<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported) July 6, 1999
--------------
PLANAR SYSTEMS, INC.
Oregon 0-23018 93-0835396
---------------------------------------------------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Identification No.)
1400 N.W. Compton Drive, Beaverton, Oregon 97006
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(503) 690-1100
---------------------------------------------------------
(Registrant's telephone number, including area code)
No Change
---------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- ----------------------------------------------------------------------------
(a) Financial Statements of Business Acquired.
Pages 3 through 13 of this Form 8-K/A contain the balance sheets of dpiX,
INC. for the years ended December 31, 1998 and 1997 and the period ended
June 25, 1999 (unaudited) and the related statements of operations and cash
flows for the years ended December 31, 1998 and 1997 and the periods ended
June 25, 1999 (unaudited) and June 30, 1998 (unaudited).
(b) Pro Forma Financial Information.
Pages 14 through 18 of this Form 8-K/A contain the unaudited Pro Forma
Balance Sheet at June 25, 1999, the unaudited Statements of Operations for
the year ended September 25, 1998, and for the six months ended June 25,
1999 for the Registrant and dpiX, INC.
(c) Exhibits.
*2.1 Agreement and Plan of Merger dated as of May 13, 1999 by and among
dpiX, INC., Xerox Corporation and New dpiX LLC.
23.1 Consent of Independent Auditors
- -------------------
*Filed previously.
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 hereunto duly authorized.
Dated: September 17, 1999
PLANAR SYSTEMS, INC.
/s/ Jack Raiton
-------------------------------
Jack Raiton
Vice President and
Chief Financial Officer
<PAGE>
Independent Auditors' Report
The Board of Directors
dpiX, Inc.:
We have audited the accompanying balance sheets of dpiX, Inc. (the Company) as
of December 31, 1997 and 1998, and the related statements of operations,
stockholders' deficit, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of dpiX, Inc. as of December 31,
1997 and 1998, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
As more fully described in note 1, the Company has experienced substantial
losses and has been funded by its parent company from inception through June 25,
1999. The parent company liquidated the Company on June 26, 1999 and contributed
certain assets and liabilities of the Company as part of its contribution in a
newly formed company, dpiX, LLC.
/s/ KPMG LLP
San Francisco, California
September 2, 1999
<PAGE>
dpiX, INC.
(A Wholly Owned Subsidiary of the Xerox Corporation)
Balance Sheets
<TABLE>
<CAPTION>
December 31, December 31, June 25,
Assets 1997 1998 1999
----------------- ------------ -----------
(unaudited)
<S> <C> <C> <C>
Current assets:
Accounts receivable, net of allowances for doubtful
accounts of $20,700, $99,400 and $71,578, respectively $ 1,547,405 2,960,371 2,582,383
Inventories, net 2,175,617 3,677,684 3,129,021
Prepaid expenses and other current assets 341,275 556,059 60,487
----------------- ----------- -----------
Total current assets 4,064,297 7,194,114 5,771,891
Property and equipment, net 21,729,014 20,098,017 18,007,571
License agreement and other assets 1,506,990 1,573,815 11,668
----------------- ----------- -----------
Total assets $ 27,300,301 28,865,946 23,791,130
================= =========== ===========
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 1,949,001 1,237,919 1,052,012
Accrued expenses 3,964,037 3,792,516 4,665,623
Current portion of lease payable 56,214 63,482 67,470
Advances from Xerox 23,929,277 44,698,037 9,178,030
----------------- ----------- -----------
Total current liabilities 29,898,529 49,791,954 14,963,135
Long-term portion of lease payable 4,863,328 4,799,845 4,765,082
----------------- ----------- -----------
Total liabilities 34,761,857 54,591,799 19,728,217
----------------- ----------- -----------
Stockholders' equity (deficit):
Common stock, $.001 par value; 65,000,000 shares
authorized; 1,000 shares issued and outstanding 1 1 1
Preferred stock, $.001 stated value; 45,000,000 shares
authorized; 16,000,000 preferred Series A shares issued
and outstanding 16,000 16,000 16,000
Preferred stock, $.001 stated value; 45,000,000 shares
authorized; 21,249,430 preferred Series B shares
issued and outstanding -- -- 21,249
Additional paid-in capital 32,559,995 32,559,995 77,030,636
Retained deficit (40,037,552) (58,301,849) (73,004,973)
----------------- ----------- -----------
Total stockholders' equity (deficit) (7,461,556) (25,725,853) 4,062,913
----------------- ----------- -----------
Total liabilities and stockholders' equity (deficit) $ 27,300,301 28,865,946 23,791,130
================= =========== ===========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
dpiX, INC.
(A Wholly Owned Subsidiary of the Xerox Corporation)
Statements of Operations
<TABLE>
<CAPTION>
Year Year Six Months Period
Ended Ended Ended Ended
December 31, December 31, June 30, June 25,
1997 1998 1998 1999
--------------- ------------ ----------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Product $ 2,555,545 7,234,988 2,895,191 3,903,975
Research contract 5,971,772 4,475,773 2,106,435 725,728
-------------- ------------ ------------ ------------
Total revenues 8,527,317 11,710,761 5,001,626 4,629,703
Cost of revenues 12,373,419 18,005,475 9,273,101 10,102,320
-------------- ------------ ------------ ------------
Gross margin (3,846,102) (6,294,714) (4,271,475) (5,472,617)
-------------- ------------ ------------ ------------
Operating expenses:
Research and development 8,832,920 8,193,924 4,230,212 3,570,708
Selling, general and administrative 4,004,074 3,155,735 1,533,643 3,849,240
-------------- ------------ ------------ ------------
Total operating expenses 12,836,994 11,349,659 5,763,855 7,419,948
-------------- ------------ ------------ ------------
Operating loss (16,683,096) (17,644,373) (10,035,330) (12,892,565)
Other expenses:
Interest expense 645,665 619,924 311,141 310,559
Write-off of license agreement -- -- -- 1,500,000
-------------- ------------ ------------ ------------
Net loss $ (17,328,761) (18,264,297) (10,346,471) (14,703,124)
============== ============ ============ ============
Basic and diluted net loss per share $ (17,329) (18,264) (10,346) (14,703)
============== ============ ============ ============
Shares used in calculation of basic and
diluted net loss per share 1,000 1,000 1,000 1,000
============== ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
dpiX, INC.
(A Wholly Owned Subsidiary of the Xerox Corporation)
Statements of Stockholders' Equity (Deficit)
Years ended December 31, 1998, 1997 and the period ended June 25, 1999
(unaudited)
<TABLE>
<CAPTION>
Preferred A stock Preferred B stock Common stock Total
--------------------- --------------------- ------------------ Retained stockholders'
Shares Amount Shares Amount Shares Amount APIC deficit equity (deficit)
---------- -------- ---------- --------- -------- -------- ---------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance as of
December 31, 1996 16,000,000 $ 16,000 -- $ -- 1,000 $ 1 32,559,995 (22,708,791) 9,867,205
Net loss -- -- -- -- -- -- -- (17,328,761) (17,328,761)
---------- -------- ---------- --------- -------- -------- ---------- ------------ ----------------
Balance as of
December 31, 1997 16,000,000 16,000 -- -- 1,000 1 32,559,995 (40,037,552) (7,461,556)
Net loss -- -- -- -- -- -- -- (18,264,297) (18,264,297)
---------- -------- ---------- --------- -------- -------- ---------- ------------ ----------------
Balance as of
December 31, 1998 16,000,000 16,000 -- -- 1,000 1 32,559,995 (58,301,849) (25,725,853)
Issuance of 21,249,430
shares of Series B
preferred stock for
cancellation of
advances from Xerox
Corporation (unaudited) -- -- 21,249,430 21,249 -- -- 44,470,641 -- 44,491,890
Net loss (unaudited) -- -- -- -- -- -- -- (14,703,124) (14,703,124)
---------- -------- ---------- --------- -------- -------- ---------- ------------ ----------------
Balances as of June 25,
1999 (unaudited) 16,000,000 $ 16,000 21,249,430 21,249 1,000 $ 1 77,030,636 (73,004,973) 4,062,913
========== ======== ========== ========= ======== ======== ========== ============ ================
</TABLE>
See accompanying notes to financial statements
<PAGE>
dpiX, INC.
(A Wholly Owned Subsidiary of the Xerox Corporation)
Statements of Cash Flows
<TABLE>
<CAPTION>
Year Year Six Months Period
ended ended ended ended
December 31, December 31, June 30, June 25,
1997 1998 1998 1999
--------------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (17,328,761) (18,264,297) (10,346,471) (14,703,124)
Depreciation and amortization 3,729,748 4,087,266 2,057,973 2,290,617
Loss on disposal of equipment 227,910 28,553 -- 28,737
Changes in operating assets and liabilities:
Accounts receivable (81,460) (1,412,966) (467,336) 377,988
Inventory (1,577,988) (1,502,067) (632,493) 548,663
Prepaid expenses and other current assets -- (214,784) 436,259 495,572
License agreement and other assets (4,492,009) (66,825) (27,175) 1,562,147
Accounts payable 616,923 (711,082) (1,014,310) (185,907)
Accrued liabilities (7,331,017) (171,521) 1,125,347 873,107
Advances from Xerox 27,122,214 20,768,760 10,943,132 (35,520,007)
--------------- ----------- ----------- -----------
Net cash provided by (used in)
operating activities 885,560 2,541,037 2,074,926 (44,232,207)
--------------- ----------- ----------- -----------
Cash flows used in investing activities -
equipment purchases (835,762) (2,484,822) (2,047,671) (228,908)
--------------- ----------- ----------- -----------
Cash flows from financing activities:
Capital lease payments (49,798) (56,215) (27,255) (30,775)
Issuance of preferred stock -- -- -- 44,491,890
--------------- ----------- ----------- -----------
Net cash (used in) provided by
financing activities (49,798) (56,215) (27,255) 44,461,115
--------------- ----------- ----------- -----------
Net increase in cash and cash equivalents -- -- -- --
Cash and cash equivalents, beginning of year -- -- -- --
--------------- ----------- ----------- -----------
Cash and cash equivalents, end of year $ -- -- -- --
=============== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
dpiX, INC
(A Wholly Owned Subsidiary of the Xerox Corporation)
Notes to Financial Statements
December 31, 1997 and 1998
(Information for the six the months ended June 30, 1998
and as of and for the period ended June 25, 1999 is unaudited)
(1) Organization
dpiX, Inc. (the Company) was established in March of 1996, following a
spinout from the Xerox Palo Alto Research Center, to focus on research and
development on 1) sensor and display technology and 2) production process.
Following the spinout, the Company was incorporated in Delaware as a wholly
owned subsidiary of the Xerox Corporation (the Xerox Corporation or the
Parent Company). Since inception, the Company has developed, manufactured
and sold sensor and display products to customers including Trixell, Varian
Medical Systems, Inc. and Planar Systems, Inc.. The Company's production
process revenues resulted from research contracts engaged with the United
States government's Defense Advance Research Project Agency and the United
States Display Consortium.
Operating Loss and Liquidity
The Company has sustained losses and negative cash flows from operations
since inception and received substantial support from the Parent Company
until June 25, 1999. On June 26, 1999, the Parent Company liquidated the
Company and contributed certain assets and liabilities to dpiX, LLC, a
newly formed Delaware limited liability company.
(2) Summary of Significant Accounting Policies
(a) Inventories
Inventories are stated at the lower of cost or market using the first-
in, first-out cost method.
Inventories are comprised of:
<TABLE>
<CAPTION>
December 31, December 31, June 25,
1997 1998 1999
-------------- -------------- --------------
(unaudited)
<S> <C> <C> <C>
Raw materials $ 1,207,133 1,801,814 1,081,477
Work-in-process 1,515,804 1,912,495 2,270,274
Finished goods 37,000 475,030 69,400
Allowance for obsolescence (584,320) (511,655) (292,130)
--------------- -------------- --------------
Total $ 2,175,617 3,677,684 3,129,021
=============== ============== ==============
</TABLE>
(b) Property and Equipment
Property and equipment are stated at cost, net of accumulated
depreciation and amortization, and are depreciated and amortized using
the straight-line method over the estimated useful lives of the
assets.
(Continued)
6
<PAGE>
dpiX, INC
(A Wholly Owned Subsidiary of the Xerox Corporation)
Notes to Financial Statements
December 31, 1997 and 1998
(Information for the six months ended June 30, 1998
and as of and for the period ended June 25, 1999 is unaudited)
(c) Revenue Recognition
The Company's revenues are derived from research contract agreements and
product sales. Research contract revenues are based upon reimbursement of
costs incurred as specified in the contracts, and are realized upon the
completion of contract milestones. Costs incurred in excess of
reimbursable amounts are recognized by the Company and accrued. Costs
accrued in excess of contract amounts totaled $191,000 in 1997. As of
June 25, 1999, the Company is no longer entering into new research
contracts. Consequently, research contract revenues are continually
diminishing and will continue until the completion of existing contracts
in fiscal year 2000.
Product revenues are realized upon shipment or at the request of certain
customers on completion. As of December 31, 1997 and 1998 and as of June
25, 1999, the Company sold all products for amounts which were below the
cost to produce. As of December 31, 1997, 1998 and June 25, 1999,
remaining manufacturing costs exceeded contracted sales price by
$2,990,000, $2,600,000 and $2,500,000, respectively. These amounts are
charged to expense in the period in which the Company became
contractually obligated.
(d) Research and Development
All research and development costs are expensed as incurred and include
salaries and expenses related to employees who conduct research and
development.
(e) Income Taxes
Upon incorporation the Company entered into a Tax Sharing Agreement with
the Parent Company in which the Xerox Corporation retained all tax
benefits from the Company's assets and operating losses; therefore, the
resulting deferred tax attributes are not presented in the Company's
financial statements.
(f) Net Loss Per Share
The Company has adopted Statement of Financial Accounting Standards
(SFAS) No. 128, Earning Per Share, which calculates basic net loss per
share and diluted net loss per share which includes potentially dilutive
effects from outstanding stock options and convertible stock, using the
treasury stock method. Stock options and convertible stock have been
excluded from the calculation of diluted net loss per share, as they are
anti-dilutive.
(Continued)
7
<PAGE>
dpiX, INC
(A Wholly Owned Subsidiary of the Xerox Corporation)
Notes to Financial Statements
December 31, 1997 and 1998
(Information for the six months ended June 30, 1998
and as of and for the period ended June 25, 1999 is unaudited)
The following table sets forth the computation of net loss per share for
each of the periods:
<TABLE>
<CAPTION>
December 31, December 31, June 30, June 25,
1997 1998 1998 1999
---------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Net loss $ (17,328,761) (18,264,297) (10,346,471) (14,703,124)
---------------- ---------------- ---------------- ------------------
Basic and diluted
weighted-average
common shares
outstanding used in
computing basic and
diluted net loss per
share 1,000 1,000 1,000 1,000
---------------- ---------------- ---------------- ------------------
Basic and diluted net
loss per share $ (17,329) (18,264) (10,346) (14,703)
================ ================ ================ ==================
</TABLE>
(g) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
(h) Concentration of Credit Risks
Accounts receivable potentially subject the Company to concentrations of
credit risk. The Company performs ongoing credit evaluations of its
customers' financial condition and generally does not require collateral
for accounts receivable. When required, the Company maintains allowances
for credit losses, and to date such losses have been within management's
expectations. As of and for the years ended December 31, 1997 and 1998
and for the six months ended June 30, 1998 and as of and for the period
ended June 25, 1999, the majority of the Company's accounts receivables
and product sales were to Trixell, Varian Medical Systems, Inc. and
Planar Systems, Inc.
(i) Accounting for Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets held and used is
measured by a comparison of the carrying amount of an asset to future net
cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair
value of the assets. Assets to be disposed of are reported at the lower
of their carrying amount or fair value less cost to sell.
(Continued)
8
<PAGE>
dpiX, INC
(A Wholly Owned Subsidiary of the Xerox Corporation)
Notes to Financial Statements
December 31, 1997 and 1998
(Information for the six months ended June 30, 1998
and as of and for the period ended June 25, 1999 is unaudited)
(j) Comprehensive Loss
The Company has no significant components of other comprehensive loss
and, accordingly, the comprehensive loss is the same as net loss for all
periods.
(k) Recent Accounting Pronouncements
The FASB recently issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred
to as derivatives), and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. For a derivative not designated as a hedging instrument, changes
in the fair value of the derivative are recognized in earnings in the
period of change. The Company must adopt SFAS No. 133 by January 1, 2000.
Management does not believe the adoption of SFAS No. 133 will have a
material effect on the financial position or results of operations of the
Company.
(l) Interim Financial Data
The accompanying financial statements for the six months ended June 30,
1998 and as of and for the period ended June 25, 1999 are unaudited. In
the opinion of management, these interim statements have been prepared on
the same basis as the audited financial statements and include all
adjustments, consisting only of normal recurring adjustments, necessary
for the fair presentation of the results of the interim periods. The
financial data disclosed in these notes to the financial statements for
these periods are also unaudited. The results of operations for the
interim periods are not necessarily indicative of the results to be
expected for any future periods.
(3) Property and Equipment
As of December 31, 1997, 1998 and June 25, 1999, property and equipment, at
cost, consisted of the following:
<TABLE>
<CAPTION>
Asset lives December 31, December 31, June 25,
years 1997 1998 1999
--------------- ---------------- -------------- ---------------
(unaudited)
<S> <C> <C> <C> <C>
Building 37 $ 5,316,964 5,316,964 5,316,966
Leasehold improvements 10 6,424,715 12,857,979 13,823,310
Plant machinery 8 21,835,691 18,304,956 17,525,524
Furniture and fixtures 5 2,127,512 1,900,168 1,883,945
Computer equipment 3 791,031 2,404,208 2,283,670
Construction-in-progress -- 3,267,023 1,356,965 173,459
---------------- -------------- ---------------
39,762,936 42,141,240 41,006,874
Less: accumulated depreciation
and amortization (18,033,922) 22,043,223) (22,999,303)
Net plant, property ---------------- -------------- ---------------
and equipment $ 21,729,014 20,098,017 18,007,571
================ ============== ===============
</TABLE>
(Continued)
9
<PAGE>
dpiX, INC
(A Wholly Owned Subsidiary of the Xerox Corporation)
Notes to Financial Statements
December 31, 1997 and 1998
(Information for the six months ended June 30, 1998
and as of and for the period ended June 25, 1999 is unaudited)
(4) Intangible Asset
The Company prepaid a license agreement for a manufacturing process valued
at $1,500,000 as of December 31, 1997 and 1998. In 1999, the Company
abandoned plans to incorporate the process in the Company's operations and
wrote off the entire value against other expense during the period ended
June 25, 1999.
(5) Capital Stock
(a) Common and Preferred Convertible Series A and B Stock
Upon the incorporation in November of 1996, the Company issued 1,000
shares of common stock and 16,000,000 shares of preferred Series A
stock to the Parent Company for assets contributed. In February 1999,
the Company issued 21,249,430 shares of preferred Series B stock in
conversion of advances of $44,491,890 from the Parent Company.
For the years ended December 31, 1997 and 1998 and during the period
ended June 25, 1999, the Company repurchased immaterial shares of
common stock outstanding from employees derived from exercised stock
options. These shares were subsequently retired upon the dissolution
of the Company on June 25, 1999 by the newly formed company.
(b) Stock Option Plan
The Company established a stock based compensation plan (the Plan) in
1996, which was subsequently terminated upon the liquidation of the
Company on June 25, 1999. For the years ended December 31, 1997 and
1998 and for the period ended June 25, 1999, the Company issued and
recorded immaterial amounts of compensation expense and additional
paid-in capital for stock options granted and exercised, respectively,
relating to stock option transactions. All outstanding stock options
outstanding as of the liquidation date were repurchased by the Company
pursuant to the termination of the Plan.
(6) Related Party Transactions
Company's operations were sustained through cash infusions from the Parent
Company since inception. The advances amounted to $23,929,277, $44,698,037
and $9,178,030 as of December 31, 1997, 1998 and June 25, 1999,
respectively. See note 5(a).
(7) Leases
Upon incorporation, the Company entered into a capital lease agreement with
the Parent Company for its manufacturing facility in California. Upon the
liquidation of the Company and the formation of a new company discussed in
note 9, the lease was canceled and replaced with a new noncancelable
operating lease agreement. Additionally, the Company maintains
noncancelable operating leases for its offices in California and for
manufacturing equipment with third parties.
(Continued)
10
<PAGE>
dpiX, INC
(A Wholly Owned Subsidiary of the Xerox Corporation)
Notes to Financial Statements
December 31, 1997 and 1998
(Information for the six months ended June 30, 1998
and as of and for the period ended June 25, 1999 is unaudited)
Future minimum lease payments under noncancelable operating leases as of
June 25, 1999 were:
Period:
June 26, 1999 to December 1999 926,958
Year ended December 31, 2000 1,355,182
2001 1,991,010
2002 2,031,864
2003 and thereafter 2,136,888
-----------------
$ 8,441,902
=================
Rent expense for operating leases amounted to $1,123,841 and $1,114,183 for
the years ended December 31, 1997 and 1998, respectively. Rent expense for
the six months ended June 30, 1998 and for the period ended June 25, 1999
was $557,091 and $556,454, respectively.
(8) Segment Information
The Company has adopted the provisions of SFAS No. 131, Disclosure About
Segments of an Enterprise and Related Information. SFAS No. 131 establishes
standards for the reporting by public business enterprises of information
about operating segments, products and services, geographic areas and major
customers. The method for determining what information to report is based
on the way that management organizes the operating segments within the
Company for making operating decisions and assessing financial performance.
The Company's chief operating decision maker is considered to be the
Company's Chief Executive Officer (CEO). The CEO reviews financial
information accompanied by disaggregated information about revenue and cost
of revenue by operating segment for purposes of making operating decisions
and assessing financial performance. The information reviewed by the CEO is
identical to the information presented in the accompanying financial
statements of operations. For the years ended December 31, 1997 and 1998,
the Company operated in two segments: research development and product
sales operations. All assets pertain solely to the product sales segment.
The Company has had no international revenues to date.
(9) Subsequent Event
On July 6, 1999, the Company, Xerox Corporation, and dpiX Holding Company
LLC (including Planar Systems, Inc., Varian Medical Systems, Inc. and
PHSITH LLC) entered into definitive agreements relating to the formation of
a new company named dpiX, LLC. The Xerox Corporation contributed certain
assets and liabilities of the Company and received a 19.9% equity interest
in dpiX, LLC.
11
<PAGE>
Planar Systems, Inc.
Pro Forma Balance Sheet
June 25, 1999
(Unaudited) (in 000's)
<TABLE>
<CAPTION>
Planar
Systems, Pro forma Pro forma
Inc. dpiX, INC. adjustments combined
----------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 24,758 $ - $ (5,338) (4) $ 19,420
Receivables 20,576 2,583 (2,583) (2) 20,576
Inventories 25,998 3,129 (3,129) (2) 25,998
Other current assets 10,388 60 (60) (2) 10,388
-------------------------------------- ------------
Total current assets 81,720 5,772 (11,110) 76,382
Property, plant & equipment, net 15,481 18,007 (18,007) (2) 15,481
Other assets 19,810 12 (12) (2)
5,338 (4) 25,148
-------------------------------------- ------------
Total assets $117,011 $ 23,791 $(23,791) $117,011
====================================== ============
Liabilities And Equity
Accounts payable $ 9,054 $ 1,052 $ (1,052) (2) $ 9,054
Other current liabilities 9,568 13,844 (13,844) (2) 9,568
Current portion of long-term obligations 1,749 67 (67) (2) 1,749
-------------------------------------- ------------
Total current liabilities 20,371 14,963 (14,963) 20,371
-
Long-term obligations 16,054 4,765 (4,765) (2) 16,054
Deferred tax liability 442 - - 442
Other liabilities 662 - - 662
-------------------------------------- ------------
Total liabilities 37,529 19,728 (19,728) 37,529
-
Common stock 75,080 77,031 (77,031) (2) 75,080
Preferred stock 37 (37) (2)
Retained earnings (accumulated deficit) 13,091 (73,005) 73,005 (2) 13,091
Foreign currency translation adjustment (8,689) - - (8,689)
-------------------------------------- ------------
Total shareholders' equity 79,482 4,063 (4,063) 79,482
-------------------------------------- ------------
Total liabilities and equity $117,011 $ 23,791 $(23,791) $117,011
====================================== ============
</TABLE>
<PAGE>
Planar Systems, Inc.
Pro Forma Statement of Operations
Nine Months ended June 25, 1999
(Unaudited) (in 000's)
<TABLE>
<CAPTION>
Planar
Systems, Pro forma Pro forma
Inc. dpiX, INC. adjustments combined
------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $90,141 $ 7,974 $ (7,974) (2) $90,141
Cost of sales 64,233 14,715 (14,715) (2) 64,233
------------------------------------- ---------
Gross profit (loss) 25,908 (6,741) 6,741 25,908
Research and development, net 9,731 5,646 (5,646) (2) 9,731
Sales, marketing and administrative 15,263 4,359 (4,359) (2) 15,263
------------------------------------- ---------
Total operating expenses 24,994 10,005 (10,005) 24,994
------------------------------------- ---------
Income (loss) from operations 914 (16,746) 16,746 914
Interest income - - - -
Interest expense (158) (465) 465 (2) (158)
Foreign exchange, net 1,969 - - 1,969
Write-off of license agreement (1,500) 1,500 (2) -
Loss on equity investment - - (5,000) (1) (5,000)
Income (loss) before income taxes 2,725 (18,711) 13,711 (2,275)
Provision (benefit) for income taxes 762 - (1,400) (3) (638)
------------------------------------- ---------
Net income (loss) $ 1,963 $(18,711) $ 15,111 $(1,637)
===================================== =========
Net income per share - basic $ 0.18 $ (0.15)
========== =========
Average shares outstanding - basic 10,678 10,678
========== =========
Net income per share - diluted $ 0.18 $ (0.15)
========== =========
Average shares outstanding -diluted 10,904 10,678
========== =========
</TABLE>
<PAGE>
Planar Systems, Inc.
Pro Forma Statement of Operations
Year ended September 25, 1998
(Unaudited) (in 000's)
<TABLE>
<CAPTION>
Planar
Systems, Pro forma Pro forma
Inc. dpiX, INC. adjustments combined
-------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $129,015 $ 11,711 $(11,711) (2) $129,015
Cost of sales 88,763 18,005 (18,005) (2) 88,763
-------------------------------------- -----------
Gross profit (loss) 40,252 (6,294) 6,294 40,252
Research and development, net 8,685 8,194 (8,194) (2) 8,685
Sales, marketing and administrative 19,740 3,156 (3,156) (2) 19,740
-------------------------------------- -----------
Total operating expenses 28,425 11,350 (11,350) 28,425
-------------------------------------- -----------
Income (loss) from operations 11,827 (17,644) 17,644 11,827
Interest income 1,029 - - 1,029
Interest expense (293) (620) 620 (2) (293)
Foreign exchange, net (659) - - (659)
Loss on equity investment - - (5,000) (1) (5,000)
-------------------------------------- -----------
Income (loss) before income taxes 11,904 (18,264) 13,264 6,904
Provision (benefit) for income taxes 2,953 - (1,240) (3) 1,713
-------------------------------------- -----------
Net income (loss) $ 8,951 $(18,264) $ 14,504 $ 5,191
====================================== ===========
Net income per share - basic $ 0.83 $ 0.48
=========== ===========
Average shares outstanding - basic 10,837 10,837
=========== ===========
Net income per share - diluted $ 0.81 $ 0.47
=========== ===========
Average shares outstanding -diluted 11,098 11,098
=========== ===========
</TABLE>
<PAGE>
PLANAR SYSTEMS, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (Unaudited)
- --------------------------------------------------------------------------------
On July 6, 1999, dpiX, LLC, a Delaware limited liability company ("dpiX") was
merged (the "Merger") with and into New dpiX LLC, a Delaware limited liability
corporation ("New dpiX") pursuant to the terms and conditions of the Agreement
and Plan of Merger dated as of May 13, 1999 (the "Merger Agreement"), by and
among dpiX, New dpiX and Xerox Corporation, a New York corporation ("Xerox"). In
the Merger, all of the outstanding Preferred Shares of dpiX, all of which were
owned by Xerox, were converted into a 19.9% membership interest in New dpiX, and
all of the outstanding Common Shares of dpiX were converted into a total of $100
in cash at a rate of $.05 per Common Share. The terms and conditions of the
Merger Agreement, including the purchase price, were negotiated on an arms-
length basis by Xerox and dpiX Holding Company LLC, a Delaware limited liability
corporation ("dpiX Holding").
New dpiX was formed solely for the purpose of effecting the Merger. Prior to the
Merger, all of the outstanding membership interests in New dpiX were owned by
dpiX Holding. The owners of membership interests in dpiX Holding are Planar
Systems, Inc. (the "Company"), Varian Medical Systems, Inc. and PHSITH, LLC, a
joint venture of the United States affiliates of Phillips Medical Systems,
Siemens A.G. and Thompson-CSF. The Company owns a 20 percent membership interest
in dpiX Holding for which it paid $5 million. The Company's investment was
funded out of working capital.
The Company's investment in dpiX Holding will be accounted for on the equity
method. The unaudited pro forma combined financial information reflect an
adjustment for the recognition of the disproportionate allocation of profit and
losses. No purchase price adjustments have been recognized due to the nature of
the transaction. The unaudited pro forma balance sheet was prepared as if the
transaction had occurred on June 25, 1999, and the unaudited pro forma
statements of operations were prepared as if the transaction had occurred on the
first day of the periods ending September 25, 1998 and June 25, 1999. The
unaudited pro forma statement of operations for the year ended September 25,
1999 includes dpiX, INC. balances for the year ended December 31, 1999. This
financial information should be read in connection with the Company's audited
financial statements for the year ended September 25, 1998 included in Form 10-K
and the Company's unaudited financial information for the nine months ended June
25, 1999 included in Form 10-Q.
In the opinion of management of the Company, all adjustments necessary to
present fairly such pro forma financial statements have been made. This
unaudited pro forma financial information is not necessarily indicative of what
actual results would have been had the transaction occurred at the beginning of
the respective period nor do they purport to indicate the results of future
operations of Planar Systems, Inc.
- -------------------
(1) Amount represents the recognition of the Company's share of the
disproportionate allocation of the profits and losses during the respective
period.
(2) Amount represents the elimination of the historical balances of dpiX, INC.
<PAGE>
(3) Amount represents the tax benefit related to the recognition of the
disproportionate losses using the effective tax rate of the period.
(4) Amount represents the cash paid for the investment and the related increase
in the investment.
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
The Board of Directors
Planar Systems, Inc.
We consent to the incorporation by reference in the Registration Statements
(Nos. 33-82696, 33-82688, 33-90258 and 333-45191) on Form S-8 of Planar Systems,
Inc. and subsidiaries of our report dated September 2, 1999, with respect to the
balance sheets of dpiX, INC. as of December 31, 1998 and 1997, and the related
statements of operations and cash flows for each of the years in the two-year
period ended December 31, 1998, which report appears in the Form 8-K of Planar
Systems, Inc. dated September 17, 1999.
/s/ KPMG LLP
San Francisco, California
September 17, 1999
