The Company’s consolidated gross profit margin (on a Non-GAAP basis) was 19.3 percent in the second quarter of 2012, down from 29.2 percent in the second quarter of 2011 (see reconciliation table). The decrease in gross profit margin, as a percent of sales, from the previous year was primarily due to the under-absorption of expenses in certain production areas as a result of lower than anticipated sales and an unfavorable product mix with lower sales of relatively higher margin products such as rear-projection cubes.
Total operating expenses (on a Non-GAAP basis) for the second quarter of 2012 were approximately flat at $12.8 million compared with the same quarter a year ago, as increases in research and development and sales and marketing expenses focused at digital signage product areas were offset by reductions in general and administrative spending. The Company recorded a $0.5 million net restructuring GAAP charge in connection with the implementation of cost reduction actions designed to lower the breakeven point of the Company.
The Company expects sales to be higher in the second half of fiscal 2012 compared with the first half. Based on this expected increase in revenues, combined with lower expenses as a result of the recent cost reduction actions, the Company believes it will report a slight profit on a Non-GAAP basis in the fourth quarter of fiscal 2012.For the third quarter of fiscal 2012, the Company expects a sequential increase in revenue, improvement in consolidated gross profit margin percent of sales, and lower operating expenses attributed to the Company’s recently implemented cost reduction actions. As a result, the Company currently anticipates revenue in the range of $39 to $42 million and a Non-GAAP loss between $0.07 and $0.10 per share for the third quarter of fiscal 2012. Results of operations and the business outlook will be discussed in a conference call today, May 2, 2012, beginning at 2:00 PM Pacific Time. The call can be heard via the Internet through a link on Planar’s website, www.planar.com, or through numerous other investor sites, and will be available for replay until June 2, 2012. The Company intends to post on its website 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 global leader in digital display technology providing premier solutions for the world's most demanding environments. Retailers, educational institutions, government agencies, businesses, utilities and energy firms, and home theater enthusiasts all depend on Planar to provide superior performance when image experience is of the highest importance. Planar solutions are used by the world’s leading organizations in applications ranging from digital signage to simulation and from interactive kiosks to large-scale data visualization. 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 the Company’s expected levels of revenue and revenue growth, gross profit levels and expansion of gross profit rates, operating expense levels, levels of operating income and revenue levels and Non-GAAP loss for the third quarter of fiscal 2012, the fourth quarter of fiscal 2012, the second half of fiscal 2012 and the entire 2012 fiscal year, and the other statements made under the heading “Business Outlook,”. These statements 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: poor or further weakened domestic and international business and economic conditions; changes or continued reductions in the demand for products in the various display markets served by the Company; any delay in the timing of customer orders or the Company’s ability to ship product upon receipt of a customer order; the extent and timing of any additional expenditures by the Company to address business growth opportunities; any inability to reduce costs or to do so quickly enough, in either case, in response to reductions in revenue; adverse impacts on the Company or its operations relating to or arising from any inability to fund desired expenditures, including due to difficulties in obtaining necessary financing; changes in the flat-panel monitor industry; changes in customer demand or ordering patterns; changes in the competitive environment including pricing pressures or the ability to keep pace with technological changes; technological advances; shortages of manufacturing capacity from the Company’s third-party manufacturing partners or other interruptions in the supply of components the Company incorporates in its finished goods including as a result of natural disasters like the recent earthquakes and tsunami in Japan; future production variables resulting in excess inventory and other risk factors listed from time to time in the Company’s periodic filings with the Securities and Exchange Commission (SEC). 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.
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