Planar Announces Fiscal Fourth Quarter And Full Year 2011 Financial Results

Planar Systems, Inc. (NASDAQ: PLNR), a worldwide leader in specialty display solutions, recorded sales of $51.1 million and GAAP loss per share of $0.07 in its fourth fiscal quarter ended September 30, 2011. On a Non-GAAP basis (see reconciliation table), income per share was $0.01 in the fourth quarter of fiscal 2011. Sales for fiscal year 2011 were $186.5 million and GAAP loss per share was $0.24. On a Non-GAAP basis income per share was $0.05 in fiscal 2011.

“I am pleased that we were able to deliver sales growth and Non-GAAP profits for the full fiscal year as well as exceed our revenue and Non-GAAP profit expectations for the fourth quarter,” said Gerry Perkel, Planar’s President and Chief Executive Officer. “Our fastest growing product line, the Clarity Matrix super narrow bezel LCD video wall offering, is making significant inroads in a number of digital signage applications in a variety of large market segments such as retail, corporate, higher education, sports arenas and stadiums, and hospitality. Customers value our unique approach as well as our innovative architecture and we believe this product line will continue to grow significantly in fiscal 2012.”

FOURTH QUARTER BUSINESS HIGHLIGHTS
  • Sales of Planar digital signage products totaled $11.4 million, and represented 22% of total revenue and 15% growth compared with the fourth quarter of the previous fiscal year, led by sales of Clarity Matrix (LCD video wall systems) which increased 290% compared to the same period in fiscal 2010
  • Revenue growth occurred in 2 of the 3 geographical regions compared with the fourth quarter of last year, with the Americas declining 8%, Europe, the Middle East and Africa (EMEA) up 63% and Asia Pacific up 61%
  • The Clarity™-brand rear projection video wall cube sales grew 31% compared with the fourth quarter of last year, with the majority of the growth coming from the EMEA and Asia Pacific regions
  • Sales of Runco® high-end home products increased 24% compared with the same period a year ago, with growth coming from both projection and flat panel offerings
  • Sales of Planar’s PT Series™ touch monitors increased 36% compared with the fourth quarter of 2010, due in part to weaker sales in the year ago period
  • Launched the PS Series™; a new line of low-cost commercial LCD displays for digital signage applications

FISCAL YEAR 2011 BUSINESS HIGHLIGHTS
  • Overall sales growth of 6.2% to $186.5 million, the highest level of annual organic sales growth in 8 years
  • Sales of Planar digital signage products totaled $39.5 million, and represented 21% of total revenue and 32% growth compared with the previous fiscal year, led by sales of Clarity Matrix (LCD video walls) which increased 180% compared to fiscal 2010
  • Revenue growth occurred in all 3 geographical regions compared with last year, with the Americas up slightly, EMEA up 12% and Asia Pacific up 49%
  • Rear-projection video wall cube sales, including Clarity LED series and Indisys™ processing, grew 23% compared with fiscal 2010, with especially strong growth in the Asia Pacific region
  • Sales of touch monitors increased 13% compared with fiscal 2010
  • Achieved the highest level of Non-GAAP EPS, $0.05, in 5 years
  • Recorded $3.2 million of Non-GAAP EBITDA for the full fiscal year

FOURTH QUARTER FISCAL 2011 RESULTS

The Company’s total sales for the fourth quarter of fiscal 2011 increased 6 percent compared with the same period a year ago. The increase was primarily driven by rising sales of Clarity Matrix LCD video wall products, rear projection video wall cubes, touch monitors and high-end home products, partially offset by declining sales of custom AMLCD displays, due primarily to the timing of customer rollouts and requests to push out planned deliveries into future quarters.

The Company’s consolidated gross margins (on a Non-GAAP basis) were 26.8 percent in the fourth quarter of 2011, up from 26.6 percent in the fourth quarter of 2010 (see reconciliation table). The increase in gross margin, as a percent of sales, from the previous year was primarily due to sales of a more favorable mix of higher margin products including digital signage displays and rear projection cubes which more than offset the decline in custom AMLCD displays. Total operating expenses (on a Non-GAAP basis) for the fourth quarter of 2011 increased approximately $1.9 million to $13.4 million compared with the same quarter a year ago, primarily driven by increased sales and marketing expenses. Consistent with prior quarters, the Company has increased sales and marketing headcount as well as marketing program spending, largely focused on pursuing increased sales of its growing digital signage products. The Company recorded a $1.1 million net restructuring GAAP charge in connection with the implementation of a new organizational structure designed to better align the Company’s resources with the overall growth strategy focused on selling a higher mix of digital signage products going forward.

BUSINESS OUTLOOK

Looking forward, the Company is planning for annual revenue growth in excess of 10 percent per year over the next 3-4 years, driven primarily by growth in sales of digital signage products, which the Company believes will grow 30 percent per year for the next several years. Over the longer term, the Company believes this planned double digital total revenue growth will yield both gross margin expansion and leverage across the operating expense base on a percentage of sales basis. As a result, the Company is planning for a long term (fiscal 2015) business model of 4 to 6 percent operating income as a percent of total revenue.

In the near term, the Company plans to continue to add resources to support its growth strategy. The Company currently anticipates revenue for the first quarter of fiscal 2012 in the range of $47-49 million, which represents 15 percent revenue growth when compared to the first quarter of fiscal 2011 at the mid-point of the range. This anticipated sequential revenue decline in the seasonally softer first quarter combined with the expected increase in operating expenses noted above, are expected to result in a Non-GAAP loss between $0.01 and $0.04 per share for the first quarter of fiscal 2012.

Results of operations and the business outlook will be discussed in a conference call today, November 3, 2011, 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 December 3, 2011. 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 margin levels and expansion of gross margin, operating expense levels, levels of operating income and revenue levels and Non-GAAP loss for the first quarter of fiscal 2012, the long-term target business model (FY15) 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.

Note Regarding the Use of Non-GAAP Financial Measures:

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 share-based compensation and the requirements of Topic 718 of the FASB Accounting Standards Codification TM, “Compensation-Stock Compensation”. The Non-GAAP financial measures also exclude impairment and restructuring charges, the amortization of intangible assets related to previous acquisitions, various tax charges including the valuation allowance against deferred tax assets, the gain or loss on foreign currency due to the non-cash nature of the charge, and various other adjustments. 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. The Company has provided reconciliations of the Non-GAAP financial measures to the most directly comparable GAAP financial measures.
 
Planar Systems, Inc.
Consolidated Statement of Operations
(In thousands, except per share amounts)
(unaudited)
       
Three months ended Twelve months ended
Sept. 30, 2011 Sept. 24, 2010 Sept. 30, 2011 Sept. 24, 2010
 
Sales $ 51,125 $ 48,193 $ 186,504 $ 175,668
Cost of Sales   37,453     35,408     134,365     131,201  
Gross Profit 13,672 12,785 52,139 44,467
 
Operating Expenses:
Research and development, net 2,780 3,061 10,748 10,515
Sales and marketing 7,040 4,883 25,929 22,062
General and administrative 4,197 3,780 16,836 16,061
Amortization of intangible assets 456 604 1,992 2,470
Impairment and restructuring charges   1,060     -     1,060     3,388  
Total Operating Expenses 15,533 12,328 56,565 54,496
 
Income (Loss) from operations (1,861 ) 457 (4,426 ) (10,029 )
 
Non-operating income (expense):
Interest, net (1 ) (55 ) 22 (62 )
Foreign exchange, net 496 (744 ) (334 ) 1,618
Other, net   (92 )   82     130     293  
Net non-operating income (expense) 403 (717 ) (182 ) 1,849
 
Income (loss) before taxes (1,458 ) (260 ) (4,608 ) (8,180 )
Provision (benefit) for income taxes   (48 )   (1,336 )   98     (3,075 )
Net Income (loss) $ (1,410 ) $ 1,076   $ (4,706 ) $ (5,105 )
 
Net Income (loss) per share - basic ($0.07 ) $ 0.06 ($0.24 ) ($0.27 )
Net Income (loss) per share - diluted ($0.07 ) $ 0.06 ($0.24 ) ($0.27 )
 
Weighted average shares outstanding - basic 19,594 19,119 19,419 18,954
Weighted average shares outstanding - diluted 19,594 19,404 19,419 18,954
 
 
Planar Systems, Inc.
Consolidated Balance Sheets
(In thousands)
(unaudited)
 
Sept. 30, 2011 Sept. 24, 2010
ASSETS
Cash $ 22,231 $ 31,709
Accounts receivable, net 25,881 27,010
Inventories 42,967 33,397
Other current assets   4,587     3,924  
Total current assets 95,666 96,040
 
Property, plant and equipment, net 4,265 5,347
Intangible assets, net 1,261 3,253
Other assets   4,110     3,794  
$ 105,302   $ 108,434  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 15,549 16,130
Current portion of capital leases - 4
Deferred revenue 2,339 1,611
Other current liabilities   18,485     19,800  
Total current liabilities 36,373 37,545
 
Other long-term liabilities   6,270     5,513  
Total liabilities 42,643 43,058
 
Common stock 182,826 180,289
Retained earnings (deficit) (118,096 ) (112,886 )
Accumulated other comprehensive loss   (2,071 )   (2,027 )
Total shareholders' equity   62,659     65,376  
$ 105,302   $ 108,434  
 
   
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, unaudited)
 
For the three months ended
Sept. 30, 2011 Sept. 24, 2010
Gross Profit:
GAAP Gross Profit   13,672     12,785  
 
Share-based Compensation   15     21  
Total Non-GAAP adjustments   15     21  
   
NON-GAAP GROSS PROFIT   13,687     12,806  
   
NON-GAAP GROSS PROFIT PERCENTAGE   26.8 %   26.6 %
 
Research and Development:
GAAP research and development expense   2,780     3,061  
 
Share-based Compensation   (53 )   (56 )
Total Non-GAAP adjustments   (53 )   (56 )
   
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSE   2,727     3,005  
 
Sales and Marketing:
GAAP sales and marketing expense   7,040     4,883  
 
Share-based Compensation   (154 )   (63 )
Total Non-GAAP adjustments   (154 )   (63 )
   
NON-GAAP SALES AND MARKETING EXPENSE   6,886     4,820  
 
General and Administrative:
GAAP General and Administrative Expense 4,197 3,780
 
Share-based Compensation   (455 )   (190 )
Total Non-GAAP adjustments   (455 )   (190 )
   
NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSE   3,742     3,590  
 
Operating Expenses:
GAAP Total Operating Expenses 15,533 12,328
 
Share-based Compensation (662 ) (309 )
Amortization of intangible assets (456 ) (604 )
Impairment and restructuring charges   (1,060 )   -  
Total Non-GAAP adjustments   (2,178 )   (913 )
   
NON-GAAP TOTAL OPERATING EXPENSES   13,355     11,415  
 
Income (Loss) from Operations:
GAAP income (loss) from operations (1,861 ) 457
 
Share-based Compensation 677 330
Amortization of intangible assets 456 604
Impairment and restructuring charges   1,060     -  
Total Non-GAAP adjustments   2,193     934  
   
NON-GAAP INCOME (LOSS) FROM OPERATIONS   332     1,391  
 
Income (Loss) before taxes & EBITDA:
GAAP income (loss) before taxes (1,458 ) (260 )
 
Share-based Compensation 677 330
Amortization of intangible assets 456 604
Impairment and restructuring charges 1,060 -
Foreign Exchange, net   (496 )   744  
Total Non-GAAP adjustments   1,697     1,678  
   
NON-GAAP INCOME (LOSS) BEFORE TAXES   239     1,418  
Depreciation   560     687  
NON-GAAP EBITDA   799     2,105  
 
Net Income (Loss):
GAAP Net Income (loss) (1,410 ) 1,076
 
Share-based Compensation 677 330
Amortization of intangible assets 456 604
Impairment and restructuring charges 1,060 -
Foreign Exchange, net (496 ) 744
Income tax effect of reconciling items   (72 )   (1,479 )
Total Non-GAAP adjustments   1,625     199  
   
NON-GAAP NET INCOME (LOSS)   215     1,275  
 
GAAP weighted average shares outstanding--basic 19,594 19,119
NON-GAAP weighted average shares outstanding--diluted 19,979 19,404
 
GAAP Net Income (Loss) per share - basic ($0.07 ) $ 0.06
Non-GAAP adjustments detailed above 0.08 0.01
NON-GAAP NET INCOME PER SHARE (basic) $ 0.01 $ 0.07
 
GAAP Net Income (Loss) per share - diluted ($0.07 ) $ 0.06
Non-GAAP adjustments detailed above 0.08 0.01
NON-GAAP NET INCOME PER SHARE (diluted) $ 0.01 $ 0.07
 
   
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, unaudited)
 
For the twelve months ended
Sept. 30, 2011 Sept. 24, 2010
Gross Profit:
GAAP Gross Profit   52,139     44,467  
 
Share-based Compensation   59     162  
Total Non-GAAP adjustments   59     162  
   
NON-GAAP GROSS PROFIT   52,198     44,629  
   
NON-GAAP GROSS PROFIT PERCENTAGE   28.0 %   25.4 %
 
Research and Development:
GAAP research and development expense   10,748     10,515  
 
Share-based Compensation   (212 )   (233 )
Total Non-GAAP adjustments   (212 )   (233 )
   
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSE   10,536     10,282  
 
Sales and Marketing:
GAAP sales and marketing expense   25,929     22,062  
 
Share-based Compensation   (534 )   (472 )
Total Non-GAAP adjustments   (534 )   (472 )
   
NON-GAAP SALES AND MARKETING EXPENSE   25,395     21,590  
 
General and Administrative:
GAAP General and Administrative Expense 16,836 16,061
 
Share-based Compensation   (1,458 )   (776 )
Total Non-GAAP adjustments   (1,458 )   (776 )
   
NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSE   15,378     15,285  
 
Operating Expenses:
GAAP Total Operating Expenses 56,565 54,496
 
Share-based Compensation (2,204 ) (1,481 )
Amortization of intangible assets (1,992 ) (2,470 )
Impairment and restructuring charges   (1,060 )   (3,388 )
Total Non-GAAP adjustments   (5,256 )   (7,339 )
   
NON-GAAP TOTAL OPERATING EXPENSES   51,309     47,157  
 
Income (Loss) from Operations:
GAAP income (loss) from operations (4,426 ) (10,029 )
 
Share-based Compensation 2,263 1,643
Amortization of intangible assets 1,992 2,470
Impairment and restructuring charges   1,060     3,388  
Total Non-GAAP adjustments   5,315     7,501  
   
NON-GAAP INCOME (LOSS) FROM OPERATIONS   889     (2,528 )
 
Income (Loss) before taxes & EBITDA:
GAAP income (loss) before taxes (4,608 ) (8,180 )
 
Share-based Compensation 2,263 1,643
Amortization of intangible assets 1,992 2,470
Impairment and restructuring charges 1,060 3,388
Foreign Exchange, net   334     (1,618 )
Total Non-GAAP adjustments   5,649     5,883  
   
NON-GAAP INCOME (LOSS) BEFORE TAXES   1,041     (2,297 )
Depreciation   2,163     2,977  
NON-GAAP EBITDA   3,204     680  
 
Income (loss) from continuing operations:
GAAP net income (loss) (4,706 ) (5,105 )
 
Share-based Compensation 2,263 1,643
Amortization of intangible assets 1,992 2,470
Impairment and restructuring charges 1,060 3,388
Foreign Exchange, net 334 (1,618 )
Income tax effect of reconciling items   (7 )   (2,214 )
Total Non-GAAP adjustments   5,642     3,669  
   
NON-GAAP NET INCOME (LOSS)   936     (1,436 )
 
GAAP weighted average shares outstanding--basic 19,419 18,954
NON-GAAP weighted average shares outstanding--diluted 19,793 18,954
 
GAAP Net Income (Loss) per share - basic ($0.24 ) ($0.27 )
Non-GAAP adjustments detailed above 0.29 0.19
NON-GAAP NET INCOME (LOSS) PER SHARE (basic) $ 0.05 ($0.08 )
 
GAAP Net Income (Loss) per share - diluted ($0.24 ) ($0.27 )
Non-GAAP adjustments detailed above $ 0.29 $ 0.19
NON-GAAP NET INCOME (LOSS) PER SHARE (diluted) $ 0.05 ($0.08 )
 

Copyright Business Wire 2010

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