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): June 1, 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 June 1, 2011 Daktronics, Inc. (the “Registrant”) issued a press release announcing financial results for the fiscal 2011 fourth quarter ending April 30, 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: June 1, 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 Fourth Quarter and Fiscal 2011 Results
• Net sales increase 24% compared to fiscal 2010 fourth quarter
• Fiscal year net sales increase 12% compared to fiscal 2010
• Backlog increases to $131 million compared to $127 million one year ago
Brookings, S.D. – June 1, 2011 - Daktronics, Inc. (Nasdaq - DAKT) today reported fiscal 2011 fourth quarter net sales of $114.4 million and net income of $3.0 million, or $0.07 per diluted share, compared to net sales of $92.0 million and a net loss of ($4.9 million), or ($0.12) per diluted share, for the fourth quarter of fiscal 2010. Backlog at the end of the fiscal 2011 fourth quarter was approximately $131 million, compared with a backlog of approximately $127 million a year earlier and $128 million at the end of the third quarter of fiscal 2011.
Net sales, net income and earnings per share for the fiscal year ended April 30, 2011 were $441.7 million, $14.2 million and $0.34 per diluted share, respectively. This compares to $393.2 million, ($7.0 million) and ($0.17) 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 $32.2 million through the fourth quarter of fiscal 2011, compared to $27.8 million through the same period one year ago. Cash and marketable securities at the end of the fourth quarter of fiscal 2011 were $78.8 million.
“We closed out fiscal year 2011 with continued strong performance in the two business units that have been leading our recovery from the slowdown of the past couple of years,” said Jim Morgan, president and chief executive officer. “Orders increased 23 percent year over year in our Commercial business unit and 38 percent year over year in our International business unit. We continue to see constraints to growth in our Live Events and Schools and Theaters business units, which were the last parts of our business to enter into the economic downturn. We saw an improvement in gross margins on new orders booked during the quarter, which we attribute to better cost performance of our new generation products.”
Business Highlights
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·
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Sales in the Commercial business unit continued to grow, led by increased orders for digital billboards. Orders in the reseller portion of the Commercial business unit were up approximately 14 percent for the fiscal year and included two orders for Times Square totaling approximately $3 million booked in the fourth quarter of fiscal 2011.
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·
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Orders in the Live Events business unit were highlighted by an order of approximately $7 million for the new Barclays Center Arena in Brooklyn, New York, future home of the Brooklyn Nets. The company also went live with four new display systems in major league baseball this season as previously announced. The new systems highlighted the home openers for the Texas Rangers, Milwaukee Brewers, Houston Astros and Philadelphia Phillies.
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·
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Orders in the Schools and Theatres business unit for the fourth quarter of fiscal 2011 were flat versus one year ago, with a trend toward larger transactions involving video displays.
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·
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The International business unit continued to expand as orders increased to $17 million in the fourth quarter of fiscal 2011, despite some orders being pushed out into the first quarter of fiscal 2012. Orders for the fourth quarter of fiscal 2011 were highlighted by a multi-million dollar display system for a theater on the Gran Via in Madrid, Spain.
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·
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Orders in the Transportation business unit, although strong, were down from the level one year ago as a result of the exceptionally large order bookings in the fourth quarter of fiscal 2010. During the fourth quarter of fiscal 2011, net sales increased significantly as our transportation factory increased throughput to work down the backlog.
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Outlook
Morgan added, “As we look forward, we continue to see opportunities for growth in our Commercial business unit, led by strength in digital billboards and the acceptance in the marketplace of our new 4000 series billboard product and our new GalaxyPro display, which is primarily used for on premise advertising. The International pipeline remains strong, coming off a record year for orders in that business unit. Our Transportation business continues to perform well and carries a large backlog into fiscal 2012. We see our Live Events business remaining relatively flat in fiscal 2012, with the uncertainty of the large projects always a factor in the business. Our Schools and Theaters business faces some uncertainty due to tightening of school budgets, although the effect of that on the business is hard to quantify because displays are funded to a large extent by advertising and sponsorship dollars. We believe that we will see an improvement in gross profit margins in large video display projects as a result of the cost effectiveness of our new DVX video product offerings and ongoing cost reduction programs, although gross profit can fluctuate quarter-to-quarter.
“There is an increasing level of interest in our architectural lighting and display products, and we see an opportunity for significant growth in this new area over the next few years. Our internet protocol television (IPTV) offering for large sports facilities is also getting increasing interest as facilities become aware of its capabilities for fan experience and revenue generation. Our most recent installation for the Texas Rangers in Arlington, Texas includes a network of 800 LCD screens, along with a number of LED video displays centrally controlled by our Show Control system,” continued 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 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 expectations, 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, including 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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Twelve Months Ended
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April 30,
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May 1,
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April 30,
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May 1,
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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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$ | 114,387 | $ | 91,964 | $ | 441,676 | $ | 393,185 | ||||||||
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Cost of goods sold
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85,949 | 71,817 | 330,192 | 298,629 | ||||||||||||
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Gross profit
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28,438 | 20,147 | 111,484 | 94,556 | ||||||||||||
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Operating expenses:
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Selling expense
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12,471 | 13,837 | 49,555 | 54,253 | ||||||||||||
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General and administrative
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6,194 | 6,184 | 23,453 | 25,199 | ||||||||||||
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Product design and development
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5,162 | 5,361 | 18,949 | 21,920 | ||||||||||||
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Gain on insurance proceeds
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- | - | - | (1,496 | ) | |||||||||||
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Goodwill impairment
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- | - | - | 1,410 | ||||||||||||
| 23,827 | 25,382 | 91,957 | 101,286 | |||||||||||||
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Operating income (loss)
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4,611 | (5,235 | ) | 19,527 | (6,730 | ) | ||||||||||
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Nonoperating income (expense):
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Interest income
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540 | 385 | 1,921 | 1,514 | ||||||||||||
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Interest expense
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(66 | ) | (21 | ) | (184 | ) | (170 | ) | ||||||||
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Other income (expense), net
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58 | (1,179 | ) | 877 | (2,756 | ) | ||||||||||
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Income (loss) before income taxes
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5,143 | (6,050 | ) | 22,141 | (8,142 | ) | ||||||||||
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Income tax expense (benefit)
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2,180 | (1,151 | ) | 7,897 | (1,153 | ) | ||||||||||
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Net income (loss)
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$ | 2,963 | $ | (4,899 | ) | $ | 14,244 | $ | (6,989 | ) | ||||||
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Weighted average shares outstanding:
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Basic
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41,632 | 41,049 | 41,422 | 40,908 | ||||||||||||
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Diluted
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42,007 | 41,049 | 42,277 | 40,908 | ||||||||||||
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Earnings (loss) per share:
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Basic
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0.07 | (0.12 | ) | 0.34 | (0.17 | ) | ||||||||||
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Diluted
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$ | 0.07 | $ | (0.12 | ) | $ | 0.34 | $ | (0.17 | ) | ||||||
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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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April 30,
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||||||||
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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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$ | 55,854 | $ | 64,867 | ||||
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Marketable securities
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22,943 | - | ||||||
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Accounts receivable, less allowance for doubtful accounts
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61,778 | 45,018 | ||||||
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Inventories
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46,889 | 35,673 | ||||||
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Costs and estimated earnings in excess of billings
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24,193 | 25,233 | ||||||
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Current maturities of long-term receivables
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5,343 | 6,232 | ||||||
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Prepaid expenses and other assets
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6,253 | 5,838 | ||||||
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Deferred income taxes
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9,640 | 12,578 | ||||||
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Income tax receivables
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4,870 | 7,444 | ||||||
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Property and equipment available for sale
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59 | 182 | ||||||
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Total current assets
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237,822 | 203,065 | ||||||
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Advertising rights, net
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525 | 1,348 | ||||||
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Long-term receivables, less current maturities
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13,558 | 13,458 | ||||||
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Goodwill
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3,384 | 3,323 | ||||||
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Intangible and other assets
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2,512 | 3,710 | ||||||
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Deferred income taxes
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180 | 62 | ||||||
| 20,159 | 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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55,457 | 55,353 | ||||||
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Machinery and equipment
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58,233 | 54,058 | ||||||
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Office furniture and equipment
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53,402 | 53,831 | ||||||
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Equipment held for rental
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1,283 | 1,630 | ||||||
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Demonstration equipment
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8,086 | 8,969 | ||||||
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Transportation equipment
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3,688 | 4,256 | ||||||
| 181,646 | 179,568 | |||||||
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Less accumulated depreciation
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111,780 | 98,683 | ||||||
| 69,866 | 80,885 | |||||||
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TOTAL ASSETS
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$ | 327,847 | $ | 305,851 | ||||
-- MORE --
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
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April 30,
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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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Notes payable
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$ | 2,316 | $ | - | ||||
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Accounts payable
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29,223 | 23,149 | ||||||
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Accrued expenses and warranty obligations
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36,222 | 33,443 | ||||||
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Billings in excess of costs and estimated earnings
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20,284 | 13,105 | ||||||
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Customer deposits
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11,288 | 9,348 | ||||||
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Deferred revenue (billed or collected)
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8,770 | 7,766 | ||||||
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Current maturities of long-term debt and marketing obligations
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273 | 322 | ||||||
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Income tax payable
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1,281 | 361 | ||||||
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Total current liabilities
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109,657 | 87,494 | ||||||
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Long-term marketing obligations, less current maturities
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662 | 600 | ||||||
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Long-term warranty obligations and other payables
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9,856 | 4,229 | ||||||
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Deferred income taxes
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11 | 2,167 | ||||||
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Long-term deferred revenue (billed or collected)
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4,559 | 4,308 | ||||||
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Total long-term liabilities
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15,088 | 11,304 | ||||||
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TOTAL LIABILITIES
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124,745 | 98,798 | ||||||
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SHAREHOLDERS' EQUITY:
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Common stock
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32,670 | 29,936 | ||||||
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Additional paid-in capital
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21,149 | 17,731 | ||||||
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Retained earnings
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149,291 | 159,842 | ||||||
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Treasury stock, at cost
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(9 | ) | (9 | ) | ||||
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Accumulated other comprehensive (income)/loss
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1 | (447 | ) | |||||
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TOTAL SHAREHOLDERS' EQUITY
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203,102 | 207,053 | ||||||
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
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$ | 327,847 | $ | 305,851 | ||||
-- MORE --
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
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Year Ended
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April 30,
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May 1,
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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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$ | 14,244 | $ | (6,989 | ) | |||
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Adjustments to reconcile net income (loss) to net cash provided
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by operating activities:
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Depreciation
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19,354 | 21,945 | ||||||
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Amortization
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287 | 315 | ||||||
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Amortization of premium/discount on marketable securities
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48 | - | ||||||
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Gain on sale of property and equipment
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(62 | ) | (982 | ) | ||||
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Stock-based compensation
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3,370 | 3,762 | ||||||
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Equity in losses of affiliates
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36 | 2,535 | ||||||
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Impairment of goodwill
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- | 1,410 | ||||||
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Loss on sale of equity investees
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- | 230 | ||||||
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Provision for doubtful accounts
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(37 | ) | 421 | |||||
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Deferred income taxes, net
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663 | (95 | ) | |||||
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Change in operating assets and liabilities
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3,443 | 21,232 | ||||||
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Net cash provided by operating activities
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41,346 | 43,784 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Purchase of property and equipment
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(9,386 | ) | (16,121 | ) | ||||
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(Purchases)/sales of marketable securities, net
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(23,035 | ) | - | |||||
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Insurance recoveries on property and equipment
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187 | 3,213 | ||||||
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Proceeds from sale of property and equipment
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238 | 181 | ||||||
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Other investing activities, net
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2,110 | (372 | ) | |||||
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Net cash used in investing activities
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(29,886 | ) | (13,099 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Borrowings on notes payable
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2,316 | - | ||||||
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Proceeds from exercise of stock options
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1,352 | 365 | ||||||
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Excess tax benefits from stock-based compensation
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122 | 71 | ||||||
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Principal payments on long-term debt
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(28 | ) | (27 | ) | ||||
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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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(21,032 | ) | (3,465 | ) | ||||
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EFFECT OF EXCHANGE RATE CHANGES ON CASH
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277 | (118 | ) | |||||
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
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(9,295 | ) | 27,102 | |||||
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CASH AND CASH EQUIVALENTS:
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Beginning of period
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63,603 | 36,501 | ||||||
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End of period
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$ | 54,308 | $ | 63,603 | ||||
-- 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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Twelve Months Ended
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|||||||||||||||
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April 30,
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May 1,
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April 30,
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May 1,
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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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$ | 28,755 | $ | 22,849 | $ | 112,515 | $ | 91,860 | ||||||||
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Live Events
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40,726 | 33,611 | 161,572 | 159,229 | ||||||||||||
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Schools & Theatres
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12,639 | 13,353 | 62,310 | 62,878 | ||||||||||||
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Transportation
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15,125 | 9,174 | 45,215 | 40,481 | ||||||||||||
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International
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17,142 | 12,977 | 60,064 | 38,737 | ||||||||||||
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Total net sales
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$ | 114,387 | $ | 91,964 | $ | 441,676 | $ | 393,185 | ||||||||
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Orders:
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Commercial
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$ | 31,335 | $ | 28,278 | $ | 115,820 | $ | 93,833 | ||||||||
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Live Events
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42,054 | 41,779 | 152,851 | 155,509 | ||||||||||||
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Schools & Theatres
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14,222 | 14,418 | 61,995 | 62,493 | ||||||||||||
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Transportation
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11,426 | 20,495 | 43,878 | 45,968 | ||||||||||||
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International
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16,634 | 15,146 | 65,318 | 47,482 | ||||||||||||
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Total orders
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$ | 115,671 | $ | 120,116 | $ | 439,862 | $ | 405,285 | ||||||||
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow
(in thousands)
(unaudited)
|
Twelve Months Ended
|
||||||||
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April 30,
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May 1,
|
|||||||
|
2011
|
2010
|
|||||||
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Net cash provided by operating activities
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$ | 41,346 | $ | 43,784 | ||||
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Purchase of property and equipment
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(9,386 | ) | (16,121 | ) | ||||
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Proceeds from sale of property and equipment
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238 | 181 | ||||||
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Free cash flow
|
$ | 32,198 | $ | 27,844 | ||||
In evaluating its business, Daktronics considers and uses free cash flow as a key measure of its operating performance. The term free cash flow is not defined under U.S. generally accepted accounting principles (“GAAP”) and is not a measure of operating income, cash flows from operating activities or other GAAP figures and should not be considered alternatives to those computations. Free cash flow is intended to provide information that may be useful for investors when assessing period to period results.
-- END --