Company Quick10K Filing
Daktronics
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 45 $339
10-Q 2019-11-27 Quarter: 2019-11-02
10-Q 2019-08-30 Quarter: 2019-08-03
10-K 2019-06-07 Annual: 2019-04-27
10-Q 2019-02-22 Quarter: 2019-01-26
10-Q 2018-11-26 Quarter: 2018-10-27
10-Q 2018-08-24 Quarter: 2018-07-28
10-K 2018-06-08 Annual: 2018-04-28
10-Q 2018-03-02 Quarter: 2018-01-27
10-Q 2017-12-01 Quarter: 2017-10-28
10-Q 2017-09-01 Quarter: 2017-07-29
10-K 2017-06-09 Annual: 2017-04-29
10-Q 2017-03-03 Quarter: 2017-01-28
10-Q 2016-12-02 Quarter: 2016-10-29
10-Q 2016-09-02 Quarter: 2016-07-30
10-K 2016-06-21 Annual: 2016-04-30
10-Q 2016-03-04 Quarter: 2016-01-30
10-Q 2015-12-04 Quarter: 2015-10-31
10-Q 2015-09-03 Quarter: 2015-08-01
10-K 2015-06-22 Annual: 2015-05-02
10-Q 2015-03-06 Quarter: 2015-01-31
10-Q 2014-12-05 Quarter: 2014-11-01
10-Q 2014-09-05 Quarter: 2014-08-02
10-K 2014-06-12 Annual: 2014-04-26
10-Q 2014-02-28 Quarter: 2014-01-25
10-Q 2013-11-27 Quarter: 2013-10-26
10-K 2013-06-12 Annual: 2013-04-27
10-Q 2013-03-01 Quarter: 2013-01-26
10-Q 2012-11-30 Quarter: 2012-10-27
10-Q 2012-08-31 Quarter: 2012-07-28
10-K 2012-06-13 Annual: 2012-04-28
10-Q 2012-03-02 Quarter: 2012-01-28
10-Q 2011-12-02 Quarter: 2011-10-29
10-Q 2011-09-02 Quarter: 2011-07-30
10-K 2011-06-16 Annual: 2011-04-30
10-Q 2011-03-04 Quarter: 2011-01-29
10-Q 2010-12-03 Quarter: 2010-10-30
10-Q 2010-09-03 Quarter: 2010-07-31
10-K 2010-06-16 Annual: 2010-05-01
10-Q 2010-02-25 Quarter: 2010-01-30
8-K 2019-12-04 Regulation FD, Exhibits
8-K 2019-11-27 Earnings, Exhibits
8-K 2019-11-15 Enter Agreement, Leave Agreement, Exhibits
8-K 2019-09-05 Regulation FD, Exhibits
8-K 2019-09-04 Officers, Shareholder Vote
8-K 2019-08-28 Earnings, Exhibits
8-K 2019-05-30 Regulation FD, Exhibits
8-K 2019-05-29 Earnings, Exhibits
8-K 2019-02-28 Regulation FD, Exhibits
8-K 2019-02-20 Earnings, Exhibits
8-K 2018-11-29 Regulation FD, Exhibits
8-K 2018-11-21 Earnings, Exhibits
8-K 2018-11-16 Enter Agreement, Shareholder Rights, Amend Bylaw, Regulation FD, Exhibits
8-K 2018-09-06 Regulation FD, Exhibits
8-K 2018-09-05 Officers, Shareholder Vote
8-K 2018-08-21 Earnings, Exhibits
8-K 2018-08-13 Officers, Exhibits
8-K 2018-05-31 Regulation FD, Exhibits
8-K 2018-05-30 Earnings, Exhibits
8-K 2018-03-01 Regulation FD, Exhibits
8-K 2018-02-20 Earnings, Exhibits
DAKT 2019-11-02
Item 1. Financial Statements
Note 1. Basis of Presentation
Note 2. Investments in Affiliates
Note 3. Earnings per Share ("Eps")
Note 4. Revenue Recognition
Note 5. Segment Reporting
Note 6. Marketable Securities
Note 7. Business Combinations
Note 8. Goodwill
Note 9. Selected Financial Statement Data
Note 10. Receivables
Note 11. Share Repurchase Program
Note 12. Leases
Note 13. Commitments and Contingencies
Note 14. Income Taxes
Note 15. Fair Value Measurement
Note 16. Derivative Financial Instruments
Note 17. Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 dakt_20191102xq2xex311.htm
EX-31.2 dakt_20191102xq2xex312.htm
EX-32.1 dakt_20191102xq2xex321.htm
EX-32.2 dakt_20191102xq2xex322.htm

Daktronics Earnings 2019-11-02

DAKT 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
BRC 2,991 1,157 307 1,161 579 131 191 2,764 50% 14.5 11%
HI 1,995 1,891 1,095 1,796 620 147 280 2,255 35% 8.0 8%
AGS 690 762 628 295 180 -13 98 1,208 61% 12.3 -2%
DAKT 339 382 190 596 138 1 0 318 23% 1,022.2 0%
ODC 214 198 61 273 64 12 13 198 23% 15.1 6%
DOGZ 108 70 9 0 0 0 0 100 0%
JASN 20 517 545 558 106 -38 43 378 19% 8.7 -7%
SGLB 14 2 1 0 -0 -6 -6 14 -0% -2.3 -281%
SUMR 10 101 93 133 54 -3 1 64 41% 56.4 -3%
AMCR

10-Q 1 dakt_20191102xq2x10-q.htm 10-Q Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 2, 2019
 
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___.
Commission File Number: 0-23246

daklogo.jpg

Daktronics, Inc.
(Exact Name of Registrant as Specified in its Charter)

South Dakota
 
46-0306862
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
 
 
201 Daktronics Drive
Brookings, SD
 
 
57006
(Address of Principal Executive Offices)
 
(Zip Code)

(605) 692-0200
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, No Par Value
DAKT
NASDAQ Global Select Market
Preferred Stock Purchase Rights
DAKT
NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes x  No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
Accelerated filer x
Non-accelerated filer o
Smaller reporting company o
 
Emerging growth company o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of the registrant’s common stock outstanding as of November 25, 2019 was 45,147,549.




DAKTRONICS, INC. AND SUBSIDIARIES
FORM 10-Q
For the Quarter Ended November 2, 2019

Table of Contents

 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 








PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)

 
 
November 2,
2019
 
April 27,
2019
ASSETS
 
 
 
 
CURRENT ASSETS:
 
 
 
 
Cash and cash equivalents
 
$
29,265

 
$
35,383

Restricted cash
 
59

 
359

Marketable securities
 
3,618

 
26,344

Accounts receivable, net
 
103,417

 
65,487

Inventories
 
79,237

 
78,832

Contract assets
 
34,395

 
33,704

Current maturities of long-term receivables
 
4,567

 
2,300

Prepaid expenses and other current assets
 
9,943

 
8,319

Income tax receivables
 
4,301

 
1,087

Property and equipment and other assets available for sale
 
1,860

 
1,858

Total current assets
 
270,662

 
253,673

 
 
 
 
 
Property and equipment, net
 
67,163

 
65,314

Long-term receivables, less current maturities
 
1,758

 
1,214

Goodwill
 
7,974

 
7,889

Intangibles, net
 
4,204

 
4,906

Investment in affiliates and other assets
 
15,458

 
5,052

Deferred income taxes
 
11,190

 
11,168

TOTAL ASSETS
 
$
378,409

 
$
349,216

 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 

Accounts payable
 
$
48,432

 
$
44,873

Contract liabilities
 
48,387

 
47,178

Accrued expenses
 
36,817

 
32,061

Warranty obligations
 
9,837

 
9,492

Income taxes payable
 
638

 
468

Total current liabilities
 
144,111

 
134,072

 
 
 
 
 
Long-term warranty obligations
 
16,148

 
14,978

Long-term contract liabilities
 
10,578

 
10,053

Other long-term obligations
 
8,295

 
1,339

Long-term income taxes payable
 
735

 
578

Deferred income taxes
 
531

 
533

Total long-term liabilities
 
36,287

 
27,481

 
 
 
 
 

1


DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(continued)
(in thousands, except per share data)
(unaudited)

 
 
November 2,
2019
 
April 27,
2019
SHAREHOLDERS' EQUITY:
 
 

 
 

Common Stock, no par value, authorized 115,000,000 shares; 45,722,110 and 45,317,267 shares issued at November 2, 2019 and April 27, 2019, respectively
 
59,276

 
57,699

Additional paid-in capital
 
43,546

 
42,561

Retained earnings
 
103,397

 
93,593

Treasury Stock, at cost, 573,775 and 303,957 shares at November 2, 2019 and April 27, 2019, respectively
 
(3,516
)
 
(1,834
)
Accumulated other comprehensive loss
 
(4,692
)
 
(4,356
)
TOTAL SHAREHOLDERS' EQUITY
 
198,011

 
187,663

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 
$
378,409

 
$
349,216

 
 
 
 
 
See notes to condensed consolidated financial statements.
 
 

 
 


2


DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

 
Three Months Ended
 
Six Months Ended
 
November 2,
2019
 
October 27,
2018
 
November 2,
2019
 
October 27,
2018
Net sales
$
174,911

 
$
172,692

 
$
355,167

 
$
326,880

Cost of sales
134,824

 
129,935

 
269,575

 
245,876

Gross profit
40,087

 
42,757

 
85,592

 
81,004

 
 
 
 
 
 
 
 
Operating expenses:
 

 
 

 
 

 
 

Selling
16,177

 
16,125

 
34,474

 
32,503

General and administrative
8,965

 
8,574

 
18,058

 
17,111

Product design and development
10,121

 
9,039

 
20,621

 
18,331

 
35,263

 
33,738

 
73,153

 
67,945

Operating income
4,824

 
9,019

 
12,439

 
13,059

 
 
 
 
 
 
 
 
Nonoperating (expense) income:
 

 
 

 
 

 
 

Interest income
162

 
188

 
431

 
385

Interest expense
(31
)
 
(2
)
 
(66
)
 
(41
)
Other income (expense), net
(514
)
 
(66
)
 
(321
)
 
(220
)
 
 
 
 
 
 
 
 
Income before income taxes
4,441

 
9,139

 
12,483

 
13,183

Income tax (benefit) expense
(2,833
)
 
533

 
(1,821
)
 
3

Net income
$
7,274

 
$
8,606

 
$
14,304

 
$
13,180

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 

 
 

 
 

 
 

Basic
45,115

 
44,780

 
45,114

 
44,717

Diluted
45,267

 
44,950

 
45,361

 
44,994

 
 
 
 
 
 
 
 
Earnings per share:
 

 
 

 
 

 
 

Basic
$
0.16

 
$
0.19

 
$
0.32

 
$
0.29

Diluted
$
0.16

 
$
0.19

 
$
0.32

 
$
0.29

 
 
 
 
 
 
 
 
See notes to condensed consolidated financial statements.
 
 
 

 
 

 
 


3


DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)

 
 
Three Months Ended
 
Six Months Ended
 
 
November 2, 2019
 
October 27,
2018
 
November 2,
2019
 
October 27,
2018
 
 
 
 
 
 
 
 
 
Net income
 
$
7,274

 
$
8,606

 
$
14,304

 
$
13,180

 
 
 
 
 
 
 
 
 
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Cumulative translation adjustments
 
146

 
(555
)
 
(380
)
 
(1,694
)
Unrealized gain (loss) on available-for-sale securities, net of tax
 
3

 
6

 
44

 
(7
)
Total other comprehensive income (loss), net of tax
 
149

 
(549
)
 
(336
)
 
(1,701
)
Comprehensive income
 
$
7,423

 
$
8,057

 
$
13,968

 
$
11,479

 
 
 
 
 
 
 
 
 
See notes to condensed consolidated financial statements.
 
 
 
 
 
 
 
 


4


DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands)
(unaudited)

 
Common Stock
 
Additional Paid-In Capital
 
Retained Earnings
 
Treasury Stock
 
Accumulated Other Comprehensive Loss
 
Total
Balance as of April 27, 2019
$
57,699

 
$
42,561

 
$
93,593

 
$
(1,834
)
 
$
(4,356
)
 
$
187,663

Net income

 

 
7,030

 

 

 
7,030

Cumulative translation adjustments

 

 

 

 
(526
)
 
(526
)
Unrealized gain (loss) on available-for-sale securities, net of tax

 

 

 

 
41

 
41

Share-based compensation

 
643

 

 

 

 
643

Employee savings plan activity
779

 

 

 

 

 
779

Dividends declared ($0.05 per share)

 

 
(2,250
)
 

 

 
(2,250
)
Treasury stock purchase

 

 

 
(1,187
)
 

 
(1,187
)
Balance as of August 3, 2019
58,478

 
43,204

 
98,373

 
(3,021
)
 
(4,841
)
 
192,193

Net income

 

 
7,274

 

 

 
7,274

Cumulative translation adjustments

 

 

 

 
146

 
146

Unrealized gain (loss) on available-for-sale securities, net of tax

 

 

 

 
3

 
3

Share-based compensation

 
541

 

 

 

 
541

Tax payments related to RSU issuances

 
(199
)
 

 

 

 
(199
)
Employee savings plan activity
798

 

 

 

 

 
798

Dividends declared ($0.05 per share)

 

 
(2,250
)
 

 

 
(2,250
)
Treasury stock purchase

 

 

 
(495
)
 

 
(495
)
Balance as of November 2, 2019
$
59,276

 
$
43,546

 
$
103,397

 
$
(3,516
)
 
$
(4,692
)
 
$
198,011

 
 
 
 
 
 
 
 
 
 
 
 
See notes to condensed consolidated financial statements.



5


DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(continued)
(in thousands)
(unaudited)

 
Common Stock
 
Additional Paid-In Capital
 
Retained Earnings
 
Treasury Stock
 
Accumulated Other Comprehensive Loss
 
Total
Balance as of April 28, 2018
$
54,731

 
$
40,328

 
$
107,105

 
$
(1,834
)
 
$
(2,714
)
 
$
197,616

Net income

 

 
4,574

 

 

 
4,574

Cumulative translation adjustments

 

 

 

 
(1,139
)
 
(1,139
)
Unrealized gain (loss) on available-for-sale securities, net of tax

 

 

 

 
(13
)
 
(13
)
Share-based compensation

 
651

 

 

 

 
651

Exercise of stock options
57

 

 

 

 

 
57

Employee savings plan activity
820

 

 

 

 

 
820

Dividends declared ($0.07 per share)

 

 
(3,121
)
 

 

 
(3,121
)
Balance as of July 28, 2018
55,608

 
40,979

 
108,558

 
(1,834
)
 
(3,866
)
 
199,445

Net income

 

 
8,606

 

 

 
8,606

Cumulative translation adjustments

 

 

 

 
(555
)
 
(555
)
Unrealized gain (loss) on available-for-sale securities, net of tax

 

 

 

 
6

 
6

Share-based compensation

 
612

 

 

 

 
612

Tax payments related to RSU issuances

 
(246
)
 

 

 

 
(246
)
Dividends declared ($0.07 per share)

 

 
(3,131
)
 

 

 
(3,131
)
Balance as of October 27, 2018
$
55,608

 
$
41,345

 
$
114,033

 
$
(1,834
)
 
$
(4,415
)
 
$
204,737

 
 
 
 
 
 
 
 
 
 
 
 
See notes to condensed consolidated financial statements.



6


DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

 
Six Months Ended
 
November 2,
2019
 
October 27,
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
14,304

 
$
13,180

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Depreciation and amortization
8,724

 
9,300

Gain (loss) on sale of property, equipment and other assets
30

 
(93
)
Share-based compensation
1,184

 
1,263

Contingent consideration adjustment

 
(956
)
Equity in loss of affiliate
241

 
265

Provision for doubtful accounts
(535
)
 
51

Deferred income taxes, net
(64
)
 
(85
)
Change in operating assets and liabilities
(34,156
)
 
(368
)
Net cash (used in) provided by operating activities
(10,272
)
 
22,557

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

Purchases of property and equipment
(9,768
)
 
(9,833
)
Proceeds from sales of property, equipment and other assets
149

 
182

Purchases of marketable securities

 
(9,209
)
Proceeds from sales or maturities of marketable securities
22,775

 
12,034

Purchases of and loans to equity investment
(896
)
 
(854
)
Acquisitions, net of cash acquired

 
(2,250
)
Net cash provided by (used in) investing activities
12,260

 
(9,930
)
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 

 
 

Principal payments on long-term obligations
(1,931
)
 
(431
)
Dividends paid
(4,500
)
 
(6,252
)
Proceeds from exercise of stock options

 
57

Payments for common shares repurchased
(1,682
)
 

Tax payments related to RSU issuances
(199
)
 
(246
)
Net cash used in financing activities
(8,312
)
 
(6,872
)
 
 
 
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(94
)
 
73

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(6,418
)
 
5,828

 
 
 
 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
 

 
 

Beginning of period
35,742

 
29,755

End of period
$
29,324

 
$
35,583

 
 
 
 
Supplemental disclosures of cash flow information:
 
 
 
Cash payments for:
 

 
 

Interest
$
117

 
$
84

Income taxes, net of refunds
1,051

 
954

 
 
 
 
Supplemental schedule of non-cash investing and financing activities:
 

 
 

Demonstration equipment transferred to inventory
$

 
$
97

Purchases of property and equipment included in accounts payable
1,469

 
2,348

Contributions of common stock under the ESPP
1,577

 
820

 
 
 
 
See notes to condensed consolidated financial statements.
 

 
 


7


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands, except per share data)
(unaudited)

Note 1. Basis of Presentation

Daktronics, Inc. and its subsidiaries (the “Company”, “Daktronics”, “we”, “our”, or “us”) are the world's industry leader in designing and manufacturing electronic scoreboards, programmable display systems and large screen video displays for sporting, commercial and transportation applications.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present our financial position, results of operations and cash flows for the periods presented.  The preparation of financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") requires management to make estimates and assumptions affecting the reported amounts therein.  Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from those estimates.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.  The balance sheet at April 27, 2019, has been derived from the audited financial statements at that date, but it does not include all the information and footnotes required by GAAP for complete financial statements.  These financial statements should be read in conjunction with our financial statements and notes thereto for the year ended April 27, 2019, which are contained in our Annual Report on Form 10-K previously filed with the Securities and Exchange Commission ("SEC").  The results of operations for the interim periods presented are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year.

Daktronics, Inc. operates on a 52- or 53-week fiscal year, with our fiscal year ending on the Saturday closest to April 30 of each year. When April 30 falls on a Wednesday, the fiscal year ends on the preceding Saturday. Within each fiscal year, each quarter is comprised of 13-week periods following the beginning of each fiscal year. In each 53-week year, an additional week is added to the first quarter, and each of the last three quarters is comprised of a 13-week period. The fiscal year ended April 27, 2019 consisted of 52 weeks. Fiscal 2020 will be a 53-week year; therefore, the six months ended November 2, 2019 contains operating results for 27 weeks while the six months ended October 27, 2018 contains operating results for 26 weeks.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the totals of the same amounts shown in the condensed consolidated statement of cash flows:
 
November 2,
2019
 
October 27,
2018
Cash and cash equivalents
$
29,265

 
$
35,557

Restricted cash
59

 
26

Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows
$
29,324

 
$
35,583


Recent Accounting Pronouncements

There have been no material changes to our significant accounting policies and estimates as described in our Annual Report on Form 10-K for the fiscal year ended April 27, 2019, other than described in the Accounting Standards Adopted section below.

Accounting Standards Adopted

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (that is, lessees and lessors). ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of their classification. ASU 2016-02 requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 (Leases) and ASU 2018-11, Leases (Topic 842), Targeted Improvements, which provide (i) narrow amendments to clarify how to apply certain aspects of the new lease standard, (ii) entities with an additional transition method to adopt the new standard, and (iii) lessors with a practical expedient for separating components of a contract.

8



We adopted ASU 2016-02 and its related guidance during the first quarter of fiscal 2020 for all agreements existing as of April 28, 2019. We elected the "comparatives under Accounting Standards Codification ("ASC") 840 option" as a transitional method, which allows us to initially apply the new lease requirements at the effective date. Comparative periods were not adjusted and will continue to be reported in accordance with prior lease guidance under ASC 840. We elected the package of practical expedients, which permits us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs. In addition, we have elected the short-term lease recognition whereby we will not recognize operating leases related assets or liabilities for leases with a lease term of less than one year. We have also elected the practical expedient to not separate lease and non-lease components in the lease payments for all asset classes. This adoption did not have an impact on our condensed consolidated statements of operations, shareholders' equity and cash flows, and there was no adjustment to retained earnings. As of April 28, 2019, we recognized a right of use asset for operating leases of $11,101 and a current and non-current lease liability for operating leases of $2,745 and $8,356, respectively. The right of use operating assets are included in the "Investment in affiliates and other assets" line item, the current lease liabilities are included in the "Accrued expenses" line item, and the non-current lease liabilities are included in the "Other long-term obligations" line item in our condensed consolidated balance sheet. See "Note 12. Leases" for more information.

Accounting Standards Not Yet Adopted

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350), which simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. A goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for interim and annual periods beginning after December 15, 2019 and will require adoption on a prospective basis. We are currently evaluating the effect that adopting ASU 2017-04 will have on our condensed consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which provides guidance regarding the measurement and recognition of credit impairment for certain financial assets. ASU 2016-13 is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted, and will require adoption on a modified retrospective basis. We are currently evaluating the effect that adopting ASU 2016-13, including all subsequent amendments and improvements to ASC Topic 326 issued by FASB, will have on our condensed consolidated financial statements and related disclosures.

Note 2. Investments in Affiliates

Investments in affiliates over which we have significant influence are accounted for under the equity method of accounting in accordance with the provisions of ASC 323, Investments – Equity Method and Joint Ventures. Investments in affiliates over which we do not have the ability to exert significant influence over the affiliate's operating and financing activities are accounted for under the cost method of accounting in accordance with the provisions of ASC 321, Investments – Equity Securities. We have evaluated our relationships with our affiliates and have determined that these entities are not variable interest entities.

The aggregate amount of investments accounted for under the equity method was $3,415 and $3,657 at November 2, 2019 and April 27, 2019, respectively. The equity method requires us to report our share of losses up to our equity investment amount. Cash paid for investments in affiliates and loans to affiliates are included in the "Purchases of and loans to equity investment" line item in our condensed consolidated statements of cash flows. Our proportional share of the respective affiliates' earnings or losses is included in the "Other income (expense), net" line item in our condensed consolidated statements of operations. For the six months ended November 2, 2019 and October 27, 2018, our share of the losses of our affiliates was $241 and $265, respectively.

The aggregate amount of investments without readily determinable fair values was $42 at November 2, 2019 and April 27, 2019. There have not been any identified events or changes in circumstances that may have a significant adverse effect on their fair value, and it is not practical to estimate their fair value. We record equity investments without readily determinable fair values at cost, less any impairment, adjusted for observable price changes. During the six months ended November 2, 2019, we did not record any changes in the measurement of such investments.

Note 3. Earnings Per Share ("EPS")

We follow the provisions of ASC 260, Earnings Per Share, where basic EPS is computed by dividing income attributable to common shareholders by the weighted average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution which may occur if securities or other obligations to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock which share in our earnings.


9


The following is a reconciliation of the net income and common share amounts used in the calculation of basic and diluted EPS for the three and six months ended November 2, 2019 and October 27, 2018
 
 Net income
 
 Shares
 
 Per share income
For the three months ended November 2, 2019
 
 
 
 
 
Basic earnings per share
$
7,274

 
45,115

 
$
0.16

    Dilution associated with stock compensation plans

 
152

 

Diluted earnings per share
$
7,274

 
45,267

 
$
0.16

For the three months ended October 27, 2018
 
 
 
 
 
Basic earnings per share
$
8,606

 
44,780

 
$
0.19

    Dilution associated with stock compensation plans

 
170

 

Diluted earnings per share
$
8,606

 
44,950

 
$
0.19

For the six months ended November 2, 2019
 
 
 
 
 
Basic earnings per share
$
14,304

 
45,114

 
$
0.32

    Dilution associated with stock compensation plans

 
247

 

Diluted earnings per share
$
14,304

 
45,361

 
$
0.32

For the six months ended October 27, 2018
 
 
 
 
 
Basic earnings per share
$
13,180

 
44,717

 
$
0.29

    Dilution associated with stock compensation plans

 
277

 

Diluted earnings per share
$
13,180

 
44,994

 
$
0.29

 
Options outstanding to purchase 2,282 shares of common stock with a weighted average exercise price of $9.90 for the three months ended November 2, 2019 and 2,377 shares of common stock with a weighted average exercise price of $9.94 for the three months ended October 27, 2018 were not included in the computation of diluted earnings per share because the effects would be anti-dilutive.

Options outstanding to purchase 2,238 shares of common stock with a weighted average exercise price of $9.97 for the six months ended November 2, 2019 and 2,129 shares of common stock with a weighted average exercise price of $10.15 for the six months ended October 27, 2018 were not included in the computation of diluted earnings per share because the effects would be anti-dilutive.

Note 4. Revenue Recognition

Disaggregation of revenue
In accordance with ASC 606-10-50, we disaggregate revenue from contracts with customers by the type of performance obligation and the timing of revenue recognition. We determine that disaggregating revenue in these categories achieves the disclosure objective to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors and to enable users of financial statements to understand the relationship to each reportable segment.

The following table presents our disaggregation of revenue by segments:

10


 
Three Months Ended November 2, 2019
 
Commercial
 
Live Events
 
High School Park and Recreation
 
Transportation
 
International
 
Total
Type of performance obligation
 
 
 
 
 
 
 
 
 
 
 
Unique configuration
$
9,007

 
$
41,413

 
$
5,186

 
$
12,419

 
$
10,542

 
$
78,567

Limited configuration
26,654

 
11,513

 
24,127

 
7,383

 
13,124

 
82,801

Service and other
3,990

 
6,393

 
880

 
528

 
1,752

 
13,543

 
$
39,651

 
$
59,319

 
$
30,193

 
$
20,330

 
$
25,418

 
$
174,911

Timing of revenue recognition
 
 
 
 
 
 
 
 
 
 
 
Goods/services transferred at a point in time
$
27,304

 
$
13,169

 
$
22,112

 
$
7,521

 
$
13,500

 
$
83,606

Goods/services transferred over time
12,347

 
46,150

 
8,081

 
12,809

 
11,918

 
91,305

 
$
39,651

 
$
59,319

 
$
30,193

 
$
20,330

 
$
25,418

 
$
174,911

 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended November 2, 2019
 
Commercial
 
Live Events
 
High School Park and Recreation
 
Transportation
 
International
 
Total
Type of performance obligation
 
 
 
 
 
 
 
 
 
 
 
Unique configuration
$
21,972

 
$
87,000

 
$
11,216

 
$
24,316

 
$
26,220

 
$
170,724

Limited configuration
53,889

 
19,226

 
47,927

 
13,970

 
23,054

 
158,066

Service and other
7,825

 
12,399

 
1,515

 
1,062

 
3,576

 
26,377

 
$
83,686

 
$
118,625

 
$
60,658

 
$
39,348

 
$
52,850

 
$
355,167

Timing of revenue recognition
 
 
 
 
 
 
 
 
 
 
 
Goods/services transferred at a point in time
$
55,007

 
$
22,289

 
$
44,711

 
$
14,218

 
$
23,688

 
$
159,913

Goods/services transferred over time
28,679

 
96,336

 
15,947

 
25,130

 
29,162

 
195,254

 
$
83,686

 
$
118,625

 
$
60,658

 
$
39,348

 
$
52,850

 
$
355,167

 
 
 
 
 
 
 
 
 
 
 
 


11


 
Three Months Ended October 27, 2018
 
Commercial
 
Live Events
 
High School Park and Recreation
 
Transportation
 
International
 
Total
Type of performance obligation
 
 
 
 
 
 
 
 
 
 
 
Unique configuration
$
11,426

 
$
38,283

 
$
6,671

 
$
10,427

 
$
10,776

 
$
77,583

Limited configuration
31,385

 
11,467

 
24,381

 
7,195

 
9,851

 
84,279

Service and other
3,258

 
5,349

 
528

 
455

 
1,240

 
10,830

 
$
46,069

 
$
55,099

 
$
31,580

 
$
18,077

 
$
21,867

 
$
172,692

Timing of revenue recognition
 
 
 
 
 
 
 
 
 
 
 
Goods/services transferred at a point in time
$
31,896

 
$
12,558

 
$
22,060

 
$
7,267

 
$
10,126

 
$
83,907

Goods/services transferred over time
14,173

 
42,541

 
9,520

 
10,810

 
11,741

 
88,785

 
$
46,069

 
$
55,099

 
$
31,580

 
$
18,077

 
$
21,867

 
$
172,692

 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended October 27, 2018
 
Commercial
 
Live Events
 
High School Park and Recreation
 
Transportation
 
International
 
Total
Type of performance obligation
 
 
 
 
 
 
 
 
 
 
 
Unique configuration
$
14,475

 
$
77,204

 
$
15,614

 
$
20,045

 
$
26,992

 
$
154,330

Limited configuration
55,252

 
17,285

 
42,928

 
14,278

 
20,629

 
150,372

Service and other
6,911

 
10,082

 
1,158

 
911

 
3,116

 
22,178

 
$
76,638

 
$
104,571

 
$
59,700

 
$
35,234

 
$
50,737

 
$
326,880

Timing of revenue recognition
 
 
 
 
 
 
 
 
 
 
 
Goods/services transferred at a point in time
$
56,479

 
$
19,360

 
$
39,058

 
$
14,499

 
$
21,662

 
$
151,058

Goods/services transferred over time
20,159

 
85,211

 
20,642

 
20,735

 
29,075

 
175,822

 
$
76,638

 
$
104,571

 
$
59,700

 
$
35,234

 
$
50,737

 
$
326,880


See "Note 5. Segment Reporting" for a disaggregation of revenue by geography.

Contract balances
Contract assets represent revenue recognized in excess of amounts billed and include unbilled receivables. Unbilled receivables, which represent an unconditional right to payment subject only to the passage of time, are reclassified to accounts receivable when they are billed according to the contract terms. Contract liabilities represent amounts billed to the clients in excess of revenue recognized to date.

The following table reflects the changes in our contract assets and liabilities:
 
November 2, 2019
 
April 27, 2019
 
Dollar Change
 
Percent Change
Contract assets
$
34,395

 
$
33,704

 
$
691

 
2.1
%
Contract liabilities - current
48,387

 
47,178

 
1,209

 
2.6

Contract liabilities - noncurrent
10,578

 
10,053

 
525

 
5.2


The changes in our contract assets and contract liabilities from April 27, 2019 to November 2, 2019 were due to the timing of billing schedules and revenue recognition, which can vary significantly depending on the contractual payment terms and the seasonality of the sports markets. We had no material impairments of contract assets for the six months ended November 2, 2019.


12


As of April 27, 2019, we had six contracts in progress that were identified as loss contracts, for which we recorded a provision for losses of $2,353 and two remaining contracts with loss estimates of $360 as of November 2, 2019. These were included in the "Accrued expenses" line item in our condensed consolidated balance sheets.

During the six months ended November 2, 2019, we recognized revenue of $39,352 related to our contract liabilities as of April 27, 2019.

Remaining performance obligations
As of November 2, 2019, the aggregate amount of the transaction price allocated to the remaining performance obligations was $239,902. We expect approximately $202,745 of our remaining performance obligations to be recognized over the next 12 months with the remainder recognized thereafter. Remaining performance obligations related to product and service agreements are $182,050 and $57,852, respectively. Although remaining performance obligations reflect business that is considered to be legally binding, cancellations, deferrals or scope adjustments may occur. Any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals are reflected or excluded in the remaining performance obligation balance, as appropriate.

Note 5. Segment Reporting

We organize and manage our business by the following five segments which meet the definition of reportable segments under ASC 280-10, Segment Reporting: Commercial, Live Events, High School Park and Recreation, Transportation, and International. These segments are based on the customer type or geography and are the same as our business units. We evaluate segment performance based on operating results through contribution margin, which is comprised of gross profit less selling expense. We exclude general and administration expense, product design and development expense, non-operating income and expense, and income tax expense in the segment analysis. Separate financial information is available and regularly evaluated by our chief operating decision-maker (CODM), who is our president and chief executive officer, in making resource allocation decisions for our segments.  

13



The following table sets forth certain financial information for each of our five reporting segments for the periods indicated:
 
Three Months Ended
 
Six Months Ended
 
November 2,
2019
 
October 27,
2018
 
November 2,
2019
 
October 27,
2018
Net sales:
 
 
 
 
 
 
 
    Commercial
$
39,651

 
$
46,069

 
$
83,686

 
$
76,638

    Live Events
59,319

 
55,099

 
118,625

 
104,571

    High School Park and Recreation
30,193

 
31,580

 
60,658

 
59,700

    Transportation
20,330

 
18,077

 
39,348

 
35,234

    International
25,418

 
21,867

 
52,850

 
50,737

 
174,911

 
172,692

 
355,167

 
326,880

 
 
 
 
 
 
 
 
Gross profit:
 
 
 
 
 
 
 
    Commercial
7,862

 
11,757

 
17,080

 
18,651

    Live Events
11,934

 
12,312

 
24,671

 
22,545

    High School Park and Recreation
9,224

 
9,759

 
19,411

 
19,261

    Transportation
7,003

 
6,140

 
13,757

 
11,591

    International
4,064

 
2,789

 
10,673

 
8,956

 
40,087

 
42,757

 
85,592

 
81,004

 
 
 
 
 
 
 
 
Contribution margin: (1)
 
 
 
 
 
 
 
    Commercial
2,853

 
7,050

 
6,937

 
9,524

    Live Events
8,362

 
8,918

 
17,234

 
15,903

    High School Park and Recreation
5,988

 
6,706

 
12,580

 
13,258

    Transportation
5,895

 
4,991

 
11,347

 
9,286

    International
812

 
(1,033
)
 
3,020

 
530

 
23,910

 
26,632

 
51,118

 
48,501

 
 
 
 
 
 
 
 
Non-allocated operating expenses:
 
 
 
 
 
 
 
    General and administrative
8,965

 
8,574

 
18,058

 
17,111

    Product design and development
10,121

 
9,039

 
20,621

 
18,331

Operating income
4,824

 
9,019

 
12,439

 
13,059

 
 
 
 
 
 
 
 
Nonoperating income (expense):
 
 
 
 
 
 
 
    Interest income
162

 
188

 
431

 
385

    Interest expense
(31
)
 
(2
)
 
(66
)
 
(41
)
Other income (expense), net
(514
)
 
(66
)
 
(321
)
 
(220
)
 
 
 
 
 
 
 
 
Income before income taxes
4,441

 
9,139

 
12,483

 
13,183

Income tax (benefit) expense
(2,833
)
 
533

 
(1,821
)
 
3

Net income
$
7,274

 
$
8,606

 
$
14,304

 
$
13,180

 
 
 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
 
 
    Commercial
$
895

 
$
1,236

 
$
1,869

 
$
2,414

    Live Events
1,394

 
1,334

 
2,792

 
2,506

    High School Park and Recreation
507

 
517

 
1,019

 
960

    Transportation
252

 
277

 
516

 
551

    International
563

 
723

 
1,087

 
1,423

    Unallocated corporate depreciation
730

 
725

 
1,441

 
1,446

 
$
4,341

 
$
4,812

 
$
8,724

 
$
9,300

(1) Contribution margin consists of gross profit less selling expense. 

14


No single geographic area comprises a material amount of our net sales or property and equipment, net of accumulated depreciation, other than the United States.  The following table presents information about net sales and property and equipment, net of accumulated depreciation, in the United States and elsewhere:
 
Three Months Ended
 
Six Months Ended
 
November 2,
2019
 
October 27,
2018
 
November 2,
2019
 
October 27,
2018
Net sales:
 
 
 
 
 
 
 
United States
$
147,106

 
$
145,936

 
$
296,566

 
$
267,261

Outside United States
27,805

 
26,756

 
58,601

 
59,619

 
$
174,911

 
$
172,692

 
$
355,167

 
$
326,880

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
November 2,
2019
 
April 27,
2019
 
 
 
 
Property and equipment, net of accumulated depreciation:
 
 
 
 
 
 


United States
$
59,655

 
$
59,192

 
 
 


Outside United States
7,508

 
6,122

 
 
 
 
 
$
67,163

 
$
65,314

 
 
 


 
We have numerous customers worldwide for sales of our products and services, and no customer accounted for 10% or more of net sales; therefore, we are not economically dependent on a limited number of customers for the sale of our products and services. 

We have numerous raw material and component suppliers, and no supplier accounts for 10% or more of our cost of sales; however, we have a number of single-source suppliers that could limit our supply or cause delays in obtaining raw material and components needed in manufacturing.

Note 6. Marketable Securities

We have a cash management program which provides for the investment of cash balances not used in current operations.  We classify our investments in marketable securities as available-for-sale in accordance with the provisions of ASC 320, Investments – Debt and Equity Securities.  Marketable securities classified as available-for-sale are reported at fair value with unrealized gains or losses, net of tax, reported in accumulated other comprehensive loss in the condensed consolidated balance sheets.  As it relates to fixed income marketable securities, it is not likely we will be required to sell any of these investments before recovery of the entire amortized cost basis. In addition, as of November 2, 2019, we anticipate we will recover the entire amortized cost basis of such fixed income securities, and we have determined no other-than-temporary impairments associated with credit losses were required to be recognized. The cost of securities sold is based on the specific identification method. Where quoted market prices are not available, we use the market price of similar types of securities traded in the market to estimate fair value.  

As of November 2, 2019 and April 27, 2019, our available-for-sale securities consisted of the following:
 
Amortized Cost
 
Unrealized Losses
 
Fair Value
Balance as of November 2, 2019
 
 
 
 
 
Certificates of deposit
$
2,717

 
$

 
$
2,717

U.S. Government sponsored entities
745

 

 
745

Municipal bonds
156

 

 
156

 
$
3,618

 
$

 
$
3,618

Balance as of April 27, 2019
 

 
 

 
 

Certificates of deposit
$
3,464

 
$

 
$
3,464

U.S. Government securities
10,779

 
(5
)
 
10,774

U.S. Government sponsored entities
10,510

 
(28
)
 
10,482

Municipal bonds
1,626

 
(2
)
 
1,624

 
$
26,379

 
$
(35
)
 
$
26,344


Realized gains or losses on investments are recorded in our condensed consolidated statements of operations as "Other income (expense), net." Upon the sale of a security classified as available-for-sale, the security’s specific unrealized gain (loss) is reclassified out of

15


accumulated other comprehensive loss into earnings based on the specific identification method. In the six months ended November 2, 2019 and October 27, 2018, the reclassifications from accumulated other comprehensive loss to net earnings were immaterial.

All available-for-sale securities are classified as current assets, as they are readily available to support our current operating needs. The contractual maturities of available-for-sale debt securities as of November 2, 2019 were as follows:
 
Less than 12 months
 
1-5 Years
 
Total
Certificates of deposit
$
1,734

 
$
983

 
$
2,717

U.S. Government sponsored entities
745

 

 
745

Municipal bonds
156

 

 
156

 
$
2,635

 
$
983