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 23,
2010
Daktronics,
Inc.
(Exact
name of registrant as specified in its charter)
|
South
Dakota
|
0-23246
|
46-0306862
|
|
(State
or other jurisdiction
|
(Commission
|
(I.R.S.
Employer
|
|
Incorporation
or organization)
|
File
Number)
|
Identification
Number)
|
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 23, 2010 Daktronics, Inc. (the “Registrant”) issued a press release
announcing financial results for the fiscal 2010 third quarter ending January
30, 2010. A copy of the press release with announced corrections
incorporated 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:
99.1 News
Release dated February 23, 2010 issued by Registrant regarding third quarter
fiscal 2010 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: February
23, 2010
|
EXHIBIT
INDEX
|
Exhibit No.
|
Description
|
Daktronics,
Inc. Announces Third Quarter Fiscal 2010 Results
|
|
•
Net sales decline
44%, resulting in
a net loss of $8.4 million for the
quarter
|
|
|
•
Large sports business
sees lower than expected
orders
|
|
|
•
Further cost reduction
initiatives underway
|
|
|
•
$25 million award of
procurement contract from the New Jersey Turnpike
Authority
|
Brookings,
S.D. – February 23, 2010 – Daktronics, Inc. (Nasdaq - DAKT) today reported
fiscal 2010 third quarter net sales of $72.4 million and a net loss of ($8.4
million), or ($0.20) per diluted share, compared to net sales of $128.7 million
and net income of $4.2 million, or $0.10 per diluted share, for the third
quarter of fiscal 2009. Backlog at the end of the fiscal 2010 third
quarter was approximately $100 million, compared with a backlog of approximately
$128 million a year earlier and $90 million at the end of the second quarter of
fiscal 2010.
Net
sales, net (loss) and net (loss) per share for the nine months ended January 30,
2010 were $301.2 million, ($2.1 million) and ($0.05) per diluted share,
respectively. This compares to net sales, net income and earnings per share of
$459.6 million, $26.1 million and $0.63 per diluted share, respectively, for the
same period in fiscal 2009.
Free cash
flow, defined as cash provided by operations less net purchases of property and
equipment, was $25.7 million through the third quarter of fiscal 2010, compared
to $11.3 million through the same period one year ago.
In
January 2010, the company received a notice of award of a contract with the New
Jersey Turnpike Authority to provide full color roadway advisory displays for
approximately $25 million over a five-year period, with a minimum guaranteed
commitment of approximately $9 million. This award is subject to
final contract execution. Backlog at the end of the third quarter of
fiscal 2010 excludes this order.
The
results for the third quarter of fiscal 2010 include a $1.4 million impairment
of goodwill related to the company’s Schools and Theatres business unit and its
International business unit and a gain of approximately $1.5 million on
insurance proceeds. The insurance proceeds were related to a fire in
late October 2009 at the company’s circuit board manufacturing plant and
represents the proceeds in excess of the carrying value of the assets destroyed
in the fire.
Order
bookings in the third quarter of fiscal 2010 were down compared to the third
quarter of fiscal 2009 primarily due to the lack of any of the large
professional baseball projects moving forward and a number of other orders being
delayed, some of which we expect to book in the fourth quarter of fiscal
2010.
“A
significant amount of orders came in late January 2010 or are delayed into the
fourth quarter of fiscal 2010 which limited conversion to sales in the third
quarter,” said Jim Morgan, president and chief executive
officer. “The lack of large baseball projects for this season is
highly unusual. We expect that the projects that didn’t happen this year will
still happen in the future. The interest of our customers in
providing more entertainment value at sports venues using our display technology
is still there. We have a list of potential projects in our sales
pipeline for summer and fall delivery in calendar 2010, but there remains
uncertainty on how the economy will impact these projects. We will
know more about this as we move through the fourth quarter of fiscal 2010 and
into the first quarter of 2011.”
Morgan
continued, “In early February, we received the $25 million notice of award from
the New Jersey Turnpike Authority as described above. This was a
significant win for our Transportation business unit. This order,
coupled with what appears to be the exit from North America by a recent
aggressive competitor in transportation, reflects an improving situation for
future growth opportunities in that business unit. We are estimating
approximately $9 million of revenue from this order in fiscal
2011.”
“The
third quarter tends to be a slower time for orders in our Commercial and Schools
and Theatres business units. In the Commercial business unit, our
quoting activity and pipeline are rising, and we have a number of opportunities
for larger video displays. In addition, we are seeing increased
activity in digital billboards, primarily at the second and third tier company
level. Within our Schools and Theatres business unit, we are seeing
more opportunities for video display systems in high schools, which could drive
growth in that business,” added Morgan.
“Operating
expenses, excluding the goodwill impairment, increased slightly from the second
quarter of fiscal 2010 as benefit costs went up and the decreases in personnel
costs were not enough to offset that increase,” said Morgan. “As we
look back over the past six quarters, we have reduced operating expenses by over
19% and manufacturing costs by over 28%. Given the results for the
quarter and increased uncertainty of orders, we have become much more aggressive
on cost reduction to ensure that we return to profitability while continuing to
deliver products and services that our customers value.”
Morgan
continued, “We are in the final stages of development of our new DVX outdoor
video display product line and expect the first units to be shipped in the
fourth quarter of fiscal 2010. This new product line has been well received by
our customers. It is an improved product at a lower price point which
enhances our competitive position in the marketplace. The timing and the
significance of bringing this major new product on line is causing our projected
revenue for the fourth quarter to be back-end loaded, creating a risk that sales
could slip in to the following quarter. We don’t expect this to have
any impact on customer commitments.”
“Our
gross profit margin decreases were primarily attributable to the decline in
sales as compared to our cost infrastructure, higher than expected costs
associated with existing customer maintenance agreements and further write-downs
of inventory,” said Bill Retterath, chief financial officer. “We
expect gross profit margins to increase in the future, but the amount and timing
of increase are difficult to predict.”
Retterath
continued, “During the fiscal 2010 third quarter, we closed on the purchase of a
building located next to our main campus in Brookings that we had contractually
committed to purchase three years ago. We are moving our circuit
board manufacturing operation into this building. Our level of
capital spending continues to be maintenance only expenditures.”
Morgan
concluded, “The current environment makes it more difficult than normal to
predict what the future holds. We maintain our belief that our
markets are still intact for the long-term, that much of the downturn in orders
represents a delay in business versus a long-term decline in market opportunity,
and that the business will rebound. When that does happen we will be
well positioned to return to developing long-term shareholder
returns. Until then, cost reduction will continue to be a primary
focus for us.”
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 Sport, Business, Schools and Theatres and
Transportation segments. 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
United 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, and other risks noted in the company’s
SEC filings, including its Annual Report on Form 10-K for its 2009 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
- --
For
more information contact:
INVESTOR
RELATIONS:
Bill
Retterath, Chief Financial Officer
(605)
692-0200
Investor@daktronics.com
Financial
tables are included on the following pages
Daktronics,
Inc. and Subsidiaries
Consolidated Statements of
Operations
(in
thousands, except per share amounts)
(unaudited)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
January
30,
|
January
31,
|
January
30,
|
January
31,
|
|||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Net
sales
|
$ | 72,406 | $ | 128,692 | $ | 301,221 | $ | 459,618 | ||||||||
|
Cost
of goods sold
|
61,634 | 94,553 | 226,817 | 331,921 | ||||||||||||
|
Gross
profit
|
10,772 | 34,139 | 74,404 | 127,697 | ||||||||||||
|
Operating
expenses:
|
||||||||||||||||
|
Selling
|
13,155 | 15,513 | 40,411 | 47,403 | ||||||||||||
|
General
and administrative
|
6,523 | 6,576 | 19,016 | 21,812 | ||||||||||||
|
Product
design and development
|
5,155 | 5,149 | 16,558 | 16,981 | ||||||||||||
|
Gain
on insurance proceeds
|
(1,496 | ) | - | (1,496 | ) | - | ||||||||||
|
Goodwill
impairment
|
1,410 | - | 1,410 | - | ||||||||||||
| 24,747 | 27,238 | 75,899 | 86,196 | |||||||||||||
|
Operating
income (loss)
|
(13,975 | ) | 6,901 | (1,495 | ) | 41,501 | ||||||||||
|
Nonoperating
income (expense):
|
||||||||||||||||
|
Interest
income
|
376 | 516 | 1,129 | 1,563 | ||||||||||||
|
Interest
expense
|
(38 | ) | (32 | ) | (149 | ) | (196 | ) | ||||||||
|
Other
income (expense), net
|
(265 | ) | (699 | ) | (1,577 | ) | (2,378 | ) | ||||||||
|
Income
(loss) before income taxes
|
(13,902 | ) | 6,686 | (2,092 | ) | 40,490 | ||||||||||
|
Income
tax expense (benefit)
|
(5,531 | ) | 2,524 | (2 | ) | 14,405 | ||||||||||
|
Net
income (loss)
|
$ | (8,371 | ) | $ | 4,162 | $ | (2,090 | ) | $ | 26,085 | ||||||
|
Weighted
average shares outstanding
|
||||||||||||||||
|
Basic
|
41,004 | 40,629 | 40,862 | 40,500 | ||||||||||||
|
Diluted
|
41,122 | 40,953 | 41,012 | 41,178 | ||||||||||||
|
Earnings
(loss) per share:
|
||||||||||||||||
|
Basic
|
$ | (0.20 | ) | $ | 0.10 | $ | (0.05 | ) | $ | 0.64 | ||||||
|
Diluted
|
$ | (0.20 | ) | $ | 0.10 | $ | (0.05 | ) | $ | 0.63 | ||||||
|
Cash
dividend paid per share
|
$ | - | $ | - | $ | 0.095 | $ | 0.09 | ||||||||
-- MORE
- --
Daktronics,
Inc. and Subsidiaries
Consolidated Balance
Sheets
(in
thousands)
|
January
30,
|
||||||||
|
2010
|
May
2,
|
|||||||
|
(unaudited)
|
2009
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS:
|
||||||||
|
Cash,
cash equivalents and restricted cash
|
$ | 58,570 | $ | 37,584 | ||||
|
Accounts
receivable, less allowance for doubtful accounts
|
40,277 | 61,412 | ||||||
|
Inventories
|
37,494 | 51,400 | ||||||
|
Costs
and estimated earnings in excess of billings
|
24,402 | 27,541 | ||||||
|
Current
maturities on long-term receivables
|
6,973 | 7,962 | ||||||
|
Prepaid
expenses and other
|
5,296 | 5,587 | ||||||
|
Deferred
income taxes
|
15,293 | 15,017 | ||||||
|
Income
tax receivable
|
6,223 | - | ||||||
|
Property
and equipment available for sale
|
182 | 470 | ||||||
|
Total
current assets
|
194,710 | 206,973 | ||||||
|
Advertising
rights, net
|
1,591 | 2,392 | ||||||
|
Long-term
receivables, less current maturities
|
13,469 | 15,879 | ||||||
|
Investments
in affiliates
|
530 | 2,541 | ||||||
|
Goodwill
|
3,262 | 4,549 | ||||||
|
Intangible
and other assets
|
3,920 | 2,804 | ||||||
|
Deferred
income taxes
|
395 | 311 | ||||||
| 23,167 | 28,476 | |||||||
|
PROPERTY
AND EQUIPMENT:
|
||||||||
|
Land
|
1,471 | 1,204 | ||||||
|
Buildings
|
54,821 | 50,810 | ||||||
|
Machinery
and equipment
|
52,837 | 50,013 | ||||||
|
Office
furniture and equipment
|
53,732 | 52,369 | ||||||
|
Equipment
held for rental
|
2,353 | 2,423 | ||||||
|
Demonstration
equipment
|
9,043 | 8,021 | ||||||
|
Transportation
equipment
|
4,531 | 5,115 | ||||||
| 178,788 | 169,955 | |||||||
|
Less
accumulated depreciation
|
94,883 | 80,528 | ||||||
| 83,905 | 89,427 | |||||||
|
TOTAL
ASSETS
|
$ | 301,782 | $ | 324,876 | ||||
-- MORE
- --
Daktronics,
Inc. and Subsidiaries
Consolidated Balance
Sheets (continued)
(in
thousands)
|
January
30,
|
||||||||
|
2010
|
May
2,
|
|||||||
|
(unaudited)
|
2009
|
|||||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
|
CURRENT
LIABILITIES:
|
||||||||
|
Accounts
payable
|
$ | 19,339 | $ | 30,273 | ||||
|
Accrued
expenses and warranty obligations
|
31,155 | 35,548 | ||||||
|
Current
maturities of long-term debt and marketing obligations
|
381 | 367 | ||||||
|
Billings
in excess of costs and estimated earnings
|
10,079 | 13,769 | ||||||
|
Customer
deposits
|
8,964 | 10,007 | ||||||
|
Deferred
revenue (billed or collected)
|
6,526 | 6,669 | ||||||
|
Income
taxes payable
|
522 | 2,935 | ||||||
|
Total
current liabilities
|
76,966 | 99,568 | ||||||
|
Long-term
debt, less current maturities
|
13 | 23 | ||||||
|
Long-term
marketing obligations, less current maturities
|
550 | 759 | ||||||
|
Long-term
warranty obligations, less current maturities
|
4,583 | 4,805 | ||||||
|
Deferred
income taxes
|
4,755 | 4,948 | ||||||
|
Long-term
deferred revenue (billed or collected)
|
4,354 | 2,862 | ||||||
|
Total
long-term liabilities
|
14,255 | 13,397 | ||||||
|
TOTAL
LIABILITIES
|
91,221 | 112,965 | ||||||
|
SHAREHOLDERS'
EQUITY:
|
||||||||
|
Common
stock
|
29,936 | 27,872 | ||||||
|
Additional
paid-in capital
|
16,449 | 13,898 | ||||||
|
Retained
earnings
|
164,742 | 170,705 | ||||||
|
Treasury
stock, at cost
|
(9 | ) | (9 | ) | ||||
|
Accumulated
other comprehensive loss
|
(557 | ) | (555 | ) | ||||
|
TOTAL
SHAREHOLDERS' EQUITY
|
210,561 | 211,911 | ||||||
|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 301,782 | $ | 324,876 | ||||
-- MORE
- --
Daktronics,
Inc. and Subsidiaries
Consolidated Statements of Cash
Flows
(in
thousands)
(unaudited)
|
Nine
Months Ended
|
||||||||
|
January
30,
|
January
31,
|
|||||||
|
2010
|
2009
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
|
Net
income (loss)
|
$ | (2,090 | ) | $ | 26,085 | |||
|
Adjustments
to reconcile net income to net cash provided
|
||||||||
|
by
operating activities:
|
||||||||
|
Depreciation
|
16,762 | 18,026 | ||||||
|
Amortization
|
236 | 236 | ||||||
|
Gain
on sale of property and equipment
|
(993 | ) | (977 | ) | ||||
|
Stock-based
compensation
|
2,491 | 2,367 | ||||||
|
Equity
in losses of affiliate
|
1,532 | 1,698 | ||||||
|
Goodwill
impairment
|
1,410 | - | ||||||
|
Provision
for doubtful accounts
|
(270 | ) | 71 | |||||
|
Loss
on sale of equity investment
|
230 | - | ||||||
|
Deferred
income taxes, net
|
(554 | ) | (356 | ) | ||||
|
Change
in operating assets and liabilities
|
19,059 | (19,520 | ) | |||||
|
Net
cash provided by operating activities
|
37,813 | 27,630 | ||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Purchase
of property and equipment
|
(12,945 | ) | (19,306 | ) | ||||
|
Loans
to equity investees
|
(1,676 | ) | (499 | ) | ||||
|
Purchase
of equity investments
|
(100 | ) | - | |||||
|
Proceeds
from sale and insurance recoveries of property and
equipment
|
820 | 3,017 | ||||||
|
Proceeds
from sale of equity method investments
|
535 | - | ||||||
|
Net
cash used in investing activities
|
(13,366 | ) | (16,788 | ) | ||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Proceeds
from exercise of stock options
|
365 | 626 | ||||||
|
Excess
tax benefits from stock-based compensation
|
60 | 363 | ||||||
|
Principal
payments on long-term debt
|
(13 | ) | (545 | ) | ||||
|
Dividend
paid
|
(3,874 | ) | (3,635 | ) | ||||
|
Net
cash used in financing activities
|
(3,462 | ) | (3,191 | ) | ||||
|
EFFECT
OF EXCHANGE RATE CHANGES ON CASH AND
|
||||||||
|
CASH
EQUIVALENTS
|
(180 | ) | 214 | |||||
|
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
20,805 | 7,865 | ||||||
|
CASH
AND CASH EQUIVALENTS BEGINNING OF PERIOD
|
36,501 | 9,325 | ||||||
|
CASH
AND CASH EQUIVALENTS END OF PERIOD
|
$ | 57,306 | $ | 17,190 | ||||
-- MORE
- --
Daktronics,
Inc. and Subsidiaries
Sales
and Orders By Market
(in
thousands)
(unaudited)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
January
30,
|
January
31,
|
January
30,
|
January
31,
|
|||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Net
Sales
|
||||||||||||||||
|
Commercial
|
$ | 20,903 | $ | 35,436 | $ | 69,011 | $ | 131,619 | ||||||||
|
Live
Events
|
22,773 | 63,281 | 125,617 | 204,772 | ||||||||||||
|
Schools
& Theatres
|
12,325 | 12,490 | 49,526 | 52,151 | ||||||||||||
|
Transportation
|
8,087 | 5,002 | 31,307 | 23,301 | ||||||||||||
|
International
|
8,318 | 12,483 | 25,760 | 47,775 | ||||||||||||
|
Total
Net Sales
|
$ | 72,406 | $ | 128,692 | $ | 301,221 | $ | 459,618 | ||||||||
|
Orders
|
||||||||||||||||
|
Commercial
|
$ | 21,892 | $ | 24,491 | $ | 65,554 | $ | 114,163 | ||||||||
|
Live
Events
|
32,280 | 70,373 | 113,729 | 190,695 | ||||||||||||
|
Schools
& Theatres
|
10,280 | 10,414 | 48,076 | 47,056 | ||||||||||||
|
Transportation
|
9,403 | 10,899 | 25,473 | 28,820 | ||||||||||||
|
International
|
8,628 | 9,310 | 32,336 | 33,983 | ||||||||||||
|
Total
Orders
|
$ | 82,483 | $ | 125,487 | $ | 285,168 | $ | 414,717 | ||||||||
-- END
- --