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): October 28, 2006
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
office) (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 2.02 Results of Operations and Financial Condition
On November 15, 2006, Daktronics, Inc. (the “Registrant”) Registrant issued a press release announcing financial results for the second quarter ending October 28, 2006. A copy of the press release is filed herewith as Exhibit 99.1 and is incorporated herein by reference.
The first paragraph of the press release as originally released indicated that backlog at the end of the fiscal 2006 second quarter was approximately $121 million. It should have stated that the backlog of $121 million was as of the fiscal 2007 second quarter. The corrected version is attached.
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:
(c) 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.
DAKTRONICS,INC.
| By: | /s/ William R. Retterath |
| William R.Retterath, Chief Financial Officer |
Date: August 15, 2006
EXHIBIT INDEX
| Exhibit No. Description | |
| 99.1 News Release dated August 16, 2006 issued by Daktronics,Inc. |
EXHIBIT 99.1
Daktronics, Inc.
Announces Second Quarter Fiscal 2007 Results
Revenues up 63% for the quarter, 46% year to date
Orders Up Over 50% for the second consecutive quarter
Brookings, S.D. – Nov 15, 2006 — Daktronics, Inc. (Nasdaq — DAKT) today reported fiscal 2007 second quarter net sales of $123.5 million and net income of $8.9 million, or $0.22 per diluted share, compared with fiscal 2006 second quarter net sales of $75.8 million and net income of $5.2 million, or $0.13 per diluted share. Backlog at the end of the fiscal 2007 second quarter was approximately $121 million, compared with a backlog of approximately $81 million at the end of second quarter of fiscal 2006.
Net sales, net income and earnings per share for the six months ended October 28, 2006 were $215.7 million, $13.9 million and $0.34 per diluted share, respectively, compared to $148.1 million, $9.8 million and $0.25 per diluted share, respectively, for the same period one year ago.
“The exceptional results for the quarter were mostly due to an absolutely fantastic team effort by everyone at Daktronics. Our people went above and beyond to serve our customers, and as a result we exceeded our guidance on both the top and bottom lines, “ said Jim Morgan, president and chief executive officer. “I want to thank all of our employees for the excellent job they did this past quarter. I would also note that the additional space that we brought on line in Brookings in the first quarter was a key enabler for us to achieve what we did in the second quarter. We also realized the benefit of process improvements that we recently implemented.”
Morgan continued, “Our Sioux Falls facility is coming along nicely. We shipped our first display out of that plant in mid-October. The capacity of this facility will continue to be ramped up over the coming months as we add personnel and additional work shifts. We are excited to have the Sioux Falls facility coming on line to help us respond to the anticipated continued growth of demand in the digital billboard marketplace. We see workforce availability as a limiting factor to the growth rate in Brookings, and therefore we continue to evaluate opportunities to expand capacity outside of Brookings.”
“Although much of the external attention to our business has been given to the outdoor advertising space where orders continue to outpace revenues, it is important to note that the orders in our sports markets are up more than 45% on a year to date basis over last fiscal year,” Morgan continued. “Also, our transportation market had an excellent quarter for orders, and it is showing greater potential. Revenues in transportation are up over 60% both for the quarter and year to date as compared to last year, although order growth remained below 10%. We remain optimistic that these two markets will continue to show solid long-term growth. Our commercial market order bookings are now up over 75% year-to-date led by outdoor advertising opportunities.”
“Our gross profit margin met our expectations, which anticipated the cost effects of the capacity expansion. We expect that our continued investment in capacity will have some effect on gross profit margin in the third quarter,” said Bill Retterath, chief financial officer. “We believe that we can expand gross profit slightly in the third quarter from the second quarter.”
Retterath continued “For the quarter, our cash decreased significantly, as we funded almost two-thirds of our capital budget in the first half of the year and made two strategic investments. Pending unforeseen changes we should now be in a position to generate free cash flow for the second half of the fiscal year,” Retterath said.
Morgan concluded, “We estimate net sales for the third quarter of fiscal 2007 will be in the range of $103 to $115 million, with earnings in the range of $0.12 to $0.18 per share. We expect that for the fiscal year as a whole, net sales could reach $450 million, which is subject to a number of risks as spelled out in our public filings.”
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 one of the world’s largest suppliers of, electronic scoreboards, computer-programmable displays, and large screen video displays and control systems. The company excels in the control of large 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 and transportation applications. 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) 697-4000 or toll-free (800) 843-5843 in the United States or write to the company at 331 32nd Ave. 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 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 risks 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.
For more information contact:
INVESTOR RELATIONS:
Bill Retterath, Chief Financial Officer
(605) 697-4000
Investor@daktronics.com
Financial tables are included on the following pages.
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands,
except earnings per share)
(unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 28, 2006 |
October 29, 2005 |
October 28, 2006 |
October 29, 2005 | ||||||||||||||
| Net sales | $ | 123,530 | $ | 75,802 | $ | 215,683 | $ | 148,147 | |||||||||
| Cost of goods sold | 88,044 | 53,485 | 153,821 | 103,636 | |||||||||||||
| Gross profit | 35,486 | 22,317 | 61,862 | 44,511 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Selling | 12,528 | 9,178 | 24,974 | 18,988 | |||||||||||||
| General and administrative | 4,628 | 2,683 | 8,356 | 5,305 | |||||||||||||
| Product design and development | 3,936 | 2,749 | 7,555 | 5,233 | |||||||||||||
| 21,092 | 14,610 | 40,885 | 29,526 | ||||||||||||||
| Operating income | 14,394 | 7,707 | 20,977 | 14,985 | |||||||||||||
| Nonoperating income (expense): | |||||||||||||||||
| Interest income (expense), net | 455 | 462 | 1,074 | 788 | |||||||||||||
| Other income (expense), net | (648 | ) | (5 | ) | (541 | ) | (77 | ) | |||||||||
| Income before income taxes | 14,201 | 8,164 | 21,510 | 15,696 | |||||||||||||
| Income tax expense | 5,310 | 2,979 | 7,631 | 5,880 | |||||||||||||
| Net income | $ | 8,891 | $ | 5,185 | $ | 13,879 | $ | 9,816 | |||||||||
| Weighted average number of fully | |||||||||||||||||
| diluted shares and common | |||||||||||||||||
| equivalent shares | 41,129 | 40,267 | 41,072 | 40,249 | |||||||||||||
| Earnings per share: | |||||||||||||||||
| Basic | $ | 0.23 | $ | 0.13 | $ | 0.36 | $ | 0.25 | |||||||||
| Diluted | $ | 0.22 | $ | 0.13 | $ | 0.34 | $ | 0.25 | |||||||||
Daktronics, Inc. and Subsidiaries
Consolidated Balance
Sheets
(in thousands)
| October 28, 2006 (unaudited) |
April 29, 2006 | |||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 5,589 | $ | 26,921 | ||||
| Restricted cash | 5,123 | – | ||||||
| Marketable securities | – | 8,310 | ||||||
| Accounts receivable, less allowance for doubtful accounts | 52,677 | 46,019 | ||||||
| Inventories | 50,602 | 31,045 | ||||||
| Costs and estimated earnings in excess of billings | 22,298 | 17,375 | ||||||
| Current maturities of long-term receivables | 4,182 | 4,476 | ||||||
| Prepaid expenses and other | 3,750 | 2,522 | ||||||
| Deferred income taxes | 7,204 | 6,213 | ||||||
| Income taxes receivable | 219 | 97 | ||||||
| Rental equipment available for sale | 23 | 286 | ||||||
| Total current assets | 151,667 | 143,264 | ||||||
| Advertising rights, net | 4,012 | 3,112 | ||||||
| Long-term receivables, less current maturities | 9,253 | 8,756 | ||||||
| Investments in affiliates | 10,000 | 582 | ||||||
| Goodwill | 4,344 | 2,706 | ||||||
| Intangible and other assets | 3,858 | 636 | ||||||
| Deferred income taxes | 114 | 232 | ||||||
| 31,581 | 16,024 | |||||||
| PROPERTY AND EQUIPMENT: | ||||||||
| Land | 2,985 | 1,223 | ||||||
| Buildings | 27,576 | 20,470 | ||||||
| Machinery and equipment | 34,881 | 22,332 | ||||||
| Office furniture and equipment | 29,172 | 22,926 | ||||||
| Equipment held for rental | 2,700 | 2,182 | ||||||
| Demonstration equipment | 4,154 | 4,899 | ||||||
| Transportation equipment | 5,889 | 4,863 | ||||||
| 107,357 | 78,895 | |||||||
| Less accumulated depreciation | 41,023 | 38,336 | ||||||
| 66,334 | 40,559 | |||||||
| TOTAL ASSETS | $ | 249,582 | $ | 199,847 | ||||
Daktronics, Inc. and Subsidiaries
Consolidated Balance
Sheets (continued)
(in thousands)
| October 28, 2006 (unaudited) |
April 29, 2006 | |||||||
|---|---|---|---|---|---|---|---|---|
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Notes payable, bank | $ | 2,363 | $ | – | ||||
| Accounts payable | 40,720 | 20,506 | ||||||
| Accrued expenses and warranty obligations | 18,888 | 15,396 | ||||||
| Current maturities of long-term debt and marketing obligations | 1,002 | 491 | ||||||
| Billings in excess of costs and estimated earnings | 23,306 | 19,760 | ||||||
| Customer deposits | 8,521 | 7,777 | ||||||
| Deferred revenue | 4,736 | 3,849 | ||||||
| Income taxes payable | 1,699 | 555 | ||||||
| Total current liabilities | 101,235 | 68,334 | ||||||
| Long-term debt, less current maturities | 635 | 131 | ||||||
| Long-term marketing obligations, less current maturities | 539 | 574 | ||||||
| Long-term warranty obligations and other payables | 6,196 | 3,864 | ||||||
| Deferred income taxes | 1,779 | 1,599 | ||||||
| 9,149 | 6,168 | |||||||
| TOTAL LIABILITIES | 110,384 | 74,502 | ||||||
| SHAREHOLDERS' EQUITY: | ||||||||
| Common stock | 20,546 | 19,551 | ||||||
| Additional paid-in capital | 4,587 | 3,480 | ||||||
| Retained earnings | 113,921 | 102,381 | ||||||
| Treasury stock, at cost | (9 | ) | (9 | ) | ||||
| Accumulated other comprehensive loss | 153 | (58 | ) | |||||
| TOTAL SHAREHOLDERS' EQUITY | 139,198 | 125,345 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 249,582 | $ | 199,847 | ||||
Daktronics, Inc. and Subsidiaries
Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
| Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| October 28, 2006 |
October 29, 2005 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | 13,879 | $ | 9,816 | |||||||
| Adjustments to reconcile net income to net cash provided | |||||||||||
| by operating activities: | |||||||||||
| Depreciation | 5,660 | 4,203 | |||||||||
| Amortization | 23 | 26 | |||||||||
| Gain on sale of property and equipment | 68 | (14 | ) | ||||||||
| Stock-based compensation | 856 | – | |||||||||
| Equity in earnings of investments in affiliates | 781 | – | |||||||||
| Provision for doubtful accounts | 263 | (255 | ) | ||||||||
| Deferred income taxes, net | (693 | ) | (930 | ) | |||||||
| Change in operating assets and liabilities | (10,168 | ) | (6,591 | ) | |||||||
| Net cash provided by operating activities | 10,669 | 6,255 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchase of property and equipment | (27,753 | ) | (7,946 | ) | |||||||
| Cash consideration paid for acquired business | (13,771 | ) | (130 | ) | |||||||
| Sales (purchases) of marketable securities, net | 8,310 | 348 | |||||||||
| Proceeds from sale of property and equipment | 44 | 33 | |||||||||
| Net cash used in investing activities | (33,170 | ) | (7,695 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Dividend paid | (2,339 | ) | (1,917 | ) | |||||||
| Excess tax benefits from stock-based compensation | 251 | – | |||||||||
| Principal payments on long-term debt | 25 | (525 | ) | ||||||||
| Net borrowing (payments) on notes payable | 2,363 | (84 | ) | ||||||||
| Proceeds from exercise of stock options and warrants | 639 | 335 | |||||||||
| Net cash used in financing activities | 939 | (2,191 | ) | ||||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | 230 | (190 | ) | ||||||||
| DECREASE IN CASH AND CASH EQUIVALENTS | (21,332 | ) | (3,821 | ) | |||||||
| CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD | 26,921 | 15,961 | |||||||||
| CASH AND CASH EQUIVALENTS END OF PERIOD | $ | 5,589 | $ | 12,140 | |||||||