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): February 22, 2011
Daktronics, Inc.
(Exact name of registrant as specified in its charter)
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South Dakota
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0-23246
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46-0306862
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer
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Incorporation or organization)
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File Number)
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Identification Number)
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201 Daktronics Drive
Brookings, SD 57006
(Address of principal executive office) (zip code)
(605) 692-0200
(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 February 22, 2011 Daktronics, Inc. (the “Registrant”) issued a press release announcing financial results for the fiscal 2011 third quarter ending January 29, 2011. 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:
(d) Exhibits. The following exhibit is furnished as part of this Report:
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.
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DAKTRONICS, INC.
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By: /s/ William R. Retterath
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William R. Retterath, Chief Financial Officer
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Date: February 22, 2011
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EXHIBIT INDEX
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Exhibit No.
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Description
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Daktronics, Inc. Announces Third Quarter Fiscal 2011 Results
• Net sales increase 38% compared to fiscal 2010 third quarter
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• Backlog increases to $128 million compared to $100 million one year ago
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Brookings, S.D. – February 22, 2011 - Daktronics, Inc. (Nasdaq - DAKT) today reported fiscal 2011 third quarter net sales of $99.9 million and net income of $1.8 million, or $0.04 per diluted share, compared to net sales of $72.4 million and a net loss of ($8.4 million), or ($0.20) per diluted share, for the third quarter of fiscal 2010. Backlog at the end of the fiscal 2011 third quarter was approximately $128 million, compared with a backlog of approximately $100 million a year earlier and $121 million at the end of the second quarter of fiscal 2011.
Net sales, net income and earnings per share for the nine months ended January 29, 2011 were $327.3 million, $11.3 million and $0.27 per diluted share, respectively. This compares to $301.2 million, ($2.1 million) and ($0.05) per diluted share, respectively, for the same period in fiscal 2010.
Free cash flow, defined as cash provided by operations less net purchases of property and equipment, was $32.1 million through the third quarter of fiscal 2011, compared to $25.7 million through the same period one year ago. Cash and marketable securities at the end of the third quarter of fiscal 2011 were $75.8 million.
“Our financial results reflect a significant improvement over the third quarter of fiscal 2010, which was a very difficult quarter for us,” said Jim Morgan, president and chief executive officer. “The third quarter is typically our weakest quarter of the fiscal year due to the seasonality of our business and the holidays, and our goal was to be profitable this quarter, which we achieved.”
Morgan added, “Our order activity was reasonably balanced across our business units. There are a few orders that we expected to book in the third quarter that we now expect to book in fourth quarter, so that should help orders in the fourth quarter, but put pressure on sales due to the delay. There are two areas that are noticeably different from last year. First, we booked four large system projects totaling more than $18 million for major league baseball facilities, whereas last year all large major league baseball projects were postponed due to the economy. Second, our digital billboard business more than doubled in the third quarter of fiscal 2011 as compared to last year’s third quarter.”
Business Highlights
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·
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The Live Events business unit improved over last year at this time, due in part to the major league baseball business described above. New, state-of-the-art Daktronics video display systems will be unveiled for the opening of baseball season for the Houston Astros, Texas Rangers, Philadelphia Phillies and Milwaukee Brewers. The company is also adding displays for the Minnesota Twins, which will be in their second season in their new ballpark. Finally, the company booked a multi-million dollar video display upgrade to the historic Los Angeles Coliseum, which will be operational for the upcoming college football season.
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·
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Order growth in the Schools and Theatres business unit for the third quarter of fiscal 2011 included a number of large display system orders, including two orders exceeding $1 million each for high school football, which is helping offset the spending pressures in the high school market for standard scoreboard products. Demand for video systems for high schools continues to increase.
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·
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Although orders increased significantly in the Commercial business unit due to the increase in orders for digital billboards, orders for the spectaculars and reseller niches were lower than expected, which the company attributes in part to the adverse weather conditions during the third quarter of fiscal 2011. The company believes that weather was also a factor in the rate of billboard deployments during the quarter, which negatively affected sales for the quarter and delayed some orders.
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·
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Order volume for the third quarter of fiscal 2011 for the International business unit was less than expected due to orders delayed by contract negotiations continuing into the fourth quarter of fiscal 2011. The pipeline for international orders remains strong.
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·
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Orders in the Transportation business unit continued to be strong through the quarter. As a result of the large backlog in the Transportation business unit and continuing strong demand, the company is continuing to ramp up production rates in its transportation products factory.
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·
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Results for the third quarter and first nine months of fiscal 2011 included a $0.5 million tax benefit due to the reinstatement of the research and development tax credit during the third quarter of fiscal 2011 and a pretax gain of approximately $0.6 million from the restructuring of the company’s investment in an affiliate.
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Outlook
Morgan added, “As a result of the growing interest in our architectural lighting products, which we are manufacturing in our facility in China, we are currently in the process of adding capabilities and capacity to our manufacturing operations there. We expect to have this capacity on line by the end of the current fiscal year so we are ready for the growing sales opportunities that we see for this product line. This is an important initiative for us over the next six months to take advantage of the opportunity we see for growth with our line of architectural lighting products.”
“Given the current makeup of our backlog and our dependence on some new product development initiatives that are required on a number of contracts, our fourth quarter net sales could be reduced by some projects getting pushed out into the first quarter of fiscal 2012. Therefore, although we expect net sales to rise in the fourth quarter of fiscal 2011 from the level of the third quarter of fiscal 2011, the amount of the increase may be limited. The competition for orders in the marketplace across all business units remains very keen, and we expect continued pressure on gross margins in the fourth quarter of fiscal 2011. We remain optimistic on the long-term outlook overall, subject to the natural volatility and the competitive pressures in the large contract business, and the performance of the overall econo
my,” said Morgan.
Strategy
“Our focus continues to be on winning orders to continue to grow the top line, while at the same time continuing to reduce costs by improving our processes across the company and further reducing the manufactured costs of our products through leveraging a global supply chain and product development initiatives. At the same time, we continue initiatives to improve reliability and quality, maintain a high level of on-time delivery, and strengthen our after-sales service delivery. We will continue to focus on free cash flow, with our priorities for cash being funding operations, including developing new and improved product offerings, expanding markets for existing products, and investing in business process improvement initiatives to create shareholder value over time,” concluded Morgan.
Webcast Information
The company will host a conference call and webcast to discuss its financial results today at 10:00 am (Central Time). This call will be broadcast live at http://investor.daktronics.com and available for replay shortly after the event.
About Daktronics
Daktronics has strong leadership positions in, and is the world’s largest supplier of, large screen video displays, electronic scoreboards, LED text and graphics displays, and related control systems. The company excels in the control of 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 four domestic business units: Live Events, Commercial, Schools and Theatres and Transportation, and one International business unit. 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) 692-0200 or toll-free (800) 843-5843 in the Unit
ed States or write to the company at 201 Daktronics Dr., 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 within the meaning of the Private Securities Litigation Reform Act of 1995 and is intended to enjoy the protection of that Act. These forward-looking statements reflect the Company’s expectations or beliefs concerning future events. The Company cautions that these and similar statements involve risk and uncertainties which could cause actual results to differ materially from our expectation, including, but not limited to, changes in economic and market conditions, management of growth, timing and magnitude of future contracts, fluctuations in margins, the introduction of new products and technology, the impact of adverse weather conditions and other risks noted in the company’s SEC filings, inclu
ding its Annual Report on Form 10-K for its 2010 fiscal year. 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.
-- END --
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For more information contact:
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INVESTOR RELATIONS:
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Bill Retterath, Chief Financial Officer
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(605) 692-0200
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Investor@daktronics.com
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Financial tables are included on the following pages.
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Daktronics, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
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Three Months Ended
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Nine Months Ended
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January 29,
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January 30,
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January 29,
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January 30,
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|||||||||||||
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2011
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2010
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2011
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2010
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Net sales
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$ | 99,868 | $ | 72,406 | $ | 327,289 | $ | 301,221 | ||||||||
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Cost of goods sold
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76,226 | 61,634 | 244,242 | 226,817 | ||||||||||||
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Gross profit
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23,642 | 10,772 | 83,047 | 74,404 | ||||||||||||
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Operating expenses:
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Selling
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12,148 | 13,155 | 37,084 | 40,411 | ||||||||||||
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General and administrative
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6,047 | 6,523 | 17,259 | 19,016 | ||||||||||||
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Product design and development
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4,673 | 5,155 | 13,787 | 16,558 | ||||||||||||
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Gain on insurance proceeds
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- | (1,496 | ) | - | (1,496 | ) | ||||||||||
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Goodwill impairment
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- | 1,410 | - | 1,410 | ||||||||||||
| 22,868 | 24,747 | 68,130 | 75,899 | |||||||||||||
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Operating income (loss)
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774 | (13,975 | ) | 14,917 | (1,495 | ) | ||||||||||
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Nonoperating income (expense):
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Interest income
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544 | 376 | 1,382 | 1,129 | ||||||||||||
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Interest expense
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(41 | ) | (38 | ) | (118 | ) | (149 | ) | ||||||||
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Other income (expense), net
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557 | (265 | ) | 818 | (1,577 | ) | ||||||||||
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Income (loss) before income taxes
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1,834 | (13,902 | ) | 16,999 | (2,092 | ) | ||||||||||
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Income tax expense (benefit)
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3 | (5,531 | ) | 5,718 | (2 | ) | ||||||||||
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Net income (loss)
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$ | 1,831 | $ | (8,371 | ) | $ | 11,281 | $ | (2,090 | ) | ||||||
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Weighted average shares outstanding:
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Basic
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41,534 | 41,004 | 41,341 | 40,862 | ||||||||||||
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Diluted
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42,201 | 41,122 | 41,969 | 41,012 | ||||||||||||
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Earnings (loss) per share:
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Basic
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$ | 0.04 | $ | (0.20 | ) | $ | 0.27 | $ | (0.05 | ) | ||||||
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Diluted
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$ | 0.04 | $ | (0.20 | ) | $ | 0.27 | $ | (0.05 | ) | ||||||
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Cash dividend paid per share
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$ | - | $ | - | $ | 0.60 | $ | 0.095 | ||||||||
-- MORE --
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
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January 29,
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2011
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May 1,
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(unaudited)
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2010
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ASSETS
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CURRENT ASSETS:
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Cash, cash equivalents and restricted cash
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$ | 58,966 | $ | 64,867 | ||||
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Marketable securities
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16,869 | - | ||||||
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Accounts receivable, less allowance for doubtful accounts
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44,642 | 45,018 | ||||||
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Inventories
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46,875 | 35,673 | ||||||
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Costs and estimated earnings in excess of billings
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25,567 | 25,233 | ||||||
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Current maturities of long-term receivables
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4,720 | 6,232 | ||||||
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Prepaid expenses and other assets
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5,454 | 5,838 | ||||||
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Deferred income taxes
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10,612 | 12,578 | ||||||
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Income tax receivables
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8,583 | 7,444 | ||||||
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Property and equipment available for sale
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69 | 182 | ||||||
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Total current assets
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222,357 | 203,065 | ||||||
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Advertising rights, net
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731 | 1,348 | ||||||
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Long-term receivables, less current maturities
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13,695 | 13,458 | ||||||
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Goodwill
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3,334 | 3,323 | ||||||
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Intangible and other assets
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2,812 | 3,710 | ||||||
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Deferred income taxes
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64 | 62 | ||||||
| 20,636 | 21,901 | |||||||
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PROPERTY AND EQUIPMENT:
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Land
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1,497 | 1,471 | ||||||
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Buildings
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55,308 | 55,353 | ||||||
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Machinery and equipment
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56,577 | 54,058 | ||||||
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Office furniture and equipment
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51,776 | 53,831 | ||||||
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Equipment held for rental
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1,316 | 1,630 | ||||||
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Demonstration equipment
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8,258 | 8,969 | ||||||
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Transportation equipment
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3,612 | 4,256 | ||||||
| 178,344 | 179,568 | |||||||
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Less accumulated depreciation
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107,572 | 98,683 | ||||||
| 70,772 | 80,885 | |||||||
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TOTAL ASSETS
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$ | 313,765 | $ | 305,851 | ||||
-- MORE --
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
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January 29,
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2011
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May 1,
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(unaudited)
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2010
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES:
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Accounts payable
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$ | 26,685 | $ | 23,149 | ||||
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Accrued expenses and warranty obligations
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36,350 | 33,443 | ||||||
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Billings in excess of costs and estimated earnings
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17,030 | 13,105 | ||||||
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Customer deposits
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12,364 | 9,348 | ||||||
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Deferred revenue (billed or collected)
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8,897 | 7,766 | ||||||
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Current maturities of long-term debt and marketing obligations
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310 | 322 | ||||||
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Income taxes payable
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876 | 361 | ||||||
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Total current liabilities
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102,512 | 87,494 | ||||||
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Long-term marketing obligations, less current maturities
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530 | 600 | ||||||
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Long-term warranty obligations and other payables
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4,572 | 4,229 | ||||||
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Deferred income taxes
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2,374 | 2,167 | ||||||
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Long-term deferred revenue (billed or collected)
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4,754 | 4,308 | ||||||
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Total long-term liabilities
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12,230 | 11,304 | ||||||
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TOTAL LIABILITIES
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114,742 | 98,798 | ||||||
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SHAREHOLDERS' EQUITY:
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Common stock
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32,541 | 29,936 | ||||||
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Additional paid-in capital
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20,431 | 17,731 | ||||||
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Retained earnings
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146,329 | 159,842 | ||||||
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Treasury stock, at cost
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(9 | ) | (9 | ) | ||||
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Accumulated other comprehensive loss
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(269 | ) | (447 | ) | ||||
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TOTAL SHAREHOLDERS' EQUITY
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199,023 | 207,053 | ||||||
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
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$ | 313,765 | $ | 305,851 | ||||
-- MORE --
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
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Nine Months Ended
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January 29,
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January 30,
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2011
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2010
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net income (loss)
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$ | 11,281 | $ | (2,090 | ) | |||
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Adjustments to reconcile net income to net cash provided
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by operating activities:
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Depreciation
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14,760 | 16,762 | ||||||
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Amortization
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220 | 236 | ||||||
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Loss (gain) on sales of property and equipment
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53 | (993 | ) | |||||
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Stock-based compensation
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2,595 | 2,491 | ||||||
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Equity in losses of affiliates
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36 | 1,532 | ||||||
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Impairment of goodwill
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- | 1,410 | ||||||
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Loss on sale of equity investee
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- | (270 | ) | |||||
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Provision for doubtful accounts
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(10 | ) | 230 | |||||
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Deferred income taxes, net
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2,172 | (554 | ) | |||||
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Change in other operating assets and liabilities
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6,267 | 19,059 | ||||||
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Net cash provided by operating activities
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37,374 | 37,813 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Purchases of property and equipment
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(5,595 | ) | (12,945 | ) | ||||
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Purchases of marketable securities
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(16,869 | ) | - | |||||
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Insurance recoveries on property and equipment
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114 | 820 | ||||||
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Proceeds from sale of property and equipment
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195 | - | ||||||
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Other investing activities, net
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2,095 | (1,241 | ) | |||||
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Net cash used in investing activities
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(20,060 | ) | (13,366 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Principal payments on long-term debt
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(14 | ) | (13 | ) | ||||
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Proceeds from exercise of stock options
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1,223 | 365 | ||||||
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Excess tax benefits from stock-based compensation
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106 | 60 | ||||||
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Dividends paid
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(24,794 | ) | (3,874 | ) | ||||
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Net cash used in financing activities
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(23,479 | ) | (3,462 | ) | ||||
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
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CASH EQUIVALENTS
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111 | (180 | ) | |||||
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
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(6,054 | ) | 20,805 | |||||
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CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD
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63,603 | 36,501 | ||||||
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CASH AND CASH EQUIVALENTS END OF PERIOD
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$ | 57,549 | $ | 57,306 | ||||
-- MORE --
Daktronics, Inc. and Subsidiaries
Net Sales and Orders By Business Unit
(in thousands)
(unaudited)
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Three Months Ended
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Nine Months Ended
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January 29,
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January 30,
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January 29,
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January 30,
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|||||||||||||
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2011
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2010
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2011
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2010
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Net Sales
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Commercial
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$ | 28,750 | $ | 20,903 | $ | 83,760 | $ | 69,011 | ||||||||
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Live Events
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36,138 | 22,773 | 120,846 | 125,617 | ||||||||||||
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Schools & Theatres
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11,672 | 12,325 | 49,671 | 49,526 | ||||||||||||
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Transportation
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11,063 | 8,087 | 30,091 | 31,307 | ||||||||||||
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International
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12,245 | 8,318 | 42,921 | 25,760 | ||||||||||||
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Total Net Sales
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$ | 99,868 | $ | 72,406 | $ | 327,289 | $ | 301,221 | ||||||||
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Orders
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Commercial
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$ | 25,772 | $ | 21,892 | $ | 84,484 | $ | 65,554 | ||||||||
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Live Events
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46,797 | 32,280 | 111,798 | 113,729 | ||||||||||||
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Schools & Theatres
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12,171 | 10,280 | 47,773 | 48,076 | ||||||||||||
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Transportation
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11,416 | 9,403 | 32,452 | 25,473 | ||||||||||||
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International
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8,993 | 8,628 | 48,683 | 32,336 | ||||||||||||
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Total Orders
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$ | 105,149 | $ | 82,483 | $ | 325,190 | $ | 285,168 | ||||||||
-- END --