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• Planar is broadening its reach into the home theater market by acquiring Runco International and its two strong home theater brands: Runco and Vidikron, both synonymous with home theater excellence
• This deal is in alignment with Planar’s long-term strategic initiative to capitalize on high-value, specialized display market segments, and will accelerate the company’s entry into the specialty home theater market
• Planar is not looking to replace Runco, Vidikron or its own brand, but to strengthen all three brands in the specialty home theater space, each having a unique, dedicated channel focus and product portfolio
• With this acquisition, Planar has amassed the best talent in the industry to deliver the finest home theater solutions to a growing global marketplace
• Leveraging Planar's global supply chain and broad display technology expertise, Runco and Vidikron will benefit from the company's unique capabilities in specialty display engineering and its well-developed global operations and supplier relationships
Runco Acquisition Questions
Q: Why are you acquiring Runco and Vidikron?
A: This acquisition accelerates Planar Systems, Inc.’s reach into the custom home theater market, in alignment with the company’s long-term strategic initiative to develop high-value solutions spanning multiple specialty display markets. This acquisition combines the best talent and offerings in the home theater industry to better position Planar Systems, Inc. in this growing market, while ensuring continued success and leadership for all three brands.
Q: Why did you select Runco and Vidikron?
A: Runco and Vidikron are synonymous with the finest in custom home theater displays, and each brand has distinct offerings that will augment Planar’s branded home theater display lineup. Runco, widely considered to offer the highest echelon of custom home theater products, has been a top-selling brand in the custom space for the past two decades. Runco is the leader in high-end home video display advancements, such as CineWide technology. Vidikron caters to clients searching for high definition video display solutions that excel in rooms with higher ambient light levels, in addition to the traditional darkened home theater environment. Runco’s and Vidikron’ offerings will round out the Planar-branded home theater strategy and products, such as the Xscreen and other innovative Planar Systems, Inc. solutions that go beyond traditional displays and incorporate the reliable, rugged and unique display technologies for which the company is known.
Q: How much did Planar pay for Runco and Vidikron?
A: Planar Systems, Inc. has acquired the assets of privately-held Runco International, Inc. for $36.7 million in cash.
Q: How will you differentiate offerings from Planar, Runco and Vidikron?
A: The Runco, Vidikron and Planar brands will continue to conduct business as usual with distinct product roadmaps that reach different partners in the specialty home theater ecosystem. However, all three brands will benefit from Planar Systems, Inc.’s innovative display technology, engineering capabilities and strong global supply chain.
Q: How will this impact current customers and dealers of Planar, Runco and Vidikron?
A: Each brand will continue to have a unique and dedicated channel focus worldwide.
Q:Who are your target customers for each of the Planar, Runco and Vidikron offerings? What is your strategy for each brand?
A:
RUNCO
Brand Strategy:
•Runco represents the world’s finest home theater products
•The definitive high-end luxury video brand that symbolizes the owners distinguished taste and no-compromise lifestyle
•Leading manufacturer of state-of-the-art projection systems, flat-panel displays, video processors and other components for the high-end consumer electronics niche market
Product Strategy:
•Runco designs and engineers reference-level video products across the entire high-performance display category
•Award-winning CineWide™ and CineWide with AutoScope™ technology utilizes the full capability of DMD chips displaying movies formatted in the 2.35:1 aspect ratio with full resolution
•As the first 1080p HD video display products to achieve THX certification, Runco video projectors are being tested to unprecedented rigorous standards as outlined in the THX Certified Display program
Channel Strategy:
•Runco works with an exclusive group of signature dealers representing the high end of the custom installation channel.
•Runco video products are sold exclusively through the custom home theater and specialty independent retailer network.
•Runco is part of the select buying group known as the Home Theater Specialists of America.
VIDIKRON
Brand Strategy:
•Going beyond home theater; Vidikron has an integrated portfolio of flat panels and video projection systems that enhance any room in the house, from the master suite to the kids’ playroom
•Vidikron is the premier manufacturer of cutting-edge projection systems and flat-panel displays for the custom retail and integration channels
•Extensive lineup of digital home theater projectors delivering among the most powerful and varied advanced display technologies in the industry
•Vidikron is unique in that it has its own Italian-born heritage that has cultivated a dedicated custom base, while sharing technology, performance, features and vision of Runco.
Product Strategy:
•Vidikron-branded products deliver best-in-class video display quality, elegant design and custom integration features not found in competitive products
•Delivering a breadth of products in performance and price including 1080p plasma and LCD displays and THX-certified video projection systems
•Unique product platforms and exclusive technologies deliver pristine cinema picture quality
Channel Strategy:
•Focused on growing the custom home theater and specialty independent retailer network
•CEDIA dealers who focus on high-quality systems integration throughout the home
•Vidikron dealers, who are increasing their own channel business platforms, often represent the new face of custom installation and embrace projects that range in size, scope and budget and aren’t exclusively defined as “home theaters.”
PLANAR
Brand Strategy:
•Unprecedented performance for those who demand an authentic theater experience
•Benefiting from best-in-class display engineering for more than 20 years, Planar applies its proven rugged, reliable display prowess, used in the most demanding industrial-display applications (ATM, airplane cockpits), by the world’s most respected hospitals and doctors and in the most demanding 24/7 command and control environments, to its full-range of specialty home theater displays
Product Strategy:
•Cutting-edge custom display solutions for the entire home, including home theater projectors, a suite of full HD 1080p thin displays and the innovative ambient-light-rejection Xscreen projection screen
•Decades of ingenuity and focus in every specialty display
Channel Strategy:
•Planar has a dedicated focus on the specialty integrator and ensures market and category success with a disciplined, exclusive strategy to the specialty home theater market
•Planar’s global footprint and success in the Americas, Asia Pacific, Europe, Africa and the Middle East is attributed to global, dedicated team and multiple facilities, offices and manufacturing around the world
Q: Will management roles change at Planar, Runco and Vidikron?
A: Planar’s Home Theater business unit will now include the Planar, Runco and Vidikron brands and will continue to be led by Scott Hix, vice president and general manager. Under Hix’s management, the union of these three brands combines the finest talent in the home theater market to ensure the continued success of all three brands. Reporting to Hix, Bob Hana will lead the Runco and Vidikron initiative and serve as vice president of worldwide sales and marketing. Jim Davis will continue his role as worldwide head of sales for Planar-branded specialty home theater displays. Runco International founder Sam Runco will provide ongoing consultation and continue to be a key contributor.
Q: What are Sam Runco’s plans – will he stay with the company?
A: Sam Runco has obviously been a key force in both driving Runco Int’l and the home theater industry as a whole. He is excited about the prospects of this combination and has committed to be an active part of the integration process. We look forward to Sam’s consultation over the next year related to making the integration go smoothly as well as working with us to continue to create market leading solutions.
Q: Will this acquisition result any lay-offs or other staffing changes at Planar, Runco and Vidikron?
A: Whenever you combine companies together it is inevitable that there is some overlap in resources. However, we have a great deal of work to finalize our integration planning which will determine the ultimate amount of overlap or change that will be implemented. We are committed to continuing the excellence that has been established for products and service at Runco International. To that end, we are extending employment offers today to virtually all Union City employees.
Q: Will Runco and Vidikron be moving operations to Beaverton and away from Union City?
A: Our goal is to see growth in both revenue and profits from the Runco and Vidikron brands. We have a great deal of work to create a finalized integration plan that will govern what changes will be made.
Q: Planar recently reported lower-than-expected earnings. How will this acquisition benefit Planar’s shareholders?
A: Last year, Planar laid out a strategic plan to leverage the company's specialty display strength to capitalize on high-value, high-growth markets and, thereby, enhance shareholder value. The specialty home theater market is a key focus of that strategic plan because it offers attractive growth opportunities in a growing market. Runco and Vidikron own a considerable share of the custom home theater space, and the acquisition will place Planar as a leading provider of specialty home theater display solutions through its Planar, Runco and Vidikron brands and further accelerates Planar toward its strategic fiscal goals set for FY09 and FY10.
Q: Runco and Vidikron are recognized leaders in the custom home theater market. How will they benefit from this deal?
A: Leveraging more than 20 years in the display industry, Planar brings substantial capabilities in specialty display technology and engineering from broad markets and a well-developed global supply chain to bring Runco and Vidikron efficiencies in worldwide operations, service, logistics and supplier relationships. Most important, the teams share similar company philosophies, with a commitment to excellence in technology, outstanding quality and service, and dedicated focus to its custom channel partners. As a result, Runco’s and Vidikron’ customers, dealers and manufacturers can expect to see continued technology advances and enhanced operational support. Additionally, Planar provides an expansive history and expertise in innovative cross-functional display development that will expand Runco’s and Vidikron’ custom home theater product portfolios.
Q: How are you communicating this announcement to Runco, Vidikron and Planar dealers?
A: Planar is taking great care to ensure Runco, Vidikron and Planar dealers understand that it will be business as usual for all three brands. We have sent out targeted communications to all partners, and we are following up with personal communications and trainings to ensure they understand the added benefits the relationship with Planar provides and that the channel plans for each brand will remain unchanged.
Q: How are Planar’s branded home theater offerings currently performing in the marketplace?
A: Product delays have impacted the overall performance for Planar’s Home Theater business unit; however, the products currently shipping – four 720p HD home theater projectors and the Xscreen – all have been met with positive response in the market.
Q: Planar announced its plans to ship 1080p projectors and LCD displays earlier this year. Are those products still going to market and if so, why are there delays?
A: We have experienced some shipping delays of these products due to limited premium parts availability, but we are working very hard to get these exciting new products into the market in 2007. Planar is committed to ensuring that we offer the highest-quality specialty home theater products to our partners and will only ship a product when it meets or exceeds our quality and performance standards. A complete line of full-HD 1080p thin displays, as well as multiple 1080p projector offerings, remain an important part of Planar’s 2007 product roadmap.
Q: Won't these products compete directly with Runco’s current product offerings?
A: Runco and Vidikron will continue to serve their established custom home theater partners and customers. Planar’s specialty Xscreen, thin displays and home theater projectors are sold through different dealer segments in each geography and sold exclusively through worldwide distribution. Because the product roadmaps, value proposition, product portfolio and channel strategies are unique to each brand, - and will remain that way - we can continue to serve different dealerships in each regional market, allowing all three brands to coexist and be successful within the custom home theater market.
Q: In the future, who should we contact if we have questions about Planar, Runco or Vidikron products or if we are interested in a product review?
A: Please continue to contact the respective PR agency for each brand (Caster Communications for Runco/Vidikron, and GolinHarris for Planar) as usual. You may also contact Pippa Edelen, senior worldwide marketing manager of Planar’s Home Theater Business Unit.
Q: How have Planar and Runco’s shareholders been responding to this news?
A: Planar’s Investor Relations Manager, Ryan Gray, can more appropriately address this question and we would be happy to coordinate this discussion.
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