8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES

EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 15, 2006

PLANAR SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

OREGON	0-23018	93-0835396
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1195 NW Compton Drive

Beaverton, Oregon 97006

(503) 748-1100

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On November 15, 2006, Planar Systems, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and year ended September 29, 2006, and its expectations as to financial results for the first quarter ending December 29, 2006 and fiscal year 2007. A copy of the press release is filed as Exhibit 99.1 to this Report.

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 the effects of the acquisition of Clarity Visual Systems, share-based compensation and the requirements of SFAS No. 123(R), “Share-based Payment” (“123R”) and other adjustments. The non-GAAP financial measures used by management and disclosed by the Company exclude the income statement effects of purchase accounting adjustments and integration costs associated with the acquisition of Clarity Visual Systems, all forms of share-based compensation, impairment and restructuring charges and the amortization of intangible assets from previous acquisitions. The average shares outstanding—diluted have not been adjusted for the impacts of 123R as the information is not available to perform the calculation and the impacts would not be considered significant. 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.

The Company applied the modified prospective method of adoption of 123R, under which the effects of 123R are reflected in the Company’s GAAP financial statement presentations during fiscal 2006, but are not reflected in results for prior periods. Gross margin, expenses (research and development, sales and marketing, general and administrative), operating income, net income and earnings per share (EPS) are the primary financial measures management uses for planning and forecasting future periods that are affected by shared-based compensation. Because management reviews these financial measures calculated without taking into account the effects of the new requirements under 123R, these financial measures are treated as “non-GAAP financial measures” under Securities and Exchange Commission rules. Management uses the non-GAAP financial measures for internal managerial purposes, including as a means to compare period-to-period results on both a segment basis and consolidated basis and as a means to evaluate the Company’s results on a consolidated basis compared to those of other companies. In addition, management uses certain of these measures when publicly providing forward-looking statements on expectations regarding future consolidated basis financial results.

The Company discloses this information to the public to enable investors who wish to more easily assess the Company’s performance on the same basis applied by management and to ease comparison on both a GAAP and non-GAAP basis among other companies that separately identify the income statement effects of purchase accounting adjustments and integration costs associated with acquisitions, all forms of share-based compensation, impairment and restructuring charges and the amortization of intangibles from previous acquisitions. The Company believes that it is useful to investors to understand how the expenses and other adjustments identified above are being reflected on the Company’s income statements.

Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits.

99.1 Press Release issued by Planar Systems, Inc. dated November 15, 2006.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on November 15, 2006.

PLANAR SYSTEMS, INC.
(Registrant)
By	/s/ Scott Hildebrandt
	Scott Hildebrandt
	Vice President and Chief Financial Officer

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EX-99.1

Exhibit 99.1

Planar Reports Fourth Quarter and Fiscal 2006 Financial Results

BEAVERTON, Ore. – November 15, 2006 – Planar Systems, Inc. (NASDAQ: PLNR), a worldwide leader in specialty display systems, recorded sales of $53.3 million and GAAP income, before cumulative effect of accounting change, per diluted share of $0.09, in the fourth quarter ended September 29, 2006. On a Non-GAAP basis (see reconciliation table), income per diluted share was $0.14 in the fourth quarter of 2006. For fiscal year 2006 GAAP income per diluted share was $0.42 compared with a loss per share of $2.37 in fiscal 2005. Non-GAAP income per diluted share was $0.63 in fiscal 2006 compared with $0.21 in fiscal 2005.

“I am very pleased with our financial performance in the fourth quarter, as well as our improvement in fiscal 2006 gross margins and earnings compared with fiscal 2005,” said Gerry Perkel, Planar’s President and Chief Executive Officer. “In addition, we were able to close the acquisition of Clarity Visual Systems prior to the end of the fourth quarter. We continue to be optimistic about our opportunities going forward related to the two new specialty display markets gained by the acquisition, command and control room and digital signage.”

Industrial segment sales in the fourth fiscal quarter were $16.9 million, up 23 percent sequentially and up 43 percent compared with the fourth quarter of fiscal 2005. Industrial segment sales in the fourth quarter of 2006 include $4.7 million in sales from the Clarity business subsequent to the closing of the Clarity transaction on September 12, 2006. Excluding the impact of Clarity, Industrial segment sales were down 11 percent sequentially and increased 4 percent compared with the fourth quarter of 2005. The Company has added sales and marketing resources in its Industrial business segment during fiscal 2006 in an effort to drive sales growth moving forward. “Based on early reviews of the sales opportunity funnel being created by our expanded sales efforts, we are cautiously optimistic about the opportunity for future growth in this highly profitable specialty display business by the second half of 2007,” continued Perkel.

The Medical segment of the Company recorded fourth quarter sales of $16.5 million, down 5 percent sequentially and down 8 percent compared with the fourth quarter a year ago. The Company has been re-focusing the sales efforts in its Medical segment on Digital Imaging display products over the past year, and expects to see return from this investment in the form of revenue growth in Digital Imaging products in fiscal 2007 compared with 2006.

Sales in the Company’s Commercial segment were $20.0 million, up 9 percent sequentially and down 19 percent versus the fourth quarter a year ago. Pricing for desktop monitors continued to be challenging during the fourth quarter, however, the Company was able to manage through this difficult environment with an ever increasing focus on higher margin products, more focus on favorable vendor terms, and continued emphasis on managing this business segment for profitability and reduced volatility on a quarterly basis.

The Company ended the fourth quarter with cash and short term investments of $48.3 million, down $27.9 million compared with the end of the third quarter. As previously noted, the Company closed the acquisition of Clarity in the fourth quarter resulting in a payment to Clarity shareholders of $21.9 million in cash and 1.8 million shares of Planar stock. In addition, the acquisition resulted in a further reduction in cash of $9.3 million relating to the payoff of the net debt position of Clarity at the closing date. At the end of the fourth quarter, the Company continues to have no debt.

BUSINESS OUTLOOK

The Company currently expects that fiscal 2007 revenues will increase from fiscal 2006 driven by internal growth initiatives and revenues added through the Clarity acquisition. However, the Company believes that fiscal 2007 will produce a slightly reduced level of Non-GAAP income per share compared with the $0.63 recorded in fiscal 2006. In addition, the majority of the Non-GAAP earnings in fiscal 2007 will occur in the second half of the year as the growth initiatives deliver higher revenues and as the expenses in the first half of the year related to Clarity integration activities subside and synergies begin to exceed ongoing costs from the acquisition. This stronger second half of fiscal 2007 financial performance provides the foundation for what the Company believes will be an improved level of financial performance in fiscal 2008. The Company currently believes that fiscal 2008 will see continued growth in revenue from our specialty display segments and improvement in the financial business model.

The Company’s expectations for the first quarter, ending December 29, 2006, are for sales of $61 million to $64 million and Non-GAAP net income per diluted share of $0.06 to $0.09, which excludes share-based compensation expense, a restructuring charge to be recorded in the first quarter relating to cost reduction activities required in realigning the combined business to the new specialty display strategy, and other acquisition related GAAP charges such as amortization of identifiable intangible assets. The Company currently believes that the restructuring charge in the first quarter will be in the range of $1.5 to $2.0 million. Adjusting for these GAAP charges, the Company believes first quarter 2007 GAAP net loss per diluted share will range from $0.12 to $0.15.

Results of operations and the business outlook will be discussed in a conference call today, November 15, 2006, beginning at 2:00PM Pacific Time. The call can be heard via the Internet through a link on Planar’s Web site, www.planar.com, or through numerous other investor sites, and will be available for replay until December 15, 2006. The Company intends to post on its Web site 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 leading provider of value-added display hardware and software for a variety of specialty display markets worldwide. Hospitals, shopping centers, banks, government agencies, transportation businesses, and other discriminating consumers depend on Planar to provide unique display-based solutions to exacting requirements leveraging its operational excellence, technical innovation, and go-to-market capabilities. 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:

The statements by Gerry Perkel, the statements regarding growth of the Digital Imaging product line, optimism related to the addition of the Clarity business, expanding sales funnel in the Industrial segment, and the statements in the Business Outlook section above are forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Such statements are based on current expectations, estimates and projections about the Company’s business. Words such as expects, anticipates, intends, plans, believes, sees, estimates and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Actual results could vary materially from the description contained herein due to many factors including the possibility that the acquisition of Clarity Visual Systems will create difficulties in the integration of the operations, employees, strategies, technologies. In addition, actual results could vary materially based on changes or slower growth in the digital signage and/or command and control display markets; the potential inability to realize expected benefits and synergies; domestic and international business and economic conditions; changes in the flat-panel monitor industry; unexpected difficulties in penetrating the Home Theater market; changes in customer demand or ordering patterns; changes in the competitive environment including pricing pressures or technological changes; technological advances; shortages of manufacturing capacity from our third-party manufacturing partners; final settlement of contractual liabilities; balance sheet changes related to updating certain estimates required for the purchase accounting treatment of the Clarity acquisition; future production variables impacting excess inventory and other risk factors listed from time to time in the Company’s Securities and Exchange Commission (SEC) filings. 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.

MEDIA CONTACTS: Pippa Edelen Planar Systems, Inc. 503.748.6983 pippa.edelen@planar.com or Chase Perrin GolinHarris 213.438.8788 cperrin@golinharris.com INVESTOR CONTACTS: Ryan Gray Planar Systems, Inc. 503.748.1100 ryan.gray@planar.com

Planar Systems, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

	Three months ended						Year ended
	Sept. 29, 2006			Sept. 30, 2005			Sept. 29, 2006			Sept. 30, 2005
	(unaudited)			(unaudited)
Sales	$	53,332		$	54,457		$	212,726		$	231,832
Cost of sales		38,268			44,143			155,096			182,195
Gross profit		15,064			10,314			57,630			49,637
Operating expenses:
Research and development, net		2,443			2,172			9,920			9,829
Sales and marketing		6,093			4,444			21,158			20,497
General and administrative		3,864			3,432			16,543			15,858
Amortization of intangible assets		465			230			906			1,740
Acquisition related costs		77			—			77			—
Impairment and restructuring charges		—			34,745			503			39,913
Total operating expenses		12,942			45,023			49,107			87,837
Income (loss) from operations		2,122			(34,709	)		8,523			(38,200	)
Non-operating income (expense):
Interest, net		750			357			2,564			675
Foreign exchange, net		(678	)		(119	)		(659	)		104
Other, net		(18	)		451			(49	)		(405	)
Net non-operating income		54			689			1,856			374
Income (loss) before income taxes and cumulative effect of accounting change		2,176			(34,020	)		10,379			(37,826	)
Provision (benefit) for income taxes		821			(1,903	)		3,897			(2,946	)
Income (loss) before cumulative effect of accounting change		1,355			(32,117	)		6,482			(34,880	)
Cumulative effect of accounting change		(202	)		—			(202	)		—
Net income (loss)	$	1,153		$	(32,117	)	$	6,280		$	(34,880	)
Basic income (loss) per share before cumulative effect of accounting change	$	0.09		$	(2.18	)	$	0.43		$	(2.37	)
Average shares outstanding - basic		15,600			14,722			15,166			14,699
Diluted income (loss) per share before cumulative effect of accounting change	$	0.09		$	(2.18	)	$	0.42		$	(2.37	)
Average shares outstanding - diluted		15,747			14,722			15,437			14,699

Planar Systems, Inc.

Consolidated Balance Sheets

(In thousands)

	Sept. 29, 2006			Sept. 30, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	48,318		$	52,185
Short-term investments		—			13,000
Accounts receivable		31,961			22,517
Inventories		49,524			36,261
Other current assets		13,837			10,745
Total current assets		143,640			134,708
Property, plant and equipment, net		10,880			15,011
Goodwill		53,217			14,696
Intangible assets		32,465			3,871
Other assets		6,023			3,798
	$	246,225		$	172,084
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	25,675		$	21,467
Current portion of capital leases		493			204
Deferred revenue		3,298			2,578
Other current liabilities		33,518			11,663
Total current liabilities		62,984			35,912
Long-term capital leases, less current portion		1,044			644
Other long-term liabilities		13,751			4,290
Total liabilities		77,779			40,846
Shareholders’ equity:
Common stock		162,409			132,277
Retained earnings		10,270			4,906
Accumulated other comprehensive loss		(4,233	)		(5,945	)
Total shareholders’ equity		168,446			131,238
	$	246,225		$	172,084

Planar Systems, Inc.

Reconciliation of GAAP to Non-GAAP Results of Operations

(In thousands, except per share amounts)

(unaudited)

	Three months ended Sept. 29, 2006
	GAAP			Clarity Acquisition			Share-Based Comp.			Other			Non-GAAP
Sales	$	53,332		$	98	(A)	$			$			$	53,430
Cost of sales		38,268			(138	)(B)		(39	)					38,091
Gross profit		15,064			236			39						15,339
Operating expenses:
Research and development, net		2,443						(35	)					2,408
Sales and marketing		6,093						(257	)					5,836
General and administrative		3,864						(304	)					3,560
Amortization of intangible assets		465			(318	)					(147	)		—
Acquisition related costs		77			(77	)								—
Impairment and restructuring charges		—												—
Total operating expenses		12,942			(395	)		(596	)		(147	)		11,804
Income from operations		2,122			631			635			147			3,535
Non-operating income (expense):
Interest, net		750												750
Foreign exchange, net		(678	)											(678	)
Other, net		(18	)											(18	)
Net non-operating income:		54												54
Income before income taxes		2,176			631			635			147			3,589
Provision for income taxes		821			237			238			55			1,351
Income before cumulative effect of accounting change	$	1,355		$	394		$	397		$	92		$	2,238
Basic income per share	$	0.09											$	0.14
Average shares outstanding - basic		15,600												15,600
Diluted income per share	$	0.09											$	0.14
Average shares outstanding - diluted		15,747												15,747

(A) Non-cash effect for mark down of Clarity deferred revenue to fair value

(B) Non-cash expense for Clarity inventory step up adjustment to fair value

Planar Systems, Inc.

Reconciliation of GAAP to Non-GAAP Results of Operations

(In thousands, except per share amounts)

(unaudited)

	Year ended Sept. 29, 2006
	GAAP			Clarity Acquisition			Share-Based Comp.			Other			Non-GAAP
Sales	$	212,726		$	98	(A)	$			$			$	212,824
Cost of sales		155,096			(138	)(B)		(188	)					154,770
Gross profit		57,630			236			188						58,054
Operating expenses:
Research and development, net		9,920						(139	)					9,781
Sales and marketing		21,158						(764	)					20,394
General and administrative		16,543						(2,276	)					14,267
Amortization of intangible assets		906			(318	)					(588	)		—
Acquisition related costs		77			(77	)								—
Impairment and restructuring charges		503									(503	)		—
Total operating expenses		49,107			(395	)		(3,179	)		(1,091	)		44,442
Income from operations		8,523			631			3,367			1,091			13,612
Non-operating income (expense):
Interest, net		2,564												2,564
Foreign exchange, net		(659	)											(659	)
Other, net		(49	)											(49	)
Net non-operating income:		1,856												1,856
Income before income taxes		10,379			631			3,367			1,091			15,468
Provision for income taxes		3,897			237			1,230			409			5,773
Income before cumulative effect of accounting change	$	6,482		$	394		$	2,137		$	682		$	9,695
Basic net income per share	$	0.43											$	0.64
Average shares outstanding - basic		15,166												15,166
Diluted net income per share	$	0.42											$	0.63
Average shares outstanding - diluted		15,437												15,437

(A) Non-cash effect for mark down of Clarity deferred revenue to fair value

(B) Non-cash expense for Clarity inventory step up adjustment to fair value

Planar Systems, Inc.

Reconciliation of GAAP to Non-GAAP Results of Operations

(In thousands, except per share amounts)

(unaudited)

	Year ended Sept. 30, 2005
	GAAP			Clarity Acquisition	Share-Based Comp.			Other			Non-GAAP
Sales	$	231,832		$	$			$			$	231,832
Cost of sales		182,195										182,195
Gross profit		49,637										49,637
Operating expenses:
Research and development, net		9,829										9,829
Sales and marketing		20,497										20,497
General and administrative		15,858				(292	)					15,566
Amortization of intangible assets		1,740							(1,740	)		—
Impairment and restructuring charges		39,913							(39,913	)		—
Total operating expenses		87,837				(292	)		(41,653	)		45,892
Income (loss) from operations		(38,200	)			292			41,653			3,745
Non-operating income (expense):
Interest, net		675										675
Foreign exchange, net		104										104
Other, net		(405	)						405			—
Net non-operating income:		374				292			405			779
Income (loss) before income taxes		(37,826	)			292			42,058			4,524
Provision (benefit) for income taxes		(2,946	)			88			4,314			1,456
Net income (loss)	$	(34,880	)	$	$	204		$	37,744		$	3,068
Basic net income (loss) per share	$	(2.37	)								$	0.21
Average shares outstanding - basic		14,699										14,699
Diluted net income (loss) per share	$	(2.37	)								$	0.21
Average shares outstanding - diluted		14,699										14,869

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 the effects of the acquisition of Clarity Visual Systems, share-based compensation and the requirements of SFAS No. 123R, “Share-based Payment” (“123R”) and other adjustments. The Non-GAAP financial measures used by management and disclosed by the company exclude the income statement effects of purchase accounting adjustments and integration costs associated with the acquisition of Clarity Visual Systems, all forms of share-based compensation, impairment and restructuring charges and the amortization of intangible assets from previous acquisitions. The average shares outstanding - diluted have not been adjusted for the impacts of 123R as the information is not available to perform the calculation and the impacts would not be considered significant. 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.