Daktronics, Inc. Announces Record Fourth Quarter and Fiscal 2006 Results; Earnings Per Share Increases 33 Percent for the Year on Sales Growth of 34 Percent.BROOKINGS Brookings, city (1990 pop. 16,270), seat of Brookings co., E S.Dak., on the Big Sioux River; inc. 1883. A trade center in a livestock and grain region, Brookings is an important seed-processing point. , S.D. -- Daktronics Daktronics Inc. (NASDAQ: DAKT) is an American company based in Brookings, South Dakota that designs, manufactures, sells, and services dynamic visual communication systems for customers worldwide. The company is best known for its diverse offering of electronic LED displays. , Inc. (Nasdaq:DAKT) today reported fiscal 2006 fourth quarter net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $90.2 million and net income of $7.1 million, or $0.35 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with fourth quarter net sales of $61.3 million and net income of $3.0 million, or $0.15 per diluted share, one year ago. Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. at the end of the quarter was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $93 million, compared with a backlog of approximately $73 million at the end of fiscal 2005. Net sales, net income and earnings per share for the 12 months ended April 29, 2006 were $309.4 million, $21.0 million and $1.04 per diluted share, respectively, compared to $230.3 million, $15.7 million and $0.78 per diluted share, respectively, for the same period one year ago. "The fourth quarter results exceeded our expectations and provide us with further confidence that we are well positioned to take advantage of the growing demand for LED-based display systems," said Jim Morgan Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. , president and chief executive officer. "The growth for the quarter included sales increases in excess of 25 percent in all three of our major markets. Breaking through $300 million and $1 per share for the year is a credit to our hard-working hard-working adj → trabajador(a) hard-working hard adj → travailleur/euse, consciencieux/euse hard-working hard employees who put in the extra effort to meet our customer demand and respond to the greater than expected growth opportunity. Orders for the quarter were up significantly in the commercial market led by billboard applications, along with continued strong interest in our standard Galaxy product for on-premise advertising. Our recently introduced GalaxyPro product, which offers a larger matrix full-color RGB (Red Green Blue) The computer's native color space, which is the color system for capturing and displaying images. RGB was derived from our own perception of color because human eyes are sensitive to red, green and blue (see trichromaticity). Galaxy display at a reduced price point, has also been very well received," said Morgan. Morgan continued, "We continue to benefit from larger orders in the college and professional sports The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. segments and video systems for high schools and smaller colleges. Order bookings for the quarter included multi-million dollar transactions with the University of Southern California The U.S. News & World Report ranked USC 27th among all universities in the United States in its 2008 ranking of "America's Best Colleges", also designating it as one of the "most selective universities" for admitting 8,634 of the almost 34,000 who applied for freshman admission , the University of Alabama The University of Alabama (also known as Alabama, UA or colloquially as 'Bama) is a public coeducational university located in Tuscaloosa, Alabama, USA. Founded in 1831, UA is the flagship campus of the University of Alabama System. , Chase Field in Phoenix, Arizona Phoenix /ˈfiːˌnɪks/ (English: Phoenix, Navajo: Hoozdo, lit. "the place is hot", Western Apache: Fiinigis) is the capital and the most populous city of the U.S. and the Louisiana Superdome New Orleans Saints • • [ . At the high school level, where we see growing potential for larger displays, we booked video systems for five facilities," said Morgan. "We are continuing to invest in the development of our ProTour(R) family of modular displays, adding models and features. The product has been well received, and we booked orders and shipped product during the quarter. We also are seeing some success in our Asian marketing efforts, where we have booked a number of multi-million dollar orders that are a direct result of our presence in Macau Macau: see Macao. Macau or Macao Chinese Aomen Special administrative region (pop., 2005 est.: 470,000), southern China. and Shanghai Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. . We believe that our investments in these areas and others will pay off in fiscal 2007. We continue to examine opportunities in the media services business," said Morgan. "Our gross profit percentage was in line with expectations. Given that our output this quarter was up about 47 percent over the same quarter last year, and we are working in the same facilities as we were a year ago, it goes without saying we are a little crowded. We are beginning the move into our new addition, which will net us about 30 percent additional manufacturing space. We are taking advantage of the move to rearrange re·ar·range tr.v. re·ar·ranged, re·ar·rang·ing, re·ar·rang·es To change the arrangement of. re our existing space to streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. our processes and gain efficiencies. We are underway with our lean manufacturing Lean manufacturing is the production of goods using less of everything compared to mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. program, and we expect to gain ongoing efficiencies from that program. In connection with our expansion in Sioux Falls, South Dakota Sioux Falls (IPA: [su fɑlz]) is the largest city in the U.S. state of South Dakota, and the county seat of Minnehaha County.GR6 The 2007 city population is 148,000. , we intend to invest over $4.5 million in equipment there. The facility will be geared to serve our commercial market demand, with a primary focus on digital billboards. We also intend to invest over $10 million in additional space and equipment in Brookings over the course of the upcoming year, including approximately $6 million in facilities. The goal of these investments is to get more throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. with lower costs to reduce our lead times and improve our margin performance. We are very excited about the opportunities and potential benefits we see in streamlining our operations," said Morgan. "For the quarter we saw a significant improvement in cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a significant growth in receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed ," said Bill Retterath, chief financial officer. "For the 2006 fiscal year, cash on hand increased over 50 percent. Much of this growth is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to projects with better payment terms and deposits on orders. We continue to focus on cash flow improvement, although we expect volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. due to the significant cash requirements for multiple larger projects," Retterath said. Retterath continued, "Fiscal year 2007 will involve significant investments back into the business in addition to the items mentioned previously. Our current plan, which is subject to change, includes capital investments of approximately $35 million. This includes approximately $20 million in plant and equipment and over $9 million in information systems infrastructure. The information systems infrastructure includes a number of initiatives, including new systems to support our services business, content management, the media services business and upgrades to various other systems. This capital investment is expected to decrease cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has for fiscal year 2007, but not result in significant debt commitments. These investments match up with our primary goal of investing into the business to build it organically." "This rapid growth that we have experienced results in the need to build non-manufacturing infrastructure as well," said Retterath. "As a result, we intend to invest in various initiatives within our general and administrative areas and to continue to aggressively pursue geographical distribution the natural arrangements of animals and plants in particular regions or districts. See under Distribution. See also: Distribution Geographic in sales and service. We believe that we can improve operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: slightly in fiscal year 2007, which is dependent on the gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. . For the first quarter of fiscal year 2007, we are expecting gross profit margins to approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. the levels of recent quarters," said Retterath. Morgan concluded, "We estimate net sales for the first quarter of fiscal 2007 will be in the range of $87 to $95 million, with earnings in the range of $.27 to $.36 per share. Earnings per share estimates do not include the impact of stock option expensing, which we believe will be similar to the pro-forma costs previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in our annual report. In addition, we are projecting that revenues for fiscal 2007 will grow in excess of 18 percent." 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 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. information, graphics, animation animation Process of giving the illusion of movement to drawings, models, or inanimate objects. From the mid-1850s, such optical devices as the zoetrope produced the illusion of animation. Stop-action photography enabled the production of cartoon films. 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 United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. or write to the company at 331 32nd Ave AVE Avenue AVE Average AVE Alta Velocidad Espanola (train between Madrid and Seville) AVE Alta Velocidad Española (Spanish: High Speed Train) AVE Audio Video Entertainment AVE Advertising Value Equivalent . PO Box 5128 Brookings, S.D. 57006-5128. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Cautionary Notice: In addition to statements of historical fact, this news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 magnitude, in astronomy, measure of the brightness of a star or other celestial object. The stars cataloged by Ptolemy (2d cent. A.D.), all visible with the unaided eye, were ranked on a brightness scale such that the brightest stars were of 1st magnitude and the 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or or unanticipated events as they occur.
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands, except earnings per share)
(unaudited)
Three Months Ended Twelve Months Ended
------------------- --------------------
April 29, April 30, April 29, April 30,
2006 2005 2006 2005
--------- --------- ---------- ---------
Net sales $ 90,173 $ 61,345 $309, 370 $230,346
Cost of goods sold 62,637 43,609 215,296 157,137
--------- --------- ---------- ---------
Gross profit 27,536 17,736 94,074 73,209
--------- --------- ---------- ---------
Operating expenses:
Selling 10,699 9,927 40,104 32,840
General and administrative 3,198 3,142 10,983 10,434
Product design and
development 3,048 2,877 11,172 10,499
--------- --------- ---------- ---------
16,945 15,946 62,259 53,773
--------- --------- ---------- ---------
Operating income 10,591 1,790 31,815 19,436
Nonoperating income
(expense):
Interest income (expense),
net 496 412 1,702 1,242
Other income (expense), net 254 484 152 768
--------- --------- ---------- ---------
Income before income taxes 11,341 2,686 33,669 21,446
Income tax expense
(benefit) 4,237 (299) 12,708 5,786
--------- --------- ---------- ---------
Net income $ 7,104 $ 2,985 $ 20,961 $ 15,660
========= ========= ========== =========
Weighted average number of
fullydiluted shares and
common equivalent shares 20,476 20,114 20,253 20,137
Earnings per share:
Basic $ 0.37 $ 0.16 $ 1.09 $ 0.83
========= ========= ========== =========
Diluted $ 0.35 $ 0.15 $ 1.04 $ 0.78
========= ========= ========== =========
Cash dividend paid per
share $ -- $ -- $ 0.10 $ --
========= ========= ========== =========
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
April 29,
2006 April 30,
(unaudited) 2005
----------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 26,921 $ 15,961
Marketable securities 8,310 8,105
Accounts receivable, less allowance for
doubtful accounts 46,019 23,762
Current maturities of long-term receivables 4,476 5,196
Inventories 31,045 24,612
Costs and estimated earnings in excess of
billings 17,375 15,301
Prepaid expenses and other 1,906 1,725
Deferred income taxes 6,530 5,076
Income taxes receivable 97 1,812
Rental equipment available for sale 286 2,733
----------- ---------
Total current assets 142,965 104,283
----------- ---------
Advertising rights, net 3,112 1,722
Long-term receivables, less current maturities 8,756 9,900
Goodwill 2,706 2,621
Intangible and other assets 1,218 1,101
Deferred income taxes -- 782
----------- ---------
15,792 16,126
----------- ---------
PROPERTY AND EQUIPMENT:
Land 1,223 1,084
Buildings 20,470 15,386
Machinery and equipment 22,332 17,592
Office furniture and equipment 22,926 19,382
Equipment held for rental 2,182 835
Demonstration equipment 4,899 5,245
Transportation equipment 4,863 3,810
----------- ---------
78,895 63,334
Less accumulated depreciation 38,336 32,281
----------- ---------
40,559 31,053
----------- ---------
TOTAL ASSETS $ 199,316 $151,462
=========== =========
April 29,
2006 April 30,
(unaudited) 2005
----------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable, bank $ -- $ 79
Accounts payable 19,890 17,121
Accrued expenses and warranty obligations 15,179 10,973
Current maturities of long-term debt 114 909
Current maturities of long-term marketing
obligations 377 304
Billings in excess of costs and estimated
earnings 19,760 5,463
Customer deposits 7,777 4,164
Deferred maintenance revenue 4,066 2,983
Income taxes payable 555 --
----------- ---------
Total current liabilities 67,718 41,996
----------- ---------
Long-term debt, less current maturities 131 171
Long-term marketing obligations, less current
maturities 574 595
Long-term warranty obligations and other
payables 3,864 1,357
Deferred income taxes 1,684 3,433
----------- ---------
6,253 5,556
----------- ---------
TOTAL LIABILITIES 73,971 47,552
SHAREHOLDERS' EQUITY:
Common stock 19,551 17,739
Additional paid-in capital 3,480 2,684
Retained earnings 102,381 83,337
Treasury stock, at cost (9) (9)
Accumulated other comprehensive income (58) 159
----------- ---------
TOTAL SHAREHOLDERS' EQUITY 125,345 103,910
----------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 199,316 $151,462
=========== =========
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Years Ended
-------------------
April 29, April 30,
2006 2005
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 20,961 $ 15,660
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 8,915 7,387
Amortization 55 40
Gain on sale of property and equipment (65) (2)
Provision for doubtful accounts (281) (172)
Deferred income taxes, net (2,421) 56
Change in operating assets and liabilities 4,753 (592)
--------- ---------
Net cash provided by operating activities 31,917 22,377
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash consideration paid for acquired businesses (165) (1,024)
Purchase of property and equipment (18,919) (13,483)
Purchases of marketable securities, net (205) (4,104)
Proceeds from sale of property and equipment 331 502
--------- ---------
Net cash used in investing activities (18,958) (18,109)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividend paid (1,916) --
Principal payments on long-term debt (913) (1,493)
Net payments on notes payable (89) (154)
Proceeds from exercise of stock options and
warrants 1,186 835
Proceeds from issuance of long-term debt -- 50
--------- ---------
Net cash used in financing activities (1,732) (762)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (267) 200
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 10,960 3,706
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 15,961 12,255
--------- ---------
CASH AND CASH EQUIVALENTS END OF PERIOD $ 26,921 $ 15,961
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