Good day everyone and welcome to the Daktronics SecondQuarter Fiscal 2008 Earning Results Conference Call. As a reminder, thisconference is being recorded Wednesday, November 14, 2007. And is available onthe company’s website at www.daktronics.com. During the call all participants will be in a listen-onlymode. Afterwards there will be a question-and-answer session. Now, I would like to turn the conference over to Mr. BillRetterath, Chief Financial Officer. Please go ahead, sir.

Thank you, Dustin. Good morning, everyone. We appreciateyour participation on our second quarter conference call. We’d like to as ourcustom make some primarily comments about the quarter after which we will openit up for a limited timeframe for question. As usual I’d like to offer our disclosure cautioninginvestors and participants in addition to statements of historical facts thiscall and our quarterly news release contained forward-looking statementsreflecting our expectations and beliefs concerning future events which couldmaterially affect our perform in the future. We caution you that these and similar statements involverisks and uncertainties including changes in economic and market conditions,management and growth, timing and magnitude of future orders and other risks asnoted in our SEC filings which may cause actual results to differ materially. Forward-looking statements are made on the context ofinformation available to us as of the date of this call. We undertake noobligation update or revise such statements reflect new circumstances orunanticipated events as they occur. With that, I’d like to turn the call over to Jim Morgan, ourChief Executive Officer to put some highlights on the quarter.

Good morning, everyone. Thank you for joining us thismorning. The results this quarter were mixed for us. Overall many things wentwell for us this quarter but we did have a few challenges. As we discussed in our news release we did experience someramp up problems in our Redwood Falls factory if you recall we brought thatfactory on line this spring. And just to give a little more color to that oneof the areas we had problems with there was supply of metal cabinets to theplant. We just brought the metal shop online at the end of thequarter. Now so prior to that we were feeding that plant from outside for thecabinets. So that will help us significantly going forward. We think we get things pretty well on track there at thispoint. We also have a couple of large products that had some cross over runthat impacted our margin a bit. These are site related -- these are one-timeoccurrences and so, a couple areas that could have performed better on thisquarter and we are addressing those for the future. As you may recall at the beginning of this fiscal year webegan operating under a business unit structure. So this is the second quarterthat we've been operating under that structure. And overall I'm very pleasedwith how that is helping us better manage the business and better positionourselves for continued growth. Over the last couple of years we've had very rapid growthand so to get our arms around all of that and position ourselves for goingforward, I think this business unit structure serving us very well. Just as an example of the success of this alignment andagain, what we did there we align in our engineering manufacturing and serviceswith our markets and really our customer demands, that's the objective there. An example of…

Thanks, Jim. Starting out I want to give just some quicknumerical values on our business units which likely will be included in our10-Q that we file within the week or so including some more specific segmentdata. Net sales on our commercial business unit are up 42%year-to-date and represent 33% of our business. Our live events business unitsales are down 3% and represent 38% again these are year-to-date figures. Remember now on the live events business unit, our businesssaw significant growth through the second quarter of last year and had it notbeen for the success that we attained this year on the large mega projects. The growth for this year would have been limited and thenbut we have said an about 10% range. So live events being down by 3% is not anegative from our perspective at this point. Net sales on our schools andtheaters business unit are up 38% year-to-date and represent 15% of our totalbusiness. International business unit is up -- is down 2% represents7% of our business and just to keep in mind on the international business thatwill be lumpy because of the small number of large transactions that we do andwe don't have the base of consistent business there. Finally, on our transportation new business unit sales --net sales are up 19% and represent 7% of our business. Also I want to touchbriefly on shipments of our Valo product line. When we introduced this product we decided the based on theway we were going about this business how we are selling it and manufacturingit was appropriate to treat that business as standard order business, meaningthat revenue recognition was on the basis of delivery rather than on thepercentage of completion with a little over $2 million of Valo product in finishedgoods therefore, at the end of the quarter…

(Operator Instructions) Steve Dyer with Craig-Hallum.

Good morning, guys. Thanks for taking my question. I guess,the obvious question is FY Q3 guidance is fairly dramatically below; I thinkeverybody's expectations, but then your commentary regarding Q4 snapping backpretty dramatically. Does that imply sort of an air pocket here in revenue orhow would you characterize the next two quarters?

I think, there are some -- there might be one way todescribe it. There's a certainly -- we are not -- our backlog is not as robustas we would like it to be at the beginning of the quarter. And so that's thereis a gap there or it's pretty much a flatness as compared to last year. The -- and there are a lot of projects on the bubble here,one of the things, the fact that it's probably an unusual amount of newconstruction projects in the live events area, large sports area. And so, one of the factors of those even if you book theorder then the revenue then it's strong out, so that the fact there is probablyunusual amount of that in the mix here tends to string some of this out alittle bit. In over a longer period and there's some benefit to thatbecause it gives us more flexibility in how we schedule that through the plantsbecause they tends to have longer lead times. And we can have some more flexibility and how we can smoothour plant loading. But in the short-term, yes, we are just a little light onbacklog going into the third quarter.

Can you point anything in particular that's causing that?You said your live events is a little bit of a push out, but that I don't readto be something that would be that near-term in revenue recognition. What sortof, what's softer in this Q3 than you expect it?

I'll just -- I'll mention some things, Steve this is Bill.You know, overall our commercial market is we did not get the order bookingsduring the quarter that we had thought that we would get, that was somewhat ofa surprise. We don't expect that softness in order bookings continue on.And in fact, as Jim mentioned we are seeing some optimize on the billboardmarket in Europe, that's some positive factors. And Bill, keep in mine one ofour large billboard accounts that we've had has historically given us ordersand big chunk. And to the first six months of the year we haven't gottenany of those big chunks, that I can recall offhand. And so clearly, thecommercial market in terms of order bookings we don't see a long-termimplications there, but it is something to monitor. On live event, I think as Imentioned that already we had one heck of a first six months a year ago. And so live events, I think is overall we feel as thoughthese orders in live events are going fairly well. It was disappointing we didn'tgo four for four, but I think in that area we are looking strong and we don'tsee in any of our business units any loss of market share or anything likethat. Our high school, schools and theaters business is actuallydoing very well and in transportation there are some nice projects out therethat our guys are working on. So I think, in terms of order bookings we don'tsee a lasting issue on order bookings, but it certainly affects our thirdquarter.

Okay. Then, if I could drill down a little but on thedigital billboard business Lamar’s raised a digital CapEx last week, both theyand Clear Channel were pretty bullish about how things were going, do you viewthis is kind of a seasonal thing just giving the weather or what do you make ofthat?

Well, in terms of our billboard business, I will justmention this, our billboard business, Q2 over Q2 is up 15% keeping in mind thatone of our large accounts placed large order in the second quarter last year. And so the billboard business is performing well I think andwe are in a good position there and with the optimism we are seeing in Europethat marketplace looks strong for us.

Can you elaborate on Europe at all, I know JC DeCaux hastalked a lot about rolling out digital billboards and size over there, anythingyou can tells on that?

Okay. Yes. Certainly. JC DeCaux is the largest player inEurope and we actually have done some business with them. We installed afeature sign in London, in the outskirts of London flat stretches in the lastyear, so we've done some work with them. But there are other outdoor companiesin Europe as well and so we are seeing interest in more than just one player.

Any timeframe when you think that could become material?

Now, there could be some things yet this fiscal yearmaterialized, we think but you know predict the future is always a littletricky but there's certainly a good potential of that.

Okay. And one more question and I will hop back in thequeue. Can you give any color about the big NFL deal, when was that announcedor decided, any reason that you can point to that you lost? Was the competitoraggressive on price to a point that you didn't feel like you could match oranything you can tell us there?

First of all I don't think it's actually been announced yetto be honest with you. So, I don't know that we want to talk a lot about it indetail to be honest with you. But the decision has been made, was made weeksback, anyway maybe last couple of months, but.

Okay. Thanks.

That's all we really want to I think comment on that at thispoint.

Thank you.

We’ll take our next question from Jim Boyle with CLK.

Good morning.

Hi, Jim.

On the digital billboard, can you give us a rough sales forwhat the revenue was in fiscal Q2? You said it was up 15% year-on-year,compared to last year's robust Q2?

Yes. The revenue was up rather significantly revenue was uproughly $14 million to $19 million.

Do you have a percent?

Third quarter -- I don't have a percent, Jim, you can.

So it was $19 million in fiscal Q2.

Yes.

Okay. Also just quick housekeeping, the one-time $2.5million plus booking in the sale, is that included in your EPS guidance or…

Yes. It is. Yes. It is, thanks for asking that, yes.

Okay. And one of your biggest individual customers Lamar hadtold you’re looking clients that are confident they were holding sort of abake-off between the top digital display vendors, how did you think you did atthat bake-off?

We think we did fine. We still are well positioned to servethat customer.

Was there any kind of the biggest positive take away and anybiggest discouraging take away from that meet in or and was it just two of youor was it three of you at that bake-off?

There was three. Our product is exciting, Jim. Yes, I thinkthere is, you know, we've done some things with our product that we had verypositive feedback on the, just some of the things we are doing, as far as, theease of installation and reducing the weight and the power. We are getting --that's been very well received and we think that's very positive.

Okay.

I'll just recover. We reduced weight, we reduced the powerand we increased the brightness concurrently while simplifying the installationprocess.

Okay. And with kind of a tougher economy and thus yourfinancing, are you seeing any impact of this on your commercial business yetand how do you forecast that demand one year out?

We don't have any sense that the economy is affecting thatbusiness itself. I mean, the -- at the retail level selling to the signcompanies there again that business driven by the recognition of the retailbusinesses, realizing that this is a good way to advertise. And we kind of look at that as it's an investment of analternative, in fact, we offer at least there so they can look at that as analternative to their investment in other types of advertising. So allbusinesses have to advertise in good or bad times and so I think we believeit's just provides a very effective advertising means. And as far as the digital billboard market I think you getthe best sense of that by hearing what the Lamar and the Clear Channel of theworld have to say in their public disclosures. I think that's the best way toget a reading on that.

Lamar did say they were very eager about the coming quartersgiven the Federal Highway Administration Rule in both New York and Texas comingup?

Right. There is some optimism about some of the biggerstates that have been holding back a little and it's, it was a clarification bythe Federal Highway Administration on how they view this technology and thatwas positive for the industry. And so to the extent these other states wouldopen up that would be very positive for us as well.

And finally why did you sell 90% of Arena Media Networks andwhy now and who did you sell it to?

That business is a capital intensive business and we arenot, that's not our mode of operation. And so our expertise and our forte thereis on the technical side and installing and operating those networks. And so we got into it with the idea of bringing that to thetable and one of the things we realized is for that business to grow is itsgoing to take somebody with some, that has some deeper pockets that wants toinvest in that. And so we felt it was appropriate at this point for us tostep aside and let somebody else step in there to drive that and so ourinvolvement there continues to be on the technical side.

And what…

Who -- Jim if I could go back to one of your question I wantto add something to it on our Galaxy product line within the commercial market.We are probably not going to achieve our original sales projections in thatarea and what we looked at internally, but I think we'll still exceed the 20%growth year-over-year. And you know, the interesting part of your question is theeconomic factor that play into that and that will be something to monitor as wego forward. I'm not quite sure that had the economy impacting that yet as Jimsaid for the reasons he said. But probably won't have quite the growth we thought goinginto the year but it's still a solid nice growth business in excess of 20%.

And who did you cell Arena to?

The company redeemed it.

Okay. Thank you.

We’ll take our next question from Jim Ricchiuti with Needhamand Company.

Hi. Thanks. Good morning. Just want to go back to thebacklog, $35 million in orders that you didn't get the final fee Arizona, canyou say are those all three products that you allude to, baseball projects?

Yes.

Okay. And so if -- Bill is there any sense you can give usas to on a couple of the projects when the -- are these upgrades or newprojects, new construction?

Those are new construction one is a big upgrade. They areonce we've talked about before.

Okay. And just with respect to the NFL project that youdidn't win, had you won that can you give a sense as to when you might haveseen the revenue impact from that?

Jim, I apologize. I've moved on to some degree and I don'trecall offhand when that revenue impact would have hit.

Okay. You also talked about the potential for a couple ofother large projects in Q4. Can you say whether those are baseball or will befootball projects or?

At this point, Jim, I would rather not. We are in goodposition on these and I would like to keep them under the radar screen to somedegree.

You know, if my memory serves me correctly in your K, youtalked about your G&A expense declining as a percent of revenues this yearand just given the trend through the first half of the year, do you still feelthat's achievable?

Yes. Jim, I'm glad you bring up that question. With whathappened in the second quarter and what we achieved in revenues coupled withthe way the third quarter has shaken out in terms of operating margin we hadreally had our sites set on 10%. And I think that's going to be a tough thing in terms of howyou look at it and the reason being is, if we were to keep SG&A flat orminimal growth it might you still be tough. Now, again the fourth quarter it's hard to know whatrevenues are going to be in the fourth quarter. We think it could be a goodquarter if we book some of these deals that look like we have a good chance on. But to achieve that 10% goal is going to be tough and Idon't think as an organization we believe that we would sacrifice the long-termmarket opportunity and scale back in the short-term when the underlyingfundamentals of our marketplace have not changed.

And Bill, just to be clear when you talk about that 10%, 10%for the year, is that were an original target?

Well, we had set our sites internally as that being a goal.

Okay.

And it was a tough goal and it wasn't like our typicalguidance type statements where that's the bottom end. That was a realisticchallenging goal and I think what happened in the second quarter and in thethird quarter makes that not likely.

Okay. Can you help us with just as we think about Q4, itsounds like you've got a number of large projects some of which you feel verygood about, others that you might get. Can you help us understand whether these are some of theseare involve upgrades that could slip and if they slip, is there much risk tothem potentially slipping out more than a couple of quarters or is this newconstruction?

You really want us to give out names, Jim.

Well, I try and…

Why don’t you goes…

I just tell you there is a new construction but bigger moneyis in a new construction type facility a major project there.

Yes. Okay.

The smaller amounts an existing upgrade and something likethat could slip. In fact on this other one if I recall right originally it wasanticipated to be a bigger project and now the customer has scaled it back thisyear. So there is some potential that a project like that could slip but it's asmaller dollar amount.

Okay.

Of that $14 million that I throughout.

Okay. Is there any color you can give us on some of the costoverruns that you experienced, how big of an impact was that on your grossmargins in the quarter?

Well, in terms of our, I'll wrap a couple of thing together.In term of the cost overruns and then a couple of projects that we had to goback do some work on. It had approached three quarters or $1 million to $1million.

Okay. And you feel that's mostly behind you?

Yes. I mean we've taken the.

Okay.

Set aside for it clearly, yes.

Okay. That's it for me.

And Jim, with that in mind though, just keep in mind we areat the nature of our business is, you know, those things don't have -- theyhappen infrequently but they can happen and that's the risk and that addsvolatility to our margins overall.

Okay. Thanks a lot.

(Operator Instructions) And we will go next to SteveAltebrando with Sidoti and Company.

Hi, guys.

Hi, Steve.

Most of my questions have been answered already but couldyou give a breakdown you know, percentage or absolute wise revenue by segmentin the quarter?

The revenue by segment in the quarter.

I think you gave the percents already didn't you, Bill?

I gave the percent year-to-date. Steve, go with your nextquestion and I’ll -- I don't know that I have the percents here or maybe I canfigure it out quickly, if not it will be in our Q.

Okay. That was basically it but it sounded like you -- justgoing back even about a month ago you seemed very positive about the businessin the near-term. Is there anything that's changed near-term or a timing issuethat's changed that sentiment, I guess?

We are positive, I think.

Yes. We are certainly positive about the long-term, the liveevents business in sports is, the lumpiness of that is timing things can slidearound and things can slide out. And so that's just an inherent part of thebusiness and long-term we still see opportunities for growth there. We see ongoing interest sports all the way up and down thespectrum of facilities it's interesting a little town of Wagner, South Dakota Ijust saw a little presentation into -- yesterday, what we've put in a gymnasiumthere. I think the population of the town is 800 and it'sinteresting what they have color displays in their gymnasium. And so that's onthe one ends of the spectrum, so from there all the way up to major leagueprofessional sports we are seeing interest in the expanded use of displaces. SoI think the interest is there and it's on these big once its just timingchallenge at time.

Steve, I can give you those numbers our live events is about36%, schools and theatres were 15%, commercial 31%, transportation 8% andinternational 10% for the quarter. Those are just rough numbers it might be offa percent or two.

All right. Okay. Thanks a lot, guys.

Okay.

Next question comes from [Charles Glosskie] withIndependence Investment.

Yes. Good morning, guys.

Good morning.

Good morning.

You know, you keep struggling with this issue of visibility.I think it's in the last six quarters I was just looking at your stock chartthere have been four days when the company's lost 20% or more of its value. Which tells me either there's a forecasting issue orcommunication issue or maybe it's just the nature of the business that it'sjust, just not that predictable and I'm not sure there's a real answer to thisbut I guess the question is, what can you possibly do to enhance visibility sothat you don't get the volatility like this in your actual results versusexpectations?

Like they will, you know, what we do is we of course we haveour order pipelines in each of our business units and we go through a processof reviewing and as we make our projections we look at those and look at our,what we've estimated our chances are at each of the projects that are out therethe order opportunities and try to factor that all in. But it's not a perfect science predicting what's going tobook, obviously and we continue to work on that to improve our ability to dothat. But in the end the customer makes a decision when they are going to dowhat they are going to do and so there's always is that degree of uncertaintythere in the future.

Charles, if I could just add, one of the reasons in givingsome feedback on some of these orders for the fourth quarter is, you know, ifyou look at the sports deals that's $14 million and that's one quarter beyondthe current one and it is in terms of visibility that's the reality of ourbusiness that whether or not that deal happens or not can affect the fourthquarter and that was one of the reasons why we emphasize that. So in terms of visibility for us as an organization webelieve strongly that you’ve got to look at our company over the long-term andaside from the struggles that we are admitting to on the operating expensesgoing back to the beginning of the year our sales over the long-term still areramping up and we are -- we do have visibility over the long-term, but theshort-term does will likely remain a tough thing to call.

Well, I know you're right at least, as far as, maintainingmarket share, I mean, that really is key and if you haven't lost market share.And you are going to have to accept a certain amount of volatility I would justurge you to be as conservative as you can in planning those numbers goingforward, so that's it you know?

Yes. Certainly. There I think it's our intent to always takea conservative approach on what we state about the future and without being ina sand bagging mode and so it's always a challenge predicting the future thatfor sure. But again I would just like to reiterate what Bill said now,long-term we were see the fundamental drivers of our business are there. Wehave invested a lot on the operations side of the business here. Not only inplant and equipment but also in improving our processes and those things all gohand-in-hand. You know, our ability to deliver a quality product on timeis certainly a key component of our ongoing success and we continue to have abig focus on that, as well as, going on the market side as well. So with that, I think we will wrap this up for today. Iappreciate all your questions. You know, we are all here and we are all stillworking hard and looking to move things forward so. Thanks.

Again that does conclude today's conference call. Thank youfor your participation. You may disconnect at this time