Item 1. Financial Statements
Item 1. FINANCIAL STATEMENTS
DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data) (unaudited)
July 30,
2022 April 30,
2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,279 $ 17,143
Restricted cash 750 865
Marketable securities 3,023 4,020
Accounts receivable, net 113,189 101,099
Inventories 157,170 134,392
Contract assets 45,204 41,687
Current maturities of long-term receivables 1,617 2,798
Prepaid expenses and other current assets 11,550 14,963
Income tax receivables 2,322 603
Total current assets 343,104 317,570
Property and equipment, net 72,395 66,765
Long-term receivables, less current maturities 1,117 1,490
Goodwill 7,857 7,927
Intangibles, net 1,387 1,472
Investment in affiliates and other assets 34,145 32,321
Deferred income taxes 13,303 13,331
TOTAL ASSETS $ 473,308 $ 440,876
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 82,470 $ 76,313
Contract liabilities 96,404 90,393
Accrued expenses 33,978 34,959
Warranty obligations 11,510 11,621
Income taxes payable 264 408
Total current liabilities 224,626 213,694
Long-term warranty obligations 17,900 17,257
Long-term contract liabilities 11,764 10,998
Other long-term obligations 7,901 7,076
Line of Credit 24,128 —
Deferred income taxes 287 287
Total long-term liabilities 61,980 35,618
SHAREHOLDERS' EQUITY:
Preferred Shares, no par value, authorized 50,000 shares; no shares issued and outstanding
— —
Common Stock, no par value, authorized 115,000,000 shares; 46,942,070 and 46,733,544 shares issued at July 30, 2022 and April 30, 2022, respectively
62,388 61,794
Additional paid-in capital 48,883 48,372
Retained earnings 91,282 96,608
Treasury Stock, at cost, 1,907,445 shares at July 30, 2022 and April 30, 2022, respectively
( 10,285 ) ( 10,285 )
Accumulated other comprehensive loss ( 5,566 ) ( 4,925 )
TOTAL SHAREHOLDERS' EQUITY 186,702 191,564
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 473,308 $ 440,876
See notes to condensed consolidated financial statements.
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DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
July 30,
2022 July 31,
2021
Net sales $ 171,920 $ 144,732
Cost of sales 146,126 112,544
Gross profit 25,794 32,188
Operating expenses:
Selling 14,433 11,795
General and administrative 9,441 7,571
Product design and development 7,439 7,162
31,313 26,528
Operating (loss)income ( 5,519 ) 5,660
Nonoperating (expense) income:
Interest (expense) income, net ( 60 ) 137
Other expense, net ( 747 ) ( 868 )
(Loss) income before income taxes ( 6,326 ) 4,929
Income tax (benefit) expense ( 1,000 ) 1,244
Net (loss) income $ ( 5,326 ) $ 3,685
Weighted average shares outstanding:
Basic 45,097 45,139
Diluted 45,097 45,419
(Loss) earnings per share:
Basic $ ( 0.12 ) $ 0.08
Diluted $ ( 0.12 ) $ 0.08
See notes to condensed consolidated financial statements.
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DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands)
(unaudited)
Three Months Ended
July 30,
2022 July 31,
2021
Net (loss) income $ ( 5,326 ) $ 3,685
Other comprehensive (loss):
Cumulative translation adjustments ( 642 ) ( 373 )
Unrealized gain (loss) on available-for-sale securities, net of tax 1 —
Total other comprehensive (loss), net of tax ( 641 ) ( 373 )
Comprehensive (loss) income $ ( 5,967 ) $ 3,312
See notes to condensed consolidated financial statements.
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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 30, 2022 $ 61,794 $ 48,372 $ 96,608 $ ( 10,285 ) $ ( 4,925 ) $ 191,564
Net loss — — ( 5,326 ) — — ( 5,326 )
Cumulative translation adjustments — — — — ( 642 ) ( 642 )
Unrealized gain (loss) on available-for-sale securities, net of tax — — — — 1 1
Share-based compensation — 511 — — — 511
Employee savings plan activity 594 — — — — 594
Balance as of July 30, 2022 $ 62,388 $ 48,883 $ 91,282 $ ( 10,285 ) $ ( 5,566 ) $ 186,702
See notes to condensed consolidated financial statements.
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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 May 1, 2021 $ 60,575 $ 46,595 $ 96,016 $ ( 7,297 ) $ ( 2,335 ) $ 193,554
Net income — — 3,685 — — 3,685
Cumulative translation adjustments — — — — ( 373 ) ( 373 )
Share-based compensation — 518 — — — 518
Employee savings plan activity 597 — — — — 597
Treasury stock reissued — 4 — 196 — 200
Balance as of July 31, 2021 $ 61,172 $ 47,117 $ 99,701 $ ( 7,101 ) $ ( 2,708 ) $ 198,181
See notes to condensed consolidated financial statements .
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DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
July 30,
2022 July 31,
2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ ( 5,326 ) $ 3,685
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization 4,025 4,052
Gain on sale of property, equipment and other assets ( 361 ) ( 106 )
Share-based compensation 511 518
Equity in loss of affiliates 890 746
Provision for doubtful accounts, net of recovery 177 ( 421 )
Deferred income taxes, net 12 ( 32 )
Change in operating assets and liabilities ( 22,743 ) ( 9,461 )
Net cash (used in) operating activities ( 22,815 ) ( 1,019 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment ( 10,655 ) ( 1,283 )
Proceeds from sales of property, equipment and other assets 365 149
Proceeds from sales or maturities of marketable securities 999 —
Purchases of equity and loans to equity investees ( 1,081 ) ( 718 )
Net cash (used in) investing activities ( 10,372 ) ( 1,852 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes payable 92,098 —
Payments on notes payable ( 67,970 ) —
Principal payments on long-term obligations — ( 200 )
Net cash provided by (used in) financing activities 24,128 ( 200 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH 80 ( 132 )
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 8,979 ) ( 3,203 )
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
Beginning of period 18,008 80,402
End of period $ 9,029 $ 77,199
Supplemental disclosures of cash flow information:
Cash paid for:
Interest $ 75 $ —
Income taxes, net of refunds 685 980
Supplemental schedule of non-cash investing and financing activities:
Demonstration equipment transferred to inventory $ — $ 46
Purchases of property and equipment included in accounts payable 3,326 868
Contributions of common stock under the ESPP 594 597
See notes to condensed consolidated financial statements.
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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 an 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 accounting principles generally accepted in the United States of America ("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 disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The balance sheet at April 30, 2022 has been derived from the audited financial statements at that date, but it does not include all the information and disclosures required by GAAP for complete financial statements. These financial statements should be read in conjunction with our financial statements and notes thereto for the fiscal year ended April 30, 2022, 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 fiscal 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 three months ended July 30, 2022 and July 31, 2021, contained operating results for 13 weeks.
Other Developments
We continue to experience volatility in our business driven by global economic conditions and supply chain disruptions. We anticipate needing to utilize a portion of our line of credit which expires in April 2025, and requires us to comply with certain covenants. As described in "Note 7. Financing Agreements", we did not comply with our debt covenants this quarter and obtained a waiver from the bank. Based on our projections we expect to be in compliance with these covenants through the next year; however, with the uncertainty and volatility in the supply chain and sensitivity of the covenants, we cannot be certain. If we violate a covenant and cannot obtain a waiver from the bank, we may need to seek additional debt or equity financing.
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 statements of cash flows. Restricted cash consists of cash and cash equivalents held in bank deposit accounts to secure issuances of foreign bank guarantees.
July 30,
2022 July 31,
2021
Cash and cash equivalents $ 8,279 $ 74,658
Restricted cash 750 2,541
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows $ 9,029 $ 77,199
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 30, 2022.
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Accounting Standards Adopted
In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities About Government Assistance ("ASU 2021-10"), which requires business entities to disclose information about transactions with a government that are accounted for by applying a grant or contribution model by analogy. For transactions covered by ASU 2021-10, the new standard requires the disclosure of information about the nature of the transaction, including significant terms and conditions, as well as the amounts and specific financial statement line items affected by the transaction. ASU 2021-10 is effective for annual periods beginning after December 15, 2021. The Company has adopted ASU 2021-10 effective May 1, 2022 and notes there is no impact of ASU 2021-10 on its accounting or disclosures for governmental assistance.
Accounting Standards Not Yet Adopted
There are no significant ASUs issued that the Company has not yet adopted as of July 30, 2022.
Note 2. Investments in Affiliates
The aggregate amount of our investments accounted for under the equity method was $ 16,026 and $ 16,916 as of July 30, 2022 and April 30, 2022, respectively. Our proportional share of the respective affiliates' earnings or losses is included in the "Other expense, net" line item in our condensed consolidated statements of operations. For the three months ended July 30, 2022, our share of the losses of our affiliates was $ 890 as compared to $ 746 for the three months ended July 31, 2021. We purchased services for research and development activities from our equity method investees. The total of these related party transactions for the three months ended July 30, 2022 and July 31, 2021 was $ 0 and $ 470 , respectively, which is included in the "Product design and development" line item in our condensed consolidated statements of operations, and for the three months ended July 30, 2022, $ 52 remains unpaid and is included in the "Accounts payable " line item in our condensed consolidated balance sheets. During the three months ended July 30, 2022, we invested $ 1,081 of convertible notes ("Notes") which are included in the "Investment in affiliates and other assets" line item in our condensed consolidated balance sheets.
Note 3. Earnings Per Share ("EPS")
The following is a reconciliation of the net (loss) income and common share amounts used in the calculation of basic and diluted EPS for the three months ended July 30, 2022 and July 31, 2021:
Net (loss) income Shares Per share (loss) income
For the three months ended July 30, 2022
Basic (loss) earnings per share $ ( 5,326 ) 45,097 $ ( 0.12 )
Dilution associated with stock compensation plans — — —
Diluted (loss) earnings per share $ ( 5,326 ) 45,097 $ ( 0.12 )
For the three months ended July 31, 2021
Basic earnings per share $ 3,685 45,139 $ 0.08
Dilution associated with stock compensation plans — 280 —
Diluted earnings per share $ 3,685 45,419 $ 0.08
Options outstanding to purchase 2,102 shares of common stock with a weighted average exercise price of $ 8.12 for the three months ended July 30, 2022 and 1,810 shares of common stock with a weighted average exercise price of $ 9.52 for the three months ended July 31, 2021 were not included in the computation of diluted earnings per share because the effects would be anti-dilutive.
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Note 4. Revenue Recognition
Disaggregation of revenue
The following table presents our disaggregation of revenue by segments:
Three Months Ended July 30, 2022
Commercial Live Events High School
Park and Recreation
Transportation International Total
Type of performance obligation
Unique configuration $ 4,687 $ 42,168 $ 6,592 $ 12,486 $ 6,501 $ 72,434
Limited configuration 31,776 8,480 28,283 6,099 11,501 86,139
Service and other 3,655 5,735 934 955 2,068 13,347
$ 40,118 $ 56,383 $ 35,809 $ 19,540 $ 20,070 $ 171,920
Timing of revenue recognition
Goods/services transferred at a point in time $ 32,557 $ 9,222 $ 27,090 $ 6,382 $ 11,876 $ 87,127
Goods/services transferred over time 7,561 47,161 8,719 13,158 8,194 84,793
$ 40,118 $ 56,383 $ 35,809 $ 19,540 $ 20,070 $ 171,920
Three Months Ended July 31, 2021
Commercial Live Events High School
Park and Recreation
Transportation International Total
Type of performance obligation
Unique configuration $ 3,587 $ 41,508 $ 4,166 $ 6,541 $ 5,883 $ 61,685
Limited configuration 25,907 5,842 22,957 5,352 11,545 71,603
Service and other 3,287 5,037 771 665 1,684 11,444
$ 32,781 $ 52,387 $ 27,894 $ 12,558 $ 19,112 $ 144,732
Timing of revenue recognition
Goods/services transferred at a point in time $ 26,379 $ 6,829 $ 21,941 $ 5,571 $ 12,019 $ 72,739
Goods/services transferred over time 6,402 45,558 5,953 6,987 7,093 71,993
$ 32,781 $ 52,387 $ 27,894 $ 12,558 $ 19,112 $ 144,732
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 customers in excess of revenue recognized to date.
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The following table reflects the changes in our contract assets and liabilities:
July 30,
2022 April 30,
2022 Dollar
Change Percent
Change
Contract assets $ 45,204 $ 41,687 $ 3,517 8.4 %
Contract liabilities - current 96,404 90,393 6,011 6.6
Contract liabilities - noncurrent 11,764 10,998 766 7.0
The changes in our contract assets and contract liabilities from April 30, 2022 to July 30, 2022 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 impairments of contract assets for the three months ended July 30, 2022.
For service-type warranty contracts, we allocate revenue to this performance obligation, recognize the revenue over time, and recognize costs as incurred. Earned and unearned revenues for these contracts are included in the "Contract assets" and "Contract liabilities". Changes in unearned service-type warranty contracts, net were as follows:
July 30,
2022
Balance at beginning of period $ 26,346
New contracts sold 13,007
Less: reductions for revenue recognized ( 10,109 )
Foreign currency translation and other ( 433 )
Balance at end of period $ 28,811
Contracts in progress identified as loss contracts as of July 30, 2022 were $ 839 and as of April 30, 2022 were immaterial. Loss provisions are recorded in the "Accrued expenses" line item in our condensed consolidated balance sheets.
During the three months ended July 30, 2022, we recognized revenue of $ 46,041 related to our contract liabilities as of April 30, 2022.
Remaining performance obligations
As of July 30, 2022, the aggregate amount of the transaction price allocated to the remaining performance obligations was $ 530,457 . We expect approximately $ 462,516 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 at July 30, 2022 were $ 469,126 and $ 61,331 , 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.
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Note 5. Segment Reporting
The following table sets forth certain financial information for each of our five reporting segments for the periods indicated:
Three Months Ended
July 30,
2022 July 31,
2021
Net sales:
Commercial $ 40,118 $ 32,781
Live Events 56,383 52,387
High School Park and Recreation 35,809 27,894
Transportation 19,540 12,558
International 20,070 19,112
171,920 144,732
Gross profit:
Commercial 4,821 7,178
Live Events 3,786 8,582
High School Park and Recreation 9,977 9,509
Transportation 5,838 3,751
International 1,372 3,168
25,794 32,188
Operating expenses:
Selling 14,433 11,795
General and administrative 9,441 7,571
Product design and development 7,439 7,162
31,313 26,528
Operating (loss) income ( 5,519 ) 5,660
Nonoperating (expense) income:
Interest (expense) income, net ( 60 ) 137
Other expense, net ( 747 ) ( 868 )
(Loss) income before income taxes $ ( 6,326 ) $ 4,929
Depreciation and amortization:
Commercial $ 803 $ 702
Live Events 1,566 1,337
High School Park and Recreation 339 438
Transportation 125 139
International 545 726
Unallocated corporate depreciation 647 710
$ 4,025 $ 4,052
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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
July 30,
2022 July 31,
2021
Net sales:
United States $ 149,438 $ 123,482
Outside United States 22,482 21,250
$ 171,920 $ 144,732
July 30,
2022 April 30,
2022
Property and equipment, net of accumulated depreciation:
United States $ 63,720 $ 58,643
Outside United States 8,675 8,122
$ 72,395 $ 66,765
We have numerous customers worldwide for sales of our products and services, and no customer accounted for 10 percent or more of net sales for the three months ended July 30, 2022 and July 31, 2021; 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 percent or more of our cost of sales; however, we have a complex global supply chain and a number of single-source suppliers that could limit our supply or cause delays in obtaining raw materials and components needed in manufacturing.
Note 6. Goodwill
The changes in the carrying amount of goodwill related to each reportable segment for the three months ended July 30, 2022 were as follows:
Live Events Commercial Transportation International Total
Balance as of April 30, 2022 $ 2,296 $ 3,349 $ 68 $ 2,214 $ 7,927
Foreign currency translation — — — ( 70 ) ( 70 )
Balance as of July 30, 2022 $ 2,296 $ 3,349 $ 68 $ 2,144 $ 7,857
We perform an analysis of goodwill on an annual basis and test for impairment more frequently if events or changes in circumstances indicate that an asset might be impaired. Our annual analysis is performed during our third quarter of each fiscal year based on the goodwill amount as of the first business day of our third fiscal quarter. We performed our annual impairment test on October 31, 2021 and concluded no goodwill impairment existed. Our market capitalization has decreased since the completion of the October 31, 2021 evaluation which caused a trigger analysis to test goodwill impairment due to supply chain and labor supply uncertainty. After evaluating our results, events and circumstances, we determined no goodwill impairment was necessary.
Note 7. Financing Agreements
As of July 30, 2022, $ 24,128 had been advanced under the loan portion of our line of credit, and the balance of letters of credit outstanding was approximately $ 6,342 . As of July 30, 2022, $ 4,530 of the credit facility was available for borrowing. On August 16, 2022, we entered into an agreement to temporarily expand the line of credit by $ 10,000 through October 31, 2022. In addition, certain financial covenants were modified to temporarily relax them through the second and third quarter of fiscal 2023. As of July 30, 2022, we were not in compliance with our financial covenants and our bank provided a waiver for these covenants.
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As of July 30, 2022, we had $ 616 of bank guarantees or other financial instruments for display installations issued by another bank and secured by a restricted cash deposit. If we are unable to meet the terms of the arrangement, the bank would subrogate its loss by drawing on the secured cash deposit.
Note 8. Commitments and Contingencies
Litigation: We are a party to legal proceedings and claims which arise during the ordinary course of business. We review our legal proceedings and claims, regulatory reviews and inspections, and other legal matters on an ongoing basis and follow appropriate accounting guidance when making accrual and disclosure decisions. For unresolved legal proceedings or claims, we do not believe there is a reasonable probability that any material loss will be incurred. Accordingly, no material accrual or disclosure of a potential range of loss has been made related to these matters. We do not expect the ultimate liability of these unresolved legal proceedings or claims to have a material effect on our financial position, liquidity or capital resources.
Warranties: Changes in our warranty obligation for the three months ended July 30, 2022 consisted of the following:
July 30,
2022
Beginning accrued warranty obligations $ 28,878
Warranties issued during the period 2,959
Settlements made during the period ( 1,820 )
Changes in accrued warranty obligations for pre-existing warranties during the period, including expirations ( 607 )
Ending accrued warranty obligations $ 29,410
Performance guarantees: We have entered into standby letters of credit, bank guarantees and surety bonds with financial institutions relating to the guarantee of our future performance on contracts, primarily construction-type contracts. As of July 30, 2022, we had outstanding letters of credit, bank guarantees and surety bonds in the amount of $ 6,342 , $ 616 and $ 82,528 , respectively. Performance guarantees are issued to certain customers to guarantee the operation and installation of the equipment and our ability to complete a contract. These performance guarantees have various terms but are generally one year. We enter into written agreements with our customers, and those agreements often contain indemnification provisions that require us to make the customer whole if certain acts or omissions by us cause the customer financial loss. We make efforts to negotiate reasonable caps and limitations on the recovery of such damages. As of July 30, 2022, we were not aware of any indemnification claim from a customer.
Note 9. Income Taxes
The provision for income taxes during interim reporting periods is calculated by applying an estimate of the annual effective tax rate to “ordinary” income or loss for the reporting period, adjusted for discrete items. Due to various factors, including our estimate of annual income, our effective tax rate is subject to fluctuation.
Our effective tax rate for the three months ended July 30, 2022 was 15.8 percent, as compared to an effective tax rate of 25.2 percent tax for the three months ended July 31, 2021. The decrease in tax rate is primarily driven by an increase in estimated tax credits and other permanent items less valuation allowances as a percentage of estimated pre-tax earnings for fiscal 2023 compared to the estimated value of tax credits and other permanent items less valuation allowances as a percentage to the estimated pre-tax earnings at the first quarter of fiscal 2022.
We operate both domestically and internationally and, as of July 30, 2022, undistributed earnings of our foreign subsidiaries were considered to be reinvested indefinitely. Additionally, as of July 30, 2022, we had $ 610 of unrecognized tax benefits which would reduce our effective tax rate if recognized.
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Note 10. Fair Value Measurement
The following table sets forth by Level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at July 30, 2022 and April 30, 2022 according to the valuation techniques we used to determine their fair values. There have been no transfers of assets or liabilities among the fair value hierarchies presented.
Fair Value Measurements
Level 1 Level 2 Level 3 Total
Balance as of July 30, 2022
Cash and cash equivalents $ 8,279 $ — $ — $ 8,279
Restricted cash 750 — — 750
Available-for-sale securities:
US Government securities 2,490 — — 2,490
US Government sponsored entities — 533 — 533
Derivatives - asset position — 951 — 951
$ 11,519 $ 1,484 $ — $ 13,003
Balance as of April 30, 2022
Cash and cash equivalents $ 17,143 $ — $ — $ 17,143
Restricted cash 865 — — 865
Available-for-sale securities:
US Government securities 3,486 — — 3,486
US Government sponsored entities — 534 — 534
Derivatives - asset position — 934 — 934
Derivatives - liability position — ( 311 ) — ( 311 )
$ 21,494 $ 1,157 $ — $ 22,651
There have been no changes in the valuation techniques used by us to value our financial instruments since the end of fiscal 2022. For additional information, see our Annual Report on Form 10-K for the fiscal year ended April 30, 2022 for the methods and assumptions used to estimate the fair value of each class of financial instrument.
Note 11. Share Repurchase Program
On June 17, 2016, our Board of Directors approved a stock repurchase program under which we may purchase up to $ 40,000 of the Company's outstanding shares of common stock. Under this program, we may repurchase shares from time to time in open market transactions and in privately negotiated transactions based on business, market, applicable legal requirements and other considerations. The repurchase program does not require the repurchase of a specific number of shares and may be terminated at any time.
In April 2020, the Board had suspended the program. On December 2, 2021, the Board of Directors of Daktronics voted to reauthorize the stock repurchase program.
During the three months ended July 30, 2022, we repurchased no shares of common stock. As of July 30, 2022, we had $ 29,355 of remaining capacity under our current share repurchase program.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.