SEC Filing | Daktronics, Inc.

View:

Download DOC

Download PDF

Download XLS

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): February 24, 2009

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 24, 2009, Daktronics, Inc. (the “Registrant”) issued a press release announcing financial results for the fiscal 2009 third quarter ending January 31, 2009. 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:

99.1

News Release dated February 24, 2009 issued by Registrant regarding third quarter fiscal 2009 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 24, 2009

EXHIBIT INDEX

Exhibit No.

Description

99.1	News Release dated February 24, 2009 issued by Daktronics, Inc.

Daktronics, Inc. Announces Third Quarter Fiscal 2009 Results

• Net sales increase nine percent, net income down 23 percent compared to third quarter of fiscal 2008

• Operating expenses decline from fiscal 2009 second quarter

• Cash at its highest level since fiscal 2006

Brookings, S.D. – Feb. 24, 2009 - Daktronics, Inc. (Nasdaq - DAKT) today reported fiscal 2009 third quarter net sales of $129.2 million and net income of $4.2 million, or $0.10 per diluted share, compared to net sales of $118.2 million and net income of $5.4 million, or $0.13 per diluted share, for the third quarter of fiscal 2008. Backlog at the end of the 2009 third quarter was approximately $128 million, compared to a backlog of approximately $138 million a year earlier and $134 million at the end of the second quarter of fiscal 2009.

Net sales, net income and earnings per share for the nine months ended January 31, 2009 were $460.1 million, $26.1 million and $0.63 per diluted share, respectively. This compares to $370.6 million, $20.5 million and $0.50 per diluted share, respectively, for the same period in fiscal 2008. The first quarter and the first nine months of fiscal 2009 contained one additional week as compared to the first quarter and the first nine months of fiscal 2008.

“Net sales for the third quarter of fiscal 2009 were up over nine percent from the prior year and we generated improved cash flow for the quarter. However, order bookings for the quarter fell by more than nine percent as compared to the third quarter of fiscal 2008, which we attribute primarily to the economic environment,” said Jim Morgan, president and chief executive officer. “Although much of the decline occurred in our Commercial business unit, order bookings in our International business and our Schools and Theatres business were also down. We expect continued weakness in much of our business into fiscal 2010 due to the economic downturn and we remain uncertain as to the impact the current economic environment will have on our Live Events business unit. We are planning the business under the assumption that Live Events will be negatively impacted.”

According to Morgan, gross margin for the quarter was also down. This resulted from a number of factors, including an issue with the company’s finishing process in manufacturing resulting in additional warranty costs and the added cost of excess manufacturing capacity resulting from lower sales. Morgan added, “We expect that during the fourth quarter of fiscal 2009, we will be better able to quantify any additional financial impact relating to the finishing process. Based on our assessment to date, this issue appears to be limited in scope.” The company also incurred adverse cost adjustments to estimates on some contracts during the quarter which impacted gross margin. “Our gross profit for the fourth quarter of fiscal 2009 as compared to the third quarter of fiscal 2009 will depend on how much we are able to reduce our manufacturing infrastructure in line with the reduction in sales, the impact of the finishing process issue and various other factors that typically impact gross margin,” said Morgan.

“Our operating expenses declined in the fiscal 2009 third quarter as compared to the fiscal 2009 second quarter. We intend to further reduce these costs during the fourth quarter of fiscal 2009,” said Bill Retterath, chief financial officer. “Our continued focus during this economic downturn is to continue to match the scale of our operations to our expectations for customer demand. This is especially difficult because we are unable to forecast the length and extent of the downturn. We remain committed to completing certain key initiatives which we feel are critical, so operating margins in the near term are likely to be below our previously communicated long-term goals.”

Retterath continued, “During the 2009 third fiscal quarter, we improved our cash position by reducing inventory, receivables and capital expenditures. We are holding back on capital expenditures which we now expect will be approximately $26 million for fiscal 2009. One of our primary goals during these uncertain times is to maximize free cash flow through expense and capital expenditure reductions along with improvements in the balance sheet.”

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 are 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 2008 fiscal year and its Quarterly Reports on Form 10-Q for its 2009 first and second fiscal quarters.. 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 Income

(in thousands, except per share amounts)

(unaudited)


		Three Months Ended						Nine Months Ended
		January 31,			January 26,			January 31,		January 26,
		2009			2008			2009		2008
Net sales		$	129,182		$	118,201		$	460,108	$	370,560
Cost of goods sold			95,043			83,019			332,411		259,299
Gross profit			34,139			35,182			127,697		111,261

Operating expenses:
	Selling		15,513			16,379			47,403		46,385
	General and administrative		6,576			6,868			21,812		19,304
	Product design and development		5,149			4,943			16,981		14,965
			27,238			28,190			86,196		80,654
	Operating income		6,901			6,992			41,501		30,607

Nonoperating income (expense):
	Interest income		516			448			1,563		1,295
	Interest expense		(32	)		(515	)		(196)		(1,265)
	Other income (expense), net		(699	)		2,015			(2,378)		1,510

Income before income taxes			6,686			8,940			40,490		32,147
	Income tax expense		2,524			3,557			14,405		11,643
	Net income	$	4,162		$	5,383		$	26,085	$	20,504

Weighted average shares outstanding:
	Basic		40,629			39,936			40,500		39,832
	Diluted		40,953			41,266			41,178		41,380

Earnings per share:
	Basic	$	0.10		$	0.13		$	0.64	$	0.51
	Diluted	$	0.10		$	0.13		$	0.63	$	0.50

	Cash dividend paid per share	$	−		$	−		$	0.09	$	0.07

-- MORE --

Daktronics, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands)

				January 31,
				2009			April 26,
				(unaudited)			2008
ASSETS

CURRENT ASSETS:
	Cash, cash equivalents and restricted cash			$	18,017		$	9,782
	Accounts receivable, less allowance for doubtful accounts				62,520			56,516
	Inventories				56,724			50,525
	Costs and estimated earnings in excess of billings				26,385			27,126
	Current maturities of long-term receivables				8,050			7,435
	Prepaid expenses and other				5,662			4,796
	Deferred income taxes				9,620			9,517
	Property and equipment available for sale				2,096			−
	Income taxes receivable				397			−
			Total current assets		189,471			165,697

Advertising rights, net					2,623			3,457
Long-term receivables, less current maturities					16,862			16,837
Investments in affiliates					3,246			2,998
Goodwill					4,532			4,722
Intangible and other assets					2,881			3,102
Deferred income taxes					395			143
					30,539			31,259
PROPERTY AND EQUIPMENT:
		Land			1,204			3,190
		Buildings			50,605			49,464
		Machinery and equipment			49,244			44,743
		Office furniture and equipment			51,800			45,482
		Equipment held for rental			3,324			2,658
		Demonstration equipment			7,988			7,516
		Transportation equipment			5,486			6,106
					169,651			159,159
			Less accumulated depreciation		(75,808	)		(61,636	)
					93,843			97,523
TOTAL ASSETS				$	313,853		$	294,479

-- MORE --

Daktronics, Inc. and Subsidiaries

Consolidated Balance Sheets (continued)

(in thousands)

				January 31,
				2009			April 26,
				(Unaudited)			2008
LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
	Accounts payable			$	29,817		$	31,540
	Accrued expenses and warranty obligations				31,345			26,100
	Current maturities of long-term debt and marketing obligations				399			910
	Billings in excess of costs and estimated earnings				10,375			24,560
	Customer deposits				11,666			12,113
	Deferred revenue				9,847			6,980
	Income taxes payable				241			949
			Total current liabilities		93,690			103,152

Long-term debt, less current maturities					34			55
Long-term marketing obligations, less current maturities					773			646
Long-term warranty obligations and other payables					5,272			3,766
Deferred income taxes					3,607			3,607
					9,686			8,074
TOTAL LIABILITIES					103,376			111,226

SHAREHOLDERS’ EQUITY:
		Common stock			27,868			25,638
		Additional paid-in capital			13,129			10,398
		Retained earnings			170,362			147,912
		Treasury stock, at cost			(9	)		(9	)
		Accumulated other comprehensive loss			(873	)		(686	)
TOTAL SHAREHOLDERS’ EQUITY					210,477			183,253
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				$	313,853		$	294,479

-- MORE --

Daktronics, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

				Nine Months Ended
				January 31, 2009			January 26, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income			$	26,085		$	20,504
	Adjustments to reconcile net income to net cash provided
	by operating activities:
		Depreciation			18,026			15,389
		Amortization			236			236
		Gain on sale of property and equipment			(977	)		(11	)
		Gain on sale of equity investments			−			(2,878	)
		Stock-based compensation			2,367			1,939
		Equity in losses of affiliates			1,698			1,604
		Provision for doubtful accounts			71			363
		Deferred income taxes, net			(356	)		(176	)
		Change in operating assets and liabilities			(19,520	)		(1,535	)
			Net cash provided by operating activities		27,630			35,435

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of property and equipment				(19,306	)		(28,372	)
	Loans to equity investees				(499	)		−
	Cash consideration paid for equity method investments				−			(750	)
	Proceeds from sale of property and equipment				3,017			425
	Proceeds from sale of investments				−			7,000
		Net cash used in investing activities			(16,788	)		(21,697	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Net borrowings on notes payable				−			(11,200	)
	Proceeds from exercise of stock options				626			1,639
	Excess tax benefits from stock-based compensation				363			324
	Principal payments on long-term debt				(545	)		(538	)
	Dividend paid				(3,635	)		(2,770	)
		Net cash used in financing activities			(3,191	)		(12,545	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH					214			(404	)

INCREASE IN CASH AND CASH EQUIVALENTS					7,865			789

CASH AND CASH EQUIVIALENTS BEGINNING OF PERIOD					9,325			2,590

CASH AND CASH EQUIVALENTS END OF PERIOD				$	17,190		$	3,379

-- MORE --

Daktronics, Inc. and Subsidiaries

Sales and Orders by Segment

(in thousands)

(unaudited)


			Three Months Ended				Nine Months Ended
			January 31,		January 26,		January 31,		January 26,
			2009		2008		2009		2008
Net sales
		Commercial	$	35,436	$	51,667	$	131,619	$	134,918
		Live Events		63,281		32,547		204,772		127,922
		Schools & Theatres		12,490		12,431		52,151		49,104
		Transportation		5,002		8,751		23,301		26,879
		International		12,973		12,805		48,265		31,737
		Total Net Sales	$	129,182	$	118,201	$	460,108	$	370,560

Orders
	Commercial		$	24,491	$	41,087	$	114,163	$	127,256
	Live Events			70,373		65,201		190,695		148,240
	Schools & Theatres			10,414		11,579		47,056		47,977
	Transportation			10,899		9,144		28,820		24,269
	International			9,310		11,108		33,983		36,053
	Total Orders		$	125,487	$	138,119	$	414,717	$	383,795

-- END --