Daktronics, Inc. Annual Report 2022

FY2022 Annual Report · Daktronics, Inc.

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20(cid:21)2 ANNUAL REPORT

Dear Shareholders,

2022 LETTER TO SHAREHOLDERS

Founded in 1968 as a USA-based manufacturing and engineering company, Daktronics has grown into a world leader in
audiovisual systems and implementation with offices around the globe. Today, we believe Daktronics offers the industry’s
broadest range of products, deepest level of experience, highest level of performance and unmatched customer service. We
help our customers to impact their audiences with large-format LED video displays, message displays, scoreboards, digital
billboards, audio systems and control systems in sport, business and transportation applications.

Every day, our values are reflected in the way we build our products and our relationships. We deliver value to our
shareholders by:

•
•
•
•
•

Engaging our employees through challenging and rewarding opportunities
Developing strategic partnerships with our suppliers
Leveraging our strengths in product innovation, manufacturing, and service
Contributing to the betterment of our communities
Generating an attractive return for our investors, many of whom are our employees.

Last year at this time, lockdowns were ending, and people began gathering, renewing our customers' confidence in their
business outlook. Our order volume rebounded from the pandemic year lows. Daktronics products and solutions are chosen
for our industry-leading value as highlighted by our all-time order record of $846 million for the year. Part of this record
was attributed to being selected as the dynamic video system provider for the LA Clippers and Real Madrid Soccer Club
stadiums. Customers also placed orders for future deliveries to secure our manufacturing capacity.

Responding to Macro-Economic Challenges
We believe owning and operating our manufacturing processes provides us a competitive advantage and helps us deliver
greater quality, reliability, and flexibility. This flexibility has been essential during this unprecedented time of order
recovery and supply chain challenges. During the pandemic contraction, FY2021, our revenue dropped to $482 million, a
decline of $127 million from FY2020. Then, sales rebounded back to $611 million or $129 million in growth in Fiscal
2022. For a manufacturer, this stressed our capacity and operational planning. In addition, our production levels were
frequently disrupted by varying supply chain challenges. Semiconductor parts, including integrated circuits and other
components needed for production, have had sporadic availability because of allocations, slowed transportation, and
continued Covid restrictions in certain geographies. To combat these disruptions and support timely deliveries, we have
increased our investment in inventories, adjusted delivery expectations, redesigned product lines for other available
material, and increased investment in automated manufacturing machinery. We expect dynamic and volatile supply chain
and labor conditions to persist at least through the calendar year, so we will continue to work to maximize productivity
while balancing constraints. As the environment evolves, we plan to adjust and adapt our pricing and our production
schedules to best serve our customers.

We responded to inflationary pressures by increasing pricing and implementing additional pricing controls. Pricing
increases have been an infrequent activity over the past 54 years. Normally, electronic components and processing improve
in pricing and efficiency and prices tend to fall over time, however, this past year we have seen historic price increases
across the varying inventory and commodities we use as well as have experienced inflationary pressures in personnel costs.
We continue to monitor our supply chains and marketplaces and adapt our pricing methodologies accordingly.

While it has been a challenging few years, our focus remains on profitable long-term growth and creating shareholder value
through strategically investing in technologies and solutions, resilient supply chains, efficient production capacity, and
growing and serving our customers.

Over the long-term, we believe the fundamentals of the audiovisual industry are resilient and are poised for growth. Our
brand and reputation are strong and we will continue to focus on serving our core businesses – sports, commercial, and
transportation – and developing new markets as we continue to invest in new technologies and solutions. We see demand
growing through new display purchases, as well as through replacement of existing equipment as systems age and
customers are attracted to new products and uses. As we invest in technologies, we will optimize the value of solutions we
provide, for customers in emerging markets and applications.

We would like to thank our teams across Daktronics, our customers and our shareholders for their support during this
challenging environment - and we look forward to continuing to deliver the great products our company is known for.

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

(This page has been left blank intentionally.)

FINANCIAL HIGHLIGHTS

Daktronics, Inc. and its subsidiaries are an 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 engage 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. Our business is organized into five business units: Commercial, Live Events, 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, Europe, and the Asia-Pacific Region.

We employ 2,477 full-time and part-time employees. Our engineering capabilities are second to none in the industry and
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 (loss)
Net income (loss)
Gross profit percentage
Operating margin percentage
Weighted average diluted shares
Diluted earnings (loss) per share
Cash dividend per share

Working capital
Total assets
Shareholders' equity
Product Backlog

Product design and development
Capital expenditures
Depreciation and amortization expense
Cash flow from operations
Regular 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

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

44,873
0.12
0.28

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

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

FY2019
569,704
130,294
135,022
(4,728)
(958)
22.9 %
(0.8) %

44,926
(0.02)
0.28

119,601
349,216
187,663
202,000

35,557
17,268
18,635
29,546
0.28

FY2020
608,932
138,700
138,867
(167)
491
22.8 %
— %

FY2021
482,033
120,583
103,475
17,108
10,926

25.0 %
3.5 %

45,316
0.01
0.20

106,037
372,651
176,980
212,000

37,772
18,091
17,718
10,808
0.20

45,202
0.24
—

118,383
375,164
193,554
251,000

26,846
7,891
17,077
66,212
—

FY2022
610,970
116,697
112,651
4,046
592
19.1 %
0.7 %

45,326
0.01
—

103,876
440,876
191,564
472,000

29,013
20,376
15,394
(27,035)
—

2,405
308

2,412
310

2,395
276

1,981
136

10.76
8.55
9.01

10.05
7.21
7.30

7.91
4.16
4.45

7.22
3.79
6.17

2,246
231

7.20
3.35
3.35

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the Fiscal Year Ended April 30, 2022
OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the Transition Period From ___ to ___.
Commission File Number: 0-23246

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

South Dakota
(State or Other Jurisdiction of Incorporation or Organization)

46-0306862
(I.R.S. Employer Identification No.)

201 Daktronics Drive
Brookings, SD
(Address of Principal Executive Offices)

57006
(Zip Code)

(605) 692-0200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Common Stock, No Par Value

Preferred Stock Purchase Rights

Trading Symbol(s)
DAKT

Name of each exchange on which registered
Nasdaq Global Select Market

DAKT

Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐
Non-accelerated filer ☐

Accelerated filer ☒
Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☒

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

The aggregate market value of the registrant's common stock held by non-affiliates at October 30, 2021 (which is the last business day of
the Registrant’s most recently completed second quarter), computed by reference to the closing sales price of the Registrant’s common
stock on The Nasdaq Global Select Market on such date, was approximately $258,641,294. For purposes of determining this number,
individual shareholders holding more than 10 percent of the Registrant’s outstanding Common Stock are considered affiliates. This
number is provided only for the purpose of this Annual Report on Form 10-K and does not represent an admission by either the
Registrant or any such person as to the status of such person.

The number of shares of the Registrant’s Common Stock outstanding as of June 2, 2022 was 45,033,839.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for its Annual Meeting of Shareholders to be held August 31, 2022 are incorporated by
reference in Part III of the Form 10-K, as indicated in Items 10 through 14 of Part III.

Auditor Name: Deloitte & Touche LLP

Location: Minneapolis, Minnesota

Auditor Firm ID: PCAOB No. 34

DAKTRONICS, INC. AND SUBSIDIARIES
FORM 10-K
FOR THE FISCAL YEAR ENDED April 30, 2022

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

PART I

ITEM 1.

BUSINESS

ITEM 1A. RISK FACTORS

ITEM 1B. UNRESOLVED STAFF COMMENTS

ITEM 2.

PROPERTIES

ITEM 3.

LEGAL PROCEEDINGS

ITEM 4. MINE SAFETY DISCLOSURES

PART II

ITEM 5.

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

ITEM 6.

[Reserved.]

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

ITEM 9A. CONTROLS AND PROCEDURES

ITEM 9B. OTHER INFORMATION

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11. EXECUTIVE COMPENSATION

ITEM 12.

ITEM 13.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

ITEM 16

FORM 10-K SUMMARY

SIGNATURES

Page

71
71

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 and ability to maintain adequate liquidity; (iii.) trends affecting our financial condition or results of
operations; (iv.) our growth and operating strategies; (v.) the declaration and payment of dividends; (vi.) the timing and
magnitude of future contracts; (vii.) raw material shortages and lead times and supply chain disruptions; (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; (xii.) our ability to manage the impact that new or adjusted tariffs may have on
the cost of raw materials and components and our ability to sell product internationally; (xiii.) the resolution of litigation
contingencies; (xiv.) the timing and magnitude of any acquisitions or dispositions; (xv.) the impact of governmental laws,
regulations, and orders, including as a result of the COVID-19 pandemic caused by the coronavirus; and (xvi) disruptions
to our business caused by geopolitical events, military actions, work stoppages, natural disasters, or international health
emergencies, such as the COVID-19 pandemic. The words “may,” “would,” “could,” “should,” “will,” “expect,”
“estimate,” “anticipate,” “believe,” “intend,” “plan” 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 its subsidiaries (the “Company”, “Daktronics”, “we”, “our”, or “us”) are an industry leader in
designing and manufacturing electronic scoreboards, programmable display systems and large screen video displays for
sporting, commercial and transportation applications. We serve our customers by providing high 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 engage 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 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 and invested
in display technologies and new markets. We have continued these investments and have supported our long-term customer
relationships to grow from a small company operating out of a garage to a world leader in the display industry. We
currently employ 2,477 people globally. We are headquartered at 201 Daktronics Dr., Brookings, SD 57006 telephone
605-692-4200. Our Internet address is https://www.daktronics.com.

Our annual, quarterly and current reports and any amendments to those reports are freely available in the "Investor
Relations" section of our website. We post each of these documents on our website as soon as reasonably practicable after
it is electronically filed with the Securities and Exchange Commission (the "SEC"). These reports and other reports, proxy
statements, and electronic filings 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.

We focus our sales and marketing efforts on markets, geographical regions and products. Our five business segments
consist of four domestic business units and the International business unit. The four domestic business units consist of
Commercial, Live Events, High School Park and Recreation, and Transportation, all of which include the geographic
territories of the United States and Canada. 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 3.
Segment Reporting" of the Notes to our Consolidated Financial Statements included in this Form 10-K.

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. LED technologies continue to evolve and advance, creating new high-resolution and micro-LED
display options of all shapes and sizes. Today, the industry continues development in both the construct of the micro-LED
and production methods of micro-LED display panels using mass-transfer technology.

Integrated visual display systems are increasingly used across a variety of vertical markets including: media/advertising,
stadiums/venues, hospitality/leisure, transportation, military and government, broadcast, control room, corporate and
education, and retail. Generally, these vertical markets use systems to collaboratively communicate, inform, entertain, and
advertise to various sized audiences. Advances in technologies and the decrease in costs of systems have opened up and
increased the market's size.

Description of Business

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. Each of those activities is
described below:

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
system 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 our products sold by resellers in
North America are standard catalog products. We support our resellers through direct mail/email advertising, social media
campaigns, 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 and contract with engineers and technicians in the areas of mechanical and electrical
design; applications engineering; software design; quality design; and customer and product support. Product managers
assigned to each product family assist our sales staff in training and implementing product improvements which ensures
each product is designed for maximum reliability and serviceability. We employ and contract with process engineers to
assist in quality and reliability processing in our product design testing and manufacturing areas. We also make selected
investments in and contract with affiliated companies to support and advance technologies and capabilities for our product
lines and solutions.

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. 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 the 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
many 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 the changes in volume of service requests 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:

ITS (intelligent transportation systems) dynamic message signs

Video displays/video walls
Scoreboards and timing systems

•
•
• Message displays
•
• Mass Transit displays
Sound systems
•
Digital billboards
•
Digital street furniture
•
Digit and price displays
•
Indoor dynamic messaging systems and indoor liquid crystal display ("LCD") signs
•
Software and controllers including Venus® Control Suite
•

Each of these product families is described below:

Video Displays/Video Walls. 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 technology.

We offer a broad range of indoor and outdoor LED video displays with these varying features. Examples of indoor
offerings include centerhung displays, landmark displays, video walls, ribbon board displays, hanging banners, corporate
office entrance displays, conference room displays, and video displays designed for retail stores, restaurants, malls,
transportation hubs and other similar indoor facilities.

Video displays provide content to serve as a revenue generation source through advertising or as an information and
communication medium (such as scoring, statistics, wayfinding, advertising, control center information), or to provide
interior design elements to create luxurious space to feature digital art.

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 both indoor and outdoor touring shows and for other live events.

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 an entire network of displays
within a venue from a single, intuitive control interface. Its 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® Pro, 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® 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 can display text, graphics and animation, as well
as prerecorded video clips. They are used primarily to convey information and on-premises 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
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 Vanguard® control system for these displays to help transportation agencies manage large networks of
displays.

Mass Transit Displays. Our Mass Transit products include a wide range of LCD and LED display solutions for public
transportation applications. Installations often involve a network of displays located on railway platforms, at bus stations,
or on concourses within a transportation hub to guide travelers to their intended destination.

Sound Systems. Our sound systems include both standard and custom options. Standard 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.

Digital Billboards. 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.

Digital street furniture. Our LED street furniture features some of the brightest imagery in the industry and is built to
withstand full-sun conditions. Our line of digital street furniture engages people with advertising content at eye level as
they walk through campuses, cityscapes, and 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 and LCD screens. Our ADFLOW DMS™ systems include indoor networked
solutions for retailers, convenience stores and other businesses. These solutions, either using LED or LCD technologies,
allow customers to broadcast advertising campaigns and other information through the software, media players and visual
hardware.

Software & Controllers including Venus® Control Suite. The Venus® Control Suite is our platform for scheduled control
capability. It can be used in any application where the intended message is created in advance and scheduled to play at a
predetermined time. It is available in an on-premise or hosted cloud-based configuration and is capable of supporting a
single display or scaling to support many displays. For applications that require both scheduled content and live video or
real time content, a control solution can combine the capabilities of Venus® Control Suite with the capabilities of the Show
Control Software Suite to create a powerful solution that enables customers to easily manage content on their displays.
Content includes media, scoring, timing, statistics, advertising, way-finding information, playback loops and entertainment
type visualizations.

Raw Materials

Materials used in the production of our video display and control systems are sourced from around the world. Examples of
the materials we use in production include LEDs, integrated circuits, printed circuit boards, power supplies, plastics,
aluminum, and steel. We source some of our materials from a single-source or a limited number of suppliers due to the
proprietary nature of the materials. The loss of a key supplier, part unavailability, tariff changes, price changes, war or
other geopolitical impacts to trade or transport, or defects 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. We also periodically prepay for future supply.

Since late fiscal 2021, we have been affected by supply chain disruptions and inflationary pressures stemming from the
coronavirus pandemic ("COVID-19"), shipping container shortages, weather events, and the changes in global demand.
Specifically, we are impacted by the global inflation and shortage of semiconductors and related electronic components,

other materials needed for production, and freight. We are unable to predict the supply chain recovery or the impact to our
business.

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. Although we own a number of patents and possess rights under others
to which we attach importance, we do not believe that our business as a whole is materially dependent upon any such
patents or rights. We also own a number of trademarks that we believe are important in connection with the identification
of our products and associated goodwill with customers, but no part of our business materially depends on such
trademarks. 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 uniquely configured 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. Uniquely configured orders can include several displays, controllers, and
subcontracted structure builds, each of which can occur on varied schedules per the customer's needs. Our third fiscal
quarter sales and profit levels are lighter than other quarters due to the seasonality of our sports business, construction
cycles, and the reduced number of production days due to holidays in the quarter.

Our gross margins tend to fluctuate more on uniquely configured orders than on limited configured orders. Uniquely
configured orders involving competitive bidding and substantial subcontracting work for product installation generally
have lower gross margins. Although we follow the over time method of recognizing revenues for uniquely configured
orders, we nevertheless have experienced fluctuations in operating results and expect our future results of operations will
be subject to similar fluctuations.

Because of the seasonality and volatility in business demand and variety of product types, 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.

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 and out-of-home
companies 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. See "Note 3. 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.

Product Order Backlog

Backlog represents the dollar value of orders for integrated electronic display systems and related products and services
which are expected to be recognized in net sales in the future. Orders are contractually binding purchase commitments
from customers. Orders are included in backlog when we are in receipt of an executed contract and any required deposits or
security and have not yet been recognized into net sales. 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. Orders and
backlog are not measures defined by accounting principles generally accepted in the United States of America ("GAAP"),
and our methodology for determining orders and backlog may vary from the methodology used by other companies in
determining their orders and backlog amounts.

Order and backlog levels provide management and investors additional details surrounding the results of our business
activities in the marketplace and highlight fluctuations caused by seasonality and our large project business. Management
uses orders to evaluate market share and performance in the competitive environment. Management uses backlog
information for capacity and resource planning. We believe order information is useful to investors because it provides an
indication of our market share. We believe backlog information is useful to investors to provide an indication of future
revenues.

Our product order backlog as of April 30, 2022 was $471.6 million as compared to $250.7 million as of May 1, 2021. This
increase in backlog is driven by record order volume and muted conversion to sales due to supply chain challenges. Our
customers have also placed orders for future deliveries to secure our manufacturing capacity.

We expect to fulfill the backlog as of April 30, 2022 within the next 24 months. The timing of backlog may be impacted by
project delays resulting from parts availability and other constraints stemming from the supply chain disruptions.

Government and Other Regulation

In the United States and other countries, various laws, regulations and ordinances related to our products and controllers
restrict the installation of outdoor signs and displays, particularly in the commercial and transportation markets. These laws
and regulations impose greater restrictions on electronic displays versus non-electronic displays due to alleged concerns
over aesthetics or driver safety. Globally, our products are also subject to various regulations and standards including
electromagnetic interference, electromagnetic compatibility, electrical safety, and flammability standards. We design and
have our products tested for these regulations; however, these factors may prevent or inhibit us from selling products to
some prospective customers in certain geographies.

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 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 can include certification of country of origin, classification within the various tariff codes and trade
agreements, compliance with other specific product or country import/export regulations, and payment of certain import or
export tariffs, duties, or taxes.

Our global operations subject us to various laws and regulations, including laws and regulations relating to tax compliance,
anti-corruption, data privacy, cybersecurity, governance, and disclosure reporting. These requirements vary and can involve
matters and processes such as using resources for related expertise and information systems, records management, policy
creation and maintenance, data protection programs, compliance filings, control design and testing, and continued training
of employees.

We are subject to regulations restricting the movement and interaction of people and business operations. During
unprecedented times, such as during the duration of the COVID-19 pandemic, countries and the U.S. states and/or its
localities can issue lock down orders impacting availability of employees, third parties, suppliers, customers, and other
services we need to operate our business.

We believe we are in material compliance with government and other regulatory 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 which range in size and product offerings. Our competitors may develop
lower-cost or lower-featured products, may be willing to charge lower prices to increase their market share, or include
different service and controller offerings. Some competitors have more capital, governmental funding, supply change
access, and other resources, which may allow them to take advantage of acquisition opportunities or adapt more quickly to
changes in customer requirements. Other competitors use sponsorships as a way to win business at a particular location or
market. In addition, our products compete with other forms of advertising, such as television, print media and fixed display
signs.

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

Research and Development

Our experience in engineering, process design, and product and service design and development capabilities, and
investments made in affiliates are very important factors in continuing to develop, produce, and offer the most up-to-date
digital displays and control system solutions desired by the market.

Over the past years, we have invested in our development and our affiliates to increase our differentiated product platforms,
advance our software architecture and offerings, support customer requirements, and advance new competitive narrow
pixel and micro-electronic technologies.

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.

Employees and Human Capital Resource Management

Our core values of Honest, Helpful and Humble support our commitment to diversity, equity and inclusion, which leads to
our vision of every person at Daktronics being able to contribute their best every day. We seek to recruit, retain, and
develop our existing and future workforce for decades-long engagements to build long-term mutual prosperity. We
facilitate company-wide groups and teamwork to inspire a more inclusive culture. We encourage each employee to
proactively and continuously build self-awareness, understanding of aspects of diversity, and openness to others’
experiences and perspectives.

The safety and well-being of our team are a top priority, and we believe each and every team member plays an essential
role in creating a safe and healthy workplace. We provide training for safety measures on the job site and in our facilities.
We provide our employees and their families with access to a variety of health programs, including benefits that support
their physical and mental health. In response to the COVID-19 pandemic, we implemented changes that we consider to be
in the best interest of our employees. We implemented additional safety measures for employees continuing critical on-site
work and allowed employees to work from home when able. We believe we have been able to preserve our business
continuity without sacrificing our commitment to keeping our employees safe during the COVID-19 pandemic.

As of April 30, 2022, we employed approximately 2,246 full-time employees and 231 part-time and temporary employees.
Of these employees, approximately 937 were in manufacturing, 468 were in sales and marketing, 503 were in customer
service, 354 were in engineering and 215 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.

Risks Relating to the COVID-19 Pandemic

We face risks related to actual or threatened health epidemics and other outbreaks, including the COVID-19
pandemic, which have and could have a material adverse effect on our operations, liquidity, financial conditions,
and financial results.

A serious global pandemic, including the current pandemic caused by COVID-19 and variants of COVID-19, can
adversely impact, shock and weaken the global economy. These impacts can amplify other risk factors and could have a
material impact on our operations, liquidity, financial conditions, and financial results.

Pandemic-related risks impacting our business may include increased exposure to: global regulatory, geopolitical, and
societal changes; rapid degradation of global economic conditions, creating an increase in the volatility and the timing and

level of orders; supply chain disruptions, material shortages, and increases in the costs of components; changes in labor
force availability, which could reduce our ability to operate across our business in development, sales and marketing,
production, installation, and ongoing service and support; an increased risk of being subject to contract performance claims
if we are unable to deliver according to the terms of our contracts or commitments and cannot claim force majeure to
mitigate or eliminate our exposure to such claims; increased geographic work restrictions that could impact our ability to
market, sell, manufacture and/or install our products; an increase in our exposure to claims or litigation relating to the
pandemic; limitations on our ability to meet the terms of our bank credit agreements that cause restrictions on our ability to
access the liquidity under such agreements; reduced access to and an increase in the cost of capital; reduced access to
surety bonds or bank guarantees to secure customer orders; volatility and changes in foreign currency rates; delayed timing
of collections and/or decreased collectability of receivables and contract assets; and a material reduction to the values of
our assets including, but not limited to, inventory, investments in affiliates, deferred tax assets, goodwill, intangibles, and
property and equipment.

The impact on our customers and suppliers and the range of governmental and community reactions to the pandemic are
uncertain. To the extent that our customers and suppliers are adversely impacted by a pandemic, this could reduce the
availability, or result in delays in the delivery of materials or supplies, or result in delays in customer payments and orders,
which in turn could materially interrupt our business operations and/or impact our liquidity. Site closures or project delays
have occurred and have required increased social distancing and health-related precautions in our factories and many work
sites, which may cause additional project delays and additional costs to be incurred. Pandemics could disrupt our
operations due to absenteeism by infected or ill employees or other employees who elect not to come to work due to the
illness or due to quarantines.

COVID-19 created constraints on supply chain operations and resulted in component part shortages due to global capacity
constraints, such as the current global capacity constraint we are facing in the supply of component parts, particularly of
semiconductor components. Such a constraint could have caused and has caused lead times for our products to increase. In
an effort to halt the outbreak of a pandemic such as COVID-19, governments may place significant restrictions on travel,
such as the restrictions placed by the Chinese government on travel within China, leading to extended business closures,
including closures at some supplier facilities and our manufacturing facilities. Although most of the restrictions on the
operations of our suppliers and on us as a result of COVID-19 have been lifted or eased, we and our suppliers could
continue to be disrupted by worker absenteeism, quarantines, office and factory closures, disruptions to ports and other
shipping infrastructure, or other travel or health-related restrictions, and such restrictions could spread to other locations if
the virus and its variants continues to spread or resurge. If our supply chain operations are adversely affected or are
curtailed by the outbreak of diseases such as COVID-19, our supply chain, manufacturing and product shipments will be
delayed, which could adversely affect our business, operations and customer relationships. We have sought and may need
to continue to seek alternate sources of supply which may be more expensive, unavailable or may result in delays in
shipments to us from our supply chain and subsequently to our customers. Further, if our distributors’ or end user
customers’ businesses are similarly affected, they might delay or reduce purchases from us, which could adversely affect
our results of operations.

In addition, freight and logistics constraints caused in part by restrictions imposed by governments to combat the
COVID-19 pandemic and additionally due to container and carriage shortages and increased fuel prices have resulted in
increased costs and constrained available transport for us and our channel partners, all at a time when global demand has
increased. If our supply chain operations continue to be adversely affected or are curtailed by the outbreak of diseases such
as COVID-19, our supply chain, manufacturing and product shipments will be delayed, which could adversely affect our
business, operations and customer relationships.

The extent to which the COVID-19 pandemic or any other pandemic will impact our business and financial results going
forward will be dependent on future developments such as the length and severity of the crisis, the potential resurgence of
COVID-19 or another pandemic and its variants, future government actions in response to the crisis, the acceptance and
effectiveness of the COVID-19 vaccines and the overall impact of the COVID-19 pandemic on the global economy and
capital markets, among many other factors, all of which remain highly uncertain and unpredictable. We cannot at this time
quantify or forecast the business impact of COVID-19, and there can be no assurance that the COVID-19 pandemic or any
other health crisis will not have a material and adverse effect on our business, financial results and financial condition.

Risks Related to Our Business

If we fail to timely and effectively obtain shipments of raw materials and components from our suppliers or to 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 for us to deliver products to our
customers.

Our utilization of a complex supply chain for raw material and component imports and the global distribution of our
products makes us vulnerable to many risks, including, among other things, shortages or delays because of work
restrictions for various reasons like COVID-19 restrictions, supply chain implications due to war or other geopolitical
impacts on supply chains, 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 or related employee worker
unavailability, that could disrupt operations at ports-of-entry; transportation and other delays in shipments 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 and, therefore, may not be able to timely
receive shipments of raw materials and components or deliver products to customers.

Cost inflation in, and shortages of, raw materials, components, and related transportation and tariff costs has and
can have a significant impact on our price competitiveness and/or ability to produce our products, which has and
could cause harm to our sales, financial condition and results of operations.

Cost inflation and shortages of any raw materials and components used to manufacture our products has and can occur due
to various factors (such as worldwide demand, natural disasters, logistic disruptions, war, and trade regulations).

Electronic and other components and materials used in our products are sometimes in short supply, which may impact our
ability to meet customer demand. Transportation costs and availability can fluctuate due to fluctuations in oil prices and
other social, economic, and geopolitical factors.

If we experience shortages or increases in the prices we pay for raw materials and components and are unable to pass on
those increases to our customers or are unable to manufacture our products at all or on a timely basis, it has and 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.

During late fiscal 2021, supply chain disruptions began to emerge because of COVID-19, shipping container shortages,
winter weather, and changes in global demand. Specifically, we are impacted by the global inflation and shortage of
semiconductors and related electronic components, other materials needed for production, and freight. We are unable to
predict the supply chain recovery or the impact to our business.

As a result of U.S. Administrative trade actions in 2019, we experienced volatility in supply and increases in the prices of
aluminum, electrical, and other components we use in our production. Further trade disputes could make us subject to
additional regulatory costs and challenges, affect global economic and market conditions, and contribute to volatility in
foreign exchange markets, which we may be unable to effectively manage through our foreign exchange risk management
program. We continue to monitor the situation and evaluate ways to minimize these impacts through vendor negotiations,
alternative sources, and potential price adjustments. We estimate our financial results were adversely impacted by
approximately $7.1 million, $2.9 million and $4.9 million of additional costs for tariffs in fiscal 2022, 2021 and 2020,
respectively.

We depend on a single-source or a limited number of suppliers for our raw materials and components from
countries around the world. The loss, an interruption, or a material change in our business relationships with our
suppliers has and could cause a disruption in supply and a substantial increase in the costs of such materials. Such
changes has and could result in extended lead times or supply changes, which could disrupt or delay our scheduled
product deliveries to our end user customers and may result in the loss of sales and end user customers and cause
harm to our sales, financial condition, and results of operations.

Our suppliers are subject to the fluctuations in global economic cycles and conditions and other business risk factors which
may impact their ability to operate their businesses. The performance and financial condition of a supplier may cause us to
alter our business terms, cease doing business with a particular supplier, or change our sourcing practices.

An interruption from our suppliers 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. Our suppliers may need to allocate available supply, and we may not be able to obtain
parts needed for production. Qualifying new suppliers to compensate for such shortages may be time-consuming and costly
and may increase the likelihood of errors in design or production.

In order to reduce manufacturing lead times and plan for adequate component supply, from time to time, we may issue
purchase orders or prepay for components and products that are non-cancelable and non-returnable. In addition, we may
purchase components and products that have extended lead teams to ensure adequate supply to support long-term customer
demand and mitigate the impact of supply disruptions. If we are unable to use all of the components we have purchased, we
may have excess inventory or obsolescence, or increased inventory or carrying costs, which could have an adverse impact
on our results of operation or financial condition.

We may fail to continue to attract, develop and retain personnel throughout our business areas, which could
negatively impact our operating results.

We depend on qualified employees, including experienced and skilled technical personnel, to design, market, fulfill, and
serve our customers. Qualified employees can be in high demand and limited in availability. Our future success and
operating results will also depend upon our ability to attract, train, motivate and retain qualified personnel to maintain and
grow capacity. Although we intend to continue to provide competitive compensation packages to attract and retain
qualified personnel, market conditions for pay levels and availability may impact our operations.

We depend on third parties to complete some of our contracts.

Depending on a contract's scope of work, we may hire third-party subcontractors to perform on-site installation and
service-related activities, hire manufacturers of structures or elements of structures related to on-site installation, hire
contract manufacturers for certain product lines, or purchase specialty non-display related system elements from other
companies. If we are unable to hire qualified subcontractors, find qualified manufacturers for on-site elements, find
qualified contract manufacturers, or purchase specialty non-display system elements, our ability to successfully complete a
project could be impaired. If we are not able to locate qualified third party subcontractors or manufacturers, the amount we
are required to pay may exceed what we have estimated, and we may suffer losses on these contracts. If the subcontractor
or manufacturer fails to perform, 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.

These third parties are subject to fluctuations in global economic cycles and conditions and other business risk factors
which may adversely impact their ability to operate their businesses. The performance and financial condition of the third
parties may cause us to alter our business terms or to cease doing business with a particular third party or change our
sourcing practices.

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 and services capacity and the overhead supporting order fulfillment 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 or services productivity;
long lead times for and availability of raw materials and components used in production;
our ability to engage qualified third parties;
geography of the order and related shipping methods; and
long lead times for our plant and equipment expenditures.

We operate in highly competitive markets and face significant competition and pricing pressures. If we are unable
to keep up with the rapidly changing product developments and new technologies or if we cannot compete
effectively, we could lose market share and orders, which would negatively impact our results of operations.

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. Our competitors may develop lower-cost or
lower-featured products, may be willing to charge lower prices to increase their market share, or market new and unique
product, service and controller offerings. 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. Other
competitors use sponsorships as a way to win business at a particular location or market. In addition, our products compete
with other forms of advertising, such as television, print media and fixed display signs. To remain competitive, we must
anticipate and respond quickly to provide products and services our customers’ needs, enhance our existing products,
introduce new products and features, and continue to price our products competitively.

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 may not be 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, 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 as well
as 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 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.

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

Customer demand and the timing and size of large contracts create volatility in supply chain planning and capacity
requirements to fulfill orders. Awards of large contracts and their timing and amounts are difficult to predict, may not be
repeatable, and are outside of our control. Market demand has not always developed as expected or remained at a

consistent level. Adjusting supply chain material planning and production and services capacity to meet this varied demand
can increase costs. Large contracts or customer awards include projects for college and professional sports facilities
markets, the OOH niche, the transportation market, and the large spectacular niche. These projects can have short delivery
time frames. Some factors that may cause our operating results to vary due to timing and size of the awards include:

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the timing of orders and related deliveries, including delays or cancellations of orders;
our ability to obtain raw materials and components timely and at reasonable prices;
our ability to adjust and utilize production and services capacity;
our ability to engage third parties to support production and fulfillment;
new product introductions;
variations in product mix; and
customer financial wherewithal and the related economic conditions impacting their business.

Operating results in one or more quarters or a fiscal year may not be indicative of future operating results.

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 timing of net sales, costs, and profits or losses in applying the principles to
contracts with customers under the cost incurred input method; credit losses for accounts receivables and contract assets;
the valuation of inventory; estimated amounts for warranty costs; the calculation and valuation of our investments and
deferred tax assets; the valuation of our investment in unconsolidated subsidiaries; fair value estimates used in goodwill
and long-term assets testing; and estimating the impact of uncertainties in the application of complex tax laws. Although
we believe 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, 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. Remediation of a claim may take time and
could result in lost or deferred revenue, lead to costly warranty expenses, and have a material adverse impact on our
financial condition and operating results.

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 and cause liquidity issues.

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. Our
credit facilities also impose certain financial covenants on us which restrict 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 facilities. Upon the
occurrence of an event of default, the lender could elect to declare any and all amounts outstanding under such facilities to
be immediately due and payable and terminate all commitments to extend further credit. For additional information on
financing agreements, see "Note 7. Financing Agreements" of the Notes to our Consolidated Financial Statements included
in this Form 10-K.

For the foreseeable future, it is anticipated that our cash on hand, marketable securities, cash provided by operating
activities, and borrowings under our existing credit facilities should provide sufficient funds to finance our capital
expenditures and working capital needs and otherwise meet operating expenses and debt service requirements. However, if
additional capital is required or we are unable to renew our existing credit facilities at all or on a timely basis, 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 meet their obligations to us.

Unanticipated events resulting in credit losses to us 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, payment bonds 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.

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 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 rights 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 rights of others also have 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.

Geopolitical issues, conflicts and other global events could adversely affect our results of operations and financial
condition.

Our business is subject to global political issues and conflicts. Such political issues and conflicts could have a material
adverse effect on our results of operations and financial condition if they escalate into geographies in which we do business
or obtain materials for production. In addition, changes in and adverse actions by various governments could have a
material adverse effect on our results of operations and financial condition. For example, the recent and continuing conflict
arising from the invasion of Ukraine by Russia could adversely impact macroeconomic conditions, give rise to regional
instability and result in heightened economic tariffs, sanctions and import-export restrictions from the U.S. and the
international community in a manner that adversely affects our Company, including to the extent that any such actions
cause material business interruptions or restrict our ability in this region to conduct business with certain suppliers or
vendors. Additionally, such conflict or sanctions may significantly devalue various global currencies and have a negative
impact on economies in geographies in which we do business.

Weakened global economic or recessionary 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 downturns and recessions, including the COVID-19 related downturn, from time to time
during 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; increased
unemployment; bankruptcies; and overall uncertainty with respect to the economy. These conditions affect consumer and
entertainment 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 and pandemics, may increase our cost of doing business or disrupt
our operations.

The occurrence of one or more unexpected events, including war, terrorist acts, pandemics, fires, tornadoes, floods, severe
weather and natural disasters 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 events 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 expose us to global regulatory, geopolitical, economic and social changes and add additional
risks and uncertainties which can harm our business, operating results, and financial condition.

Our United States and foreign operations, sales, earnings, and strategies for profitable growth can be adversely affected by
global conditions and compliance with global regulations and governmental orders. Global conditions include political
developments; economic changes; unfavorable trading policies; difficulties in staffing and managing global operations;
changes in foreign and domestic governmental regulations or requirements, treaty and trade relationships; the imposition of
government orders that differ among jurisdictions, including mandatory closures, work-from-home and lock-down orders
and social distancing protocols, or other restrictions related to the COVID-19 pandemic; 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 that exist include changing social conditions and attitudes, terrorism, or political
hostilities and war. Other difficulties of global operations include staffing and managing our various locations, 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,
customers, 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”); the 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 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
the bribery of foreign officials and 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. 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
partners take inside or outside of the United States even though we are not aware of such actions or 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 of
2017 is one such example of legislation that has impacted 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 project undertaken by the Organization 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, partial investments, and divestitures pose financial, management and other risks and challenges.

We routinely explore investing in or acquiring other businesses and related assets to complement or enhance our business
strategies. These investments are often made to increase customer relations and market base, expand geographically, or
obtain technological advances to support our solution portfolio. Periodically, we may also consider disposing of these
businesses, partial investments, assets, or other lines of business.

The financial, management and other risks and challenges associated with these activities include, but are not limited to,
the following:

•
•
•
•

•
•
•
•
•
•
•

•

diversion of management attention;
difficulty with integrating acquired businesses;
adverse impact on overall profitability if the expanded operations do not achieve the strategic benefits forecasted;
potential loss or adverse relationship with or a change of key employees, customers, or suppliers of the acquired
business;
inability to effectively manage our expanded operations;
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;
the time involved in evaluating or modifying the financial systems of an acquired business and the establishment
of appropriate internal controls; and
incorrect estimates made in the accounting for the transaction that cause misstatements of acquisition assets and
liabilities.

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.

Our financial results are impacted negatively or positively from our proportionate share of our affiliates financial
performance. Any reduction or impairment of the value of an investment and related acquired assets, goodwill, or
investments in affiliates would result in charges against earnings, which would adversely affect our results of operations in
future periods.

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 in our consolidated balance sheets as described in "Note 4. 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 in our consolidated balance sheets 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.

We had no impairments in fiscal 2022, 2021, and 2020.

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, for the support of our controller
offerings, 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, to reimburse customers' losses, 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 have been increasing regulatory enforcement and litigation activities in the
areas of privacy, data protection and information security in the U.S. and in various countries in which we operate.

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, including the General Data Protection Regulation in the European Union and similar laws in other regions
of the world, including the United States, 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, customer indemnity claims, 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, 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, indemnity claims, 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. See "Note 16. Commitments and Contingencies"
of the Notes to our Consolidated Financial Statements included in this Form 10-K for further information on litigation
obligations.

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 utilize 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 adversely affect our stock price.

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.

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, we have filed annual Forms SD with the SEC 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 of 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.

Risks Related to an Investment in Our Common Stock

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 and include provisions relating to:

•

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 agreement providing for the exercise of junior participating preferred stock
purchase rights when a person becomes the beneficial owner of 20 percent or more of our outstanding common
stock and upon the occurrence of certain similar events (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
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 price 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. 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 approved regular dividends from fiscal 2006 until March 2020. The declaration, amount and timing
of such dividends are determined by our Board of Directors at its discretion. Such determinations are subject to capital
availability, compliance with all respective laws and our agreements applicable to the declaration and payment of cash
dividends, our strategic investment cash needs, our business outlook and other factors balancing our long-term needs of our
business and the interests of our shareholders.

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.

On April 1, 2020, our Board of Directors announced the suspension of dividends for the foreseeable future. We believe
these measures still are necessary to help preserve our ability to borrow for liquidity needs and help us to be well
positioned when the COVID-19 pandemic passes and economies recover.

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

Co-founder Dr. Aelred Kurtenbach served as our Chairman of the Board until September 3, 2014. Dr. Aelred Kurtenbach's
family members currently serve as executive officers of the Company. His son, Mr. Reece Kurtenbach, serves as our
Chairman of the Board and Chief Executive Officer and two other children serve as our Vice President of Human
Resources and as our Vice President of Manufacturing. Together, these individuals, in the aggregate, beneficially owned
9.8 percent of our outstanding common stock as of June 2, 2022, assuming the exercise by them of all of their options that
were currently exercisable or that vest within 60 days of June 2, 2022. Our other executive officers and directors, in the
aggregate, beneficially owned an additional 4.0 percent of our outstanding common stock as of June 2, 2022, assuming the
exercise by them of all of their options currently exercisable or that vest within 60 days of June 2, 2022. Although 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
the approval of any merger, consolidation, sale of all or substantially all of our assets or other business combination or
reorganization requiring shareholder approval. 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.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2. PROPERTIES

Our principal properties include space for manufacturing products, designing and testing new developments or processes,
and employee collaboration space. Our properties are generally aligned with our business segments; however, we
manufacture the same products across our manufacturing facilities to efficiently utilize capacity and reduce costs. We
consider all our properties to be both suitable and adequate to meet our requirements for the foreseeable future.

Our principal properties consist of the following:

Facilities

Owned or Leased

Square Footage

Facility Activities

Brookings, SD, USA

Redwood Falls, MN, USA
Ennistymon, Ireland

Sioux Falls, SD, USA
Shanghai, China

Owned

Owned
Owned

Leased
Leased

765,000

151,000
62,000

277,000
152,000

Corporate Office, Manufacturing, Sales,
Service

Manufacturing, Sales, Service, Office
Manufacturing, Sales, Service, Office

We also utilize sales and service offices located throughout the United States, Canada, Europe, and the Asia-Pacific region.
These spaces are generally small leased offices used for sales related activities. See "Note 9. Leases" 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 16. 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

Stock Performance

Our common stock is quoted on The Nasdaq Global Select Market under the ticker symbol DAKT. Daily market activity,
along with quoted prices and other trading information, are readily available for our common stock on numerous websites
including www.nasdaq.com. As of June 2, 2022, we had 948 shareholders of record.

The following graph shows changes during the period from April 29, 2017 to April 30, 2022 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.

Share Repurchases

On June 17, 2016, our Board of Directors approved a stock repurchase program under which Daktronics 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. In April 2020, the Board suspended the program. On December 2, 2021, the
Board of Directors of Daktronics voted to reauthorize the stock repurchase program. During fiscal 2021, we had no
repurchases of shares of our outstanding common stock. During fiscal 2022 and 2020, we repurchased 0.6 million and 1.0
million, respectively, shares of common stock at a total cost of $3.2 million and $5.6 million, respectively. As of April 30,
2022, we had $29.4 million of remaining capacity under our current share repurchase program.

Index ValueComparison of 5 Year Cumulative Total ReturnAssumes Initial Investment of $100April 2022100.0098.1182.3251.8371.8739.02Daktronics IncNASDAQ Composite-Total ReturnS&P 600 Electric Equipment Manufacturers4.29.20174.28.20184.27.20195.02.20205.01.20214.30.2022020406080100120140160180200220240260280300320The following table provides information about share repurchases of common stock during the fourth quarter of fiscal
2022:

Total number of
shares
purchased as
part of
publicly
announces plans
or programs

Approximate
dollar value
of shares may
yet be
purchased
under the
share
repurchase
program (1)

Total number of
shares
purchased

Average price
paid per
share (including
fees)

—

40,919 $

—

40,919

—

4.50

—

— $

29,539,079

40,919

—

40,919

29,354,956

Period

January 30, 2022 - February 26, 2022

February 27, 2022 - March 26, 2022

March 27, 2022 - April 30, 2022

Total

(1) The share repurchases described in the above table were made pursuant to the $40.0 million share repurchase program
authorized by the Board of Directors on June 17, 2016 and reinstated on December 2, 2021.

Repurchases of shares are treated as dividends under the South Dakota Business Corporation Act (which is codified as
Chapter 47-1A to the South Dakota statutes), so our repurchases of shares could be affected by the limitations imposed on
dividends in our credit facility, as further described in "Note 7. Financing Agreements" of the Notes to our Consolidated
Financial Statements included in this Form 10-K.

Item 6. [Reserved]

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.

Management's Discussion and Analysis - Fiscal 2021 compared to Fiscal 2020

The comparison of fiscal 2021 with fiscal 2020, including the results of operations and liquidity, can be found in the
"Management's Discussion and Analysis" section of our Annual Report on Form 10-K for fiscal 2021, which comparison is
incorporated by reference herein.

EXECUTIVE OVERVIEW

Our mission is to be a world leader at informing and entertaining audiences through dynamic audio-visual communication
systems. We organize into business units to focus on customer loyalty over time and earn new and replacement business as
our products have a finite lifetime. See "Note 3. Segment Reporting" of the Notes to our Consolidated Financial Statements
included in this Form 10-K for further information. Our strategies include the creation of a comprehensive line of
innovative solutions and systems and our ability to create and leverage platform designs and technologies. These strategies
align us to effectively deliver value to our varied customers and their market needs, while serving our stakeholders over the
long-term. We focus on creating local capabilities for sales, service, and manufacturing in geographies with expected
digital market opportunities. We believe consistently generating profitable growth will provide value to our stakeholders
(customers, employees, shareholders, suppliers, and communities).

We measure our success using a variety of measures including:

•

•
•
•
•

our percentage of market share by comparing our estimated revenue to the total estimated global digital display
revenue;
our order growth compared to the overall digital market order change;
financial metrics such as annual order volume and profit change as compared to our previous financial results;
customer retention and expansion rates; and
our ability to generate profits over the long-term to provide a shareholder return.

Certain factors impact our ability to succeed in these strategies and impact our business units to varying degrees. For
example, the overall manufacturing costs and the selling prices of our products impact profitability. Due to volatility in our
supply chain and labor conditions, our manufacturing costs and selling prices of our products have increased during the
2022 fiscal year and may continue to increase for some time into the future. Our competitors outside the U.S. are impacted
differently by the global trade environment allowing them to avoid tariff costs and have access to parts supplies and lower
costs of doing business, which may allow them to maintain lower prices or reduce prices. As a result, additional
competitors have entered the market, and each year we must sell more product to generate the same or greater level of net
sales as in previous fiscal years. However, the decline of digital solution pricing over the years and increased user adoption
and applications have increased the size of the global market.

Competitors' offerings, actions and reactions also can vary and change over time or in certain customer situations. Projects
with multimillion-dollar revenue potential attract competition, and competitors can use marketing or other tactics to win
business.

Each business unit's long-term performance can be impacted by 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 with social changes causing decreases in sporting event revenues,
the sports business can also be seriously impacted.

Outlook: Impacts to and changes in global economic conditions are expected as the world economies recover from and
react to the COVID-19 pandemic, adjust to changing supply chain conditions and disruptions, and react to the evolving war
and geopolitical environment.

Supply chain disruptions continue as a result of several factors, including the pandemic lockdowns, shipping container
shortages, labor shortages, war and other conflicts, and changes in global demand. We are specifically impacted by the
global shortage of semiconductors and related electronic components. Our production schedules were disrupted because of
supply shortages, and we experienced increased input costs in many areas including material, commodity, freight, and tariff
costs. Personnel spend also increased throughout the 2022 fiscal year.

We have responded to input cost increases by increasing pricing, and we began quoting at the new price levels across the
business areas in the third quarter of fiscal 2022. Certain areas will see additional increases at the beginning of fiscal 2023.
We also use pricing policies and opportunity evaluations across markets to manage price levels. We will continue to
monitor our supply chains and our marketplaces and adapt our pricing methodologies as we see appropriate.

Although we cannot predict the length or severity of these conditions, we expect continued disruptions in obtaining
material, commodities, labor, and freight availability and an increase in inflation. We also expect impacts to the global
economic conditions in reaction to the evolving war and geopolitical environment. Due to longer planning horizons and
volatility in supply chains, we plan to carry higher quantities of inventory and anticipate changes in the timing of payments
from our customers as we work through different disruptions and fulfill our backlog, all likely creating a consumption of
cash. We are also planning additional cash use for capital spending to grow our manufacturing capacity.

All of these conditions have and will continue to cause volatility in our cash flow, pricing, order volumes, lead-times,
competitiveness, revenue cycles, and production costs, and it is likely these conditions will have some negative impact in
fiscal 2023. However, the full impact to our financial condition, results of operations and cash flows cannot be determined
at this time.

In addition to the COVID-19 and supply chain impacts described above, the outlook and unique key growth drivers and
challenges by our business units include the following:

Commercial Business Unit: Our customers who rely on advertising revenues for Out-of-Home ("OOH") advertising or who
rely on customer foot-traffic to drive sales are beginning to increase their capital spending through the COVID-19
economic recovery. Businesses using our displays for self-promotion or on-premise advertising may have reduced budgets
for the foreseeable future or choose to utilize displays as part of their recovery, both actions creating an impact to the
Commercial near-term outlook.

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 national retailers,
quick-serve restaurants, petroleum retailers, and other nationwide organizations.
Additional standard display offerings using micro-LED designs.
Increasing use of LED technologies replacing signage previously using LCD technology by existing and new
customers.
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.
New market adoption and expansion for use of LED in government and military and corporate campuses.
Dynamic messaging systems demand growth due to market adoption and expanded use of this technology.
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 advertising companies continue developing new sites and
replacing digital billboards reaching end of life. This is dependent on no adverse changes occurring in the digital
billboard regulatory environment restricting future billboard deployments, as well as maintaining our current
market share in a business that is concentrated in a few large OOH companies.
Replacement cycles within each of these areas.

Live Events Business Unit: During fiscal year 2022, as the restrictions on gathering started to decrease, more customers
chose to invest or upgrade current audiovisual systems in their locations. Some live events customers took advantage of the
downtime during the COVID-19 pandemic to build new or renovate existing arenas and sport stadiums. This created large
orders being booked during fiscal year 2022 that are expected to be recognized as sales in future fiscal years.

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, including additional micro-LED 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 drive larger displays or higher resolution displays,
both of which increase the average transaction size.
Dynamic messaging system needs throughout a sports facility.
Increasing use of LED technologies replacing signage previously using LCD technology in and surrounding live
events facilities.
Replacement cycles within each of these areas.

High School Park and Recreation Business Unit: In the near-term, our customers are upgrading their equipment as the
pandemic eases and advertising revenue is available.

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 compared to traditional scoreboards and these systems' ability to provide or enhance academic
curriculum offerings for students.

•

•
•

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.
Lower system costs driving the use of more sophisticated displays in school athletic facilities, such as large
integrated video systems.
Expanding control system options tailored for the markets' needs.
Certain display requirements for sporting events.

Transportation Business Unit: Daktronics has experienced governmental agencies placing orders as a way to spend their
allocated budgets for their fiscal years. In addition, the Infrastructure Investment and Jobs Act signed into law in
November 2021, is expected to have a positive impact on all segments of United States transportation terminals and public
transit facilities.

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

•

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.
Expanded use of dynamic messaging systems for advertising and wayfinding use in public transport and airport
terminals due to expanded market usage and displays, with LED technology replacing prior LCD installations and
additional display offerings using micro-LEDs.

International Business Unit: As most restrictions on gathering are reduced across geographies, more customers are
choosing to invest in their digital needs.

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

•

•
•

•

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.
Continued focus on sports facility, spectacular-type, OOH advertising products, and architectural lighting 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.
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 city-center locations.
New market adoption and expansion of use of LED in government and military and corporate campuses.
Additional opportunities exist with expanded market usage of LED technology due to price considerations, usage
of LED technology replacing prior LCD installations and additional display offerings using micro-LEDs.
Our product and service offerings, including additional micro-LED offerings which remain the most integrated
and comprehensive offerings in the industry.
Growing our reseller channels to promote our products and gain market share.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") are
based upon, and should be read in conjunction with, our Consolidated Financial Statements and Notes to the Consolidated
Financial Statements included in this Form 10-K, which have been prepared in accordance with accounting principles
generally accepted in the United States of America ("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" of the Notes to our Consolidated Financial Statements
included in this Form 10-K, the following discussion is intended to highlight and describe those accounting policies that are
especially critical to the preparation of our consolidated financial statements.

A critical accounting policy is defined as a policy that is both very important to the portrayal of a company's financial
condition and results and requires management's most difficult, subjective or complex judgments. We regularly review our
critical accounting policies and evaluate them based on these factors. We believe the estimation process for uniquely
configured contracts and warranties are most material and critical. These areas contain estimates with a reasonable

likelihood to change, and those changes could have a material impact on our financial condition and reported results of
operations. The estimation processes for these areas are also difficult, subjective and use complex judgments. Our critical
accounting estimates are based on historical experience; on our 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 uniquely configured contracts. Revenue for uniquely configured (custom) or integrated systems is
recognized over time using the cost incurred input method. Over time revenue recognition is appropriate because we have
no alternative use for the uniquely configured system and have an enforceable right to payment for work performed. The
cost incurred input method measures cost incurred to date compared to estimated total costs for each contract. This method
is the most faithful depiction of our performance because it measures the value of the contract transferred to the customer.
Costs to perform the contract include direct and indirect costs for contract design, production, integration, installation, and
assurance-type warranty reserve. Direct costs include material and components; manufacturing, project management and
engineering labor; and subcontracting expenses. Indirect costs include allocated charges for such items as facilities and
equipment depreciation and general overhead. Provisions of estimated losses on uncompleted contracts are made in the
period when such losses are capable of being estimated.

We may have multiple performance obligations in these types of contracts; however, a majority are treated as a combined
single performance obligation. In our judgment, this accounting treatment is most appropriate because the substantial part
of our promise to our customer is to provide significant integration services and incorporate individual goods and services
into a combined output or system. Often times the system is customized or significantly modified to the customer's desired
configurations and location, and the interrelated goods and services provide utility to the customer as a package. See "Note
1. Nature of Business and Summary of Significant Accounting Policies" of the Notes to our Consolidated Financial
Statements included in this Form 10-K for further information on our revenue recognition policies.

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 contractual warranties. Warranty estimates include the cost of direct
material and labor estimates to repair products over their warranty coverage period. Generally, estimates are based on
historical experience considering 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. Although prior
estimates have been materially correct, estimates for warranty liabilities can change based on 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 30, 2022 and May 1, 2021, we had approximately $28.9 million and $26.0 million accrued for these warranty
obligations, 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 16. Commitments and Contingencies" of the Notes to our Consolidated Financial
Statements included in this Form 10-K for further information on warranties.

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

Daktronics, Inc. operates on a 52- or 53-week fiscal year, with our fiscal year ending on the Saturday closest to April 30 of
each year. When April 30 falls on a Wednesday, the fiscal year ends on the preceding Saturday. Within each fiscal year,
each quarter is comprised of 13-week periods following the beginning of each fiscal year. In each 53-week year, an
additional week is added to the first quarter, and each of the last three quarters is comprised of a 13-week period.

Net Sales

The following table shows information regarding net sales for the fiscal years ended April 30, 2022 and May 1, 2021:

(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

Year Ended

April 30,
2022

May 1, 2021

Dollar
Change

Percent
Change

154,211 $

127,300 $

199,106

111,816

62,707

83,130

143,049

91,557

58,284

61,843

26,911

56,057

20,259

4,423

21,287

21.1 %

39.2

22.1

7.6

34.4

610,970 $

482,033 $

128,937

26.7 %

192,917 $

138,878 $

313,940

156,305

77,993

104,916

157,177

94,292

49,696

75,841

54,039

156,763

62,013

28,297

29,075

38.9 %

99.7

65.8

56.9

38.3

846,071 $

515,884 $

330,187

64.0 %

Fiscal Year 2022 as compared to Fiscal Year 2021

During fiscal year 2022, sales and orders increased, as demand was up across all markets compared to fiscal 2021 as the
world economies recovered from the economic downturn caused by the COVID-19 pandemic. We reached record order
levels because of the recovery, multi-million dollar orders for sport facilities, and bulk orders for OOH displays. These
orders are in the Live Events, Commercial, and International business segments.

Net sales during fiscal year 2022 increased due to the conversion of the higher order volume. Throughout the year
however, material supply and labor shortages created an increase in lead times, extending the timing of converting some
orders to sales.

Commercial: The increase in net sales for fiscal 2022 compared to fiscal 2021 was primarily due to an increase in OOH
niche and spectaculars orders. Fiscal 2021 had an overall low market activity in these two particular niches due to the
pandemic, and their recovery was strong.

The increase in orders for fiscal 2022 compared to fiscal 2021 was primarily due to overall higher market activity in all
commercial niches.

We continue to see increased adoption of video solutions in our Commercial business unit marketplace. Depending on the
duration of the current economic conditions, we see opportunities for orders and sales over the coming years in our OOH,
on-premise, and spectacular focused niches due to replacement cycles, expansion of dynamic messaging systems usage,
releases of new solutions, additional distribution methods, and increased market size due to the decline of digital pricing
over the years as well as the desire for higher resolution technology. Due to a number of factors, such as the discretionary
nature of customers committing to a system, economic dependencies, regulatory environments, competitive factors, and
supply chain constraints, it is difficult to predict orders and net sales for fiscal 2023. We expect growth in the Commercial
business unit over the long-term, assuming favorable economic conditions and our success in counteracting competitive
pressures.

Live Events: The increase in net sales and orders for fiscal 2022 compared to fiscal 2021 was primarily due to high demand
for upgraded or new solutions for arenas, university venues, and sports stadiums. This increase was due to the economic
recovery from the COVID-19 pandemic, several large projects including in the bowl and other immersive displays through

the sports facilities, and replacement orders due to systems' ages. Bookings of large multi-million dollar projects also
contributed to the order increases and a record order year for Live Events.

We continue to see ongoing interest from venues at all levels in increasing the size and capabilities of their display systems
and in the usage of dynamic messaging systems throughout their 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,
the limited number of large custom projects, competitive factors, and the uncertainty of the overall impact of supply chain
constraints, make forecasting fiscal 2023 orders and net sales difficult. We expect this business unit's size to remain stable
over the long-term, assuming favorable economic condition, and success in maintaining market share by counteracting
competitive pressures.

High School Park and Recreation: The increase in net sales and orders for fiscal 2022 compared to fiscal 2021 was
primarily due to higher market activity as schools are upgrading to video equipment systems and have COVID-19 related
funding to invest in their facilities.

We expect larger video systems and our classic scoring and message centers to remain in demand in fiscal 2023, 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 using these systems. Some
growth is also expected for regulatory requirements of certain display types for sports events. Several factors, such as the
potential reduction in the availability of advertising revenues, the discretionary nature of customers committing to upgrade
systems, replacement cycles, competitive factors, and the uncertainty of the overall impact of supply chain constraints,
make forecasting fiscal 2023 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 and orders for fiscal 2022 compared to fiscal 2021 was primarily due to pent up
demand from fiscal 2021 for Intelligent Transportation Systems ("ITS") which had been delayed due to the COVID-19
pandemic.

Several factors, such as transportation funding, the competitive environment, customer delivery changes, and the
uncertainty of the impacts of supply chain constraints, make forecasting orders and net sales difficult for fiscal 2023.
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 wayfinding use in public transport and airport
terminals continue 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 and orders for fiscal 2022 compared to fiscal 2021 was primarily due to the
economic recovery from the COVID-19 pandemic in OOH, transportation, and sport stadium projects.

We expect demand for larger video systems for commercial and sports applications, indoor and outdoor OOH applications,
and transportation applications to remain strong over the long-term. Macroeconomic factors, the discretionary nature of
customers committing to new systems or replacements, the pace of market growth, and the uncertainty of the impacts of the
supply chain constraints, may impact order bookings and timing, making it difficult to predict order and sales levels for
fiscal 2023. 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, continue to enhance our tailored
portfolio of product and control solution offerings, invest in additional distribution methods, and expect the trend of
increased use and adoption of our technology globally to continue.

Gross Profit and Contribution Margin

(in thousands)
Gross Profit:

Commercial

Live Events

High School Park and Recreation

Transportation

International

Year Ended

April 30, 2022

May 1, 2021

Amount

As a Percent
of Net Sales

Amount

As a Percent
of Net Sales

31,851

21,787

35,477

18,172

9,410

20.7 % $

10.9

31.7

29.0

11.3

33,072

24,397

31,472

20,329

11,313

26.0 %

17.1

34.4

34.9

18.3

116,697

19.1 % $

120,583

25.0 %

Fiscal Year 2022 as compared to Fiscal Year 2021

The decline in gross profit percentage in fiscal 2022 is primarily related to the ongoing supply chain disruptions and
inflationary challenges in materials, freight, tariff, and personnel related costs; the difference in sales mix between periods;
other factors experienced during fiscal 2021 which had a positive impact on fiscal 2021 margins; and an increase in
warranty expense in fiscal 2022. Total warranty expense as a percent of sales increased to 1.9 percent for fiscal 2022 as
compared to 1.4 percent during fiscal 2021.

Factors impacting the gross profit in fiscal 2021 included the positive $2.1 million litigation claim reversal in the High
School Park and Recreation business unit and $1.8 million of COVID relief governmental subsidies offset by $2.8 million
of severance costs to reduce our workforce to adjust to the impacts of the COVID-19 pandemic. In addition, we earned a
higher rate of gross profit on our service agreements in fiscal 2021 due to reduced stand ready services conducted during
the year because of the pandemic. During fiscal year 2022, we had more large project sales which generally have lower
gross profit because of their competitive nature.

It is difficult to project gross profit levels for fiscal 2023 because of the uncertainty regarding the level of sales, the sales
mix, price strategy and timing of sales generation, the COVID-19 impact, potential inflation and the availability of
materials, labor, and freight, 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 selectively increasing pricing, releasing new
product designs to lower overall costs of the product; improving reliability to reduce warranty expenses; expanding our
global capacity and planning; meeting customer solution expectations; and continued improvements in operational
effectiveness in manufacturing, installation, and service delivery areas. Cost reductions made during the pandemic vary in
permanency and may not be sustainable in future periods as orders and sales volumes recover.

(in thousands)
Contribution
Margin:

Commercial

Live Events

High School Park
and Recreation

Transportation

International

Year Ended

April 30, 2022

May 1, 2021

Amount

As a Percent
of Net Sales

Dollar
Change

Percent
Change

Amount

As a Percent
of Net Sales

16,073

11,903

23,587

14,553

(494)

10.4 % $

6.0

21.1

23.2

(0.6)

(2,903)

(3,295)

2,178

(2,695)

403

(15.3) % $

(21.7)

18,976

15,198

10.2

(15.6)

(44.9)

21,409

17,248

(897)

65,622

10.7 % $

(6,312)

(8.8) % $

71,934

14.9 %

10.6

23.4

29.6

(1.5)

14.9 %

Fiscal Year 2022 as compared to Fiscal Year 2021

Contribution margin is a non-GAAP measure and consists of gross profit less selling expenses. Selling expenses consist
primarily of personnel related costs, travel and entertainment expenses, marketing related expenses (show rooms, product
demonstration, depreciation and maintenance, conventions and trade show expenses), customer relationship management/
marketing systems, bad debt expenses, third-party commissions, and other expenses.

Contribution margin in fiscal 2022 was impacted by the previously discussed sales levels and impacts on gross profit, as
well as a 5.0% increase in selling expenses in fiscal 2022 compared to fiscal 2021.

Since the beginning of fiscal 2022, we have adjusted our sales and marketing activities and staffing levels to achieve
current and expected future sales levels. During fiscal 2021, we had lowered overall staffing and furloughed employees to
achieve lower operating costs to align with the uncertainties created by the COVID-19 pandemic. These fiscal 2021
savings were partially offset by a $1.4 million increase in bad debt expenses.

Reconciliation from non-GAAP contribution margin to operating income (loss) GAAP measure is as follows:

(in thousands)

Amount

Year Ended

April 30, 2022

May 1, 2021

As a Percent
of Net Sales

Dollar
Change

Percent
Change

Amount

As a Percent
of Net Sales

Contribution margin $

65,622

10.7 % $

(6,312)

(8.8) % $

71,934

14.9 %

General and
administrative

Product design and
development

Operating income

32,563

29,013

4,046

5.3

4.7

4,583

2,167

16.4

8.1

0.7 % $

(13,062)

(76.4) % $

27,980

5.8

26,846

17,108

5.6

3.5 %

Fiscal Year 2022 as compared to Fiscal Year 2021

General and administrative expenses for fiscal 2022 increased as compared to the same period one year ago primarily due
to increases in personnel related expenses.

We expect general and administrative expenses to increase for fiscal 2023 as compared to fiscal 2022 as labor rates
continue to rise and further increase in personnel may be needed to keep up with the increased demand.

Our costs for product design and development represent an allocated amount of costs based on time charges, professional
services, material 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
included in cost of sales.

Product design and development expenses in fiscal 2022 increased as compared to fiscal 2021 primarily due to an increase
in personnel related expenses.

We expect product design and development expenses to increase for fiscal 2023 as compared to fiscal 2022 due to
continued increases in labor costs. We will continue to actively invest in new technologies.

Other Income and Expenses

April 30, 2022

May 1, 2021

Amount

As a Percent of
Net Sales

Dollar
Change

Percent
Change

Amount

As a Percent of
Net Sales

Year Ended

171

— % $

236

(363.1) % $

(65)

— %

(3,109)

(0.5) % $

(126)

4.2 % $

(2,983)

(0.6) %

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

Fiscal Year 2022 as compared to Fiscal Year 2021

The change in interest (expense) income, net for fiscal 2022 as compared to fiscal 2021 was primarily due to the change in
investment levels and interest expense for our drawings on the line of credit.

Other expense, net: The change in other income and expense, net for fiscal 2022 as compared to fiscal 2021, was primarily
due to a $0.6 million increase in losses from affiliates accounted for under the equity method of accounting.

Income Taxes

Our effective tax rate was approximately 46.6 percent for fiscal year 2022. The effective income tax rate for fiscal 2022
was impacted due to tax benefits from permanent tax credits offset by valuation allowances as well as other various
permanent tax adjustments and state taxes with additional expense for prior year provision to return adjustments.

Our fiscal 2021 effective tax rate was approximately 22.3 percent resulting from the tax benefit of permanent tax credits
and previous year provision to return adjustments offset by valuation allowances as well as other various permanent tax
adjustments and state taxes.

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 because we operate in multiple state and foreign jurisdictions, our effective
tax rate is subject to fluctuation. See "Note 12. Income Taxes" of the Notes to our Consolidated Financial Statements
included in this Form 10-K for further information.

LIQUIDITY AND CAPITAL RESOURCES

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

Operating activities

Investing activities

Financing activities

Effect of exchange rate changes on cash

April 30,
2022

Year Ended

May 1, 2021

Dollar
Change

(27,035) $

66,212 $

(31,384)

(3,576)

(399)

(10,221)

(15,585)

(416)

(93,247)

(21,163)

12,009

Net (decrease) increase in cash, cash equivalents and restricted cash

(62,394) $

39,990 $

(102,384)

Cash decreased by $62.4 million in fiscal 2022 as compared to an increase of $40.0 million in fiscal 2021. Operating assets
and liabilities decreased cash flow by $45.4 million during fiscal 2022 as the business expanded compared to a $31.7
million increase in cash flow during fiscal 2021 as the business contracted and management conserved the Company's cash.

Net cash used in operating activities: Net cash used in operating activities was $27.0 million for fiscal 2022 compared to
$66.2 million net cash provided by operating activities in fiscal 2021. The $93.2 million decrease in cash from operating
activities was primarily the result of changes in net operating assets and liabilities and a decrease of $10.3 million in net

income. For specific quantitative changes in operating assets and liabilities, see "Note 13. 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 $31.4 million for fiscal 2022 compared to
$10.2 million in fiscal 2021. Purchases of property and equipment totaled $20.4 million in fiscal 2022 compared to $7.9
million in fiscal 2021. Proceeds from the sales of property and equipment totaled $0.9 million in fiscal 2022 compared to
$3.2 million in fiscal 2021. Purchase of marketable securities totaled $4.0 million in fiscal 2022 compared to no purchases
of marketable securities in fiscal 2021.

Net cash used in financing activities: Net cash used in financing activities was $3.6 million for fiscal 2022 compared to
$15.6 million in fiscal 2021. During fiscal 2021, we paid $15.0 million on notes payable. During fiscal 2021, there were no
share repurchases compared to $3.2 million of share repurchases in fiscal 2022.

Other Liquidity and Capital Resources Discussion: The timing and amounts of working capital changes, profitability,
capital spending, investments in affiliates, repurchases of stock and dividend payments impact our liquidity.

Working capital was $103.9 million at April 30, 2022 and $118.4 million at May 1, 2021. The changes in working capital,
particularly changes in accounts receivable, accounts payable, inventory, and contract assets and liabilities, and the sports
market seasonality, can have a significant impact on the amount of net cash provided by operating activities largely due to
the timing of payments and receipts. On multimillion-dollar orders, the time between order acceptance and project
completion may extend up to or exceed 12 months or more depending on the amount of custom work and a customer’s
delivery needs. We often receive down payments or progress payments on these orders. We expect to use cash in
operations as our business returns and exceeds pre-pandemic levels.

We had $7.1 million of retainage on long-term contracts included in receivables and contract assets as of April 30, 2022,
which has an impact on our liquidity. We expect to collect these amounts within one year.

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 30, 2022, we had $88.3 million of bonded work outstanding against this line.

Our business growth and profitability improvement strategies depend on investments in capital expenditures and strategic
investments. We projected capital expenditures to be approximately $30 million for fiscal 2023. Projected capital
expenditures include manufacturing equipment for new or enhanced product production, expanded capacity, investments in
quality and reliability equipment, and continued information infrastructure investments.

The Board of Directors authorized reinstatement of the share repurchase program in December of 2021. Shares may be
repurchased from time to time in open market purchases, private transactions or other transactions. The timing, volume,
and nature of share repurchases will be at the sole discretion of management and will be dependent on market conditions,
applicable securities laws and other factors, and share repurchases may be suspended or discontinued at any time.

The Board of Directors suspended dividends during fiscal 2020 as part of our cash conservation measures through the
pandemic. The timing and future reinstatement of dividends is at the discretion of the Board of Directors. Future dividends
are also impacted by the limitations imposed in our credit facility.

We believe the audiovisual industry fundamentals will drive long-term growth for our business; however, for the near-term
outlook, we expect to continue to have disruptions from our supply chain and logistics. Due to longer planning horizons
and volatility in supply chains, we plan to carry higher quantities of inventory and anticipate changes in the timing of
payments from our customers as we work through different disruptions and fulfill backlog. We also plan to use cash for
capital spending to grow our manufacturing capacity. When cash is needed, we expect to use borrowings under our bank
credit agreement. As of April 30, 2022, we were in compliance with all applicable bank loan covenants. For additional
information on financing agreements, see "Note 7. Financing Agreements" of the Notes to our Consolidated Financial
Statements included in this Form 10-K.

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, or other currencies. For fiscal 2022, 15.9 percent of net sales were
derived in currencies other than U.S. dollars. We incur expenses in currencies other than U.S. dollars relating to specific
contracts with customers and for our operations outside the U.S.

If we believe currency risk in any foreign location or with respect to 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 30, 2022 was $11.3 million, and all contracts mature within ten months. These
contracts are marked to market each balance sheet date and are not designated as hedges. See "Note 15. Derivative
Financial Instruments" of the Notes to our Consolidated Financial Statements included in this Form 10-K for further
details. We estimate that a 10 percent change in all foreign exchange rates would impact our reported income before taxes
by approximately $0.8 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.

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 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.

We have foreign currency cash accounts to operate our global business. These accounts are impacted by changes in foreign
currency rates. Of our $17.1 million in cash balances at April 30, 2022, $11.7 million were denominated in U.S. dollars, of
which $3.9 million were held by our foreign subsidiaries. As of April 30, 2022, we had an additional $5.4 million in cash
balances denominated in foreign currencies, of which $4.7 million were maintained in accounts of our foreign subsidiaries.

Interest Rate Risks
Our exposure to market risks relate primarily to changes in interest rates on cash and marketable securities. We do not
expect our income or cash flows to be significantly impacted by interest rates.

Commodity Risk
We are dependent on basic raw materials, sub-assemblies, components, and other supplies used in our production
operations. Our financial results have been and could continue to be affected by changes in the availability, prices, and
global tariff regulation of these materials. Some of these materials are sourced from one or a limited number of suppliers in
countries around the world. 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
adversely impact our ability to produce products and satisfy incoming sales orders on a timely basis. Our sourcing and
material 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. During late fiscal 2021 and through fiscal 2022, supply chain disruptions began to
emerge because of the COVID-19 pandemic, shipping container shortages, and the changes in global demand. Specifically,
we are impacted by the global inflation and shortage of semiconductors and related electronic components, other materials
needed for production, and freight. We are unable to predict the supply chain recovery or the impact to our business.

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.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Daktronics, Inc and subsidiaries (the "Company") as of
April 30, 2022 and May 1, 2021, the related consolidated statements of operations, comprehensive (loss) income,
shareholders' equity, and cash flows, for each of the three years in the period ended April 30, 2022, and the related notes
(collectively referred to as the "financial statements"). We have also audited the Company's internal control over financial
reporting as of April 30, 2022, 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 present fairly, in all material respects, the financial position of the Company as of
April 30, 2022 and May 1, 2021, and the results of its operations and its cash flows for each of the three years in the period
ended April 30, 2022, 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 30, 2022, 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 audits 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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements,
taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – Uniquely Configured Contracts — Refer to Notes 1 and 2 to the financial statements

Critical Audit Matter Description

The Company recognizes revenue as its contractual performance obligations are satisfied, which may be at a point in time
or over time. Certain of the Company’s contracts are for the delivery, installation, and integration of uniquely configured
audio-visual communication systems. Revenue for these uniquely configured systems is recognized over time using the
cost incurred input method. This input method requires management to make estimates of the costs that will ultimately be
incurred at the completion of each contract. Revenue is recognized based on the transaction price and the percentage of cost
incurred as of the balance sheet date in relation to the total estimated inputs at completion.

We identified revenue associated with uniquely configured contracts as a critical audit matter because of the significant
judgments necessary for management to estimate total costs to be incurred to recognize revenue under these contracts.
Changes in estimated costs could have a significant impact on the timing and amount of revenue recognized. This required
an increased level of auditor judgment due to the complexity of uniquely configured contracts and extent of effort when
performing audit procedures to audit management’s estimate of total costs and evaluating the reasonableness of the
underlying estimates.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to estimates of total cost used to recognize revenue for uniquely configured contracts included
the following, among others:

• We tested the effectiveness of controls over uniquely configured contracts, including management’s controls over

the estimates of total costs.

• We selected a sample of uniquely configured contracts and performed the following:

•

Compared costs incurred to date to the costs management estimated to be incurred to date.

Evaluated management’s ability to achieve the estimates of total cost by performing corroborating
inquiries with the Company’s project managers and engineers, and compared the estimates to
management’s work plans, engineering specifications, and supplier contracts.

Confirmed contractual terms with third parties.

Tested the mathematical accuracy of management’s estimate of total costs.

• We evaluated management’s ability to accurately estimate total costs by comparing actual costs to management’s

historical estimates for uniquely configured contracts that have been fulfilled.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota
June 16, 2022

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

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

April 30, 2022

May 1, 2021

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

Restricted cash

Marketable securities

Accounts receivable, net

Inventories

Contract assets

Current maturities of long-term receivables

Prepaid expenses and other current 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

Contract liabilities

Accrued expenses

Warranty obligations

Income taxes payable

Total current liabilities

Long-term warranty obligations

Long-term contract liabilities

Other long-term obligations

Long-term income tax payable

Deferred income taxes

Total long-term liabilities

SHAREHOLDERS' EQUITY:

Preferred Shares, no par value, authorized 50,000 shares; no shares issued and outstanding

Common stock, no par value, authorized 115,000,000 shares; 46,733,544 and 46,264,576 shares issued at
April 30, 2022 and May 1, 2021, respectively

Additional paid-in capital

Retained earnings

Treasury stock, at cost, 1,907,445 and 1,297,409 shares at April 30, 2022 and May 1, 2021, respectively

Accumulated other comprehensive loss

TOTAL SHAREHOLDERS' EQUITY

17,143 $

865

4,020

101,099

134,392

41,687

2,798

14,963

603

317,570

66,765

1,490

7,927

1,472

32,321

13,331

440,876 $

76,313 $

90,393

34,959

11,621

408

213,694

17,257

10,998

6,599

477

287

35,618

—

61,794

48,372

96,608

(10,285)

(4,925)

191,564

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

440,876 $

See notes to consolidated financial statements.

77,590

2,812

—

67,808

74,356

32,799

1,462

7,445

731

265,003

58,682

1,635

8,414

2,083

27,403

11,944

375,164

40,251

64,495

30,672

10,464

738

146,620

15,496

10,720

7,816

548

410

34,990

—

60,575

46,595

96,016

(7,297)

(2,335)

193,554

375,164

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 (loss)

Nonoperating income (expense):

Interest income (expense), net

Other expense, net

Income (loss) before income taxes

Income tax expense (benefit)

Net income

Weighted average shares outstanding:

Basic

Diluted

Earnings per share:

Basic
Diluted

See notes to consolidated financial statements.

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

610,970 $

482,033 $

494,273

116,697

361,450

120,583

51,075

32,563

29,013

112,651

4,046

48,649

27,980

26,846

103,475

17,108

171

(65)

(3,109)

(2,983)

1,108

516

14,060

3,134

592 $

10,926 $

608,932

470,232

138,700

65,902

35,193

37,772

138,867

(167)

699

(541)

(9)

(500)

491

45,188

45,326

44,989

45,202

45,031

45,316

$
$

0.01 $
0.01 $

0.24 $
0.24 $

0.01
0.01

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

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

Net income

592 $

10,926 $

491

Other comprehensive (loss) income:

Cumulative translation adjustments

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

Total other comprehensive (loss) income, net of tax

(2,556)

(34)

(2,590)

2,942

—

2,942

Comprehensive (loss) income

(1,998) $

13,868 $

(965)

(921)

(430)

See notes to consolidated financial statements.

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

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
Loss

Total

Balance as of April 27, 2019:

$ 57,699 $

42,561 $ 93,593 $

(1,834) $

(4,356) $ 187,663

Net income

Cumulative translation
adjustments

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

Share-based compensation

Tax payments related to RSU
issuances

—

Employee savings plan activity

2,311

Dividends paid ($0.20 per
share)

Treasury stock purchase

—

2,265

(199)

—

Balance as of May 2, 2020:

60,010

44,627

Net income

Cumulative translation
adjustments

Share-based compensation

Tax payments related to RSU
issuances

Employee savings plan activity

Treasury stock reissued

—

565

—

2,067

(125)

—

491

—

(8,994)

—

85,090

10,926

—

(5,636)

(7,470)

—

173

—

491

(965)

—

2,265

(199)

2,311

(8,994)

(5,636)

(5,277) 176,980

—

10,926

2,942

—

2,942

2,067

(125)

565

199

Balance as of May 1, 2021:

60,575

46,595

96,016

(7,297)

(2,335) 193,554

Net income

Cumulative translation
adjustments

Unrealized gain (loss) 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

1,211

Treasury stock purchase

Treasury stock reissued

—

1,973

—

(200)

—

592

—

(3,184)

196

—

592

(2,556)

(34)

—

(34)

1,973

(200)

1,211

(3,184)

200

Balance as of April 30, 2022:

$ 61,794 $

48,372 $ 96,608 $ (10,285) $

(4,925) $ 191,564

See notes to consolidated financial statements.

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

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

592 $

10,926 $

491

Adjustments to reconcile net income to net cash (used) provided by
operating activities:

Depreciation and amortization

Gain on sale of property, equipment and other assets

15,394

17,077

(743)

(572)

Share-based compensation

Equity in loss of affiliates

Provision for doubtful accounts, net of recovery

Deferred income taxes, net

Change in operating assets and liabilities

Net cash (used)/provided by operating activities

1,973

2,970

(286)

(1,555)

(45,380)

(27,035)

2,067

2,370

1,299

1,314

31,731

66,212

17,718

(35)

2,265

741

(99)

(2,183)

(8,090)

10,808

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(20,376)

(7,891)

(18,091)

Proceeds from sales of property, equipment and other assets

Purchases of marketable securities

Proceeds from sales or maturities of marketable securities

Purchases of and loans to equity investees
Net cash used in investing activities

885

(4,045)

—

3,184

—

1,230

(7,848)

(6,744)

(31,384)

(10,221)

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings on notes payable

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

EFFECT OF EXCHANGE RATE CHANGES ON CASH

NET (DECREASE)/ INCREASE IN CASH, CASH EQUIVALENTS
AND RESTRICTED CASH

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

46,801

—

(46,801)

(15,000)

(200)

(460)

—

(3,184)

(200)

—

(125)

(3,576)

(15,585)

(399)

(416)

(62,394)

39,990

322

—

25,162

(11,664)

(4,271)

15,000

—

(2,149)

(8,994)

—

(5,636)

(199)

(1,978)

111

4,670

Beginning of period

End of period

80,402

40,412

18,008 $

80,402 $

35,742

40,412

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 fiscal
years ended April 30, 2022 and May 1, 2021 contained operating results for 52 weeks, while the fiscal year ended May 2,
2020 contained operating results for 53 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, recording the investment at cost and then subsequently adjusting to account for our share of
the affiliates' profit or losses, in accordance with the provisions of Accounting Standards Codification ("ASC") 323,
Investments - Equity Method and Joint Ventures. Investments in affiliates over which we do not have the ability to exert
significant influence over the affiliates' operating and financing activities are accounted for under the cost method of
accounting, recording the investment at cost and then subsequently adjusting for any changes in ownership or dividends in
accordance with the provisions of ASC 321, Investments - Equity Securities. We have evaluated our relationships with our
affiliates and have determined that these entities are not variable interest entities. Equity method investments as a whole are
assessed for other-than-temporary impairments whenever events or changes in circumstances indicate that the carrying
amount of the investment may not be recoverable.

The aggregate amount of our investments in affiliates accounted for under the equity method was $16,916 and $19,887 as
of April 30, 2022 and May 1, 2021 respectively. Our proportional share of the respective affiliates' earnings or losses is
included in the "Other (expense) income, net" line item in our consolidated statements of operations. For the fiscal years
2022, 2021 and 2020, our share of the losses of our affiliates was $2,970, $2,370 and $741, respectively. During fiscal
2022, we purchased $7,488 of convertible notes (“Notes”) which are included in the “Investment in affiliates and other
assets" and "Current maturities of long-term receivables" line items in our consolidated balance sheet. There were no
convertible notes as of May 1, 2021.

We purchased services for research and development activities from our equity method investees. The total of these related
party transactions for fiscal year 2022, 2021 and 2020 was $1,520, $460, and $1,113, respectively, which is included in the
"Product design and development" line item in our consolidated statement of operations, and for fiscal 2022, $296 of this
remains unpaid and is included in the "Accounts payable " line item in our consolidated balance sheet. Fiscal 2021 had
$470 unpaid and included in the "Accounts payable" line item in our consolidated balance sheet.

Summarized financial information for equity method investments consist of the following:

Balance sheet data:

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Income statement data:

Net loss

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

6,672 $

7,534 $

10,593

4,491

13,938

1,738

4,637

2,807

1,793

4,266

2,755

4,086

(11,928) $

(13,436) $

(1,383)

Use of estimates: The preparation of financial statements in conformity with accounting principles generally accepted in
the United States of America ("GAAP") requires management to make estimates and assumptions affecting the reported
amounts 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. Due
to the inherent uncertainty involved in making estimates, actual results in future periods may differ 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 uniquely configured contracts and estimated costs to be incurred for product warranties and income
taxes. Estimation processes are also used in inventory valuation and determining, 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 consolidated
balance sheets that sum to the totals of the same amounts shown in the consolidated statements of cash flows. Restricted
cash consists of cash and cash equivalents held in bank deposit accounts to secure issuances of foreign bank guarantees.

Cash and cash equivalents

Restricted cash
Total cash, cash equivalents, and restricted cash shown in the
consolidated statements of cash flows

April 30,
2022

May 1, 2021 May 2, 2020

17,143 $

77,590 $

40,398

865

2,812

18,008 $

80,402 $

40,412

Inventories: In accordance with 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. Cost is measured as the price of the components
and allocated expenses for production or betterment of the inventory item. 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, costs of completion, and technological
obsolescence.

Allowance for doubtful accounts: We make estimates regarding the collectability of our accounts receivable, long-term
receivables, contract assets 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 it is determined collection will not occur in
accordance with ASC 310, Receivables.

Revenue recognition: Our accounting policies and estimates are in accordance with ASC 606, Revenue from Contracts with
Customers, and are as follows:

Contracts are identified and follow the revenue recognition policies when all of the following occur: we have evidence that
all parties to the contract have approved the contract and are committed to perform their respective obligations, we can
identify each party’s rights regarding the goods or services to be transferred, we can identify the payment terms for the
goods or services to be transferred, the contract has commercial substance, and it is probable we will collect substantially
all of the consideration to which we would be entitled in exchange for the goods or services.

Pre-contract costs are generally expensed as incurred, unless they are directly associated with an anticipated contract and
recoverability from that contract is probable. Pre-contract costs directly associated with anticipated contracts expected to be
recoverable include $117 and $492 as of April 30, 2022 and May 1, 2021, respectively. These are included in the
"Inventories" line item in our consolidated balance sheets.

At contract inception, we identify performance obligations by reviewing the agreement for material distinct goods and
services. Goods and services are distinct when the customer can benefit from them on its own and our promises to transfer
these items are identifiable from other promises within the contract. When we are contracted to provide a single promise
(an integrated system), we often treat it as a single performance obligation if we are providing goods and services with the
same pattern of transfer that are highly integrated or interdependent, that are modified or customized by other goods or
services promised, or that provide a combined outcome for which the customer has contracted. When less interdependency
or integration is necessary, or when the customer can benefit from distinct items, we separate the contract into multiple
performance obligations. We account for extended warranties and other services ("service-type warranties") that represent a
distinct service as a separate performance obligation.

Our contracts can contain multiple components of transaction price. We evaluate each contract for these components and
include fixed consideration, variable consideration, financing components, and non-cash consideration and exclude
consideration payable to a customer and sales taxes in the transaction price. When we are responsible for site installations
which include subcontracted work, we maintain the contractual responsibilities and risks and include the consideration for
these services in the transaction price. When our contract contains variable consideration, including return rights, discounts,
claims, unpriced change orders, and liquidated damages, we estimate the transaction price using the expected value (i.e.,
the sum of the probability-weighted amount) or the most likely amount method, whichever is expected to better predict
revenue for that contract situation. We also constrain the revenue to the extent that it is probable that a significant reversal
of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable
consideration is subsequently resolved. We consider the following factors in determining revenue associated with variable
consideration: (a) the contract or other evidence providing the legal basis, (b) additional costs caused by unforeseen
circumstances, (c) evidence supporting the claim, and (d) historical evidence and patterns of customers. We adjust the
contract price for the effects of a significant financing component if we expect, at contract inception, that the period
between when we transfer goods and services to a customer will exceed one year from the time the customer pays and
represents financing. If the payment structures exceed a year but are structured to account for risks with a contract or
correspond to payments on milestones or are scheduled for performance, we do not adjust the contract price for a financing
component. See "Note 6. Receivables" for amounts recorded in long-term receivables.

When separate performance obligations are identified, we allocate the transaction price to the individual performance
obligation based on the best method we judge as faithfully depicting the value of the performance obligation. Many of our
contracts are bundled, and we do not have separate selling prices for each performance obligation; therefore, for these
contracts, we primarily use the cost plus a margin approach to allocate the relative transaction price to identified
performance obligations, as it is the best representative of our pricing methods.

Revenue is recognized when we satisfy a performance obligation. We receive payments from customers based on a billing
schedule as established in our contracts. Billing schedules include down payments and progress billings over time; set
milestone payments that are specific to the project are scheduled for performance-based payments or are set time-based
payment(s). Variability in contract assets and contract liabilities relates to the timing of billings and revenue recognition,
which can vary significantly depending on contractual payment terms, build and installation schedules and the related
timing differences in transfer of control. Balances are also impacted by the seasonality in our business.

Significant judgments and estimates are used in our revenue policies. In order to assure appropriate and consistent revenue
recognition, we regularly evaluate available project related information and update estimates accordingly. We maintain
internal policies and procedures to provide guidance for those involved in recording revenue. We monitor for changes in
our business sales practices and customer interactions to capture the appropriate types of performance obligations and
adjust for any change in control terms and conditions.

Our material performance obligation types include:

Unique configuration contracts: audio-visual communication systems uniquely configured (custom) or integrated
for a customer's particular location and system configuration may include all or a combination of the following:
engineering services, project management services, video display(s), control solution(s), installation and
integration services, scoring and messaging equipment, training, other on-site services, spare parts, software
licenses, and assurance-type warranties.

We may have multiple performance obligations in these types of contracts; however, a majority are treated as a
combined single performance obligation. In our judgment, this accounting treatment is most appropriate because
the substantial part of our promise to customers is to provide significant integration services and incorporate
individual goods and services into a combined output or system. Often times, the system is customized or
significantly modified to the customer's desired configurations and location, and the interrelated goods and
services provide utility to the customer as a package.

Revenue for uniquely configured (custom) or integrated systems is recognized over time using the cost incurred
input method. Over time revenue recognition is appropriate because we have no alternative use for the uniquely
configured system and have an enforceable right to payment for work performed. The cost incurred input method
measures costs incurred to date compared to estimated total costs for each contract. This method is the most
faithful depiction of our performance because it measures the value of the contract transferred to the customer.
Costs to perform include direct and indirect costs for contract design, production, integration, installation, and
assurance-type warranty reserve. Direct costs include materials and components; manufacturing, project
management and engineering labor; and subcontracting expenses. Indirect costs include allocated charges for such
items as facilities and equipment depreciation and general overhead. Provisions of estimated losses on
uncompleted contracts are made in the period when such losses are capable of being estimated.

Contract modifications to existing contracts with customers are evaluated in accordance with the five-step revenue
model. We treat contract modifications as a separate contract and new performance obligations when the
additional goods or services are distinct and do not add to the unique configuration or are outside the integrated
system and when the consideration reflects standalone selling prices. If the additional goods or services offered
under the modification enhance the uniquely configured or integrated systems, revenue is allocated to the existing
contracts' performance obligation. Modifications may cause changes in the timing of revenue recognition
depending on the allocation to various performance obligations.

The time between contract order and project completion is typically less than 12 months but may extend longer
depending on the amount of custom work and customers’ delivery needs.

Limited configuration (standard systems) and after-sale parts contracts: Limited configured (standard systems) or
after-sale parts contracts with limited or no configuration or limited integration are recognized as distinct
individual performance obligations when material. When not distinct, we combine into one performance
obligation the goods and/or services with each other until the bundle of goods or services is distinct. For standard
display purchases made in large quantities, we account for each piece of equipment separately as a distinct
performance obligation from which a customer derives benefit. Immaterial goods or services in the context of the
contract are included with the display system performance obligation. Standard systems and equipment with
limited configurations or integrations may include all or a combination (when immaterial) of the following
performance obligations: engineering services, project management services, video display(s), control solution(s),
installation and integration services, scoring, messaging and audio equipment, training, spare parts, software
licenses, assurance-type warranties, and after-sale parts.

Revenue is recognized at a point in time when control passes, or over time as services are performed. When
fulfilling limited configuration performance obligations, we are typically able to redirect the video displays or
scoring, messaging, or audio equipment to another customer without incurring significant economic losses.

Therefore, we have an alternative use for the performance obligation and recognize revenue upon our substantial
completion and at the point in time we estimate control has transferred to the customer. When limited configured
single performance obligations are more service-type (i.e., installation and integration services), we recognize
revenue over time using the cost-to-cost input method, which is the most faithful depiction of the customer
obtaining control and benefits from the work performed.

Services and other: Services sold on a stand-alone basis or after the initial system sale include performance
obligations such as event support, control room design, on-site training, equipment service, service-type
warranties, technical support, software sold as a service, and other immaterial revenue streams. These are
contracted with a customer generally per service event or service type on a stand-alone basis. Services, service
type warranties, and other are recognized as net sales when the services are performed, and control is transferred
to the customer at a point in time when title or control passes or over time as services are performed and for time-
based "stand ready to perform" type obligations. We use professional judgment to determine control transfer. If
we have the right to consideration from a customer that directly corresponds with the value of our performance
(where we bill a fixed amount for each hour of service provided), we recognize revenue related to the work
completed.

Software: Revenues from software license fees on sales, other than uniquely configured type contracts, are recognized
when delivery of the product has occurred. 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 pro-rata over the term of the engagement.

Shipping and handling 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.

Warranty: 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 (assurance type warranty) 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. For service-type warranty contracts, we allocate revenue to this
performance obligation, recognize the revenue over time, and recognize costs as incurred.

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 are 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

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

Years

5 - 40

5 - 7

3 - 5

2 - 7

3 - 5

5 - 7

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.

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.

A qualitative assessment may be used to first determine whether it is "more likely than not" that the fair value of a
reporting unit is less its carrying value. Based on this assessment, if it is determined that is more likely than not that
impairment has occurred, a quantitative analysis will be performed. The quantitative assessment uses an income approach
to estimate the fair value of each reporting unit. 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. Fair
value is estimated using internally developed forecasts and assumptions and takes into account management plans, business
trends, and market and economic conditions. If the quantitative assessment of good impairment fails, an impairment loss
equal to the amount that a reporting unit's carrying value exceeds its fair value will be recognized.

We completed our annual impairment analysis during the third quarter of fiscal 2022, utilizing a quantitative approach.
Based on the outcome of that analysis, goodwill was not impaired.

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 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 and statutory tax rates applicable to the years in which we expect these temporary differences
will affect taxable income. These assets and liabilities are analyzed regularly, and we assess the likelihood that deferred tax
assets will be recoverable from future taxable income. When necessary, a valuation allowance is established if it is more
likely than not the deferred tax asset will not be realized. We report the net deferred tax asset and liability as a long-term
asset or liability. Net deferred assets or liabilities are calculated by combining them based on their jurisdiction.

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. See "Note 12. Income Taxes" for further information.

Comprehensive income (loss): 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 (loss) 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 (loss) 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.

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 shares of common stock or resulted in the issuance of shares 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 April 30, 2022, May 1, 2021 and May 2, 2020:

For the year ended April 30, 2022:

Basic earnings per share

Dilution associated with stock compensation plans

Diluted earnings per share

For the year ended May 1, 2021:

Basic earnings per share

Dilution associated with stock compensation plans

Diluted earnings per share

For the year ended May 2, 2020:

Basic earnings per share

Dilution associated with stock compensation plans

Diluted earnings per share

Net income

Per share
income

592

—

592

10,926

—

10,926

491

—

491

45,188 $

138

45,326 $

44,989 $

213

45,202 $

45,031 $

285

45,316 $

0.01

—

0.01

0.24

—

0.24

0.01

—

0.01

Options outstanding to purchase 1,846, 2,262 and 2,198 shares of common stock with a weighted average exercise price of
$9.15, $9.11 and $9.95 for the fiscal years ended April 30, 2022, May 1, 2021 and May 2, 2020, 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 10. Shareholders' Equity and Share-Based Compensation" for additional information
and the assumptions we use to calculate the fair value of share-based employee compensation.

Other Business Developments

Impacts to and changes in global economic conditions are expected as the world economies recover from the COVID-19
pandemic, adjust to supply chain conditions and disruptions, and react to the evolving war and geopolitical environment.
Our ability to fund operations and capital expenditures in the future will be dependent on our ability to generate cash flow
from operations in these conditions, to maintain or improve margins, and to use funds from our credit facility or other
funding sources.

We anticipate needing to utilize a portion of our line of credit which was recently extended to April 2025 to help with our
continued investment in capacity to meet our expanding demand. We believe it is probable our existing cash balances and
future actions will be sufficient to fund our normal business operations over the next twelve months from the date of this
filing.

We received governmental wage subsidies from various governmental programs related to COVID-19 implications of $293
and $1,757 during the fiscal years 2022 and 2021, respectively and recorded the subsidies as a reduction of compensation
expense, most of it is included in the "Costs of sales" line item in our consolidated statements of operations. We also have
elected to defer payments of the employer portion of social security taxes during the payroll tax deferral period, which
ended on December 31, 2020. As of April 30, 2022, the total amount of such deferral was $2,633, which is included in the
"Accrued expenses" line item in our consolidated balance sheet. Per the terms of the deferral program, the total amount is
due on December 31, 2022.

Recent Accounting Pronouncements

Accounting Standards Adopted

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-03, Measurement of Credit Losses on
Financial Instruments, which provides guidance regarding the measurement and recognition of credit impairment for
certain financial assets. ASU 2016-03 improves financial reporting by requiring more timely recording of credit losses on
loans and other financial instruments held by financial institutions and other organizations. Under the new guidance, ASU
2016-03 requires an organization to measure all expected credit losses for financial assets held at the reporting date based
on historical experience, current conditions, and reasonable supportable forecasts. We adopted ASU 2016-03 and its related
guidance during the first quarter of fiscal 2021, and the adoption did not have a material impact on our consolidated
financial statements.

We estimate an allowance for doubtful accounts using a loss rate method. We measure all expected credit losses for
financial assets held at the reporting date based on historical experience, current conditions, and reasonable supportable
forecasts.

A reconciliation of the beginning and ending allowance for doubtful accounts is as follows:

Balance as of Balance at beginning of year

Charged to costs and expenses

Deductions (1)

Balance as of Balance at end of year

(1) Includes account collections and write offs

Year Ended

April 30,

May 1, 2021

3,942 $

2,083

(3,271)

2,754 $

2,828

3,318

(2,204)

3,942

There have been no significant ASUs issued that we adopted during the fiscal year ended April 30, 2022.

Accounting Standards Not Yet Adopted

In November 2021, FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities
About Government Assistance ("ASU 2021-10"), which requires business entities to disclose information about transactions
with a government that are accounted for by applying a grant or contribution model by analogy. For transactions covered
by ASU 2021-10, the new standard requires the disclosure of information about the nature of the transaction, including
significant terms and conditions, as well as the amounts and specific financial statement line items affected by the
transaction. ASU 2021-10 is effective for annual periods beginning after December 15, 2021, which for us is the first
quarter of fiscal 2023. Early adoption is permitted. The Company does not expect the adoption of ASU 2021-10 to have a
material impact on future disclosures.

Note 2. Revenue Recognition

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

The following table presents our disaggregation of revenue by segments:

Fiscal Year 2022

Commercial Live Events

High School
Park and
Recreation

Transportation

International

Total

Type of performance
obligation

Unique configuration

20,849 $

144,095 $

20,175 $

38,843 $

32,658 $ 256,620

Limited configuration

118,308

Service and other

15,054

30,181

24,830

88,162

3,479

21,370

2,494

43,029

7,443

301,050

53,300

154,211 $

199,106 $

111,816 $

62,707 $

83,130 $ 610,970

Timing of revenue
recognition

Goods/services
transferred at a point
in time

Goods/services
transferred over time

Type of performance
obligation

120,776 $

37,229 $

82,678 $

22,088 $

45,036 $ 307,807

33,435

161,877

29,138

40,619

38,094

303,163

154,211 $

199,106 $

111,816 $

62,707 $

83,130 $ 610,970

Fiscal Year 2021

Commercial Live Events

High School
Park and
Recreation

Transportation

International

Total

Unique configuration

16,535 $

104,682 $

22,258 $

36,398 $

22,266 $ 202,139

Limited configuration

Service and other

96,420

14,345

18,679

19,688

66,697

2,602

19,690

2,196

32,583

6,994

234,069

45,825

127,300 $

143,049 $

91,557 $

58,284 $

61,843 $ 482,033

Timing of revenue
recognition

Goods/services
transferred at a point in
time
Goods/services
transferred over time

98,243 $

23,906 $

60,859 $

20,180 $

34,388 $ 237,576

29,057

119,143

30,698

38,104

27,455

244,457

127,300 $

143,049 $

91,557 $

58,284 $

61,843 $ 482,033

Fiscal Year 2020

Commercial Live Events

High School
Park and
Recreation

Transportation

International

Total

Type of performance
obligation

Unique configuration

35,212 $

140,044 $

19,176 $

43,519 $

40,454 $ 278,405

Limited configuration

Service and other

102,847

14,568

31,897

24,650

74,266

2,972

24,588

2,032

45,626

279,224

7,081

51,303

152,627 $

196,591 $

96,414 $

70,139 $

93,161 $ 608,932

Timing of revenue
recognition

Goods/services
transferred at a point in
time

Goods/services
transferred over time

105,096 $

39,521 $

68,582 $

25,157 $

47,345 $ 285,701

47,531

157,070

27,832

44,982

45,816

323,231

152,627 $

196,591 $

96,414 $

70,139 $

93,161 $ 608,932

See "Note 3. Segment Reporting" for a disaggregation of revenue by geography.

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

The following table reflects the balances and changes in our contract assets and liabilities:

Contract assets

Contract liabilities - current

Contract liabilities - non-current

April 30,
2022

May 1, 2021

41,687 $

90,393

10,998

32,799

64,495

10,720

The changes in our contract assets and contract liabilities from May 1, 2021 to April 30, 2022 were due to the timing of
billing schedules and revenue recognition, which can vary significantly depending on the contractual payment terms and
the seasonality of the sports markets. We had no material impairments of contract assets for fiscal 2022.

For service-type warranty contracts, we allocate revenue to this performance obligation, recognize the revenue over time,
and recognize costs as incurred. Earned and unearned revenues for these contracts are included in the "Contract assets" and
"Contract liabilities". Changes in unearned service-type warranty contracts, net were as follows:

Balance at beginning of year

New contracts sold

Less: reductions for revenue recognized

Foreign currency translation and other

Balance at end of year

April 30,
2022

May 1, 2021

24,590 $

42,619

24,490

35,623

(40,614)

(36,723)

(249)

26,346 $

1,200

24,590

As of April 30, 2022 and May 1, 2021, our contracts in progress that were identified as loss contracts were immaterial. For
these contracts, the provision for losses are included in the "Accrued expenses" line item in our consolidated balance
sheets.

During fiscal 2022, we recognized revenue of $53,241 related to our contract liabilities as of May 1, 2021.

Remaining performance obligations
As of April 30, 2022, the aggregate amount of the transaction price allocated to the remaining performance obligations was
$533,340. We expect approximately $452,289 of our remaining performance obligations to be recognized over the next 12
months, with the remainder recognized thereafter. Remaining performance obligations related to product and service
agreements at April 30, 2022 are $471,589 and $61,751, respectively. Although remaining performance obligations reflect
business that is considered to be legally binding, cancellations, deferrals or scope adjustments may occur. Any known
project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals are
reflected or excluded in the remaining performance obligation balance, as appropriate.

Note 3. Segment Reporting

We organize and manage our business by the following five segments which meet the definition of reportable segments
under ASC 280-10, Segment Reporting: Commercial, Live Events, High School Park and Recreation, Transportation, and
International. These segments are based on the customer type or geography and are the same as our business units. Separate
financial information is available and regularly evaluated by our chief operating decision-maker (CODM), who is our
president and chief executive officer, in making resource allocation decisions for our segments. Our CODM evaluates
segment performance according to the GAAP measure of gross profit.

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, shopping centers, cruise ships, 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 systems 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 for sale outside of the United States
and Canada to the related type of company, including sports and commercial business facilities, OOH companies, and
governmental transportation agencies.

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 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 in the segment analysis.

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:

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

Net sales:

Commercial

Live Events

High School Park and Recreation

Transportation

International

Total company net sales

Gross profit:

Commercial

Live Events

High School Park and Recreation

Transportation

International

Operating expenses

Selling

General and administrative

Product design and development

Operating income (loss)

Nonoperating income (expense):

Interest income (expense), net

Other expense, net

Income (loss) before income taxes

Depreciation and amortization:

Commercial

Live Events

High School Park and Recreation

Transportation

International

Unallocated corporate depreciation

154,211 $

127,300 $

199,106

111,816

62,707

83,130

610,970

31,851

21,787

35,477

18,172

9,410

143,049

91,557

58,284

61,843

152,627

196,591

96,414

70,139

93,161

482,033

608,932

33,072

24,397

31,472

20,329

11,313

29,246

39,518

28,874

23,910

17,152

116,697

120,583

138,700

51,075

32,563

29,013

112,651

4,046

48,649

27,980

26,846

103,475

17,108

65,902

35,193

37,772

138,867

(167)

171

(3,109)
1,108 $

(65)

(2,983)
14,060 $

699

(541)
(9)

2,677 $

3,037 $

5,238

1,420

551

2,796

2,712

5,798

1,942

979

2,887

2,434

3,682

5,605

2,025

1,029

2,460

2,917

15,394 $

17,077 $

17,718

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

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

513,740 $

413,211 $

97,230

68,822

610,970 $

482,033 $

504,931

104,001

608,932

58,643 $

50,130 $

8,122

8,552

66,765 $

58,682 $

58,422

9,062

67,484

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

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

Note 4. Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill related to each reportable segment for the fiscal year ended April 30, 2022
were as follows:

Live Events

Commercial

Transportation

International

Total

Balance as of May 1, 2021:

Foreign currency translation

Balance as of April 30, 2022:

2,313 $

3,464 $

(17)

(115)

2,296 $

3,349 $

84 $

(16)

68 $

2,553 $

8,414

(339)

(487)

2,214 $

7,927

We perform an analysis of goodwill on an annual basis and test for impairment more frequently if events or changes in
circumstances indicate that an asset might be impaired. Our annual analysis is performed during our third quarter of each
fiscal year, based on the goodwill amount as of the first business day of our third fiscal quarter. We performed our annual
impairment test and concluded no goodwill impairment existed for fiscal years 2022, 2021, and 2020.

Intangible Assets

The following table summarizes intangible assets, net, as of April 30, 2022 and May 1, 2021:

Registered trademarks

Software

Customer relationships

Other

Total

Registered trademarks

Software

Customer relationships

Other

Total

April 30, 2022

Weighted
Average Life
(in years)

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

20.0 $

3.0

10.0

1.0

7.6 $

639 $

233 $

2,984

2,853

101

2,984

1,787

101

6,577 $

5,105 $

406

—

1,066

—

1,472

May 1, 2021

Weighted
Average Life
(in years)

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

19.4 $

738 $

246 $

3.0

10.0

1.5

6,606

2,984

132

6,412

1,588

131

492

194

1,396

6.1 $

10,460 $

8,377 $

2,083

In the fiscal years 2022, 2021, and 2020, amortization expense was $504, $1,502, and $1,498, respectively. Amortization
expenses are included primarily in product design and development and selling expense in the consolidated statements of
operations. Intangible assets are written off when fully amortized.

As of April 30, 2022, amortization expenses for future periods were estimated to be as follows:

Fiscal years ending

2023

2024

2025
2026
2027

Thereafter

Amount

300

300
266
36

270

Total expected amortization expense

1,472

Note 5. Selected Financial Statement Data

Inventories consisted of the following:

Raw materials

Work-in-process

Finished goods

April 30,
2022

May 1, 2021

71,410 $

14,238

48,744

134,392 $

29,913

9,948

34,495

74,356

Property and equipment, net consisted of the following:

Land

Buildings

Machinery and equipment

Office furniture and equipment

Computer software and hardware

Construction in Process

Demonstration equipment

Transportation equipment

Less accumulated depreciation

April 30,
2022

May 1, 2021

1,899 $

69,170

110,079

4,098

46,922

5,792

7,260

7,065

252,285

185,520

66,765 $

1,924

69,608

98,451

4,103

44,851

—

7,186

7,264

233,387

174,705

58,682

Our depreciation expense was $14,890, $15,575, and $16,230 for the fiscal years 2022, 2021, and 2020, respectively.

Accrued expenses consisted of the following:

Compensation

Taxes, other than income taxes

Accrued employee benefits

Operating lease liabilities

Short-term accrued expenses

Acquisition-related contingency consideration

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

April 30,
2022

May 1, 2021

15,944 $

13,079

6,741

3,227

2,309

6,738

—

5,888

2,174

1,881

7,455

195

34,959 $

30,672

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

Foreign currency transaction (losses) gains

(227) $

(675) $

Equity in losses of affiliates

Other

Note 6. Receivables

(2,970)

(2,370)

(3,109) $

(2,983) $

207

(741)

(7)

(541)

We invoice customers based on a billing schedule as established in our contracts. We sometimes 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 $2,754 and $3,942 at April 30, 2022 and May 1, 2021, respectively.
Included in accounts receivable as of April 30, 2022 and May 1, 2021 was $1,834 and $660, respectively, of retainage on
construction-type contracts, all of which is expected to be collected within one year.

In some contracts with customers, we agree to installment payments exceeding 12 months. The present value of these
contracts is 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, including accrued interest
and current maturities, was $4,288 and $3,097 as of April 30, 2022 and May 1, 2021, respectively. Contract receivables
bearing annual interest rates of 0.0 to 9.0 percent are due in varying annual installments through November 2025. The face
value of long-term receivables was $4,364 as of April 30, 2022 and $3,438 as of May 1, 2021.

Note 7. Financing Agreements

We have a credit agreement with a bank which provides for a $35,000, line of credit and allows up to $20,000 for
commercial and standby letters of credit. The bank has a security interest in certain assets located in the United States. The
interest rate on the line of credit ranges from the secured overnight financing rate ("SOFR") plus 75 basis points to SOFR
plus 125 basis points depending on certain ratios. The line of credit was renewed on April 29, 2022, and the maturity date
of our credit agreement and related revolving bank note is April 29, 2025.

The credit agreement and amendments to the credit agreement require us to be in compliance with certain financial ratios,
including a covenant to maintain the ratio of interest-bearing debt to earnings before income taxes, depreciation, and
amortization of less than 2.5, and other covenants. The credit agreement and amendments to the credit agreement also
contain customary events of default, including the failure to comply with covenants, the failure to pay or discharge material
judgments and taxes, bankruptcy, the failure to pay loans and fees, and experiencing a change of control. The occurrence of
an event of default by us would permit the lenders to terminate their commitments and accelerate repayment of the loans,
foreclose on the collateral for the loans, and require collateralization of outstanding letters of credit.

As of April 30, 2022, there were no advances under the loan portion of the line of credit, and the balance of the letters of
credit outstanding was approximately $4,669. As of April 30, 2022, $30,331 of the credit facility was available for
borrowing.

As of April 30, 2022, we had $715 of bank guarantees or other financial instruments for display installations issued by
another bank and secured by a restricted cash deposit. If we are unable to meet the terms of the arrangement, the bank
would subrogate its loss by drawing on the secured cash deposit.

Note 8. Share Repurchase Program

On June 17, 2016, our Board of Directors approved a stock repurchase program under which we may purchase up to
$40,000 of the Company's outstanding shares of common stock. Under this program, we may repurchase shares from time
to time in open market transactions and in privately negotiated transactions based on business, market, applicable legal
requirements and other considerations. The repurchase program does not require the repurchase of a specific number of
shares and may be terminated at any time.

In April 2020, the Board had suspended the program. On December 2, 2021, the Board of Directors of Daktronics voted to
reauthorize the stock repurchase program.

During fiscal 2021, we had no repurchases of shares of our outstanding common stock. During fiscal 2022 and 2020, we
repurchased 641 and 1,039, respectively, shares of common stock at a total cost of $3,184 and $5,636, respectively. As of
April 30, 2022, we had $29,355 of remaining capacity under our current share repurchase program.

Note 9. Leases

We lease facilities and various equipment to manufacture products and provide employee collaboration space and tools.
These are all classified as operating leases and have initial lease terms ranging from one to five years. These operating
leases do not contain material residual value guarantees or material restrictive covenants. Our lease for our facility in Sioux
Falls, South Dakota has a purchase option. We do not have any financing leases.

We determine if an arrangement is a lease at the inception of the lease. Leases with an initial term of 12 months or less are
not recorded on the balance sheet. Right-of-use assets represent our right to use an underlying asset for the lease term, and
lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets
and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.
As we are generally not able to determine the rate implicit in our leases, we use the incremental borrowing rate based on
the information available at the commencement date in determining the present value of future lease payments. The

operating lease right-of-use asset includes any prepaid lease payments and initial direct costs and excludes any lease
incentives and impairments. Some of our leases include options to extend the term, which is only included in the right-of-
use assets and lease liability calculation when it is reasonably certain that we will exercise that option. We have lease
agreements with lease and non-lease components, and we have elected to account for all asset classes as a single lease
component. Our operating leases also typically require payment of real estate taxes, insurance, and common area
maintenance. These components comprise the majority of our variable lease cost and are excluded from the present value
of our lease obligations. In instances where they are fixed, they are included due to our election to combine lease and non-
lease components. Our total variable lease costs are immaterial.

Operating lease cost is recognized on a straight-line basis over the lease term, and short-term lease cost is recognized when
paid. During fiscal 2022, the amount of the operating lease cost included in cost of sales and operating expenses in the
consolidated statements of operations was $2,425 and $870, respectively, as compared to $2,241 and $977, respectively, in
fiscal year 2021; and $2,325 and $1,116, respectively, in fiscal year 2020. Operating lease cost includes short-term leases,
which are immaterial.

As of April 30, 2022, the weighted average remaining lease term and discount rate related to operating leases was 3.6 years
and 2.4 percent as compared to 4.7 years and 3.3 percent as of May 1, 2021.

Supplemental unaudited cash flow information related to operating leases were as follows:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

2,680 $

2,752

Future minimum operating lease payments as of, and subsequent to, April 30, 2022 under ASC 842 are as follows:

Year Ended

April 30,
2022

May 1, 2021

Fiscal years ending

2023

2024

2025

2026

2027
Thereafter
Total lease payments

Less imputed interest

Total lease liabilities

Operating
Leases(1)

2,489

2,285

1,632

807

667
—
7,880

(417)

7,463

(1) Includes $3,556 to extend the term of the lease for our Sioux Falls, South Dakota manufacturing facility.

Note 10. Shareholders' Equity and Share-Based Compensation

Authorized shares types and shareholder rights plan: Our 120,000 authorized shares consist of 115,000 shares of common
stock, 50 shares of Series A Junior Participating Preferred Stock, and 4,950 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 preferred share purchase right. Each right entitles the registered
holder of our common stock to purchase from us one one-thousandth of one share of our Series A Junior Participating
Preferred Stock at an initial exercise price of $20 per right, 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 20

percent or more of our outstanding common shares (subject to certain exceptions) 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 20 percent or more of our
outstanding common shares. The rights expire on November 19, 2024, which date may be extended by our Board of
Directors subject to certain additional conditions.

Stock incentive plans: During fiscal 2021, we established the Daktronics, Inc. 2020 Stock Incentive Plan (“2020 Plan”) and
ceased granting options under the 2015 Stock Incentive Plan ("2015 Plan"). The 2020 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 2015 Plan and 2020 Plan generally have a 10-year
life, an exercise price equal to the closing 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 closing
market value on the date of grant. Stock options granted to independent directors vest in one year, provided that the
directors remain on the Board. 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 30, 2022, the aggregate number of shares available for future grants under the 2020 Plan for stock options and
restricted stock awards was 2,456 shares. Shares of common stock subject to all stock awards granted under the 2020 Plan
are counted as one share of stock for each share of stock subject to the award. Although the 2015 Plan remains in effect for
options outstanding that were granted under the 2015 Plan until the earlier of the exercise of the options or their expiration
or termination without being exercised, no new options can be granted under the 2015 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 $1,772 at April 30, 2022, which is expected to be recognized over a
weighted-average period of 2.71 years. The total fair value of restricted stock vested was $1,203, $1,293, and $1,415 in
fiscal years 2022, 2021, and 2020, respectively.

A summary of non-vested restricted stock and restricted stock units for fiscal years 2022, 2021, and 2020 is as follows:

April 30, 2022

Year Ended
May 1, 2021

May 2, 2020

Number of
Nonvested
Shares

Weighted
Average
Grant Date
Fair Value
Per Share

Number of
Nonvested
Shares

Weighted
Average
Grant Date
Fair Value
Per Share

Number of
Nonvested
Shares

Weighted
Average
Grant Date
Fair Value
Per Share

Outstanding at
beginning of year

Granted

Vested

Forfeited
Outstanding at end
of year

480 $

214

(213)

(12)

469 $

5.62

5.66

5.58

5.64

5.65

449 $

223

(176)

(16)

480 $

7.16

3.92

7.27

7.00

5.62

444 $

186

(173)

(8)

449 $

7.58

7.03

8.10

7.37

7.16

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 our 2015 Plan and 2020 Plan during the fiscal year ended April 30,
2022 is as follows:

Outstanding at May 1, 2021

Granted

Canceled or forfeited

Exercised

Outstanding at April 30, 2022

Shares vested and expected to vest

Exercisable at April 30, 2022

Weighted
Average
Exercise
Price
Per Share

Weighted
Average
Remaining
Contractual
Life (Years)

Aggregate
Intrinsic
Value

Stock
Options

2,227 $

223

(341)

(2)

2,107 $

2,075 $

1,371 $

8.53

5.66

9.17

4.11

8.13

8.17

9.47

4.83 $

843

—

4.98 $

4.92 $

3.26 $

—

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 30, 2022 as options having exercise prices lower than the $3.35 per share market price of our common stock on that
date. There were no shares exercisable that were in-the-money options at April 30, 2022. The total intrinsic value of
options exercised during fiscal years 2022, 2021, and 2020 was $2, $0, and $0, respectively. The total fair value of stock
options vested was $465, $451, and $566 for fiscal years 2022, 2021, and 2020, 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 (in years)

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

2.43

1.71

1.07 %

— %

40.60 %

6.94

0.43 %

— %

40.53 %

6.94

1.99

1.51 %

3.50 %

37.55 %

6.94

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 4,000. The number of shares of common stock issued under the ESPP totaled 310, 170, and 453 shares in fiscal
2022, 2021, and 2020, respectively. The number of shares of common stock reserved for future employee purchases under
the ESPP totaled 705 shares at April 30, 2022. 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 30, 2022, there was $2,862 of total unrecognized compensation cost
related to non-vested 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 2.71 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

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

458 $

1,159
356
1,973 $

450 $

1,203
414
2,067 $

492

1,341
432
2,265

A summary of the share-based compensation expense for stock options, restricted stock, restricted stock units and shares
issued under the ESPP for fiscal years 2022, 2021, and 2020 is as follows:

Cost of sales

Selling

General and administrative

Product design and development

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

434 $

472 $

472

656

411

484

678

433

514

572

717

462

1,973 $

2,067 $

2,265

We received $8 in cash from option exercises under all share-based payment arrangements for the fiscal year ended
April 30, 2022. The tax (expense) benefit related to non-qualified options and restricted stock units under all share-based
payment arrangements totaled ($47), ($70), and ($92) for fiscal years 2022, 2021, and 2020, respectively.

Note 11. Retirement Benefits

We sponsor a 401(k) savings plan providing benefits for substantially all United States-based employees of Daktronics,
Inc. and its subsidiaries, subject to certain Internal Revenue Service ("IRS") limits. We made matching cash contributions
equal to 50 percent of the employee's qualifying contribution up to six percent of such employee's compensation; however,
we eliminated our matching contribution as one of our cost savings initiatives for fiscal 2021. These benefits were
reinstated for fiscal 2022. Employees are eligible to participate in the 401(k) savings plan the first day of the calendar
month following completion of 30 days of continuous service if they have attained the age of 21. We contributed $2,573,
$0 and $2,917 for matches to the plan for fiscal years 2022, 2021, and 2020, respectively.

Note 12. Income Taxes

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

Domestic

Foreign

Income (loss) before income taxes

Income tax expense (benefit) consisted of the following:

Current:

Federal

State

Foreign

Deferred:

Federal
State

Foreign

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

(2,696) $

10,413 $

3,804

3,647

1,108 $

14,060 $

(4,187)

4,178

(9)

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

644 $

507 $

452

975

(1,020)
(476)

(59)

516 $

422

891

1,216
59

3,134 $

625

297

761

(2,028)
(321)

166

(500)

The reconciliation of the provision (benefit) for income taxes and the amount computed by applying the federal statutory
rate to income (loss) before income taxes is as follows:

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

Computed income tax expense (benefit) at federal statutory rates

233 $

2,953 $

Change in uncertain tax positions

Research and development tax credit

Other, net

Change in valuation allowances

GILTI

Base Erosion Anti-Abuse Tax (BEAT)

Stock compensation

Meals and entertainment

Dividends paid to retirement plan

State taxes, net of federal benefit

(71)

(382)

(227)

609

(14)

150

—

139

(34)

(1,047)

403

402

(156)

(285)

355

—

494

516 $

3,134 $

(2)

(1,621)

(241)

482

149

301

318

305

(111)

(84)

(500)

The effective income tax rate for fiscal 2022 was impacted by tax benefits from permanent tax credits offset by valuation
allowances as well as other various permanent tax adjustments and state taxes with additional expense for prior year
provision to return adjustments.

During fiscal 2021, our effective income tax rate was impacted due to tax benefits from permanent tax credits and prior
year provision to return adjustments offset by valuation allowances as well as other various permanent tax adjustments and
state taxes.

During fiscal 2020, our effective income tax rate was impacted due to a tax benefit of permanent tax credits reduced by a
valuation allowance placed on equity investments in proportion to a small pre-tax book loss which results in an abnormal
tax rate.

The components of the net deferred tax assets 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

Lease accounting - lease liability

Other

Total deferred tax assets

Valuation allowance

Net deferred tax assets

Deferred tax liabilities:

Property and equipment

Lease accounting - right of use asset

Prepaid expenses

Intangible assets

Unrealized gain on foreign currency exchange

Other

Total deferred tax liabilities

Net deferred tax asset

April 30,
2022

May 1, 2021

7,117 $

1,618

272

2,316

276

528

1,278

1,019

—

729

396

1,918

2,296

19,763

(2,452)

17,311

(1,693)

(1,907)

(428)

—

(180)

(59)

(4,267)

13,044 $

6,293

1,222

398

1,776

324

829

583

1,707

856

516

1,572

1,513

17,674

(1,732)

15,942

(2,373)

(1,580)

(337)

(69)

—

(49)

(4,408)

11,534

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

Non-current assets

Non-current liabilities

April 30,
2022

May 1, 2021

13,331 $

11,944

(287)

(410)

13,044 $

11,534

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

April 30,
2022

May 1, 2021

Balance at beginning of year

548 $

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

(54)

116

(150)

477 $

582

(1)

(138)

548

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 occurring in the next
12 months: expiring statutes, audit activity, tax payments, or competent authority proceedings. A statute of limitations
relating to $166 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. Additionally, we recognized the release of $150
in unrecognized tax benefits related to the lapse of a statute of limitations in fiscal 2022.

Interest and penalties incurred associated with uncertain tax positions are included in the "Income tax expense" line item in
our consolidated statements of operations. Accrued interest and penalties are included in the related tax liability line item in
our consolidated balance sheets of $38 and $38 as of April 30, 2022 and May 1, 2021, respectively.

As of April 30, 2022, we had foreign net operating loss (“NOL”) carryforwards of approximately $3,460 primarily related
to our operations in Belgium and Ireland, which have indefinite lives. A deferred tax asset has been recorded for all NOL
carryforwards totaling approximately $723. However, due to uncertainty in future taxable income, a valuation allowance
totaling approximately $581 has been recorded. 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 statements 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. Fiscal years
2019, 2020 and 2021 remain open to federal tax examinations, and fiscal years 2018, 2019, 2020 and 2021 remain open for
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 2011. In the event of any future tax assessments, we have
elected to record the income taxes and any related interest and penalties as income tax expense in our consolidated
statement of operations.

As of April 30, 2022, we had no deferred tax liability recognized relating to our investment in foreign subsidiaries where
the earnings have been indefinitely reinvested. The Tax Act of 2017 generally eliminates U.S. federal income taxes on
dividends from foreign subsidiaries, and, as a result, the accumulated undistributed earnings would be subject only to other
taxes, such as withholding taxes and state income taxes, on the 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.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted in response to
the COVID-19 global pandemic. The CARES Act includes provisions such as: a deferral of the employer portion of certain
payroll taxes, refundable payroll tax credits, alternative minimum tax credit refunds, modifications to the net interest
deduction limitations, technical corrections to tax depreciation methods for qualified improvement property, and permitting
NOL carryforwards incurred in tax years 2018, 2019, and 2020 (our fiscal years 2019, 2020, and 2021) to be carried back
to each of the five preceding taxable years to generate a refund of previously paid income taxes. Subsequently to the
CARES Act, the Consolidated Appropriations Act (“CAA”) of 2021 was signed into law on December 27, 2020,
expanding and extending rules pertaining to payroll tax credits outlined in the CARES Act. Additionally, the American
Rescue Plan Act of 2021 (“ARPA”) was signed into law on March 11, 2021, further extending the payroll tax credits with

slight modifications. We continue to evaluate the specific rules, guidance, and procedures allowed by the provisions of the
CARES Act, CAA and ARPA. Some of these provisions do not apply to our income tax results; however, we are currently
participating in the payment deferral of the employer portion of certain payroll taxes.

Note 13. Cash Flow Information

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

(Increase) decrease:

Account receivable

Long-term receivables

Inventories

Contract assets

Prepaid expenses and other current assets

Income taxes receivables

Investment in affiliates and other assets

Increase (decrease):

Accounts payable

Contract liabilities

Accrued expenses

Warranty obligations

Long-term warranty obligations

Income taxes payable

Long-term marketing obligations and other payables

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

(33,876) $

4,864 $

(440)

(61,159)

(9,545)

(7,661)

121

(357)

33,002

27,398

6,354

1,160

1,764

(379)

(1,762)

1,737

13,900

3,080

2,450

(148)

744

(7,081)

12,628

(2,936)

696

(367)

(173)

2,337

(45,380) $

31,731 $

(7,461)

(1,173)

(8,347)

(1,931)

(1,403)

533

(3,137)

2,377

4,548

6,745

273

883

390

(387)

(8,090)

Supplemental disclosures of cash flow information consisted of the following:

Cash payments for:

Interest

Income taxes, net of refunds

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

16 $

264 $

1,951

2,557

977

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

Demonstration equipment transferred to inventory

53 $

56 $

Purchases of property and equipment included in accounts payable

Contributions of common stock under the ESPP

4,177

1,211

667

565

1,951

2,311

Year Ended

April 30,
2022

May 1, 2021 May 2, 2020

Note 14. Fair Value Measurement

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 long-term receivables 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 in our consolidated balance sheets for long-term receivables 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 in 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 30, 2022 and May 1, 2021 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.

Balance as of April 30, 2022:

Cash and cash equivalents

Restricted cash

Available-for-sale securities:

US Government Securities
US Government Sponsored entities

Derivatives - asset position

Derivatives - liability position

Balance as of May 1, 2021:

Cash and cash equivalents

Restricted cash

Derivatives - asset position

Derivatives - liability position

Acquisition-related contingent consideration

Fair Value Measurements

Level 1

Level 2

Level 3

Total

17,143 $

865

3,486
—

—

— $

—

—
534

934

(311)

— $

17,143

—

—
—

—

865

3,486

534
934

(311)

21,494 $

1,157 $

— $

22,651

77,590 $

— $

2,812

—

(261)

—

80,402 $

(257) $

—

(363)

(363) $

77,590

2,812

(261)

(363)

79,782

A roll forward of the Level 3 contingent liabilities, both short- and long-term, for the fiscal year ended April 30, 2022 is as
follows:

Acquisition-related contingent consideration as of May 1, 2021

Additions

Settlements

Interest

Acquisition-related contingent consideration as of April 30, 2022

363

(400)

—

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.

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 15. Derivative Financial Instruments" for more information
regarding our derivatives.

Contingent liabilities: Consists of the fair value of liabilities measured on expected future payments relating to business
acquisitions if conditions are met. The contingent liabilities were calculated by estimating the discounted present value of
expected future payments as of the acquisition date and subsequently at the end of each reporting period. The fair value
measurement is based on significant unobservable inputs as of May 1, 2021. There were no contingent liabilities as of
April 30, 2022.

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.

Other measurements using fair value: Some of our financial instruments, such as accounts receivable, long-term
receivables, prepaid expense and other assets, contract assets and liabilities, accounts payable, warranty obligations, and
other long-term obligations are reflected in the consolidated balance sheets at carrying value, which approximates fair
value due to their short-term nature.

Note 15. 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 in the consolidated balance
sheets 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 30, 2022 and
May 1, 2021, we had not designated any of our derivative instruments as accounting hedges, and thus we recorded the
changes in fair value in the "Other (expense) income, net" line item in the consolidated statements of operations.

The foreign currency exchange contracts in aggregated notional amounts in place to exchange U.S. dollars at April 30,
2022 and May 1, 2021 were as follows:

April 30, 2022

May 1, 2021

U.S. Dollars

Foreign
Currency

U.S. Dollars

Foreign
Currency

Foreign Currency Exchange Forward Contracts:

U.S. Dollars/Australian Dollars

U.S. Dollars/Canadian Dollars

U.S. Dollars/British Pounds

U.S. Dollars/Euros

—

942

1,774

8,575

—

1,189

1,345

7,513

2,410

—

418

—

3,464

—

300

—

As of April 30, 2022, there was an asset and liability of $934 and $311, respectively, and as of May 1, 2021, there was an
asset and liability of $4 and $261, respectively, representing the fair value of foreign currency exchange forward contracts,
which were determined using Level 2 inputs from a third-party bank. As of April 30, 2022, all contracts mature within ten
months.

Note 16. 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 May 2, 2020, we recorded a $2,072 reserve for the probable and reasonably estimated cost to settle a patent litigation
claim, which was included in the "Accrued expenses" line item in our consolidated balance sheets and "Cost of Sales" in
consolidated statement of operations. During fiscal 2021, an appellate court ruled in our favor on this matter. Since we no
longer estimate we have a probable loss, we recorded a credit to the "Cost of sales" line item in our consolidated statement
of operations and removed the liability from our consolidated balance sheet during fiscal 2021.

For other unresolved legal proceedings or claims, we do not believe there is a reasonable probability that any material loss
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 or claims to have a material
effect on our financial position, liquidity or capital resources.

Warranties: See "Note 1. Nature of Business and Summary of Significant Accounting Policies" for more information
regarding warranties.

Changes in our warranty obligation for the fiscal years ended April 30, 2022 and May 1, 2021 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

25,960 $

9,748

(7,503)

673

Ending accrued warranty obligations

28,878 $

25,624

8,539

(5,718)

(2,485)

25,960

April 30,
2022

May 1, 2021

Performance guarantees: We have entered into standby letters of credit, bank guarantees and surety bonds with financial
institutions relating to the guarantee of our future performance on contracts, primarily construction-type contracts. As of
April 30, 2022, we had outstanding letters of credit, bank guarantees and surety bonds in the amount of $4,669, $715 and
$88,323, respectively. Performance guarantees are issued to certain customers to guarantee the operation and installation of
the equipment and our ability to complete a contract. These performance guarantees have various terms but are generally
one year. We enter into written agreements with our customers, and those agreements often contain indemnification
provisions that require us to make the customer whole if certain acts or omissions by us cause the customer financial loss.
We make efforts to negotiate reasonable caps and limitations on the recovery of such damages. As of April 30, 2022, we
were not aware of any indemnification claim from a customer.

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 30, 2022, we were obligated under the following unconditional purchase
commitments:

Fiscal years ending

2023

2024

2025

2026

2027

Amount

4,389

1,686

113

—

6,228

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

None.

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 Rule 13a-15(e) under the Securities Exchange Act of 1934. As of April 30, 2022, 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 30, 2022, 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 30, 2022, 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 regarding the reliability of financial reporting and the preparation of our financial statements
for external purposes in accordance with the accounting principles generally accepted in the United States. 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 30, 2022.

Our internal control over financial reporting as of April 30, 2022 has been audited by Deloitte & Touche, LLP, our
independent registered public accounting firm, as stated in their report, which is included in this Annual Report on Form
10-K.

By /s/ Reece A. Kurtenbach

Reece A. Kurtenbach

Chief Executive Officer

June 16, 2022

Item 9B. OTHER INFORMATION

None.

By /s/ Sheila M. Anderson

Sheila M. Anderson

Chief Financial Officer

June 16, 2022

Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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 2022 annual meeting of shareholders (“Proxy Statement”) to be
filed within 120 days after our most recent fiscal year-end. Any 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 “Delinquent Section 16(a) Reports.”
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 30, 2022 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 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 2022.

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

Consolidated Balance Sheets as of April 30, 2022 and May 1, 2021

Consolidated Statements of Operations for each of the three fiscal years ended April 30, 2022, May 1, 2021 and
May 2, 2020

Consolidated Statements of Comprehensive Income (Loss) for each of the three fiscal years ended April 30, 2022,
May 1, 2021 and May 2, 2020

Consolidated Statements of Shareholders’ Equity for each of the three fiscal years ended April 30, 2022, May 1,
2021 and May 2, 2020

Consolidated Statements of Cash Flows for each of the three fiscal years ended April 30, 2022, May 1, 2021 and
May 2, 2020

Notes to the Consolidated Financial Statements

(2)

Schedules

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

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.

Amended and Restated Articles of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 of the
Quarterly Report on Form 10-Q/A (Amendment No. 1) of Daktronics, Inc. filed on December 21, 2018).
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 dated as November 16, 2018 between Daktronics, Inc. and Equiniti Trust Company, as Rights
Agent (Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K of Daktronics, Inc. filed on
November 16, 2018).

First Amendment to Rights Agreement dated as of November 19, 2021 between Daktronics, Inc. and Equiniti
Trust Company, as Rights Agent (Incorporated by reference to Exhibit 4.2 of the Current report on Form 8-K of
Daktronics, Inc. filed on November 19, 2021).

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).*
Daktronics, Inc. 2020 Incentive Stock Plan ("2020 Plan") (Incorporated by reference to Exhibit A to the
Company's Definitive Proxy Statement on Schedule 14A filed on July 16, 2020).*
Form of Restricted Stock Award Agreement under the 2020 Plan (Incorporated by reference to Exhibit 10.2 filed
with our Current Report on Form 8-K on September 3, 2020).*
Form of Non-Qualified Stock Option Agreement Terms and Conditions under the 2020 Plan (Incorporated by
reference to Exhibit 10.3 filed with our Current Report on Form 8-K on September 3, 2020).*
Form of Incentive Stock Option Terms and Conditions under the 2020 Plan (Incorporated by reference to Exhibit
10.4 filed with our Current Report on Form 8-K on September 3, 2020).*
Form of Restricted Stock Unit Terms and Conditions under the 2020 Plan (Incorporated by reference to Exhibit
10.5 filed with our Current Report on Form 8-K on September 3, 2020).*

3.1

3.2

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10 Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of
1934 (Incorporated by reference to Exhibit 4(vi) filed with our Annual Report on Form 10-K filed on June 12,
2020).

10.1 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).

10.2 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).

10.3

10.4

10.5

10.6

Second Amendment to Credit Agreement dated as of November 15, 2019 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 15, 2019).

Third Amendment to Credit Agreement dated as of August 28, 2020 by and between the Company and U.S. Bank
National Association (Incorporated by reference to Exhibit 10.4 filed with our Quarterly Report on Form 10-Q on
August 28, 2020).

Fourth Amendment to Credit Agreement dated as of March 11, 2021 by and between the Company and U.S. Bank
National Association (Incorporated by reference to Exhibit 10.5 filed with our Annual Report on Form 10-K on
June 11, 2021).

Fifth Amendment to Credit Agreement dated as of April 29, 2022 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 on
April 29, 2022).

10.7

Security Agreement dated as of August 28, 2020 by and between the Company and U.S. Bank National
Association (Incorporated by reference to Exhibit 10.5 filed with our Current Report on Form 10-Q of Daktronics,
Inc. filed on August 28, 2020).
Subsidiaries of the Company. (1)
21.1
23.1 Consent of Deloitte & Touche LLP. (1)
24

Power of Attorney. (1)

31.1 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)

31.2 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)

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

Section 1350).(1)

32.2 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 May 1, 2021,
formatted in Extensible Business Reporting Language (iXBRL): (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, and (vi) Notes
to Consolidated Financial Statements. (1)
Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)

101

104

(1) Filed herewith electronically.
** Paper Filing

* Indicates a management contract or compensatory plan or arrangement

ADFLOW®, AJT Systems®, All Sport®, Daktronics®, D®, DakStats®, Data Display®, DataTime®, Fuelight™, Fuelink™,
Galaxy®, GalaxyPro™, Go Digital®, Keyframe®, Liveticker®, Matside®, OmniSport®, ProAd®, ProPixel®, ProRail®,
ProStar®, Sportsound®, Statvision®, Tuff Sport®, Uniview®, 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.

Item 16. FORM 10-K SUMMARY

None.

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 10, 2022.

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/ Shereta Williams
Shereta Williams

By /s/ Lance D. Bultena
Lance D. Bultena

By /s/ Dr. José-Marie Griffiths
Dr. José-Marie Griffiths

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

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

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

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

Date

June 16, 2022

Title

Director

(This page has been left blank intentionally.)

DIRECTORS & COMPANY MANAGERS

Shereta D. Williams 1,2
Senior VP Business of Cox Enterprise,
Inc

INDEPENDENT DIRECTORS

Lance D. Bultena 1,3
Global Director of Hogan Lovells

Dr. Jose-Marie Griffiths 2,3
President of Dakota State University

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

Kevin P. McDermott 1
Former Partner KPMG LLP

John P. Friel 1,2
Former CEO of Vascor, Inc.
Former President & CEO of
MEDRAD, Inc.

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

NON-INDEPENDENT DIRECTORS

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

Sheila M. Anderson
Chief Financial Officer and Treasurer

Matthew J. Kurtenbach
Vice President of Manufacturing

NAMED EXECUTIVE OFFICERS

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

Carla S. Gatzke
Vice President of Human Resources
and Secretary

Brett D. Wendler
Vice President of Engineering

Sarah B. Rose
Vice President of Services

OTHER OFFICERS

Rich E. Hintz
Vice President of Information
Technology

Jay W. Parker
Vice President of Live Events Sales

Seth T. Hansen
Vice President of Project Management Vice President of International Sales

Judd C. Guthmiller

INVESTOR INFORMATION

ANNUAL MEETING
September 7, 2022, 4:30pm Central Daylight Time
Daktronics, Inc.
201 Daktronics Drive
Brookings, South Dakota
Shareholders of record on July 6, 2022 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 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 and ability to maintain adequate liquidity; (iii.)
trends affecting our financial condition or results of operations; (iv.) our growth and operating strategies; (v.) the declaration and payment of dividends;
(vi.) the timing and magnitude of future contracts; (vii.) raw material shortages and lead times and supply chain disruptions; (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; (xii.) our
ability to manage the impact that new or adjusted tariffs may have on the cost of raw materials and components and our ability to sell product
internationally; (xiii.) the resolution of litigation contingencies; (xiv.) the timing and magnitude of any acquisitions or dispositions; (xv.) the impact of
governmental laws, regulations, and orders, including as a result of the COVID-19 pandemic caused by the coronavirus; and (xvi.) disruptions to our
business caused by geopolitical events, military actions, work stoppages, natural disasters, or international health emergencies, such as the COVID-19
pandemic. The words “may,” “would,” “could,” “should,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend,” “plan” 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.