This Management's Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Report contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are made pursuant to the safe harbor provisions of the federal securities laws. These and other forward-looking statements, which may be identified by the inclusion of words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "goal" and variations of such words and other similar expressions, are based on current expectations, estimates, assumptions and projections that are subject to change, and actual results may differ materially from the forward-looking statements. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Many factors, including the following, could cause actual results to differ materially from the forward-looking statements: the possibility that Planar will experience further difficulties integrating and operating the Clarity and Runco businesses; changes or slower growth in the digital signage and/or command and control display markets; further inability to realize expected benefits and synergies of the Clarity and Runco acquisitions; domestic and international business and economic conditions; any reduction in or delay in the timing of customer orders or the Company's ability to ship product upon receipt of a customer order; any inability to reduce costs quickly enough in response to unanticipated reductions in revenue; adverse impacts on the Company or its operations relating to or arising from the Company's indebtedness including difficulties in obtaining financing, changes in the flat-panel monitor industry; 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 the Company's 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 and Runco acquisitions; future production variables impacting excess inventory and other risk factors described under Item 1A. The forward-looking statements contained in this report 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 Report. If the Company does update one or more forward-looking statements, it should not be concluded that the Company will make additional updates with respect thereto or with respect to other forward-looking statements.

This Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to revenue recognition, bad debts, inventories, warranty obligations, goodwill and intangible asset valuation, stock based compensation and income taxes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies and the related judgments and estimates affect the preparation of the consolidated financial statements.

Revenue Recognition. The Company's policy is to recognize revenue for product sales when evidence of an arrangement exists, sales price is determinable or fixed, title transfers and risk of loss has passed to the customer, which is generally upon shipment of our products to our customers. The Company defers and recognizes service revenue over the contractual period or as services are rendered. Some distributor agreements allow for potential return of products and provide price protection under certain conditions within limited time

Allowance for Doubtful Accounts. The Company maintains allowances for estimated losses resulting from the inability of its customers to make required payments. Credit limits are established through a process of reviewing the financial history and stability of each customer. Where appropriate, the Company obtains credit rating reports and financial statements of the customer when determining or modifying their credit limits. The Company regularly evaluates the collectability of its trade receivable balances based on a combination of factors. When a customer's account balance becomes past due, the Company initiates dialogue with the customer to determine the cause. If it is determined that the customer will be unable to meet its financial obligation to the Company, such as in the case of bankruptcy, deterioration in the customer's operating results or financial position or other material events impacting their business, the Company records a specific allowance to reduce the related receivable to the amount the Company expects to recover.

The Company also records an allowance for all customers based on certain other factors including the length of time the receivables are past due, the amount outstanding, and historical collection experience with customers. The Company believes its reported allowances are adequate. However, if the financial condition of those customers were to deteriorate, resulting in their inability to make payments, the Company may need to record additional allowances which would result in additional operating expense being recorded for the period in which such determination was made.

Inventory. The Company is exposed to a number of economic and industry factors that could result in portions of its inventory becoming either obsolete or in excess of anticipated usage, or subject to lower of cost or market issues. These factors include, but are not limited to, technological and regulatory changes in the Company's markets, the Company's ability to meet changing customer requirements, competitive pressures in products and prices, changes to forecasts, new product introductions, quality issues with key suppliers, product phase-outs, future customer service and repair requirements, and the availability of key components from the Company's suppliers. The Company's policy is to reduce the value of inventory when conditions exist that suggest that its inventory may be in excess of anticipated demand or is obsolete based upon its assumptions about future demand for its products and market conditions. The Company regularly evaluates its ability to realize the value of its inventory based on a combination of factors including the following: historical usage rates, forecasted sales or usage, product end-of-life dates, estimated current and future market values and new product introductions. Purchasing practices and alternative usage avenues are explored within these processes to mitigate inventory exposure. When recorded, the Company's adjustments are intended to reduce the carrying value of its inventory to its net realizable value. If actual demand for the Company's products deteriorates or market conditions become less favorable than those that the Company projects, additional inventory adjustments may be required.

Product Warranties. The Company's products are sold with warranty provisions that require it to remedy deficiencies in quality or performance over a specified period of time, generally between 12 and 36 months, at no cost to the Company's customers. The Company's policy is to establish warranty reserves at levels that represent its estimate of the costs that will be incurred to fulfill those warranty requirements at the time that revenue is recognized. The Company believes that its recorded liabilities are adequate to cover its future cost of materials, labor and overhead for the servicing of its products. If product failure rates, or material or service delivery costs differ from the Company's estimates, its warranty liability would need to be revised accordingly.

As required by these rules, the Company performs an impairment review of goodwill annually or earlier if indicators of potential impairment exist. The annual impairment reviews are performed in the second quarter for the Industrial segment, the third quarter for the Home Theater segment and the fourth quarter for the Control Room and Signage segment. The impairment review completed in the second quarter for the Industrial segment did not indicate impairment. In the third quarter of 2008 the Company considered the continued decline in its share price and the continued trend of operating results and determined that a triggering event and therefore potential impairment had occurred. Accordingly, a review was completed in the third quarter for all segments' associated goodwill. As discussed in Note 4 to the Consolidated Financial Statements, this review indicated an impairment of the goodwill associated with the Control Room and Digital Signage segment and the Home Theater segments and all goodwill associated with those segments was written off.

For identifiable intangible assets, the Company amortizes the cost over the estimated useful life and assesses any impairment by estimating the undiscounted future cash flows from the associated asset in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." Based upon the impairment reviews performed in fiscal 2008, impairment charges were recorded (see additional discussion in Note 4-Impairment and Restructuring Charges in the Notes to the Consolidated Financial Statements). If the estimated cash flow related to these assets decreases in the future or the useful life is shorter than originally estimated, the Company may incur further charges for impairment of these assets. Additional impairment could result if the associated products do not sell as expected.

Share Based Compensation Expense. On October 1, 2005, the Company adopted FAS
123(R), which requires the measurement and recognition of compensation expense for all share based payment awards made to our employees and directors including employee stock options, restricted stock and employee stock purchases related to the Employee Stock Purchase Plan, based on estimated fair values. Upon adoption of FAS 123(R), the Company maintained its method of valuation of share based awards using the Black-Scholes option pricing model, which has historically been used for the purpose of the pro forma financial information in accordance with FAS 123. The determination of fair value of share based payment awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding the risk-free interest rate, the expected dividend yield, the expected option life, and expected volatility over the term of the awards. The Company estimates volatility based on its historical stock price volatility for a period consistent with the expected life of its options. The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected life of the Company's employee stock options. The dividend yield assumption is based on the Company's history and expectation of dividend payouts. The expected life of employee stock options represents the weighted-average period the stock options are expected to remain outstanding based on historical experience. As share based compensation expense recognized in the Consolidated Statement of Operations for fiscal 2008 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. FAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical and anticipated future experience. If factors change and we employ different assumptions in the application of FAS 123(R) in future periods, the compensation expense that we record under FAS 123(R) may differ significantly from what we have recorded in the current period.

Income Taxes. The Company records a valuation allowance when necessary to reduce its deferred tax assets to the amount that is more likely than not to be realized. If the Company is able to realize the deferred tax assets in an amount in excess of its reported net amounts, an adjustment to decrease the valuation allowance associated with deferred tax assets would decrease goodwill or increase earnings in the period such a

In September 2006, the Company completed the acquisition of Clarity Visual Systems, Inc. ("Clarity"). Clarity is engaged in the design, development, manufacturing, marketing, distribution, support, and maintenance of large-screen video cube display systems for entertainment, business, transportation, government and retail market applications. As a result of the acquisition, the Company is able to broaden its product offerings in the specialized display market segments. The acquisition was accounted for as a purchase and, accordingly, the operations of Clarity have been included in the consolidated financial statements from the date of acquisition. See Note 3-Business Acquisitions in the Notes to Consolidated Financial Statements which is included in Item 8-Financial Statements and Supplementary Data in this report.

In May 2007, the Company acquired substantially all of the assets and certain liabilities of Runco International, Inc. ("Runco"), a supplier of premium video projectors, video processors, plasma screens and LCD's to the home theater market. As a result of the acquisition the Company is able to accelerate its reach into the market for high-end home theater projection systems, large-format thin video displays, and front-projection screens. The acquisition was accounted for as a purchase and, accordingly, the operations of Runco have been included in the consolidated financial statements from the date of acquisition. See Note 3-Business Acquisitions in the Notes to Consolidated Financial Statements which is included in Item 8-Financial Statements and Supplementary Data in this report.

In August 2008, the Company sold the stock of DOME imaging systems, inc., a subsidiary of Planar Systems, Inc. to NDS Surgical Imaging for approximately $32.2 million, after closing adjustments. This transaction represented a disposal of the Company's Medical segment. See Note 6-Discontinued Operations in the Notes to Consolidated Financial Statements which is included in Item 8-Financial Statements and Supplementary Data in this report.

The following table sets forth, for the periods indicated, the percentage of sales of certain items in the Consolidated Financial Statements of the Company. The table and the discussion below should be read in conjunction with the Consolidated Financial Statements and Notes thereto.

                                                              Fiscal Years Ended
                                                   Sept. 26,       Sept. 28,       Sept. 29,
                                                     2008            2007            2006
Sales                                                  100.0 %         100.0 %         100.0 %
Cost of sales                                           81.1            77.6            76.5

Gross profit                                            18.9            22.4            23.5
Operating expenses:
Research and development, net                            4.4             5.1             3.4
Sales and marketing                                     13.6            14.2             7.3
General and administrative                               8.7             9.4             9.8
Amortization of intangible assets                        2.5             3.0             0.2
Acquisition related costs                                0.6             1.1              -
Impairment and restructuring charges                    29.0             0.6             0.3

Total operating expenses                                58.8            33.5            21.0

Income (loss) from operations                          (39.9 )         (11.1 )           2.5
Non-operating income (expense):
Interest, net                                           (0.3 )           0.4             1.5
Foreign exchange, net                                     -               -             (0.4 )
Other, net                                              (0.1 )           0.1              -

Net non-operating income (expense)                      (0.4 )           0.5             1.1

Income (loss) from continuing operations
before income taxes and cumulative effect of
accounting change                                      (40.3 )         (10.6 )           3.6
Provision for income taxes                               0.3             0.9             1.3

Income (loss) from continuing operations
before cumulative effect of accounting change          (40.6 )         (11.5 )           2.3
Income from discontinued operations                      6.0             1.4             1.5
Income (loss) before cumulative effect of
accounting change                                       34.6            10.1             3.8
Cumulative effect of change in accounting
principle                                                 -               -             (0.1 )

Net income (loss)                                      (34.6 )         (10.1 )           3.7

Overview

Sales of $259.3 million in fiscal 2008 increased $30.3 million or 13.2% as compared to sales of $229.1 million in fiscal 2007. The increase in sales was primarily a result of increases in sales in the Home Theater segment due to the acquisition of Runco which was completed in third quarter of 2007, and also due to increased sales in the Industrial segment. In 2008, net loss was $89.8 million and net loss per share was $5.05, as compared to net loss of $23.2 million and net loss per share of $1.33 in fiscal 2007. The net loss in 2008 was significantly affected by impairment and restructuring charges recognized in the second half of fiscal 2008. The loss in 2008 was partially offset by the gain recognized on the sale of DOME imaging, inc., ("DOME") which occurred in the fourth quarter of 2008.

In the Industrial segment, sales increased $11.1 million to $72.7 million in 2008 from $61.6 million in 2007. The increase in sales was due primarily to an increase in sales of certain retail display products due to new design

In the Control Room and Signage segment, sales were $58.2 million in 2008 as compared to $65.3 million in 2007, a decrease of approximately $7.1 million, or 10.9%. The decrease in sales was due primarily to a decrease in Command and Control products as a result of the softening U.S. economy which affected customer demand. These decreases were partially offset by increases in service revenues in 2008, as compared to 2007 and also due to increases in sales outside of the United States partially as a result of the positive impact of the strengthening Euro as compared to the U.S. Dollar, as a large portion of this segment's sales are denominated in Euros. Operating income for this segment was $3.1 million in fiscal 2008 as compared to $20 thousand in fiscal 2007 due to improved margins and also due to decreases in research and development and sales and marketing expenses.

In the Home Theater segment, sales were $50.3 million in 2008 as compared to $23.6 million in 2007. The increase in sales was primarily the result of the acquisition of Runco which occurred in the third quarter of fiscal 2007. Operating loss for this segment was $14.8 million in fiscal 2008 as compared to operating loss of $5.5 million in fiscal 2007 due to lower margins in 2008 as compared to 2007 and also due to increases in research and development and sales and marketing expenses.

In the Commercial segment, sales decreased by $0.4 million to $78.2 million in 2008 from $78.6 million in 2007 as revenues were impacted by an approximate 3.9% increase in average selling price for commercial products which was offset by an approximate 4.6% decrease in volume. Operating income in the Commercial segment improved to $4.3 million in 2008 as compared to $2.8 million in 2007. This improvement was primarily due to higher gross margins in fiscal 2008 related to an improved mix of higher margin touch monitors and commercial projector products. These increases were also partially affected by reduced sales and marketing expenses in 2008 as compared to 2007.

In August 2008 the Company sold the stock of DOME, a subsidiary of Planar Systems, Inc. to NDS Surgical Imaging for approximately $32.2 million in cash, after closing adjustments. This transaction represents a disposal of the Company's Medical segment.

In fiscal 2008 the Company initiated a new strategic direction intended to fix or fix and sell its under-performing or non-strategic business segments, reduce costs, and improve and strengthen its balance sheet. The first step in this process was completed during the fourth quarter with the sale of DOME, as discussed above. Subsequent to the end of fiscal 2008 the Company entered into an agreement to sell a portion of its digital signage business for cash to Bally Gaming, Inc. who has the rights to pursue the digital signage business in the gaming industry. Planar will continue to pursue opportunities to partner in other markets for the digital signage business. In fiscal 2008 the Company also initiated a restructuring plan to reduce costs associated with global operations and production as well changes in the Home Theater segment.

Sales

Sales of $259.3 million in 2008 increased $30.3 million or 13.2% as compared to sales of $229.1 million in 2007. The increase in sales was due primarily to increases in the Home Theater and Industrial segments. The increase in the Home Theater segments is due to the acquisition of Runco in the third quarter of 2007. The increase in the Industrial segment is due primarily to new design wins and increased customer demand. These increases were partially offset by sales decreases in the Control Room and Signage and Commercial segments. The decrease in the Control Room and Signage segment was due primarily to a decrease in sales of Command and Control products. Sales in the Commercial segment decreased minimally in 2008, as increases in average selling prices were partially offset by decreases in volume.

Sales in the Control Room and Signage segment decreased $7.1 million or 10.9% to $58.2 million in 2008 from $65.3 million in 2007. The decrease was primarily a result of a decrease in sales of Command and Control products in 2008 as compared to 2007 due to fluctuations in customer demand from the impact of the softening U.S. economy which affected customer demand. This decrease was partially offset by increases in service revenue.

Sales in the Home Theater segment increased $26.7 million or 113% to $50.3 million in 2008 from $23.6 million in 2007. The increase was due to the acquisition of Runco late in the third quarter of 2007 which allowed the segment to increase its product offering to include Runco and Vidikron products with the existing Planar branded home theater products throughout 2008.

Sales in the Commercial segment decreased $0.4 million or 0.5% to $78.2 million in 2008 from $78.6 million in 2007 as increases in average selling prices were offset by decreases in volume.

Sales of $229.1 million in 2007 increased $60.4 million or 35.8% as compared to sales of $168.6 million in 2006. The increase in sales was due to increases in the Control Room and Signage and Home Theater segments as a result of the . . .