Planar Reports 3Q Loss, Sells Medical Business for $34.25M

Planar Systems, Inc., parent of Runco, recorded sales of $75 million and a GAAP (generally accepted accounting principles) loss per share of $3.46 in the third quarter ended June 27, 2008, revealed the company in a financial report released Wednesday.

Planar also announced the sale of its medical business to NDS Surgical Imaging for $34.25 million in cash.

The announcements came amid Internet rumors that Planar, which acquired Runco for $37 million in 2007, is dropping the Vidikron brand. When asked by CE Pro, Planar representatives denied that it's considering dropping its longtime brand, saying that everything is "status quo" with Vidikron.

All in all, Planar president and CEO Gerry Perkel said he's "pleased with our recent progress shoring up our balance sheet, highlighted by improvement in inventory management and the cash proceeds from the sale of our medical business segment."

On a non-GAAP basis, the report indicates, net earnings per share approximately broke even during the third quarter. The industrial segment of the business grew 11 percent over last year to $16.4 million for the quarter.

The now-sold medical business unit had experienced a revenue decline of 6 percent versus the previous third quarter. The commercial business unit climbed 7 percent over the previous third quarter.

Runco Acquisition Contributes to Home Theater Unit's Underperformance

The home theater business unit "grew revenues sequentially in the third quarter," according to the report, but it also "under perform[ed] compared to our earlier expectations."

The report indicated that "internal execution issues subsequent to the Runco acquisition a year ago" contributed to that unit's slow growth. Larger economic issues and other external factors also contributed to the company's loss.

However, Planar's report seems to indicate that it intends to turn things around via internal tweaks:

"While some of the factors impacting the Company's performance in these two segments are macro economic in nature, the Company is not waiting for a stronger economic environment to see improvement. Instead, the Company currently plans to implement a number of actions in the fourth quarter designed to improve the performance of these units."

Following the release of Planar's second quarter financial report, in which the home theater division showed that it had "not achieved expected financial performance in the business after the acquisition of Runco," the company saw major changes.

Planar veteran Scott Hix removed himself from his role of vice president and general manager of the home theater business unit. Perkel stepped in to take over that unit while continuing his roles as president and CEO.

The proceeds of the sale of the medical business unit will be used to pay off the full outstanding balance of Planar's current line of credit and augment future working capital needs, the report indicates.

Planar estimates that it will end the fourth quarter with $15 million to $20 million in cash and no debt.