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8/7/2007:Planar Reports Third Fiscal Quarter 2007 Financial Results
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Company reports 38 percent sales growth, primarily driven by specialty display acquisitions
BEAVERTON, Ore.--(BUSINESS WIRE)--Aug. 7, 2007--Planar Systems, Inc. (NASDAQ: PLNR), a worldwide leader in specialty display solutions, recorded sales of $68.2 million and a GAAP loss per share of $0.24, in the third quarter ended June 29, 2007. On a Non-GAAP basis (see reconciliation table), net loss per share was $0.04 in the third quarter of 2007.
"During our third quarter we made some significant progress in pursuit of our strategic goal to transform Planar into a growing specialty display product supplier," said Gerry Perkel, Planar's President and Chief Executive Officer. "In addition to completing the acquisition of Runco International, accelerating our entry into the high-end custom Home Theater display market, we also saw progress in our other segments, including solid growth in Control Room and Signage, sequential growth in Industrial, growth of US OEM Diagnostic Imaging monitors in Medical, and an improving mix of higher-margin display products in our Commercial segment. Our efforts to transform the Company are starting to yield revenue growth and now our challenge is to translate our revenue progress into increasing profits and shareholder value."
Industrial segment sales in the third fiscal quarter were $14.8 million, up 5 percent sequentially and down 28 percent compared with the third quarter of fiscal 2006. The Company has been investing in additional product development, sales and marketing resources to seek out and capture new design wins to slow the decline and ultimately begin to grow sales in this segment. The third quarter of 2007 represented the first sequential revenue growth in more than a year. The Company expects sequential growth to continue in the fourth fiscal quarter and for the full fiscal year in 2008 as sales associated with new design wins increase.
The Medical segment of the Company recorded third quarter sales of $11.1 million, up 7 percent compared with the second quarter of fiscal 2007 and up 4 percent compared with the third quarter a year ago. Sales of Diagnostic Imaging monitors grew 10 percent compared with the third quarter of 2006. Sales growth occurred during the quarter as the Company captured market share gains in the US OEM segment of the Diagnostic Imaging monitor market. Sales to the US OEM channel increased 56 percent year over year. This was partially offset by a decrease in sales to the US IT reseller channel. In addition, sales of lower-margin patient monitors decreased 43 percent year over year as the Company is transitioning away from this lower-margin product line to focus on higher-margin opportunities for Diagnostic Imaging monitors.
Sales in the Home Theater segment were $6.2 million for the third quarter of 2007 compared with sales of $0.3 million during the same period a year ago. This new segment includes the results of the recently acquired business, Runco International for the period following the close, May 23 to June 29, 2007. Sales for Runco and Vidikron branded products were $5.8 million, while sales for Planar branded products were $0.4 million during the third quarter of 2007. The Company is now focused on driving growth and operational efficiencies in this growing high-end segment of the market.
Sales of the Company's Control Room and Signage segment, formerly Clarity Visual Systems, were $17.0 million in the third quarter, up 41 percent sequentially and up 7 percent compared with the year-ago period, based upon the historical results of Clarity pre-acquisition. The sequential growth was due to seasonal patterns in this segment and increased sales of command and control equipment, which also impacted year over year growth.
Sales in the Company's Commercial segment were $19.1 million, up 11 percent sequentially and up 6 percent versus the third quarter a year ago. The increase was due to sales in new product categories including touch monitors and business projectors reflecting the Company's strategic shift to higher-margin products in this segment. Sales of these higher-margin display products represented approximately 23 percent of total sales in the Commercial segment, up from 13 percent of total sales in third quarter of 2006. Sales of desktop monitors were down compared to the third quarter of 2006, as higher unit sales did not fully offset the decline in average selling prices during the quarter.
The Company ended the third quarter with cash and short term investments of $15.5 million, down $25.1 million compared with the end of the second quarter. In addition, the Company has outstanding $22.0 million of short-term borrowing on the Company's line of credit. The change in net cash was primarily due to $36.7 million used to fund the Runco acquisition, an increase in accounts receivable on higher sales, and additional cash consumed related to capital and integration costs associated with the Clarity and Runco acquisitions.
BUSINESS OUTLOOK
In the short term, the Company's expectations for the fourth quarter, ending September 28, 2007, are for sales of $75 million to $79 million and Non-GAAP net loss per share of $0.05 to $0.00. The Non-GAAP estimates include the addition of Runco for a full fiscal quarter, which will be slightly dilutive to guidance provided earlier, as the Company works through integration activities associated with the acquisition. These forward looking estimates exclude share-based compensation expense and acquisition-related GAAP charges such as amortization of identifiable intangible assets. Adjusting for these GAAP charges, the Company believes the fourth quarter 2007 GAAP net loss per share will range from $0.22 to $0.17 (see reconciliation table).
The Company believes it has added substantial capability to address specialty display markets over the past year. The acquisitions of Clarity and Runco have brought additional product development and go to market resources to augment the specialty display capabilities within the legacy Planar businesses. Those additions, along with new investments in Planar's other specialty business segments, have created a new platform for growth into specialty display markets. Now that the foundation is in place, the Company believes leveraging these multiple market opportunities and focusing on operational efficiencies across the enterprise will result in Non-GAAP profitability for fiscal 2008.
"As we exit fiscal 2007, we will be turning our energies to creating value from the new strategic platform we have established. We have opportunities to improve our profitability by growing revenues, enhancing gross profit margins and improving our cost models across the Company. We are focused on all three areas for improvement," noted Perkel.
Results of operations and the business outlook will be discussed in a conference call today, August 7, 2007, beginning at 2:00 PM Pacific Time. The call can be heard via the Internet through a link on Planar's Web site, www.planar.com, or through numerous other investor sites, and will be available for replay until September 7, 2007. The Company intends to post on its Web site a transcript of the prepared management commentary from the conference call shortly after the conclusion of the call.
ABOUT PLANAR
Planar Systems, Inc (NASDAQ:PLNR) is a leading provider of value-added display hardware and software for a variety of specialty display markets worldwide. Hospitals, shopping centers, banks, government agencies, transportation businesses, and home theater enthusiasts depend on Planar to provide unique display-based solutions to exacting requirements leveraging its operational excellence, technical innovation, and go-to-market capabilities. Founded in 1983, Planar is headquartered in Oregon, USA, with offices, manufacturing partners, and customers worldwide. For more information, visit www.planar.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 relating to Planar's business operations and prospects, including statements relating to design wins providing future growth in the Industrial segment and the statements made under the heading "Business Outlook" are made pursuant to the safe harbor provisions of the federal securities laws. These and other forward-looking statements, which may be identified by the inclusion of words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "goal" and variations of such words and other similar expressions, are based on current expectations, estimates, assumptions and projections that are subject to change, and actual results may differ materially from the forward-looking statements. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Many factors, including the following, could cause actual results to differ materially from the forward-looking statements: the possibility that the acquisitions of Clarity Visual Systems and Runco International will create difficulties in the integration of the operations, employees, strategies, and technologies; changes or slower growth in the digital signage and/or command and control display markets; the potential inability to realize expected benefits and synergies of the Clarity and Runco acquisitions; domestic and international business and economic conditions; any reduction in or delay in the timing of customer orders or the Company's ability to ship product upon receipt of a customer order; changes in the flat-panel monitor industry; changes in customer demand or ordering patterns; changes in the competitive environment including pricing pressures or technological changes; technological advances; shortages of manufacturing capacity from the Company's third-party manufacturing partners; final settlement of contractual liabilities; balance sheet changes related to updating certain estimates required for the purchase accounting treatment of the Clarity and Runco acquisitions; future production variables impacting excess inventory and other risk factors listed from time to time in the Company's Securities and Exchange Commission (SEC) filings. The forward-looking statements contained in this press release speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release.
Planar Systems, Inc.
Consolidated Statement of Operations
(In thousands, except per share amounts)
(unaudited)
Three months ended Nine months ended
June 29, June 30, June 29, June 30,
2007 2006 2007 2006
-------- --------- --------- ---------
Sales $68,200 $49,365 $187,698 $159,394
Cost of Sales 50,289 36,035 138,521 116,828
-------- --------- --------- ---------
Gross Profit 17,911 13,330 49,177 42,566
Operating Expenses:
Research and development, net 4,570 2,442 11,611 7,477
Sales and marketing 10,433 5,039 28,396 15,065
General and administrative 5,723 3,579 15,882 12,679
Amortization of intangible
assets 2,101 147 5,401 441
Acquisition related cost 935 - 1,674 -
Impairment and restructuring - - 1,625 503
-------- --------- --------- ---------
Total Operating Expenses 23,762 11,207 64,589 36,165
Income (loss) from operations (5,851) 2,123 (15,412) 6,401
Non-operating income (expense):
Interest, net (57) 682 910 1,814
Foreign exchange, net (90) 166 90 19
Other, net (13) (9) (37) (31)
-------- --------- --------- ---------
Net non-operating income
(expense) (160) 839 963 1,802
Income (loss) before taxes (6,011) 2,962 (14,449) 8,203
Provision (benefit) for income
taxes (1,893) 1,294 (5,058) 3,076
-------- --------- --------- ---------
Net income (loss) $(4,118) $ 1,668 $ (9,391) $ 5,127
======== ========= ========= =========
Basic net income (loss) per
share ($0.24) $ 0.11 ($0.54) $ 0.34
Average shares outstanding -
basic 17,477 15,320 17,317 15,052
Diluted net income (loss) per
share ($0.24) $ 0.11 ($0.54) $ 0.33
Average shares outstanding -
diluted 17,477 15,635 17,317 15,314
Planar Systems, Inc.
Consolidated Balance Sheets
(In thousands)
June 29, 2007 Sept. 29, 2006
------------- --------------
ASSETS (unaudited)
Cash and cash equivalents $ 15,545 $ 48,318
Accounts receivable, net 41,661 31,961
Inventories 63,880 49,524
Other current assets 13,151 13,837
------------- --------------
Total current assets 134,237 143,640
Property, plant and equipment, net 11,113 10,880
Goodwill 67,138 51,996
Intangible assets 46,264 32,465
Other assets 10,485 6,021
------------- --------------
$ 269,237 $ 245,002
============= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 32,312 $ 25,674
Note payable 22,000 -
Current portion of capital leases 363 493
Deferred revenue 5,678 6,326
Other current liabilities 29,408 30,237
------------- --------------
Total current liabilities 89,761 62,730
Capital leases, net of current portion 901 1,044
Other long-term liabilities 14,280 13,653
------------- --------------
Total liabilities 104,942 77,427
Common stock 166,862 161,538
Retained earnings 712 10,270
Accumulated other comprehensive loss (3,279) (4,233)
------------- --------------
Total shareholders' equity 164,295 167,575
------------- --------------
$ 269,237 $ 245,002
============= ==============
Planar Systems, Inc.
Reconciliation of GAAP to Non-GAAP Results of Operations
(In thousands, except per share amounts)
(unaudited)
Three months ended June 29, 2007
Adjustments
Clarity Share-
/Runco based
GAAP Acquisitions Comp. Other Non-GAAP
----------------------------------------------
Sales $68,200 34 (A) $68,234
Cost of Sales 50,289 (519)(B) (126) 49,644
-------- --------- -------- ------ --------
Gross Profit 17,911 553 126 - 18,590
Operating Expenses:
Research and
development, net 4,570 (113) 4,457
Sales and marketing 10,433 (487) 9,946
General and
administrative 5,723 (580) 5,143
Amortization of
intangible assets 2,101 (1,954) (147) -
Acquisition related
cost 935 (935) -
Impairment and
restructuring - -
-------- --------- -------- ------ --------
Total Operating Expenses 23,762 (2,889) (1,180) (147) 19,546
Income (loss) from
operations (5,851) 3,442 1,306 147 (956)
Non-operating income
(expense):
Interest, net (57) (57)
Foreign exchange, net (90) (90)
Other, net (13) (13)
-------- --------- -------- ------ --------
Net non-operating
income (expense) (160) (160)
Income (loss) before
taxes (6,011) 3,442 1,306 147 (1,116)
Provision (benefit) for
income taxes (1,893) 1,085 411 46 (351)
-------- --------- -------- ------ --------
Net income (loss) $(4,118) $ 2,357 $ 895 $ 101 $ (765)
======== ========= ======== ====== ========
Basic net income (loss)
per share ($0.24) ($0.04)
Average shares
outstanding - basic 17,477 17,477
Diluted net income
(loss) per share ($0.24) ($0.04)
Average shares
outstanding - diluted 17,477 17,477
(A) Non-cash effect for mark down of Clarity deferred revenue to fair
value
(B) Non-cash expense for Runco inventory step up adjustment to fair
value
In addition to disclosing financial results calculated in accordance
with U.S. generally accepted accounting principles (GAAP), the
company's earnings release contains Non-GAAP financial measures that
exclude the effects of the acquisitions of Clarity Visual Systems and
Runco International, share-based compensation and the requirements of
SFAS No. 123R, "Share-based Payment" ("123R") and other adjustments.
The Non-GAAP financial measures used by management and disclosed by
the company exclude the income statement effects of purchase
accounting adjustments and integration costs associated with the
acquisitions of Clarity and Runco, all forms of share-based
compensation, impairment and restructuring charges and the
amortization of intangible assets from previous acquisitions. The
Non-GAAP financial measures disclosed by the company should not be
considered a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and the financial results
calculated in accordance with GAAP and reconciliations to those
financial statements should be carefully evaluated. The Non-GAAP
financial measures used by the company may be calculated differently
from, and therefore may not be comparable to, similarly titled
measures used by other companies.
Planar Systems, Inc.
Reconciliation of GAAP to Non-GAAP Results of Operations
(In thousands, except per share amounts)
(unaudited)
Three months ended June 30, 2006
Adjustments
Clarity Share-
/Runco based
GAAP Acquisitions Comp. Other Non-GAAP
--------------------------------------------
Sales $49,365 $49,365
Cost of Sales 36,035 (53) 35,982
-------- ----------- ------ ------ --------
Gross Profit 13,330 - 53 - 13,383
Operating Expenses:
Research and
development, net 2,442 (43) 2,399
Sales and marketing 5,039 (230) 4,809
General and
administrative 3,579 (327) 3,252
Amortization of
intangible assets 147 - (147) -
Acquisition related cost - - -
Impairment and
restructuring - - - -
-------- ----------- ------ ------ --------
Total Operating Expenses 11,207 - (600) (147) 10,460
Income (loss) from
operations 2,123 - 653 147 2,923
Non-operating income
(expense):
Interest, net 682 682
Foreign exchange, net 166 166
Other, net (9) (9)
-------- ----------- ------ ------ --------
Net non-operating
income (expense) 839 839
Income (loss) before taxes 2,962 - 653 147 3,762
Provision (benefit) for
income taxes 1,294 - 285 64 1,643
-------- ----------- ------ ------ --------
Net income (loss) $ 1,668 $- $ 368 $ 83 $ 2,119
======== =========== ====== ====== ========
Basic net income (loss)
per share $ 0.11 $ 0.14
Average shares outstanding
- basic 15,320 15,320
Diluted net income (loss)
per share $ 0.11 $ 0.14
Average shares outstanding
- diluted 15,635 15,635
In addition to disclosing financial results calculated in accordance
with U.S. generally accepted accounting principles (GAAP), the
company's earnings release contains Non-GAAP financial measures that
exclude the effects of the acquisitions of Clarity Visual Systems and
Runco International, share-based compensation and the requirements of
SFAS No. 123R, "Share-based Payment" ("123R") and other adjustments.
The Non-GAAP financial measures used by management and disclosed by
the company exclude the income statement effects of purchase
accounting adjustments and integration costs associated with the
acquisitions of Clarity and Runco, all forms of share-based
compensation, impairment and restructuring charges and the
amortization of intangible assets from previous acquisitions. The
Non-GAAP financial measures disclosed by the company should not be
considered a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and the financial results
calculated in accordance with GAAP and reconciliations to those
financial statements should be carefully evaluated. The Non-GAAP
financial measures used by the company may be calculated differently
from, and therefore may not be comparable to, similarly titled
measures used by other companies.
Planar Systems, Inc
Reconciliation of GAAP to Non-GAAP Guidance
Net Income/(Loss) per share
(unaudited)
Estimates for the Quarter Ended
September 28, 2007
Low End High End
----------------- -------------
GAAP net income (loss) per share $ (0.22) $ (0.17)
Amortization of intangible assets 0.07 0.07
Share-based compensation 0.06 0.06
Acquisition related costs 0.04 0.04
Purchase accounting adjustments 0.00 0.00
----------------- -------------
Non-GAAP net income (loss) per share $ (0.05) $ -
================= =============
Both GAAP and Non-GAAP estimates assumes a tax rate of 35%
GAAP net loss per share assumes 17.6 million average basic shares
outstanding
CONTACT: Media Contacts:
Planar Systems, Inc.
Pippa Edelen, 503-748-6983
pippa.edelen@planar.com
or
GolinHarris
Chase Perrin, 213-438-8788
cperrin@golinharris.com
or
Investor Contacts:
Planar Systems, Inc.
Ryan Gray, 503-748-8911
ryan.gray@planar.com
SOURCE: Planar Systems, Inc.
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