Daktronics, Inc. Announces Third Quarter Results.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 2005 third 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 $50.8 million and net income of $2.5 million or $0.12 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 third quarter net sales of $44.5 million and net income of $2.6 million, or $0.13 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. $53 million, compared with a backlog of approximately $43 million at the end of the third quarter of fiscal year 2004. Net sales, net income and earnings per share for the nine months ended January January: see month. 29, 2005, were $169.0 million, $12.7 million and $0.63 per diluted share, respectively, compared to $152.0 million, $13.6 million and $0.68 per diluted share, respectively, for the same period one year ago. "Although net sales and income for the quarter did not meet our previously announced estimates, the factors driving our positive long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. outlook for sales growth have not changed," 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 CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "We continue to see significant growth in our standard line of commercial products, led by growing acceptance of our Galaxy(R) product line. We began shipments of a new color and monochrome Also called "mono." Refers to display screens that use one foreground and one background color; for example, black on white, white on black or green on black. The first terminals connected to mainframes and minicomputers were monochrome, and monochrome screens were widely used on early combination Galaxy(R) display. Growth of commercial products outside of the strong national account business was especially pleasing. These areas of our business continue to meet our expectations," said Morgan. Morgan added, "With baseball baseball, bat-and-ball sport known as the national pastime of the United States. It derives its name from the four bases that form a diamond (the infield) around the pitcher's mound. season just around the corner, we booked a number of large orders during the quarter including the Rogers Centre
• (formerly Skydome) in Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing , Dodger Stadium • • [ in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , Coors Field • • [ in Denver Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. , and a number of minor league and spring training facilities. A number of sports orders that we expected to book in the third quarter have booked or are booking in the first few weeks of the fourth quarter, giving us an overall solid order performance for the baseball season." "In our transportation market, we booked a number of larger orders, including orders with the Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and , New Jersey and North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. Departments of Transportation and a number of airport transactions for new and repeat customers." "We completed two small acquisitions to expand our product and distribution base," said Morgan. "Although neither transaction will have an immediate material impact on sales, we look forward to their contributions for the longer term. With the addition of sound reinforcement systems A sound reinforcement system is an arrangement of microphones, electronic signal processors, amplifiers, and loudspeakers that makes live or pre-recorded sounds—usually music or speech— louder, or which distributes the sound to a larger or more distant audience. to our display systems, we have further strengthened our integrated systems offering. With the acquisition of European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Timing Systems in the United Kingdom, we will be better positioned for providing service and support to larger installations and expanding the distribution of our standard products. This is the same service-based approach which has worked well for us domestically. For the first few quarters following each acquisition, however, we expect added selling and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. as we invest in these businesses for the long term." Morgan continued, "We have been investing more in product development as we work aggressively to complete product designs. Our product development costs exceeded our general target of 4%, primarily due to added investments in the mobile and modular business, in commercial products and in the digital signage Digital signage is a form of out-of-home advertising in which content and messages displayed on an electronic screen, or digital sign, can be changed without modification to the physical sign, typically with the goal of delivering targeted messages to specific locations at controllers. In the mobile and modular business, we continue development on the ProTour(TM) product line. In the commercial products area, we began shipments of our color and monochrome combination Galaxy(R) displays, a product targeted for the retail marketplace." "For the quarter, our gross profit margin 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. was approximately 30% compared with the guidance we had given in the past of approximately 32%," said Bill Retterath, chief financial officer. "The lower than expected results were attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to lower margins on orders booked during the quarter, due, in some cases, to competitive pressures, lower than expected absorption absorption [Lat.,=sucking from], taking of molecules of one substance directly into another substance. It is contrasted with adsorption, in which the molecules adhere only to the surface of the second substance. of fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). due to the holidays, and added costs to expedite ex·pe·dite tr.v. ex·pe·dit·ed, ex·pe·dit·ing, ex·pe·dites 1. To speed up the progress of; accelerate. 2. raw materials due to order booking delays. We are expecting the gross margin percentage to be approximately 31% for the fourth quarter, realizing that actual rates could vary depending on orders booked during the quarter and sales performance. " "Our selling, general and administrative costs were also higher during the quarter due to costs of developing our international market, the effects of the acquisitions, and the costs related to Sarbanes-Oxley compliance. In addition, during the quarter there was a significant commitment of internal resources in connection with Sarbanes-Oxley compliance," said Retterath. Retterath continued, "The research and development tax credits which we announced previously contributed to the income tax benefit for the quarter. This should provide continued benefits in future years through a slight reduction in our overall effective tax rate." Regarding cash flow, Retterath said, "We performed well during the quarter, generating free cash flow (defined as cash flows from operations, less cash flows used in investing activities) of $8.3 million for the quarter, as compared with a negative $1.6 million for the third quarter of last year. This increase resulted from an improvement in net operating assets Operating Assets Another term for working capital. , which included the reduction of long-term 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 , despite a buildup build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. of inventory at the end of the quarter in anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of order bookings." Morgan concluded, "We are estimating net sales for the fourth quarter of fiscal 2005 will be in the range of $58 to $66 million, with earnings in the range of $0.20 to $0.30 per share. These estimates are based on our current backlog and anticipated orders and include approximately $0.05 per share estimated benefit from research and development credits for prior fiscal years. The timing of large orders will affect actual sales and net income realized in the fourth quarter. This guidance puts our annual revenue estimates at between $227 million and $235 million and our net income estimates at $0.83 to $0.93 per share." The Company will webcast its quarterly conference call at 10:00 am (central) on Wednesday Wednesday: see week. , February February: see month. 16, 2005. To listen to the webcast, go to 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 February 16. To access the replay, call toll-free in the U.S. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of 800-633-8284 and enter code #21228772. International callers can dial 402-977-9140 and enter code #21228772 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, large screen video displays, 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 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 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 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)
Three Months Ended Nine Months Ended
----------------------- -----------------------
January 29, January 31, January 29, January 31,
2005 2004 2005 2004
(13 weeks) (13 weeks) (39 weeks) (39 weeks)
----------- ----------- ----------- -----------
Net sales $50,818 $44,475 $169,000 $151,969
Cost of goods sold 35,457 29,996 113,527 97,914
----------- ----------- ----------- -----------
Gross profit 15,361 14,749 55,473 54,055
----------- ----------- ----------- -----------
Operating expenses:
Selling 8,186 6,819 22,913 19,695
General and
administrative 2,459 2,521 7,292 6,858
Product design and
development 2,522 1,893 7,622 6,177
----------- ----------- ----------- -----------
13,167 11,233 37,827 32,730
----------- ----------- ----------- -----------
Operating income 2,194 3,516 17,646 21,325
Nonoperating income
(expense):
Interest income 365 258 990 721
Interest expense (49) (78) (160) (401)
Other income, net (171) 222 284 571
----------- ----------- ----------- -----------
Income before income
taxes and minority
interest 2,339 3,918 18,760 22,216
Income tax expense
(benefit) (116) 1,345 6,085 8,592
----------- ----------- ----------- -----------
Income before
minority interest 2,455 2,573 12,675 13,624
Minority interest in
income of subsidiary - 43 - (31)
----------- ----------- ----------- -----------
Net income $2,455 $2,616 $12,675 $13,593
=========== =========== =========== ===========
Earnings per share:
Basic $0.13 $0.14 $0.67 $0.73
=========== =========== =========== ===========
Diluted $0.12 $0.13 $0.63 $0.68
=========== =========== =========== ===========
Weighted average
number of shares and
common equivalent
shares 20,196 20,012 20,180 19,865
=========== =========== =========== ===========
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
January 29, May 1,
2005 2004
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $25,830 $16,255
Accounts receivable, less allowance for
doubtful accounts 27,571 28,686
Current maturities of long-term receivables 3,759 3,772
Inventories 22,375 16,604
Costs and estimated earnings in excess of
billings 12,707 12,862
Prepaid expenses and other 1,413 905
Deferred income taxes 6,020 4,524
Income taxes receivable 1,575 813
Rental Equipment available for sale 2,821 2,706
----------- -----------
Total current assets 104,071 87,127
----------- -----------
Advertising rights, net 1,319 1,415
Long-term receivables, less current maturities 9,263 10,267
Goodwill, net of accumulated amortization 2,630 1,411
Intangible and other assets 807 920
----------- -----------
14,019 14,013
----------- -----------
PROPERTY AND EQUIPMENT:
Land 654 654
Buildings 13,758 12,415
Machinery and equipment 17,080 14,616
Office furniture and equipment 18,147 15,542
Demonstration equipment 5,442 3,892
Transportation equipment 3,577 3,006
----------- -----------
58,658 50,125
Less accumulated depreciation 30,090 25,029
----------- -----------
28,568 25,096
----------- -----------
TOTAL ASSETS $146,658 $126,236
=========== ===========
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
January 29, May 1,
2005 2004
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $81 $214
Accounts payable 13,372 12,586
Accrued expenses 11,781 9,911
Current maturities of long-term debt 1,151 1,181
Current maturities of long-term marketing
obligations 306 115
Billings in excess of costs and estimated
earnings 5,645 6,761
Customer deposits 4,742 2,829
Deferred Revenue 2,262 1,700
----------- -----------
Total current liabilities 39,340 35,297
----------- -----------
Long-term debt, less current maturities 255 1,148
Long-term marketing obligations 631 350
Deferred income 1,800 1,134
Deferred income taxes 3,507 2,043
----------- -----------
6,193 4,675
----------- -----------
TOTAL LIABILITIES 45,533 39,972
SHAREHOLDERS' EQUITY:
Common stock 17,445 16,406
Additional paid-in capital 3,264 2,274
Retained earnings 80,351 67,677
Treasury stock, at cost (9) (9)
Accumulated other comprehensive loss 74 (84)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 101,125 86,264
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $146,658 $126,236
=========== ===========
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended
-----------------------
January 29, January 31,
2005 2004
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $12,675 $13,593
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 5,454 4,540
Amortization 77 100
Minority interest in income of subsidiary - 31
Provision for doubtful accounts (178) 328
(Gain) loss on sale of property and
equipment 15 (304)
Deferred taxes, net (32) 113
Net change in operating assets and
liabilities 1,387 (6,301)
----------- -----------
Net cash provided by operating activities 19,398 12,100
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (8,235) (7,100)
Cash consideration paid for acquired
businesses (1,024) -
Proceeds from sale of property and equipment 79 688
----------- -----------
Net cash used in investing activities (9,180) (6,412)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (1,170) (5,495)
Payments on notes payable (157) (105)
Proceeds from exercise of stock options and
warrants 542 463
Proceeds from long-term debt 51 185
----------- -----------
Net cash used in financing activities (734) (4,952)
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 91 14
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 9,575 750
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 16,255 9,277
----------- -----------
CASH AND CASH EQUIVALENTS END OF PERIOD $25,830 $10,027
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