NET SALES

Net sales increased 24.2% to $460.1 million for the nine months ended January 31, 2009 as compared to $370.6 million for the same period of fiscal 2008. Net sales increased 9.3% to $129.2 million for the three months ended January 31, 2009 as compared to $118.2 million for the same period of fiscal 2008. The first three and nine months of fiscal 2009 had one more week than the first three and nine months of fiscal 2008.

Commercial Business Unit. Net sales in the Commercial business unit declined during the third quarter and first nine months of fiscal 2009 as compared to the same periods of fiscal 2008. For the first nine months of fiscal 2009, net sales decreased 2.4%, and for the quarter, decreased 31.4% as compared to the same periods of our last fiscal year. For the third quarter of fiscal 2009, net sales in the outdoor advertising (digital billboard) niche decreased by approximately $11.5 million or 50% as compared to the third quarter of fiscal 2008. Net sales in our reseller niche, which includes primarily sales of our Galaxy® products, declined by approximately $4.4 million or 21%. For the first nine months of fiscal 2009, net sales in the outdoor advertising niche have increased approximately 3% while net sales in the reseller niche decreased approximately 12% as compared to the first nine months of fiscal 2008.

In the early part of the third quarter of fiscal 2009, we were notified that our largest customer in our outdoor advertising niche was decreasing its spending on digital billboards from approximately $100 million annually to approximately $15 million annually, effective for calendar year 2009. We are one of two primary vendors of digital billboards for this customer. This was followed by a decline in orders overall in the outdoor advertising niche, which started to become evident late in the second quarter of fiscal 2009. It is our belief that the current economic conditions and limited credit availability have resulted in a significant decline in this portion of our business.

The decline in the reseller niche was due to a lower level of large contract business and Galaxy® displays. We attribute the decline in both areas to a large degree to the worsening economic conditions to internal execution issues related to meeting delivery commitments during the past twelve months.

Subject to the foregoing, our Commercial business unit generally benefits from increasing product acceptance, lower cost of displays, our expanding distribution network and a better understanding by our customers of the product as a revenue generation tool. The most significant factor for increasing sales in the past has been the order volume of digital billboards for outdoor advertising companies. This occurred primarily due to an increase in our customer base and the increasing number of displays being purchased by existing customers. The outdoor advertising business has a number of constraints, primarily economic and regulatory. We expect that the Commercial business unit will experience declining sales and orders over the rest of fiscal 2009 and into fiscal 2010 due to economic conditions and credit availability. The outlook thereafter is generally uncertain and depends on the economy and the availability of credit, which we cannot forecast at this time.

In the past, the seasonality of the outdoor advertising niche has been a factor in the fluctuation of our net sales because the deployment of displays slows in the winter months in the colder climate regions of the U.S. Generally speaking, seasonality is not a material factor in the rest of the Commercial business. Our estimates for sales and orders in the Commercial business unit could vary significantly depending on our success in retaining the business of the major billboard companies as well as on their rate of deployment and our ability to capture business in our national account niche, if it were to recover materially. Our growth in the Commercial business unit also depends on the state of the economy, which has negatively impacted net sales and is expected to continue to negatively impact it until the economy improves.

Order bookings in the Commercial business unit were down approximately 10% in the first nine months of fiscal 2009 as compared to the same period of fiscal 2008. For the third quarter of fiscal 2009, orders declined in this unit by approximately 40% as compared to the third quarter of fiscal 2008. The decline was caused by declines in both the reseller and outdoor advertising market for the same reasons as described in net sales.

Live Events Business Unit. Net sales in the Live Events business unit increased by approximately 94% in the third quarter of fiscal 2009 as compared to the same quarter of fiscal 2008. Orders increased approximately 8% in the third quarter of fiscal 2009 as compared to the same period one year ago. On a year-to-date basis, orders increased by more than 25% in fiscal 2009 as compared to fiscal 2008, and for the third quarter of fiscal 2009 are up approximately 8% compared to the same period a year ago. The increase in orders for the third quarter of fiscal 2009 as compared to the same period in fiscal 2008 reflects $27 million of the total expected contract value of over $45 million related to the New Meadowlands Stadium in New Jersey. We also booked two other large contracts for major league baseball facilities totaling approximately $16 million during the third quarter of fiscal 2009. This compares to a number of transactions booked in the third quarter of fiscal 2008 each of which exceeded $10 million, primarily in professional baseball facilities.

As we began fiscal 2009, we had expected to see significant order growth in the Live Events business unit as a result of the number of large projects in our pipeline and taking into account our market share. Through the year, we seem to have executed well to achieve our share of these projects which, along with growth in the smaller projects have allowed us to achieve higher than expected sales growth and has partially offset the decline in Commercial business unit sales. At this point, it is too early to forecast growth estimates for fiscal 2010; however, we realize that given the unusually large new construction projects awarded over the past twelve months, achieving growth in fiscal 2010 in our Live Events unit may be difficult. In addition, although our Live Events business is typically resistant to economic conditions, the severity of the current economic environment causes us to be less optimistic about how the economy may impact this business. Trade journal and news reports concerning how the current economic conditions will impact our Live Events business have been mixed. There have been transactions which have been delayed due to economic conditions, but the impact to date has not been material. This could change as we enter the selling season for fall sports which begins late in our fiscal fourth quarter. However, over the long-term we expect to see growth assuming that the economy improves.

Our expectations regarding growth over the long-term in the large sports venues is due to a number of factors, including the expanding market, with facilities historically spending more on larger display systems; our product and services offering, which remains the most integrated and comprehensive offering in the industry; and our network of field sales and service offices, which are important to support our customers. In addition, we benefit from the competitive nature of sports teams who strive to out-perform their competitors with display systems. This impact has and is expected to continue to be a driving force in increasing transaction sizes in new construction and major renovations. Growth in the large sports venues is also driven by the desire for high definition video displays, which typically drive larger displays or higher resolution displays, both of which increase the average transaction size. We believe that the effects of the economy have a lesser impact on the sports market as compared to our other markets because our products are generally revenue-generation tools (through advertising) for facilities, and the sports business is generally considered to be a recession-resistant business, although the severity of the current economic conditions are somewhat unprecedented. Net sales in our sports marketing and mobile and modular portion of this business unit were less than 2% of total sales and thus were not significant in the first nine months of fiscal 2009 and the first nine months of fiscal 2008.

Schools and Theatres Business Unit. Net sales in the Schools and Theatres business unit were flat in the third quarter of fiscal 2009 as compared to the same quarter in fiscal 2008.  Net sales for the first nine months of fiscal 2009 are up over 6% as compared to the first nine months of fiscal 2008.  Orders for the business unit are relatively flat for the first nine months of fiscal 2009 as compared to the first nine months of fiscal 2008. Underlying the lack of growth overall on a year-to-date basis, is an increase of approximately 5.5% in orders of

display systems to smaller colleges and K-12 facilities and a decline of approximately 40% in sales of hoist systems. We had expected orders to increase by more than 15% for the entire fiscal year, but achievement of this growth has been hurt primarily by shipping delays earlier in fiscal 2009. It’s also possible that economic conditions have impacted this business unit, although their impact does not seem to have been material to date.  We still expect to see modest growth in orders and sales for the business unit for fiscal 2009.    

Transportation Business Unit. Net sales in the Transportation business unit decreased approximately 43% in the third quarter of fiscal 2009 as compared to the same period in fiscal 2008, and year-to-date net sales are down approximately 13%. Orders for the first nine months of fiscal 2009 are up approximately 19% over the same period in fiscal 2008. We believe that the increase in orders for this business unit is due to legislation passed during calendar year 2005 by the United States Congress that provided for increased spending on transportation projects, including large increases associated with intelligent transportation systems, and to our gaining market share. For fiscal 2009 as a whole, we expect that sales will be down approximately 16% as compared to fiscal 2008. The decrease in sales as compared to orders is the result of timing as driven by our customers. We expect orders to increase for the year and we remain optimistic that current stimulus spending by the US government could drive additional business. However, we do not expect to see any increase as a result of the current stimulus spending for at least 12 months.

International Business Unit. Net sales in the International business unit in the third quarter of fiscal 2009 as compared to the third quarter of fiscal 2008 were up approximately 1% and on a year-to-date basis are up approximately 52%. Orders were down approximately 6% for the first three quarters of fiscal 2009 as compared to fiscal 2008. Orders have not lived up to expectations year-to-date, but we still expect to achieve sales growth of more than 20% for fiscal 2009 as compared to fiscal 2008 as a result of a decline in backlog from the beginning of the fiscal year. The increase in net sales on a year-to-date basis was attributable to large orders booked in the fourth quarter of fiscal 2008 for a rail station in Beijing and a network of displays in the U.K. that converted to sales in the first quarter of fiscal 2009. Due to the focus on large contracts in this business unit and the small number of contracts actually booked, volatility is not unusual. Overall, we are making considerable investments in growing our business internationally, where we do not have the same market share as we do domestically.

The near-term outlook for the International business unit for orders and net sales is generally uncertain due to the current economic conditions worldwide. We have visibility to orders which could drive growth in fiscal 2010, however the likelihood of these orders moving ahead and being awarded to us is extremely hard to predict at this time.

The International business unit covers all types of customers and products but is driven primarily by commercial type orders which seem to be experiencing the adverse effects of the economy.

Advertising Revenues. We occasionally sell products in exchange for the advertising revenues generated from use of the products. These sales represented 1.7% and 1.6% of net sales for the first nine months of fiscal 2009 and 2008, respectively. The gross profit percent on these transactions have typically been higher than the gross profit percent on other transactions of similar size, although the selling expenses associated with these transactions also are typically higher.

Backlog. The order backlog as of January 31, 2009 was approximately $128 million as compared to $138 million as of January 26, 2008, and $134 million at the beginning of the third quarter of fiscal 2009. Historically, our backlog varies due to the timing of large orders. The changes in the backlog were the result of the combination of the changes in orders and net sales discussed above. The declining overall expectations in the Commercial business unit is driving the majority of the decrease in backlog.

NET SALES

Net sales increased 31.1% to $330.9 million for the six months ended November 1, 2008 as compared to $252.4 million for the same period of fiscal 2008. Net sales increased 29.1% to $169.7 million for the three months ended November 1, 2008 as compared to $131.4 million for the same period of fiscal 2008. The first three and six months of fiscal 2009 had one more week than the first three and six months of fiscal 2008.

Commercial Business Unit. Net sales in the Commercial business unit grew during the second quarter and first six months of fiscal year 2009 as compared to the same periods of fiscal year 2008. For the first six months of fiscal year 2009, net sales increased 15.5%, and for the quarter, increased 16.8% as compared to the same periods of last fiscal year. The largest growth in terms of dollars and as a percentage is in our outdoor advertising niche, which increased by more than 34%, followed by an increase in sales to national accounts, primarily in our Galaxy® product line. These increases were offset by a decline of approximately 7% in sales in our reseller niche, which involved a decline in large custom projects. The increase in the outdoor advertising niche was the result of the expanding market for digital billboards, primarily to a limited number of large customers. The decline in sales within our reseller niche was due to the inherent volatility in the timing of large contracts. In addition, the rate of growth of sales of Galaxy products within the reseller niche was lower than expected, which we believe was primarily the result of economic conditions, resulting in customers postponing purchasing electronic displays for retail establishments.

In the early part of the third quarter of fiscal 2009, we were notified that our largest customer in the outdoor advertising niche was decreasing their spending on digital billboards from approximately $100 million annually to approximately $15 million annually, effective for calendar year 2009. We are one of two vendors for this company. This followed a decline in orders overall in the outdoor advertising niche, which started to become evident late in the second quarter of fiscal 2009. It is our belief that the current economic conditions and limited credit availability has resulted in a significant decline in this portion of our business. As a result, we expect to see revenues decline significantly in the and fourth quarter in our outdoor advertising business as compared to the first half of fiscal 2009 and the last half of fiscal year 2008. We believe that once economic conditions improve and credit becomes more available, our sales will start to recover. These conditions seem to be impacting most if not all outdoor advertising companies, and the actual outlook is very difficult to estimate at this time.

Subject to the foregoing, our Commercial business unit generally benefits from increasing product acceptance, lower cost of displays, our expanding distribution network and a better understanding by our customers of the product as a revenue generation tool. The most significant factor for increasing sales in the past has been the order volume of digital displays for outdoor advertising companies. This occurred primarily due to an increase in our customer base and the increasing number of displays being purchased by existing customers. We believe that the outdoor advertising business has a number of constraints, primarily economic and regulatory. We expect that the Commercial business unit will experience declining sales and orders over the rest of fiscal 2009 and into the first half of fiscal 2010. The outlook thereafter is generally uncertain and depends on the economy and credit.

In the past, the seasonality of the outdoor advertising niche has been a factor in the fluctuation of our net sales because the deployment of displays slows in the winter months in the colder climate regions of the U.S. Generally speaking, seasonality is not a material factor in the rest of the Commercial business. Our estimates for sales and orders in the Commercial business unit could vary significantly depending on our success in retaining the business of the major billboard companies as well as on their rate of deployment and our ability to capture business in our national account niche if it were to develop materially. Our growth in the Commercial business unit also depends on the state of the economy, which has negatively impacted net sales and is expected to continue to impact it until the economy improves.

Order bookings in the Commercial business unit were up approximately 4% in the first six months of fiscal 2009 as compared to the same period of fiscal 2008. For the second quarter of fiscal 2009, orders declined in this unit by approximately 17% as compared to the second quarter of fiscal 2008. The major factor in the decline was the decline in orders in the outdoor advertising niche.

Live Events Business Unit. Net sales in the Live Events business unit increased by approximately 63% in the second quarter of fiscal 2009 as compared to the same quarter of fiscal 2008. This increase is primarily the result of the impact of large contracts booked in fiscal 2008 and increased orders booked during the first half of fiscal 2009. Orders increased approximately 104% in the second quarter of fiscal 2009 as compared to the same period one year ago. The increase in orders in the Live Events business unit reflects only $13 million of the total expected contract value of over $45 million related to the award of the New Meadowlands Stadium in New Jersey. An additional $27 million related to this contract was booked early in the third quarter of fiscal 2009. We have also been awarded two other large contracts for major league baseball facilities that are pending final contract execution, which should exceed $16 million in total and are expected to be booked in the third quarter of fiscal 2009. Finally, we were awarded and executed a contract for more than $9.5 million for a National Football League facility during the second quarter.

As we began fiscal year 2009, we had expected to see significant order growth in the Live Events business unit as a result of the number of large projects in our pipeline and taking into account our market share. Through the year, we seem to have executed well to achieve our share of these projects which, along with a growth in the smaller projects have allowed us to achieve higher than expected sales growth and has partially offset the decline in Commercial business unit sales. At this point, it is too early to forecast growth estimates for fiscal year 2010; however, we realize that given the unusually large new construction projects awarded over the past twelve months, achieving a significant growth rate in our Live Events unit may be difficult. However, over the long-term we expect to see growth.

Our expectations regarding growth over the long-term in the large sports venues is due to a number of factors, including the expanding market, with facilities spending more on larger display systems; our product and services offering, which remains the most integrated and comprehensive offering in the industry; and our network of field sales and service offices, which are important to support our customers. In addition, we benefit from the competitive nature of sports teams who strive to out-perform their competitors with display systems. This impact has and is expected to continue to be a driving force in increasing transaction sizes in new construction and major renovations. Growth in the large sports venues is also driven by the desire for high definition video displays, which typically drive larger displays or higher resolution displays, both of which increase the average transaction size. We believe that the effects of the economy have a lesser impact on the sports market as compared to our other markets because our products are generally revenue-generation tools (through advertising) for facilities, and the sports business is generally considered to be a recession-resistant business. Net sales in our sports marketing and mobile and modular portion of this business unit were less than 5% of total sales and thus were not significant in the first half of fiscal year 2009 and the first half of fiscal 2008.

As described above, an important factor in orders and sales for the remainder of fiscal 2009 will be our success in winning a limited number of large contracts expected to be awarded in the large sports venue niche primarily in the third quarter. These transactions, exceeding $5 million each, could have a significant impact on both orders and sales.

Schools and Theatres Business Unit. Net sales in the Schools and Theatres business unit increased by approximately 18% in the second quarter of fiscal 2009 as compared to the same quarter in fiscal 2008. Year to date sales are up over 9%. The main driver for the increase in sales in the second quarter of fiscal 2009 was the result of the larger backlog going into the quarter resulting from the delays in manufacturing experienced in the first quarter of fiscal year 2009. Orders for the business unit are relatively flat year-to–date, which we attribute to the adverse impact of these delays, although part of the slower rate of growth could be due to economic conditions. We still expect to see modest growth in orders and sales for the business unit for fiscal year 2009.

Transportation Business Unit. Net sales in the Transportation business unit decreased approximately 15% in the second quarter of fiscal 2009 as compared to the same period in fiscal 2008, and year-to-date are up approximately 1%. Orders for the first half of fiscal 2009 are up approximately 18% over the same period in fiscal 2008. We believe that the increase in orders for this business unit is due to legislation passed during calendar year 2005 by the United States Congress that provided for increased spending on transportation projects, including large increases associated with intelligent transportation systems, and to our gaining market share. For fiscal 2009 as a whole, we expect that sales will grow in excess of 15% as compared to fiscal 2008. The lower level of sales growth as compared to orders is the result of timing as driven by our customers.

International Business Unit. Net sales in the International business unit in the second quarter of fiscal 2009 as compared to the second quarter of fiscal 2008 were down approximately 6% and on a year-to-date basis are up approximately 86%. Orders were down approximately 1% for the first half of fiscal 2009 as compared to fiscal 2008. Orders have not lived up to expectations year-to-date, but we remain optimistic that we can achieve sales growth of more that 20% for fiscal 2009 as compared to fiscal 2008. The increase in net sales on a year-to-date basis was attributable to large orders booked in the fourth quarter of fiscal 2008 for a rail station in Beijing and a network of displays in the U.K. that converted to sales in the first quarter of fiscal 2009. Due to the focus on large contracts in this business unit and the small number of contracts actually booked, volatility is not unusual. Overall, we are making considerable investments in growing our business internationally, where we do not have the same market share as we do domestically. We continue to see success with our efforts in Asia and, as a result of our expanding line of products and the relationships we have developed with large repeat customers, we expect that European sales will also increase over the long-term.

Advertising Revenues. We occasionally sell products in exchange for the advertising revenues generated from use of the products. These sales represented 2% and 1% of net sales for the first six months of fiscal 2009 and 2008, respectively. The gross profit percent on these transactions have typically been higher than the gross profit percent on other transactions of similar size, although the selling expenses associated with these transactions are typically higher.

Backlog. The order backlog as of November 1, 2008 was approximately $134 million as compared to $119 million as of October 27, 2007 and $173 million at the beginning of the second quarter of fiscal 2009. Historically, our backlog varies due to the timing of large orders. The changes in the backlog were the result of the combination of the changes in orders and net sales discussed above. Backlog at the end of the second quarter of fiscal 2009 does not include three contracts, consisting of one for $27 million that was executed early in the third quarter and two others totaling more than $16 million that have been awarded and are expected to be executed prior to the end of the fiscal 2008 third quarter.

NET SALES

Net sales increased 33.3% to $161.2 million for the first quarter of fiscal 2009 as compared to $120.9 million for the first quarter of fiscal 2008.

Commercial Business Unit. Net sales in the Commercial business unit increased approximately 14% to $48.4 million during the first quarter of fiscal 2009 as compared to the same period of fiscal 2008. The largest growth in terms of dollars and as a percentage is attributable to increases in our outdoor advertising niche, which increased by more than 36%, followed by an increase in sales to national accounts, primarily in our Galaxy® product line. This increase was offset by a decline of approximately 16% in sales in our reseller niche, all of which involved a decline in large custom projects. The increase in the outdoor advertising niche was the result of the expanding market for digital billboards, primarily to a limited number of large customers. The decline in sales within our reseller niche was due to the inherent volatility in the timing of large contracts. In addition, the rate of growth of sales of Galaxy products within the reseller niche was lower than expected, which we believe was primarily the result of economic conditions where customers are postponing purchasing electronic displays for retail establishments.

Overall, the Commercial business unit continues to benefit from increasing product acceptance, lower cost of displays, our expanding distribution network and a better understanding by our customers of the product as a revenue generation tool. The most significant factor for increasing sales has been the order volume of digital displays for outdoor advertising companies. This occurred primarily due to an increase in our customer base and the increasing number of displays being purchased by existing customers. We also believe that our Valo™ digital billboard product line will help us maintain and potentially grow our market share due to its features and functions. We believe that the outdoor advertising business has a number of constraints, primarily economic and regulatory, which to date our customers have been successful at overcoming. We expect that the Commercial business unit will continue to grow for the rest of fiscal 2009 at 15% to 20%, subject to economic conditions.

As the outdoor advertising business has become a larger percent of our mix, we believe that the seasonality of that business could become a factor in the fluctuation of our net sales because the deployment of displays slows in the winter months in the colder climate regions of the U.S. Generally speaking, seasonality is not a material factor in the rest of the Commercial business. Our rate of growth in the Commercial business unit could vary significantly depending on our success in retaining the business of the major billboard companies as well as on their rate of deployment and our ability to capture business in our national account niche if it were to develop materially.

Our growth in the Commercial business unit also depends to some degree on the state of the economy, which negatively impacted net sales and is expected to continue to impact it until we see improvement in the economy. To date, we have not experienced adverse effects of the economy on the outdoor advertising portion of our business. We believe that this will sustain economic downturns to some degree given the economics of the technology for advertising.

Order bookings in the Commercial business unit were up 30% in the first quarter of fiscal 2009 as compared to the same period of fiscal 2008. Although order bookings were up in the billboard niche in the first quarter of fiscal 2009 as compared to the same period of fiscal 2008, they were down sequentially from the fourth quarter of fiscal 2008. This is evidence of the declining rate of percentage growth in the digital billboard market.

Live Events Business Unit. Net sales in the Live Events business unit increased by approximately 33% in the first quarter of fiscal 2009 as compared to the same quarter of last year. This increase is primarily the result of the impact of large contracts booked in fiscal 2008 and increased orders booked during the first quarter of fiscal 2009. Orders increased approximately 12% in the first quarter of fiscal 2009 as compared to the same period one year ago. The increase in orders does not reflect the award of the New Meadowlands Stadium in New Jersey, which should exceed $45 million. At the beginning of the second quarter of fiscal 2009, we booked a portion of that contract (approximately $13 million), and the remainder is expected to book in the second quarter of fiscal 2009. We have also been awarded two large contracts that are pending final contract execution, which should exceed $17 million in total.

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At the beginning of fiscal 2009, we had a higher level of backlog than is customary as a result of a greater percentage of new construction projects as opposed to upgrades and enhancements. It is expected that this higher level of backlog will contribute to higher sales, assuming, however, that new order volume meets expectations. Achieving increased sales is also dependent on additional large contracts that are expected to be awarded in the current fiscal year. Overall, we believe that we are on track to meet our net sales growth objectives of more than 20% for the entire 2009 fiscal year.  In the first quarter of fiscal 2009, our bookings were on track to achieve this increase.

Growth over the long term in the large sports venues is due to a number of factors, including the expanding market, with facilities spending more on larger display systems; our product and services offering, which remains the most integrated and comprehensive offering in the industry; and our network of field sales and service offices, which are important to support our customers. In addition, we benefit from the competitive nature of sports teams who strive to out-perform their competitors with display systems. This impact has and is expected to continue to be a driving force in increasing transaction sizes in new construction and major renovations. Growth in the large sports venues is also driven by the desire for high definition video displays, which typically drive larger displays or higher resolution displays, both of which increase the average transaction size. We believe that the effects of the economy have a lesser impact on the sports market as compared to our other markets because our products are generally revenue-generation tools (through advertising) for facilities, and the sports business is generally considered to be a recession-resistant business. Net sales in our sports marketing and mobile and modular portion of this business unit were not significant in the first quarter of fiscal 2009 or 2008. Net sales in both these areas were less than 5% of total sales for both periods.

As described above, an important factor in orders for the remainder of fiscal 2009 will be our success in winning a limited number of large contracts expected to be awarded in the large sports venue niche over the remainder of the fiscal year. There are a number of transactions, each exceeding $8 million, which could have a significant impact on both orders and sales.

Schools and Theatres Business Unit. Net sales in the Schools and Theatres business unit declined by approximately 3% in the first quarter of fiscal 2009 as compared to the same quarter in fiscal 2008. The decline was generally due to delays in manufacturing due primarily to inventory availability. This has caused lead times to lengthen, deliveries to be delayed and backlog to increase. We believe that we have the issues addressed and that the second quarter of fiscal 2009 will improve and demonstrate growth over fiscal 2008 on a year-to-date basis. Depending on the success in orders for the second quarter, however, our net sales growth rate for the year as a whole may not achieve our goal of greater than 15%. The growth of this business is driven by the depth, quality and performance of the product and the related service we provide.

Transportation Business Unit. Net sales in the Transportation business unit increased approximately 22% in the first quarter of fiscal 2009 as compared to the same period in fiscal 2008. Orders for the first quarter of fiscal 2009 are up approximately 16% over the same period in fiscal 2008. We believe that the increases in net sales and orders in this business are due to legislation passed during calendar year 2005 by the United States Congress that provided for increased spending on transportation projects, including large increases associated with intelligent transportation systems, and to our gaining market share. For fiscal 2009 as a whole, we expect that sales will grow in excess of 15%.

International Business Unit. Net sales in the International business unit in the first quarter of fiscal 2009 as compared to the first quarter of fiscal 2008 were up 285%. Orders were down approximately 3% in the same period. The increase in net sales in the first quarter was attributable to large orders booked in the fourth quarter of fiscal 2008 for a rail station in Beijing and a network of displays in the U.K. that converted to sales in the first quarter of fiscal 2009. Due to the focus on large contracts in this business unit and the small number of contracts actually booked, volatility is not unusual. We expect international sales in the second quarter of fiscal 2009 to decline and then increase again in the second half of the fiscal year. Overall, we are making considerable investments in growing our business internationally, where we do not have the same market share as we do domestically, and we believe net sales will increase significantly in fiscal 2009 as compared to 2008. We continue to see success with our efforts in Asia and, as a result of our expanding line of ProTour® products and the relationships we have developed with large repeat customers, we expect that European sales will also increase.

Advertising Revenues. We occasionally sell products in exchange for the advertising revenues generated from use of the products. These sales represented 1.6% and 1.1% of net sales for the first quarter of fiscal 2009 and 2008, respectively. The gross profit percent on these transactions have typically been higher than the gross profit percent on other transactions of similar size, although the selling expenses associated with these transactions are typically higher.

Backlog. The order backlog as of August 2, 2008 was approximately $173 million as compared to $142 million as of July 28, 2007 and $175 million at the beginning of the first quarter of fiscal 2009. Historically, our backlog varies due to the timing of large orders. The changes in the backlog were the result of the combination of the changes in orders and net sales discussed above.

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NET SALES

Net sales increased 17% to $252.4 million for the six months ended October 27, 2007 as compared to $215.7 million for the same period in fiscal year 2007. Net sales increased 6.4% to $131.4 million for the three months ended October 27, 2007 as compared to $123.5 million for the same period in fiscal year 2007.

The level of net sales generated through the first two quarters of fiscal year 2007 in all business units was limited as a result of capacity constraints within our manufacturing facilities, both in terms of space and personnel. This trend began in the second quarter of fiscal year 2007 and diminished to a large degree in the third quarter as a result of the ramping-up of facilities in Brookings and Sioux Falls, South Dakota. These capacity constraints did not exist in fiscal year 2008.

Commercial Business Unit. Net sales in the Commercial business unit grew during the second quarter and first six months of fiscal year 2008 as compared to the same periods of fiscal year 2007. For the first six months of fiscal year 2008, net sales increased 42%, and for the quarter, they increased 25% as compared to the same periods of last fiscal year. This increase is attributable to increases in both standard and custom orders. The largest growth in terms of dollars and as a percentage is attributable increases in sales in our outdoor advertising niche followed by a smaller increase in our standard Galaxy product line. During the second quarter of fiscal 2008, we experienced a lengthening of lead times in our Galaxy product line caused by supply chain challenges and plant execution. We have addressed these issues and expect that in the third quarter of fiscal 2008, this will not be an issue, however it did inhibit sales of these products in the second quarter of fiscal 2008, some of which were pushed out into the third quarter but also a loss of orders, which is difficult to quantify.

Overall, the Commercial business unit continues to benefit from increasing product acceptance, lower cost of displays, our expanding distribution network and a better understanding by our customers of the product as a revenue generation tool. The most significant factor for increasing sales has been the order volume of digital displays for outdoor advertising companies. This occurred primarily due to an increase in our customer base and the increasing number of displays being purchased by existing customers. We also believe that our recently introduced Valo digital billboard product line will help us maintain and potentially grow our market share due to its features and function. We believe that the outdoor advertising business has a few constraints, which to date our customers have been successful at overcoming. Taking this into account, we expect this portion of our business to continue to be an important driver of growth throughout fiscal year 2008. We expect that the Commercial business unit will continue to grow for the rest of fiscal year 2008.

As the outdoor advertising business has become a larger percent of our mix, we believe that the seasonality of that business could become a factor in the fluctuation of our net sales as the deployment of displays slows in the winter months. Generally speaking, seasonality is not a material factor in the rest of the Commercial business. Our rate of growth in the Commercial business unit could vary significantly

depending on our success in capturing and retaining the business of the major billboard companies as well as their rate of deployment.

Our growth in the Commercial business unit also depends to some degree on the state of the economy, which we do not believe had any adverse effects in the first six months of fiscal year 2008 as compared to the same period in fiscal year 2007.

Order bookings in the Commercial business unit were up 13% for the first six months of fiscal year 2008 as compared to the same period of fiscal year 2007. The smaller than expected increase was due to a lower level of orders in the second quarter of fiscal 2008 which was a result of lower than expected orders of Galaxy products. As discussed above, we attribute these lower orders to our lead times lengthening and also to the timing of orders in our billboard niche. Generally, orders increase due to the same factors as noted in sales.

Live Events Business Unit. Net sales in the Live Events business unit declined by approximately 22% in the second quarter of fiscal 2008 as compared to the same quarter last year and are generally flat for the year to date over last fiscal year. During the first half of fiscal year 2007, orders for live events, primarily large sports venues, were unusually high. As a result, we had expected that the sales for the first half of fiscal year 2008 would be limited in growth potential. This is due to the volatility caused by large projects in general.

Growth over the long-term in the large sports venues is due to a number of factors, including the expanding market, with facilities spending more on larger display systems; our product and services offering, which remains the most integrated and comprehensive offering in the industry; and our network of sales and service offices, which are important to support our customers. In addition, we benefit from the competitive nature of sports teams who strive to out-perform their competitors with display systems. This impact has and is expected to continue to be a driving force in increasing transaction sizes in new construction and major renovations. Growth in the large sports venues is also driven by the desire for high definition video displays, which typically drive larger displays or higher resolution displays, both of which increase the average transaction size. We believe that the effects of the economy have a lesser impact on the sports market as compared to our other markets because our products are generally revenue-generation tools (through advertising) for facilities, and the sports business is generally considered to be a recession-resistant business. Net sales in our sports marketing and mobile and modular portion of this business unit were not significant in the first half of fiscal year 2007 or 2008. Net sales in both niches were less than 5% of total sales for the first half of fiscal year 2008.

An important factor in orders and net sales for the remainder of fiscal year 2008 will be our success in winning a limited number of large contracts expected to be awarded in the large sports venue market in fiscal year 2008. Each of these transactions could range in value from $10 million to potentially $20 million and, depending on which transactions (if any) we are awarded, we could see a significant variation in the level of net sales, primarily in the second half of the 2008 fiscal year, and in backlog. As of the end of the second quarter of fiscal year 2008, we have received verbal commitments and non-binding letters of intent for three projects for major league baseball that together should exceed $35 million. Although it is difficult to project, we estimate that during the third quarter of fiscal year 2008, we will be working on one of these projects as well as the previously announced project for the Kansas City Royals facility. Overall, the ultimate net sales growth in the live events business unit is difficult to estimate for the 2008 fiscal year due to uncertainty over the timing of these projects, but assuming that we prevail in winning projects based on our current market share, net sales in our Live Events business unit could expand in excess of 15%.

Orders (as opposed to net sales) in the Live Events business unit were down in the first half of fiscal year 2008 as compared to the first half of fiscal year 2007 by approximately 7%. This decrease was primarily the result of the timing of the orders. We expect that the orders for the third quarter will increase significantly due the projects mentioned above.

Schools and Theatres Business Unit. Net sales in the Schools and Theatres business unit were up 29% in the second quarter of fiscal 2008 as compared to the same quarter one year ago. Year to date sales are up over 38%. The increase in net sales was due to the acquisition of the hoist business late in the second quarter of

fiscal year 2007 and more orders being booked as we further penetrate the market. The growth of this business is driven to a large degree by the depth, quality, performance and service of the products offered. Orders within this business unit have increased at a much higher rate and are up over 45% year to date as compared to last fiscal year, which has exceeded our expectations.

Transportation Business Unit. Net sales in the Transportation business unit increased 45% in the second quarter of fiscal year 2008, as compared to the second quarter of fiscal 2007, and year to date are up 40% over the first six months of fiscal year 2007. Orders for the first half of the year are up 12%. We believe that the increases in net sales and orders in this business are due to legislation passed during calendar year 2005 by the United States Congress that provided for increased spending on transportation projects, including large increases associated with intelligent transportation systems, and to us gaining market share. For fiscal year 2008 as a whole, we expect that sales will continue to grow in excess of 15% as a result of the gains we made in market share and the increased government spending, which we believe will continue.

International Business Unit. Net sales in the International business unit in the second quarter of fiscal year 2008 as compared to the second quarter of fiscal year 2007 were up 75% and on a year to date basis are down approximately 2%. The increase in the second quarter was attributable to the increasing success we are experiencing in Europe and Asia, which are the primary geographic areas of focus for us. Orders as compared to net sales have increased 45% year to date over the first half of fiscal year 2007. Due to the focus on large contracts on in our International business and the small number of contracts actually booked, this volatility is not unusual. Overall, we are making considerable investments in growing our business internationally, where we do not have the same market share as we do domestically, and we believe net sales will increase significantly in all of fiscal year 2008 as compared to 2007. We continue to see success with our efforts in Asia and, as a result of our expanding line of ProTour products, we expect that European sales will also expand. Orders in this business unit increased for the same reasons as noted in the individual domestic business units.

We occasionally sell products in exchange for the advertising revenues generated from use of the products. These sales represented 1% and less than 2% of net sales for the first six months of fiscal year 2008 and 2007. The gross profit percent on these transactions have typically been higher than the gross profit percent on other transactions of similar size, although the selling expenses associated with these transactions are typically higher.

The order backlog as of October 27, 2007 was approximately $119 million as compared to $121 million as of October 28, 2006 and $142 million at the beginning of the second quarter of fiscal year 2008. Historically, our backlog varies due to the timing of large orders. The changes in the backlog were the result of the combination of the changes in orders and net sales discussed above.

NET SALES

Net sales increased 31.2% to $120.9 million for the three months ended July 28, 2007 as compared to $92.2 million for the same period in fiscal year 2007.

For the quarter ended July 28, 2007, net sales increased in all four of our domestic business units, with the commercial business unit experiencing the greatest percentage growth rate at over 62%. The live events, schools and theaters and transportation business units were up 27%, 48% and 29%, respectively, while the international business unit was down 45%. Overall domestic net sales for the quarter ended July 28, 2007 were up over 40%. As a percent of overall net sales, standard product orders were approximately 25% of net sales for the first quarter of fiscal year 2008 and 2007.

The level of net sales generated during the first quarter of fiscal year 2008 in all business units increased over the first quarter of fiscal year 2007 in part due to the elimination of capacity constraints within our manufacturing facilities, both in terms of space and personnel, which occurred in fiscal year 2007.

As reported in prior filings, we made two investments in media companies in the first quarter of fiscal year 2007, one that owns and controls the nation’s largest network of digital LCD and plasma screens in professional sports facilities and the other company that owns and controls the nation’s largest gas pump digital display network. Both of these transactions were intended to help us generate more recurring revenue opportunities and expand our services businesses. Also, these companies are non-consolidated entities, and therefore their sales are not included in our net sales. During the second quarter of fiscal year 2007, we acquired certain operating assets of Hoffend & Sons, Inc., a leader in the automated hoist business for sporting and theater applications. There were no sales included in the first quarter of fiscal year 2007 for this business while the first quarter of fiscal year 2008 includes net sales from this business of approximately $3 million.

Commercial Business Unit. The increase in net sales in the commercial business unit in the first quarter of fiscal year 2008 over fiscal year 2007 is attributed to both standard orders and custom projects. The increase in custom projects is due primarily to the increase in orders from outdoor advertising companies, while the increase in standard product orders is due to the growth in our Galaxy displays both within the national account portion of our business and through resellers. Overall, the commercial market continues to benefit from increasing product acceptance, lower cost of displays, our expanding distribution network and a better understanding by our customers of the product as a revenue generation tool. The most

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As the outdoor advertising business has become a larger percent of our mix, we believe that the seasonality of that business could become a factor in the fluctuation of our net sales as the deployment of displays softens in the winter months. Generally speaking, seasonality is not a material factor in the rest of the commercial business. This industry continues to increase the demand for digital displays in place of traditional billboards. Our rate of growth in the commercial business unit could vary significantly depending on our success in capturing and retaining the business of the major billboard companies as well as their rate of deployment.

Our growth in the commercial market depends to some degree on the state of the economy, which we do not believe had any adverse effects in the first quarter of fiscal year 2008 as compared to the first quarter of fiscal year 2007.

Live Events Business Unit. The approximately 27% increase in net sales in the first quarter of fiscal year 2008 as compared to the first quarter of fiscal year 2007 in the live events business unit resulted primarily from the higher level of orders booked in the large sports venue market in the fourth quarter of fiscal year 2007 as compared to the fourth quarter of fiscal 2006. Growth in the large sports venues is due to a number of factors, including the expanding market, with facilities spending more on larger display systems; our product and services offering, which remains the most integrated and comprehensive offering in the industry; and our network of sales and service offices, which are important to support our customers. In addition, we benefit from the competitive nature of sports teams who strive to out perform their competitors with display systems. This impact has and is expected to continue to be a driving force in increasing transaction sizes in new construction and major renovations. Growth in the large sports venues is also driven by the desire for high definition video displays, which typically drive larger displays, or higher resolution displays, both of which increase the average transaction size. We believe that the effects of the economy have a lesser impact on the sports market as compared to our other markets because our products are generally revenue-generation tools (through advertising) for facilities and the sports business is generally considered to be a recession-resistant business. Net sales in our sports marketing and mobile and modular portion of this business unit were not significant in the first quarter of fiscal year 2007 or 2008. Net sales in both markets were less than 5% of total sales for the first quarter of fiscal year 2008.

An important factor in orders and net sales for the remainder of fiscal year 2008 will be our success in winning a limited number of large contracts expected to be awarded in the large sports venue market in fiscal year 2008. Each of these transactions could range in value from $10 million to potentially $20 million and, depending on which transactions (if any) we are awarded, we could see a significant variation in the level of net sales, primarily in the second half of the fiscal year and in backlog. As a result, the ultimate net sales growth in the live events business unit is difficult to estimate, but assuming that we prevail in winning projects based on our current market share, net sales to the live events business unit could expand in excess of 20%.

Orders (as opposed to net sales) in the live events business unit were down in the first quarter of fiscal year 2008 as compared to the first quarter of fiscal year 2007. This decrease was primarily the result of the timing of the orders. In the fourth quarter of fiscal year 2007, we booked an unusually large number of orders which otherwise would have been booked in the first quarter of fiscal 2008. This reflects the normal impact of timing of this business unit. Overall, we expect orders to continue to expand for fiscal year 2008 for the same reasons net sales are expected to increase.

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              Schools and Theaters Business Unit. The increase in net sales in the schools and theaters business unit for the first quarter of fiscal year 2008 as compared to the first quarter of fiscal year 2007 was due to the acquisition of the hoist business of Hoffend & Sons, Inc. in the second quarter of fiscal year 2007, the easing of capacity constraints and the increased orders being booked as we further penetrate the market. The growth of the business, excluding the hoist acquisition, was in excess of 20%, which is slightly higher than our expectations for that business for the year as a whole. The growth of this business is driven to a large degree by the depth, quality, performance and service of the products offered. Orders within this business unit grew at a rate similar to net sales.

Transportation Business Unit. The increase in net sales in the transportation business unit resulted from an increase in spending on state and local transportation projects. This increase, which relates primarily to sales of our Vanguard® product line, was due in part to furthering our penetration with more jurisdictions across the United States. Orders in the transportation market were up significantly more than net sales for the first quarter of fiscal year 2008 as compared to the same period in fiscal year 2007. We believe that the increase in orders and net sales is due to legislation passed during calendar year 2005 by Congress that provided for increased spending on transportation projects, including large increases associated with intelligent transportation systems, and as a result of gaining market share. For fiscal year 2008 as a whole, we expect that sales will continue to grow in excess of 15% as a result of the gains we made in market share and the increased government spending, which we believe will continue.

International Business Unit. The decline in net sales in the international business unit in the first quarter of fiscal year 2008 as compared to the first quarter of fiscal year 2007 was primarily the result of the timing of order bookings. Orders as compared to net sales increased over 80% in the same periods. Due to the focus on large contracts on an international basis and the small number of contracts actually booked, this volatility is not unusual. Overall, we are making considerable investments in growing our business internationally where we do not have the same market share as we do domestically, and we believe net sales will increase significantly in all of fiscal year 2008 as compared to 2007. We continue to see success with our efforts in Asia and as a result of our expanding line of ProTour products, and we expect that European sales will also expand. Orders in this business unit increased for the same reasons as noted in the individual domestic business units.

We occasionally sell products in exchange for the advertising revenues generated from use of products. These sales represented 1.1% of net sales for the first quarter of fiscal year 2008. The gross profit percent on these transactions have typically been higher than the gross profit percent on other transactions of similar size, although the selling expenses associated with these transactions are typically higher.

The order backlog as of July 28, 2007 was approximately $142 million as compared to $123 million as of July 29, 2006 and $127 million at the beginning of the first quarter of fiscal year 2008. Historically, our backlog varies due to the timing of large orders. Our order backlog as of July 28, 2007 was higher in all business units, except commercial, when compared to the backlog as of July 29, 2006 and in all business units when compared to April 28, 2007. The changes in the backlog were the result of the combination of the changes in orders and net sales discussed above. In addition, the decline in backlog on the commercial business unit is more of a factor relating to the decline in lead times.

Net Sales

Fiscal Year 2007 as compared to Fiscal Year 2006

        Net sales increased 40.0% to $433.2 million for fiscal year 2007 as compared to $309.4 million for fiscal year 2006. The increase was across all three of our markets, with the commercial market showing the most significant growth on a percentage basis. Net sales increased both domestically and internationally. As a percent of net sales, standard orders declined to approximately 24% of net sales in fiscal 2007 as compared to 26% in the previous fiscal year. Overall, we believe that orders and net sales will continue to grow in fiscal year 2008, but at a smaller rate. The highest growth rates for fiscal year 2008 are again expected to be in the commercial market: however, as further explained below, the sports market could see greater growth depending on our success in a limited number of very large orders. We also are expecting that international business could experience higher than the corporate average rate of growth. We believe that all areas of our business were impacted by capacity constraints in the first half of fiscal year 2007 as the order volume during this period and the period preceding it exceeded expectations. The constraints were diminished to acceptable levels during the 2007 fiscal year and we do not foresee any long term negative implications as a result of the constraints.

        The increase in net sales in the commercial market in fiscal year 2007 over fiscal year 2006 was approximately 46% on a worldwide basis. This increase is attributed to both standard and custom projects. The increase in custom projects is due primarily to the increase in orders from outdoor advertising companies and our success internationally, primarily in Asian markets, while the increase in standard product orders is due to the growth in our Galaxy® and GalaxyPro™ displays both within the national account portion of our business and through resellers. Overall, the commercial market continues to benefit from increasing product acceptance, lower cost of displays, our expanding distribution network, international expansion and a better understanding by our customers of the product as a revenue generation tool. For fiscal year 2007, net sales exceeded our expectations set at the beginning of the year. The most significant factor for exceeding these expectations was orders from outdoor advertising companies, which more than doubled. This occurred primarily due to an increase in our customer base and the increasing amount of displays being purchased by existing customers. We believe that the outdoor advertising business has a few important constraints to more rapid deployment, including regulatory and economic constraints which to date our customers have been successful at overcoming. Taking this into account, we expect this portion of our business to be one of the most important drivers of growth into fiscal year 2008. We expect that the growth in the commercial market will continue into fiscal year 2008 but at a lower rate. The overall growth is due to our expanded distribution network, greater product acceptance, international expansion, the development of our resellers and integrated product offerings. Net sales in the commercial market should also expand at rates faster than our other markets and our national account business within the commercial market could grow faster depending on our success in booking major accounts in this niche. We also expect to see growth generated through our new ProTour® line of mobile and modular displays, which we believe will drive improvements in profitability internationally.

        As the outdoor advertising business becomes a larger percent of our mix, we believe that seasonality of that business could become a factor as the deployment of displays softens in the winter months. Generally speaking, seasonality is not a material factor in the rest of the commercial business.

        As we have reported in prior filings, we made significant investments in digital networks where the display media is primarily LCD and plasma screens, including investments in Arena Media Networks, LLC and FuelCast Networks LLC. With FuelCast, we have in place one of the largest networks of advertising displays in the United States and we expect to expand this network significantly in fiscal year 2008, which could require additional capital. These affiliates intend to fund their growth with external financing sources. We also intend to decrease our investment in Arena Media during the upcoming fiscal year.

        Our growth in the commercial market depends to some degree on the state of the economy, which we do not believe had any adverse effects in fiscal year 2007 as opposed to fiscal year 2006.

        The increase in net sales in the sports markets of approximately 25% resulted from increases in sales to large and small sports venues. Net sales increased both domestically and internationally. Our sports market is subject to volatility based on the timing of large orders, especially orders for professional facilities, which can cause net sales to fluctuate year to year. The mid-sized and smaller facilities experience more consistency in growth rates due to the greater number of facilities. The number of major new construction and renovation projects for professional facilities was not a significant factor in increasing net sales in fiscal year 2007 as compared to fiscal year 2006. We are expecting that new construction, primarily with professional facilities, could be a factor in increasing orders and sales in fiscal year 2008 and 2009 as new construction of sports facilities is expected to increase over the next few years. This growth in sales for large and small sports venues was due to a number of factors, including the expanding market, with facilities spending more on larger display systems; our product and services offering, which remains the most integrated and comprehensive offering in the industry; and our network of sales and service offices, which are important to support our customers. In addition, we benefit from the competitive nature of sports teams who strive to out perform their competitors with display systems. This impact has and is expected to continue to be a driving force in increasing transaction sizes in new construction and major renovations. This is also driven by the desire for high definition video displays which typically drive larger displays or higher resolution displays, both of which increase the average transaction size. We believe that the effects of the economy have a lesser impact on the sports market as compared to our other markets because our products are generally revenue-generation tools (through advertising) for facilities and the sports business is generally considered to be a recession-resistant business. Net sales in our sports marketing portion of this business did not perform as well as expected and we do not expect that this portion of the business will grow materially in terms of net sales in fiscal year 2008 over fiscal year 2007. Net sales in this sports marketing were less than 5% of total sales for fiscal year 2007.

        An important factor in net sales for fiscal year 2008 will be our success in winning a limited number of very large contracts expected to be awarded in the sports market in fiscal year 2008. These transactions will generally range in value from $10 million to potentially $25 million and depending on which transactions (if any) we are awarded, we could see a significant variation in the level of net sales, primarily in the second half of the fiscal year and a significant increase in backlog. As a result, the ultimate net sales growth in the sports market is difficult to estimate, but assuming that we prevail in winning projects based on our current market share, net sales to the sports market could expand in excess of 20%.

         Orders (as opposed to net sales) in the sports market also performed much better in fiscal year 2007 as compared to 2006. This improved performance is due to the same reasons indicated for the increase in net sales in the sports market.

        The increase in net sales in the transportation market for fiscal 2007 was approximately 18%, resulting from an increase in spending on state and local transportation projects. This increase, which relates primarily to sales of our Vanguard® product line, was due in part to furthering our penetration with more jurisdictions across the United States. Orders in the transportation market were up over 32% for fiscal year 2007 versus fiscal year 2006. We believe that this increase is due to legislation passed during calendar year 2005 by Congress that provided for increased spending on transportation projects, including large increases associated with intelligent transportation systems and as a result of gaining market share. Going into fiscal year 2008, we expect that sales will continue to grow in excess of 15% as a result of the gains we made in market share in fiscal year 2007 and the increased government spending, which we believe will continue.

Fiscal Year 2006 as compared to Fiscal Year 2005

        Net sales increased 34.3% to $309.4 million for fiscal year 2006 as compared to $230.3 million for fiscal year 2005. The increase was across all three markets, with the commercial market showing the most significant growth on a percentage basis. Net sales increased both domestically and internationally. As a percent of net sales, standard orders declined to approximately 29% of net sales in fiscal 2006 as compared to 32% in the previous fiscal year.

        The increase in net sales in the commercial market in fiscal year 2006 over fiscal year 2005 was 65% on a worldwide basis. This increase is attributed to both standard and custom projects. The increase in custom projects was due primarily to the increase in orders from outdoor advertising companies, while the increase in standard product orders was due to the growth in our Galaxy® displays both within the national account portion of our business and through resellers. Overall, the commercial market benefited from increased product acceptance, lower cost of displays, our expanding distribution network and a better understanding by our customers of the product as a revenue generation tool. For fiscal year 2006, net sales exceeded our expectations set at the beginning of the fiscal year. The most significant factor for exceeding these expectations was orders to outdoor advertising companies. We believe this occurred primarily as a result of the efforts by the outdoor advertising industry to ease the permit process for displays and to gain an understanding as to how to maximize revenue generation on the displays and the reduced price points on the displays.

        The increase in net sales in the sports markets of approximately 20% resulted from increases in sales to large and small sports venues. Increases in net sales domestically in sports were partially offset by a decline on an international basis. The number of major new construction and renovation projects for professional facilities in fiscal year 2006 was relatively flat as compared to 2005. The increase in sales to large sports venues for fiscal 2006 was attributable to increases in sales primarily for professional sports facilities. This growth in sales for large and small sports venues was due to a number of factors, including the expanding market, with facilities spending more on larger display systems; our product and services offering, which remains the most integrated and comprehensive offering in the industry; and our network of sales and service offices, which are important to support our customers. Net sales in our sports marketing portion of this business did not perform as well as expected and were less than 5% of total sales for fiscal year 2006.

         Orders (as opposed to net sales) in the sports market also performed much better in fiscal year 2006 as compared to 2005. This improved performance is due to the same reasons indicated for the increase in net sales in the sports market. The growth in orders was in the same areas as net sales. On an international basis, orders declined in fiscal year 2006 from fiscal year 2005, which we attribute to its inherent volatility.

        The increase in net sales in the transportation market for fiscal 2006, which was slightly less than 10%, resulted from an increase in spending on state and local transportation projects. This increase, which relates primarily to sales of our Vanguard product line, was due in part to furthering our penetration with more jurisdictions across the United States. Orders in the transportation market were up over 16% for fiscal year 2006 versus fiscal year 2005. We believe that we benefited from legislation passed during calendar year 2005 by Congress that provided for increased spending on transportation projects, including large increases associated with intelligent transportation systems.

Backlog

        Our backlog at the end of fiscal year 2007 was $127 million as compared to $93 million at the end of fiscal year 2006. The growth in backlog as a percent of fiscal year 2006 backlog was the highest in the commercial market due to increased volume and the timing of order bookings. Backlog also increased over fiscal year 2006 in the sports and transportation markets. Overall, the increase was the result of the order bookings in the most recent quarter as compared to previous quarters. Backlog varies significantly quarter to quarter due to the effects of large orders and significant variations can be expected, as explained previously herein. In addition, our backlog is not necessarily indicative of future sales or net income, also as explained previously.

        We occasionally sell products in exchange for advertising revenues from the scoreboard or display. These revenues represented less than 5% of net sales for each of fiscal years 2007, 2006 and 2005. The gross profit margin on these net sales has historically been comparable to or higher than the gross profit margin on other net sales of similar sized installations.