The Company’s consolidated gross profit margin (on a Non-GAAP basis) was 22.0 percent in the third quarter of 2012, down from 28.1 percent in the third 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 with a relatively higher fixed cost basis, such as EL product facilities, and an unfavorable product mix with a greater proportion of total revenue derived from sales of relatively lower margin products such as desktop monitors.
Total operating expenses (on a Non-GAAP basis) for the third quarter of 2012 decreased $2.1 million, or 16 percent, to $11.1 million compared with the same quarter a year ago, as expenses declined in all functions as a result of cost reduction measures implemented early in the third quarter of 2012.
The Company’s cash balance increased $1.1 million sequentially to $16.2 million at the end of the third quarter compared to the end of the second quarter of fiscal 2012. The increase in cash was primarily caused by a $7 million reduction in inventory, partially offset by an increase in accounts receivable associated with sequential revenue growth and a reduction in accounts payable.
BUSINESS OUTLOOKLooking forward, the Company continues to see opportunities to grow sales of digital signage products by accessing new customers and expanding relationships with existing customers as well as by adding new products to the digital signage portfolio such as Planar Mosaic, Planar LookThru, and Planar UltraLux. For the fourth quarter of fiscal 2012, the Company expects continued revenue growth in sales of digital signage products and a reduction in sales of commercial and industrial products on a year over year basis. As a result, for the fourth fiscal quarter of 2012 the Company currently anticipates similar revenue, gross profit margins, levels of operating expenses and profits compared with the third fiscal quarter of 2012.