Del Global directors fall after hostile proxy vote

June 11, 2003

Effect on imaging equipment group not knownThe apparent financial turnaround by Del Global of Valhalla, NY, was not enough to convince stockholders to keep its current board of directors. In a proxy fight that culminated at this

Effect on imaging equipment group not known

The apparent financial turnaround by Del Global of Valhalla, NY, was not enough to convince stockholders to keep its current board of directors. In a proxy fight that culminated at this year's annual meeting held May 29 in nearby Chester, stockholders voted all but one of its directors off the board, replacing them with candidates proposed by Steel Partners II, the company's largest shareholder. Ed Smith is the only surviving board member. How the turnover may affect the company's imaging business is not known.

"I cannot speculate on what we will see, but we are all focused on a strong close to our fiscal year 2003, while we continue making progress on the foundation of our x-ray imaging business," said Walt Schneider, president of Del Medical Systems Group. "The growth and progress we have made over the past couple quarters should not be impeded, since in my opinion the board, old or new, wants to see progress in a growing, healthy business."

The proxy fight concluded just two weeks after Del Global launched its StingRay digital x-ray system with high hopes of future success (see accompanying story) and predictions from executives of profitability during the current quarter. The company had struggled during much of the past two years to untangle itself from a series of financial, personnel, accounting, and legal knots. Net income rose 7% during the most recent quarter, however, and things are looking up.

Elected to the board were David Wright, Gerald Czarnecki, Suzanne Hopgood, and Wallace Barnes. Among those up for reelection was Samuel Park, Del's president and CEO and a guiding force during the recent turnaround. Park was not available for comment. In a prepared statement announcing the results of the proxy vote, he committed his management team and the outgoing board members to a successful transition.

"We are proud of what our team has been able to accomplish in two years at Del," he said. "Presuming the inspectors . . . confirm the preliminary results, management and the board of directors are committed to work toward a smooth and orderly transition."

Newly elected board member Wright would not comment on the election, and efforts to reach Warren Lichtenstein, managing partner of New York-based Steel Partners, which owns 18.7% of the outstanding shares, were not successful. A week before the election, however, Lichtenstein, a chief spokesman for the takeover bid, pledged strong, independent management oversight, aggressive pursuit of relisting on the Nasdaq, restoration of the right of stockholders to call a special meeting, and "an end to any hint of abusive practices." Among the challenges facing Del Global over the last couple of years have been questions about its accounting practices (SCAN 11/27/02).

As the company prepares to go forward, the medical group is keeping its sights focused on enhancing not just its product portfolio but the means by which products are sold. Schneider confirmed Del Global's commitment to an independent dealer network and equipment backed by strong warranties.

"We will expand our distribution network in the global market to take greater market share," he said. "We have a broad product line. We are positioned to compete well in both the domestic and export markets."