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): May 26, 2004
Daktronics, Inc.
(Exact name of Registrant as specified in its charter)
| South Dakota | 0-23246 | 46-0306862 | ||||||
| (State or other jurisdiction of | (Commission | (I.R.S. Employer | ||||||
| incorporation or organization) | File Number) | Identification Number) | ||||||
331
32ndAvenue
Brookings, SD 57006
(Address of principal executive
offices, zip code)
(605) 697-4000
(Registrant's telephone number,
including area code)
Not Applicable
(Former name or former address, if changed since last report.)
Item 7. Financial Statements and Exhibits:
(c) Exhibits
99.1 News Release dated May 26, 2004, issued by Daktronics, Inc. regarding fourth quarter results
Item 12. Results of Operations and Financial Condition
On May 26, 2004, the company issued a press release announcing financial results for the quarter and fiscal year ending May 1, 2004. 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 SEC 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.
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: May 26, 2004
EXHIBIT INDEX
| Exhibit No. Description | |
| 99.1 News Release dated May 26, 2004 issued by Daktronics,Inc. |
331 32nd Avenue
P.O. Box 5128
Brookings, SD 57006
Phone (605) 697-4000
www.daktronics.com.
For more information contact
Bill Retterath at (605)697-4000)
Daktronics, Inc. announces record results for fiscal 2004
Record net sales and order bookings for the fourth quarter
Brookings, S.D. — May 26, 2004 — Daktronics, Inc. (Nasdaq — DAKT), today reported fiscal 2004 fourth quarter net sales of $57.9 million and net income of $4.1 million or $.21 per diluted share, compared with fourth quarter sales of $47.4 million and net income of $3.4 million, or $.17 per diluted share, one year ago. Both net sales and net income were records for the Company’s fourth quarter. Sales and orders climbed in all three markets served.
Net sales, net income and earnings per share for fiscal 2004 were $209.9 million, $17.7 million and $.89 per diluted share, respectively, compared with $177.8 million, $12.5 million, and $.64 per diluted share, respectively, for the previous fiscal year. Net sales, net income and earnings per share for the year were the highest in the Company’s history.
Backlog at the end of the quarter was approximately $54 million, compared with a backlog of approximately $50 million at the end of the last fiscal year. The timing of large orders can cause significant fluctuations in the Company’s backlog.
“Not only did we close out the year with strong sales and net income, we also booked a record level of orders, which included strong performances in all three of our markets,” said Jim Morgan, president and CEO of Daktronics. “We completed a number of premier installations, including display systems for major league baseball facilities in Cleveland, Anaheim, San Diego, and Philadelphia, as well as displays for the Sands Macao Casino near Hong Kong, Churchill Downs, and the Virginia Department of Transportation. We started work on projects for Times Square, the FedExForum in Memphis, and the University of Wisconsin,” Morgan said. “As compared to the previous two quarters our standard order volume was down as a percent of sales resulting from a decline in the national account business, which we expect to be stronger next quarter and fiscal year over the current year which was at record levels. This along with the expected decline in margins and other factors contributed to the fourth quarter gross margin of 31.8 percent,” Morgan said.
“The most dramatic sales and order growth has been in our commercial market. Not only are we seeing higher standard product business over fiscal year 2003, we are also seeing significant growth in video products installations for commercial accounts across many applications such as horse racing, gaming, retail and destination sites. Sales and orders in our transportation market also showed a very nice rebound in the quarter. Orders in all three markets were up for the quarter over last year by double-digit percentage increases,” Morgan said.
“On the product development side, we introduced a number of key products during the quarter, including our V-Net(TM) solution for the digital advertising marketplace, our three millimeter ProStar(R) video display and our Galaxy(R) 3200 series, all of which are expected to have an important impact on our total solution to our end markets,” said Morgan.
“Gross margin was slightly below expectations for the quarter as a result of the standard order mix, lower than expected margins on a couple of larger installations and industry pricing reacting to the lower cost of raw materials,” said Bill Retterath, CFO. “On the operating expense growth for the quarter, there were a number of factors contributing, including investments we are making on international sales development, higher personnel costs, compliance costs associated with Sarbanes-Oxley, the concentration of trade shows during the quarter and the costs associated with the new product introductions,” Retterath said.
“Finally, on the cash flow front, we performed well during the quarter, generating slightly less than $9 million in cash from operations through earnings and improvements in our balance sheet. Free cash flow defined as cash flow from operations less capital expenditures was also strong with the investments in demonstration equipment causing the rise in capital spending,” Retterath said.
“Our backlog going into the first quarter of fiscal year 2005, combined with a significant number of orders that were either booked in the first quarter or are expected to book very shortly, plus anticipated growth in our standard order business, brings our estimate of revenues for our next quarter in the range of $57 million to $62 million. We expect earnings per share for the quarter to be in the range of $.19 - $.26 per share. For the fiscal year 2005, we are estimating sales in the range of $235 to $250 million.” Morgan said.
Noteworthy projects booked in the fourth quarter include display systems for Stanford University, Stanford, Calif.; Antelope Valley Fair, Lancaster, Calif.; Gonzaga University, Spokane, Wash.; U.S. Smokeless Tobacco Company, Lewisville, Texas; University of Wisconsin, Madison, Wisc.; Dayton Dragons, Dayton, Ohio; Hamilton Tiger Cats, Hamilton, Ontario; MTS Centre, Winnipeg, Manitoba; Angel Stadium of Anaheim, Anaheim, Calif.; Arizona Cardinals Stadium, Glendale, Ariz.; FedExForum, Memphis, Tenn.; Owasso High School, Owasso, Okla.; Nextel, Las Vegas, Nev.; Texas Station, North Las Vegas, Nev.; Lamar Advertising Company, Birmingham, Ala.; North Carolina D.O.T; Illinois State Tollway ; Port Authority of New York & New Jersey; and New York State D.O.T.
The Company will webcast its quarterly conference call at 10:00 am (central) on Wednesday, May 26. To listen to the webcast, go to the home page of www.daktronics.com, and click on the icon at the bottom right corner of the screen. Completion of a short registration form, along with Windows(R)Media Player software, are required to hear the webcast. A replay of the teleconference via the internet will also be accessible shortly after the conclusion of the conference call through www.daktronics.com. A replay of the teleconference accessible by telephone will be available for one week starting at noon Central Time on May 26. To access the replay, call toll-free in the U.S. and Canada 800-633-8284 and enter code 21195040. International callers can dial 402-977-9140 and enter code 21195040 to hear the replay by phone.
Daktronics has strong leadership positions in, and is one of the world’s largest suppliers of, electronic scoreboards, computer-programmable displays, and large screen video display and control systems. The Company excels in the control of large display systems, including those that require integration of complex multiple displays showing real time information, graphics, animation and video. Daktronics designs, manufactures, markets and services display systems for customers around the world in sport, business and transportation applications, and celebrated its 35th year in business in 2003. For more information, visit the Company’s worldwide web site at http://www.daktronics.com, email the Company at sales@daktronics.com, call toll-free 1-800-DAKTRONICS (800-325-8766) in the U.S., or write to the Company at 331 32nd Avenue, P.O. Box 5128, Brookings, SD 57006-5128.
Cautionary Notice: In addition to statements of historical fact, this news release contains forward-looking statements reflecting the Company’s expectations or beliefs concerning future events which could materially affect company performance in the future. The Company cautions that these and similar statements involve risk and uncertainties including changes in economic and market conditions, management of growth, timing and magnitude of future contracts, and other risks noted in the company’s SEC filings which may cause actual results to differ materially. Forward-looking statements are made in the context of information available as of the date stated. The Company undertakes no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.
Financial tables are included on the following pages.
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands,
except earnings per share)
| Three Months Ended |
Twelve Months Ended |
||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| May 1, 2004 | May 3, 2003 | May 1, 2004 | May 3, 2003 | ||||||||||||||
| (13 weeks) | (13 weeks) | (52 weeks) | (53 weeks) | ||||||||||||||
| (unaudited) |
(unaudited) |
(unaudited) |
|||||||||||||||
| Net sales | $ | 57,938 | $ | 47,364 | $ | 209,907 | $ | 177,764 | |||||||||
| Cost of goods sold | 39,523 | 31,707 | 137,436 | 118,633 | |||||||||||||
| Gross profit | 18,415 | 15,657 | 72,471 | 59,131 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Selling | 7,610 | 6,317 | 27,305 | 24,966 | |||||||||||||
| General and administrative | 2,652 | 2,263 | 9,510 | 7,422 | |||||||||||||
| Product design and development | 1,949 | 1,833 | 8,126 | 6,918 | |||||||||||||
| 12,211 | 10,413 | 44,941 | 39,306 | ||||||||||||||
| Operating income | 6,204 | 5,244 | 27,530 | 19,825 | |||||||||||||
| Nonoperating income (expense): | |||||||||||||||||
| Interest income | 290 | 178 | 1,014 | 694 | |||||||||||||
| Interest expense | (78 | ) | (222 | ) | (478 | ) | (897 | ) | |||||||||
| Other income (expense), net | 19 | 651 | 586 | 974 | |||||||||||||
| Income before income taxes and | |||||||||||||||||
| minority interest | 6,435 | 5,851 | 28,652 | 20,596 | |||||||||||||
| Income tax expense | 2,315 | 2,419 | 10,907 | 8,107 | |||||||||||||
| Income before minority interest | 4,120 | 3,432 | 17,745 | 12,489 | |||||||||||||
| Minority interest in (income) loss of | |||||||||||||||||
| subsidiary | 13 | (21 | ) | (18 | ) | (31 | ) | ||||||||||
| Net income | $ | 4,133 | $ | 3,411 | $ | 17,727 | $ | 12,458 | |||||||||
| Weighted average number of fully diluted | |||||||||||||||||
| shares and common equivalent shares | 20,092 | 19,739 | 19,936 | 19,514 | |||||||||||||
| Earnings per share: | |||||||||||||||||
| Basic | $ | 0.22 | $ | 0.18 | $ | 0.95 | $ | 0.68 | |||||||||
| Diluted | $ | 0.21 | $ | 0.17 | $ | 0.89 | $ | 0.64 | |||||||||
Daktronics, Inc. and Subsidiaries
Consolidated Balance
Sheets
(in thousands)
| May 1, 2004 | May 3, 2003 | |||||||
|---|---|---|---|---|---|---|---|---|
| (unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 16,255 | $ | 9,277 | ||||
| Accounts receivable, less allowance for doubtful accounts | 28,686 | 25,912 | ||||||
| Current maturities of long-term receivables | 3,772 | 2,650 | ||||||
| Inventories | 16,604 | 14,863 | ||||||
| Costs and estimated earnings in excess of billings | 12,862 | 11,467 | ||||||
| Prepaid expenses and other | 905 | 756 | ||||||
| Deferred income taxes | 4,524 | 3,801 | ||||||
| Income taxes receivable | 813 | – | ||||||
| Total current assets | 84,421 | 68,726 | ||||||
| Advertising rights, net | 1,415 | 385 | ||||||
| Long term receivables, less current maturities | 10,267 | 6,711 | ||||||
| Goodwill, net of accumulated amortization | 1,411 | 1,043 | ||||||
| Intangible and other assets | 920 | 873 | ||||||
| 14,013 | 9,012 | |||||||
| PROPERTY AND EQUIPMENT: | ||||||||
| Land | 654 | 654 | ||||||
| Buildings | 12,415 | 12,281 | ||||||
| Machinery and equipment | 18,123 | 13,762 | ||||||
| Office furniture and equipment | 15,706 | 13,495 | ||||||
| Equipment held for rental | 4,581 | 3,476 | ||||||
| Transportation equipment | 3,054 | 2,185 | ||||||
| 54,533 | 45,853 | |||||||
| Less accumulated depreciation | 26,731 | 21,064 | ||||||
| 27,802 | 24,789 | |||||||
| TOTAL ASSETS | $ | 126,236 | $ | 102,527 | ||||
Daktronics, Inc.and Subsidiaries
Consolidated Balance
Sheets (continued)
(in thousands)
| May 1, 2004 | May 3, 2003 | |||||||
|---|---|---|---|---|---|---|---|---|
| (unaudited) |
||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Notes payable, bank | $ | 214 | $ | 180 | ||||
| Accounts payable | 12,586 | 9,312 | ||||||
| Accrued expenses | 11,611 | 7,790 | ||||||
| Current maturities of long-term debt | 1,296 | 2,951 | ||||||
| Billings in excess of costs and estimated earnings | 6,761 | 5,528 | ||||||
| Customer deposits | 2,829 | 1,709 | ||||||
| Income taxes payable | – | 1,556 | ||||||
| Total current liabilities | 35,297 | 29,026 | ||||||
| Long-term debt, less current maturities | 1,498 | 5,449 | ||||||
| Deferred revenue | 1,134 | 1,338 | ||||||
| Deferred income taxes | 2,043 | 1,296 | ||||||
| 4,675 | 8,083 | |||||||
| TOTAL LIABILITIES | 39,972 | 37,109 | ||||||
| Minority Interest In Subsidiary | – | 115 | ||||||
| SHAREHOLDERS' EQUITY: | ||||||||
| Common stock | 15,944 | 14,654 | ||||||
| Additional paid-in capital | 2,736 | 746 | ||||||
| Retained earnings | 67,677 | 49,950 | ||||||
| Treasury stock, at cost | (9 | ) | (9 | ) | ||||
| Accumulated other comprehensive loss | (84 | ) | (38 | ) | ||||
| TOTAL SHAREHOLDERS' EQUITY | 86,264 | 65,303 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 126,236 | $ | 102,527 | ||||
Daktronics, Inc.and Subsidiaries
Consolidated
Statements of Cash Flows
(dollars in thousands)
| Twelve Months Ended |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| May 1, 2004 | May 3, 2003 | ||||||||||
| (52 weeks) | (53 weeks) | ||||||||||
| (unaudited) |
|||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | 17,727 | $ | 12,458 | |||||||
| Adjustments to reconcile net income to net cash provided | |||||||||||
| by operating activities: | |||||||||||
| Depreciation | 6,264 | 5,686 | |||||||||
| Amortization | 125 | 242 | |||||||||
| (Gain) loss on sale of property and equipment | (301 | ) | 400 | ||||||||
| Minority interest in income of subsidiary | 18 | 31 | |||||||||
| Provision for doubtful accounts | 256 | (225 | ) | ||||||||
| Deferred taxes, net | 24 | (1,002 | ) | ||||||||
| Change in operating assets and liabilities | (3,196 | ) | (1,678 | ) | |||||||
| Net cash provided by operating activities | (20,917 | ) | (15,912 | ) | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchase of property and equipment | (9,779 | ) | (5,340 | ) | |||||||
| Proceeds from sale of property and equipment | 820 | 1,287 | |||||||||
| Net cash used in investing activities | (8,959 | ) | (4,053 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Net proceeds on notes payable | 35 | 129 | |||||||||
| Proceeds from long-term debt | 358 | 1,594 | |||||||||
| Principal payments on long-term debt | (5,988 | ) | (7,102 | ) | |||||||
| Proceeds from exercise of stock options and warrants | 655 | 718 | |||||||||
| Net cash used in financing activities | (4,940 | ) | (4,661 | ) | |||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | (40 | ) | (18 | ) | |||||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 6,978 | 7,180 | |||||||||
| CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD | 9,277 | 2,097 | |||||||||
| CASH AND CASH EQUIVALENTS END OF PERIOD | $ | 16,255 | $ | 9,277 | |||||||