UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 16, 2005
Daktronics, Inc.
(Exact name of registrant as specified in its charter)
| South Dakota | 0-23246 | 46-0306862 | ||||||
| (State or other jurisdiction of | (Commission | (I.R.S. Employer | ||||||
| incorporation or organization) | File Number) | Identification Number) | ||||||
331
32ndAvenue
Brookings, SD 57006
(Address of principal executive
office) (zip code)
(605) 697-4000
(Registrant's telephone number,
including area code)
Not Applicable
(Former name or former address, if changed since last report.)
Item 2.02 Results of Operations and Financial Condition
On November 16, 2005, Daktronics, Inc. (the “Registrant”) Registrant issued a press release announcing financial results for the second quarter ending October 29, 2005. A copy of the press release is filed herewith as Exhibit 99.1 and is incorporated herein by reference.
The information furnished in this report, including the exhibit, shall not be incorporated by reference into Daktronics’ filings with the Securities and Exchange Commission under the Securities Act of 1933 and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Securities Act of 1934.
Item 9.01 Financial Statements and Exhibits:
(c) Exhibits. The following exhibit is furnished as part of this Report:
99.1 News Release dated November 16, 2005, issued by Registrant regarding first quarter results
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
DAKTRONICS,INC.
| By: | /s/ William R. Retterath |
| William R.Retterath, Chief Financial Officer |
Date: November 16, 2005
EXHIBIT INDEX
| Exhibit No. Description | |
| 99.1 News Release dated November 16, 2005 issued by Daktronics,Inc. |
EXHIBIT 99.1
331 32nd Avenue P.O. Box 5128
Brookings, SD 57006 Phone (605) 697-4000 www.daktronics.com
For more information contact
Bill Retterath at (800) 605-DAKT (3258)
Daktronics, Inc.
announces second quarter results
Revenue up 27% quarter
over quarter
Backlog up 62% to $81
million over last year
Digital billboard
volume increases
BROOKINGS, S.D. – November 16, 2005 — Daktronics Inc. (Nasdaq-DAKT) today reported fiscal 2006 second quarter net sales of $75.8 million and net income of $5.2 million, or $0.26 per diluted share, compared with second quarter net sales of $59.5 million and net income of $5.2 million, or $0.26 per diluted share, one year ago.
Backlog at the end of the quarter was approximately $81 million as compared to $50 million at the end of the second quarter of fiscal year 2005.
“It is evident from our strong sales and order performance that the industry is robust and we are well positioned to respond,” said Jim Morgan, president and chief executive officer. “Our success this quarter was attributable to the dedication, hard work and support of our employees, subcontractors, and vendors, who collectively did what it took to design, manufacture and install equipment to meet our many critical deadlines. Orders were up significantly in the commercial market, in large part due to the growing interest in outdoor digital billboards and the national account business. Sports orders also grew, led by the recently announced order for Dolphins Stadium that will showcase the world’s largest high definition LED video display. Finally, we were pleased to see a rebound in our small sports facility business,” said Morgan.
Morgan continued, “Our gross margin percentage was down sequentially from the first quarter. Going forward, we will focus on eliminating the production inefficiencies resulting from the expedited rapid ramp up in production in the past two quarters through increased standardization, economies of scale, and other process improvements. This ramp up during the last quarter had an adverse effect on gross margins. We expect that gross profit margins will improve slightly next quarter given our current backlog and project estimates,” said Morgan.
“A number of noteworthy orders were booked during the quarter. In addition to Dolphins Stadium, we received orders for large sports systems for the Rose Garden in Portland, Oregon, the Delta Center, in Salt Lake City, and the Arrowhead Pond in Anaheim, California. The commercial market bookings included orders for more than 25 digital LED video billboards, and large systems for the new South Coast Casino in Las Vegas, Nevada, Chelsea Piers in New York, and the Emperor Hotel in Macau which will be a landmark display on the island. In the transportation market we booked orders for the Nevada, Connecticut, Idaho, New Jersey, and North Carolina Departments of Transportation and various airport and parking systems throughout the country,” said Morgan.
“Operating expenses were down from the first quarter of this fiscal year led by lower labor costs. Personnel involved in supporting sales efforts spent more time supporting installation, manufacturing and services activities, which are charged to costs of goods sold. Some of these labor costs may be included in selling costs in the next quarter thereby increasing selling costs next quarter. Year over year, operating expenses increased due to higher personnel costs, health insurance, travel and entertainment and our product and distribution expansion efforts.” said Bill Retterath, chief financial officer.
Retterath continued, “We are increasing our capacity based on our backlog and future expectations. Year to date, the company has invested approximately $2.7 million in facility expansion projects, primarily the addition of new plant capacity in Brookings, which should come on line in the last part of the fiscal year and increase manufacturing space by more than 30%. In addition to the cash flow associated with the facility, we expect to purchase additional manufacturing equipment to supplement capacity. We project capital expenditures for the entire fiscal year will be approximately $20 million, which includes $7 million related to the facility’s expansion.”
Morgan concluded, “Based on our backlog going into the third quarter of fiscal year 2006, and expectations of order bookings, we are estimating a range of $65-$72 million in net sales and earnings per diluted share in the range of $0.15 to $0.25. The third quarter is historically the lowest quarter in terms of net sales due to the seasonality of the sports business and the effects of the holidays. We are also increasing our annual guidance for net sales previously projected to increase by more than 15%, to an increase of more than 20% over fiscal year 2005. “
Conference Call Information
The company will webcast its quarterly conference call today at 10:00 am (Central Time). To listen to the webcast, go to the home page of www.daktronics.com, and click on the icon at the bottom right corner of the screen. Completion of a short registration form, along with Windows® Media Player software, are required to hear the webcast. A replay of the teleconference via the internet will also be accessible shortly after the conclusion of the conference call through www.daktronics.com. A replay of the teleconference accessible by telephone will be available for one week starting at noon Central Time on November 16. To access the replay, call toll-free in the U.S. and Canada 800-633-8284 and enter code 21267625. International callers can dial 402-977-9140 and enter code 21267625 to hear the replay by phone.
About Daktronics
Daktronics has strong leadership positions in, and is one of the world’s largest suppliers of, electronic scoreboards, computer-programmable displays, and large screen video displays and control systems. The company excels in the control of large display systems, including those that require integration of multiple complex displays showing real-time information, graphics, animation and video. Daktronics designs, manufactures, markets and services display systems for customers around the world, in sport, business and transportation applications. For more information, visit the company’s World Wide Web site at: http://www.daktronics.com, e-mail the company at investor@daktronics.com, call (605) 697-4000 or toll-free (800) 843-5843 in the United States or write to the company at 331 32nd Ave. PO Box 5128 Brookings, S.D. 57006-5128.
Safe Harbor Statement
Cautionary Notice: In addition to statements of historical fact, this news release contains forward-looking statements reflecting the Company’s expectations or beliefs concerning future events, which could materially affect company performance in the future. The Company cautions that these and similar statements involve risk and uncertainties including changes in economic and market conditions, management of growth, timing and magnitude of future contracts, and other risks noted in the company’s SEC filings which may cause actual results to differ materially. Forward-looking statements are made in the context of information available as of the date stated. The Company undertakes no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands,
except earnings per share)
(unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 29, 2005 |
October 30, 2004 |
October 29, 2005 |
October 30, 2004 | ||||||||||||||
| Net sales | $ | 75,802 | $ | 59,472 | $ | 148,147 | $ | 118,182 | |||||||||
| Cost of goods sold | 53,485 | 39,478 | 103,636 | 78,070 | |||||||||||||
| Gross profit | 22,317 | 19,994 | 44,511 | 40,112 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Selling | 9,178 | 7,348 | 18,988 | 14,727 | |||||||||||||
| General and administrative | 2,683 | 2,215 | 5,305 | 4,833 | |||||||||||||
| Product design and development | 2,749 | 2,862 | 5,233 | 5,100 | |||||||||||||
| 14,610 | 12,425 | 29,526 | 24,660 | ||||||||||||||
| Operating income | 7,707 | 7,569 | 14,985 | 15,452 | |||||||||||||
| Nonoperating income (expense): | |||||||||||||||||
| Interest income | 490 | 314 | 867 | 625 | |||||||||||||
| Interest expense | (28 | ) | (57 | ) | (79 | ) | (111 | ) | |||||||||
| Other income (expense), net | (5 | ) | 378 | (77 | ) | 455 | |||||||||||
| Income before income taxes | 8,164 | 8,204 | 15,696 | 16,421 | |||||||||||||
| Income tax expense | 2,979 | 3,016 | 5,880 | 6,201 | |||||||||||||
| Net income | $ | 5,185 | $ | 5,188 | $ | 9,816 | $ | 10,220 | |||||||||
| Weighted average number of fully | |||||||||||||||||
| diluted shares and common | |||||||||||||||||
| equivalent shares | 20,134 | 20,179 | 20,124 | 20,152 | |||||||||||||
| Earnings per share: | |||||||||||||||||
| Basic | $ | 0.27 | $ | 0.27 | $ | 0.51 | $ | 0.54 | |||||||||
| Diluted | $ | 0.26 | $ | 0.26 | $ | 0.49 | $ | 0.51 | |||||||||
Daktronics, Inc. and Subsidiaries
Consolidated Balance
Sheets
(in thousands)
| October 29, 2005 (unaudited) |
April 30, 2005 | |||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 12,140 | $ | 15,961 | ||||
| Marketable securities | 7,757 | 8,105 | ||||||
| Accounts receivable, less allowance for doubtful accounts | 33,658 | 23,762 | ||||||
| Current maturities of long-term receivables | 6,133 | 5,196 | ||||||
| Inventories | 29,811 | 24,612 | ||||||
| Costs and estimated earnings in excess of billings | 21,194 | 15,301 | ||||||
| Prepaid expenses and other | 1,886 | 1,725 | ||||||
| Deferred income taxes | 5,012 | 5,076 | ||||||
| Income taxes receivable | 76 | 1,812 | ||||||
| Rental equipment available for sale | — | 2,733 | ||||||
| Total current assets | 117,667 | 104,283 | ||||||
| Advertising rights, net | 2,401 | 1,722 | ||||||
| Long–term receivables, less current maturities | 9,553 | 9,900 | ||||||
| Goodwill | 2,644 | 2,621 | ||||||
| Intangible and other assets | 1,232 | 1,101 | ||||||
| Deferred income taxes | 433 | 782 | ||||||
| 16,263 | 16,126 | |||||||
| PROPERTY AND EQUIPMENT: | ||||||||
| Land | 1,183 | 1,084 | ||||||
| Buildings | 18,393 | 15,386 | ||||||
| Machinery and equipment | 19,152 | 17,592 | ||||||
| Office furniture and equipment | 21,138 | 19,382 | ||||||
| Equipment held for rental | 984 | 835 | ||||||
| Demonstration equipment | 5,263 | 5,245 | ||||||
| Transportation equipment | 4,318 | 3,810 | ||||||
| 70,431 | 63,334 | |||||||
| Less accumulated depreciation | 34,969 | 32,281 | ||||||
| 35,462 | 31,053 | |||||||
| TOTAL ASSETS | $ | 169,392 | $ | 151,462 | ||||
Daktronics, Inc. and Subsidiaries
Consolidated Balance
Sheets (continued)
(in thousands)
| October 29, 2005 (unaudited) |
April 30, 2005 | |||||||
|---|---|---|---|---|---|---|---|---|
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Notes payable, bank | $ | — | $ | 79 | ||||
| Accounts payable | 17,779 | 17,121 | ||||||
| Accrued expenses and warranty obligations | 12,046 | 10,973 | ||||||
| Current maturities of long-term debt | 414 | 909 | ||||||
| Current maturities of long-term marketing obligations | 184 | 304 | ||||||
| Billings in excess of costs and estimated earnings | 12,041 | 5,463 | ||||||
| Customer deposits | 6,020 | 4,164 | ||||||
| Deferred maintenance revenue | 3,424 | 2,983 | ||||||
| Income taxes payable | 223 | — | ||||||
| Total current liabilities | 52,131 | 41,996 | ||||||
| Long–term debt, less current maturities | 150 | 171 | ||||||
| Long–term marketing obligations, less current maturities | 701 | 595 | ||||||
| Deferred income | 1,885 | 1,357 | ||||||
| Deferred income taxes | 2,090 | 3,433 | ||||||
| 4,826 | 5,556 | |||||||
| TOTAL LIABILITIES | 56,957 | 47,552 | ||||||
| SHAREHOLDERS' EQUITY: | ||||||||
| Common stock | 18,369 | 17,739 | ||||||
| Additional paid–in capital | 2,845 | 2,684 | ||||||
| Retained earnings | 91,236 | 83,337 | ||||||
| Treasury stock, at cost | (9 | ) | (9 | ) | ||||
| Accumulated other comprehensive loss | (6 | ) | 159 | |||||
| TOTAL SHAREHOLDERS' EQUITY | 112,435 | 103,910 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 169,392 | $ | 151,462 | ||||
Daktronics, Inc. and Subsidiaries
Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
| Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| October 29, 2005 (unaudited) |
October 30, 2004 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | 9,816 | $ | 10,220 | |||||||
| Adjustments to reconcile net income to net cash provided | |||||||||||
| by operating activities: | |||||||||||
| Depreciation | 4,203 | 3,555 | |||||||||
| Amortization | 26 | 51 | |||||||||
| (Gain) loss on sale of property and equipment | (14 | ) | 14 | ||||||||
| Provision for doubtful accounts | (255 | ) | 132 | ||||||||
| Deferred income taxes, net | (930 | ) | 72 | ||||||||
| Change in operating assets and liabilities | (6,591 | ) | (6,229 | ) | |||||||
| Net cash provided (used) by operating activities | 6,255 | 7,815 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Cash consideration paid for acquired business | (130 | ) | — | ||||||||
| Purchase of property and equipment | (7,946 | ) | (5,962 | ) | |||||||
| Sales (purchases) of marketable securities, net | 348 | — | |||||||||
| Proceeds from sale of property and equipment | 33 | 21 | |||||||||
| Net cash used in investing activities | (7,695 | ) | (5,941 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Dividend paid | (1,917 | ) | — | ||||||||
| Principal payments on long-term debt | (525 | ) | (623 | ) | |||||||
| Net borrowing (payments) on notes payable | (84 | ) | (155 | ) | |||||||
| Proceeds from exercise of stock options and warrants | 335 | 277 | |||||||||
| Net cash used in financing activities | (2,191 | ) | (501 | ) | |||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | (190 | ) | 204 | ||||||||
| (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (3,821 | ) | 1,577 | ||||||||
| CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD | 15,961 | 16,255 | |||||||||
| CASH AND CASH EQUIVALENTS END OF PERIOD | $ | 12,140 | $ | 17,832 | |||||||