Sales down but income on track for Planar: News from Planar Systems

Note: Readers of the free Electronicstalk email newsletter will have read this news when it was announced. Find out how to register for your free copy now.

Planar Systems recorded year-over-year and sequential declines in sales but met net income expectations in its first quarter of fiscal 2002. Sales in the quarter ended28th December 2001, were $40.8 million, down 19% from last year's first quarter. The majority of the decline reflects the company's exit from military markets completed in the fourth quarter of last fiscal year and the remainder was caused by soft orders early in the quarter.

Net income per diluted share was $0.19, down from $0.26 recorded in last year's first quarter but meeting expectations for bottom-line performance.

"I'm pleased with the operating efficiency we've demonstrated this past quarter", said Balaji Krishnamurthy, president and CEO.

"Performance in lean times is at least as important a measure of a company's quality as results during boom times, and I could not be more proud of how this organisation has responded to the current economic challenges".

Gross margins for the quarter, as a percentage of sales, were 30.5%, up slightly from 30.2% a year ago.

Operating expenses of 21.2% of sales, compared to 19.5% in last year's first quarter, were down significantly in dollar terms reflecting prudent expense control.

Sales in each of the company's core business segments were down year-over-year, though indicators of renewed growth were noted in each area.

New design wins achieved in the medical business unit demonstrate progress in supplying the electronic display needs of healthcare professionals in patient proximity.

Customers of the industrial business unit were working through excess inventory during the quarter, but new bookings in the retail petroleum and ATM markets signal the expanding opportunity for robust displays in kiosk applications.

The continuing business portion of the transportation business unit was flat, reflecting ongoing softness in capital equipment markets.

Overall, the company enjoyed solid growth in backlog during the quarter.

"We continue to see the market opportunities expand in our core custom display business due to three key forces", Krishnamurthy said.

"Flat-panels are taking over in applications traditionally served by CRTs, display complexity and value are increasing as the demand for full colour and rich graphics grows, and manufacturers continue to outsource display subsystems to experts".

The home and office market for flat-panel monitors continues its strength as an area of extraordinary growth opportunity.

Planar's desktop monitor business grew more than 50% sequentially, with about $9 million in sales in the first quarter, and exceeded its profitability goals.

Three new on-line resellers were added, and existing relationships with retailers were expanded and strengthened.

Significant operational accomplishments by the desktop monitor team made possible the continued rapid growth in the business.

Progress in the refinement of processes and the development of customer relationships marked the past quarter in Planar's photonics business.

Opportunities for the company's proprietary atomic layer deposition technology continue to develop, first and foremost in thin-film optical components for the metro-area networking market.

"Our desktop and photonics businesses are demonstrating traction in a key element of the company's growth strategy", Krishnamurthy continued.

"Through the systematic development of what we call quantum projects, we intend to leverage the company's core strengths and address opportunities in high-growth markets.

These two projects are just the first to emerge on the market's stage, and demonstrate our intention to deliver to shareholders additional growth and value from beyond the company's core activities".

The company expects sales of approximately $200 million in fiscal 2002, with sales increasing in each quarter.

This represents an annual growth rate of 12% excluding discontinued businesses.

Gross margins are expected to be approximately 31% of sales for fiscal 2002.

Operating expenses are anticipated to be about 20% of sales in fiscal 2002.

The effective tax rate is expected to be about 34% in fiscal 2002.

The company expects net income in fiscal 2002 to be approximately $1.10 per fully diluted share.

• Planar Systems: contact details and other news
• Email this news to a colleague
• Register for the free Electronicstalk email newsletter
• Electronicstalk Home Page