office and principal place of business within the Chicago, Illinois
area.




The
Company’s Villa subsidiary maintains short-term credit facilities that are
renewed annually with Italian banks.  The current balance due on these
credit faculties at May 2, 2009 is $129.  Available borrowing under
the short-term credit facilities is $11,500 and variable interest rates
currently range from 3.7% to 14.25%.  The interest rate on these
facilities is variable and is currently 6.25%.




In October
2006, Villa entered into a 1,000 Euro loan for financing of R&D projects,
with an option for an additional 1,000 Euro upon completion of 50% of the
projects.  In April 2008, the Company declined the option for
additional financing and demonstrated successful completion of the project,
triggering a more favorable interest rate.  Interest, previously
payable at Euribor 3 months plus 1.3 points, was reduced in the first quarter of
fiscal 2009 to Euribor plus 1.04 points, currently 4.322%.  The note
is repayable over a 7-year term. Repayment began in September
2008.  The note contains a financial covenant which provides that the
net equity of Villa cannot fall below 5,000 Euros.  This covenant
could limit Villa’s ability to pay dividends to the U.S. parent company in the
event future losses, future dividends or other events should cause Villa’s
equity to fall below the defined level.




In
December 2006, Villa entered into a 1,000 Euro loan with interest payable at
Euribor 3 months plus 0.95 points, currently 3.809%.  The loan is
repayable in 4 years.




Villa is
also a party to two Italian government long-term loans with a fixed interest
rate of 3.425% with principal payable annually through maturity in February and
September 2010.  At May 2, 2009, total principal due is 700
Euro.  Villa’s manufacturing facility is subject to a capital lease
obligation which matures in 2011 with an option to purchase.  Villa is
in compliance with all related financial covenants under these short and
long-term financings.




11


NOTE
7 - SEGMENT INFORMATION




The
Company has three reportable segments: Medical Systems Group, Power Conversion
Group and Other.  The “Other” segment includes unallocated corporate
costs.  Interim segment information is as follows:




For
      three months ended
                  May
      2, 2009
              
              Medical
      Systems Group
              
              
              Power
                  Conversion
      Group
              
              
              Other
              
              
              TotalNet
      Sales to External Customers
              
              $
              14,395
              
              
              $
              2,709
              
              
              
              -
              
              
              $
              17,104Cost
      of sales
              
              
              12,197
              
              
              
              1,944
              
              
              
              -
              
              
              
              14,141Gross
      margin
              
              
              2,198
              
              
              
              765
              
              
              
              -
              
              
              
              2,963Operating
      expenses
              
              
              3,051
              
              
              
              702
              
              
              
              (49
              )
              
              
              3,704Operating
      income (loss)
              
              $
              (853
              )
              
              $
              63
              
              
              $
              49
              
              
              $
              (741
              )





For
      three months ended
                  April
      26, 2008
              
              Medical
      Systems Group
              
              
              Power
                  Conversion
      Group
              
              
              Other
              
              
              TotalNet
      Sales to External Customers
              
              $
              20,920
              
              
              $
              3,530
              
              
              $
              -
              
              
              $
              24,450Cost
      of sales
              
              
              16,630
              
              
              
              2,105
              
              
              
              -
              
              
              
              18,735Gross
      margin
              
              
              4,290
              
              
              
              1,425
              
              
              
              -
              
              
              
              5,715Operating
      expenses
              
              
              6,247
              
              
              
              646
              
              
              
              30
              
              
              
              6,923Operating
      income (loss)
              
              $
              (1,957
              )
              
              $
              779
              
              
              $
              (30
              )
              
              $
              (1,208
              )





For
      nine months ended
                  May
      2, 2009
              
              Medical
      Systems Group
              
              
              Power
                  Conversion
      Group
              
              
              Other
              
              
              TotalNet
      Sales to External Customers
              
              $
              55,502
              
              
              $
              8,629
              
              
              
              -
              
              
              $
              64,131Cost
      of sales
              
              
              44,395
              
              
              
              5,666
              
              
              
              -
              
              
              
              50,061Gross
      margin
              
              
              11,107
              
              
              
              2,963
              
              
              
              -
              
              
              
              14,070Operating
      expenses
              
              
              9,929
              
              
              
              1,948
              
              
              
              4,228
              
              
              
              16,105Operating
      income (loss)
              
              $
              1,178
              
              
              $
              1,015
              
              
              $
              (4,228
              )
              
              $
              (2,035
              )





For
      nine months ended
                  April
      26, 2008
              
              Medical
      Systems Group
              
              
              Power
                  Conversion
      Group
              
              
              Other
              
              
              TotalNet
      Sales to External Customers
              
              $
              72,233
              
              
              $
              8,826
              
              
              
              -
              
              
              $
              81,059Cost
      of sales
              
              
              55,941
              
              
              
              5,483
              
              
              
              -
              
              
              
              61,424Gross
      margin
              
              
              16,292
              
              
              
              3,343
              
              
              
              -
              
              
              
              19,635Operating
      expenses
              
              
              13,280
              
              
              
              1,930
              
              
              
              815
              
              
              
              16,025Operating
      income (loss)
              
              $
              3,012
              
              
              $
              1,413
              
              
              $
              (815
              )
              
              $
              3,610





NOTE
8 - STOCK OPTION PLAN AND WARRANTS




During the
third quarter of fiscal year 2009, the Company granted options to purchase
25,000 common shares under the 2007 Incentive Stock Plan at a weighted average
exercise price of $1.00 per share. The options under these grants vest 25%
immediately and 25% per year over the next three years.  The aggregate
fair value of these options was $9,000.  The fair values of the grants
awarded were determined using the following assumptions in the Black-Scholes
model: an estimated life of seven years, volatility of approximately 68%, risk
free interest rate of 2.7% and the assumption that no dividends will be paid.
During the second quarter of fiscal year 2009, the Company granted options to
purchase 229,000 common shares under the 2007 Incentive Stock Plan at a weighted
average exercise price of $1.00 per share.  The options under these
grants vest 25% immediately and 25% per year over the next three
years.  The aggregate fair value of these options was
$153.




There were
no stock options granted during the first quarter of fiscal 2009.




During the
first quarter of fiscal year 2008, the Company granted options to purchase
212,500 common shares under the 2007 Incentive Stock Plan at a weighted average
exercise price of $2.72 per share.  The options under these grants
vest 25% immediately and 25% per year over the next three years.  The
aggregate fair value of these options was $556.  The fair values of
the grants awarded were determined using the following assumptions in the
Black-Scholes model: an estimated life of seven years, volatility of
approximately 64% to 72%, risk free interest rate of 3.6% to 4.20% and the
assumption that no dividends will be paid.




12


In the
third quarter of fiscal 2009 and 2008, the Company recorded $86 and $127,
respectively, of compensation expense related to stock options.  In
the nine months ended May 2, 2009 and April 26, 2008, the Company recorded $254
and $382, respectively, of compensation expense related to stock
options.  There were no exercises of stock options during the first
nine months of fiscal 2009.  During the third quarter of fiscal 2008,
80,681 stock options were exercised for cash proceeds to the Company
of  $40 and 31,694 shares valued at $69 (added to treasury) and an
intrinsic value of $68.  During the second quarter of fiscal 2008,
2,500 stock options were exercised for cash proceeds to the Company of $4 and an
intrinsic value of $3.  The intrinsic value is the amount by which the
market value of the underlying stock exceeds the exercise price of the
option.  There were no options exercised during the first quarter of
fiscal 2008.




During the
first quarter of fiscal 2008, 47,527 warrants were exercised for cash proceeds
to the Company of $68.  During the second quarter of fiscal 2008, 880
warrants were exercised for cash proceeds to the Company of
$1.  During the third quarter of fiscal 2008, 12,609 warrants were
exercised for cash proceeds to the Company of $32. No warrants were exercised
during the first nine months of fiscal 2009.




As of May
2, 2009 and April 26, 2008, 0 and 512,500 warrants to purchase common stock were
outstanding, respectively. The warrants expired on March 28, 2009.




NOTE
9 - CONTINGENCIES




EMPLOYMENT MATTERS – The
Company had an employment agreement with Samuel Park, a previous Chief Executive
Officer (“CEO”), for the period May 1, 2001 to April 30, 2004.  The
employment agreement provided for certain payments in the event of a change in
the control of the Company as defined in the agreement.  On October 9,
2003, the Company terminated Mr. Park’s employment, and on October 10, 2003, the
Company announced the appointment of Walter F. Schneider as President and CEO to
replace Mr. Park, effective as of such date.  As a result, the Company
recorded a charge of $200 during the first quarter of fiscal 2004 to accrue the
balance of salary remaining under Mr. Park’s employment agreement.




The
Company’s employment agreement with Mr. Park provided for payments upon a change
in control as defined in the agreement.  The Company’s Board of
Directors elected at the Company’s Annual Meeting of Shareholders held on May
29, 2003, reviewed the “change in control” provisions in the employment
agreement between the Company and Mr. Park, regarding a payment to him in the
event of a change in control as defined in the agreement.  As a result
of this review and based upon, among other things, the advice of special
counsel, the Company’s Board of Directors determined that no obligation to make
the payment has been triggered.  Prior to his departure from the
Company on October 10, 2003, Mr. Park orally informed the Company that, after
reviewing the matter with his counsel, he believed that the obligation to pay
him for a change in control had been triggered.  On October 27, 2003,
the Company received a letter from Mr. Park’s counsel demanding payment of
certain sums and other consideration pursuant to the Company’s employment
agreement with Mr. Park, including a change in control payment.  On
November 17, 2003, the Company filed a complaint in the United States District
Court, Southern District of New York, against Mr. Park seeking a declaratory
judgment that no change in control payment was or is due to Mr. Park, and that
an amendment to the employment contract with Mr. Park regarding reimbursement of
legal fees is invalid and unenforceable.  Mr. Park answered the
complaint and asserted counterclaims seeking payment from the Company based on
his position that a “change in control” occurred in June 2003 and a declaration
that the amendment on legal fees incurred by him was valid and
enforceable.  Mr. Park also sought other consideration he believed he
was owed under his employment agreement.  The Company filed a reply to
Mr. Park’s counterclaims denying that he was entitled to any of these payments
or the declaration of validity and enforceability of the legal fees
amendment.  Discovery in this matter was conducted and
completed.  Following discovery, the Company and Mr. Park filed
motions for summary judgment on the issues related to the change in control and
the amendment to the employment agreement, which motions were fully submitted to
the court for consideration.




By
memorandum decision and order dated December 15, 2008, the court denied the
Company’s motion for summary judgment, and granted Mr. Park’s motion for partial
summary judgment (a) on his first counterclaim seeking a declaration that he is
entitled to a change in control payment from the Company and an order that such
payment be made to him together with interest and (b) on his third counterclaim
for a declaration that he is entitled to recover his legal fees and expenses
reasonably incurred by him in, as he alleged, enforcing the terms of his
employment agreement with the Company and an order directing payment of such
fees.




13


By motion
served on February 2, 2009, as amended by reply papers served by Mr. Park on
February 25, 2009, Mr. Park sought entry of judgment in the amount of $2,153,
along with post-judgment interest thereon, on Mr. Park’s first counterclaim
(change in control payment) and on his third counterclaim (in the amount of the
attorneys’ fees and disbursements incurred by him through November 30,
2008).  The motion also sought as part of the judgment a direction
that Del Global pay Park’s attorneys’ fees and disbursements incurred in the
action from on and after December 1, 2008 within thirty days after Mr. Park
submits to the Company written notice thereof.




Mr. Park’s
counsel advised the Court by letter in January 2009 that in his second
counterclaim, which was not a subject of any of the motions for summary judgment
previously made in the action, Mr. Park sought a total of approximately $920 in
alleged damages and interest thereon.  This total included the
following items allegedly owed to him in the following approximate
amounts:  $605 for stock options, $193 (subsequently changed to $174)
for bonus for fiscal year 2004 pro rated to April 30, 2004, $81 for unused
vacation, and $41 for business expenses.




The
parties entered into an agreement as of April 2, 2009, settling the
action.  Pursuant to the settlement agreement, the Company made
payments to Mr. Park and his counsel totaling $2,500.  The Court
signed an order on April 13, 2009 dismissing the action with prejudice, which
was entered by the Clerk of the Court.




On May 24,
2007, the Company’s Power Conversion subsidiary, RFI Corporation (“RFI”), was
served with a subpoena to testify before a grand jury of the United States
District Court of New York and to provide items and records from its Bay Shore,
NY offices in connection with U.S. Department of Defense contracts.  A
search warrant from the United States District Court, Eastern District of New
York was issued and executed with respect to such offices.  The
Company believes that it is in full compliance with the quality standards that
its customers require and is fully cooperating with investigators to assist them
with their review.  RFI continues to ship products to the U.S.
Government, as well as to its commercial customers.




On April
28, 2008, George Apergis, the former General Manager of RFI, filed a charge with
the EEOC alleging that RFI discriminated against him by terminating his
employment with RFI on December 18, 2007. George Apergis alleged three claims
against RFI: (1) violation of Title VII of the Civil Rights Act; (2) violation
of the Age Discrimination in Employment Act and (3) retaliation.  RFI
responded to the EEOC charge with a position statement filed with the EEOC on
June 26, 2008 denying each allegation of the charge.  As of June 2,
2009, RFI is waiting to hear for a response to their position statement from the
EEOC.  RFI intends to defend vigorously against George
Apergis.




In
December 2007, the Company was added to an action (Diamond v. Allied Diagnostic
Imaging Resources, Inc., et al. (Superior Court, County of Los Angeles; Case No.
BC362544)) brought against several other defendants in which the plaintiff
alleges that she is the wife of a chiropractor who died in June
2005.  Plaintiff alleges that her husband was exposed to chemical
products used in developing x-ray film and cleaning film processing machines and
worked with x-ray film processing machines and x-ray machines, and that the
defendants manufactured, supplied or serviced the chemical products and
machines.  The complaint further alleges that the decedent was exposed
to toxic chemicals and radiation from the chemical products used on or in the
machines, which caused “serious injuries to his internal organs, including acute
myelogenous leukemia,” resulting in his death.




The
complaint alleges the following six claims against the defendants: (1)
negligence in manufacturing and distributing the chemical products and machines,
servicing the machines, and failing adequately to warn decedent of the hazards
of the chemical products and machines, (2) violation of a California statute and
regulation by failing to determine whether the chemical products caused health
hazards and failing to label or identify in material safety data sheets a health
hazard relating to acute myelogenous leukemia, (3) strict products liability for
failing to warn adequately of the chemical products’ and machines’ health
hazards, (4) strict products liability for defects in the design of the chemical
products and machines, (5) fraudulent concealment of the toxic and carcinogenic
nature of the chemical products and the machines, and (6) breach of implied
warranties as to the fitness of the chemical products and machines for intended
uses, merchantability, and lack of defects.




While the
complaint does not allege a total amount of damages sought, plaintiff alleges
that she has suffered damages consisting of medical, funeral, and burial
expenses, the decedent’s lost earnings prior to and lost wages after his death,
lost benefits after his death, the value of his services in managing his
family’s home, and loss of companionship and similar losses.  The
plaintiff also requests punitive damages.  The Company has not
recorded an accrual for any potential settlement of this claim as it has no
basis upon which to estimate either the outcome or amount of loss, if
any.  In its answer to the complaint, the Company denied the
substantive allegations of the complaint and denied that it has any liability to
plaintiff.    On November 17, 2008, the action as against
the Company was dismissed without prejudice pursuant to a stipulation signed by
plaintiff’s counsel.




The
Company is a defendant in several other legal actions in various U.S. and
foreign jurisdictions, arising from the normal course of
business.  Management believes the Company has meritorious defenses to
such actions and that the outcomes will not be material to the Company’s
consolidated financial statements.




14




Item
      2.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS




This
Management’s Discussion and Analysis of Financial Condition and Results of
Operations contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995.  These statements are based
on current expectations and the current economic environment and are not
guarantees of future performance.  They involve a number of risks and
uncertainties that are difficult to predict including, but not limited to, our
ability to implement our business plan, retention of management, changing
industry and competitive conditions, obtaining anticipated operating
efficiencies, securing necessary capital facilities and favorable determinations
in various legal and regulatory matters.  Actual results could differ
materially from those expressed or implied in the forward-looking
statements.  Important assumptions and other important factors that
could cause actual results to differ materially from those in the
forward-looking statements are specified in the Company’s filings with the
Securities and Exchange Commission including our Annual Report on Form 10-K for
the fiscal year ended August 2, 2008, our Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K.




OVERVIEW




The
Company is primarily engaged in the design, manufacture and marketing of
cost-effective medical and dental diagnostic imaging systems consisting of
stationary and portable imaging systems, radiographic/fluoroscopic systems,
dental imaging systems and digital radiography systems.  The Company
also manufactures electronic filters, high voltage capacitors, pulse modulators,
transformers and reactors, and a variety of other products designed for
industrial, medical, military and other commercial applications.  The
Company manages its business in two operating segments: the Medical Systems
Group and the Power Conversion Group.  In addition, the Company has a
third reporting segment, Other, comprised of certain unallocated corporate
General and Administrative expenses.  See “Segment Information” in
Part I, Item 1 of this Quarterly Report on Form 10-Q for the fiscal quarter
ended May 2, 2009 (this “Quarterly Report”) for discussions of the Company’s
segments.




The
Company operates in the highly competitive medical equipment industry and face
strong competition in the industry.  The Company’s financial results,
like those of other medical equipment manufacturers, are affected by a number of
factors including, but not limited to, cost to manufacture and distribute
product, general economic conditions, national and international laws and
regulations and availability of raw materials.  The continuing
recessionary trends in the global economy have significantly affected the
Company’s’ revenue during the third quarter of fiscal 2009.   As
a result, the Company is unable to accurately forecast demand of its products or
the prices of raw materials.  It is not possible to predict when
economic growth will resume.




CRITICAL
ACCOUNTING POLICIES




Complete
descriptions of significant accounting policies are outlined in Note 1 of the
Notes to Consolidated Financial Statements included in our Annual Report on Form
10-K for the fiscal year ended August 2, 2008.  Within these policies,
the Company has identified the accounting for revenue recognition, deferred tax
assets, the allowance for obsolete and excess inventory and goodwill as being
critical accounting policies due to the significant amount of estimates
involved.  In addition, for interim periods, the Company has
identified the valuation of finished goods inventory as being critical due to
the amount of estimates involved.




15


Revenue
Recognition




The
Company recognizes revenue upon shipment, provided there is persuasive evidence
of an arrangement, there are no uncertainties concerning acceptance, the sale
price is fixed, collection of the receivable is probable and only perfunctory
obligations related to the arrangement need to be completed.  The
Company maintains a sales return allowance, based upon historical patterns, to
cover estimated normal course of business returns, including defective or out of
specification product.  The Company’s products are covered primarily
by one-year warranty plans and in some cases optional extended warranties for up
to five years are offered.  The Company establishes allowances for
warranties on an aggregate basis for specifically identified, as well as
anticipated, warranty claims based on contractual terms, product conditions and
actual warranty experience by product line.  The Company recognizes
service revenue when repairs or out of warranty repairs are
completed.  The Company has an FDA obligation to continue to provide
repair service for certain medical systems for up to seven years past the
warranty period.  These repairs are billed to the customers at market
rates.




Deferred
Income Taxes




The
Company accounts for deferred income taxes in accordance with Statement of
Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes,”
whereby it recognize deferred income tax assets and liabilities for temporary
differences between financial reporting basis and income tax reporting basis and
for tax credit carryforwards.




The
Company periodically assesses the realization of its net deferred income tax
assets.  This evaluation is primarily based upon current operating
results and expectations of future operating results.  A valuation
allowance is recorded if the Company believes its net deferred income tax assets
will not be realized.  The Company’s determination is based on what it
believes will be the more likely than not result.




For fiscal
year 2008, the Company recorded operating income on a consolidated
basis.  The Company’s foreign tax reporting entity was profitable and
its U.S. tax reporting entities incurred a taxable loss.  Based
primarily on these results, the Company concluded that it should maintain a 100%
valuation allowance on its net U.S. deferred income tax assets.  For
the quarter ended May 2, 2009, the Company continues to carry a 100% valuation
allowance on its net U.S. deferred income tax asset.




The
Company recorded a tax expense with respect to its foreign subsidiary’s income
in all periods presented and based on a more likely than not standard, believes
that the foreign subsidiary’s net deferred income tax asset at May 2, 2009 will
be realized.




The
Company’s foreign subsidiary operates in Italy.  Italy recently
enacted legislation that reduces tax rates effective for the Company’s fiscal
year 2009.  The fiscal quarter ended May 2, 2009 income tax expense
includes a charge that reduces the carrying value of the foreign subsidiary’s
net deferred income tax asset resulting from the income tax rate
reduction.




The
Company’s primary income tax jurisdictions are in the United States and
Italy.  The Company is currently not under audit in either
jurisdiction.  Tax years since 2003 are open pursuant to statutes in
Italy and tax years since 2004 are open pursuant to statutes in the United
States.




It is the
Company’s practice to recognize interest and/or penalties related to income tax
matters in tax expense.  As of May 2, 2009, there were no material
interest or penalty amounts to accrue.




Obsolete
and Excess Inventory




The
Company re-evaluates allowance for obsolete inventory once a quarter, and this
allowance comprises the most significant portion of our inventory
reserves.  The re-evaluation of reserves is based on a written policy,
which requires at a minimum that reserves be established based on our analysis
of historical actual usage on a part-by-part basis.  In addition, if
management learns of specific obsolescence in addition to this minimum formula,
these additional reserves will be recognized as well.  Specific
obsolescence might arise due to a technological or market change, or based on
cancellation of an order.  As we typically do not purchase inventory
substantially in advance of production requirements, we do not expect
cancellation of an order to be a material risk.  However, market or
technology changes can occur.




16


Valuation
of Finished Goods Inventories




In
addition, the Company uses certain estimates in determining interim operating
results.  The most significant estimates in interim reporting relate
to the valuation of finished goods inventories.  For the interim
periods of certain subsidiaries, we estimate the amount of labor and overhead
costs related to finished goods inventories.  As of May 2, 2009,
finished goods represented approximately 22.0% of the gross carrying value of
our total gross inventory.  We believe the estimation methodologies
used to be appropriate and are consistently applied.




Goodwill




The
Company’s goodwill is subject to, at a minimum, an annual impairment assessment
of its carrying value. Goodwill impairment is deemed to exist if the net book
value of a reporting unit exceeds its estimated fair value.  Estimated
fair values of the reporting units are estimated using an earnings model and a
discounted cash flow valuation model. The discounted cash flow model
incorporates the Company’s estimates of future cash flows, future growth rates
and management’s judgment regarding the applicable discount rates used to
discount those estimated cash flows.




As part of
its assessment, the Company estimates the fair value of the reporting unit based
on internal cash flows expected to be earned by the business and an appropriate
risk-adjusted discount rate.  While such estimates are subject to
significant uncertainties and actual results could be materially different, the
analysis on the Company’s U.S. Medical Systems Group reporting unit, resulted,
pursuant to the implementation guidance of FASB No. 142, Accounting for Goodwill
and Intangible Assets, in a complete impairment of the unit’s goodwill
balance.  Accordingly, the Company recorded a $1.911 million
impairment charge during the third quarter of fiscal 2008.




CONSOLIDATED
RESULTS OF OPERATIONS




Three
Months and Nine Months Ended May 2, 2009 Compared to Three and Nine Months Ended
April 26, 2008




The
following table summarizes key indicators of consolidated results of
operations:




Three
      Months Ended
                
                
                Nine
      Months Ended(Dollars
      in thousands, except per share data)
                
                May
      2, 2009
                
                
                April
      26, 2008
                
                
                May
      2, 2009
                
                
                April
      26, 2008Sales
                
                $
                17,104
                
                
                $
                24,450
                
                
                $
                64,131
                
                
                $
                81,059Gross
      margin as a percentage of sales
                
                
                17.3
                %
                
                
                23.4
                %
                
                
                22.0
                %
                
                
                24.2
                %Total
      operating expenses
                
                
                3,704
                
                
                
                6,923
                
                
                
                16,105
                
                
                
                16,025Net
      earnings (loss) from continuing operations
                
                
                (741
                )
                
                
                (1,208
                )
                
                
                (2,035
                )
                
                
                3,610Diluted
      earnings per share
                
                $
                (0.04
                )
                
                $
                (0.07
                )
                
                $
                (0.14
                )
                
                $
                0.04





Sales:




The
following table summarizes sales:




Three
      Months Ended
                
                
                Nine
      Months Ended(Dollars
      in thousands, except per share data)
                
                May
      2, 2009
                
                
                April
      26, 2008
                
                
                May
      2, 2009
                
                
                April
      26, 2008Medical
      System Group
                
                $
                14,395
                
                
                $
                20,920
                
                
                $
                55,502
                
                
                $
                72,233Power
      Conversion Group
                
                
                2,709
                
                
                
                3,530
                
                
                
                8,629
                
                
                
                8,826Total
                
                $
                17,104
                
                
                $
                24,450
                
                
                $
                64,131
                
                
                $
                81,059





17


Consolidated
net sales of $17.1 million for the third quarter of fiscal 2009 reflect a
decrease of $7.3 million or 30.0% from fiscal 2008 third quarter net sales of
$24.4 million.  The Medical Systems Group’s third quarter fiscal 2009
sales of $14.4 million were $6.5 million or 31.1% less than the prior year’s
third quarter primarily due to decreased international sales volume associated
with the global economic slowdown and reductions in capital expenditures and
credit availability for customers.  Sales at the Power Conversion
Group during the third quarter of fiscal 2009 were $2.7 million, approximately
$0.8 million or 23.3% less than prior year’s third quarter sales, due to delays
driven by customer rescheduling activity in the current period.




Consolidated
net sales of $64.1 million for the first nine months of fiscal 2009 reflect a
decrease of $16.9 million or 20.9% from fiscal 2008 net sales of $81.0 million,
due to decreased sales in our Medical Systems Group.  Sales at the
Medical Systems Group for the first nine months of fiscal 2009 of $55.5 million
reflect a decrease of $16.7 million or 23.2 % from the prior year’s first nine
months, primarily due to decreased international sales volume attributable to a
favorable prior year shipment level on an expired international
contract.  The Power Conversion Group’s sales for the first nine
months of fiscal 2009 of $8.6 million were approximately $0.2 million less than
prior year’s sales due to weaker sales bookings in the current
period.




Gross
Margin:




Consolidated
gross margin as a percent of sales was 17.3% for the third quarter of fiscal
2009, compared to 23.4% in the third quarter of fiscal 2008. The Medical Systems
Group, third quarter of fiscal 2009 gross margin of 15.3% was lower than the
gross margin of 20.5% in the third quarter of fiscal 2008 due primarily to lower
sales volumes and plants operating with excess capacity.  The Power
Conversion Group’s gross margin for the third quarter of fiscal 2009 was 28.2%,
versus 40.3% in the prior year third quarter, attributable to decreased sales
volume.




Consolidated
gross margin as a percent of sales was 22.0% for the first nine months of fiscal
2009, compared to 24.2% for the first nine months of fiscal 2008, this was due
to lower sales volumes and plants operating with excess capacity as discussed
above.




Operating
Expense:




Operating
expenses for the third quarter of fiscal 2009 decreased to 21.7% of net sales
from 28.3% of net sales in the same period one year ago.  This
reduction was the result of a $1.9 million one-time, non cash goodwill
impairment charge related to the Medical Systems Group’s U.S medical business in
the third quarter of 2008, as well as a decrease of $1.1 million in selling,
general and administrative expenses, primarily in the areas of litigation,
general administration and marketing expenses.  In
addition,  research and development expenses  in the third
quarter of fiscal 2009 of $0.4 million were $0.2 million lower than the third
quarter of fiscal 2008, primarily due to the effect of favorable currency
translation rates.




The
following table summarizes the key change in operating expenses for the three
months ended May 2, 2009 from prior third quarter ended April 26, 2008 presented
(in millions):




Three
      Months Ended
                      May
      2, 2009Amount
                  
                  
                  Percent
      ChangeChanges
      in Operating Expense:R&D
                  
                  $
                  (0.2
                  )
                  
                  
                  (32.5
                  %)Selling,
      General and Administrative
                  
                  
                  (0.7
                  )
                  
                  
                  (18
                  %)Litigation
      Settlement Cost
                  
                  
                  (0.4
                  )
                  
                  
                  (91.0
                  %)Goodwill
      Impairment
                  
                  
                  (1.9
                  )
                  
                  
                  (100
                  %)Change
      in total operating expense
                  
                  $
                  (3.2
                  )
                  
                  
                  (46.5
                  %)





18


Operating
loss for the third quarter of fiscal 2009 was $0.7 million compared to operating
loss of $1.2 million in the comparable prior year period.  Operating
loss at the Medical Systems Group for the third quarter of fiscal 2009 was $0.9
million compared to $2.0 million for the same period the prior year, due to the
goodwill impairment of $1.9 million recorded during the third quarter of fiscal
2008.   The Power Conversion Group’s operating income in the
third quarter of fiscal 2009 decreased by $0.7 million to $0.1 million compared
to $0.8 million in the third quarter of fiscal 2008 due primarily to the
decrease in sales noted above.




Operating
loss for the first nine months of fiscal 2009 was $2.0 million versus income of
$3.6 million in the comparable prior year period.  In the first nine
months of fiscal 2009, the Medical Systems Group had an operating profit of $1.2
million and the Power Conversion Group achieved an operating profit of $1.0
million offset by unallocated corporate expenses of $4.2 million in the first
nine months of fiscal 2009.




Net loss
in the third quarter of fiscal 2009 was $0.8 million, or $0.04 per basic share,
compared to a net loss of $1.6 million, or $0.07 per basic share in the
comparable prior year period.  For the third quarter of fiscal 2009,
there were approximately 22.7 million weighted average common shares diluted
outstanding (“shares outstanding”) compared to 24.2 million shares diluted
outstanding in the third quarter of fiscal 2008.  The decrease in
diluted shares outstanding was due to the impact of warrants that expired March
28, 2009 and common shares purchased pursuant to the Company’s common stock
repurchase program, which the Company’s Board of Directors suspended in January
2009.




The
Company recorded a net loss of $3.2 million or $0.14 per basic share in the
first nine months of fiscal 2009, compared to net income of $0.9 million or
$0.04 per basic share in the first nine months of the prior fiscal
year.




BACKLOG




Consolidated
backlog at May 2, 2009 was $14.9 million compared to a backlog at August 2, 2008
of approximately $22.7 million.   The Company’s Medical System
segment experienced a decrease in third quarter fiscal 2009 backlog of $9.3
million from August 2, 2008, due to a weak global economy. The backlog in the
Power Conversion Group of $5.6 million reflects an increase of $0.2 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.




FINANCIAL
CONDITION, LIQUIDITY AND CAPITAL RESOURCES




The
Company’s sources of capital include, but are not limited to, cash flow from
operations, short-term credit facilities and the residual proceeds of the Rights
Offering.  Recently the capital and credit market have become
increasingly volatile as a result of adverse conditions that have caused the
failure and near failure of a number of large financial services
companies.   If the capital and credit markets continue to
experience volatility and the availability of funds remains limited, it is
possible that the Company’s ability to access the capital and credit markets may
be limited by these or other factors at a time when the Company would like, or
need to do so, which could have an impact on our ability to react to changing
economic and business conditions.  Notwithstanding the foregoing, at
this time, we believe that available short-term and long-term capital recourses
are sufficient to fund our working capital requirements, scheduled debt
payments, interest payments, capital expenditures, income tax obligation and
shares repurchases for the foreseeable future.




Working Capital — At May 2,
2009 and August 2, 2008, our working capital was approximately $22.1 million and
$31.2 million, respectively.  The decrease in working capital for the
first nine months of fiscal 2009 related primarily to cash payments for
litigation settlement and decreases in ending accounts receivable resulting from
lower sales and lower foreign currency translation rates.




At May 2,
2009 and August 2, 2008, we had approximately $4.0 million and $7.9 million,
respectively, in cash and cash equivalents.  This decrease is
primarily due to cash payments for litigation settlement as well as the
reduction in accounts payable.  As of May 2, 2009, we had
approximately $6.5 million of excess borrowing availability under our domestic
revolving credit facility compared to $9.0 million at April 26,
2008.




19


In
addition, as of May 2, 2009 and August 2, 2008, our Villa subsidiary had an
aggregate of approximately $11.5 million and $13.5 million of excess borrowing
availability under its various short-term credit facilities,
respectively.  Terms of the Italian credit facilities do not permit
the use of borrowing availability to directly finance operating activities at
our U.S. subsidiaries.




The
      following is a summary of the Company’s cash flows:
                
                Nine
      Months Ended(Dollars
      in thousands, except per share data)
                
                May
      2, 2009
                
                
                April
      26, 2008Net
      cash used in operating activities
                
                
                (2,464
                )
                
                
                (3
                )Net
      cash used in investing activities
                
                
                (425
                )
                
                
                (736
                )Net
      cash used in financing activities
                
                
                (187
                )
                
                
                (805
                )Effect
      of exchange rate changes on cash
                
                
                (747
                )
                
                
                425Net
      decrease in cash and cash equivalents
                
                
                (3,823
                )
                
                
                (1,119
                )Cash
      and cash equivalents at beginning of year
                
                
                7,828
                
                
                
                7,860Cash
      and cash equivalents at end of period
                
                $
                4,005
                
                
                $
                6,741





Cash Flows from Operating
Activities — For
the nine months ended May 2, 2009, the Company used approximately $2.4 million.
The increase from fiscal 2008 was primarily due to aggressive payables
management offset by a reduction in the receivable balances in the third quarter
of fiscal 2009.




Cash Flows from Investing
Activities —The
Company made $0.4 million of facility improvements and capital equipment
expenditures for the nine months ended May 2, 2009, which was $0.3 million less
than the facility improvements and capital equipment expenditures for the
comparable prior fiscal year period.  As part of our cost reduction
strategy, we are in the process of relocating the Company’s corporate
offices.  The approximate cost associated with relocating the
Company’s corporate offices is estimated to be between $0.2 million to $0.3
million. The move to the new facility will result in an annual cost saving of
approximately $0.3 million.




Cash Flows from Financing
Activities —During the nine-month period ended May 2, 2009, the Company borrowed
approximate $2.5 million for use in the business. The Company repaid a total of
$1.2 million of indebtedness on our Italian borrowings, as compared to $1.0
million in the comparable prior fiscal year period.  In addition, the
Company repurchased approximately $1.6 million of its common stock outstanding
in the second quarter of fiscal 2009.




Credit
Facilities




On August
1, 2005, the Company entered into a three-year revolving credit and term loan
facility with North Fork Business Capital (the North Fork Facility) and repaid
the prior facility.  In March 2007, the Company used a portion of the
proceeds from a Rights Offering to pay all outstanding balances under this
facility as well as $2.5 million of subordinated notes then outstanding and $0.1
million in related interest.




On June 1,
2007, the North Fork Facility was amended and restated.  As restated,
the North Fork Facility provides for a $7.5 million formula based revolving
credit facility based on the Company’s eligible accounts receivable and
inventory as defined in the credit agreement and a capital expenditure loan
facility up to $1.5 million.  Interest on the revolving credit and
capital expenditure borrowings is payable at prime plus 0.5% or alternatively at
a LIBOR rate plus 2.5%.  Other changes to the terms and conditions of
the original loan agreement include an extension through May 24, 2010, the
modification of covenants, removal of the Villa stock as loan collateral and the
removal of daily collateral reporting which was part of the previous asset-based
facility requirements.




As of May
2, 2009 and August 2, 2008, the Company had approximately $6.5 million and $9.0
million of availability respectively under the North Fork
Facility.  This difference in borrowing availability is due to the
draw of $2.5 million against the line of credit during the third quarter ended
May 2, 2009.




There are
certain covenants, including tangible net worth that the Company must meet. As
of May 2, 2009 and August 2, 2008, the Company was in compliance with all
covenants under the North Fork Facility.




20


The North
Fork Facility is subject to commitment fees of 0.5% per annum on the
daily-unused portion of the facility, payable monthly.  The Company
granted a security interest to the lender on its U.S. credit facility in
substantially all of its accounts receivable, inventory, property, plant and
equipment, other assets and intellectual property in the U.S.




On
November 26, 2008, the Company requested and was granted consent by Capital One
Leverage Finance Corp., who acquired Northfork Business Capital during fiscal
year 2008, to repurchase up to 2,424,616 shares, or up to $3.0 million
(approximately 10%), of Del Global’s outstanding shares of common stock, par
value $0.10, from its shareholders provided none of the funds used to fund the
proposed repurchase are proceeds of loans and that no less than $2.0 million of
the funds used to repurchase said shares are from proceeds of cash dividends
paid by Villa.  Terms of the common stock repurchase program are
detailed below.




The
Company received a dividend from its Villa subsidiary in December 2008 of
approximately $1.8 million, which was used to repurchase the Company’s
outstanding common stock pursuant to the common stock repurchase
program.  On various dates in December 2008 the Company repurchased a
total of 1,527,859 common shares then outstanding at a total cost of
approximately $1.6 million.  In January 2009, the Company’s Board of
Directors suspended the common stock repurchase program.




In
addition, on November 26, 2008 the Company requested and was granted consent by
Capital One Leverage Finance Corp. to relocate the Company’s chief executive
office and principal place of business within the Chicago, Illinois
area.




The
Company’s Villa subsidiary maintains short-term credit facilities that are
renewed annually with Italian banks.  The current balance due on these
credit faculties at May 2, 2009 is $0.1 million.  Available borrowing
under the short-term credit facilities is $11.5 million and variable interest
rates currently range from 3.7% - 14.25%.  The interest rate on these
facilities is variable and is currently 6.25%.




In October
2006, Villa entered into a 1.0 million Euro loan for financing of R&D
projects, with an option for an additional 1.0 million Euro upon completion of
50% of the projects.  In April 2008, the Company declined the option
for additional financing and demonstrated successful completion of the project,
triggering a more favorable interest rate.  Interest, previously
payable at Euribor 3 months plus 1.3 points, was reduced in the first quarter of
fiscal 2009 to Euribor plus 1.04 points, currently 4.322%.  The note
is repayable over a 7 year term. Repayment began in September
2008.  The note contains a financial covenant which provides that the
net equity of Villa cannot fall below 5.0 million Euros.  This
covenant could limit Villa’s ability to pay dividends to the U.S. parent company
in the event future losses, future dividends or other events should cause
Villa’s equity to fall below the defined level.




In
December 2006, Villa entered into a 1.0 million Euro loan with interest payable
at Euribor 3 months plus 0.95 points, currently 3.809%.  The loan is
repayable in 4 years.




Villa is
also a party to two Italian government long-term loans with a fixed interest
rate of 3.425% with principal payable annually through maturity in February and
September 2010.  At May 2, 2009, total principal due is 0.7 million
Euro.  Villa’s manufacturing facility is subject to a capital lease
obligation which matures in 2011 with an option to purchase.  Villa is
in compliance with all related financial covenants under these short and
long-term financings.




Contractual
Obligations




The
Company’s contractual obligations, including debt and operating leases, as
previously disclosed on our Annual report on Form 10-K for the fiscal year ended
August 2, 2008, have not changed materially at May 2, 2009.




CONTINGENCIES




The
Company had an employment agreement with Samuel Park, a previous CEO, for the
period May 1, 2001 to April 30, 2004.  The employment agreement
provided for certain payments in the event of a change in the control of the
Company as defined in the agreement.  On October 9, 2003, the Company
terminated Mr. Park’s employment, and on October 10, 2003, the Company announced
the appointment of Walter F. Schneider as President and CEO to replace Mr. Park,
effective as of such date.  As a result, the Company recorded a charge
of $200,000 during the first quarter of fiscal 2004 to accrue the balance of
salary remaining under Mr. Park’s employment agreement.




21


The
Company’s employment agreement with Mr. Park provided for payments upon a change
in control as defined in the agreement.  The Company’s Board of
Directors elected at the Company’s Annual Meeting of Shareholders held on May
29, 2003, reviewed the “change in control” provisions in the employment
agreement between the Company and Mr. Park, regarding a payment to him in the
event of a change in control as defined in the agreement.  As a result
of this review and based upon, among other things, the advice of special
counsel, the Company’s Board of Directors determined that no obligation to make
the payment has been triggered.  Prior to his departure from the
Company on October 10, 2003, Mr. Park orally informed the Company that, after
reviewing the matter with his counsel, he believed that the obligation to pay
him for a change in control had been triggered.  On October 27, 2003,
the Company received a letter from Mr. Park’s counsel demanding payment of
certain sums and other consideration pursuant to the Company’s employment
agreement with Mr. Park, including a change in control payment.  On
November 17, 2003, the Company filed a complaint in the United States District
Court, Southern District of New York, against Mr. Park seeking a declaratory
judgment that no change in control payment was or is due to Mr. Park, and that
an amendment to the employment contract with Mr. Park regarding reimbursement of
legal fees is invalid and unenforceable.  Mr. Park answered the
complaint and asserted counterclaims seeking payment from the Company based on
his position that a “change in control” occurred in June 2003 and a declaration
that the amendment on legal fees incurred by him was valid and
enforceable.  Mr. Park also sought other consideration he believed he
was owed under his employment agreement.  The Company filed a reply to
Mr. Park’s counterclaims denying that he was entitled to any of these payments
or the declaration of validity and enforceability of the legal fees
amendment.  Discovery in this matter was conducted and
completed.  Following discovery, the Company and Mr. Park filed
motions for summary judgment on the issues related to the change in control and
the amendment to the employment agreement, which motions were fully submitted to
the court for consideration.




By
memorandum decision and order dated December 15, 2008, the court denied the
Company’s motion for summary judgment, and granted Mr. Park’s motion for partial
summary judgment (a) on his first counterclaim seeking a declaration that he is
entitled to a change in control payment from the Company and an order that such
payment be made to him together with interest and (b) on his third counterclaim
for a declaration that he is entitled to recover his legal fees and expenses
reasonably incurred by him in, as he alleged, enforcing the terms of his
employment agreement with the Company and an order directing payment of such
fees.




By motion
served on February 2, 2009, as amended by reply papers served by Mr. Park on
February 25, 2009, Mr. Park sought entry of judgment in the amount of
$2,153,412, along with post-judgment interest thereon, on Mr. Park’s first
counterclaim (change in control payment) and on his third counterclaim (in the
amount of the attorneys’ fees and disbursements incurred by him through November
30, 2008).  The motion also sought as part of the judgment a direction
that Del Global pay Park’s attorneys’ fees and disbursements incurred in the
action from on and after December 1, 2008 within thirty days after Mr. Park
submits to the Company written notice thereof.




Mr. Park’s
counsel advised the Court by letter in January 2009 that in his second
counterclaim, which was not a subject of any of the motions for summary judgment
previously made in the action, Mr. Park sought a total of approximately $920,000
in alleged damages and interest thereon.  This total included the
following items allegedly owed to him in the following approximate
amounts:  $605,000 for stock options, $193,000 (subsequently changed
to $174,000) for bonus for fiscal year 2004 pro rated to April 30, 2004, $81,000
for unused vacation, and $41,000 for business expenses.




The
parties entered into an agreement as of April 2, 2009, settling the
action.  Pursuant to the settlement agreement, the Company made
payments to Mr. Park and his counsel totaling $2,500,000.  The Court
signed an order on April 13, 2009 dismissing the action with prejudice, which
was entered by the Clerk of the Court.




On May 24,
2007, the Company’s Power Conversion subsidiary, RFI, was served with a subpoena
to testify before a grand jury of the United States District Court of New York
and to provide items and records from its Bay Shore, NY offices in connection
with U.S. Department of Defense contracts.  A search warrant from the
United States District Court, Eastern District of New York was issued and
executed with respect to such offices.  The Company believes that it
is in full compliance with the quality standards that its customers require and
is fully cooperating with investigators to assist them with their
review.  RFI continues to ship products to the U.S. Government, as
well as to its commercial customers.




22


On April
28, 2008, George Apergis, the former General Manager of RFI, filed a charge with
the EEOC alleging that RFI discriminated against him by terminating his
employment with RFI on December 18, 2007. George Apergis alleged three claims
against RFI: (1) violation of Title VII of the Civil Rights Act; (2) violation
of the Age Discrimination in Employment Act and (3) retaliation.  RFI
responded to the EEOC charge with a position statement filed with the EEOC on
June 26, 2008 denying each allegation of the charge.  As of June 2,
2009, RFI is waiting to hear for a response to their position statement from the
EEOC.  RFI intends to defend vigorously against George
Apergis.




In
December 2007, the Company was added to an action (Diamond v. Allied Diagnostic
Imaging Resources, Inc., et al. (Superior Court, County of Los Angeles; Case No.
BC362544)) brought against several other defendants in which the plaintiff
alleges that she is the wife of a chiropractor who died in June
2005.  Plaintiff alleges that her husband was exposed to chemical
products used in developing x-ray film and cleaning film processing machines and
worked with x-ray film processing machines and x-ray machines, and that the
defendants manufactured, supplied or serviced the chemical products and
machines.  The complaint further alleges that the decedent was exposed
to toxic chemicals and radiation from the chemical products used on or in the
machines, which caused “serious injuries to his internal organs, including acute
myelogenous leukemia,” resulting in his death.




The
complaint alleges the following six claims against the defendants: (1)
negligence in manufacturing and distributing the chemical products and machines,
servicing the machines, and failing adequately to warn decedent of the hazards
of the chemical products and machines, (2) violation of a California statute and
regulation by failing to determine whether the chemical products caused health
hazards and failing to label or identify in material safety data sheets a health
hazard relating to acute myelogenous leukemia, (3) strict products liability for
failing to warn adequately of the chemical products’ and machines’ health
hazards, (4) strict products liability for defects in the design of the chemical
products and machines, (5) fraudulent concealment of the toxic and carcinogenic
nature of the chemical products and the machines, and (6) breach of implied
warranties as to the fitness of the chemical products and machines for intended
uses, merchantability, and lack of defects.




While the
complaint does not allege a total amount of damages sought, plaintiff alleges
that she has suffered damages consisting of medical, funeral, and burial
expenses, the decedent’s lost earnings prior to and lost wages after his death,
lost benefits after his death, the value of his services in managing his
family’s home, and loss of companionship and similar losses.  The
plaintiff also requests punitive damages.  The Company has not
recorded an accrual for any potential settlement of this claim as it has no
basis upon which to estimate either the outcome or amount of loss, if
any.  In its answer to the complaint, the Company denied the
substantive allegations of the complaint and denied that it has any liability to
plaintiff.    On November 17, 2008, the action as against
the Company was dismissed without prejudice pursuant to a stipulation signed by
plaintiff’s counsel.




The
Company is a defendant in several other legal actions in various U.S. and
foreign jurisdictions, arising from the normal course of
business.  Management believes the Company has meritorious defenses to
such actions and that the outcomes will not be material to the Company’s
consolidated financial statements.




OFF
BALANCE SHEET COMMITMENTS AND ARRANGEMENTS




The
Company has not had any investments in unconsolidated variable interest entities
or other off balance sheet arrangements during any of the periods presented in
this Quarterly Report on Form 10-Q.




23


Item
      3.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK




The
Company does not hold market risk sensitive instruments for trading
purposes.  The Company, however, recognizes market risk from interest
rate and foreign currency exchange exposure.  There have been no
changes in financial market risks as described in the Company’s Annual Report on
Form 10-K for the fiscal year ended August 2, 2008.




Item
      4.
            CONTROLS
      AND PROCEDURES




(a)           Disclosure
Controls and procedures.




The
Company, under the supervision and with the participation of the Company’s
management, including James A. Risher, Chief Executive Officer, and Mark A.
Zorko, Chief Financial Officer, has evaluated the effectiveness of the design
and operation of the Company’s “disclosure controls and procedures”, as such
term is defined in Rules 13a-15e and 15d-15e promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the
period covered by this Quarterly Report.  Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer have concluded that the
Company’s disclosure controls and procedures were effective as of the end of the
period covered by this Quarterly Report to ensure that all material information
required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is accumulated and communicated to management as
appropriate to allow timely decisions regarding required disclosure and that all
such information is recorded, processed, summarized and reported as specified in
the SEC’s rules and forms.




(b)           Changes
in Internal Control Over Financial Reporting.




There was
no change in the Company’s internal control over financial
reporting  during our third quarter of fiscal 2009 that has materially
affected or is reasonably likely to materially affect the Company’s internal
control over financial reporting.




PART
II - OTHER INFORMATION




Item
      1.
            LEGAL
      PROCEEDINGS




The
Company had an employment agreement with Samuel Park, a previous CEO, for the
period May 1, 2001 to April 30, 2004.  The employment agreement
provided for certain payments in the event of a change in the control of the
Company as defined in the agreement.  On October 9, 2003, the Company
terminated Mr. Park’s employment, and on October 10, 2003, the Company announced
the appointment of Walter F. Schneider as President and CEO to replace Mr. Park,
effective as of such date.  As a result, the Company recorded a charge
of $200,000 during the first quarter of fiscal 2004 to accrue the balance
of salary remaining under Mr. Park’s employment agreement.




The
Company’s employment agreement with Mr. Park provided for payments upon a change
in control as defined in the agreement.  The Company’s Board of
Directors elected at the Company’s Annual Meeting of Shareholders held on May
29, 2003, reviewed the “change in control” provisions in the employment
agreement between the Company and Mr. Park, regarding a payment to him in the
event of a change in control as defined in the agreement.  As a result
of this review and based upon, among other things, the advice of special
counsel, the Company’s Board of Directors determined that no obligation to make
the payment has been triggered.  Prior to his departure from the
Company on October 10, 2003, Mr. Park orally informed the Company that, after
reviewing the matter with his counsel, he believed that the obligation to pay
him for a change in control had been triggered.  On October 27, 2003,
the Company received a letter from Mr. Park’s counsel demanding payment of
certain sums and other consideration pursuant to the Company’s employment
agreement with Mr. Park, including a change in control payment.  On
November 17, 2003, the Company filed a complaint in the United States District
Court, Southern District of New York, against Mr. Park seeking a declaratory
judgment that no change in control payment was or is due to Mr. Park, and that
an amendment to the employment contract with Mr. Park regarding reimbursement of
legal fees is invalid and unenforceable.  Mr. Park answered the
complaint and asserted counterclaims seeking payment from the Company based on
his position that a “change in control” occurred in June 2003 and a declaration
that the amendment on legal fees incurred by him was valid and
enforceable.  Mr. Park also sought other consideration he believed he
was owed under his employment agreement.  The Company filed a reply to
Mr. Park’s counterclaims denying that he was entitled to any of these payments
or the declaration of validity and enforceability of the legal fees
amendment.  Discovery in this matter was conducted and
completed.  Following discovery, the Company and Mr. Park filed
motions for summary judgment on the issues related to the change in control and
the amendment to the employment agreement, which motions were fully submitted to
the court for consideration.




24


By
memorandum decision and order dated December 15, 2008, the court denied the
Company’s motion for summary judgment, and granted Mr. Park’s motion for partial
summary judgment (a) on his first counterclaim seeking a declaration that he is
entitled to a change in control payment from the Company and an order that such
payment be made to him together with interest and (b) on his third counterclaim
for a declaration that he is entitled to recover his legal fees and expenses
reasonably incurred by him in, as he alleged, enforcing the terms of his
employment agreement with the Company and an order directing payment of such
fees.




By motion
served on February 2, 2009, as amended by reply papers served by Mr. Park on
February 25, 2009, Mr. Park sought entry of judgment in the amount of
$2,153,412, along with post-judgment interest thereon, on Mr. Park’s first
counterclaim (change in control payment) and on his third counterclaim (in the
amount of the attorneys’ fees and disbursements incurred by him through November
30, 2008).  The motion also sought as part of the judgment a direction
that Del Global pay Park’s attorneys’ fees and disbursements incurred in the
action from on and after December 1, 2008 within thirty days after Mr. Park
submits to the Company written notice thereof.




Mr. Park’s
counsel advised the Court by letter in January 2009 that in his second
counterclaim, which was not a subject of any of the motions for summary judgment
previously made in the action, Mr. Park sought a total of approximately $920,000
in alleged damages and interest thereon.  This total included the
following items allegedly owed to him in the following approximate
amounts:  $605,000 for stock options, $193,000 (subsequently changed
to $174,000) for bonus for fiscal year 2004 pro rated to April 30, 2004, $81,000
for unused vacation, and $41,000 for business expenses.




The
parties entered into an agreement as of April 2, 2009, settling the
action.  Pursuant to the settlement agreement, the Company made
payments to Mr. Park and his counsel totaling $2,500,000.  The Court
signed an order on April 13, 2009 dismissing the action with prejudice, which
was entered by the Clerk of the Court.




On May 24,
2007, the Company’s Power Conversion subsidiary, RFI, was served with a subpoena
to testify before a grand jury of the United States District Court of New York
and to provide items and records from its Bay Shore, NY offices in connection
with U.S. Department of Defense contracts.  A search warrant from the
United States District Court, Eastern District of New York was issued and
executed with respect to such offices.  The Company believes that it
is in full compliance with the quality standards that its customers require and
is fully cooperating with investigators to assist them with their
review.  RFI continues to ship products to the U.S. Government, as
well as to its commercial customers.




On April
28, 2008, George Apergis, the former General Manager of RFI, filed a charge with
the EEOC alleging that RFI discriminated against him by terminating his
employment with RFI on December 18, 2007. George Apergis alleged three claims
against RFI: (1) violation of Title VII of the Civil Rights Act; (2) violation
of the Age Discrimination in Employment Act and (3) retaliation.  RFI
responded to the EEOC charge with a position statement filed with the EEOC on
June 26, 2008 denying each allegation of the charge.  As of June 2,
2009, RFI is waiting to hear for a response to their position statement from the
EEOC.  RFI intends to defend vigorously against George
Apergis.




In
December 2007, the Company was added to an action (Diamond v. Allied Diagnostic
Imaging Resources, Inc., et al. (Superior Court, County of Los Angeles; Case No.
BC362544)) brought against several other defendants in which the plaintiff
alleges that she is the wife of a chiropractor who died in June
2005.  Plaintiff alleges that her husband was exposed to chemical
products used in developing x-ray film and cleaning film processing machines and
worked with x-ray film processing machines and x-ray machines, and that the
defendants manufactured, supplied or serviced the chemical products and
machines.  The complaint further alleges that the decedent was exposed
to toxic chemicals and radiation from the chemical products used on or in the
machines, which caused “serious injuries to his internal organs, including acute
myelogenous leukemia,” resulting in his death.




The
complaint alleges the following six claims against the defendants: (1)
negligence in manufacturing and distributing the chemical products and machines,
servicing the machines, and failing adequately to warn decedent of the hazards
of the chemical products and machines, (2) violation of a California statute and
regulation by failing to determine whether the chemical products caused health
hazards and failing to label or identify in material safety data sheets a health
hazard relating to acute myelogenous leukemia, (3) strict products liability for
failing to warn adequately of the chemical products’ and machines’ health
hazards, (4) strict products liability for defects in the design of the chemical
products and machines, (5) fraudulent concealment of the toxic and carcinogenic
nature of the chemical products and the machines, and (6) breach of implied
warranties as to the fitness of the chemical products and machines for intended
uses, merchantability, and lack of defects.




25


While the
complaint does not allege a total amount of damages sought, plaintiff alleges
that she has suffered damages consisting of medical, funeral, and burial
expenses, the decedent’s lost earnings prior to and lost wages after his death,
lost benefits after his death, the value of his services in managing his
family’s home, and loss of companionship and similar losses.  The
plaintiff also requests punitive damages.  The Company has not
recorded an accrual for any potential settlement of this claim as it has no
basis upon which to estimate either the outcome or amount of loss, if
any.  In its answer to the complaint, the Company denied the
substantive allegations of the complaint and denied that it has any liability to
plaintiff.    On November 17, 2008, the action as against
the Company was dismissed without prejudice pursuant to a stipulation signed by
plaintiff’s counsel.




The
Company is a defendant in several other legal actions in various U.S. and
foreign jurisdictions, arising from the normal course of
business.  Management believes the Company has meritorious defenses to
such actions and that the outcomes will not be material to the Company’s
consolidated financial statements.




Item
      1A.
            RISK
      FACTORS




Our annual
report on Form 10-K for the fiscal year ended August 2, 2008 contains a detailed
discussion of our risk factors. The information below updates and should be read
in conjunction with the risk factors and other information disclosed in our 2008
Annual Report on Form 10-K.




Recent
and future economic conditions, including turmoil in the financial and credit
markets, may adversely affect our business.




Recent
economic conditions may adversely affect our business, including as a result of
the potential impact on the medical imaging and power conversion system
industries, our customers, our financing and other contractual
arrangements.  In addition, conditions may remain depressed in the
future or may be subject to further deterioration.  Recent or future
developments in the U.S. and global economies may lead to a reduction in
spending on the products we provide, which could have an adverse impact on sales
of our products.




Tightening
of the credit markets and recent or future turmoil in the financial markets
could also make it more difficult for us to refinance our existing indebtedness
(if necessary), to enter into agreements for new indebtedness or to obtain
funding through the issuance of the Company’s
securities.  Specifically, the tightening of the credit markets and
turmoil in the financial markets could make it more difficult or impossible for
us to refinance or renew the Company’s existing credit facility with Capital One
Leverage Finance Corp. when it expires on May 24, 2010.




Worsening
economic conditions could also result in difficulties for financial institutions
(including bank failures) and other parties that we may do business with, which
could potentially, impair our ability to access financing under existing
arrangements or to otherwise recover amounts as they become due under our other
contractual arrangements.




26




Item
      6.
              EXHIBITS
  Exhibit
      Number
                          Description31.1*
                          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


DEL
GLOBAL TECHNOLOGIES CORP. AND SUBSIDIARIES




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/
      James A. RisherJames
      A. RisherChief
      Executive Officer/s/
      Mark A. ZorkoMark
      A. ZorkoChief
      Financial Officer





Dated:  June
9, 2009






28


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