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 1937
Date of
Report (Date of earliest event reported): November 12,
2009
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.)
This
Form 8-K contains both historical and forward-looking statements that
involve risks, uncertainties and assumptions. The statements contained in this
report that are not purely historical are forward-looking statements that are
subject to the safe harbors created under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, including
statements regarding our expectations, beliefs, intentions and strategies for
the future. These statements appear in a number of places in this Report and
include all statements that are not historical statements of fact regarding our
intent, belief or current expectations with respect to, among other things: (i)
our financing plans; (ii) trends affecting our financial condition or results of
operations; (iii) our growth strategy and operating strategy; and (iv) the
declaration and payment of dividends. The words “may,” “would,” “could,”
“should,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend,”
“plans” and similar expressions and variations thereof are intended to identify
forward-looking statements. Investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risk and uncertainties, many of which are beyond our ability to control, and
that actual results may differ materially from those projected in the
forward-looking statements as a result of various factors discussed herein,
including those discussed in detail in our filings with the Securities and
Exchange Commission, including in our Annual Report on Form 10-K for the fiscal
year ended May 2, 2009 in the section entitled “Item 1A. Risk
Factors”
Item
1.01 Entry into a Material Definitive Agreement.
On
November 12, 2009, the Company entered into amendments (the “Amendments”) to its
Loan Agreement and related Revolving Note (collectively, the “Credit Facility”)
with U.S. Bank National Association (the “Bank”). The Amendments decrease
the limit on the revolving loan amount available from $45.0 million to $35.0
million; modify the Adjusted Fixed Charge Coverage ratio by increasing the
reserve for maintenance capital expenditures from $4.0 million to $6.0 million;
increase the loan fee of 0.100% per annum to 0.125% per annum on the average
daily unused portion of the Credit Facility; and increase the interest rate
(which fluctuates depending on certain ratios) from LIBOR plus 75 to 125 basis
points to LIBOR plus 125 to 175 basis points. As of November 12, 2009, no
advances under the Revolving Note were outstanding, and letters of credit
outstanding as of the same date were approximately $3.7
million. The Credit Facility remains unsecured.
As
a result of the strong cash position of the Company and the rising costs of
credit facilities, the Company determined that it was appropriate to reduce the
total loan amount available under the Credit Facility. As of October 31,
2009, the Company had approximately $56.0 million of available and unrestricted
cash, which it feels diminishes the need for larger credit facilities, although
this situation could
change.
The
foregoing description of the Credit Facility is qualified in its entirety by
reference to the Amendments, copies of which are filed as Exhibits 10.1 and 10.2
to this Current Report on Form 8-K and incorporated herein by
reference.
Item
2.03 Creation of a Direct Financial Obligation Under an Off-Balance
Sheet Arrangement of a Registrant.
The
disclosure required by this item is included in Item 1.01 and is incorporated
herein by reference.
Item
9.01 Financial Statements and Exhibits
The
following exhibit is filed with this Form 8-K:
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
12, 2009
EXHIBIT
INDEX
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Exhibit
No.
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Description
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EIGHTH
AMENDMENT TO LOAN AGREEMENT
This Eighth Amendment to
Loan Agreement is made and entered into effective the 12th day
of
November,
2009,
by and
between U.S.
Bank National Association, a
national banking association,
with an address of 141 North
Main
Avenue,
Post Office Box 5308, Sioux Falls, South Dakota
57117-5308 (“Lender”) and Daktronics,
Inc., a South
Dakota
corporation,
with an address of 331 -
32nd Avenue, Brookings, South Dakota 57006 (“Borrower”).
RECITALS:
A. Lender
and Borrower entered into a Loan Agreement dated October 14, 1998, and Borrower
executed and delivered to Lender a Revolving Note dated October 14, 1998, in the
original principal sum of $15,000,000.00.
B. The
Loan Agreement and Revolving Note were amended by an Amendment to Loan Agreement
and a Modification of Promissory Note, each dated November 30, 1999, an
Amendment to Loan Agreement and a Modification of Promissory Note, each dated
December 8, 2000, a Third Amendment to Loan Agreement and Revolving Note dated
June 20, 2002, a Fourth Amendment to Loan Agreement and Revolving Note dated
December 2, 2003, a Fifth Amendment to Loan Agreement and Revolving Note dated
October 1, 2005, and a Sixth Amendment to Loan Agreement and a Renewal Revolving
Note, each dated January 23, 2007.
C. Pursuant
to the Sixth Amendment to Loan Agreement and the Renewal Revolving Note dated
January 23, 2007, the loan amount was increased to $45,000,000.00 (the
"Revolving Loan"). The Loan Agreement and Renewal Revolving Note were
amended by a Seventh Amendment to Loan Agreement and an Amendment to Renewal
Revolving Note, each dated April 28, 2008.
D. Lender
and Borrower mutually wish to renew and amend the Revolving Note (pursuant to a
Renewal Revolving Note dated even date herewith), decrease the principal amount
of the Revolving Loan and extend the maturity date thereof, and to
correspondingly amend the Loan Agreement.
NOW, THEREFORE, in
consideration of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, Borrower and Lender covenant
and agree as follows:
1. The
following definitions in Section 1.1 of the Loan Agreement are amended and
restated as follows:
“Revolving
Loan Maturity Date”: November 15, 2010.
“Revolving
Note”: The Renewal Revolving Note dated November 4, 2009,
along with any amendments, renewals, or extensions thereof.
2.
Section 2.1 of the Loan Agreement is amended and restated as
follows:
Section
2.1 Revolving
Loan. Upon the terms and subject to the conditions hereof,
Lender agrees to make available a revolving loan (the "Revolving Loan") to
Borrower in the principal amount of Thirty-five Million and No/100 Dollars
($35,000,000.00). Borrower may obtain advances, prepay and obtain new
advances under the Revolving Loan.
Borrower
may request and Lender, in its sole discretion, may issue as part of the
Revolving Loan, letters of credit in a total amount not to exceed
$15,000,000.00. Letters of credit not exceeding a total amount of
$3,000,000.00 may have an expiration date of no later than November 15, 2011 and
letters of credit not exceeding $100,000.00 may have an expiration date of no
later than January 23, 2013. Otherwise, all letters of credit will
expire on or before November 15, 2010. The amount available to be
borrowed under the Revolving Loan will be correspondingly reduced by the face
amount of all letters of credit issued. Notwithstanding any agreement
to the contrary, Lender will have no obligation to issue any letter of credit,
or to amend, extend, renew or replace any letter of credit, unless it is in form
and substance acceptable to Lender.
3. Section
2.3 of the Loan Agreement is amended and restated as follows:
Section
2.3 Loan
Fee. Borrower agrees to pay Lender a loan fee of .125% per
annum on the average daily unused amount of the Revolving Loan from and after
November 4, 2009 through the Revolving Loan Maturity Date, computed on the basis
of the actual number of days elapsed and a 360-day year. The amount
of such loan fee accruing during each quarter will be due and payable on or
before the 30th day of the following quarter, provided that the loan fee
remaining unpaid will be due and payable when the unpaid balance of principal
and interest under the Revolving Note becomes due and payable in
full. “Unused amount of the Revolving Loan” means the difference of
(a) the amount of the Revolving Loan, minus, (b) the aggregate outstanding
principal amount of the advances and outstanding letters of
credit. In addition, Borrower agrees to pay Lender a fee of .50% of
the amount of any international letters of credit.
4. Schedule
VI to the Loan Agreement (“Schedule VI”) is amended and restated as attached to
this Eighth Amendment.
5. Except
as modified herein, all the terms and conditions of the Loan Agreement,
including previous amendments thereto, will remain in full force and
effect.
6. Borrower
acknowledges that the Loan Agreement and related Loan Documents are and will
remain the legal and binding obligation of Borrower, free of any claim, defense,
or offset.
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BORROWER:
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DAKTRONICS,
INC.
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By:
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/s/
James B. Morgan
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James
B. Morgan, Its Chief Executive Officer
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By:
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/s/
William R. Retterath
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William
R. Retterath, Its Chief Financial Officer
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LENDER:
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U.S.
BANK NATIONAL ASSOCIATION
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By:
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/s/
Carl Wynja
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Carl
Wynja, Its Senior Vice President
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SCHEDULE
VI
ADDITIONAL
COVENANTS
Until the Revolving Note
and all of the other Obligations are paid and performed in full, unless the
Lender shall otherwise consent in writing:
Dividends. The
Borrower will not pay in excess of current year's net profit after tax any
dividends or otherwise make any distributions on, or redemptions of, any of its
outstanding stock.
Minimum
Adjusted Fixed Charge Coverage Ratio. The Borrower will not
permit its Minimum Adjusted Fixed Charge Ratio, as of the last day of any fiscal
year for the four consecutive fiscal quarters ending on that date to be less
than 2 to 1.
For purposes hereof, the
following definitions have the following meanings:
“EBITDA”: For
any period of determination, the net income of the Borrower before deductions
for income taxes, interest expense, depreciation and amortization, all as
determined in accordance with GAAP.
“Adjusted
Fixed Charge Coverage Ratio”: For any period of determination
with respect to the Borrower, the ratio of
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(a)
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EBITDA
minus the sum of (i) any dividends or other distributions, (ii) a reserve
for maintenance capital expenditures in the amount of $6,000,000.00, and
(iii) tax expenses, to
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(b)
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all
required principal and interest payments with respect to Indebtedness
(including but not limited to all payments with respect to capitalized
lease obligations of the Borrower),
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in each case determined
for said period in accordance with GAAP.
"Indebtedness": All
interest-bearing obligations, including those represented by bonds, debentures,
or other debt securities, except principal reductions on the Revolving
Loan.
IBD/EBITDA
Ratio. The Borrower will not permit the ratio of its IBD to
EBITDA, as of the last day of any fiscal quarter to be greater than 1 to
1. For purposes hereof, the following definitions have the following
meanings:
“IBD”: All
interest bearing obligations, including those represented by bonds, debentures,
or other debt securities, excluding any long-term contractual obligations
related to marketing transactions whose source of payment is underlying
advertising agreements.
“EBITDA”: For
any period of determination, the net income of the Borrower before deductions
for income taxes, interest expense, depreciation and amortization, all as
determined in accordance with GAAP. This computation will use the
last four quarters.
RENEWAL
REVOLVING NOTE
| $35,000,000.00 |
Brookings,
South Dakota
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November
12, 2009
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FOR VALUE RECEIVED, Daktronics,
Inc., a South Dakota corporation ("Borrower"), promises to pay to U.S.
Bank National Association, a national banking association ("Lender",
which term shall include any future holder hereof), at 141 North Main Avenue,
Post Office Box 5308, Sioux Falls, South Dakota 57117-5308 or at such other
place as Lender may from time to time designate in writing, the principal sum of
Thirty-five Million and No/100 Dollars ($35,000,000.00) or so much thereof as
may be advanced hereunder and to pay interest on the outstanding principal
balance hereof from time to time at a daily fluctuating rate tied to the
One-Month Reserve Adjusted Reuters London Inter-Bank Offering Rate ("LIBOR"),
with the rate tiers determined on the last day of each fiscal quarter of
Borrower's accounting year, and based upon the following rate
tiers:
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1.
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Total
IBD / EBITDA ratio < 0.50x
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LIBOR
+ 125 basis points
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2.
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Total
IBD / EBITDA ratio = or > 0.50x and <
1.25x
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LIBOR
+ 150 basis points
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3.
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Total
IBD / EBITDA ratio = or > 1.25x
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LIBOR
+ 175 basis points
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Lender
will tell Borrower the current LIBOR rate interest rate and rate tier upon
Borrower's request. The initial rate tier shall be #1
above. The rate tier shall not be adjusted more often than
quarterly. Interest shall be computed on the basis of actual days
elapsed and a year of 360 days.
Interest is payable
beginning December 1, 2009, and on the same date of each consecutive month
thereafter, plus a final interest payment with the final payment of
principal. Principal is payable on November 15, 2010, the
"Revolving Loan Maturity Date".
This Note may be prepaid
in full or in part at any time without indemnity. Prepayments of less
than all the outstanding principal amount of this Note shall be applied upon
principal payments in the inverse order of their maturities.
Failure to exercise any
option provided herein shall not constitute a waiver of the right to exercise
the same in the event of any subsequent default. Borrower agrees that
if, and as often as, this Note is given to an attorney for collection or to
defend or enforce any of Lender's rights hereunder, Borrower will pay to the
Lender its reasonable attorneys' fees, together with all court costs and other
expenses paid by Lender.
Borrower waives
presentment, protest and demand, notice of protest, demand and of dishonor and
nonpayment of this Note and any lack of diligence or delays in collection or
enforcement of this Note. Borrower agrees that this Note, or any
payment hereunder, may be extended from time to time, and Borrower consents to
the release of any party liable for the obligation evidenced by this Note, the
release of any of the security for this Note, the acceptance of any other
security therefor, or any other indulgence or forbearance whatsoever, all
without notice to any party and without affecting the liability of
Borrower.
THIS NOTE SHALL BE
CONSTRUED UNDER AND GOVERNED BY THE LAWS OF THE STATE OF SOUTH DAKOTA, WITHOUT
GIVING EFFECT TO CONFLICT OF LAWS OR PRINCIPLES THEREOF, BUT GIVING EFFECT TO
FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL
BANKS. WHENEVER POSSIBLE, EACH PROVISION OF THIS NOTE AND ANY OTHER
STATEMENT, INSTRUMENT OR TRANSACTION CONTEMPLATED HEREBY OR RELATING HERETO,
SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER SUCH
APPLICABLE LAW, BUT, IF ANY PROVISION OF THIS NOTE OR ANY OTHER STATEMENT,
INSTRUMENT OR TRANSACTION CONTEMPLATED HEREBY OR RELATING HERETO SHALL BE HELD
TO BE PROHIBITED OR INVALID UNDER SUCH APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE ONLY TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
NOTE OR ANY OTHER STATEMENT, INSTRUMENT OR TRANSACTION CONTEMPLATED HEREBY OR
RELATING HERETO.
AT THE OPTION OF LENDER,
THIS NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR SOUTH DAKOTA CIRCUIT COURT
SITTING IN SIOUX FALLS OR BROOKINGS, SOUTH DAKOTA; AND BORROWER CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN
SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE,
LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
Borrower irrevocably
waives any and all right to trial by jury in any legal proceeding arising out of
or relating to this Note or any of the Loan Documents (as defined in the Loan
Agreement) or the transactions contemplated hereby or
thereby.
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DAKTRONICS,
INC.
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By
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/s/
James B. Morgan
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James
B. Morgan, Its Chief Executive Officer
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By
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/s/
William R. Retterath
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William
R. Retterath, Its Chief Financial
Officer
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STATE
OF SOUTH DAKOTA
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)
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:
SS
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COUNTY
OF BROOKINGS
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)
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On this the 12th day of
November, 2009, before me personally appeared James B. Morgan, known to me to be
the Chief Executive Officer, and William R. Retterath, known to me to be the
Chief Financial Officer, of Daktronics, Inc., the corporation that is described
in and that executed the within instrument and acknowledged to me that such
corporation executed the same.
IN WITNESS WHEREOF, I
hereunto set my hand and official seal.
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/s/
Nichole F. Hofer
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Notary
Public – South Dakota
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My
Commission Expires: 31 March 2011
(seal)