05.24.2007 — Runco International is known as much for creating "the world's finest home theater products" as throwing the world's greatest parties hosted by founders Sam and Lori Runco. The company announced yesterday it would be acquired by Planar Systems, Inc. (NASDAQ: PLNR), a publicly traded company with considerably less sex appeal.

Runco dealers everywhere want to know: Is this the end of their annual junket to Mexico?

"Book your flights now," says Scott Hix, vice president and general manager of Planar’s Home Theater business unit, which will absorb the Runco and Vidikron brands. "I can't turn my head that Runco is still part of a public company, but the CEO, the CFO, and the board of directors understand that the interest in the brand ties as much to emotion as to [the products]."

He says the Planar group recognizes that the "secret mojo" that makes Runco so successful must be "carefully protected."

In fact, says Runco president Bob Hana, the Runco personality has already spilled onto the suits at Planar. "You know how we dress, with Hawaiian clothes?" he says. "Now they're all dressing like that."

Hix points out, "We're only a $220 million company. We're not that big that we can't be nimble and fun."

Runco, by comparison, had net sales of $54.6 million in the 12 months ending March 31, 2007. Planar's resources are not lost on John Bishop, a manufacturer's rep for Runco. "Today, we take 25 or 30 dealers to Mexico. What happens if you take 200? You could really create a club."

More than a Party

Besides throwing bigger parties, Planar can help take Runco to places it couldn't go before with its relatively limited resources.

Hana was brought into Runco four years ago to help strengthen the family-run organization. He says the company has improved its infrastructure to support growth, "but there are still limitations," he says. "We still need more."

Planar brings much-needed infrastructure to Runco, says Hix. "We've got the logistics and the quality control, with Planar being an ISO company."

Those resources extend beyond North America.

Currently, Runco is heavily focused on the North American market, where it does about 80% of its business. Planar, on the other hand, derives more than 35 percent of its revenues outside of North America.

"We have factories in Finland, and infrastructure in Europe in Asia," Hix says. "We have local call centers where they speak Italian, they speak German, they speak Spanish …"

Planar plans to exploit the infrastructure to expand Runco's international presence.

On the product side, Runco's core strategy and its dealer base will remain unchanged, Hix says, "Hopefully we will augment the current technology segments," which today includes high-end home theater projectors, and plasma and LCD displays.

Longer term, however, Planar plans to contribute some of its own technologies to the Runco repertoire, "to be additive to the Runco brand," Hix says. He declines to elaborate but says, "There are some interesting things I think Runco can be a part of."