Daktronics, Inc. Annual Report 2018

FY2018 Annual Report · Daktronics, Inc.

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2018 ANNUAL REPORT

2018 LETTER TO SHAREHOLDERS

We are celebrating our 50 years of business this year! As I look back at past shareholder letters, I'm reminded of our humble beginnings
and tremendous successes. Over the years, we have grown from an idea by two university professors and their families of keeping talent
in South Dakota. They started a company with a handful of people out of a small-town garage, committed to innovate products and to
serve customers. This philosophy led us to our successful growth of being the world leader in our industry. We continue to create and
provide innovative products and services to our customers - designing, manufacturing, and delivering value-added solutions to the global
market. Our product evolution started in voting systems for state legislatures, to scoreboards for wrestling and many other sports, to
Olympic systems, and today's highly technical digital signage and control systems. Through our history, we’ve sustained our core values
of honesty, integrity, helpfulness, and humility. We grow leaders who embrace continuous learning and improvement, and who focus on
serving our stakeholders - customers, employees, suppliers, communities, and investors.

Today, we operate in a dynamic and growing digital marketplace. While the overall financial results for fiscal 2018 were below
expectations, we accomplished many initiatives and remain optimistic for the future.

• We delivered a number of unique and world-class installations including display systems at the Mercedes-Benz Stadium in
Atlanta and at Piccadilly Circus in London. We continue to be the vendor of choice for many national and global companies.
• We proactively increased the velocity of our product development activities and we introduced additional narrow pixel pitch
solutions and control features to our broad array of offerings. The marketplace is using these types of solutions in many
applications from sport to retail to commercial buildings and transportation hubs.

• While warranty claims challenged our bottom line, we maintained strong customer relationships through our demonstrated

commitment to serve them over the long-term.

• We made improvements to our production facilities by investing in new testing machinery and processes to further the robustness

of our product lines.

• We continued to grow our global accounts business, including successes in European, Middle Eastern, and Asia-Pacific

geographies.

We are focused on winning more orders and continuing our velocity in product development to serve the industry's growth and solution
demands. Some of the opportunities and trends we see in the marketplace include:

•

Sport, commercial, and governmental entities continuing to choose digital applications to support their needs. This demand is
driving long-term growth globally in LED video displays as well as other digital applications.
Digital systems have a known end-of-life that will drive continued replacement or refurbishment.
Our range of solutions and global capabilities make us the industry’s most experienced digital display provider.

•
•
• We continue to release new or enhanced product lines and comprehensive solutions both for our broad market base and for

specific customers. This enables marketplace success during the natural economic ups and downs in each segment.

We expect continued success in growing our business profitably over the long-term. While our path will not always be smooth - our
business will continue to be ‘lumpy’ - we believe the growing market and our industry-leading solutions position us to generate long-
term, profitable growth.

Thank you to all of our key stakeholders - to our customers for your years of engagement and trust, to our employees for increasing
performance in serving our customers, to our suppliers for your continued partnerships, and to our investors and communities for
understanding the nature of our business and supporting us these past 50 years.

We are looking forward to a successful fiscal 2019 and the next 50 years!

Reece A. Kurtenbach
Chairman of the Board
President and Chief Executive Officer

FINANCIAL HIGHLIGHTS

Daktronics, Inc. and subsidiaries is the world’s largest supplier of large screen video displays, electronic scoreboards, LED text and
graphics displays, and related control systems, services and products. We excel in the control of display systems, including those that
require integration of multiple complex displays showing real-time information, graphics, animation and video. We design, manufacture,
sell and service display systems for customers around the world through five business units: Live Events, Commercial, High School Park
and Recreation, Transportation and International. Our customers value our products for their customer and fan experience, and the ability
to generate revenues and inform their audiences. Our products have been installed in venues from grade school gyms to premier sports
facilities, destination sites and in over 100 countries throughout the world. We serve our customers through a network of offices in the
United States, Canada, United Kingdom, Germany, France, United Arab Emirates, Australia, China, Hong Kong, Japan, Spain, Singapore,
Brazil, Belgium, Ireland and Macau.

We employ approximately 2,713 full-time and part-time employees. As a manufacturer and technical contractor, Daktronics markets
standard display products and customized displays and sound systems. We believe our engineering capabilities are second to none in the
industry. We are committed to on-going product development to find new applications for our products and expand the markets we serve.
Daktronics stock is traded on The NASDAQ Global Select Market under the symbol DAKT.

(Dollars in thousands, except per share and share price data.)

Net sales
Gross profit
Operating expenses
Operating income
Net income
Gross profit percentage
Operating margin percentage
Weighted average diluted shares outstanding
Diluted earnings per share
Cash dividend per share

Working capital
Total assets
Shareholders' equity
Backlog

Product design and development expense
Capital expenditures
Depreciation and amortization expense
Cash flow from operations
Regular dividend per share
Special dividend per share

Employees as of year-end:
Full-time
Part-time and students

Stock price during fiscal year:
High
Low
Stock price at fiscal year-end

FY2014
$551,970
141,710
105,153
36,557
22,206

25.7%
6.6%

43,762
0.51
0.39

FY2015
$615,942
144,579
113,294
31,285
20,882

23.5%
5.1%

44,443
0.47
0.40

FY2016
$570,168
121,019
118,524
2,495
2,061
21.2%
0.4%

44,456
0.05
0.40

FY2017
$586,539
140,415
124,994
15,421
10,342

23.9%
2.6%

44,303
0.23
0.31

FY2018
$610,530
145,669
133,209
12,460
5,562
23.9%
2.0%

44,873
0.12
0.28

$140,532
357,451
203,119
172,000

$23,375
13,519
14,501
36,199
0.39
0.00

$149,075
379,479
212,039
191,000

$24,652
21,837
14,968
53,513
0.40
0.00

$123,714
349,948
201,067
181,000

$26,911
17,056
16,943
13,283
0.40
0.00

$127,130
355,433
198,286
203,000

$29,081
8,502
18,562
39,407
0.27
0.04

$132,825
358,800
197,616
171,000

$35,530
18,127
17,784
30,361
0.28
0.00

2,280
390

2,420
330

2,470
315

2,405
304

2,405
308

$14.47
10.03
10.75

$12.24
6.9
8.7

$11.00
6.00
9.46

$10.76
8.55
9.01

$15.80
9.63
13.06

SPECIAL NOTE REGARDING FORWARD–LOOKING STATEMENTS

This Annual Report on Form 10-K (including exhibits and any information incorporated by reference herein) (the "Form 10-K" or the
"Report") contains both historical and forward-looking statements that involve risks, uncertainties and assumptions. The statements
contained in this Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21B of the Securities Exchange Act of 1934, as amended, including statements regarding our
expectations, beliefs, intentions and strategies for the future. These statements appear in a number of places in this Report and include
all statements that are not historical statements of fact regarding the intent, belief or current expectations with respect to, among other
things: (i.) our competition; (ii.) our financing plans; (iii.) trends affecting our financial condition or results of operations; (iv.) our
growth strategy and operating strategy; (v.) the declaration and payment of dividends; (vi.) the timing and magnitude of future contracts;
(vii.) raw material shortages and lead times; (viii.) fluctuations in margins; (ix.) the seasonality of our business; (x.) the introduction of
new products and technology; (xi.) the amount and frequency of warranty claims; and (xii.) the timing and magnitude of any acquisitions
or dispositions. The words “may,” “would,” “could,” “should,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend,”
“plans” and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that
any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are
beyond our ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a
result of various factors discussed herein, including those discussed in the section of this Form 10-K entitled “Part I, Item 1A. Risk
Factors” and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and those
factors discussed in detail in our other filings with the Securities and Exchange Commission.

PART I.

Item 1. BUSINESS

Business Overview

Daktronics, Inc. and 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. We serve our customers by providing the highest quality standard display products as well as custom-designed
and integrated systems. We offer a complete line of products, from small scoreboards and electronic displays to large multimillion-dollar
video display systems as well as related control, timing, and sound systems. We are recognized as a technical leader with the capabilities
to design, market, manufacture, install and service complete integrated systems displaying real-time data, graphics, animation and video.

We were founded in 1968 by Drs. Aelred Kurtenbach and Duane Sander, professors of electrical engineering at South Dakota State
University in Brookings, South Dakota. The Company began with the design and manufacture of electronic voting systems for state
legislatures. In 1971, Daktronics developed the patented Matside® wrestling scoreboard, the first product in the Company's growing
and evolving line. In 1994, Daktronics became a publicly traded company, offering shares under the symbol DAKT on the NASDAQ
National Market system. Today, Daktronics has grown from a small company operating out of a garage to the world leader in the display
industry.

We are engaged in a full range of activities: marketing and sales, engineering and product design and development, manufacturing,
technical contracting, professional services and customer service and support. We have organized our business into five segments:
Commercial, Live Events, High School Park and Recreation, Transportation, and International. These segments are based on the type
of customer or geography and are the same as our business units. Financial information concerning these segments is set forth in this
Form 10-K in "Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" and "Note 2.
Segment Reporting" of the Notes to our Consolidated Financial Statements included in this Form 10-K.

Our annual, quarterly and current reports and any amendments to those reports are filed with the Securities and Exchange Commission
(“SEC”) and are available at http://investor.daktronics.com. We post each of these documents on our website as soon as reasonably
practicable after it is electronically filed with the SEC. These reports are also found on the SEC’s website at www.sec.gov. Information
contained on our website is not deemed to be incorporated by reference into this Report or filed with the SEC.

Industry Background

Over the years, our products have evolved significantly from scoreboards and matrix displays with related software applications to
complex, integrated visual display systems which include full color video with text and graphics displays located on a local or remote
network that are tied together through sophisticated control systems. In the mid-1990's, as light emitting diodes (“LEDs”) became
available in red, blue and green colors with outdoor brightness, we pioneered the development of full color LED video displays capable
of replicating trillions of colors, thereby producing large format video systems with excellent color, brightness, energy efficiency and
lifetime. Due to our foundation of developing scoring and graphics display systems, we were able to add video capabilities so we could

meet all our customers' large format display needs in a complete, integrated system. This has proven to be a key factor in Daktronics
becoming a leader in large electronic displays.

Description of Business

Marketing and Sales. Our sales force is comprised of direct sales staff and resellers located throughout the world supporting all customer
types in both sales and service. We primarily use a direct sales force for large integrated display systems sales in professional sports,
colleges and universities, and commercial spectacular projects. We also use our direct sales force to sell third-party advertising and
transportation applications. We utilize resellers outside North America for large integrated system sales where we do not have a direct
sales presence. The majority of the products sold by resellers in North America are standard catalog products. We support our resellers
through direct mail/email advertising, trade journal advertising, product and installation training, trade show exhibitions and accessibility
to our regional sales or service teams and demonstration equipment.

Engineering and Product Design and Development. The large format electronic display industry is characterized by ongoing product
innovations and developments in technology and complementary services. To remain competitive, we have a tradition of applying
engineering resources throughout our business to anticipate and respond rapidly to the system needs in the marketplace. We employ
engineers and technicians in the areas of mechanical and electrical design; applications engineering; software design; quality design; and
customer and product support. We assign product managers to each product family to assist our sales staff in training and implementing
product improvements which ensures each product is designed for maximum reliability and serviceability. We employ process engineers
to assist in quality and reliability processing in our product design testing and manufacturing areas.

Manufacturing. The majority of our products are manufactured in the United States, specifically in South Dakota and Minnesota. We
also have manufacturing facilities in China and Ireland. We perform component manufacturing, system manufacturing (metal fabrication,
electronic assembly, sub-assembly and final assembly) and testing in-house for most of our products to control quality, improve response
time and maximize cost-effectiveness. Our manufacturing facilities are somewhat aligned with our business segments' sales, marketing,
and product design and development areas to accelerate technology improvements and improve our cost structure. Given the cyclical
nature of some parts of our business and dispersed sales geography, we balance and maintain our ability to manufacture the same products
across our plants so we can efficiently utilize our capacity and reduce costs. A key strategy of ours is to increase standardization and
commonality of parts and manufacturing processes across product lines through use of product platforms to increase efficiencies. Other
strategies include supplier management programs and lean manufacturing techniques. For more details on our facilities, see "Part II,
Item 2. Properties".

Technical Contracting. We serve as a technical contractor for larger display system installations requiring custom designs and innovative
product solutions. The purchase of display systems typically involves competitive proposals. As part of our response to a proposal
request, we may suggest additional products or features to assist the prospective customer in analyzing the optimal type of display
system. We usually include site preparation and installation services related to the display system in our proposal. In these cases, we
serve as a contractor and may retain subcontractors for electrical, steel and installation labor. We have developed relationships with many
subcontractors throughout the United States and the world, which is an advantage for us in bidding and delivering on these projects. We
are licensed as a general contractor in a number of jurisdictions.

Professional Services. To assist our clients' ability to engage, inform and entertain their audiences, we provide professional services
including event support, content creation, product maintenance, marketing assistance, training on hardware and software, control room
design, and continuing technical support training for operators.

Customer Service and Support. We offer limited warranties on our products, ranging from one to 10 years, against failure due to defective
parts or workmanship. In addition, we offer service agreements of various scopes. To serve our customers, we provide help-desk access,
parts repair and replacement, display monitoring and on-site support. Our technical help desk has experienced technicians who are on-
call 24 hours a day to support events and sites. Our field service personnel and third-party service partners are trained to provide on-site
support. We use third-party service partners to allow us to respond to changes in volume of service during our seasonal peaks.

Products and Technologies

The two principal components of our systems are the display and the controller, which manages the operation of the display. We produce
displays varying in complexity, size and resolution. The physical dimensions of a display depend on the size of the viewing area, the
distance from the viewer to the display, and the amount and type of information to be displayed. The controller is comprised of computer
hardware and software products designed to compile information provided by the operator and other integrated sources to display

information, graphics or animation on the displays. We customize our products according to the design specifications of the customer
and the conditions of the environment in which our products function.

Our products are comprised of the following product families, all of which include control systems and software:

Video displays
Scoreboards and timing systems

•
•
• Message displays
•
•
•
•
•
•

ITS (intelligent transportation systems) dynamic message signs
Space availability displays
Audio systems
Out-of-Home advertising displays
Digit and price displays
Indoor dynamic messaging systems

Each of these product families is described below:

Video Displays. These displays are comprised of a large number of full-color pixels capable of showing various levels of video, graphics
and animation. These displays include red, green and blue LEDs arranged in various combinations to form pixels. The electronic circuitry,
which controls the pixels, allows for variances in the relative brightness of each LED to provide a full color spectrum, thereby displaying
video images in striking, vibrant colors. Variables in video displays include the spacing of the pixels (pixel pitch), the resolution of the
displays (number of pixels), the brightness of the displays (nits), the number of discrete colors the display is able to produce (color depth),
the viewing angles, and the LED mount technology (surface mount vs. through hole).

Our LED ribbon board displays are ultra-slim, customizable displays that accommodate curved and 360° installations. These displays
are used for end zones, sidelines, encircling a stadium, outfields, concourses, stadium exterior or other linear applications. For new
construction projects, our ProRail® attachment system is combined with ribbon board technology to provide improved sight lines for
fans. Digital ribbon boards generally serve as a revenue generation source for teams and facilities through advertising, as well as another
location to display information such as scoring and statistics.

Our mobile and modular display systems are transportable and are comprised of lightweight individual LED video panels less than a
square meter in size and are assembled together to form a display in a customizable size. These displays are used for touring shows and
live events market.

Our display technology may be integrated with architectural mesh to deliver a dynamic communication medium that provides a semi-
transparent viewing experience within a building. These displays can be mounted over a solid facade or in front of windows, resulting
in a finished solution that is free from visible cabling and delivers a clean, semi-transparent view. These displays are less than one inch
in depth and provide an elegant, refined structural appearance.

Our line of freeform LED displays is architectural lighting and display products. The ProPixel® freeform products use mountable LED
elements to transform ordinary structures into stunning visual landmarks. A flexible mounting platform allows designers to transform
any structure into a full-motion video display.

The control components for video displays in live event applications include our Show Control Software Suite, proprietary digital media
players and video processors. These control components provide advanced capabilities for the display of live video and real-time content
on our displays. The Show Control Software Suite can operate entire networks of displays from a single, intuitive control interface.
Features allow users to instantly deliver media clips, camera feeds, and streaming information to any display in a network.

Scoreboards and Timing Systems. Our line of scoreboards and timing products include indoor and outdoor scoreboards for many different
sports, digit displays, scoring and timing controllers, statistics software and other related products. Indoor and outdoor systems range in
complexity from small scoreboards to larger systems incorporating scoring, timing, video, message centers, advertising panels and control
software.

We offer a variety of controllers complementing our scoreboards and displays. These controllers vary in complexity from the All Sport®
100, a handheld controller for portable scoreboards, to the All Sport® 5500, designed for more sophisticated scoring systems and allowing
for more user-defined options.

We also offer timing systems for sports events, primarily aquatics and track competitions. A component of these systems is our
OmniSport® 2000 timing console. The system has the capability to time and rank the competitors and to interface with event management

software to facilitate the sporting event. Other timing system components include swimming touchpads, race start systems, and relay
take-off platforms.

As a key component of an integrated system, we market sports statistics and results software under the DakStats® trademark. The
software allows the entry and display of sports statistics and other information. It is one of the leading applications of its type in collegiate
and high school sports.

Message Displays. The Galaxy® product line is a family of full-matrix displays, available in both indoor and outdoor models and
controlled with the Venus® Control Suite. Galaxy® displays are full color or monochrome with varying pixel spacing depending on
color, size and viewing distance. Galaxy® displays are capable of displaying text, graphics and animation, as well as prerecorded video
clips. They are used primarily as message centers to convey information and advertising to consumers.

The Venus® Control Suite software is used to control the creation of messages and graphic sequences for uploading to the Galaxy®
displays. This software is designed to be user friendly and applicable to all general advertising or message applications. It can be used
to control a single message display or can scale up to provide a secure, cloud-based control center for large networks of message displays.

ITS Dynamic Message Signs ("DMS"). DMS products include a wide range of LED displays for road management, mass transit and
aviation applications. The Vanguard® family of dynamic message displays is typically used to direct traffic and inform motorists. These
displays are used over freeways, on arterial roads, near bridges, at toll booths and in other locations. We have also developed a control
system for these displays to help transportation agencies manage large networks of displays.

Space Availability Displays. This product line is our digit and directional displays, which are primarily marketed and sold for use in
parking facilities. They include multi-line displays delivered in vertical cabinets or drop-in digit panels designed to be mounted in existing
structures or signs.

Audio Systems. Our audio systems include both standard and custom options. Standard audio systems are designed to meet the needs
of a variety of indoor and outdoor sports venues based on the size and configuration of the facility. Custom indoor and outdoor systems
are tailored for larger venues and venues with unique seating configurations and are often integrated into an overall venue solution for
scoring, timing, message display and/or video capability. Our audio systems also complement our video display systems used in mall
applications.

Out-of-Home Advertising Displays. Our line of out-of-home advertising displays includes billboards and street furniture displays. Our
line of digital billboards offers a unique display solution for the Out-of-Home (“OOH”) advertising industry. The products are used to
display images which change at regular intervals. These systems include many features unique to the outdoor advertising market, such
as our patented mounting system, self-adjusting brightness, improved energy consumption, and enhanced network security.

The Visiconn® system and Venus Control Suite are the software applications for controlling content and playback loops for OOH
applications. This system can transform any Internet-ready computer into a secure, global control center for multiple LED displays, flat
panel monitors and other display technologies.

Our line of digital street furniture engages people with advertising content at eye level as they walk through campuses, cityscapes, and
outlet malls. This design enhances the message and complements surrounding architecture. These street furniture displays are our most
flexible solution for digital OOH campaigns.

Digit and Price Displays. This product line includes our DataTime® and Fuelight™ displays. The DataTime® product line consists of
outdoor time and temperature displays which use a remote sensor for temperature data. Fuelight™ digit displays are specifically designed
for the petroleum industry, offering high visibility and quick fuel price updates using the Fuelink™ control software.

Indoor Dynamic Messaging Systems. Our ADFLOW DMSTM systems include indoor networked solutions for retailers, convenience
stores and other businesses. These solutions allow customers to broadcast advertising campaigns and other information through the
software, media players and visual hardware.

Raw Materials

Materials used in the production of our video display systems are sourced from around the world. We source some of our materials from
a single-source or a limited number of suppliers due to the proprietary nature of the materials. Many electrical components are in high
demand and can cause extended lead-times. The loss of a key supplier, part unavailability, or a defect in the supplied material or component
could have an adverse impact on our business and operations. Our sourcing group works to implement strategies to mitigate these risks.
Periodically, we enter into pricing agreements or purchasing contracts under which we agree to purchase a minimum amount of product
in exchange for guaranteed price terms over the length of the contract, which generally does not exceed one year.

Intellectual Property

We own or hold licenses to use numerous patents, copyrights, and trademarks on a global basis. Our policy is to protect our competitive
position by filing U.S. and international patent applications to protect technology and improvements that we consider important to the
development of our business. This will allow us to pursue infringement claims against competitors for protection due to patent violations.
We also rely on nondisclosure agreements with our employees and agents to protect our intellectual property. Despite these intellectual
property protections, there can be no assurance a competitor will not copy the functions or features of our products.

Seasonality

Our net sales and profitability historically have fluctuated due to the impact of large project orders, such as display systems for professional
sports facilities, colleges and universities, and spectacular projects in the commercial area, as well as the seasonality of the sports market.
Large project orders can include several displays, controllers, and subcontracted structure builds, each of which can occur on varied
schedules per the customer's needs. Outdoor installations sales can be impacted by outdoor weather conditions and seasons. Often, our
first and second fiscal quarters are the busiest because of the impact of the sports and construction season. Our third fiscal quarter tends
to be a slower quarter because it includes two holidays and generally less outdoor construction work occurs.

Our gross margins on large custom and large standard orders tend to fluctuate more than on small standard orders. Large product orders
involving competitive bidding and substantial subcontract work for product installation generally have lower gross margins. Although
we follow the percentage of completion method of recognizing revenues for large custom orders, we nevertheless have experienced
fluctuations in operating results and expect our future results of operations will be subject to similar fluctuations.

Working Capital

For information regarding working capital items, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations-Liquidity and Capital Resources” in this Form 10-K.

Customers

We have a large and diverse worldwide customer base, ranging from local main street business owners to the owners and operators of
premier professional sports arenas. Our customers are important to us, and we strive to serve them over the long-term to earn their future
business. The loss of one or more customers could have an adverse effect on us. Although we are not economically dependent on any
single customer, within our Commercial business unit digital billboard niche, two major customers account for more than 50 percent of
sales. See "Note 2. Segment Reporting" of the Notes to our Consolidated Financial Statements included in this Form 10-K for our primary
markets and customers of each business unit.

Backlog

Our backlog consists of contractually binding sales agreements or purchase orders for integrated electronic display systems and related
products and excludes extended service agreements and service only orders. Orders are included in backlog when we are in receipt of
an executed contract and any required deposits or security. As a result, certain orders for which we have received binding letters of intent
or contracts will not be included in backlog until all required contractual documents and deposits are received. Backlog can fluctuate
due to large order bookings and the timing and seasonality of net sales. Because order backlog fluctuates and may be subject to extended
delivery schedules, orders may be canceled, and orders have varied estimated profitability, our backlog is not necessarily indicative of
future net sales or net income. Backlog is not a measure defined by generally accepted accounting principles in the United States
("GAAP"), and our methodology for determining backlog may vary from the methodology used by other companies in determining their
backlog amounts.

Our backlog as of April 28, 2018 was $170.8 million as compared to $203.2 million as of April 29, 2017. We expect to fulfill this backlog
within the next 24 months.

Government and Other Regulation

In the United States and other countries, various laws, regulations and ordinances restrict the installation of outdoor signs and displays,
particularly in the commercial market. These laws and regulations impose greater restrictions on electronic displays versus non-electronic
displays due to alleged concerns over aesthetics or driver safety. These factors may prevent or inhibit us from selling products to some
prospective customers.

Our manufacturing facilities and products comply with industry specific requirements, including environmental rules and regulations
and safety standards. These requirements include quality, manufacturing process controls, manufacturing documentation, supplier
certification of raw materials, and various safety tests. Our products and production processes require the storage, use and disposal of a
variety of hazardous chemicals under applicable laws.

Our global supply chain and sales distribution channels subject us to various trade compliance regulations. These requirements include
certification of country of origin, classification within the various tariff codes, and compliance with other specific product or country
import/export regulations.

Our global operations subject us to various laws and regulations, including laws and regulations relating to tax compliance, anti-corruption,
and data privacy. These requirements vary and can include things like records management, policy creation and maintenance, data
protection programs, compliance filings, and continued training of employees.

We believe we are in material compliance with these requirements.

Competition

We encounter a wide variety of competitors that vary by product, geographic area, and business unit. Our competitors include both United
States and foreign companies and range in size and product offerings. Some of our competitors compete in certain markets by providing
lower-cost display systems, which are of a lesser quality with lower product performance or include less customer support. Other
competitors use sponsorships as a means to win the business at a particular location.

We believe that our ability to compete depends upon product quality and features, technical expertise, service breadth, and cost-effective
solutions.

Research and Development

We believe our engineering and product design and development capability and experience are very important factors to continue to
develop the most up-to-date digital displays and control system solutions desired by the market. Our product design and development
expenses were $35.5 million, $29.1 million and $26.9 million for the fiscal years 2018, 2017 and 2016, respectively.

Employees

As of April 28, 2018, we employed approximately 2,405 full-time employees and approximately 308 part-time and temporary
employees. Of these employees, approximately 881 were in manufacturing, 567 were in sales and marketing, 575 were in customer
service, 431 were in engineering and 259 were in general and administrative. None of our employees are represented by a collective
bargaining agreement. We believe employee relations are good.

Item 1A. RISK FACTORS

The factors that are discussed below, as well as the matters that are generally set forth in this Form 10-K and the documents incorporated
by reference herein, could materially and adversely affect the Company’s business, results of operations and financial condition.

We operate in highly competitive markets and face significant competition and pricing pressure. If we are unable to keep up
with the rapidly changing product market or compete effectively, we could lose market share, large project orders, and our results
of operations could be negatively impacted.

The electronic display industry is characterized by ongoing product improvement, innovations and development. We compete against
products produced in foreign countries and the United States. In addition, our products compete with other forms of advertising, such
as television, print media and fixed display signs. Our competitors may develop cheaper, more efficient products, or they may be willing
to charge lower prices to increase their market share. Some competitors have more capital and other resources, which may allow them
to take advantage of acquisition opportunities or adapt more quickly to changes in customer requirements. To remain competitive, we
must anticipate and respond quickly to our customers’ needs, enhance our existing products, introduce new products and features, and
continue to price our products competitively.

Our results of operations on a quarterly and annual basis are likely to fluctuate and are substantially affected by the size and
timing of large contract order awards.

Our net sales and earnings have varied in the past and are likely to vary in the future. When awarded large contracts, primarily in the
college and professional sports facilities markets, the OOH niche, the transportation market, and the large spectacular niche, the timing

and amount of these contracts could cause material fluctuations in our net sales and earnings. Awards of large contracts and their timing
and amounts are difficult to predict, may not be repeatable, and are outside of our control. Operating results in one quarter or fiscal year
may not be indicative of future operating results. Some factors that may cause our operating results to vary include:

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new product introductions;
variations in product mix;
production capacity utilization; and
delays or cancellations of orders.

Our actual results could differ from the estimates and assumptions we make to prepare our financial statements, which could
have a material impact on our financial condition and results of operations.

In connection with the preparation of our financial statements, including the Consolidated Financial Statements included in this Form
10-K, our management is required under GAAP to make estimates and assumptions based on historical experience and other factors.
Our most critical accounting estimates are described in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations" in this Form 10-K. These estimates and assumptions affect the recognition of contract revenue, costs, profits
or losses in applying the principles of percentage of completion; estimated amounts for warranty costs; the valuation of our deferred tax
assets; and estimating the impact of uncertainties in the application of complex tax laws. Although we believe that these estimates and
assumptions are reasonable under the circumstances, they are subject to significant uncertainties, some of which are beyond our control.
If management's estimates and assumptions change or are not correct, our financial condition or results of operation could be adversely
affected.

Unanticipated warranty and other costs for defective products could adversely affect our financial condition and results of
operations and reputation.

We provide warranties on our products with terms varying from one to 10 years. In addition, we offer extended warranties. These
warranties require us to repair or replace faulty products and meet certain performance standards, among other customary warranty
provisions. Although we continually monitor our warranty claims and accrue a liability for estimated warranty costs, unanticipated claims
could have a material adverse impact on our financial results. In some cases, we may be able to subrogate a claim back to a subcontractor
or supplier if the subcontractor or supplier supplied the defective product or performed the service, but this may not always be possible.
In addition, the need to repair or replace products with design and manufacturing defects could adversely affect our reputation. The time
required to remediate a claim may take time and could result in lost or deferred revenue, lead to costly warranty expenses, and could
have a material adverse impact on our financial condition and operating results.

During fiscal 2016, we discovered a warranty issue caused by a mechanical device failure within a module for displays primarily in our
OOH application built prior to fiscal 2013. During fiscal 2018, 2017 and 2016, we recognized warranty expense for probable and
reasonably estimated costs to remediate this issue of $4.5 million, $1.8 million, and $9.2 million, respectively. The increased warranty
expense in fiscal 2018 is primarily based on our decision to preserve our market leadership and for customer relationship purposes in
certain cases beyond our contractual obligations. See "Note 18. Commitments and Contingencies" of the Notes to our Consolidated
Financial Statements included in this Form 10-K for more information regarding our warranty accrual.

We enter into fixed-price contracts, which could reduce our profits if actual costs exceed estimated costs.

Because of the complexity of many of our client contracts, accurately estimating the cost, scope and duration of a particular contract can
be a difficult task. Unanticipated costs that exceed our original estimates are not recoverable under fixed price contracts. Unanticipated
cost increases may occur as a result of several factors including, but not limited to: increases in the cost or shortages or non-availability
of materials or labor; unanticipated technical problems; required project modifications not initiated by the customer; suppliers’ or
subcontractors’ failure to perform or delay in performing their obligations; logistics disruptions or delays; and capacity constraints. In
addition to increased costs, these factors could delay delivery of products, which may result in the assessment of liquidated damages or
other contractual damages which would negatively impact our profits.

Backlog may not be indicative of future revenue or profitability.

Many of our products have long sales, delivery and acceptance cycles. In addition, our backlog is subject to order cancellations and
delays. Orders normally contain cancellation provisions to permit our recovery of costs expended and a pro-rata portion of the profit. If
projects are delayed, revenue recognition can occur over longer periods of time, and projects may remain in the backlog for extended
periods of time. If we receive relatively large orders in any given quarter, fluctuations in the levels of the quarterly backlog can result
because the backlog may reach levels which may not be sustained in subsequent quarters.

We depend on a single-source or a limited number of suppliers for our raw materials and components. The loss, interruption,
or material change in our business relationship could cause a disruption in supply and a substantial increase in costs of such
materials. Such change could cause harm to our sales, financial condition, and results of operations.

We obtain some of our raw materials and components used in the manufacture of our products from one or a limited number of suppliers.
If we cannot obtain key raw materials or components from our suppliers, the raw materials and components may not be readily available
from other suppliers, other suppliers may not agree to supply the materials to us on terms as favorable as the terms we currently receive,
or the materials from any other suppliers may not be of adequate and consistent quality. Although we believe our supply of raw materials
and components is adequate for the needs of our business, we cannot assure that new sources of supply will be available when needed. Any
interruption in our supply of raw materials or components could affect our ability to manufacture our products until a new source of
supply is located and, therefore, could have a material adverse effect on our business, financial condition or results of operations.

If we fail to timely and effectively obtain shipments of raw materials and components from our suppliers or send shipments of
our manufactured product to our customers, our business and operating results could be adversely affected.

We cannot control all of the various factors that might affect our suppliers' timely and effective delivery of raw materials and components
to our manufacturing facilities or the availability of freight capacity to deliver products to our customers.

Our utilization of a complex supply chain for raw material and component imports and our global distribution of our products makes us
vulnerable to many risks, including, among other things, risks of damage, destruction or confiscation of products while in transit to and
from our manufacturing facilities; organized labor strikes and work stoppages, such as labor disputes, that could disrupt operations at
ports-of-entry; transportation and other delays in shipments, including as a result of heightened security screening and inspection processes
or other port-of-entry limitations or restrictions; unexpected or significant port congestion; lack of freight availability; and freight cost
increases. In addition, we may be required to arrange for products to be delivered through airfreight, which is significantly more expensive
than standard shipping by sea. We may not be able to obtain sufficient freight capacity on a timely basis or at favorable shipping rates
and, therefore, may not be able to timely receive shipments of raw materials and components or deliver products to customers.

Price fluctuations in, and shortages of, raw materials and components can have a significant impact on our ability to produce
our products which could cause harm to our sales, financial condition and results of operations.

Price fluctuations and shortages of any raw materials and components used to manufacture our products can occur due to various factors
(such as worldwide demand, natural disasters, logistic disruptions, and trade regulations). Electronic components used in our products
are sometimes in short supply, which may impact our ability to meet customer demand. If we experience shortages or increases in the
price of raw materials and components and are unable to pass on those increases to our customers or are unable to manufacture our
products, it could negatively affect our business, financial condition or results of operations. In addition to increased costs, these factors
could delay delivery of products, which may result in the assessment of liquidated damages or other contractual damages that could
negatively impact our profits.

We depend on third parties to complete our contracts.

Depending on the breadth of the scope of work of a contract, we may hire third-party subcontractors to perform on-site installation and
service related activities or hire manufacturers of structures or elements of structures related to on-site installation. If we are unable to
hire qualified subcontractors or find qualified manufacturers for on-site elements, our ability to successfully complete a project could be
impaired. If we are not able to locate qualified third-party subcontractors or manufacturers of on-site elements, the amount we are required
to pay for subcontractors or equipment and supplies may exceed what we have estimated, and we may suffer losses on these contracts.
If the subcontractor or manufacturer fails to provide services or manufacture on-site elements, we may be required to source these services
to other third parties on a delayed basis or on less favorable terms, which could impact contract profitability. There is a risk that we may
have disputes with our subcontractors relating to, among other things, the quality and timeliness of work performed, customer concerns
about the subcontractor, or faulty workmanship resulting in claims against us for failure to meet required project specifications and
negatively impacting our financial condition and results of operations.

Unanticipated events resulting in credit losses could have a material adverse impact on our financial results.

Significant portions of our sales are to customers who place large orders for custom products. We closely monitor the creditworthiness
of our customers and have not, to date, experienced significant credit losses. We mitigate our exposure to credit risk, to some extent, by
requiring deposits, payments prior to shipment, progress payments and letters of credit. However, because some of our exposure to credit
losses is outside of our control, unanticipated events resulting in credit losses could have a material adverse impact on our operating
results.

We may not be able to utilize our capacity efficiently or accurately plan our capacity requirements, which may negatively affect
our business and operating results.

We increase our production capacity and the overhead supporting production based on anticipated market demand. Market demand,
however, has not always developed as expected or remained at a consistent level. This underutilization risk can potentially decrease our
profitability and result in the impairment of certain assets.

The following factors are among those that could complicate capacity planning for market demand:

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changes in the demand for and mix of products that our customers buy;
our ability to add and train our manufacturing staff in advance of demand;
the market’s pace of technological change;
variability in our manufacturing productivity;
long lead time for components used in production;
geography of the order and related shipping methods; and
long lead times for our plant and equipment expenditures.

Insurance coverage can be difficult or expensive to obtain, and our failure to obtain adequate insurance coverage could adversely
affect our financial condition or results of operations.

We maintain insurance both as a corporate risk management strategy and to satisfy the requirements of many of our contracts with
customers. As the costs and availability of insurance change, we may decide not to be covered against certain losses where, in the judgment
of management, the insurance is not warranted due to the cost or availability of coverage or the remoteness of the perceived risk. We
cannot provide assurance that all necessary or appropriate insurances will be available, cover every type of loss incurred, or be able to
be economically secured. For example, some insurers limit coverages, increase premium costs or increase deductibles when global
catastrophic events occur. As part of our corporate risk management strategy, we monitor and place our coverages with financially strong
insurers, layer our risk with multiple insurers, and seek advice on the amount, breadth and type of insurance coverages to protect our
interests. We also contractually require subcontractors and others working on our behalf to carry common insurance coverages for the
types of work they perform to mitigate any risk of our loss. Our failure to obtain adequate insurance coverage could adversely affect our
financial condition or results of operations.

The terms and conditions of our credit facilities impose restrictions on our operations, and if we default on our credit facilities,
it could have a material adverse effect on our results of operations and financial condition and make us vulnerable to adverse
economic or industry conditions.

The terms and conditions of our credit facilities impose restrictions limiting our ability to incur debt, contingent liabilities, lease obligations
or liens; make a substantial change of ownership; or acquire or purchase a business or its assets. The availability of our credit facilities
is also subject to certain financial covenants which impose restrictions on the level of cash dividends and capital expenditures. A breach
of any of these covenants could result in an event of default under our credit facility. Upon the occurrence of an event of default, the
lender could elect to declare any and all amounts outstanding under such facility to be immediately due and payable and terminate all
commitments to extend further credit. For additional information on financing agreements, see "Note 10. Financing Agreements" of the
Notes to our Consolidated Financial Statements included in this Form 10-K.

For the foreseeable future, it is anticipated that borrowings from our existing credit facilities and cash provided by operating activities
should provide sufficient funds to finance our capital expenditures, working capital and otherwise meet operating expenses and debt
service requirements. However, if additional capital is required, there can be no assurance we will be able to obtain such capital when
needed or on satisfactory terms. Also, market conditions can negatively impact our customers' ability to fund their projects and can
impact our vendors, suppliers, and subcontractors and may not allow them to perform their obligations to us.

If we became unable to obtain adequate surety bonding or letters of credit, it could adversely affect our ability to bid on new
work, which could have a material adverse effect on our future revenue and business prospects.

In line with industry practice, we are often required to provide performance and surety bonds to customers and may be required to provide
letters of credit. These bonds and letters of credit provide credit support for the client if we fail to perform our obligations under the
contract. If security is required for a particular project and we are unable to obtain a bond or letter of credit on terms acceptable to us
and our client, we may not be able to pursue that project. In addition, bonding may be more difficult to obtain in the future or may be
available only at significant additional cost as a result of general conditions that affect the insurance and bonding markets.

We may be unable to protect our intellectual property rights effectively, or we may infringe upon the intellectual property of
others, either of which may have a material adverse effect on our operating results and financial condition.

We rely on a variety of intellectual property rights we use in our products and services. We may not be able to successfully preserve our
intellectual property rights in the future, and these rights could be invalidated, circumvented or challenged. In particular, the laws of
certain countries in which our products are sold do not protect our products and intellectual property rights to the same extent as the laws
of the United States. If litigation is necessary in the future to enforce our intellectual property rights, to protect our trade secrets or to
determine the validity and scope of the proprietary rights of others, such litigation could result in substantial costs and diversion of
resources even if we ultimately prevail.

In addition, intellectual property of others also has an impact on our ability to offer some of our products and services for specific uses
or at competitive prices. Competitors' patents or other intellectual property may limit our ability to offer products or services to our
customers. Any infringement or claimed infringement by us of the intellectual property rights of others could result in litigation and
adversely affect our ability to continue to provide, or could increase the cost of providing, products and services.

Weakened global economic conditions may adversely affect our industry, business and results of operations.

Our overall performance depends in part on worldwide economic conditions. The United States and other key international economies
have experienced cyclical downturns from time to time in which economic activity was impacted by falling demand for a variety of goods
and services; restricted credit; poor liquidity; reduced corporate profitability; volatility in credit, equity and foreign exchange markets;
bankruptcies; and overall uncertainty with respect to the economy. These conditions affect consumer spending and could adversely affect
our customers’ ability or willingness to purchase our products, delay prospective customers’ purchasing decisions, reduce the value of
their contracts, or affect attrition rates, all of which could adversely affect our operating results.

Unexpected events, including natural disasters, may increase our cost of doing business or disrupt our operations.

The occurrence of one or more unexpected events, including war, terrorist acts, fires, tornadoes, floods and severe weather in the United
States or in other countries in which we operate, may disrupt our operations as well as the operations of our customers. Such acts could
create additional uncertainties, forcing customers to reduce, delay, or cancel already planned projects. These events could result in damage
to, and a complete or partial closure of, one or more of our manufacturing facilities, which could make it difficult to supply our customers
with product and provide our employees with work, thereby adversely affecting our business, operating results or financial condition.

Our global operations are exposed to global geopolitical, economic and social changes and conditions which expose our operations
to risks and uncertainties, including unfavorable political developments, economic changes, unfavorable trading policies,
difficulties in staffing and managing global operations, and additional compliance with foreign and domestic governmental
regulations or requirements.

Our United States and foreign operations, sales, earnings, and strategies for profitable growth can be adversely affected by changes in
treaty and trade relationships, changes in monetary and fiscal policies, changes in laws and regulations, or other activities of the United
States and other foreign governments, agencies, and similar organizations. These conditions include, but are not limited to, changes in
a country's or region's economic or political conditions; pricing and marketing of products; local labor conditions and regulations; reduced
protection of intellectual property rights; changes in the regulatory or legal environment; lack of well-developed legal systems; restrictions
and foreign exchange rate fluctuations; and burdensome taxes and tariffs and other trade regulations or barriers. Other exposures and
uncertainties exist include changing social conditions and attitudes, terrorism, or political hostilities and war. Other difficulties of global
operations include staffing and managing foreign operations, including logistical and communication challenges. The likelihood of such
occurrences and their overall effect on us vary greatly from country to country and are not predictable.

Our future results may be affected by compliance risks related to United States and other countries' anti-bribery and anti-
corruption laws, trade controls, economic sanctions, and similar laws and regulations. Our failure to comply with these laws and
regulations could subject us to civil, criminal and administrative proceedings or penalties and harm our reputation.

Doing business on a worldwide basis requires us to comply with the laws and regulations of the United States government and various
foreign jurisdictions. These laws and regulations place restrictions on our operations, trade practices, partners, and investments.

In particular, we and our operations are subject to U.S. and foreign anti-corruption and trade control laws and regulations, such as the
United States Foreign Corrupt Practices Act (the “FCPA”), United Kingdom Bribery Act (the “Bribery Act”); and export controls and
economic sanctions programs, including those administered by the U.S. Treasury Department’s Office of Foreign Assets Control
(“OFAC”), the State Department’s Directorate of Defense Trade Controls (the “DDTC”), and the Bureau of Industry and Security (the
“BIS”) of the U.S. Department of Commerce.

As part of our business, we deal with state-owned business enterprises, the employees of which are considered to be foreign officials for
purposes of the FCPA's prohibition on United States companies from engaging in bribery, providing anything of value, or making other
prohibited payments to foreign officials for the purpose of obtaining or retaining business, and other similar regulations in other areas of
the world. In addition, the provisions of the Bribery Act apply to bribery of foreign officials and also to transactions with individuals
that a government does not employ. The FCPA also requires us to maintain specific record-keeping standards and adequate internal
accounting controls. In addition, we are subject to similar requirements in other countries. Some of the international locations in which
we do business lack a developed legal system and have higher than normal levels of corruption. Our expansion outside of the United
States, and our development of new partnerships and joint venture relations worldwide, could increase the risk of violation of the FCPA,
OFAC, the Bribery Act or similar laws and regulations.

As an exporter, we must comply with various laws and regulations relating to the export of products and technology from the U.S. and
other countries having jurisdiction over our operations and trade sanctions against embargoed countries and destinations administered
by OFAC. Before shipping certain items, we must obtain an export license or verify that license exemptions are available. Any failures
to comply with these laws and regulations could result in fines, adverse publicity and restrictions on our ability to export our products,
and repeat failures could carry more significant penalties.

Bribery, corruption, and trade laws and regulations, and the enforcement thereof, are increasing in frequency, complexity and severity
on a global basis. Violations of anti-corruption, anti-bribery and trade control laws and sanctions regulations are punishable by civil
penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations
or restrictions of licenses, as well as criminal fines and imprisonment, and could harm our reputation, create negative shareholder sentiment
and affect our share value. We have established policies and procedures with the intention of providing reasonable assurance of compliance
with these laws and regulations and trained our employees to comply with these laws and regulations. However, our employees, contractors,
agents and licensees involved in our international operations may take actions in violations of such policies. If our employees, agents,
distributors, suppliers and other third parties with whom we do business violate anti-bribery, anti-corruption or similar laws and regulations,
we may incur severe fines, penalties and reputational damage. Additionally, there can be no assurance that our policies and procedures
will effectively prevent us from violating these regulations in every transaction in which we may engage or provide a defense to any
alleged violation. In particular, we may be held liable for the actions that our joint venture partners take inside or outside of the United
States, even though our partners may not be subject to these laws. Such a violation, even if our policies prohibit it, could have an adverse
effect on our reputation, business, financial condition and results of operations. In addition, various state and municipal governments,
universities and other investors maintain prohibitions or restrictions on investments in companies that do business with sanctioned
countries, persons and entities, which could adversely affect our reputation, business, financial condition and results of operations.

Global tax law changes may adversely affect our business, financial condition and results of operations.

We are subject to the income tax laws of the United States and its various state and local governments as well as several foreign tax
jurisdictions. Our future income taxes could be materially adversely affected by changes in the amount or mix of earnings amongst
countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax rates or the
interpretation of tax rules and regulations in jurisdictions in which we do business, changes in tax laws, or the outcome of income tax
audits and any related litigation. The U.S. Tax Cuts and Jobs Act is one such example of recent legislation that impacts our effective tax
rate.

Further changes in the tax laws of the United States and foreign jurisdictions could arise, including additional tax reform in the United
States and the base erosion and profit shifting (“BEPS”) project undertaken by the Organisation for Economic Co-operation and
Development (“OECD”). Both the United States tax reform and the OECD proposed recommendations, in some cases, would make
substantial changes to numerous long-standing tax positions and principles. These contemplated changes could increase tax uncertainty
and may adversely affect our business, financial condition and results of operations.

Acquisitions and divestitures pose financial, management and other risks and challenges.

We routinely explore acquiring other businesses and assets. Periodically, we may also consider disposing of certain assets, subsidiaries,
or lines of business. Acquisitions or divestitures present financial, managerial and operational challenges. These include, but are not
limited to, the following:

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diversion of management attention;
difficulty with integrating acquired businesses;
difficulty with the integration of different corporate cultures;
personnel issues;
increased expenses;
assumption of unknown liabilities and indemnification obligations;
potential disputes with the buyers or sellers;

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the time involved in evaluating or modifying the financial systems of an acquired business; and
establishment of appropriate internal controls.

There can be no assurance that we will engage in any acquisitions or divestitures or that we will be able to do so on terms that will result
in any expected benefits.

If goodwill or other intangible assets in connection with our acquisitions become impaired, we could take significant non-cash
charges against earnings.

We have pursued and will continue to seek potential acquisitions to complement and expand our existing businesses, increase our revenues
and profitability, and expand our markets. As a result of prior acquisitions, we have goodwill and intangible assets recorded on our
consolidated balance sheet as described in "Note 6. Goodwill and Intangible Assets" of the Notes to our Consolidated Financial Statements
included in this Form 10-K. Goodwill represents the purchase price paid in excess of the fair value of net tangible and intangible assets
acquired in a business combination. Goodwill is not amortized and remains on our balance sheet indefinitely unless there is an impairment
or a sale of a portion of the business. Under current accounting guidelines, we must assess, at least annually, whether the value of goodwill
and other intangible assets has been impaired. Any reduction or impairment of the value of goodwill or other intangible assets will result
in charges against earnings, which would adversely affect our results of operations in future periods. During fiscal 2017, we recorded a
technology and customer list intangible asset impairment of $0.8 million. We had no impairment in fiscal 2018.

Our data systems could fail or their security could be compromised, causing a material adverse effect on our business.

We rely heavily on digital technologies for the successful operation of our business and for the collection and retention of business data.
Any failure of our digital systems, or any breach of our systems’ security measures, could adversely affect our operations, at least until
our data can be restored and/or the breaches remediated. Despite the security measures we have in place, our facilities and systems and
those of our third-party service providers may be vulnerable to cybersecurity breaches, acts of vandalism, computer viruses, misplaced
or lost data, programming issues, and/or human errors or other similar events. Any misappropriation, loss or other unauthorized disclosure
of confidential or personally identifiable information, whether by us or by our third-party service providers, could adversely affect our
business and operations. We could face significant fines and penalties under various global laws revolving around data loss, lack of
adequate date protection or lack of required reporting. Any disruption in our digital technologies could affect our business and operations,
causing potentially significant expenses to recover and modify the data systems and to investigate and remediate any vulnerabilities,
which could severely damage our reputation with customers, suppliers, employees and investors and expose us to risk of litigation and
liability.

Regulation in the areas of privacy, data protection and information security could increase our costs and affect or limit our
business opportunities and how we collect or use personal information.

As privacy, data protection and information security laws, including data localization laws, are interpreted and applied, compliance costs
may increase, particularly in the context of ensuring that adequate data protection and data transfer mechanisms are in place. In recent
years, there has been increasing regulatory enforcement and litigation activity in the areas of privacy, data protection and information
security in the U.S. and in various countries in which we operate. For example, effective on May 25, 2018, the General Data Protection
Regulation (“GDPR”) became effective, and the GDPR applies to any organization, including Daktronics, that holds or uses data on
people inside the European Union (“EU”). Under the GDPR, businesses must generally obtain consent from individuals in the EU before
they store or process personal information, and data cannot be held longer than necessary. The GDPR creates a range of new compliance
obligations, which have caused us to change some of our business practices relative to the EU. The GDPR greatly increases the jurisdictional
reach of EU law and significantly increases financial penalties for noncompliance, including possible fines of up to 4% of global annual
turnover for the preceding financial year or €20 million (whichever is higher) for the most serious infringements.

In addition, state and federal legislators and/or regulators in the U.S. and other countries in which we operate are increasingly adopting
or revising privacy, data protection and information security laws that potentially could have significant impact on our current and planned
privacy, data protection and information security-related practices; our collection, use, sharing, retention and safeguarding of consumer
and/or employee information; and some of our current or planned business activities. New legislation or regulation could increase our
costs of compliance and business operations and could reduce revenues from certain business initiatives. Moreover, the application of
existing or new laws to existing technology and practices can be uncertain and may lead to additional compliance risk and cost.

Compliance with current or future privacy, data protection and information security laws relating to consumer and/or employee data
could result in higher compliance and technology costs and could restrict our ability to provide certain products and services, which could
materially and adversely affect our results of operations. Our failure to comply with privacy, data protection and information security
laws could result in potentially significant regulatory and/or governmental investigations and/or actions, litigation, fines, sanctions,
ongoing regulatory monitoring, customer attrition, decreases in the use or acceptance of our products and services, and damage to our
reputation and our brand.

We may fail to continue to attract, develop and retain key management personnel, which could negatively impact our operating
results.

We depend on the performance of our senior executives and key employees, including experienced and skilled technical personnel. The
loss of any of our senior executives could negatively impact our operating results and ability to execute our business strategy. Our future
success will also depend upon our ability to attract, train, motivate and retain qualified personnel.

Although we intend to continue to provide competitive compensation packages to attract and retain key personnel, some of our competitors
for these employees have greater resources and more experience, making it difficult for us to compete successfully for key personnel. If
we cannot attract and retain sufficiently qualified technical employees for our research and development and manufacturing operations,
we may be unable to achieve the synergies expected from mergers and acquisitions, or to develop and commercialize new products or
new applications for existing products. Furthermore, possible shortages of key personnel, including engineers, in the regions surrounding
our facilities could require us to pay more to hire and retain key personnel, thereby increasing our costs.

The outcome of pending and future claims, investigations or litigation can have a material adverse impact on our business, financial
condition, and results of operations.

We are involved from time to time in a variety of litigation, investigations, inquires or similar matters arising in our business. Litigation,
investigations and regulatory proceedings are subject to inherent uncertainties, and unfavorable rulings and outcomes can and do occur.
Pending or future claims against us could result in professional liability, product liability, criminal liability, warranty obligations or other
liabilities to the extent we are not insured against a loss or our insurance fails to provide adequate coverage. Also, a well-publicized
actual or perceived threat of litigation could adversely affect our reputation and reduce the demand for our products.

Our business involves the use of hazardous materials, and we must comply with environmental, health and safety laws and
regulations, which can be expensive and restrict how we do business.

Our business involves the blending, controlled storage, use and disposal of hazardous materials. We and our suppliers are subject to
federal, state, local and foreign laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous
materials. Although we believe the safety procedures we utilized for handling and disposing of these materials comply with the standards
prescribed by these laws and regulations, we cannot eliminate the risk of accidental contamination or injury from these materials. In the
event of an accident, local, state, federal or foreign authorities may curtail the use of these materials and interrupt our business operations.
If we are subject to any liability as a result of activities involving hazardous materials, our business, financial condition and results of
operations may be adversely affected and our reputation may be harmed.

If our internal control over financial reporting is found to be ineffective, our financial statements may not be fairly stated, raising
concerns for investors and potentially adversely affecting our stock price.

Under Section 404 of the Sarbanes-Oxley Act of 2002, we are required to evaluate and determine the effectiveness of our internal controls
over financial reporting. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting
and accounting systems to meet our reporting obligations as a public company. We may encounter problems or delays in completing the
review and evaluation, implementing improvements, or receiving a positive attestation from our independent registered public accounting
firm. In addition, our assessment of internal controls may identify deficiencies in our internal controls over financial reporting or other
matters which may raise concerns for investors and therefore adversely affect our stock price.

The protections we have adopted and to which we are subject may discourage takeover offers favored by our shareholders.

Our articles of incorporation, by-laws and other corporate governance documents and the South Dakota Business Corporation Act ("SD
Act") contain provisions that could have an anti-takeover effect and discourage, delay or prevent a change in control or an acquisition
that many shareholders may find attractive. These provisions make it more difficult for our shareholders to take some corporate actions.
These provisions relate to:

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the ability of our Board of Directors, without shareholder approval, to authorize and issue shares of stock with voting, liquidation,
dividend and other rights and preferences that are superior to our common stock;
the classification of our Board of Directors, which effectively prevents shareholders from electing a majority of the directors at
any one meeting of shareholders;
the adoption of a shareholder rights plan providing for the exercise of common stock purchase rights when a person becomes
the beneficial owner of 15 percent or more of our outstanding common stock (subject to certain exceptions);
under the SD Act, limitations on the voting rights of shares acquired in specified types of acquisitions and restrictions on specified
types of business combinations; and

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under the SD Act, prohibitions against engaging in a “business combination” with an “interested shareholder” for a period of
four years after the date of the transaction in which the person became an interested shareholder unless the business combination
is approved.

These provisions may deny shareholders the receipt of a premium on their common stock, which in turn may have a depressive effect
on the market price of our common stock.

Our common stock has at times been thinly traded, which may result in low liquidity and price volatility.

The daily trading volume of our common stock has at times been relatively low. If this were to occur in the future, the liquidity and
appreciation of our common stock may not meet our shareholders’ expectations, and the prices at which our stock trades may be volatile.
The market price of our common stock could be adversely impacted as a result of sales by existing shareholders of a large number of
shares of common stock in the market or by the perception such sales could cause.

Significant changes in the market price of our common stock could result in securities litigation claims against us.

The market price of our common stock has fluctuated and will likely continue to fluctuate and, in the past, companies that have experienced
significant changes in the market price of their stock have been subject to securities litigation claims. We may be the target of this type
of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from
other business concerns, which could harm our business.

Additionally, if we fail to meet or exceed the expectations of securities analysts and investors, or if one or more of the securities analysts
who cover us adversely change their recommendation regarding our stock, the market price of our common stock could decline. Moreover,
our stock price may be based on expectations, estimates and forecasts of our future performance that may be unrealistic or that may not
be met. Further, our stock price may fluctuate based on reporting by the financial media, including television, radio, press reports and
blogs.

There can be no assurance that we will pay dividends on our common stock.

Our Board of Directors has approved a regular dividend since fiscal 2006. The declaration, amount and timing of such dividends are
subject to capital availability and determinations by our Board of Directors that cash dividends are in the best interest of our shareholders
and are in compliance with all respective laws and our agreements applicable to the declaration and payment of cash dividends. Our
ability to pay dividends will depend upon, among other factors, our cash balances and potential future capital requirements for strategic
transactions, including acquisitions, results of operations, financial condition and other factors that our Board of Directors may deem
relevant. A reduction in or elimination of our dividend payments and/or our dividend program could have a material negative effect on
our stock price.

Our executive officers, directors and principal shareholders have the ability to significantly influence all matters submitted to
our shareholders for approval.

Dr. Aelred Kurtenbach served as our Chairman of the Board until September 3, 2014, when he retired. Mr. Reece Kurtenbach, who is
Dr. Aelred Kurtenbach's son, serves as our Chairman of the Board and Chief Executive Officer. In addition, Dr. Aelred Kurtenbach has
two other children who serve as our Vice President of Human Resources and as our Vice President of Manufacturing. Together, these
individuals, in the aggregate, beneficially owned 9.0% of our outstanding common stock as of June 4, 2018, assuming the exercise by
them of all of their options that were currently exercisable or that vest within 60 days of June 4, 2018. In addition, our other executive
officers and directors, in the aggregate, beneficially owned an additional 4.7% of our outstanding common stock as of June 4, 2018,
assuming the exercise by them of all of their options currently exercisable or that vest within 60 days of June 4, 2018. While this does
not represent a majority of our outstanding common stock, if these shareholders were to choose to act together, they would be able to
significantly influence all matters submitted to our shareholders for approval, as well as our management and affairs. For example, these
persons, if they choose to act together, could significantly influence the election of directors and approval of any merger, consolidation,
sale of all or substantially all of our assets or other business combination or reorganization. This concentration of voting power could
delay or prevent an acquisition of us on terms that other shareholders may desire. The interests of this group of shareholders may not
always coincide with the interests of other shareholders, and they may act in a manner that advances their best interests and not necessarily
those of other shareholders, including seeking a premium value for their common stock, that might affect the prevailing market price for
our common stock.

We have been required to conduct a good faith reasonable country of origin analysis on our use of “conflict minerals”, which has
imposed and may impose additional costs on us and could raise reputational challenges and other risks.

The SEC has promulgated rules in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding disclosure
of the use of certain minerals, known as conflict minerals, mined from the Democratic Republic of the Congo and adjoining countries.
As required annually, we filed Forms SD since 2014 reporting our work performed to gain information on the source of conflict minerals
we use. We incur costs associated with complying with these disclosure requirements. As we continue our due diligence, we may face
reputational challenges if we continue to be unable to verify the origins for all conflict minerals used in our products. We may also
encounter challenges in our efforts to satisfy customers that may require all of the components of products purchased to be certified as
conflict free. If we are not able to meet customer requirements, customers may choose to disqualify us as a supplier.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2. PROPERTIES

Our principal real estate properties are in areas we deem necessary to meet sales, service and operating requirements. We consider all
our properties to be both suitable and adequate to meet our requirements for the foreseeable future. A description of our principal facilities
is set forth below:

Facilities

Brookings, SD, USA

Redwood Falls, MN, USA

Rupelmonde, Belgium

Ennistymon, Ireland

Sioux Falls, SD, USA

Shanghai, China

Owned or
Leased

Square
Footage Facility Activities

Owned

Leased

773,000 Corporate Office, Manufacturing, Sales, Service

151,000 Manufacturing, Sales, Service, Office

40,000

Sales, Service, Office

60,000 Manufacturing, Sales, Service, Office

278,000 Manufacturing, Sales, Service, Office

90,500 Manufacturing, Sales, Service, Office

The remaining sales and service offices located throughout the United States, Canada, Europe, South America, and the Asia-Pacific
regions are small offices, generally consisting of less than 10,000 square feet leased under operating leases. These lease obligations
expire on various dates, with the longest commitment extending to fiscal 2025. We believe all our leases will be renewable at market
terms, at our discretion, or that suitable alternative space would be available to lease under similar terms and conditions. See "Note 18.
Commitments and Contingencies" of the Notes to our Consolidated Financial Statements included in this Form 10-K for further information
on lease obligations.

Item 3. LEGAL PROCEEDINGS

We are involved in a variety of legal actions relating to various matters during the normal course of business. Although we are unable
to predict the ultimate outcome of these legal actions, it is the opinion of management that the disposition of these matters, taken as a
whole, will not have a material adverse effect on our financial condition or results of operations. See "Note 18. Commitments and
Contingencies" of the Notes to our Consolidated Financial Statements included in this Form 10-K for further information on any legal
proceedings and claims.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES

Our common stock is quoted on The NASDAQ Global Select Market under the symbol “DAKT”. As of June 4, 2018, we had 1,045
shareholders of record. Following are the high and low sales prices for our common stock for each quarter within the last two fiscal
years.

Fiscal Year 2018

Fiscal Year 2017

Sales Price

High

Low

Cash
Dividends
Declared

Sales Price

High

Low

Cash
Dividends
Declared

9.93
10.76
10.27
9.45

8.94
9.24
9.04
8.55

0.07
0.07
0.07
0.07

8.55
9.97
11.00
10.17

6.00
6.45
8.19
8.97

0.10
0.07
0.07
0.07

1st Quarter
2nd Quarter
3rd Quarter
4th Quarter

On May 31, 2018, our Board of Directors declared a regular quarterly dividend of $0.07 per share on our common stock payable on
June 21, 2018 to holders of record of our common stock on June 11, 2018.

Although we expect to continue to pay dividends for the foreseeable future, any and all subsequent dividends will be reviewed regularly
and declared by the Board at its discretion. In addition, our credit facility imposes limitations on our ability to pay dividends as further
described in "Note 10. Financing Agreements" of the Notes to our Consolidated Financial Statements included in this Form 10-K.

Share Repurchases

On June 17, 2016, our Board of Directors approved a stock repurchase program under which Daktronics, Inc. may purchase up to $40
million of its 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. During fiscal
2018, we had no repurchases of shares of our outstanding common stock. During fiscal 2017, we repurchased 0.3 million shares of
common stock at a total cost of $1.8 million. As of April 28, 2018, we had $38 million of remaining capacity under our current share
repurchase program.

Performance Graph

The following graph shows changes during the period from April 27, 2013 to April 28, 2018 in the value of $100 invested in: (1) our
common stock; (2) The NASDAQ Composite; and (3) the Standard and Poor's 600 Index for Electronic Equipment Manufacturers. The
values of each investment as of the dates indicated are based on share prices plus any cash dividends, with the dividends reinvested on
the date they were paid. The calculations exclude trading commissions and taxes.

Item 6. SELECTED FINANCIAL DATA (in thousands, except per share data)

The table below provides selected historical financial data, which should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements and the Notes to the Consolidated
Financial Statements, which are included in Part II, Items 7 and 8 in this Form 10-K. The statement of operations data for the fiscal years
ended April 28, 2018, April 29, 2017 and April 30, 2016 and the balance sheet data at April 28, 2018 and April 29, 2017 are derived from,
and are qualified by reference to, the audited Consolidated Financial Statements included elsewhere in this Form 10-K. The statement
of operations data for the fiscal years ended May 2, 2015 and April 26, 2014 and the balance sheet data at April 30, 2016, May 2, 2015
and April 26, 2014 are derived from audited financial statements that are not included in this Form 10-K.

Statement of Operations Data:

Net sales
Gross profit
Gross profit margin
Operating income
Operating margin
Net income

Diluted earnings per share
Weighted average diluted shares outstanding
Balance Sheet Data:
Working capital
Total assets
Total long-term liabilities
Total shareholders' equity
Cash dividends per share

2018(2)(3)(5)

2017(4)(5)

2016(5)(6)

2015(1)(7)(8)

2014(9)(10)

$ 610,530
145,669

$ 586,539
140,415

$ 570,168
121,019

$ 615,942
144,579

$ 551,970
141,710

23.9%

12,460

2.0%

5,562
0.12
44,873

23.9%

15,421

2.6%

10,342
0.23
44,303

21.2%
2,495

0.4%

2,061
0.05
44,456

23.5%

31,285

5.1%

20,882
0.47
44,443

25.7%

36,557

6.6%

22,206
0.51
43,762

$ 132,825
358,800
29,876
197,616
0.28

$ 127,130
355,433
26,552
198,286
0.31

$ 123,714
349,948
27,364
201,067
0.40

$ 149,075
379,479
25,420
212,039
0.40

$ 140,532
357,451
20,624
203,119
0.39

(1) Fiscal year 2015 consisted of 53 weeks. Each of the other fiscal years presented consisted of 52 weeks.
(2) Includes the sale of our non-digital division assets. See "Note 5. Sale of Non-Digital Division Assets" of the Notes to our

Consolidated Financial Statements included in this Form 10-K for further information.

(3) Includes the effects of the U.S. Tax Cuts and Jobs Act, which impacted our deferred tax asset valuation and increased tax
expense. See "Note 14. Income Taxes" of the Notes to our Consolidated Financial Statements included in this Form 10-K
for further information.

(4) Includes an impairment loss on intangible assets. See "Note 6. Goodwill and Intangible Assets" of the Notes to our

Consolidated Financial Statements included in this Form 10-K for further information.

(5) Includes an additional warranty charge in our OOH product application in fiscal years 2018, 2017, and 2016 of $4.5 million,
$1.8 million, and $9.2 million, respectively. See "Note 18. Commitments and Contingencies" of the Notes to our Consolidated
Financial Statements included in this Form 10-K for further information.

(6) Includes the acquisition of ADFLOW Networks, Inc. in March 2016. See "Note 4. Business Combinations" of the Notes to

our Consolidated Financial Statements included in this Form 10-K for further information.

(7) Includes the acquisition of Data Display in August 2014. See "Note 4. Business Combinations" of the Notes to our
Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 2, 2015 for
further information.

(8) Includes the sale of our automated rigging systems division for theatre applications. See "Note 5. Sale of Theatre Rigging
Division" of the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal
year ended May 2, 2015 for further information.

(9) Includes the acquisition of OPEN Out-of-Home Solutions in May 2013. See "Note 4. Business Combinations" of the Notes
to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended April 26,
2014 for further information.

(10) Includes a valuation allowance against our deferred tax asset for our equity investments booked in the fourth quarter of fiscal
2014. See "Note 12. Income Taxes" of the Notes to our Consolidated Financial Statements included in our Annual Report
on Form 10-K for the fiscal year ended April 26, 2014 for further information.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following discussion provides our highlights and commentary related to factors impacting our financial conditions and further
describes the results of operations. The most significant risks and uncertainties are discussed in "Item 1A. Risk Factors."

This discussion should be read in conjunction with the accompanying Consolidated Financial Statements and Notes to the Consolidated
Financial Statements included in this Form 10-K.

EXECUTIVE OVERVIEW

Our mission is to be the world leader at informing and entertaining audiences through dynamic audio-visual communications systems.
We measure our success through estimated market share based on estimated market demand for digital displays and generating profits
over the long-term. Our success is contingent on the depth and quality of our products, including related control systems, the depth of
our service offerings and our technology serving these market demands. These qualities are important for our long-term success because
our products have finite lifetimes and we strive to win replacement business from existing customers.

Increases in user adoption, the acceptance of a variety of digital solutions, and the decline of digital solution pricing over the years has
increased the size of the global market. With this positive demand, strong competition exists across all of our business units, which causes
margin constraints. Projects with multimillion-dollar revenue potential also attract competition, which generally reduces profitability.

We organize around customer segments and geographic regions as further described in "Note 2. Segment Reporting" of the Notes to our
Consolidated Financial Statements included in this Form 10-K. Each business segment also has unique key growth drivers and challenges.

Commercial Business Unit: Over the long-term, we believe growth in the Commercial business unit will result from a number of factors,
including:

•

Standard display product market growth due to market adoption and lower product costs, which drive marketplace expansion.
Standard display products are used to attract or communicate with customers and potential customers of retail, commercial, and
other establishments. Pricing and economic conditions are the principal factors that impact our success in this business unit.
We utilize a reseller network to distribute our standard products.

• National accounts standard display market opportunities due to customers' desire to communicate their message, advertising
and content consistently across the country. Increased demand is possible from retailers, quick serve restaurants, petroleum
businesses, and other nationwide organizations.
Increasing interest in spectaculars, which include very large and sometimes highly customized displays as part of entertainment
venues such as casinos, shopping centers, cruise ships and Times Square type locations.

•

• Dynamic messaging systems demand growth due to market adoption and marketplace expansion.
• The use of architectural lighting products for commercial buildings, which real estate owners use to add accents or effects to an

entire side or circumference of a building to communicate messages or to decorate the building.

• The continued deployment of digital billboards as OOH companies continue developing new sites and replacing digital billboards
which are reaching end of life. This is dependent on there being no adverse changes in the digital billboard regulatory environment
restricting future deployments of billboards, as well as maintaining our current market share of the business concentrated in a
few large OOH companies.

• Replacement cycles within each of these areas.

Live Events Business Unit: Over the long-term, we believe growth in the Live Events business unit will result from a number of factors,
including:

Facilities spending more on larger display systems to enhance the game-day and event experience for attendees.

•
• Lower product costs, driving an expansion of the marketplace.
• Our product and service offerings, which remain the most integrated and comprehensive offerings in the industry.
• The competitive nature of sports teams, which strive to out-perform their competitors with display systems.
• The desire for high-definition video displays, which typically drives larger displays or higher resolution displays, both of which

increase the average transaction size.

• Dynamic messaging systems needs throughout a sports facility.
• Replacement cycles within each of these areas.

High School Park and Recreation Business Unit: Over the long-term, we believe growth in the High School Park and Recreation business
unit will result from a number of factors, including:

•

Increased demand for video systems in high schools as school districts realize the revenue generating potential of these displays
versus traditional scoreboards.
Increased demand for different types of displays and dynamic messaging systems, such as message centers at schools to
communicate to students, parents and the broader community.

• The use of more sophisticated displays in school athletic facilities, such as large integrated video systems.

Transportation Business Unit: Over the long-term, we believe growth in the Transportation business unit will result from increasing
applications and acceptance of electronic displays to manage transportation systems, including roadway, airport, parking, transit and
other applications. Effective use of the United States transportation infrastructure requires intelligent transportation systems. This growth
is highly dependent on government spending, primarily by state and federal governments, along with the continuing acceptance of private/
public partnerships as an alternative funding source. Growth is also expected in dynamic messaging systems for advertising and way-
finding use in public transport and airport terminals.

International Business Unit: Over the long-term, we believe growth in the International business unit will result from achieving greater
penetration in various geographies and building products more suited to individual markets. We continue to broaden our product offerings
into the transportation segment in Europe and the Middle East. We also focus on sports facility, spectacular-type, and third-party advertising
market opportunities and the factors listed in each of the other business units to the extent they apply outside of the United States and
Canada.

Each of our business units is impacted by adverse economic conditions in different ways and to different degrees. The effects of an
adverse economy are generally less severe on our sports related business as compared to our other businesses, although in severe economic
downturns, the sports business also can be seriously impacted. Our Commercial and International business units are highly dependent
on economic conditions in general.

The cost to manufacture and selling prices of our products have decreased over time and are expected to continue to decrease in the
future. As a result, each year we must sell more product to generate the same or greater level of net sales as in previous fiscal years. This
price decline has been significant as a result of increased competition across all business units.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A) are based upon our
consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United
States ("GAAP"). The preparation of these financial statements requires us to make estimates and judgments affecting the reported
amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Although our significant
accounting policies are described in "Note 1 - Nature of Business and Summary of Significant Accounting Policies", the following
discussion is intended to highlight and describe those accounting policies that are especially critical to the preparation of our consolidated
financial statements. The MD&A should be read in conjunction with the accompanying Consolidated Financial Statements and Notes
to the Consolidated Financial Statements included in this Report.

A critical accounting policy is defined as a policy that is both very important to the portrayal of the company's financial condition and
results, and requires management's most difficult, subjective or complex judgments. We regularly review for critical accounting policies
and evaluate based on these factors. We believe the estimation process for long-term construction-type contracts, warranties, and income
taxes are most material and critical. These areas contain estimates with a reasonable likelihood to change and those changes could have
a materially impact to our financial condition and reported results. The estimation processes for these areas are also difficult, subjective
and use complex judgments. Our critical accounting estimates are based on historical experience, interpretation of GAAP, current laws
and regulations, and on various other assumptions believed to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities not readily apparent from other sources. Actual results may differ
from these estimates.

Revenue recognition on long-term construction-type contracts. Earnings on construction-type contracts are recognized on the percentage-
of-completion method, measured by the percentage of costs incurred to date to estimated total costs for each contract. Construction-type
contracts include uniquely configured combinations of technical design services, equipment specified for the customer design, installation
and integration services and other related services. Contract costs include all direct material, manufacturing, project management, and
engineering labor, subcontracting and indirect costs related to contract design, production, integration, installation, delivery of all
performance obligations, and any warranty reserve. Indirect costs include allocated charges for such items as facilities, equipment
depreciation, and general overhead. Provisions for estimated losses on uncompleted contracts are made in the period such losses are
capable of being estimated.

Generally, construction-type contracts we enter into have fixed prices established, and to the extent the actual costs to complete
construction-type contracts are higher than the amounts estimated as of the date of the financial statements, the resulting gross margin
would be negatively affected in future quarters when we revise our estimates. Our policy and practice is to revise estimates as soon as
such changes in estimates are known. While prior estimates have been materially correct, estimates can change based on specific project
contractual scope of work understanding and ability to perform to those specifications, ability to hire qualified subcontractors for on-site
construction type work, and our estimation process for the materials and production expenses,

We combine contracts for accounting purposes when they are negotiated as a package with an overall profit margin objective, essentially
represent an agreement to do a single project for a customer, involve interrelated construction activities, and are performed concurrently
or sequentially. When we combine a group of contracts, revenue and profit are recognized uniformly over the performance of the combined
projects. We segment revenues in accordance with the contract segmenting criteria in Accounting Standards Codification (“ASC”) 605-35,
Construction-Type and Production-Type Contracts. Approximately 60.8 percent, 58.1 percent, and 59.7 percent of our fiscal 2018, 2017,
and 2016 revenues were recorded under this method of accounting.

Warranties. We have recognized an accrued liability for warranty obligations equal to our estimate of the actual costs to be incurred in
connection with our performance under the contractual warranties. Warranty estimates include costs of direct material and labor estimates
to repair products over their warranty coverage period. Generally, estimates are based on historical experience taking into account known
or expected changes. If we would become aware of an increase in our estimated warranty costs, additional accruals may become necessary,
resulting in an increase in cost of sales. While prior estimates have been materially correct, estimates for warranty liabilities can change
based on the actual versus estimated defect rates over the lifetime of the warranty coverage, a difference in actual to estimated costs to
conduct repairs for the components and related labor needed, and other site related actual to estimated cost changes.

As of April 28, 2018 and April 29, 2017, we had approximately $30.0 million and $27.9 million accrued for these costs, respectively.
Due to the difficulty in estimating probable costs related to certain warranty obligations, there is a reasonable likelihood that the ultimate
remaining costs to remediate the warranty claims could differ materially from the recorded accrued liabilities. See "Note 18. Commitments
and Contingencies" of the Notes to our Consolidated Financial Statements included in this Form 10-K for further information on warranties.

Income taxes. We record a tax provision for anticipated tax consequences of the reported results of operations. Deferred tax assets and
liabilities are measured using currently enacted tax rates that apply to taxable income in effect for the years in which those deferred tax
assets and liabilities are expected to be realized or settled. These assets and liabilities are analyzed regularly, and we assess the likelihood

that deferred tax assets will be recoverable from future taxable income. A valuation allowance is established if it is more likely than not
the deferred tax asset will not be realized.

In addition, because we operate in multiple income tax jurisdictions both within the United States and internationally, the calculation of
tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution
of these uncertainties in a manner inconsistent with our expectations could have a material impact on our financial condition and operating
results. For fiscal 2018, the U.S. tax law changed due to the adoption of the Tax Cuts and Jobs Act, requiring additional estimating
processes and judgment in the application of the new laws. See "Note 14. Income Taxes" of the Notes to our Consolidated Financial
Statements included in this Form 10-K for further information.

RECENT ACCOUNTING PRONOUNCEMENTS

For a summary of recently issued accounting pronouncements and the effects those pronouncements have on our financial results, refer
to "Note 1. Nature of Business and Summary of Significant Accounting Policies" of the Notes to our Consolidated Financial Statements
included elsewhere in this Form 10-K.

RESULTS OF OPERATIONS

Net Sales

The following table shows information regarding net sales for the fiscal years ended April 28, 2018, April 29, 2017, and April 30,
2016:

(dollars in thousands)
Net Sales:

Commercial
Live Events
High School Park and Recreation
Transportation
International

Orders:

Commercial
Live Events
High School Park and Recreation
Transportation
International

April 28,
2018

April 29,
2017

Amount

2018 vs 2017

Dollar
Change

Percent
Change

April 30,
2016

Amount

2017 vs 2016

Dollar
Change

Percent
Change

$ 134,535
236,333
87,627
59,578
92,457
$ 610,530

$ 135,363
203,036
87,243
50,581
107,244
$ 583,467

$ 148,073
213,982
82,798
52,426
89,260
$ 586,539

$ 151,562
222,965
83,605
62,638
92,734
$ 613,504

$ (13,538)
22,351
4,829
7,152
3,197
$ 23,991

$ (16,199)
(19,929)
3,638
(12,057)
14,510
$ (30,037)

(9.1)% $ 148,261
205,151
10.4
70,035
5.8
13.6
52,249
94,472
3.6
4.1 % $ 570,168

(10.7)% $ 135,824
220,377
(8.9)
76,485
4.4
56,834
(19.2)
71,266
15.6
(4.9)% $ 560,786

(188)
8,831
12,763
177
(5,212)
$ 16,371

$ 15,738
2,588
7,120
5,804
21,468
$ 52,718

(0.1)%
4.3
18.2
0.3
(5.5)
2.9 %

11.6 %
1.2
9.3
10.2
30.1
9.4 %

Fiscal Year 2018 as compared to Fiscal Year 2017

Commercial: The decrease in net sales for fiscal 2018 compared to fiscal 2017 was primarily due to lower order volume in the on-premise
niche and the timing of delivery of large projects in the spectacular niche, which was partially offset by an increase in sales in the OOH
niche.

The decrease in orders for fiscal 2018 compared to fiscal 2017 was primarily due to decreases in orders in the on-premise and spectacular
focused niches due to a number of factors, including competitive market pricing, a timing difference in national account-based
opportunities, and the natural volatility of large project timing, which was partially offset by an increase in orders in the OOH niche.

We continue to see increased adoption of video solutions in our Commercial business unit marketplace. We see opportunity for orders
and sales in our out of home, on-premise, and spectacular focused niches due to replacement cycles, expansion of dynamic messaging
systems usage, and increased market size due to decline of digital pricing solutions over the years. A number of large custom video
contract opportunities are available in the marketplace for unique facades throughout North America. Due to a number of factors, such
as the discretionary nature of customers committing to a system, economic dependencies, regulatory environment, and competitive factors,
it is difficult to predict orders and net sales for fiscal 2019. We expect growth in this business unit over the long-term, assuming favorable
economic conditions and our success in counteracting competitive pressures.

Live Events: The increase in net sales for fiscal 2018 compared to fiscal 2017 was primarily the timing of the demand for upgraded or
new solutions for arenas, professional sports, and colleges and universities. These types of installations occur for new construction or
refurbishment needs of the customer and can vary in timing and size in accordance with the needs of the customer. During fiscal 2018,
we completed and recognized more than $21 million of sales for two specific significant customer orders contributing to the increase in
sales.

The decrease in orders for fiscal 2018 compared to fiscal 2017 was primarily the result of the size and timing of large contract order
awards. During fiscal 2017, we were awarded five projects valued over five million dollars as compared to three in fiscal 2018 contributing
to the change in orders.

We continue to see ongoing interest from venues at all levels to increase the size and capability of their display system and in the usage
of dynamic messaging systems throughout facilities in our Live Events business unit marketplace. A number of factors, such as the
discretionary nature of customers committing to upgrade systems, long replacement cycles, and competitive factors, make forecasting
fiscal 2019 orders and net sales difficult. We expect similar results in fiscal 2019 and continued growth in this business unit over the
long-term, assuming favorable economic conditions and our success in counteracting competitive pressures.

High School Park and Recreation: The increase in net sales for fiscal 2018 compared to fiscal 2017 was primarily due to continued
success in winning orders in the growing market and the timing of shipments of scoring systems and message centers.

The increase in orders for fiscal 2018 compared to fiscal 2017 was primarily due to overall strong market demand and an increase in
projects for larger video systems.

We expect larger video systems and our classic scoring and message centers to remain in demand in fiscal 2019, primarily in high school
facilities which benefit from our sports marketing services that generate advertising revenue to fund the display systems and because of
schools' desire to communicate with students and parents. A number of factors, such as the discretionary nature of customers committing
to upgrade systems and competitive factors, make forecasting fiscal 2019 orders and net sales difficult. We expect growth in this business
unit over the long-term, assuming favorable economic conditions.

Transportation: The increase in net sales for fiscal 2018 compared to fiscal 2017 was primarily due to the variability of large order
production timing caused by customer project schedules.

The decrease in orders for fiscal 2018 compared to fiscal 2017 was primarily due to variability of size and large order timing.

A number of factors, such as transportation funding, the competitive environment, and customer delivery changes, make forecasting
orders and net sales difficult for fiscal 2019. However, the stability of long-term federal transportation funding and the number of capital
projects for highways and public transit that include dynamic message signs and for advertising and way-finding use in public transport
and airport terminals continues to rise. We expect continued growth in this business unit over the long-term, assuming favorable economic
conditions and continued transportation funding.

International: The increase in net sales for fiscal 2018 compared to fiscal 2017 was primarily the result of increased demand in the OOH
niche market demand and improved economic conditions.

The increase in orders for fiscal 2018 compared to fiscal 2017 was primarily due to variability caused by large order timing and included
a number of orders for global OOH niche customers and professional soccer sports stadiums. In addition, we continued to market our
solutions through multiple geographies to gain recognition and further our market-share.

For fiscal 2019, while our pipeline for large commercial, sports and OOH application, and transportation applications remains strong,
macroeconomic factors may impact order bookings and timing, making it difficult to predict order and sales levels for fiscal 2019. For
the long-term, we believe the International business unit has the potential for sales growth as we penetrate markets with our established
sales networks to increase our International market share and to increase the use and adoption of our technology globally.

Backlog: The product order backlog as of April 28, 2018 was $170.8 million as compared to $203.2 million as of April 29,
2017. Historically, our backlog varies due to the seasonality of our business, the timing of large projects, and customer delivery schedules
for these orders. The backlog increased from one year ago in our Commercial and International business units, decreased in our Live
Events and Transportation business units, and remained relatively flat in our High School Park and Recreation business unit.

Fiscal Year 2017 as compared to Fiscal Year 2016

Commercial: Net sales for fiscal 2017 compared to fiscal 2016 remained relatively flat. We had declines in billboard shipments in fiscal
2017 compared to fiscal 2016 due to the volatility in large custom video demand in our spectacular niche, which was offset by increased
demand in our on-premise niche related to a full year of sales from ADFLOW, the company we acquired in the fourth quarter of fiscal
2016. ADFLOW sales in the Commercial business unit were $9.9 million during fiscal 2017.

The increase in orders for fiscal 2017 compared to fiscal 2016 was primarily due to the timing of an increase in our on-premise niche
related to in-store media solutions due to ADFLOW and increases in the spectacular niche due to the timing of large customer projects.
Although we estimate our market share held in the national operators billboard niche expanded in fiscal 2017 with independent billboard
operators, we experienced a decline in billboard niche orders for the year as compared to fiscal 2016. Order activity in the billboard
niche is impacted by customer capital allocation decisions and overall satisfaction with our product lifetime, leading to longer product
replacement cycles.

Live Events: The increase in net sales for fiscal 2017 compared to fiscal 2016 was primarily due to work completed for football stadiums
and continued demand for upgraded or new solutions throughout other sports venues for national sports leagues, minor league teams and
colleges and universities.

The increase in orders for fiscal 2017 compared to fiscal 2016 was primarily the result of order timing variability of large professional
sports projects in fiscal 2017 compared to fiscal 2016.

High School Park and Recreation: The increase in net sales for fiscal 2017 compared to fiscal 2016 was primarily due to increased video
project sizes with higher average selling prices and more custom indoor video and audio demand in fiscal 2017 compared to fiscal 2016.

The increase in orders for fiscal 2017 compared to fiscal 2016 was primarily due to strong market demand for video in sporting applications
with larger average selling prices than orders for scoring or message centers.

Transportation: Net sales for fiscal 2017 compared to fiscal 2016 remained relatively flat.

The increase in orders for fiscal 2017 compared to fiscal 2016 was primarily due to the variability caused by large order timing and
increased state government procurement project activity. During fiscal 2017, we had an award of a multimillion-dollar project for an
active traffic management system with no same sized projects in the prior year.

International: The decrease in net sales for fiscal 2017 compared to fiscal 2016 was primarily the result of the variability of timing of
conversion of orders to net sales. Our backlog increased at the end of fiscal 2017 and had been reduced at the end of fiscal 2016.

The increase in orders for fiscal 2017 compared to fiscal 2016 was primarily due to increased market activity in sports and spectacular
projects and OOH application business. Global macroeconomic conditions also improved during fiscal 2017 as compared fiscal 2016.

Gross Profit

(dollars in thousands)
Commercial
Live Events
High School Park and
Recreation
Transportation
International

April 28, 2018

Year Ended
April 29, 2017

April 30, 2016

Amount

As a Percent
of Net Sales

Amount

As a Percent
of Net Sales

Amount

26,665
49,755

29,317
21,247
18,685
145,669

19.8% $
21.1

33.5
35.7
20.2
23.9% $

36,514
40,810

26,388
18,027
18,676
140,415

24.7% $
19.1

31.9
34.4
20.9
23.9% $

29,147
36,568

20,624
16,572
18,108
121,019

As a Percent
of Net Sales
19.7%
17.8

29.4
31.7
19.2
21.2%

Fiscal Year 2018 as compared to Fiscal Year 2017

The gross profit percentage remained flat for fiscal 2018 compared to fiscal 2017. The following describes the overall impact by business
unit:

Commercial: The gross profit percent decrease in the Commercial business unit for fiscal 2018 compared to fiscal 2017 was primarily
the result of higher warranty expenses and lower sales volumes over relatively fixed infrastructure costs.

Live Events: The gross profit percent increase in the Live Events business unit for fiscal 2018 compared to fiscal 2017 was the result of
increased volume of sales over relatively fixed infrastructure costs and improved performance on large projects as compared to original
estimates.

High School Park and Recreation: The gross profit percent increase in the High School Park and Recreation business unit for fiscal 2018
compared to fiscal 2017 was primarily due to a favorable sales mix and improved productivity.

Transportation: The gross profit percent increase in the Transportation business unit for fiscal 2018 compared to fiscal 2017 was primarily
due to increased volume of sales over relatively fixed infrastructure costs and improved productivity.

International: The gross profit percent decrease in the International business unit for fiscal 2018 compared to fiscal 2017 was primarily
the result of higher warranty expenses, which were offset by a $1.2 million gain from the sale of our non-digital division assets.

It is difficult to project gross profit levels for fiscal 2019 because of the uncertainty regarding the level of sales, the sales mix and timing,
and the competitive factors in our business. We are focused on improving our gross profit margins as we execute our strategies for
improved profitability, which include releasing new product designs to lower overall costs of the product, improving reliability to reduce
warranty expenses, global capacity capability and planning, meeting customer solution expectations, and continued improvements in
operational effectiveness in manufacturing, installation, and services delivery areas.

Fiscal Year 2017 as compared to Fiscal Year 2016

The gross profit percentage increase for fiscal 2017 compared to fiscal 2016 was primarily due to lower warranty charges, higher sales
volumes, and the product mix of sales. The following describes the overall impact by business unit:

Commercial: The gross profit percent increase in the Commercial business unit for fiscal 2017 compared to fiscal 2016 was primarily
the result of lower warranty charges, as fiscal 2016 had specific warranty obligations for particular projects, improved productivity at
lower costs in manufacturing areas, and the non-recurrence of a licensing charge that negatively impacted fiscal 2016, offset by lower
profitability on sales mix due to the competitive environment.

Live Events: The gross profit percent increase in the Live Events business unit for fiscal 2017 compared to fiscal 2016 was the result of
a favorable sales mix impacted by project sizes and type, increased volumes of sales, and slight decline in manufacturing-related costs.

High School Park and Recreation: The gross profit percent increase in the High School Park and Recreation business unit for fiscal 2017
compared to fiscal 2016 was primarily due to increased volumes of sales over our relatively fixed manufacturing cost infrastructure and
lower production costs due to process improvements.

Transportation: The gross profit percent increase in the Transportation business unit for fiscal 2017 compared to fiscal 2016 was primarily
due to favorable sales mix and lower warranty costs as a percent of sales.

International: The gross profit percent increase in the International business unit for fiscal 2017 compared to fiscal 2016 was primarily
the result of lower warranty costs as a percent of sales, which were offset by a negative impact due to a $0.6 million non-digital technology
intangible asset impairment.

Contribution Margin

(dollars in thousands)
Commercial
Live Events
High School Park and
Recreation
Transportation
International

April 28, 2018

Year Ended

April 29, 2017

April 30, 2016

As a
Percent of
Net Sales

Percent
Change

As a
Percent of
Net Sales

Percent
Change

As a
Percent of
Net Sales

Amount

5.9% (55.7)% $
15.0

27.7

18,046
27,750

20.9
28.6
4.5
13.6%

13.7
26.6
22.8
5.3 % $

16,114
13,465
3,353
78,728

12.2%
13.0

19.5
25.7
3.8
13.4%

36.6% $
19.7

13,210
23,178

56.2
8.0
10.3
26.6% $

10,314
12,466
3,039
62,207

8.9%
11.3

14.7
23.9
3.2
10.9%

Amount

7,986
35,439

18,317
17,048
4,119
82,909

Fiscal Year 2018 as compared to Fiscal Year 2017

Contribution margin is comprised of gross profit less selling expense. Selling expenses consist primarily of salaries, other employee-
related costs, travel and entertainment expenses, facilities-related costs for sales and service offices, bad debt expenses, third-party
commissions, and expenditures for marketing efforts, including the costs of collateral materials, conventions and trade shows, product
demonstrations, customer relationship management systems, and supplies.

Contribution margin is impacted by previously discussed sales and gross margin for each business unit. The impact of changes in selling
expenses on each business unit contribution margin is as follows:

Selling expense for fiscal 2018 compared to fiscal 2017 increased in in our Commercial, Live Events, and High School Park and Recreation
business units and decreased in our Transportation and International business units. Live Events selling expense increased year over year
primarily due to increased conventions/advertising expenses and bad debt expenses. Commercial and High School Park and Recreation
business unit selling expense increased year over year primarily due to increased personnel expenses. Transportation business unit selling
expense decreased primarily due to lower bad debt expense. International business unit selling expense decreased primarily due to lower
bad debt expense and personnel expenses.

During fiscal 2019, we plan to invest in areas to enable order growth, but we continue to expect constraints in selling expenses. We
expect selling expenses will increase slightly in dollars for fiscal 2019 as compared to fiscal 2018.

Fiscal Year 2017 as compared to Fiscal Year 2016

Selling expense in the Commercial business unit increased in fiscal 2017 compared to fiscal 2016 primarily due to a full year of expenses
from ADFLOW, the company we acquired in the fourth quarter of fiscal 2016. Selling expense remained relatively flat in dollars for
fiscal 2017 compared to fiscal 2016 in our Live Events, High School Park and Recreation, Transportation, and International business
units. International business unit selling expenses included a $0.2 million intangible asset impairment related to a customer list. Bad
debt expense Company-wide was $1.4 million for fiscal 2017 as compared to $1.3 million for fiscal 2016.

Other Operating Expenses

Year Ended

Amount
(dollars in thousands)
General and administrative
$ 34,919
Product design and development $ 35,530

April 28, 2018
As a
Percent of
Net Sales

April 29, 2017
As a
Percent of
Net Sales

Percent
Change Amount
2.0% $ 34,226
22.2% $ 29,081

5.7%
5.8%

Percent
Change Amount
4.3% $ 32,801
8.1% $ 26,911

5.8%
5.0%

April 30, 2016
As a
Percent of
Net Sales

5.8%
4.7%

Fiscal Year 2018 as compared to Fiscal Year 2017

General and administrative expenses consist primarily of salaries, other employee-related costs, professional fees, shareholder relations
costs, facilities and equipment-related costs for administrative departments, training costs, and the costs of supplies.

General and administrative expenses in fiscal 2018 increased as compared to fiscal 2017 primarily due to increases in personnel expenses
and information technology software and hardware expenses.

We expect general and administrative expenses to increase in dollars primarily for personnel related expenses and investments in
information technology software and hardware expenses for fiscal 2019 as compared to fiscal 2018.

Product design and development expenses consist primarily of salaries, other employee-related costs, professional services, facilities
costs and equipment-related costs and supplies. Product design and development investments in the near term are focused on developing
or improving our video technology over a wide range of pixel pitches for both indoor and outdoor applications. These new or improved
technologies are focused on varied pixel density for image quality and use, expanded product line offerings for our various markets and
geographies, improved quality and reliability, and improved cost points. We plan to make continued investments in our software and
controller capabilities throughout our various product offerings. Through all design efforts, we focus on standardizing display components
and control systems for both single site and network displays.

Our costs for product design and development represent an allocated amount of costs based on time charges, professional services,
materials costs and the overhead of our engineering departments. Generally, a significant portion of our engineering time is spent on
product design and development, while the rest is allocated to large contract work and is included in cost of sales.

Product design and development expenses in fiscal 2018 increased compared to fiscal 2017 primarily due to increased labor costs and
professional services assigned to product design and development projects relating to our strategy to accelerate the deployment of products
and solutions to our markets. To deliver value to our customers and serve the markets' expectations we expect similar level of expenditures
for new or enhanced customer solutions in fiscal 2019.

Fiscal Year 2017 as compared to Fiscal Year 2016

General and administrative expenses in fiscal 2017 increased as compared to fiscal 2016 primarily due to increases in personnel expenses
and professional fees, partially offset by declines in information technology software and hardware expenses. Professional fees have
increased due to defensive work to protect our patent portfolio.

Product design and development expenses in fiscal 2017 increased compared to fiscal 2016 primarily due to increased labor costs and
professional services assigned to product design and development projects relating to our strategy to accelerate the deployment of our
products and solutions to the market.

Other Income and Expenses

(dollars in thousands)
Interest income, net
Other (expense) income, net

April 28, 2018
As a
Percent of
Net Sales

Year Ended

April 29, 2017
As a
Percent of
Net Sales

Amount
506
$
(537)
$

Percent
Change Amount
521
(354)

0.1 %
(2.9)% $
(0.1)% 51.7 % $

Percent
Change Amount
759
(128)

0.1 % (31.4)% $
(0.1)% 176.6 % $

April 30, 2016
As a
Percent of
Net Sales

0.1 %
— %

Fiscal Year 2018 as compared to Fiscal Year 2017

Interest income, net: We generate interest income through short-term cash investments, marketable securities, and product sales on an
installment basis or in exchange for the rights to sell and retain advertising revenues from displays, which result in long-term
receivables. Interest expense is comprised primarily of interest costs on long-term marketing obligations.

Interest income, net decreased in fiscal 2018 as compared to fiscal 2017 as a result of lower long-term receivables which bear imputed
interest rates. As a result of the volatility of working capital needs and changes in investing and financing activities, along with changes
in the interest rate environment, it is difficult to project changes in interest income.

Other (expense) income, net: The change in other income and expense, net for fiscal 2018 as compared to fiscal 2017 was primarily due
to foreign currency volatility and the losses recorded from an equity method affiliate.

Fiscal Year 2017 as compared to Fiscal Year 2016

Interest income, net: Interest income, net decreased in fiscal 2017 as compared to fiscal 2016 as a result of lower long-term receivables
which bear imputed interest rates and lower interest rates realized on lower average invested cash during the same period.

Other (expense) income, net: The change in other income and expense, net for fiscal 2017 as compared to fiscal 2016 was primarily due
to foreign currency volatility offset by the losses from an equity method affiliate.

Income Taxes

Our effective tax rate was approximately 55.2 percent, 33.7 percent and 34.1 percent for fiscal 2018, fiscal 2017, and fiscal 2016,
respectively.

The current-year tax rate was significantly impacted by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), which was signed into law
on December 22, 2017. Most notably, the Tax Act reduced the statutory U.S. federal corporate income tax rate from 35% to 21%. Because
we file our tax return based on our fiscal year, the statutory tax rate for our fiscal 2018 tax return will be a blended rate of 30.4%. In
addition to the effect of the lower overall federal tax rate, the Tax Act resulted in a provisional $3.5 million one-time expense for the
estimated re-measurement of our net deferred tax asset and a $0.3 million estimated one-time transition tax on certain undistributed
earnings of our foreign subsidiaries in fiscal 2018. The actual impact of the Tax Act may differ materially from our provisional amounts
due to further refinement of our calculations as allowed by SAB 118, changes in interpretations and assumptions we have made, or actions
we may take as a result of the Tax Act. The provisional amounts will be finalized within the one-year measurement period as we gather
and analyze the additional documentation necessary for the calculations. See "Note 14. Income Taxes" of the Notes to our Consolidated
Financial Statements included in this Form 10-K for further information.

Our consolidated effective tax rate is impacted by the statutory income tax rates applicable to each of the jurisdictions in which we operate.
Due to various factors and operating in multiple state and foreign jurisdictions, our effective tax is subject to fluctuation; however, with
the lower U.S. statutory tax rate enacted by the Tax Act, we expect our fiscal 2019 effective tax rate to be approximately 21%.

The effective income tax rate for fiscal 2017 and 2016 includes the impact of benefits from increased research and development tax
credits, which was offset by valuation allowances in certain foreign jurisdictions.

LIQUIDITY AND CAPITAL RESOURCES

(dollars in thousands)
Net cash provided by (used in):

Operating activities
Investing activities
Financing activities
Effect of exchange rate changes on cash

Net increase in cash and cash equivalents

April 28,
2018

Year Ended

April 29,
2017

Percent
Change

30,361
(19,563)
(13,262)
(620)
(3,084)

39,407
(18,180)
(16,323)
(591)
4,313

(23.0)%
7.6
(18.8)
4.9
171.5 %

Net cash provided by operating activities: Operating cash flows consist primarily of net income adjusted for non-cash items including
depreciation and amortization, stock-based compensation, deferred income taxes and the effect of changes in operating assets and liabilities.

Net cash provided by operating activities was $30.4 million for fiscal 2018 compared to $39.4 million in fiscal 2017. The decrease in
net cash provided by operating activities of $9.0 million was the net result of a decrease in net operating assets and liabilities of $5.3
million, a decrease of $4.8 million in net income, a $0.8 million decrease in depreciation and amortization, a $0.8 million decrease in an
impairment loss of intangible assets, a $1.3 million gain on the sale of property, equipment and other assets mostly related to the sale of
our non-digital division assets, and a $1.2 million decrease in other non-cash items, net, adjusted by an increase of $5.2 million in our
deferred income taxes, net.

Overall, changes in operating assets and liabilities can be impacted by the timing of cash flows on large orders, which can cause significant
short-term and seasonal fluctuations in inventory, accounts receivables, accounts payable, customer deposits, costs and earnings in excess
of billings and billings in excess of costs and earnings, and various other operating assets and liabilities. Variability in costs and earnings
in excess of billings and billings in excess of costs and earnings ("Net over/underbillings") relates to the timing of billings on construction-
type contracts and revenue recognition, which can vary significantly depending on contractual payment terms and build and installation

schedules. Balances are also impacted by the seasonality of the sports markets. The primary change in operating assets and liabilities
were the timing of large projects orders and the work in process including their billings and work performed at the end of fiscal 2018 as
compared to fiscal 2017. This timing differences created an outflow of cash for inventory, from accounts payable, and from Net over/
underbillings. For specific quantitative changes in operating assets and liabilities, see "Note 15. Cash Flow Information" of the Notes
to our Consolidated Financial Statements included in this Form 10-K.

Net cash used in investing activities: Net cash used in investing activities totaled $19.6 million for fiscal 2018 compared to $18.2 million
in fiscal 2017. Purchases of property and equipment totaled $18.1 million in fiscal 2018 compared to $8.5 million in fiscal 2017, offset
by a net increase in marketable securities of $6.1 million for fiscal 2018 as compared to fiscal 2017. Proceeds from the sale of property,
equipment and other assets totaled $2.2 million for fiscal 2018 compared to $0.2 million for fiscal 2017; this was mostly related to the
sale of our non-digital division assets.

Net cash used in financing activities: Net cash used in financing activities was $13.3 million for fiscal 2018 compared to $16.3 million
in fiscal 2017. Dividends of $12.4 million, or $0.28 per share, were paid to Daktronics shareholders during fiscal 2018 compared to
$13.7 million, or $0.31 per share, paid to Daktronics shareholders during fiscal 2017. In fiscal 2017, we used $1.8 million to purchase
our common shares as part of the $40.0 million share repurchase plan authorized by our Board of Directors, and there were no purchases
in fiscal 2018.

Other Liquidity and Capital Resources Discussion: We have $5.8 million of retainage on long-term contracts included in receivables and
costs in excess of billings as of April 28, 2018, which we expect to collect within one year.

Working capital was $132.8 million at April 28, 2018 and $127.1 million at April 29, 2017. The changes in working capital, particularly
changes in accounts receivable, accounts payable, inventory, and costs in excess of billings and billings in excess of costs, and the
seasonality of the sports market can have a significant impact on the amount of net cash provided by operating activities largely due to
the timing of payments and receipts. We have historically financed working capital needs through a combination of cash flow from
operations and borrowings under bank credit agreements.

We have used and expect to continue to use cash balances to meet our short-term working capital requirements. On large product orders,
the time between order acceptance and project completion may extend up to and exceed 24 months depending on the amount of custom
work and a customer’s delivery needs. We often receive down payments or progress payments on these product orders. To the extent
these payments are not sufficient to fund the costs and other expenses associated with these orders, we use working capital and bank
borrowings to finance these cash requirements. For additional information on financing agreements, see, "Note 10. Financing Agreements"
of the Notes to our Consolidated Financial Statements included in this Form 10-K.

We utilize cash on hand to pay dividends to our investors. The following table summarizes the quarterly dividends declared and/or paid
since the prior fiscal year end of April 29, 2017:

Date Declared

June 1, 2017

August 31, 2017

November 30, 2017
March 1, 2018

May 31, 2018

Record Date

June 13, 2017

September 11, 2017

December 11, 2017
March 12, 2018

June 11, 2018

Payment Date

June 23, 2017

September 21, 2017

December 21, 2017
March 22, 2018

June 21, 2018

Amount per Share

$0.07

$0.07
$0.07

$0.07

Although we expect to continue to pay dividends for the foreseeable future, the nature and amounts of dividends will be reviewed regularly
and declared by the Board at its discretion. In addition, our credit facility imposes limitations on our ability to pay dividends as further
described in "Note 10. Financing Agreements" of the Notes to our Consolidated Financial Statements included in this Form 10-K.

During fiscal 2017, the Board of Directors authorized a share repurchase program for the purchase of shares from the open market. During
fiscal 2017, we repurchased 0.3 million shares. Although we have authorization for additional share repurchases, any and all subsequent
purchases are reviewed regularly for market conditions and are made to comply with the various regulations for company share repurchase
programs. For additional information on the share repurchase program, see, "Note 11. Share Repurchase Program" of the Notes to our
Consolidated Financial Statements included in this Form 10-K.

We are sometimes required to obtain performance bonds for display installations, and we have a bonding line available through a surety
company for an aggregate of $150.0 million in bonded work outstanding. If we were unable to complete the work and our customer

would call upon the bond for payment, the surety company would subrogate its loss to Daktronics. At April 28, 2018, we had $16.5
million of bonded work outstanding against this line.

Our business growth and profitability improvement strategies depend on investments in capital expenditures. We are projecting capital
expenditures to be less than $20 million for fiscal 2019 for purchases of manufacturing equipment for new or enhanced product production,
expanded capacity, investments in quality and reliability equipment, and continued information infrastructure investments.

We believe our working capital available from all sources will be adequate to meet the cash requirements of our operations in the foreseeable
future. If our growth extends beyond current expectations, profitability does not continue, or if we make any strategic investments, we
may need to increase our credit facilities or seek other means of financing. We anticipate we will be able to obtain any needed funds
under commercially reasonable terms from our current lenders or other sources, although there can be no guarantee of such.

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

We enter into various lease, purchase and long-term obligations that require payments in future periods. Operating lease obligations
relate primarily to leased manufacturing space, office space, furniture, and vehicles. Conditional and unconditional purchase obligations
represent future payments for inventory, advertising rights and various other products and services purchase commitments. Long-term
marketing obligations relate to amounts due in future periods for payments on net sales where we sold and installed our equipment in
exchange for future advertising revenue. When certain advertising revenue thresholds are met, all or a portion of excess cash is owed
back to the customer. Long-term obligations also consist of payments owed for a business combination if certain conditions in the business
performance are met.

We have entered into standby letters of credit and surety bonds with financial institutions relating to the guarantee of future performance
on contracts, primarily construction-type contracts. Performance guarantees are issued to certain customers to guarantee the operation
and installation of equipment and our ability to complete a contract. These performance guarantees have various terms, which are typically
one year or less.

As of April 28, 2018, our contractual obligations were as follows (in thousands):

Contractual Obligations
Cash commitments:

Long-term obligations and accrued interest
Operating leases
Unconditional purchase obligations
Conditional purchase obligations
Unrecognized tax benefits(1)

Total

Other commercial commitments:

Standby letters of credit and bank guarantees
Surety bonds

Total

Less than
1 year

1-3 Years

4-5 Years

After 5
Years

$
$

2,408
8,959
5,118
350
3,178
20,013

7,706
16,522

$
$

1,188
2,795
2,585
150
—
6,718

5,563
11,723

$
$

1,220
4,108
2,011
200
—
7,539

2,131
4,799

$
$

— $

1,759
256
—
—
2,015

12
$
— $

—
297
266
—
—
563

—
—

(1) We are not able to reasonably estimate the timing of future payments relating to these non-current tax benefits. This
obligation is retired when the uncertain tax position is settled or applicable tax year is no longer subject to examination by the
tax authorities.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Rates

Our results of operations could be affected by factors such as changes in foreign currency rates or weak economic conditions in foreign
markets. We derive net sales in U.S. dollars and other currencies including Canadian dollars, Euros, Chinese renminbi, British pounds,
Australian dollars, Brazilian reais or other currencies. For fiscal 2018, 18% of net sales were derived in currencies other than U.S. dollars.
We have expenses in currencies other than U.S. dollars relating to our sales, service, and manufacturing operations. The cost of raw
materials derived from international sources can be impacted by fluctuations in foreign currency. We have foreign currency cash accounts
to operate our global business. These accounts are also impacted by changes in foreign currency rates. As of April 28, 2018, we had
$5.4 million denominated in currencies outside the U.S. dollar.

If we believe currency risk in any foreign location or specific sales or purchase transaction is significant, we utilize foreign exchange
hedging contracts to manage our exposure to the currency fluctuations. The notional amount of the foreign currency agreements as of
April 28, 2018 is $8.5 million, and all contracts mature within 16 months. These contracts are marked to market each balance sheet date
and are not designated as hedges. See "Note 17. Derivative Financial Instruments" of the Notes to our Consolidated Financial Statements
included in this Form 10-K for further details.

Over the long term, net sales to international markets are expected to increase as a percentage of total net sales and, consequently, a
greater portion of our business could be denominated in foreign currencies. As a result, operating results may become more subject to
fluctuations based upon changes in the exchange rates of certain currencies in relation to the U.S. dollar. To the extent we engage in
international sales denominated in U.S. dollars, an increase in the value of the U.S. dollar relative to foreign currencies could make our
products less competitive in international markets. This effect is also impacted by sources of raw materials from international sources
and costs of our sales, service, and manufacturing locations outside the U.S. We estimate that a 10 percent change in all foreign exchange
rates would impact our reported income before taxes by approximately $1.2 million. This sensitivity analysis disregards the possibilities
that rates can move in opposite directions and that losses from one geographic area may be offset by gains from another geographic area.

We will continue to monitor and minimize our exposure to currency fluctuations and, when appropriate, use financial hedging techniques
to minimize the effect of these fluctuations. However, exchange rate fluctuations as well as differing economic conditions, changes in
political climates, and other rules and regulations could adversely affect our ability to effectively hedge exchange rate fluctuations in the
future.

Interest Rate Risks

Our exposure to market rate risk for changes in interest rates relates primarily to our marketing obligations and long-term accounts
receivable. As of April 28, 2018, our outstanding marketing obligations were $0.5 million, all of which were in fixed rate obligations.

In connection with the sale of certain display systems, we have entered into various types of financing with customers. The aggregate
amounts due from customers include an imputed interest element. The majority of these financings carry fixed rates of interest. As of
April 28, 2018, our outstanding long-term receivables were $3.4 million. Each 25 basis point increase in interest rates would have an
associated immaterial annual opportunity cost.

The following table provides maturities and weighted average interest rates on our financial instruments sensitive to changes in interest
rates.

Fiscal Years (dollars in thousands)

2019

2020

2021

2022

2023

Thereafter

Assets:
Long-term receivables, including current

maturities:
Fixed-rate
Average interest rate

Liabilities:
Long- and short-term obligations:

Variable-rate
Average interest rate

Long-term marketing obligations,
including current portion:
Fixed-rate
Average interest rate

1,752

8.7%

785
8.6%

447
8.5%

341
9.0%

42
9.0%

26
9.0%

926
8.5%

1,074

3.0%

— $
—%

262
9.0%

136
7.2%

10
9.0%

— $
—%

—
—%

Of our $29.7 million in cash balances at April 28, 2018, $24.3 million were denominated in U.S. dollars of which $4.9 million is held by
our foreign subsidiaries. We have an additional $5.4 million in cash balances denominated in foreign currencies, of which $4.9 million
are maintained in accounts of our foreign subsidiaries. A portion of the cash held in foreign accounts is used to collateralize outstanding
bank guarantees issued by our foreign subsidiaries.

Commodity Risk

We are dependent on basic raw materials, sub-assemblies, components, and other supplies used in our production operations. Our financial
results could be affected by changes in the availability, prices, and global tariff regulations of these materials. Some of these materials
are sourced from one or a limited number of suppliers. Some of these materials are also key source materials for our competitors and
for other technology companies. Some of these materials are sourced outside of the countries in which we manufacture our products and
are subject to transportation delays. Any of these factors may cause a sudden increase in costs and/or limited or unavailable supplies.
As a result, we may not be able to acquire key production materials on a timely basis, which could impact our ability to produce products
and satisfy incoming sales orders on a timely basis. Our sourcing and materials groups work to implement strategies to monitor and
mitigate these risks. Periodically, we enter into pricing agreements or purchasing contracts under which we agree to purchase a minimum
amount of product in exchange for guaranteed price terms over the length of the contract, which generally does not exceed one year.
Over the years, we have been impacted by the factors noted; however, we believe that we have adequate sources of supply for our key
materials in the near-term.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Daktronics, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Daktronics, Inc. and subsidiaries (the "Company") as of April 28, 2018,
the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows, for the fiscal year ended
April 28, 2018, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").
We also have audited the Company’s internal control over financial reporting as of April 28, 2018, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as
of April 28, 2018, and the results of its operations and its cash flows for the fiscal year ended April 28, 2018, in conformity with accounting
principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of April 28, 2018, based on criteria established in Internal Control - Integrated
Framework (2013) issued by COSO.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial
statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud,
and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit
of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
June 8, 2018

We have served as the Company's auditor since 2017.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Daktronics, Inc.

We have audited the accompanying consolidated balance sheets of Daktronics, Inc. and subsidiaries (the Company) as of April 29, 2017,
and the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the two
years in the period ended April 29, 2017. Our audits also included the financial statement schedule listed in the Index at Item 15(a)(2).
These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion
on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of
Daktronics, Inc. and subsidiaries at April 29, 2017, and the consolidated results of their operations and their cash flows for each of the
two years in the period ended April 29, 2017, in conformity with U.S. generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in
all material respects, the information set forth therein.

/s/ Ernst & Young LLP
Minneapolis, Minnesota
June 9, 2017

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

ASSETS
CURRENT ASSETS:

Cash and cash equivalents
Restricted cash
Marketable securities
Accounts receivable, net
Inventories
Costs and estimated earnings in excess of billings
Current maturities of long-term receivables
Prepaid expenses and other assets
Income tax receivables
Total current assets

Property and equipment, net
Long-term receivables, less current maturities
Goodwill
Intangibles, net
Investment in affiliates and other assets
Deferred income taxes

TOTAL ASSETS

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:

Accounts payable
Accrued expenses
Warranty obligations
Billings in excess of costs and estimated earnings
Customer deposits
Deferred revenue
Current portion of other long-term obligations
Income taxes payable

Total current liabilities

Long-term warranty obligations
Long-term deferred revenue
Other long-term obligations
Long-term income tax payable
Deferred income taxes

Total long-term liabilities

SHAREHOLDERS' EQUITY:

Common stock, no par value, authorized 120,000,000 shares; 44,779,534 and
44,372,357 shares issued at April 28, 2018 and April 29, 2017, respectively

Additional paid-in capital
Retained earnings
Treasury stock, at cost, 303,957 and 303,957 shares at April 28, 2018 and April 29,
2017, respectively
Accumulated other comprehensive loss

TOTAL SHAREHOLDERS' EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

See notes to consolidated financial statements.

April 28,
2018

April 29,
2017

29,727
28
34,522
77,387
75,335
30,968
1,752
9,029
5,385
264,133

68,059
1,641
8,264
3,682
5,091
7,930
358,800

48,845
27,445
13,891
12,195
14,532
12,652
1,088
660
131,308

16,062
7,475
2,285
3,440
614
29,876

32,623
216
32,713
78,846
66,486
36,403
2,274
7,553
611
257,725

66,749
2,616
7,812
4,705
4,534
11,292
355,433

51,499
25,033
13,578
10,897
14,498
12,137
1,409
1,544
130,595

14,321
5,434
2,848
3,113
836
26,552

54,731
40,328
107,105

(1,834)
(2,714)
197,616
358,800

52,530
38,004
113,967

(1,834)
(4,381)
198,286
355,433

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

Net sales
Cost of sales

Gross profit

Operating expenses:

Selling
General and administrative
Product design and development

Operating income

Nonoperating income (expense):

Interest income
Interest expense
Other (expense) income, net

Income before income taxes
Income tax expense
Net income

Weighted average shares outstanding:

Basic
Diluted

Earnings per share:

Basic
Diluted

See notes to consolidated financial statements.

April 28,
2018
610,530
464,861
145,669

Year Ended
April 29,
2017
586,539
446,124
140,415

April 30,
2016
570,168
449,149
121,019

62,760
34,919
35,530
133,209
12,460

61,687
34,226
29,081
124,994
15,421

723
(217)
(537)

751
(230)
(354)

12,429
6,867
5,562

15,588
5,246
10,342

58,812
32,801
26,911
118,524
2,495

987
(228)
(128)

3,126
1,065
2,061

44,457
44,873

44,114
44,303

43,990
44,456

0.13
0.12

$
$

0.23
0.23

$
$

0.05
0.05

$
$

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

April 28,
2018

Year Ended
April 29,
2017

April 30,
2016

Net income

5,562

10,342

2,061

Other comprehensive income (loss):

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

Total other comprehensive income (loss), net of tax
Comprehensive income

See notes to consolidated financial statements.

1,808

(141)
1,667
7,229

(1,472)

(11)
(1,483)
8,859

(529)

7
(522)
1,539

Balance as of May 2, 2015:

Net income
Cumulative translation adjustments
Unrealized (loss) gain on available-
for-sale securities, net of tax
Net tax benefit related to share-based

compensation

Share-based compensation
Exercise of stock options
Tax payments related to RSU
issuances
Employee savings plan activity
Dividends paid ($0.40 per share)

Balance as of April 30, 2016:

Net income
Cumulative translation adjustments
Unrealized (loss) gain on available-
for-sale securities, net of tax

Share-based compensation
Exercise of stock options
Tax payments related to RSU
issuances
Employee savings plan activity
Dividends paid ($0.31 per share)
Treasury stock purchase

Balance as of April 29, 2017:

Net income
Cumulative translation adjustments
Unrealized (loss) gain on available-
for-sale securities, net of tax

Share-based compensation
Exercise of stock options
Tax payments related to RSU
issuances
Employee savings plan activity
Dividends paid ($0.28 per share)

Balance as of April 28, 2018:

See notes to consolidated financial statements

DAKTRONICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)

Common
Stock

Additional
Paid-In
Capital

48,960
—
—

32,693
—
—

Retained
Earnings
$ 132,771
2,061
—

Accumulated
Other
Comprehensive
Loss

Treasury
Stock

Total

(9) $
—
—

(2,376) $ 212,039
2,061
(529)

—
(529)

—

—
—
610

—
1,777
—
51,347
—
—

—
—
343

—
840
—
—
52,530
—
—

—
—
519

—

3
2,958
—

(303)
—
—
35,351
—
—

—
2,914
—

(261)
—
—
—
38,004
—
—

—
2,635
—

—

—
—
—

—
—
(17,556)
117,276
10,342
—

—
—
—

—
—
(13,651)
—
113,967
5,562
—

—
—
—

—

—
—
—

—
—
—
(9)
—
—

—
—
—

—
—
—
(1,825)
(1,834)
—
—

—
—
—

—
—
—
(2,898)
—
(1,472)

(11)
—
—

—
—
—
—
(4,381)
—
1,808

(141)
—
—

3
2,958
610

(303)
1,777
(17,556)
201,067
10,342
(1,472)

(11)
2,914
343

(261)
840
(13,651)
(1,825)
198,286
5,562
1,808

(141)
2,635
519

—
1,682
—
54,731

(311)
—
—
40,328

—
—
(12,424)
$ 107,105

—
—
—
(1,834) $

—
—
—

(311)
1,682
(12,424)
(2,714) $ 197,616

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

CASH FLOWS FROM OPERATING ACTIVITIES:

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

5,562

10,342

2,061

April 28,
2018

Year Ended
April 29,
2017

April 30,
2016

Depreciation and amortization
Impairment of intangible assets
(Gain) loss on sale of property, equipment and other assets
Share-based compensation
Gain on sale of equity investment
Equity in loss of affiliate
Provision for doubtful accounts
Deferred income taxes, net
Change in operating assets and liabilities

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment
Proceeds from sales of property, equipment and other assets
Purchases of marketable securities
Proceeds from sales or maturities of marketable securities
Proceeds from sale of equity investment
Purchases of equity investment
Acquisitions, net of cash acquired

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments on notes payable
Principal payments on long-term obligations
Dividends paid
Proceeds from exercise of stock options
Payments for common shares repurchased
Tax payments related to RSU issuances

Net cash used in financing activities

17,784
—
(1,252)
2,635
—
481
140
3,148
1,863
30,361

(18,127)
2,179
(17,438)
15,273
—
(1,450)
—
(19,563)

—
(1,046)
(12,424)
519
—
(311)
(13,262)

18,562
830
36
2,914
—
136
1,426
(2,043)
7,204
39,407

(8,502)
199
(24,159)
15,928
—
(1,646)
—
(18,180)

(8)
(921)
(13,651)
343
(1,825)
(261)
(16,323)

16,943
—
(71)
2,958
(119)
—
481
911
(9,881)
13,283

(17,056)
152
(21,286)
21,862
377
(503)
(7,364)
(23,818)

(38)
(467)
(17,556)
610
—
(303)
(17,754)

EFFECT OF EXCHANGE RATE CHANGES ON CASH
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND
RESTRICTED CASH

(620)

(591)

(965)

(3,084)

4,313

(29,254)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

Beginning of period
End of period

32,839
29,755

28,526
32,839

57,780
28,526

See notes to consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)

Note 1. Nature of Business and Summary of Significant Accounting Policies

Nature of business: Daktronics, Inc. and its subsidiaries are engaged principally in the design, market, and manufacture of a wide range
of integrated electronic display systems and related products which are sold in a variety of markets throughout the world and the rendering
of related maintenance and professional services. Our products are designed primarily to inform and entertain people through the
communication of content.

Fiscal year: We operate 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 years ended April 28, 2018, April 29, 2017, and April 30, 2016
contained operating results for 52 weeks.

Principles of consolidation: The consolidated financial statements include Daktronics, Inc. and its subsidiaries. All intercompany accounts
and transactions are eliminated in consolidation.

Investments in affiliates: Investments in affiliates over which we have significant influence are accounted for under the equity method
of accounting. 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. 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 $3,647 and $2,678 at April 28, 2018 and April 29,
2017, respectively. The equity method requires us to report our share of losses up to our equity investment amount. Cash paid for
investments in affiliates is included in the "Purchases of equity investment" line item in our consolidated statements of cash flows. Our
proportional share of the respective affiliate’s earnings or losses is included in the "Other (expense) income, net" line item in our
consolidated statements of operations. For the fiscal years ended April 28, 2018 and April 29, 2017, our share of the losses of our affiliates
was $481 and $136, respectively.

The aggregate amount of investments accounted for under the cost method was $42 at each of April 28, 2018 and April 29, 2017. 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.

Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles in the United
States ("GAAP") requires us to make estimates and judgments that affect the reported amounts of assets and liabilities; the disclosure of
contingent assets and liabilities at the date of the financial statements; the reported amounts of revenues and expenses during the reporting
period; and our ability to continue as a going concern. Actual results could differ significantly from those estimates. Material estimates
that are particularly susceptible to significant change in the near-term relate to the determination of the estimated total costs on long-term
construction-type contracts, estimated costs to be incurred for product warranties and income taxes. Estimation processes are also used
in inventory valuation, the allowance for doubtful accounts, share-based compensation, goodwill impairment, and extended warranty
and product maintenance agreements. Changes in estimates are reflected in the periods in which they become known.

Cash and cash equivalents: All highly liquid investments with maturities of three months or less at the date of purchase are considered
to be cash equivalents and consist primarily of government repurchase agreements, savings accounts and money market accounts that
are carried at cost, which approximates fair value. We maintain our cash in bank deposit accounts, the balances of which at times may
exceed federally insured limits. We have not experienced any losses in such accounts.

Restricted cash: Restricted cash consists of cash and cash equivalents held in bank deposit accounts to secure issuances of foreign bank
guarantees.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial
position that sum to total of the same amounts showing in the statement of cash flows.

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows

April 28,
2018

April 29,
2017

29,727

29,755

32,623

216

32,839

Inventories: In accordance with Accounting Standards Codification (“ASC”) 330, Inventory, our inventories are stated at the lower of
cost (first-in, first-out method) and net realizable value. Net realizable value is the estimated selling price in the ordinary course of
business, less reasonably predictable costs of completion, disposal, and transportation. When we estimate net realizable value to be lower
than cost, any necessary adjustments are charged to cost of sales in that period. In determining net realizable value, we review various
factors such as current inventory levels, forecasted demand, and technological obsolescence.

Allowance for doubtful accounts: We make estimates regarding the collectability of our accounts receivable, long-term receivables, costs
and estimated earnings in excess of billings and other receivables. In evaluating the adequacy of our allowance for doubtful accounts,
we analyze specific balances, customer creditworthiness, changes in customer payment cycles, and current economic trends. If the
financial condition of any customer were to deteriorate, resulting in an impairment of its ability to make payments, additional allowances
may be required. We charge off receivables at such time as it is determined collection will not occur in accordance with ASC 310,
Receivables.

Revenue recognition: Net sales are reported net of estimated sales returns and discounts and exclude sales taxes. We estimate our sales
returns reserve based on historical return rates and analysis of specific accounts. Our sales returns reserve was $39 and $42 at April 28,
2018 and April 29, 2017, respectively.

Long-term construction-type contracts: Earnings on construction-type contracts are recognized on the percentage-of-completion method,
measured by the percentage of costs incurred to date to estimated total costs for each contract. Construction-type contracts include
uniquely configured combinations of technical design services, equipment specified for the customer design, installation and integration
services and other related services. Contract costs include all direct material, manufacturing, project management, engineering labor,
subcontracting and indirect costs related to contract design, production, integration, installation, delivery of all performance obligations,
and any warranty reserve. Indirect costs include allocated charges for such items as facilities, equipment depreciation, and general
overhead. Provisions for estimated losses on uncompleted contracts are made in the period such losses are capable of being
estimated. Generally, construction-type contracts we enter into have fixed prices established, and to the extent the actual costs to complete
construction-type contracts are higher than the amounts estimated as of the date of the financial statements, the resulting gross margin
would be negatively affected in future quarters when we revise our estimates. Our policy and practice is to revise estimates as soon as
such changes in estimates are known. We combine contracts for accounting purposes when they are negotiated as a package with an
overall profit margin objective, essentially represent an agreement to do a single project for a customer, involve interrelated construction
activities, and are performed concurrently or sequentially. When we combine a group of contracts, revenue and profit are recognized
uniformly over the performance of the combined projects. We segment revenues in accordance with the contract segmenting criteria in
ASC 605-35, Construction-Type and Production-Type Contracts. Approximately 60.8 percent, 58.1 percent, and 59.7 percent of our
fiscal 2018, 2017, and 2016 revenues were recorded under this method of accounting.

Equipment contracts: In accordance with ASC 605, Revenue Recognition, we recognize revenue on standard equipment and replacement
part orders when title passes and the related installation services are substantially complete. We recognize the revenue only if the terms
of the arrangement are fixed and determinable and collectability is reasonably assured. We record estimated sales returns and discounts
as a reduction of net sales in the same period revenue is recognized. Approximately 31.1 percent, 34.0 percent, and 33.0 percent of our
fiscal 2018, 2017, and 2016 revenues were recorded under this method of accounting.

Extended warranty and product maintenance: In accordance with ASC 605, Revenue Recognition, we recognize deferred revenue related
to separately priced extended warranty and product maintenance agreements. The deferred revenue is recognized ratably over the
contractual term, which vary up to 10 years. If we would become aware of an increase in our estimated costs under these agreements in
excess of our deferred revenue, additional charges may be necessary, resulting in an increase in cost of sales. In determining if additional
charges are necessary, we examine cost trends on the contracts and other information and compare them to the deferred revenue. We do
not believe there is a reasonable likelihood there will be a material change in the future estimates or assumptions we use to determine
estimated costs under these agreements. As of April 28, 2018 and April 29, 2017, we had $20,127 and $17,571 of deferred revenue related
to separately priced extended warranty and product maintenance agreements, respectively.

Services: Revenues generated by us for services, such as event support, control room upgrades, content creation, on-site training,
equipment service, and technical support sold after the completion of an initial long-term construction-type contract or equipment contract
or that are considered a separate unit of accounting under these types of sales, are recognized as net sales when the services are performed

in accordance with ASC 605, Revenue Recognition. Net sales from services, extended warranty and product maintenance was
approximately 8.0 percent, 7.8 percent and 7.3 percent for fiscal 2018, 2017, and 2016, respectively.

Software: We follow ASC 985-605, Software-Revenue Recognition. Revenues from software license fees on sales, other than construction-
type contracts, are recognized when persuasive evidence of an arrangement exists, delivery of the product has occurred, the fee is fixed
or determinable, and collectability is probable. Subscription-based licenses include the right for a customer to use our licenses and receive
related support for a specified term and revenue is recognized ratably over the term of the arrangement.

Multiple-element arrangements: We often contract some or all equipment and services to our customers under the terms of a bundled
multiple-element sales arrangement. We also contract to deliver multiple pieces of equipment over time rather than at a single point in
time.

When a sales arrangement involves multiple elements, the items included in the arrangement (deliverables) are evaluated pursuant to
ASC 605-25, Revenue Arrangements with Multiple Deliverables, and ASC 605-35, Accounting for Performance of Construction-Type
and Certain Production-Type Contracts, to determine whether they represent separate units of accounting. We perform this evaluation
at the inception of an arrangement and as we deliver each item in the arrangement. We first consider the separation criteria of ASC
605-35. Deliverables not within the scope of ASC 605-35 are evaluated for separation under ASC 605-25. For those elements falling
under the guidance of ASC 605-25, we generally account for a deliverable (or a group of deliverables) separately if the delivered item(s)
has standalone value to the customer and if we have given the customer a general right of return relative to the delivered item(s) and
delivery or performance of the undelivered item(s) or service(s) is probable and substantially in our control.

When items included in a multiple-element arrangement represent separate units of accounting, we allocate the arrangement consideration
to the individual items based on their relative fair values. The amount of arrangement consideration allocated to the delivered item(s) is
limited to the amount not contingent on us delivering additional products or services. Once we have determined the amount, if any, of
arrangement consideration allocable to the delivered item(s), we apply the applicable revenue recognition policy to determine when and
by which method such amount may be recognized as revenue.

We generally determine if objective and reliable evidence of fair value for the items included in a multiple-element arrangement exists
based on whether we have vendor-specific objective evidence ("VSOE") of the price for which we sell an item on a standalone basis. If
we do not have VSOE for the item, we will use the price charged by a competitor selling a comparable product or service on a standalone
basis to similarly situated customers, if available. If neither VSOE nor third party evidence is available, we use our best estimate of the
selling price for that deliverable.

Long-term receivables and advertising rights: We occasionally sell and install our products at facilities in exchange for the rights to sell
or to retain future advertising revenues. For these transactions, we recognize revenue equal to the amount of the present value of the
future advertising payments if enough advertising is sold to obtain normal margins on the contract, and we record the related receivable
in long-term receivables. We recognize imputed interest as earned.

Property and equipment: In accordance with ASC 360, Property, Plant, and Equipment, Property and equipment is stated at cost and
depreciated principally on the straight-line method over the following estimated useful lives:

Buildings and improvements
Machinery and equipment

Office furniture and equipment

Computer software and hardware

Equipment held for rental

Demonstration equipment

Transportation equipment

Years

5 - 40
5 - 7

3 - 5

2 - 7

3 - 5

5 - 7

Leasehold improvements are depreciated over the lesser of the useful life of the asset or the term of the lease.

Impairment of Long-Lived Assets: In accordance with ASC 360, Property, Plant, and Equipment, we assess long-lived tangible assets
and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying value may not be
recoverable.

When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the asset's estimated future
cash flows (undiscounted and without interest charges). If the estimated future cash flows are less than the carrying value of the asset,

we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset's estimated fair
value. We recognize an impairment loss if the amount of the asset's carrying value exceeds the asset's estimated fair value. If we recognize
an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis. For a depreciable long-lived asset, the new
cost basis will be depreciated (amortized) over the remaining useful life of that asset.

Our impairment loss calculations contain uncertainties because they require management to make assumptions and to apply judgment to
estimate future cash flows and asset fair values, including forecasting useful lives of the assets and selecting the discount rate that reflects
the risk inherent in future cash flows.

During fiscal 2017, we recognized an impairment loss of $830 on intangible assets related to a technology and customer list. No intangible
asset impairment was recognized for fiscal 2018. See "Note 6. Goodwill and Intangible Assets" for further information.

Goodwill and Other Intangible Assets: We account for goodwill and other intangible assets with indefinite lives in accordance with ASC
350, Goodwill and Other. Under these provisions, goodwill is not amortized but is tested for impairment on at least an annual
basis. Impairment testing is required more often than annually if an event or circumstance indicates an impairment or a decline in value
may have occurred. Such circumstances could include, but are not limited to, a worsening trend of orders and sales without a corresponding
way to preserve future cash flows or a significant decline in our stock price. In conducting our impairment testing, we compare the fair
value of each of our business units (reporting unit) to the related carrying value. If the fair value of a reporting unit exceeds its carrying
value, goodwill is not impaired. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is measured and
recognized.

We utilize an income approach to estimate the fair value of each reporting unit. We selected this method because we believe it most
appropriately measures our income producing assets. We considered using the market approach and cost approach, but concluded they
were not appropriate in valuing our reporting units given the lack of relevant and available market comparisons. The income approach
is based on the projected cash flows, which are discounted to their present value using discount rates which consider the timing and risk
of the forecasted cash flows. We believe that this approach is appropriate because it provides a fair value estimate based upon the reporting
unit's expected long-term operating cash performance. This approach also mitigates the impact of the cyclical trends occurring in the
industry. Fair value is estimated using internally-developed forecasts and assumptions. The discount rate used is the average estimated
value of a market participant’s cost of capital and debt, derived using customary market metrics. Other significant assumptions include
terminal value margin rates, future capital expenditures, and changes in future working capital requirements. We also compare and
reconcile our overall fair value to our market capitalization. Although there are inherent uncertainties related to the assumptions used
and to our application of these assumptions to this analysis, we believe the income approach provides a reasonable estimate of the fair
value of our reporting units. The foregoing assumptions to a large degree were consistent with our long-term performance, with limited
exceptions. We believe our future investments for capital expenditures as a percent of revenue will remain similar to the historical rates
as a percentage of sales in future years. Our investments are expected to relate to equipment replacements and new product line
manufacturing equipment needs, and to keep our information technology infrastructure robust. These assumptions could deviate materially
from actual results.

Software costs to be sold, leased, or marketed: We follow the provisions of ASC 985, Software, which states software development costs
are expensed as incurred until technological feasibility has been established. At such time, such costs are capitalized until the product is
made available for release to customers. Additionally, costs incurred after release to customers are expensed as research and development
expenses. As of April 28, 2018 and April 29, 2017, capitalized software to be sold, leased, or otherwise marketed had a net book value
of $869 and $1,759, respectively.

Foreign currency translation: We follow the provisions of ASC 830, Foreign Currency Matters. Our foreign subsidiaries use the local
currency of their respective countries as their functional currency. The assets and liabilities of foreign operations are generally translated
at the exchange rates in effect at the balance sheet date. The operating results of foreign operations are translated at weighted average
exchange rates. The related translation gains or losses are reported as a separate component of shareholders’ equity in accumulated other
comprehensive loss.

Income taxes: We account for income taxes in accordance with ASC 740, Income Taxes. We record a tax provision for anticipated tax
consequences of the reported results of operations. Deferred tax assets and liabilities are measured using currently enacted tax rates that
apply to taxable income in effect for the years in which those deferred tax assets and liabilities are expected to be realized or settled.
These assets and liabilities are analyzed regularly, and we assess the likelihood that deferred tax assets will be recoverable from future
taxable income. A valuation allowance is established if it is more likely than not the deferred tax asset will not be realized.

of these uncertainties in a manner inconsistent with our expectations could have a material impact on our financial condition and operating
results. See "Note 14. Income Taxes" for further information.

Comprehensive income: We follow the provisions of ASC 220, Reporting Comprehensive Income, which establishes standards for
reporting and displaying comprehensive income and its components, and disclose these components in the consolidated statements of
comprehensive income. Comprehensive income reflects the change in equity of a business enterprise during a period from transactions
and other events and circumstances from non-owner sources. For us, comprehensive income represents net income adjusted for cumulative
foreign currency translation adjustments and unrealized gains and losses on available-for-sale securities. The foreign currency translation
adjustment included in the comprehensive income calculation has not been tax affected, as the investments in foreign affiliates are deemed
to be permanent.

Product design and development: We follow the provisions of ASC 730, Research and Development, which states all expenses related
to product design and development are charged to operations as incurred. Our product design and development activities include the
enhancement of existing products and technologies and the development of new products and technologies.

Advertising costs: In accordance with ASC 720-35, Advertising Costs, we expense advertising costs as incurred. Advertising expenses
were $2,855, $2,125 and $2,209 for the fiscal years 2018, 2017 and 2016, respectively.

Shipping and handling costs: In accordance with ASC 605-45, Shipping and Handling Fees and Costs, shipping and handling costs
collected from our customers in connection with our sales are recorded as revenue. We record shipping and handling costs as a component
of cost of sales at the time the product is shipped.

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.

The following is a reconciliation of the net income and common share amounts used in the calculation of basic and diluted EPS for the
fiscal years ended 2018, 2017 and 2016:

For the year ended April 28, 2018:
Basic earnings per share

Dilution associated with stock compensation plans

Diluted earnings per share
For the year ended April 29, 2017:
Basic earnings per share

Dilution associated with stock compensation plans

Diluted earnings per share
For the year ended April 30, 2016:
Basic earnings per share

Dilution associated with stock compensation plans

Diluted earnings per share

Net income

Per share
income

5,562
—
5,562

10,342
—
10,342

2,061
—
2,061

44,457
416
44,873

44,114
189
44,303

43,990
466
44,456

0.13
(0.01)
0.12

0.23
—
0.23

0.05
—
0.05

Options outstanding to purchase 1,548, 2,112 and 2,122 shares of common stock with a weighted average exercise price of $11.69, $13.30
and $15.04 for the fiscal years ended April 28, 2018, April 29, 2017 and April 30, 2016, respectively, were not included in the computation
of diluted earnings per share because the effects would be anti-dilutive.

Share-based compensation: We account for share-based compensation in accordance with ASC 718, Compensation-Stock
Compensation. Under the fair value recognition provisions of ASC 718, we measure share-based compensation cost at the grant date
based on the fair value of the award and recognize the compensation expense over the requisite service period, which is the vesting
period. See "Note 12. Shareholders’ Equity and Share-Based Compensation" for additional information and the assumptions we use to
calculate the fair value of share-based employee compensation.

Recent Accounting Pronouncements

Accounting Standards Adopted

In August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-15, Statement
of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments, which reduces the diversity in practice in how
certain cash receipts and cash payments are presented and classified in the statement of cash flows. We early adopted ASU 2016-15
during the second quarter of fiscal 2018. Adoption of ASU 2016-15 did not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Restricted Cash, which requires that the statements of cash flows explain the change
during the period in the total of cash, cash equivalents, and restricted cash. Accordingly, restricted cash will be included with cash and
cash equivalents when reconciling the beginning-of-period and end-of-period total amounts presented on the statements of cash flows.
We early adopted ASU 2016-18 during the second quarter of fiscal 2018 and applied its provisions retrospectively. Other than the change
in presentation within the statements of cash flows, the adoption of ASU 2016-18 did not have an impact on our consolidated financial
statements.

New Accounting Standards Not Yet Adopted

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of
Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other
comprehensive income to retained earnings for stranded tax effects resulting from the newly enacted federal corporate income tax rate
under the U.S. Tax Cuts and Jobs Act (the "Tax Act"). ASU 2018-02 is effective for interim and annual periods beginning after December
15, 2018, with early adoption permitted. We are currently evaluating the effect that adopting ASU 2018-02 will have on our consolidated
financial statements and related disclosures.

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 consolidated financial statements
and related disclosures.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) Intra-Entity Transfers of Assets Other than Inventory, which
is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Current
GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an
outside party, which is an exception to the principle of comprehensive recognition of current and deferred income taxes in GAAP. This
update eliminates the exception by requiring entities to recognize the income tax consequences of an intra-entity transfer of an asset other
than inventory when the transfer occurs. We will adopt ASU 2016-16 and related guidance during the first quarter of fiscal 2019 and
apply its provisions on a modified retrospective basis. We are currently evaluating the effect that adopting ASU 2016-16 will have on
our 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 will have on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued 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. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption
permitted and will require adoption on a modified retrospective basis. We are currently evaluating the effect that adopting ASU 2016-02
will have on our consolidated financial statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Subsequently, the FASB also issued
ASUs 2016-08, 2016-10, 2016-12, and 2016-20 to give further guidance to revenue recognition matters. ASU 2014-09 and related

guidance supersedes revenue recognition requirements under FASB ASC Topic 605 and related industry specific revenue recognition
guidance. This new standard defines a comprehensive revenue recognition model, requiring a company to recognize revenue from the
transfer of goods or services to customers in an amount that reflects the consideration that the entity expects to receive in exchange for
those goods or services. It defines a five-step process to achieve this core principle and allows companies to use more judgment and
make more estimates than under current guidance and requires additional disclosures about the nature, amount, timing, and uncertainty
of revenue and cash flows arising from the customer contracts. It provides guidance on transition requirements.

We will adopt ASU 2014-09 and related guidance under the modified retrospective method during the first quarter of fiscal 2019. We
have completed our evaluation of our revenue arrangements under the new standard and have assessed that the adoption will not materially
change the timing or amount of revenue recognized, based upon our current assessment of "point in time" and "over time" revenue
recognition. No adjustment to beginning retained earnings will be recorded upon adoption. We will make additional disclosures related
to revenue from contracts with customers as required by the new standard upon adoption.

Note 2. Segment Reporting

We have organized our business into 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.

Our Commercial business unit primarily consists of sales of our integrated video display systems, digital billboards, Galaxy® and Fuelight™
product lines, and dynamic messaging systems to resellers (primarily sign companies), out-of-home ("OOH") companies, national retailers,
quick-serve restaurants, casinos, commercial building owners, and petroleum retailers. Our Live Events business unit primarily consists
of sales of integrated scoring and video display systems to college and professional sports facilities and convention centers and sales of
our mobile display technology to video rental organizations and other live events type venues. Our High School Park and Recreation
business unit primarily consists of sales of scoring systems, Galaxy® displays and video display systems to primary and secondary
education facilities and resellers (primarily sign companies). Our Transportation business unit primarily consists of sales of intelligent
transportation system dynamic messaging signs for road management, mass transit, and aviation applications and other electronic signage
for advertising and way-finding needs, which includes our Vanguard® and Galaxy® product lines and other intelligent transportation
systems dynamic message signs, to governmental transportation departments, transportation industry contractors, airlines and other
transportation related customers. Our International business unit consists of sales of all product lines outside the United States and
Canada. In our International business unit, we focus on product lines related to integrated scoring and video display systems for sports
and commercial applications, OOH advertising products, architectural lighting, and transportation related products to the related type of
company, including sports and commercial business facilities, OOH companies, and governmental transportation agencies.

We evaluate segment performance based on operating results through contribution margin, which is comprised of gross profit less selling
expense. Gross profit is net sales less cost of sales. Cost of sales consists primarily of inventory and components, consumables, salaries,
other employee-related costs, facilities-related costs for manufacturing locations, machinery and equipment maintenance and depreciation,
site sub-contractors, warranty costs, enterprise resource and service management systems, inventory obsolescence and write-downs,
inventory procurement and handling costs, and other manufacturing, installation, and service delivery expenses. Selling expenses consist
primarily of salaries, other employee-related costs, travel and entertainment expenses, facilities-related costs for sales and service offices,
bad debt expenses, third-party commissions and expenditures for marketing efforts, including the costs of collateral materials, conventions
and trade shows, product demonstrations, customer relationship management systems, and supplies. Contribution margin excludes general
and administration expense, product design and development expense, non-operating income and expense and income tax expense. Assets
are not allocated to the segments. Depreciation and amortization are allocated to each segment based on various financial measures;
however, some depreciation and amortization are corporate in nature and remain unallocated. Our segments follow the same accounting
policies as those described in "Note 1. Nature of Business and Summary of Significant Accounting Policies." Some expenses or services
are not directly allocable to a sale or segment or the resources and related expenses are shared across business segment areas. These
expenses are allocated using estimates and allocation methodologies based on some financial measures and professional judgment. Shared
or unabsorbed manufacturing costs are allocated to the business unit benefiting most from that manufacturing location's production
capabilities. Shared or unabsorbed costs of domestic field sales and services infrastructure, including most field administrative staff, are
allocated to the Commercial, Live Events, High School Park and Recreation, and Transportation business units based on cost of
sales. Shared manufacturing, buildings and utilities, and procurement costs are allocated based on payroll dollars, square footage and
various other financial measures.

We do not maintain information on sales by products; therefore, disclosure of such information is not practical.

The following table sets forth certain financial information for each of our five reporting segments for the periods indicated:

April 28,
2018

Year Ended
April 29,
2017

April 30,
2016

134,535
236,333
87,627
59,578
92,457
610,530

26,665
49,755
29,317
21,247
18,685
145,669

7,986
35,439
18,317
17,048
4,119
82,909

34,919
35,530
12,460

723
(217)
(537)

12,429
6,867
5,562

6,199
4,783
1,646
1,138
1,163
2,855
17,784

148,073
213,982
82,798
52,426
89,260
586,539

36,514
40,810
26,388
18,027
18,676
140,415

18,046
27,750
16,114
13,465
3,353
78,728

34,226
29,081
15,421

751
(230)
(354)

15,588
5,246
10,342

6,337
5,032
1,725
1,267
2,317
2,714
19,392

148,261
205,151
70,035
52,249
94,472
570,168

29,147
36,568
20,624
16,572
18,108
121,019

13,210
23,178
10,314
12,466
3,039
62,207

32,801
26,911
2,495

987
(228)
(128)

3,126
1,065
2,061

4,925
4,970
1,722
1,364
1,227
2,735
16,943

Net sales:

Commercial
Live Events
High School Park and Recreation
Transportation
International

Gross profit:

Commercial
Live Events
High School Park and Recreation
Transportation
International

Contribution margin: (1)

Commercial
Live Events
High School Park and Recreation
Transportation
International

Non-allocated operating expenses:

General and administrative
Product design and development
Operating income

Nonoperating income (expense):

Interest income
Interest expense
Other (expense) income, net

Income before income taxes
Income tax expense
Net income

Depreciation, amortization and impairment:

Commercial
Live Events
High School Park and Recreation
Transportation
International
Unallocated corporate depreciation

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

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:

Net sales:

United States
Outside United States

Property and equipment, net of accumulated depreciation:

United States
Outside United States

April 28,
2018

Year Ended
April 29,
2017

April 30,
2016

502,701
107,829
610,530

61,206
6,853
68,059

486,573
99,966
586,539

62,425
4,324
66,749

465,598
104,570
570,168

68,233
4,930
73,163

We have numerous customers worldwide for sales of our products and services, and no customers 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 except
with respect to our dependence on two major digital billboard customers in our Commercial business unit.

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 3. 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 on the balance sheet. 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 April 28,
2018, 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 April 28, 2018 and April 29, 2017, our available-for-sale securities consisted of the following:

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Fair Value

Balance as of April 28, 2018:
Certificates of deposit
U.S. Government securities
U.S. Government sponsored entities
Municipal bonds

Balance as of April 29, 2017:
Certificates of deposit
U.S. Government securities
U.S. Government sponsored entities
Municipal bonds

8,669
999
20,072
4,936
34,676

12,487
400
12,260
7,574
32,721

— $
—
—
—
— $

— $
—
—
14
14

— $
(7)
(123)
(24)
(154)

— $
—
(22)
—
(22)

8,669
992
19,949
4,912
34,522

12,487
400
12,238
7,588
32,713

Realized gains or losses on investments are recorded in our consolidated statements of operations as Other (expense) income, net. Upon
the sale of a security classified as available-for-sale, the security’s specific unrealized gain (loss) is reclassified out of accumulated other
comprehensive loss into earnings based on the specific identification method. In the fiscal years ended April 28, 2018 and April 29, 2017,
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 April 28, 2018 were as follows:

Certificates of deposit
U.S. Government securities
U.S. Government sponsored entities
Municipal bonds

Note 4. Business Combinations

ADFLOW Acquisition

Less than 12
months

1-5 Years

Total

5,205
—
11,355
3,248
19,808

3,464
992
8,594
1,664
14,714

8,669
992
19,949
4,912
34,522

We acquired 100 percent ownership in ADFLOW Networks, Inc. ("ADFLOW"), a Canadian company, on March 15, 2016 for an
undisclosed amount. The results of its operations and its assets and liabilities have been included in our consolidated financial statements
since the date of acquisition. We have not made pro forma disclosures because the results of its operations are not material to our
consolidated financial statements.

The purchase price included deferred payments of $1,833 to be made over three years unless certain conditions in the business are not
met. We have included the payment obligation in other long-term obligations in our consolidated balance sheets. The fair value of such
contingent consideration is estimated as of the acquisition date, and subsequently at the end of each reporting period, using forecasted
cash flows. Projecting future cash flows requires us to make significant estimates and assumptions regarding future events, conditions,
or revenues being achieved under the subject contingent agreement as well as the appropriate discount rate. Such valuation techniques
include one or more significant inputs that are not observable. See "Note 16. Fair Value Measurement" for more information.

Note 5. Sale of Non-Digital Division Assets

In fiscal 2018, we sold our non-digital division assets, primarily consisting of inventory, non-digital manufacturing equipment, patented
and unpatented technology and know-how, customer lists, and backlog, net of warranty obligations and accounts payable with a net book
value of $517. We recorded a gain of $1,267 on the disposal, which is included in cost of sales in the International business unit.

During fiscal 2017, we recognized an impairment loss of $830 on intangible assets related to the technology and customer list. See "Note
6. Goodwill and Intangible Assets" for further information.

Note 6. Goodwill and Intangible Assets

We account for goodwill and intangible assets in accordance with ASC 350, Goodwill and Other Intangible Assets.

Goodwill

The changes in the carrying amount of goodwill related to each reportable segment for the fiscal year ended April 28, 2018 were as
follows:

Balance as of April 29, 2017:

Foreign currency translation

Balance as of April 28, 2018:

Live Events
2,274
$
21
2,295

Commercial
3,199
$
145
3,344

Transportation
45
$
22
67

International
2,294
$
264
2,558

Total

7,812
452
8,264

We perform an analysis of goodwill on an annual basis, and it is tested for impairment more frequently if events or changes in circumstances
indicate that an asset might be impaired. We perform our annual analysis during our third quarter of each fiscal year, based on the goodwill
amount as of the first business day of our third fiscal quarter. The result of the analysis indicated no goodwill impairment existed for
fiscal years 2018, 2017, and 2016.

In conducting our impairment testing, we compare the fair value of each of our business units to the related carrying value of the allocated
assets. We utilize the income approach based on discounted projected cash flows to estimate the fair value of each unit. The projected
cash flows use many estimates including market conditions, expected market demand and our ability to grow or maintain market share,

gross profit, and expected expenditures for capital and operating expenses. Assets shared or not directly attributed to a reportable segment's
activities are allocated to the reportable segment based on sales and other measures.

Intangible Assets

The following table summarizes intangible assets, net, as of April 28, 2018 and April 29, 2017:

Registered trademarks
Software
Customer relationships
Other
Total amortized intangible assets

Weighted
Average Life
(in years)

Gross
Carrying
Amount

20.0
3.0
10.0
1.0
7.8

Weighted
Average Life
(in years)

20.0
3.0
9.7
1.0
9.3

709
2,978
2,859
100
6,646

Gross
Carrying
Amount

1,604
2,814
3,209
95
7,722

April 28, 2018

Accumulated
Amortization
118
$
2,109
637
100
2,964

April 29, 2017

Accumulated
Amortization
429
$
1,055
608
95
2,187

Impairment
$

Net Carrying
Amount

— $
—
—
—
— $

591
869
2,222
—
3,682

Impairment
604
$
—
226
—
830

Net Carrying
Amount

571
1,759
2,375
—
4,705

During fiscal 2017, we chose to transition out of the non-digital market in our International business unit. We identified certain technology
and customer lists with carrying values deemed to not be recoverable. Based on this evaluation, we recognized an impairment loss of
$830 for non-digital related technology and customer list intangible assets. This was included in cost of sales and selling expense in the
consolidated statement of operations. The impairment loss was calculated based on expected future cash flows using level 3 inputs. The
level 3 inputs included weighted average estimated future cash flows from non-digital product sales and estimated selling value of non-
digital intellectual property. See "Note 5. Sale of Non-Digital Division Assets" for more information.

In the fiscal years 2018, 2017, and 2016, amortization expense including impairment related to intangible assets was $1,330, $2,546, and
$295, respectively. Amortization expenses are included primarily in product design and development and selling expense in the
consolidated statement of operations.

As of April 28, 2018, amortization expenses for future periods were estimated to be as follows:

Fiscal years ending
2019
2020
2021
2022
2023
Thereafter
Total expected amortization expense

Amount

1,200
331
328
303
303
1,217
3,682

Note 7. Selected Financial Statement Data

Inventories consisted of the following:

Raw materials
Work-in-process
Finished goods

Property and equipment, net consisted of the following:

Land
Buildings
Machinery and equipment
Office furniture and equipment
Computer software and hardware
Equipment held for rental
Demonstration equipment
Transportation equipment

Less accumulated depreciation

April 28,
2018

April 29,
2017

30,570
8,645
36,120
75,335

April 28,
2018

2,161
67,773
93,439
5,878
53,004
287
7,035
7,632
237,209
169,150
68,059

24,801
7,366
34,319
66,486

April 29,
2017

2,099
65,935
84,189
5,604
51,523
374
7,109
7,108
223,941
157,192
66,749

Our depreciation expense was $16,273, $16,732, and $16,561 for the fiscal years 2018, 2017, and 2016, respectively.

In the fiscal years 2018, 2017, and 2016, the pretax impairment charges for property and equipment were immaterial. The impairment
charges were related to equipment obsoleted due to technology improvements or to custom demonstration equipment with no resale
value. These impairment charges were included primarily in product design and development and selling expense in the consolidated
statements of operations.

Accrued expenses consisted of the following:

Compensation
Taxes, other than income taxes
Accrued employee benefits
Short-term accrued expenses
Claims liabilities

Other (expense) income, net consisted of the following:

Foreign currency transaction gains (losses)
Equity in losses of affiliates
Other

April 28,
2018

April 29,
2017

12,841
2,907
2,829
6,157
2,711
27,445

12,732
3,878
2,916
5,357
150
25,033

April 28,
2018

Year Ended
April 29,
2017

April 30,
2016

29
(481)
(85)
(537)

(331)
(136)
113
(354)

(326)
—
198
(128)

Note 8. Uncompleted Contracts

Uncompleted contracts consisted of the following:

Costs incurred
Estimated earnings

Less billings to date

April 28,
2018

April 29,
2017

524,453
168,731
693,184
674,411
18,773

508,993
161,611
670,604
645,098
25,506

April 29,
2017

36,403
(10,897)
25,506

Uncompleted contracts are included in the accompanying consolidated balance sheets as follows:

Costs and estimated earnings in excess of billings
Billings in excess of costs and estimated earnings

Note 9. Receivables

April 28,
2018

30,968
(12,195)
18,773

We sell our products throughout the United States and in certain foreign countries on credit terms we establish for each customer. On
the sale of certain products, we have the ability to file a contractor’s lien against the product installed as collateral and to file claims
against surety bonds to protect our interest in receivables. Foreign sales are at times secured by irrevocable letters of credit or bank
guarantees.

Accounts receivable are reported net of an allowance for doubtful accounts of $2,151 and $2,610 at April 28, 2018 and April 29, 2017,
respectively. Included in accounts receivable as of April 28, 2018 and April 29, 2017 was $964 and $1,857, respectively, of retainage on
construction-type contracts, all of which is expected to be collected within one year.

In connection with certain sales transactions, we have entered into sales contracts with installment payments exceeding 12 months and
sales-type leases. The present value of these contracts and leases are recorded as a receivable as the revenue is recognized in accordance
with GAAP, and profit is recognized to the extent the present value is in excess of cost. We generally retain a security interest in the
equipment or in the cash flow generated by the equipment until the contract is paid. The present value of long-term contracts and lease
receivables, including accrued interest and current maturities, was $3,393 and $4,890 as of April 28, 2018 and April 29, 2017,
respectively. Contract and lease receivables bearing annual interest rates of 4.8 to 10.0 percent are due in varying annual installments
through 2024. The face amount of long-term receivables was $3,733 as of April 28, 2018 and $5,201 as of April 29, 2017, respectively.

Note 10. Financing Agreements

On November 15, 2016, we entered into a credit agreement and a related revolving note with a U.S. bank. The agreement and note have
a maturity date of November 15, 2019. The revolving amount of the agreement and note is $35,000, including up to $15,000 for commercial
and standby letters of credits. The interest rate ranges from LIBOR plus 145 basis points to LIBOR plus 195 basis points depending on
the ratio of our interest-bearing debt to EBITDA. EBITDA is defined as net income before deductions for interest expense, income taxes,
depreciation and amortization, all as determined in accordance with GAAP. The effective interest rate was 3.4 percent at April 28,
2018. We are assessed a loan fee equal to 0.125 percent per annum on any unused portion of the loan. As of April 28, 2018, there were
no advances to us under the loan portion of the line of credit, and the balance of letters of credit outstanding was approximately $6,495.

The credit agreement is unsecured and requires us to be in compliance with the following financial ratios:

•

A minimum fixed charge coverage ratio of at least 2 to 1 at the end of any fiscal year. The ratio is equal to (a) EBITDA minus
the sum of dividends or other distributions (unless the bank approves), share repurchases, a maintenance capital expenditure
reserve in the amount of $6,000, and income tax to (b) all principal and interest payments with respect to indebtedness, excluding
principal payments on the line of credit; and
A ratio of funded debt, excluding any marketing obligations, to EBITDA of less than 1 to 1 at the end of any fiscal quarter.

On November 15, 2016, we entered into an amended and restated loan agreement and a continuing and unlimited guaranty agreement
with another U.S. bank which supports our credit needs outside of the United States. The loan and guaranty have a maturity date of
November 15, 2019. The revolving amount of the loan is $20,000. We intend to use the borrowings under the agreement to support
credit needs for general corporate purposes outside the United States. This credit agreement is unsecured. It contains the same covenants
as the credit agreement on the line of credit and contains an inter creditor agreement whereby the debt has a cross default provision with
the primary credit agreement. Total credit allowed between the two credit agreements is limited to $55,000. The interest rate is equal
to LIBOR plus 1.5 percent. As of April 28, 2018, there were no advances outstanding under the loan agreement and approximately $1,211
in bank guarantees under this line of credit.

As of April 28, 2018, we were in compliance with all applicable bank loan covenants.

Note 11. Share Repurchase Program

On June 17, 2016, our Board of Directors approved a stock repurchase program under which Daktronics, Inc. may purchase up to $40,000
of its 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. During fiscal 2018, we had
no repurchases of shares of our outstanding common stock. During fiscal 2017, we repurchased 284 shares of common stock at a total
cost of $1,825. As of April 28, 2018, we had $38,175 of remaining capacity under our current share repurchase program.

Note 12. Shareholders’ Equity and Share-Based Compensation

Common stock: Our 120,000 authorized shares consist of 115,000 shares of common stock and 5,000 shares of “undesignated stock.” Our
Board of Directors has the power to authorize and issue any or all of the shares of undesignated stock without shareholder approval,
including the authority to establish the rights and preferences of the undesignated stock.

Each outstanding share of our common stock includes one common share purchase right. Each right entitles the registered holder to
purchase from us one-tenth of one share of common stock at a price of $100 per common share, subject to adjustment and the terms of
the shareholder rights agreement under which the dividend was declared and paid. The rights become exercisable immediately after the
earlier of (i) 10 business days following a public announcement that a person or group has acquired beneficial ownership of 15 percent
or more of our outstanding common shares (subject to certain exclusions) or (ii) 10 business days following the commencement or
announcement of an intention to make a tender offer or exchange offer for our common shares, the consummation of which would result
in the beneficial ownership by a person or group of 15 percent or more of our outstanding common shares. The rights expire on November
19, 2018, which date may be extended by our Board of Directors subject to certain additional conditions.

Stock incentive plans: During fiscal 2016, we established the 2015 Stock Incentive Plan (“2015 Plan”) and ceased granting options under
the 2007 Stock Incentive Plan ("2007 Plan"). The 2015 Plan provides for the issuance of stock-based awards, including stock options,
restricted stock, restricted stock units and deferred stock, to employees, directors and consultants. Stock options issued to employees
under the plans generally have a 10-year life, an exercise price equal to the fair market value on the grant date and a five-year annual
vesting period. Stock options granted to independent directors under these plans have a seven-year life and an exercise price equal to
the fair market value on the date of grant. Stock options granted to independent directors vest in one year. The restricted stock granted
to independent directors vests in one year, provided that the directors remain on the Board. Restricted stock units are granted to employees
and have a five-year annual vesting period. As with stock options, restricted stock and restricted stock unit ownership cannot be transferred
during the vesting period.

At April 28, 2018, the aggregate number of shares available for future grant under the 2015 Plan for stock options and restricted stock
awards was 1,870 shares. Shares of common stock subject to all stock awards granted under the 2015 Plan are counted as one share of
stock for each share of stock subject to the award. Although the 2007 Plan remains in effect for options outstanding, no new options can
be granted under this plan.

Restricted stock and restricted stock units: We issue restricted stock to our non-employee directors and restricted stock units to employees.
Restricted stock issued to non-employee directors are participating securities and receive dividends prior to vesting. Unvested restricted
stock will terminate and be forfeited upon termination of employment or service. The fair value of restricted stock and our restricted
stock unit awards are measured on the grant date based on the market value of our common stock. The related compensation expense
as calculated under ASC 718, net of estimated forfeitures, is recognized over the applicable vesting period. Unrecognized compensation
expense related to the restricted stock and restricted stock unit awards was approximately $1,226 at April 28, 2018, which is expected to
be recognized over a weighted-average period of 2.8 years. The total fair value of restricted stock vested was $1,274, $1,214, and $1,191
for fiscal years 2018, 2017, and 2016, respectively.

A summary of nonvested restricted stock and restricted stock units for fiscal years 2018, 2017, and 2016 is as follows:

April 28, 2018

Number of
Nonvested
Shares

Weighted
Average
Grant Date
Fair Value
Per Share

402
178
(141)
(2)
437

8.69
8.46
9.06
8.93
8.48

Year Ended
April 29, 2017

Number of
Nonvested
Shares

Weighted
Average
Grant Date
Fair Value
Per Share

384
157
(134)
(5)
402

9.10
8.00
9.03
8.98
8.69

April 30, 2016

Number of
Nonvested
Shares

Weighted
Average
Grant Date
Fair Value
Per Share

344
159
(110)
(9)
384

10.63
7.04
10.76
10.69
9.10

Outstanding at beginning of year

Granted
Vested
Forfeited

Outstanding at end of year

Stock Options: We issue incentive stock options to our employees and non-qualified stock options to our independent directors. A
summary of stock option activity under all stock option plans during the fiscal year ended April 28, 2018 is as follows:

Outstanding at April 29, 2017

Granted
Canceled or forfeited
Exercised

Outstanding at April 28, 2018

Shares vested and expected to vest
Exercisable at April 28, 2018

Weighted
Average
Exercise
Price Per
Share

Stock
Options

2,481
169
(287)
(58)
2,305

2,282
1,788

$
$

11.15
9.63
19.78
8.91
10.02

10.02
10.04

Weighted
Average
Remaining
Contractual
Life (Years)
4.53
—
—
—
4.51

4.47
3.50

$
$

Aggregate
Intrinsic
Value

768
—
—
65
356

354
304

The aggregate intrinsic value of stock options represents the difference between the exercise price of stock options and the fair market
value of the underlying common stock for all in-the-money options. We define in-the-money options at April 28, 2018 as options having
exercise prices lower than the $9.01 per share market price of our common stock on that date. There were in-the-money options to
purchase 594 shares exercisable at April 28, 2018. The total intrinsic value of options exercised during fiscal years 2018, 2017, and 2016
was $65, $64, and $132, respectively. The total fair value of stock options vested was $977, $1,102, and $1,190 for fiscal years 2018,
2017, and 2016, respectively.

We estimate the fair value of stock options granted using the Black-Scholes option valuation model. We recognize the fair value of the
stock options on a straight-line basis as compensation expense. All options are recognized over the requisite service periods of the awards,
which are generally the vesting periods.

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including
the expected stock price volatility. ASC 718 requires us to estimate forfeitures at the time of grant and revise those estimates in subsequent
periods if actual forfeitures differ from those estimates. We use historical data to estimate pre-vesting option forfeitures and record share-
based compensation expense only for those awards expected to vest. The following factors are the significant assumptions used in the
computation of the fair value of options:

Expected life. The expected life of options granted represents the period of time they are expected to be outstanding. We estimate
the expected life of options granted based on historical exercise patterns, which we believe are representative of future behavior. We
have examined our historical pattern of option exercises in an effort to determine if there were any discernible patterns of activity
based on certain demographic characteristics. Demographic characteristics tested included age, salary level, job level and
geographic location. We have determined there were no meaningful differences in option exercise activity based on the
demographic characteristics tested.

Expected volatility. We estimate the volatility of our common stock at the date of grant based on historical volatility consistent
with ASC 718 and Securities and Exchange Commission ("SEC") Staff Accounting Bulletin No. 107, Share Based Payments.

Risk-free interest rate. The rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a term similar to the
expected life of the options.

Dividend yield. We use an expected dividend yield consistent with our historical dividend yield pattern.

The following table provides the weighted-average fair value of options granted and the related assumptions used in the Black-Scholes
model:

Fair value of options granted
Risk-free interest rate
Expected dividend rate
Expected volatility
Expected life of option

April 28,
2018

Year Ended
April 29,
2017

April 30,
2016

2.82
1.95%
3.27%
42.51%
6.83 years

2.93

2.92

1.31 - 1.44%
3.15%
44.12 - 44.51%
5.78 - 6.98 years

1.70 - 1.90%
2.78%
42.71 - 48.32%
5.78 - 6.98 years

Employee stock purchase plan: We have an employee stock purchase plan (“ESPP”), which enables employees after six months of
continuous employment to elect, in advance and semi-annually, to contribute up to 15 percent of their compensation, subject to certain
limitations, toward the purchase of our common stock at a purchase price equal to 85 percent of the lower of the fair market value of the
common stock on the first or last day of the participation period. The ESPP requires participants to hold any shares purchased under the
ESPP for a minimum period of one year after the date of purchase. Compensation expense recognized on shares issued under our ESPP
is based on the value of a traded option to purchase shares of our stock at a 15 percent discount to the stock price. The total number of
shares reserved under the ESPP is 2,500. The number of shares of common stock issued under the ESPP totaled 223, 118, and 227 shares
in fiscal 2018, 2017, and 2016, respectively. The number of shares of common stock reserved for future employee purchases under the
ESPP totaled 173 shares at April 28, 2018. The ESPP is intended to qualify under Section 423 of the Internal Revenue Code of 1986
(the "Code").

Total share-based compensation expense: As of April 28, 2018, there was $3,752 of total unrecognized compensation cost related to
nonvested share-based compensation arrangements granted under all equity compensation plans. Total unrecognized compensation cost
will be adjusted for future changes in estimated forfeitures. We expect to recognize the cost over a weighted-average period of 2.9 years.

The following table presents a summary of the share-based compensation expense by equity type as follows:

Stock options
Restricted stock and stock units
Employee stock purchase plans

April 28,
2018

Year Ended
April 29,
2017

April 30,
2016

763
1,442
430
2,635

1,072
1,287
555
2,914

1,179
1,237
542
2,958

A summary of the share-based compensation expenses for stock options, restricted stock, restricted stock units and shares issued under
the ESPP for fiscal years 2018, 2017, and 2016 is as follows:

Cost of sales
Selling
General and administrative
Product design and development

April 28,
2018

Year Ended
April 29,
2017

April 30,
2016

619
644
851
521
2,635

714
723
877
600
2,914

751
780
839
588
2,958

We received $519 in cash from option exercises under all share-based payment arrangements for the fiscal year ended April 28, 2018.
The tax benefit (expense) related to non-qualified options and restricted stock units under all share-based payment arrangements totaled
$9, $2, and $(69) for fiscal years 2018, 2017, and 2016, respectively.

Note 13. Retirement Benefits

We sponsor a 401(k) savings plan providing benefits for substantially all United States based employees of both Daktronics, Inc. and its
subsidiaries, subject to certain Internal Revenue Service ("IRS") limits. We make matching cash contributions equal to 50 percent of the
employee's qualifying contribution up to six percent of such employee's compensation. Employees are eligible to participate upon
completion of three months of continuous service if they have attained the age of 21. We contributed $2,612, $2,463 and $2,382 to the
plan for fiscal years 2018, 2017, and 2016, respectively.

Note 14. Income Taxes

On December 22, 2017, President Trump signed the Tax Act into law. The Tax Act makes broad and complex changes to the Code. Some
of the most significant provisions of the Tax Act impacting us include a reduction of the U.S. federal corporate income tax rate from 35%
to 21%, a one-time "deemed repatriation" tax on previously untaxed accumulated earnings and profits of subsidiaries in non-U.S.
jurisdictions, and a transition of U.S. international taxation from a worldwide tax system to a territorial tax system. Because we file our
tax return based on our fiscal year, the federal statutory tax rate for our fiscal 2018 tax return will be a blended rate of 30.4%.

As a result of the Tax Act, we have recorded a provisional reduction to our net U.S. deferred tax assets of $3,534, which resulted in a
corresponding increase to income tax expense for fiscal 2018. Additionally, we have recorded a provisional increase to income tax
expense of $285 for the one-time deemed repatriation tax.

On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118 which allows the recording of provisional amounts during a
measurement period, not to exceed one year from the enactment date of the Tax Act, to account for the impacts of the Tax Act in companies'
financial statements when companies do not have the necessary information available, prepared or analyzed in reasonable detail to
complete their accounting for the effects of the changes in the Tax Act. Since the Tax Act was passed late in the fourth quarter of calendar
2018, ongoing guidance and accounting interpretation are expected over the next year, and significant data and analysis is required to
finalize amounts recorded pursuant to the Tax Act. We will continue to refine any estimates throughout the measurement period or until
the accounting is complete, and the impact of the Tax Act may differ from these estimates, possibly materially, due to, among other things,
changes in estimates and assumptions that we have made.

The Tax Act includes a provision designed to currently tax global intangible low-taxed income ("GILTI") starting in fiscal 2019. Due to
the complexity of the new GILTI tax rules, we are continuing to evaluate this provision of the Tax Act and the application of ASC 740,
and we are considering available accounting policy alternatives to adopt to either record the U.S. income tax effect of future GILTI
inclusions in the period in which they arise or establish deferred taxes with respect to the expected future tax liabilities associated with
future GILTI inclusions. In addition, we are awaiting further interpretive guidance in connection with the computation of the GILTI tax.
For these reasons, we have not yet determined a policy for the effect of this provision of the Tax Act. We expect to complete our analysis
within the measurement period in accordance with Staff Accounting Bulletin No.118.

The fiscal 2018 effective rate was higher than the federal statutory rate primarily due to the impacts of the new tax law totaling $3,819.

The effective income tax rate for fiscal 2017 included the impact of benefits from increased research and development tax credits, which
was offset by valuation allowances recorded during the current year in certain foreign jurisdictions.

The effective income tax rate for fiscal 2016 included the impact of the Protecting Americans from Tax Hikes Act of 2015 (“PATH Act”)
signed in December 2015, which retroactively reinstated as well as permanently extended the research and development tax credit. This
provided a recognition of approximately $2,015 in tax benefits during fiscal 2016. The benefit is largely offset by pre-tax losses with no
tax benefit due to valuation allowances and the current year establishment of valuation allowances in certain jurisdictions of $1,265 that
were recognized during fiscal 2016.

The following tables reflect the significant components of our income tax provision. The pretax income attributable to domestic and
foreign operations was as follows:

Domestic
Foreign

Income before income taxes

April 28,
2018

Year Ended
April 29,
2017

April 30,
2016

9,235
3,194
12,429

16,010
(422)
15,588

3,264
(138)
3,126

Income tax expense consisted of the following:

Current:
Federal
State
Foreign
Deferred:
Federal
State
Foreign

April 28,
2018

Year Ended
April 29,
2017

April 30,
2016

1,646
868
1,205

3,693
27
(572)
6,867

5,268
1,158
863

(1,625)
(397)
(21)
5,246

(467)
123
557

463
(89)
478
1,065

A reconciliation of the provision for income taxes and the amount computed by applying the federal statutory rate to income before
income taxes is as follows:

Computed income tax expense at federal,

state and local jurisdiction statutory rates

Impact of Tax Act
Research and development tax credit
State taxes, net of federal benefit
Other, net
Change in valuation allowances
Stock compensation
Meals and entertainment
Domestic production activities deduction
Dividends paid to retirement plan
Change in uncertain tax positions

April 28,
2018

Year Ended
April 29,
2017

April 30,
2016

3,779
3,819
(1,598)
592
559
(486)
336
333
(294)
(238)
65
6,867

5,456
—
(1,573)
539
378
388
497
299
(542)
(293)
97
5,246

1,063
—
(2,015)
40
142
1,265
525
334
(91)
(323)
125
1,065

The components of the net deferred tax asset were as follows:

Deferred tax assets:

Accrued warranty obligations
Vacation accrual
Deferred maintenance revenue
Allowance for excess and obsolete inventory
Equity compensation
Allowance for doubtful accounts
Inventory capitalization
Accrued compensation and benefits
Unrealized loss on foreign currency exchange
Net operating loss carry forwards
Research and development tax credit carry forwards
Other

Valuation allowance

Deferred tax liabilities:

Property and equipment
Prepaid expenses
Intangible assets
Other

April 28,
2018

April 29,
2017

7,282
1,567
392
1,376
553
531
481
651
37
1,286
334
1,042
15,532
(1,506)
14,026

(4,881)
(486)
(1,302)
(41)
(6,710)
7,316

10,469
2,100
1,336
1,254
848
677
354
1,232
226
1,772
311
1,266
21,845
(2,061)
19,784

(6,762)
(601)
(1,809)
(156)
(9,328)
10,456

The classification of net deferred tax assets in the accompanying consolidated balance sheets is:

Non-current assets
Non-current liabilities

April 28,
2018

April 29,
2017

7,930
(614)
7,316

11,292
(836)
10,456

The summary of changes in the amounts related to unrecognized uncertain tax benefits are:

Balance at beginning of year

Gross increases related to prior period tax positions
Gross decreases related to prior period tax positions
Gross increases related to current period tax positions
Lapse of statute of limitations

Balance at end of year

April 28, 2018 April 29, 2017
3,016
$
235
—
—
(138)
3,113

3,113 $
82
(30)
152
(139)
3,178 $

All of our unrecognized tax benefits would have an impact on the effective tax rate if recognized. It is reasonably possible that the amount
of unrecognized tax benefits could change due to one or more of the following events in the next 12 months: expiring statutes, audit
activity, tax payments, or competent authority proceedings. A statute relating to $2,569 of the unrecognized tax benefits (including
interest) expires in the next 12 months. The benefit will be recognized if the statute lapses with no further action taken by regulators.

Interest and penalties incurred associated with uncertain tax positions are included in the "Income tax expense" line item in our consolidated
statement of operations. Accrued interest and penalties are included in the related tax liability line item in our consolidated balance sheet
of $238 and $170 as of April 28, 2018 and April 29, 2017, respectively.

As of April 28, 2018, we had foreign net operating loss (“NOL”) carryforwards of approximately $7,223 primarily related to our operations
in Belgium and Ireland, which have indefinite lives, and $62 is related to other international operations that expires in fiscal 2019. A
deferred tax asset has been recorded for all NOL carryforwards totaling approximately $1,286. However, due to uncertainty in future
taxable income, a valuation allowance totaling approximately $1,279 has been recorded in Belgium and Ireland. If sufficient evidence
of our ability to generate future taxable income in the jurisdictions in which we currently maintain a valuation allowance causes us to
determine that our deferred tax assets are more likely than not realizable, we would release our valuation allowance, which would result
in an income tax benefit being recorded in our consolidated statement of operations.

Additional tax information:

We are subject to U.S. federal income tax as well as income taxes of multiple state and foreign jurisdictions. Due to various factors and
operating in multiple state and foreign jurisdictions, our effective tax is subject to fluctuation. As a result of the expiration of statutes of
limitations, our fiscal years 2015, 2016, and 2017 are the remaining years open under statutes of limitations for federal and state income
tax examinations. Certain subsidiaries are also subject to income tax in several foreign jurisdictions which have open tax years varying
by jurisdiction beginning in fiscal 2008.

As of April 28, 2018, we have no deferred tax liability recognized relating to our investment in foreign subsidiaries where the earnings
have been indefinitely reinvested. The Tax Act generally eliminates U.S. federal income taxes on dividends from foreign subsidiaries,
and as a result, the accumulated undistributed earnings would only be subject to other taxes, such as withholding taxes and state income
taxes, on distribution of such earnings. No additional withholding or income taxes have been provided for any remaining undistributed
foreign earnings not subject to the one-time deemed repatriation tax, as it is our intention for these amounts to continue to be indefinitely
reinvested in foreign operations in all of our non-U.S. jurisdictions.

Note 15. Cash Flow Information

The changes in operating assets and liabilities consisted of the following:

April 28,
2018

Year Ended
April 29,
2017

April 30,
2016

(Increase) decrease:
Account receivable
Long-term receivables
Inventories
Costs and estimated earnings in excess of billings
Prepaid expenses and other current assets
Income taxes receivables
Investment in affiliates and other assets

Increase (decrease):

Current marketing obligations and other payables
Accounts payable
Customer deposits
Accrued expenses
Warranty obligations
Billings in excess of costs and estimated earnings
Long-term warranty obligations
Income taxes payable
Deferred revenue
Long-term marketing obligations and other payables

2,266
1,548
(8,517)
5,911
(1,252)
(4,747)
413

(358)
(2,573)
(53)
3,830
346
1,034
1,729
(592)
2,499
379
1,863

(2,718)
2,213
3,581
(6,203)
(980)
4,201
(611)

857
5,544
(1,514)
2,351
(2,986)
536
389
1,331
1,256
(43)
7,204

Supplemental disclosures of cash flow information consisted of the following:

Cash payments for:

Interest
Income taxes, net of refunds

April 28,
2018

Year Ended
April 29,
2017

193
8,937

228
3,196

3,789
2,851
(5,100)
4,867
1,290
1,061
(776)

21
(9,926)
(941)
776
4,726
(13,436)
(710)
(37)
2,120
(456)
(9,881)

April 30,
2016

303
(824)

Supplemental schedule of non-cash investing and financing activities consisted of the following:

Demonstration equipment transferred to inventory

218

227

April 28,
2018

Year Ended
April 29,
2017

April 30,
2016

Purchases of property and equipment included in

accounts payable

Contributions of common stock under the ESPP

Contingent consideration related to acquisition of

ADFLOW

Note 16. Fair Value Measurement

1,983

1,682

—

2,524

840

142

1,777

1,955

ASC 820, Fair Value Measurement, defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an
exit price) in an orderly transaction between market participants at the measurement date. It also establishes a fair value hierarchy which
requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The
fair value hierarchy within ASC 820 distinguishes between the following three levels of inputs which may be utilized when measuring
fair value.

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices included within Level 1 for the assets or liabilities, either directly or indirectly (for
example, quoted market prices for similar assets and liabilities in active markets or quoted market prices for identical assets or
liabilities in markets not considered to be active, inputs other than quoted prices that are observable for the asset or liability, or
market-corroborated input).

Level 3 - Unobservable inputs supported by little or no market activity based on our own assumptions used to measure assets and liabilities.

The fair values for fixed-rate contracts receivable are estimated using a discounted cash flow analysis based on interest rates currently
being offered for contracts with similar terms to customers with similar credit quality. The carrying amounts reported on our consolidated
balance sheets for contracts receivable approximate fair value and have been categorized as a Level 2 fair value measurement. Fair values
for fixed-rate long-term marketing obligations are estimated using a discounted cash flow calculation applying interest rates currently
being offered for debt with similar terms and underlying collateral. The total carrying value of long-term marketing obligations as reported
on our consolidated balance sheets within other long-term obligations approximates fair value and has been categorized as a Level 2 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 April 28, 2018 and April 29, 2017 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.

Level 1

Fair Value Measurements
Level 3
Level 2

Total

Balance as of April 28, 2018:
Cash and cash equivalents
Restricted cash
Available-for-sale securities:
Certificates of deposit
U.S. Government securities
U.S. Government sponsored entities
Municipal bonds

Derivatives - asset position
Derivatives - liability position
Contingent liability

Balance as of April 29, 2017:
Cash and cash equivalents
Restricted cash
Available-for-sale securities:
Certificates of deposit
U.S. Government securities
U.S. Government sponsored entities
Municipal bonds

Derivatives - asset position
Derivatives - liability position
Contingent liability

29,727
28

—
992
—
—
—
—
—
30,747

32,623
216

—
400
—
—
—
—
—
33,239

— $
—

29,727
28

8,669
—
19,949
4,912
41
(236)
—
33,335

—
—
—
—
—
—
(1,000)
(1,000)

8,669
992
19,949
4,912
41
(236)
(1,000)
63,082

— $
—

32,623
216

12,487
—
12,238
7,588
64
(277)
—
32,100

—
—
—
—
—
—
(1,891)
(1,891)

A roll forward of the Level 3 contingent liability, both short- and long-term, for the year ended April 28, 2018 is as follows:

Contingent liability as of April 29, 2017

Settlements
Interest

Foreign currency translation

Contingent liability as of April 28, 2018

12,487
400
12,238
7,588
64
(277)
(1,891)
63,448

1,891

(1,009)
37

1,000

The following methods and assumptions were used to estimate the fair value of each class of financial instrument. There have been no
changes in the valuation techniques used by us to value our financial instruments.

Cash and cash equivalents: Consists of cash on hand in bank deposits and highly liquid investments, primarily money market
accounts. The fair value was measured using quoted market prices in active markets. The carrying amount approximates fair value.

Restricted cash: Consists of cash and cash equivalents held in bank deposit accounts to secure issuances of foreign bank guarantees. The
fair value of restricted cash was measured using quoted market prices in active markets. The carrying amount approximates fair value.

Certificates of deposit: Consists of time deposit accounts with original maturities of less than three years and various yields. The fair
value of these securities was measured based on valuations observed in less active markets than Level 1 investments from a third-party
financial institution. The carrying amount approximates fair value.

U.S. Government securities: Consists of U.S. Government treasury bills, notes, and bonds with original maturities of less than three years
and various yields. The fair value of these securities was measured using quoted market prices in active markets.

U.S. Government sponsored entities: Consists of Fannie Mae and Federal Home Loan Bank investment grade debt securities trading
with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis. The fair value of these securities
was measured based on valuations observed in less active markets than Level 1 investments. The contractual maturities of these
investments vary from one month to three years.

Municipal bonds: Consists of investment grade municipal bonds trading with sufficient frequency and volume to enable us to obtain
pricing information on an ongoing basis. The contractual maturities of these investments vary from two to three years. The fair value
of these bonds was measured based on valuations observed in less active markets than Level 1 investments.

Derivatives – currency forward contracts: Consists of currency forward contracts trading with sufficient frequency and volume to enable
us to obtain pricing information on an ongoing basis. The fair value of these securities was measured based on a valuation from a third-
party bank. See "Note 17. Derivative Financial Instruments" for more information regarding our derivatives.

Contingent liability: Consists of the fair value of a liability measured on an expected future payment in fiscal 2019 relating to a business
acquisition if future financial performance measures are achieved. The contingent liability was calculated by estimating the discounted
present value of expected future payments for estimated performance measure attainment. To estimate future performance measure
attainment, we utilized significant unobservable inputs as of April 28, 2018 and April 29, 2017. The unobservable inputs included
management expectations and forecasts for business sales and profits performance and an estimated discount rate based on current
borrowing interest rates. To the extent that these assumptions changed or actual results differed from these estimates, the fair value of
the contingent consideration liability could change from $1,000 to $0 or increase in proportion to increased business performance from
this estimate. The contingent liability is presented in other long-term obligations in our consolidated balance sheets.

Non-recurring measurements: The fair value measurement standard also applies to certain non-financial assets and liabilities measured
at fair value on a nonrecurring basis. Certain long-lived assets such as goodwill, intangible assets and property and equipment are
measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is
evidence of impairment. We used Level 3 inputs to measure and record a technology and customer list intangible asset impairment of
$830 during fiscal 2017. See "Note 6. Goodwill and Intangible Assets" for more information.

Other measurements using fair value: Some of our financial instruments, such as accounts receivable, long-term receivables, prepaid
expense and other assets, costs and earnings in excess of billings and billings in excess of costs, accounts payable, warranty obligations,
customer deposits, deferred revenue, and other long-term obligations, are reflected in the balance sheet at carrying value, which
approximates fair value due to their short-term nature.

Note 17. Derivative Financial Instruments

We utilize derivative financial instruments to manage the economic impact of fluctuations in currency exchange rates on those transactions
denominated in currencies other than our functional currency, which is the U.S. dollar. We enter into currency forward contracts to
manage these economic risks. We account for all derivatives on the balance sheet within accounts receivable or accounts payable measured
at fair value, and changes in fair values are recognized in earnings unless specific hedge accounting criteria are met for cash flow or net
investment hedges. As of April 28, 2018 and April 29, 2017, we had not designated any of our derivative instruments as accounting
hedges, and thus we recorded the changes in fair value in "Other (expense) income, net."

The foreign currency exchange contracts in aggregated notional amounts in place to exchange U.S. dollars at April 28, 2018 and
April 29, 2017 were as follows:

Foreign Currency Exchange Forward Contracts:

U.S. Dollars/Australian Dollars

U.S. Dollars/Canadian Dollars

U.S. Dollars/British Pounds

U.S. Dollars/Singapore Dollars

U.S. Dollars/Euros

U.S. Dollars/Swiss Franc

April 28, 2018

April 29, 2017

U.S.
Dollars

Foreign
Currency

U.S.
Dollars

Foreign
Currency

1,081

2,165

5,856

236
(854)
41

1,400

2,819

4,368

312
(708)
40

7,984

256

4,936

605

528

—

10,669

345

3,959

844

491

—

As of April 28, 2018, there was an asset and liability of $41 and $236, respectively, and, as of April 29, 2017, there was an asset and
liability of $64 and $277, respectively, representing the fair value of foreign currency exchange forward contracts, which were determined
using Level 2 inputs from a third-party bank.

Note 18. 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. We establish accruals for those contingencies when the incurrence of a loss is
probable and can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess
of the amount accrued, if such disclosure is necessary for our financial statements to not be misleading. We do not record an accrual
when the likelihood of loss being incurred is probable, but the amount cannot be reasonably estimated, or when the loss is believed to
be only reasonably possible or remote, although disclosures will be made for material matters as required by ASC 450-20, Contingencies
- Loss Contingencies. Our assessment of whether a loss is reasonably possible or probable is based on our assessment and consultation
with legal counsel regarding the ultimate outcome of the matter following all appeals.

As of April 28, 2018, we recorded a liability and related other receivable of $1,904 for a net claim from a customer against work performed
by one of our subcontractors during installation which damaged our customer's property. The amount recorded is for probable and
reasonably estimated cost to remediate the damage. Our subcontractor has full insurance for such matters, we have claims to a performance
bond as additional collateral, and we carry insurance to cover such matters. In the opinion of management, the ultimate liability of this
claim is not expected to have a material effect on our financial position, liquidity or capital resources.

As of April 28, 2018, a customer was withholding $2,224 of payment claiming we did not perform to the customer's specifications. We
believe we have performed to the agreed-upon written specifications, have strong contractual documentation to support our position, and
a customer with wherewithal to pay. We believe that we will ultimately prevail in collections. Although our assessment of the loss is
remote, a number of factors could change the outcome.

We did not believe there was a reasonable probability that any material loss for other various claims or legal actions, including reviews,
inspections or other legal proceedings, if any, would 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 to have a
material effect on our financial position, liquidity or capital resources.

As of April 29, 2017, we did not believe there was a reasonable probability that any material loss for various claims or legal actions,
including reviews, inspections or other legal proceedings, if any, would be incurred. Accordingly, no material accrual or disclosure of a
potential range of loss has been made.

Warranties: We offer a standard parts coverage warranty for periods varying from one to five years for most of our products. We also
offer additional types of warranties to include on-site labor, routine maintenance and event support. In addition, the terms of warranties
on some installations can vary from one to 10 years. The specific terms and conditions of these warranties vary primarily depending on
the type of product sold. We estimate the costs which may be incurred under the contractual warranty obligations and record a liability
in the amount of such estimated costs at the time the revenue is recognized. Factors affecting our estimate of the cost of our warranty
obligations include historical experience and expectations of future conditions. We continually assess the adequacy of our recorded
warranty accruals and, to the extent we experience any changes in warranty claim activity or costs associated with servicing those claims,
our accrued warranty obligation is adjusted accordingly.

During fiscal 2016, we discovered a warranty issue caused by a mechanical device failure within a module for displays primarily in our
OOH applications built prior to fiscal 2013. The device failure causes a visual defect in the display. Over the past three years, we have
deployed preventative maintenance to impacted sites and repaired the defective devices in our repair center. When certain site locations
have exceeded an acceptable failure rate, we have refurbished the display to meet customers’ expectations under contractual obligations.
During fiscal 2018, 2017, and 2016, we recognized warranty expense for probable and reasonably estimated costs to remediate this issue
of $4,539, $1,766, and $9,174, respectively. The decision to incur additional warranty expense in fiscal 2018 is primarily based on our
decision to preserve our market leadership and, in certain cases, customer relationship by providing coverage beyond our contractual
obligations. As of April 28, 2018, we had $1,555 remaining in accrued warranty obligations for the estimate of probable future claims
related to this issue. Although many of our contractual warranty arrangements are nearing expiration for products with this issue, we
may incur additional discretionary costs to maintain customer relationships or for higher than expected failure rates. Accordingly, it is
possible that the ultimate cost to resolve this matter may increase and be materially different from the amount of the current estimate and
accrual.

Changes in our warranty obligation for the fiscal years ended April 28, 2018 and April 29, 2017 consisted of the following:

Beginning accrued warranty obligations
Warranties issued during the period
Settlements made during the period
Changes in accrued warranty obligations for pre-

existing warranties during the period, including
expirations

Ending accrued warranty obligations

April 28, 2018
27,899
$
11,961
(17,653)

April 29, 2017
30,496
$
10,930
(16,790)

April 30, 2016
26,481
$
10,528
(18,377)

7,746
29,953

3,263
27,899

11,864
30,496

Performance guarantees: We have entered into standby letters of credit and surety bonds with financial institutions relating to the
guarantee of our future performance on contracts, primarily construction-type contracts. As of April 28, 2018, we had outstanding letters
of credit and surety bonds in the amount of $7,706 and $16,522, 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.

Leases: We lease vehicles, office space and equipment for various global sales and service locations, including manufacturing space in
the United States and China. Some of these leases, including the lease for manufacturing facilities in Sioux Falls, South Dakota, include
provisions for extensions or purchase. The lease for the facilities in Sioux Falls, South Dakota can be extended for an additional five
years past its current term, which ends March 31, 2022, and it contains an option to purchase the property subject to the lease from March
31, 2017 to March 31, 2022 for $9,000, which approximates fair value. If the lease is extended, the purchase option increases to $9,090
for the year ending March 31, 2023 and $9,180 for the year ending March 31, 2024. Rental expense for operating leases was $3,477,
$3,175 and $3,031 for the fiscal years 2018, 2017, and 2016, respectively.

Future minimum payments under noncancelable operating leases, excluding executory costs such as management and maintenance fees,
with initial or remaining terms of one year or more consisted of the following at April 28, 2018:

Fiscal years ending
2019
2020
2021
2022
2023
Thereafter

Amount

2,795
2,220
1,888
1,510
249
297
8,959

Purchase commitments: From time to time, we commit to purchase inventory, advertising, cloud-based information systems, information
technology maintenance and support services, and various other products and services over periods that extend beyond one year. As of
April 28, 2018, we were obligated under the following conditional and unconditional purchase commitments, which included $350 in
conditional purchase commitments:

Fiscal years ending
2019
2020
2021
2022
2023
Thereafter

Amount

2,735
1,898
313
143
113
266
5,468

Other long-term obligations: We are obligated to pay the following payments for acquisitions and for other various obligations:

Advertising

Deferred purchase price

Other

Total outstanding

Less: current liability
Other long-term obligations

Note 19. Subsequent Events

April 28, 2018

April 29, 2017

408

1,844

156

2,408

1,187
1,221

580

2,479

165

3,224

1,506
1,718

Note 20. Quarterly Financial Data (Unaudited)

The following table presents summarized quarterly financial data:

Net sales
Gross profit
Net income (loss)
Basic earnings (loss) per share
Diluted earnings (loss) per share

July 29,
2017
172,728
44,646
8,429
0.19
0.19

July 30,
2016
157,146
39,067
5,539
0.13
0.13

Fiscal Year 2018(1)(2)(3)

October 28,
2017

169,309
42,604
7,132
0.16
0.16

January 27,
2018
130,316
28,567
(6,189)
(0.14)
(0.14)

Fiscal Year 2017(4)

October 29,
2016

169,992
44,308
9,021
0.21
0.20

January 28,
2017
115,719
23,316
(5,127)
(0.12)
(0.12)

April 28,
2018
138,177
29,852
(3,810)
(0.09)
(0.09)

April 29,
2017
143,682
33,724
909
0.02
0.02

(1) The financial data for the quarter ended October 28, 2017 includes the sale of our non-digital division assets. See "Note 5.

Sale of Non-Digital Division Assets" for further information.

(2) The financial data for the quarters ended October 28, 2017 and April 28, 2018 includes additional warranty charges due to
specific site issues of $3,179 and $2,354, respectively. See "Note 18. Commitments and Contingencies" for further
information.

(3) The financial data for the quarters ended January 27, 2018 and April 28, 2018 includes the effects of the Tax Act, which
impacted our deferred tax asset valuation and the impact of deemed repatriation of foreign earnings with an increase to tax
expense of $4,280 and a decrease to tax expense of $461. See "Note 14. Income Taxes" for further information.

(4) The financial data for the quarter ended October 29, 2016 includes an impairment loss on intangible assets. See "Note 6.

Goodwill and Intangible Assets" for further information.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

As reported on the Company’s Current Report on Form 8-K filed on September 15, 2017, effective on September 12, 2017, the Audit
Committee dismissed Ernst & Young LLP as the Company’s independent registered public accounting firm and appointed Deloitte &
Touche, LLP to serve in this role for the fiscal year ended April 28, 2018. For more information, see the Current Report on Form 8-K
filed on September 15, 2017, as amended by the Current Report on Form 8-K/A (Amendment No. 1) filed on December 1, 2017.

Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management of our Company is responsible for establishing and maintaining effective disclosure controls and procedures as defined in
Rules 13a-15(e) under the Securities Exchange Act of 1934. As of April 28, 2018, an evaluation was performed, under the supervision
and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that as of April 28, 2018, our disclosure controls and procedures were effective at the reasonable assurance
level to ensure information required to be disclosed in this Annual Report on Form 10-K was recorded, processed, summarized and
reported within the time period required by the SEC’s rules and forms and accumulated and communicated to management, including
our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the quarter ended April 28, 2018, there have been no changes in our internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control system was designed to provide reasonable assurance
to our management and board of directors regarding the preparation and fair presentation of published financial statements. All internal
control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement preparation and presentation.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer,
we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control
—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based
on our evaluation under the framework in Internal Control—Integrated Framework, our management concluded our internal control over
financial reporting was effective as of April 28, 2018.

Our internal control over financial reporting as of April 28, 2018 has been audited by Deloitte & Touche, LLP, our independent registered
public accounting firm, which is included in this Annual Report on Form 10-K.

By /s/ Reece A. Kurtenbach

Reece A. Kurtenbach

Chief Executive Officer

June 8, 2018

By /s/ Sheila M. Anderson

Sheila M. Anderson

Chief Financial Officer

June 8, 2018

Item 9B. OTHER INFORMATION

None

PART III.

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item 10 will be included under the captions “Proposal One - Election of Directors” and “Corporate
Governance” in our Proxy Statement for our 2018 annual meeting of shareholders (“Proxy Statement”) to be filed within 120 days after
our most recent fiscal year-end. Information concerning the compliance of our officers, directors and 10 percent shareholders with
Section 16(a) of the Securities Exchange Act of 1934 is incorporated by reference to the information to be contained in the Proxy Statement
under the caption “Section 16(a) Beneficial Ownership Reporting Compliance.” The information regarding Audit Committee members
and “Audit Committee Financial Experts” is incorporated by reference to the information to be contained in the Proxy Statement under
the caption “Corporate Governance–Committees of the Board of Directors.” The information regarding our Code of Conduct is
incorporated by reference to the information to be contained in the Proxy Statement under the heading “Corporate Governance – Code
of Conduct.”

Item 11. EXECUTIVE COMPENSATION

Information regarding the compensation of our directors and officers for the fiscal year ended April 28, 2018 will be in the Proxy Statement
under the heading “Proposal One - Election of Directors” and “Executive Compensation” and is incorporated herein by reference.

We maintain a Code of Conduct which applies to all of our employees, officers and directors. Included in the Code of Conduct are ethics
provisions that apply to our Chief Executive Officer, Chief Financial Officer and all other financial and accounting management
employees. A copy of our Code of Conduct can be obtained from our website at www.daktronics.com on the Investor Relations page and
will be made available free of charge to any shareholder upon request. Information on or available through our website is not part of this
Form 10-K. We intend to disclose any waivers from, or amendments to, the Code of Conduct by posting a description of such waiver or
amendment on our Internet website. However, to date, we have not granted a waiver from the Code of Conduct.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS

The security ownership of certain beneficial owners and management will be contained in the Proxy Statement under the heading “Security
Ownership of Certain Beneficial Owners and Management” and “Executive Compensation - Securities Authorized for Issuance Under
Equity Compensation Plans” and is incorporated herein by reference.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Information required by this item is incorporated by reference from the sections entitled “Proposal One – Election of Directors –
Independent Directors” and “Corporate Governance - Compensation Committee Interlocks and Insider Participation” that will be contained
in our Proxy Statement. There were no related party transactions in fiscal 2018.

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information regarding our principal accountant will be contained in the Proxy Statement under the heading “Proposal Three - Ratification
of Appointment of Independent Registered Public Accounting Firm” and is incorporated herein by reference.

PART IV.

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements

Our financial statements, a description of which follows, are contained in Part II, Item 8:

Report of Independent Registered Public Accounting Firm - Deloitte & Touche LLP
Report of Independent Registered Public Accounting Firm - Ernst & Young LLP
Consolidated Balance Sheets as of April 28, 2018 and April 29, 2017
Consolidated Statements of Operations for each of the three fiscal years ended April 28, 2018, April 29, 2017, and April 30, 2016
Consolidated Statements of Comprehensive Income for each of the three fiscal years ended April 28, 2018, April 29, 2017, and
April 30, 2016
Consolidated Statements of Shareholders’ Equity for each of the three fiscal years ended April 28, 2018, April 29, 2017, and April
30, 2016
Consolidated Statements of Cash Flows for each of the three fiscal years ended April 28, 2018, April 29, 2017, and April 30, 2016
Notes to the Consolidated Financial Statements

(2)

Schedules

The following financial statement schedule is submitted herewith:

Schedule II – Valuation and Qualifying Accounts

Other schedules are omitted because they are not required or are not applicable or because the required information is included in
the financial statements listed above.

(3)

Exhibits

A list of exhibits required to be filed as part of this report is set forth in the Index of Exhibits, which immediately precedes such
exhibits, and is incorporated herein by reference.

ADFLOW®, All Sport®, Daktronics®, D®, DakStats®, DataTime®, Fuelight™, Fuelink™, Galaxy®, GalaxyPro™, Go Digital®,
Hoffend®, Keyframe®, Matside®, OmniSport®, ProAd®, ProPixel®, ProRail®, ProStar®, Replay®, Sportsound®, Statvision®, Tuff
Sport®, Uniview®, Vac®, Vanguard®, Venus®, Visiconn®, V-Tour®, V-Link®, and Web-Sync® are trademarks of Daktronics, Inc. All
other trademarks referenced are the intellectual property of their respective companies.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual
Report to be signed on its behalf by the undersigned, thereunto duly authorized, on June 8, 2018.

DAKTRONICS, INC.

By: /s/ Reece A. Kurtenbach

Chief Executive Officer and President

(Principal Executive Officer)

By: /s/ Sheila M. Anderson

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.

Signature

By /s/ Byron J. Anderson
Byron J. Anderson

By /s/ Robert G. Dutcher
Robert G. Dutcher

By /s/ Nancy D. Frame
Nancy D. Frame

By /s/ Reece A. Kurtenbach
Reece A. Kurtenbach

By /s/ James B. Morgan
James B. Morgan

By /s/ John L. Mulligan
John L. Mulligan

By /s/ John P. Friel
John P. Friel

By /s/ Kevin P. McDermott
Kevin P. McDermott

Title

Director

Date

June 8, 2018

Director

June 8, 2018

Director

June 8, 2018

Director

June 8, 2018

Director

June 8, 2018

Director

June 8, 2018

Director

June 8, 2018

Director

June 8, 2018

DAKTRONICS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

Description

For the year ended April 28, 2018:

Deducted from asset accounts:

Additions

Balance at
Beginning
of Year

Charged to
Costs and
Expenses

Charged to
Other
Accounts

Deductions

Balance
at End
of Year

Allowance for doubtful accounts

2,610

1,451

For the year ended April 29, 2017:

Deducted from asset accounts:

Allowance for doubtful accounts

2,797

2,496

For the year ended April 30, 2016:

Deducted from asset accounts:

Allowance for doubtful accounts

2,316

934

(a)

Write-off of uncollected accounts, net of collections

—

(1,910) (a)

2,151

(2,683) (a)

2,610

(453) (a)

2,797

Index of Exhibits

Certain of the following exhibits are incorporated by reference from prior filings. The form with which each exhibit was filed and
the date of filing are as indicated below; the reports described below are filed as Commission File No. 0-23246 unless otherwise
indicated.

3.1

3.2

4.1

4.2

4.3

4.5

4.6

4.7

4.8

4.9

10.1

10.2

10.3

10.4

10.5

10.6

16.1

21.1

23.1

23.2

31.1

31.2

32.1

32.2

101

Amended and Restated Articles of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 filed with
our Quarterly Report on Form 10-Q on August 30, 2013).

Amended and Restated Bylaws of the Company (Incorporated by reference to Exhibit 3.4 filed with our Annual Report
on Form 10-K on June 12, 2013).

Form of Stock Certificate Evidencing Common Stock, without par value, of the Company (Incorporated by reference to
Exhibit 4.1 filed with our Amendment No. 1 to the Registration Statement on Form S-1 on January 12, 1994 as
Commission File No. 33-72466).

Rights Agreement (Incorporated by reference to Exhibit 4.1 filed with our Form 8-A on August 29, 2008).

Daktronics, Inc. 2007 Incentive Stock Plan (Incorporated by reference to Exhibit 10.1 filed with our Quarterly Report
on Form 10-Q on August 20, 2007).*

Daktronics, Inc. 2015 Incentive Stock Plan ("2015 Plan") (Incorporated by reference to Exhibit A to the Company's
Definitive Proxy Statement on Schedule 14A filed on July 14, 2015).*

Form of Restricted Stock Award Agreement under the 2015 Plan (Incorporated by reference to Exhibit 10.2 filed with
our Current Report on Form 8-K on September 3, 2015).*

Form of Non-Qualified Stock Option Agreement Terms and Conditions under the 2015 Plan (Incorporated by reference
to Exhibit 10.3 filed with our Current Report on Form 8-K on September 3, 2015).*

Form of Incentive Stock Option Terms and Conditions under the 2015 Plan (Incorporated by reference to Exhibit 10.4
filed with our Current Report on Form 8-K on September 3, 2015).*

Form of Restricted Stock Unit Terms and Conditions under the 2015 Plan (Incorporated by reference to Exhibit 10.5
filed with our Current Report on Form 8-K on September 3, 2015).*

Amended and Restated Deferred Compensation Agreement Between the Company and Aelred Kurtenbach
(Incorporated by reference to Exhibit 10.1 filed with our Annual Report on Form 10-K on June 28, 2004).*

Credit Agreement dated November 15, 2016 by and between the Company and U.S. Bank National Association
(Incorporated by reference to Exhibit 10.1 filed with our Current Report on Form 8-K filed on November 16, 2016).

Revolving Note dated November 15, 2016 issued by the Company to U.S. Bank National Association (Incorporated by
reference to Exhibit 10.2 filed with our Current Report on Form 8-K filed on November 16, 2016).
Amended and Restated Loan Agreement dated November 15, 2016 by and between the Company and Bank of America,
N.A. (Incorporated by reference to Exhibit 10.3 filed with our Current Report on Form 8-K filed on November 16,
2016).

Continuing and Unconditional Guaranty dated November 15, 2016 by and between the Company and Bank of America,
N.A. (Incorporated by reference to Exhibit 10.4 filed with our Current Report on Form 8-K filed on November 16,
2016).

Amended and Restated Loan Agreement dated May 5, 2017 by and between the Company and Bank of America, N.A.
(Incorporated by reference to Exhibit 10.6 filed with our Annual Report on Form 10-K filed on June 9, 2017).

Letter from Ernst & Young LLP, dated September 14, 2017, to the Securities and Exchange Commission (Incorporated
by reference to Exhibit 16.1 filed with our Current Report on Form 8-K filed on September 15, 2017).

Subsidiaries of the Company. (1)

Consent of Deloitte & Touche LLP. (1)

Consent of Ernst & Young LLP. (1)

Power of Attorney. (1)

Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities
Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1)

Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1)

Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
Section 1350). (1)

Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
Section 1350). (1)

The following financial information from our Annual Report on Form 10-K for the fiscal year ended April 28, 2018,
formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the
Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the
Consolidated Statements of Shareholders' Equity, (v) the Consolidated Statements of Cash Flows, (vi) Notes to
Consolidated Financial Statements, and (vii) document and entity information. (1)

(1)

Filed herewith electronically.

Indicates a management contract or compensatory plan or arrangement.

DAKTRONICS, INC.
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EXHIBIT 32.1

In connection with the Annual Report on Form 10-K of Daktronics, Inc. (the “Company”) for the annual period ended April 28,
2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Reece A. Kurtenbach, Chief
Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of

operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the
Company and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Reece A. Kurtenbach
Reece A. Kurtenbach
Chief Executive Officer
June 8, 2018

DAKTRONICS, INC.
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EXHIBIT 32.2

In connection with the Annual Report on Form 10-K of Daktronics, Inc. (the “Company”) for the annual period ended April 28,
2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sheila M. Anderson, Chief Financial
Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of

operations of the Company.

/s/ Sheila M. Anderson
Sheila M. Anderson
Chief Financial Officer
June 8, 2018

DIRECTORS & COMPANY MANAGERS

Byron J. Anderson2, 3
Former Senior Vice President
Agilent Technologies, Inc.
John L. Mulligan1
Former Investment Associate
UBS Financial Services, Inc.

James B. Morgan1, 3
Former President and CEO
Daktronics, Inc.

1 Member of Audit Committee
2 Member of Compensation Committee
3 Member of Nominating and Governance Committee

Reece A. Kurtenbach
Chairman of the Board, President and CEO

Sheila M. Anderson
Chief Financial Officer and Treasurer

Matthew J. Kurtenbach
Vice President Manufacturing

INDEPENDENT DIRECTORS

Robert G. Dutcher2
Former Strategic Advisor Lead Member of
MEDRAD, Inc.
Kevin McDermott1
Former Partner
KPMG LLP

Nancy D. Frame3
Former Deputy Director
U.S. Trade and Development Agency
John Friel1, 2
CEO Vascor, Inc.
Former President & CEO of MEDRAD,
Inc.

NON-INDEPENDENT DIRECTORS

NAMED EXECUTIVE OFFICERS

Bradley T. Wiemann
Executive Vice President Commerical,
High School Park and Recreation, and
Transportation Business Units

Carla S. Gatzke
Vice President Human Resources,
Secretary

Brett D. Wendler
Vice President Engineering
Jay W. Parker
Vice President Live Events Sales
Pete F. Egart
Vice President EMELA Sales

OTHER OFFICERS

Sarah Rose
Vice President Services
Seth T. Hansen
Vice President Project Management
Daniel J. Chase
Vice President Asia-Pacific Sales

Rich E. Hinzt
Vice President Information Technology

Judd Guthmiller
Vice President International Operations

INVESTOR INFORMATION

ANNUAL MEETING
September 5, 2018, 7:00pm Central Daylight Time
Daktronics, Inc.
201 Daktronics Drive
Brookings, South Dakota
Shareholders of record on July 2, 2018 will be eligible to vote
at the meeting.

INQUIRIES & INFORMATION
Daktronics, Inc.
Investor Relations
PO Box 5128
Brookings, SD 57006
Website: www.daktronics.com
Email: investor@daktronics.com
Phone: 605-692-0200
Fax: 605-697-4700

STOCK TRANSFER AGENT & REGISTRAR
Equiniti Trust Company
(Formerly Wells Fargo Bank, N.A.)

EQ Shareowner Services
PO Box 64874
St. Paul, MN 55164-0874
Or Overnight Mail:
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120

800-468-9716
www.shareowneronline.com

INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Deloitte & Touche, LLP
Minneapolis, Minnesota

LEGAL COUNSEL
Winthrop & Weinstine, P.A.,
Minneapolis, Minnesota

Cautionary Notice Regarding Forward-Looking Statements:
This annual report, including information incorporated by reference and the Annual Report on Form 10-K, contains both historical and forward-looking statements that
involve risks, uncertainties and assumptions. The statements contained in this report that (including exhibits and any information incorporated by reference) are not purely
historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Exchange Act
of 1934, as amended, including statements regarding our expectations, beliefs, intentions and strategies for the future. These statements appear in a number of places in
this report and include all statements that are not historical statements of fact regarding the intent, belief or current expectations with respect to, among other things: our
financing plans; trends affecting our financial condition or results of operations; our growth strategy and operating strategy; our competition; our business outside of the
United States; our large contracts with significant customers; our ability to protect our intellectual property rights; excess production capacity or capacity needs; our
involvement in litigation; difficult conditions of the economy; and the declaration and payment of dividends. The words “may,” “would,” “could,” “will,” “expect,”
“estimate,” “anticipate,” “believe,” “intend,” “plans” and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are
cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, many of which are beyond our ability to
control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors discussed herein, including those
discussed in the section of the Annual Report on Form 10-K entitled “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and those factors discussed in detail in our other filings with the Securities and Exchange Commission.