“I am pleased with the continued progress we have made strengthening our balance sheet in the face of the global economic slowdown,” said Gerry Perkel, Planar’s president and chief executive officer. “Our cash balance has increased each quarter this fiscal year and while our revenue levels declined in the second quarter, we believe that revenue will increase in our third quarter based on our expectations for increased demand in most of our business segments. Going forward, we are committed to continuing our strategy to strengthen our balance sheet through further dispositions of underperforming or non-strategic assets and improved working capital management. We also anticipate that planned actions to reduce costs will result in additional improvement in our profitability and cash flow.”
Summary Of Key Financial Metrics
The following information summarizes some key financial measures for the company at the end of the second quarter of fiscal 2009:
Cash increased $5.7 million to $23.5 million compared to the end of the first quarter (about $1.28 per diluted share outstanding for the second quarter). The company had no debt outstanding at the end of the quarter.
Net working capital increased to $52.3 million.
Days sales outstanding (DSO) in accounts receivable ended at 58 days.
Current Ratio improved to 2.4.
The company ended the quarter with Tangible Net Worth of $58.6 million, representing a tangible book value of about $3.19 per diluted share outstanding for the second quarter.
Summary Of Second Quarter Financial Results
Revenues from continuing operations in the second quarter were down about 37% compared to the second quarter of fiscal 2008. Sales in the company’s Industrial Business Unit (IBU) declined 39% to $10.9 million in the second quarter compared to the second quarter in fiscal 2008. The Industrial segment experienced slowing demand and new requests for delays in shipment schedules from existing customers as a direct result of poor economic conditions. In addition, the second quarter of 2008 included a large, one-time order which did not repeat in the second quarter of 2009. Sales in the Commercial Business Unit (CBU) declined 45% compared to the second quarter of the prior fiscal year, as a result of a strategic decision to pursue higher margin sales opportunities and maintain relatively low levels of inventory. Sales for the Control Room & Signage Business Unit (CSBU) declined 25% compared to the second quarter of 2008 as a result of the macroeconomic difficulties and the relatively large capital project nature of typical video wall installations. In addition, the sale of the Coolsign software business in the first quarter of 2009 resulted in a decline in revenues in the CSBU. Sales for the Home Theater Business Unit (HTBU) declined 37% compared to the second quarter of 2008 as demand for high-end home theater equipment continued to be negatively impacted by the slower spending in luxury home construction and high end home remodeling.
During the second quarter the company recorded a $1.3 million net restructuring charge related to the company’s most recent cost reduction plan. In addition, the company was able to complete the sale of some non-strategic intellectual property assets during the second quarter, further helping to increase its cash position.
Business Guidance
While the company’s balance sheet has been strengthened over the past few quarters, the company expects that the weak global economy will continue to adversely impact improvement in the overall financial results of the company. While relatively soft demand is expected to continue over the next few quarters, the company currently believes it will experience some sequential revenue growth and small profit improvement in the third quarter of 2009. In addition, if the company is able to continue executing its strategic action plans as intended, the company’s cash balance should increase slightly by the end of fiscal 2009 as compared to the balance at the end of the second quarter.
