<PAGE>
 
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 26, 1997          Commission File No 0-23018

                              PLANAR SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

             OREGON                                      93-0835396
(State or other jurisdiction of                       (I.R.S. employer
 incorporation or organization)                    identification number)
                             
                             1400 NW Compton Drive
                              Beaverton, OR 97006
                    (Address of principle executive offices,
                              including zip code)

                                (503) 690-1100
              (Registrants telephone number, including area code)
                   __________________________________________

       Securities registered pursuant to Section 12(b) of the Act: None

   Securities registered pursuant to Section 12(g) of the Act: Common Stock

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the proceeding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES  X   NO
    ---     ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this form 10-K or any
amendment to this Form 10-K  [X]

<TABLE>
<CAPTION>
                                                          As of December 13, 1997
                                                          -----------------------
<S>                                                            <C>
Aggregate market value of the voting stock held by
non-affiliates of the Registrant based upon the closing
bid price of such stock:                                       $120,564,229
 
Number of shares of Common Stock outstanding                     10,798,141
</TABLE>

                      DOCUMENTS INCORPORATED BY REFERENCE
                                        
Portions of the Proxy Statement to be used in connection with the Annual Meeting
of Shareholders to be held on February 12, 1998, are incorporated by reference
into Part III of this report.

================================================================================

                                       
<PAGE>
 
PART I
------

ITEM 1.
                                    BUSINESS

     Planar Systems, Inc. (Planar) is a leading developer, manufacturer and
marketer of high performance electronic display products. The Company's products
include its proprietary electroluminscent (EL) flat panel displays, cathode ray
tubes (CRTs), active matrix liquid crystal displays (AMLCDs), backlights and its
newly acquired passive matrix liquid crystal display (PMLCD) products. These
products are used in a wide variety of medical, industrial process control,
instrumentation, military/avionics, transportation, communications and other
applications. The Company competes on a global basis with full development,
manufacturing and marketing operations in both the United States and Europe.
Major customers include Datascope, Hewlett-Packard, Protocol Systems,
SCI/Johnson & Johnson, Siemens, and Smiths Industries.

INDUSTRY BACKGROUND

     The information display industry is undergoing significant changes as the
proliferation and sophistication of microprocessors is increasing the volume of
text, graphics and video information that is generated and displayed. At the
same time, electronic systems are becoming smaller and more portable. These
trends are converging to drive a growing demand for high performance flat,
lightweight, power-efficient displays that are capable of delivering high
volumes of information. Although commodity CRTs dominate the overall information
display market, they are large, heavy, fragile, and require substantial amounts
of power to operate.

     There are several display technologies currently in development or
commercially available, including various forms of liquid crystal, gas plasma
and EL displays. The principal basis of competition among display suppliers are
commercial availability, long life, price, display performance, size, customer
service, design flexibility, power usage and ruggedness.

     Passive Matrix LCD.  PMLCDs modulate light (which is either reflected or
applied directly) by applying a voltage to a liquid crystal material placed
between two glass plates.

     Active Matrix LCD.  AMLCD screens incorporate the PMLCD technology plus add
a transistor at every pixel location. This allows each pixel to be turned on and
off independently which increases the image quality, response time and side-to-
side viewing angle of the display.

     Gas Plasma.  Gas plasma creates a visible image by ionizing a gas contained
between two glass plates. The ionized gas emits a visible light, typically red.
Gas plasma displays generally have higher power consumption requirements than
other display technologies but may provide the most cost effective solution for
large-sized displays. These displays are primarily used in industrial, point-of-
sale and military applications.

                                       2
<PAGE>
 
     Electroluminescent.  Planar's standard monochrome EL display technology is
a solid state device with a thin film luminescent layer sandwiched between
transparent dielectric (insulator) layers and a matrix of row and column
electrodes deposited on a single glass substrate. A circuit board, with control
and drive components mounted within the same area as the viewing area on the
glass panel, is connected to the back of the glass substrate using various
interconnect technologies. The result is a flat, compact, reliable and rugged
display device. When AC voltage is applied to a column and a row electrode, the
phosphor thin film between them emits light that passes through the transparent
electrode, through the glass face, and on to the viewer. Increasing the number
of rows and columns, and thus the number of pixels, in a given space increases
the clarity of the display to the viewer.

     Other.  There is a wide diversity of new technologies constantly under
development with the objective of competing in this market. Some of the more
visible efforts include field emissions displays (FED), ferroelectic LCDs and
various forms of projection displays.

STRATEGY

     The Company's goal is to enhance its position as a leading, independent
supplier of information displays. The Company has successfully developed a broad
product line of information displays which has resulted in large market
acceptance. In the last two fiscal years, the Company has shipped over a quarter
million units to customers with a particular emphasis on the medical,
industrial, instrumentation, transportation and military / avionics markets. The
Company is now seeking to broaden its technology base and market penetration.
Key elements of the Company's strategy to achieve this goal include:

     Expand Market Presence.  The Company continues to identify and pursue
growing markets that have a high correlation between the capabilities of the
Company's products and the specific needs of the target market. Within these
markets, the Company focuses on a broad range of customers whose applications
receive high value and benefit from Planar's products. Today, the Company's core
markets are industrial (medical, process control and instrumentation),
transportation and military/avionics. Additionally, Planar is focusing increased
attention on emerging markets for high information content displays including
communications and business/office.

     Provide Differentiated Products.  To maintain its technological advantage,
the Company is continuing to expand the capabilities and applications of its
proprietary EL, AMLCD and CRT technologies. During fiscal year 1997, Planar
introduced several new products within its ICEBrite/TM/ family. These products
are based upon Planar's Integral Contract Enhancement technology. Additionally,
the Company introduced the ColorBrite product family that includes multi-color
EL products and AMLCD products for commercial applications. The Company, also
continues its development of a militarized AMLCD in connection with its
agreement with dpiX (a Xerox company). Through business acquisitions this past
year, the Company expanded its product line to include a full line of PMLCD
products which adds low power and lower cost products to the Company's
offerings.

                                       3
<PAGE>
 
     Enhance Competitive Position Through Operations.  The Company seeks to
manufacture and deliver products of superior quality and reliability supported
by a high level of customer service. The Company maintains a close relationship
with its customers throughout the product life cycle, from engineering
prototypes through production and sales.

     The Company believes that it is the only flat panel display company with
full development, manufacturing and sales operations in both the United States
and Europe. The Company believes that separate regional facilities permit the
Company to provide: (i) direct access to key regional markets, allowing for a
faster and more complete response to customer needs; (ii) two internal sources
of manufactured products to protect the Company's customers from disruption of
supply; (iii) multiple production and processing technologies to accelerate new
product development and optimize displays for specific applications; and (iv)
reduced supplier risk as each operation tends to use different vendors.

     Pursue Strategic Relationships.  The Company seeks to provide customers
with the best display solution regardless of technology. Display industry
customers are constantly asking for higher product performance at competitive
prices. To meet these customer demands, the Company intends to continue to
evaluate, and actively seek to develop or acquire, promising technologies
directly, or through strategic relationships.

MARKETS

The Company is currently serving the following core market segments:

          Industrial-Medical.  Displays are used in patient monitors and a range
     of diagnostic and therapeutic equipment, including anesthesia systems,
     ventilators, infusion pumps and blood analyzers. These medical applications
     typically require a wide viewing angle and clear, crisp images readable
     from across the room in varying light conditions by multiple users at the
     same time. The Company believes that its displays provide superior display
     quality and reliability for crucial medical applications.

          Industrial-Process Control.  Displays are used in a wide range of
     manufacturing environments, including industrial computers, operator
     interfaces and machine control panels. The reliability, ruggedness, wide
     operating temperature range and low susceptibility to electromagnetic
     interference of Planar displays permit the Company to deliver solutions to
     a range of problems in these difficult environments.

          Industrial-Instrumentation.  The Company's displays are used in a wide
     range of test and measurement products, including digital oscilloscopes,
     analyzers and telecommunications test equipment. The Company believes there
     is an increasing market demand for the Company's displays in smaller, more
     portable test equipment.

          Military/Avionics.  The Company's sales in this market consist
     primarily of high performance CRTs and AMLCDs sold to systems integrators
     for military cockpits. Additionally, the Company sells processed EL display
     glass to military systems suppliers 

                                       4
<PAGE>
 
     for integration into various military subsystems used in communications
     applications, tactical displays, avionics and shipboard command and control
     equipment. Although military spending is contracting in the U.S., the
     Company believes that this will remain an important strategic market
     because military customers continue to require increasing display
     performance, are often willing to share development costs and have
     significant influence over the distribution of research and development
     funding from government sources.

          Transportation.  The pervasive use of microprocessors has increased
     the demand for higher information content displays for space constrained
     transportation applications. The Company has sold displays to customers for
     use in global positioning applications, cockpit displays for trains,
     forklift applications and railway car information systems.

In addition to the core markets described above, Planar is serving the following
emerging markets:

          Communications.  As hardware becomes increasingly portable and the
     support systems allow for greater transmission of data, telecommunication
     devices require displays with more information capability. The Company has
     sold displays to customers for use in field communication systems and
     financial trader telephone turrets.

          Business/Office Equipment.  The Company sells displays for a variety
     of applications in the office and retail markets, including high speed
     photocopiers, office control panels, point-of-sale devices, custom designed
     monitors and elevators.

PRODUCTS

     The Company offers a variety of displays and display systems in a wide
range of resolutions, formats, viewing areas and technologies. These displays
can be classified in three primary product lines:

     Flat Panel Displays. This product line includes monochrome EL and LCD,
multi-color EL and full color AMLCD displays. This is principally an OEM
component market where the customers purchase displays to either incorporate
directly into their products or enhance the displays by integrating additional
features and reselling them to the ultimate user.

     Cathode Ray Tubes. The Company offers high performance CRTs based on its
proprietary taut shadow mask technology. These displays are sold primarily to
military systems companies who integrate them into cockpit applications.

     Value-added Display Solutions. To be able to better satisfy customers'
display needs, the Company has a small business activity that develops,
manufactures and sells end user products. These products incorporate displays
into systems that often include keyboards, touch input devices, local computing
capability and special packaging. An initial market for these products

                                      5
<PAGE>
 
has been bedside computing applications where hospitals are increasingly
recognizing the productivity gained by such installations.

RESEARCH, DEVELOPMENT AND PRODUCT ENGINEERING

     The Company believes that a significant level of investment in research,
development and product engineering is required to maintain market leadership.
Total expenses were $17.3, $16.5, and $14.1 million for the fiscal years 1997,
1996 and 1995, respectively for research, development and product engineering.
These expenses were partially offset by contract funding from both government
agencies (in the United States and Finland) and private sector companies of
$9.6, $9.4 and $9.1 million in fiscal years 1997, 1996 and 1995, respectively.
Research and development expenses of the Company are primarily related to
advanced technology programs in a new display family utilizing active matrix
electroluminscent (AMEL) technology, new drive architectures and fundamental
process improvements. Product engineering expenses are directly related to the
design, prototyping and release to production of new Company products. Research,
development and product engineering expenses consist primarily of salaries,
project materials, outside services, allocation of facility expenses and other
costs associated with the Company's ongoing efforts to develop new products,
processes and enhancements.

     Recent development efforts have been focused on both short term and long
term programs designed to enhance the Company's product offerings and
capabilities. These programs include the following:

     AMEL.  This program is focused on the development of high resolution image
sources for miniature display applications. During fiscal 1997, the Company
announced product capabilities for monochrome AMEL VGA displays. Current
development efforts are addressing higher resolution (up to 2,000 lines per
inch), improved performance, color and lower manufacturing costs. Potential
markets include medical, industrial, military, computing and entertainment.

     Small Graphics Displays (SGD).  This product development effort led to the
an SGD service that provides quick turnaround designs coupled with volume
production of small graphics custom display systems. Initial targeted markets
include industrial process control, business/office equipment and
transportation.

     New Technology Development.  As part of the Company's strategy,
relationships are continuing to be established to explore various display
technologies and their incorporation into the product line. Some of the projects
being pursued include AMLCDs, fast PMLCDs, backlights, field emission displays
(FED), and organic light emitting diodes.

GOVERNMENT AND INDUSTRY PARTNERSHIPS

     The Company believes that it is necessary for the United States and Europe
to further develop sources of supply, equipment and a base of trained personnel
to support the display industry. Additionally, as part of the Company's
technology strategy, the Company believes that it is important to be involved
with a broad range of display technologies and industry groups. As

                                       6

<PAGE>
 
a result of its participation, the Company benefits from work being done which
complements (and in some cases, funds) the Company's internal development
objectives. To that end, the Company has employees who actively participate in
several government/industry partnerships, including:

     Phosphor Technology Center of Excellence (PTCOE).  Advance Research
Projects Agency (ARPA) has funded the creation of the PTCOE to promote the
development of appropriate materials and processes for the fabrication of
phosphors for light emissive displays. Dr. King is a member of the steering
committee of the PTCOE's Board.

     United States Display Consortium (USDC).  The USDC was created to develop
an infrastructure to support a U.S.-based display industry by funding equipment
and materials suppliers in this industry, establishing and maintaining
appropriate benchmarks and disseminating information to industry participants.
The USDC is funded by contracts from ARPA and member contributions.

     Next Generation EL Manufacturers Consortium.  This Consortium was created
in connection with an agreement with ARPA under a focused Technology
Reinvestment Project. This two-year cost share program which will provide the
Planar-led consortium with approximately $30 million, which the consortium is
required to match on a one to one basis, to further develop technologies
necessary to manufacturing AMEL miniature displays.

     EUREKA.  EUREKA is a European Union program targeted at supporting the
development of critical technology capacity within Europe. Planar International
qualified for participation in the EUREKA program for its project to develop
multi-color and full color EL display products and received funding under this
program in 1996 and 1997.

MANUFACTURING

     The Company operates EL manufacturing facilities in both the U.S. and
Finland. These facilities are designed to produce a wide range of display sizes
and types from 1"x 4" to 12"x 14" that can be manufactured with relatively minor
changes to the basic equipment set-up.

     The CRT facility is designed to produce 5" x 5" and 6" x 6" militarized
CRTs. However, the Company believes that the CRT facility and technology can be
scaled to produce displays up to 25" per side with little capital investment.

                                       7

<PAGE>
 
     The Company's manufacturing operations consist of the procurement and
inspection of components, manufacture of the display component, final assembly
of all components and extensive testing of finished products. The Company
currently procures all of its raw materials from outside suppliers. This
includes glass substrates, driver integrated circuits, electronic circuit
assemblies, power supplies and high density interconnects.

     Quality and reliability are emphasized in the design and manufacture of the
Company's products. All of the Company's manufacturing facilities have active
operator training/certification programs and regularly use advanced statistical
process control techniques. The Company's products undergo thorough quality
inspection and testing throughout the manufacturing process.

     The Company believes that worldwide quality standards are increasing and
that many customers now want manufacturers to have ISO9001 certification. This
certification requires that a company meet a set of criteria, established by an
independent, international quality organization that measures the quality of
systems, procedures and implementation in manufacturing, marketing and
development of products and services. As of September 26, 1997, all three
existing operating divisions have received and maintain their ISO9001
certification. It is anticipated that the newest division, Planar Standish will
obtain ISO9001 certification in the near future.

SALES AND MARKETING

     The Company's products are distributed worldwide through a combination of
independent sales representatives, distributors and Company-employed sales
personnel. In the United States, Planar has regional sales personnel in the
Boston, Chicago, Dallas, Detroit, Milwaukee, Los Angles, Portland and Tampa
metropolitan areas. Each of these locations is staffed by a regional sales
manager who has responsibility for OEM sales in a specific region. Each region
also has a number of independent sales representatives who generally have
exclusive marketing and sales rights in their area and are managed by the
regional sales manager. International sales are conducted through a combination
of direct sales offices (Finland, Germany and the United Kingdom), independent
sales representatives and distributors.

     As of September 26, 1997, the Company's backlog of domestic and
international orders aggregated approximately $31.4 million. The Company
includes in its backlog all accepted contracts or purchase orders that are
scheduled for delivery in the next six months. The Company believes that its
backlog may be of limited utility in predicting future sales, particularly since
its international sales are primarily conducted through distributors, which
typically do not place purchase orders substantially in advance of delivery
dates. Variations in the magnitude and duration of contracts received by the
Company and customer delivery requirements may result in substantial
fluctuations in backlog from period to period.

                                       8

<PAGE>
 
COMPETITION

     The market for information displays is highly competitive, and the Company
expects this to continue. The Company believes that over time this competition
will have the effect of reducing average selling prices of flat panel displays.
If the Company is unable to increase unit volumes or increase the performance of
its products in order to offset or reduce any decreases in selling prices, the
Company's results of operations would be adversely impacted. In addition, the
Company's ability to maintain gross margins will depend in part on its ability
to reduce cost of sales in an amount sufficient to compensate for any decreases
in selling prices.

     The Company competes with other display manufacturers based upon commercial
availability, long life, price, display performance (e.g., brightness, color
capabilities, contrast and viewing angle), size, customer service, design
flexibility, power usage, durability and ruggedness. The Company believes its
total quality program, wide range of product offerings, flexibility,
responsiveness, regional production sites, technical support and customer
satisfaction programs are important to the competitive position of the Company.

     The principal display competitors against which the Company competes
include Sharp, Toshiba, Optrex, Seiko-Epson and Hitachi for LCDs, Sharp for EL,
Sharp, DTI, Hitachi and NEC for AMLCDs. In addition, a significant number of
Korean companies including Samsung, Hyundai and Goldstar have also made large
investments in AMLCD technology.

     The Company's CRT business, Planar Advance, has no direct competitors but
there are two companies offering military avionic displays: Sony Corp. and
Thompson CSF. Due to the products' design and performance, the Company believes
that it currently supplies 100% of the United States' market for high brightness
full color military CRTs and has a dominant share of the total military cockpit
display market worldwide. Increasingly, the Company is seeing display
manufacturers attempting to move into the military avionics markets with the
U.S. government investing significantly in the AMLCD technology for avionics
applications. The primary competitors producing militarized AMLCDs are Litton
Canada and OIS Optical Imaging Systems.

INTELLECTUAL PROPERTY

     The Company relies on a combination of patents, trade secrets, trademarks,
copyrights and other intellectual property law, nondisclosure agreements and
other measures to protect its proprietary rights. The Company currently owns or
has license rights to over 50 patents and several more pending patent
applications for its technologies. The expiration dates of the Company's
existing patents range from 1999 to 2012. Features for which the Company has and
is seeking patent protection include display glass design, materials,
electronics addressing and control functions and process manufacturing.

     Pursuant to the agreements under which the Company receives research and
development funding from government agencies, the funding entities retain
certain rights with respect to

                                       9

<PAGE>
 
technical data developed by the Company pursuant to funded research. Generally,
these rights restrict the government's use of the specific data to governmental
purposes, performed either directly or by third parties sub-licensed by the
government. Rights under the Company's funding agreements with private sector
companies vary significantly with the Company and the third party each
retaining certain intellectual property rights.

EMPLOYEES

     As of September 27, 1996, the Company had 575 full-time, regular employees
worldwide, 323 in the United States and 252 in Europe. Of these employees, 43
were engaged in marketing and sales, 83 in research, development and product
engineering, 50 in finance and administration, 168 in manufacturing support and
231 in manufacturing. Through the acquisition of Standish Industries, Inc. the
Company has added an additional 302 employees to its workforce.

     The Company's future success will depend in a large part upon its ability
to continue to attract, retain and motivate highly skilled and qualified
manufacturing, technical, marketing, engineering and management personnel. The
Company's U.S. employees are not represented by any collective bargaining units
and the Company has never experienced a work stoppage in the U.S. The Company's
Finnish employees are, for the most part, covered by national union contracts.
These contracts are negotiated annually between the various unions and the
Employer's Union and stipulate benefits, wage rates, wage increases, grievance
and termination procedures and work conditions.

ITEM 2. PROPERTIES

     The Company leases its three primary manufacturing facilities and various
sales offices in the United States and Europe. The two U.S. facilities, located
in Beaverton, Oregon, are Planar America and Planar Advance. Planar America
leases 45,000 square feet of custom designed space, including 5,000 square feet
of cleanroom. In addition, during fiscal 1997, Planar America leased an
additional facility which when completed will provide an additional 34,000
square feet, including 10,000 square feet of cleanroom. Planar Advance's
operation is located in a large facility in which it leases 29,000 square feet,
including approximately 7,000 square feet of cleanroom. The European facility,
located in Espoo, Finland, is a custom designed facility in which Planar leases
85,000 square feet, including approximately 15,000 square feet of cleanroom.

     During 1994, the Company acquired a 21,000 square foot facility with
approximately 6,000 square feet of cleanroom located near the Planar America
facility. This facility is being used for research and development activities
and production of miniature displays. Additionally, the Company has leased
17,000 square feet of an adjacent building.

     As of September 26, 1997, the Company acquired Standish Industries, Inc.
Standish is located in Lake Mills, Wisconsin and owns and occupies a 70,000
square foot facility with approximately 7,500 square feet of cleanroom.

                                       10

<PAGE>
 
     The Company has six field sales offices in key U.S. metropolitan areas and
two sales offices in Europe. The offices are located in Boston, Chicago, Dallas,
Detroit, Los Angles, Tampa, London and Munich metropolitan areas. Lease
commitments for these facilities are short term, typically six to twelve months.
None of these sales offices has any significant leasehold improvements nor are
any planned.

     The Company believes that its current facilities are adequate for its
immediate and near term requirements and does not anticipate the need for
significant expansion in the near future.

ITEM 3. LEGAL PROCEEDINGS

     There are no pending material legal proceedings to which the Company is a
party or to which any of its property is subject.

ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
 
     No matters were submitted to stockholders during the fourth quarter of the
fiscal year.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

     Shares of the Company Common Stock commenced trading in the over-the-market
on the Nasdaq National Market System on December 16, 1993, under the symbol
PLNR. As of December 12, 1997, there were 4,956 beneficial holders of the
Company's Common Stock.

     The Company has never declared nor paid any cash dividend on its capital
stock. The Company currently intends to retain its earnings to support
operations and, therefore, does not anticipate paying any cash dividends in the
foreseeable future. The following table sets forth for the fiscal periods
indicated, the range of the high and low closing prices for the Company's Common
Stock on the Nasdaq National Market System.

<TABLE>
<CAPTION>
 
                                                        High     Low   
                                                       ------   ------ 
     <S>                                               <C>      <C>    
     FISCAL 1996                                                       
          First Quarter..............................  $20.00   $15.00 
          Second Quarter.............................   18.75    10.63 
          Third Quarter..............................   16.50    12.00 
          Fourth Quarter.............................   13.00     9.50 
                                                                       
     FISCAL 1997                                                       
          First Quarter..............................   12.13     9.38 
          Second Quarter.............................   14.00    11.50 
          Third Quarter..............................   12.81     9.75 
          Fourth Quarter.............................   14.81    10.25 
                                                                       
     FISCAL 1998                                                       
          First Quarter (through December 4, 1997)...   13.00    10.88  

</TABLE>

                                       11
<PAGE>
 
     During the quarter ended September 26, 1997, the Company sold securities
without registration under the Securities Act of 1933, as amended (the
"Securities Act") upon the exercise of certain stock options granted under the
Company's stock option plans. An aggregate of 56,633 shares of Common Stock were
issued at exercises prices ranging from $2.00 to $6.50. These transactions were
effected in reliance upon the exemption from registration under the Securities
Act provided by Rule 701 promulgated by the Securities and Exchange Commission
pursuant to authority granted under Section 3 (b) of the Securities Act. On
September 26, 1997, Planar Systems, Inc. (the "Company") purchased all of the
outstanding capital stock of Standish Industries, Inc., a Wisconsin corporation,
and Standish International, Inc., a Wisconsin corporation, from Charles P. Hoke,
Elizabeth A. Hoke and William R. Steinmetz, Trustee of the Steven Hoke
Management Trust, the Catherine Hoke Management Trust, the Lauren Hoke
Management Trust and the Charles D. Hoke Management Trust (together, the
"Sellers") in exchange for approximately $13,650,000 in cash and 89,126 shares
of common stock of the Company (the "Stock"). The Stock was offered and sold to
the Sellers in reliance upon the exemption from the registration under the
Securities Act provided by Section 4(2) of the Securities Act.

                                       12

<PAGE>
 
ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
Fiscal year
(in thousands, except per share)      1997        1996        1995        1994        1993
                                    --------     -------     -------     -------     ------- 
<S>                                 <C>          <C>         <C>         <C>         <C>
OPERATIONS
Sales............................   $ 88,850     $80,371     $78,523     $60,359     $45,799
Gross Profit.....................     28,488      27,988      28,388      20,740      14,926
Income (loss) from operations....     (1,395)      9,104      12,102       8,582       5,142
Net income.......................        274     $ 8,672     $10,537     $ 7,462     $ 6,038
Net income per share.............   $    .02     $  0.77     $  0.98     $  0.77     $  0.81

BALANCE SHEET
Working capital..................   $ 52,871     $56,924     $59,078     $40,067     $20,562
Assets...........................    114,196      97,295      88,674      64,015      29,865
Long term liabilities............      7,516       4,176       2,477         450          23
Shareholders' equity.............     77,280      79,969      72,356      49,402      19,697
</TABLE>

                                       13
<PAGE>
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS

General

     The Company is a  worldwide leader in the development, manufacture and
marketing of high performance electronic display products.  Planar began
shipping products in 1983 and has experienced revenue growth based upon the
expansion of its product line and market acceptance of its products for a
variety of applications.

Results of Operations

     The following table sets forth, for the periods indicated, the percentage
of net 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.

<TABLE>
<CAPTION>
 
FISCAL YEAR ENDED                               SEPTEMBER 26,     SEPTEMBER 27,    SEPTEMBER 29,
                                                    1997              1996             1995
                                                -------------     -------------    -------------
<S>                                             <C>               <C>              <C>
Sales..........................................     100.0%            100.0%           100.0%
Cost of sales..................................      67.9              65.2             63.8
                                                    -----             -----            -----
Gross profit...................................      32.1              34.8             36.2
Operating expenses:
  Research and development, net................       8.6               8.8              6.4
  Purchased research & development.............       9.3               --               --
  Sales and marketing..........................       9.1               8.8              8.5
  General and administrative...................       7.1               6.5              6.5
  Amortization of excess fair market value of 
    acquired net assets over purchase price....      (0.5)             (0.6)            (0.6)
                                                    -----             -----            -----
      Total operating expenses.................      33.6              23.5             20.8
                                                    -----             -----            -----
Income (loss) from operations..................      (1.5)             11.3             15.4
Non-operating income (expense):
  Interest, net................................       1.5               1.9              1.9
  Foreign exchange, net........................       1.7               0.3             (0.9)
  Other, net...................................      (2.3)              --               --
                                                    -----             -----            ----- 
      Net non-operating income.................       0.9               2.2              1.0
                                                    -----             -----            -----
Income (loss) before income taxes..............      (0.6)             13.5             16.4
Provision (benefit) for income taxes...........      (0.9)              2.7              3.0
                                                    -----             -----            -----
Net income.....................................       0.3%             10.8%            13.4%
                                                    =====             =====            ===== 
 
</TABLE>

     Sales.  The Company's sales increased by 10.5% to $88.9 million in fiscal
1997 from $80.4 million in fiscal 1996. The increase in fiscal 1997 was
attributable primarily to increases in sales to manufacturers of medical and
transportation products which offset declines in the industrial and
instrumentation markets. Fiscal 1996 sales increased by 2.4% from $78.5 million
in fiscal 1995. The increase in fiscal 1996 was attributable primarily to
increases in sales to manufacturers of medical and industrial products and sales
in the information technology market,
                                     
                                      14

<PAGE>
 
specifically in the bedside point of care market which offset a decline of
nearly 30% in military sales.

     International sales, net of intercompany eliminations, decreased 20% to
$23.6 million in fiscal 1997 as compared to the $29.8 million recorded in fiscal
1996 and increased 10% in fiscal 1996 from fiscal 1995. As a percentage of total
sales, international sales decreased in fiscal 1997 to 26.6%. This was
attributable to two primary factors: a decline in military sales to European
customers and weakness in the Finnish markka which results in lower sales when
translated from the Finnish markka to the US dollar. The higher percentage,
37.1%, in fiscal 1996 versus fiscal 1995, 34.5%, was primarily attributable to
an increase in military sales to Europe which offset a decline in European sales
of the component business.

     Gross Profit.  The Company's gross profit as a percentage of sales
decreased to 32.1% in fiscal 1997 from 34.8% in fiscal 1996 and 36.2% in fiscal
1995. The decline in gross margin in fiscal 1997 was related primarily to
changes in the product mix from higher margin CRT products to flat panels and
several one time adjustments related to the product transitions of the systems
products as well as contract adjustment on the CRT products. The decrease in
gross margin in fiscal 1996 was primarily due to the decline in the federal
business which is historically at a higher margin.

     Research and Development.  Total expenses related to research and
development increased 4.7% in fiscal 1997 from fiscal 1996 and 17.1% in fiscal
1996 from fiscal 1995. Net expenses (after the deduction of related contract
funding) increased 8.4% in fiscal 1997 from fiscal 1996 and increased by 41.2%
in fiscal 1996 from fiscal 1995. Increases in net expenses in both years are
related to continued work on the next generation color products, new technology
development at Planar Advance including work on AMLCDs and FEDs and the
continued development of AMEL miniature displays.

     Purchased Research and Development Costs.  Purchased research and
development costs were $8.3 million for fiscal 1997. These one-time, non-
recurring costs represent in-process research and development costs expensed by
the Company in connection with its acquisition of Standish Industries, Inc.

     Sales and Marketing.  Sales and marketing expenses increased by 14.1% to
$8.1 million in fiscal 1997 from $7.1 million in fiscal 1996 and increased 6.7%
in fiscal 1996 from $6.7 million in fiscal 1995. The increase in marketing and
sales costs was attributable to sales commissions paid on a higher level of
sales and an increased focus on marketing. As a percentage of sales, sales and
marketing expenses increased to 9.1% in 1997 from 8.8% in fiscal 1996 and
increased from 8.5% in fiscal 1995. The increase in fiscal 1997 as a percentage
of sales was attributable to development of sales and market infrastructures to
support expansion of the federal products line and the end user systems
business. The increase in fiscal 1996 was due to the additional resources added
to the North American sales force.

     General and Administrative.  General and administrative costs increased by
20.5% to $6.3 million in fiscal 1997 from $5.2 million in fiscal 1996 and
increased 1.9% over the $5.1 million

                                       15

<PAGE>
 
spent in fiscal 1995. The increase in fiscal 1997 was primarily related to the
additional administrative costs required to build the infrastructure to support
of the growth of the Company, specifically in areas of management systems and
overall management development. The increase in fiscal 1996 was primarily due to
the increases in overall costs.

     Amortization of Excess of Fair Market Value of Acquired Net Assets Over
Purchase Price.  In connection with the Company's acquisition of Planar
International in January 1991, the Company exchanged Common Stock with a fair
market value (based upon an independent valuation) equivalent to the value of
the business acquired. Due to historical losses of this business and the
expectation of future losses, the value of the Common Stock paid was less than
the fair market value of the net assets acquired. This required the Company to
write fixed assets down to zero and to record negative goodwill on its balance
sheet for the remaining amount of the excess of fair market value of the net
assets acquired over the purchase price. Amortization of this negative goodwill
has created a positive offset to operating expenses in the amount of $476,000
per year. Negative goodwill is being amortized over a ten-year period.

     Non-operating Income and Expense.  Non-operating income and expense
includes interest income on investments, interest expense and net foreign
currency exchange gain or loss. Net interest income decreased in fiscal 1997
from fiscal 1996 due to the increased debt used to finance production expansion.
Net interest income increased in fiscal 1996 from fiscal 1995 due to increased
average cash balances.

     Foreign currency exchange gains and losses are related to timing
differences in the receipt and payment of funds in various currencies and the
conversion of cash accounts denominated in foreign currencies to the applicable
functional currency. Foreign currency exchange gains and losses accounted for a
gain of $1,543,000 in fiscal 1997, and a gain of $242,000 and a loss of
approximately $690,000 in fiscal 1995. These amounts are comprised of realized
gains and losses on cash transactions involving various currencies and
unrealized gains and losses related to foreign currency denominated receivables
and payables resulting from exchange rate fluctuations between the various
currencies in which the Company operates.

     From September 27, 1996 to September 26, 1997, the U.S. dollar strengthened
by almost 14% against the Finnish markka. This strengthening of the U.S. dollar
resulted in lower reported revenues and operating expenses due to translation of
the Finnish markka to U.S. dollars for consolidated financial reporting.

     The Company generally realizes about one-third of its revenue outside the
United States and expects this to continue in the future. Additionally, the
functional currency of the Company's major foreign subsidiary, Planar
International, is the Finnish markka which must be translated to U.S. dollars
for consolidation. As such, the Company's business and operating results will be
impacted by the effects of future foreign currency fluctuations.

     The other expense recognized for the year ended September 26, 1997 reflects
the write off of an equity investment in Virtual i-O, a privately held virtual
reality headset manufacturing
                             
                                      16

<PAGE>
 
company. The investment was accounted for under the cost method. In December
1996, as a result of delays in product developments and supplier issues, Virtual
i-O needed additional funding which it received at a price per share lower than
that paid by the Company. Based upon the lower of cost or market method, the
Company's investment was written down based on the price paid in the last round
of independent financing. This resulted in a $250,000 write-down in the quarter
ended December 1996. During the quarter ended March 28, 1997, Virtual i-O
declared bankruptcy and the remainder of the Company's investment was written
off.

     Provision for Income Taxes.  The Company recorded a tax benefit of $784,000
for the year ended September 26, 1997 versus effective rates of 20.0% in fiscal
1996 and 18.2% in fiscal 1995. For fiscal 1997, the change in the effective tax
rates was due to recognition of a book loss in the US compared to the book
income of the Planar International. The book loss in the US was significantly
impacted by the write off of the purchased research and development associated
with the acquisition of Standish Industries, Inc. In prior years, the change in
effective tax rates was due to the relative profitability of Planar
International compared to the US entities. As a result of the acquisition of
Planar International in January 1991, the Company recognized a change in
ownership for tax purposes that resulted in a limitation on the annual
utilization of net operating loss carryforwards for U.S. tax purposes. In fiscal
1996 and 1997, the Company is subject to the $2.1 million annual limitation.

QUARTERLY RESULTS OF OPERATIONS

     The following table presents unaudited consolidated financial results for
each quarter in the two year period ended September 26, 1997. The Company
believes that all necessary adjustments have been included to present fairly the
quarterly information when read in conjunction with the Consolidated Financial
Statements. The operating results for any quarter are not necessarily indicative
of the results that may be expected for any future period.

<TABLE>
<CAPTION>
 
                                                                    Three Months Ended
                                                                    ------------------
                                                          (in thousands, except per share data)
                                                          -------------------------------------
                                 Sept. 26,   June 27,   March  28,   Dec. 27,   Sept. 28,   June 28,   March 29,   Dec. 29, 
                                   1997        1997        1997        1996       1996        1996        1996       1995
                                 ---------   --------   ----------   --------   ---------   --------   ---------   --------
 <S>                             <C>         <C>        <C>          <C>        <C>         <C>        <C>         <C>
Sales...........................  $21,785    $21,723      $23,190    $22,152     $20,421    $19,519     $20,114    $20,317
Gross profit....................    5,495      7,303        8,417      7,273       6,180      7,136       7,536      7,136
Income (loss) from operations...   (8,466)     2,140        2,841      2,090       1,524      2,269       2,548      2,763
Net (loss) income...............   (5,396)     2,307        1,687      1,676       1,210      2,111       2,646      2,705
Net income (loss) per common                                                                                  
  and common equivalent share...   ($0.48)     $0.21      $  0.15    $  0.15     $  0.11    $  0.19     $  0.24    $  0.24
Weighted average number of                                                                                    
  common and common equivalent                                                                                
  shares outstanding............   11,260     11,233       11,288     11,181      11,184     11,233      11,243     11,246

</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

     Net cash provided by operating activities was $12.6 million, $1.5 million
and $9.5 million in fiscal 1997, 1996 and 1995, respectively. The increase in
1997 was primarily related to changes in the balance sheet accounts. The decline
in 1996 from 1995 was primarily due to the increase in inventory and a decline
in operating income.

     Additions to plant and equipment were $2.5 million, $3.4 million and $6.9
million in fiscal 1997, 1996 and 1995, respectively. The principal acquisitions
during fiscal 1997 were

                                       17

<PAGE>
 
related to the acquisition of equipment to be used in connection with the
development of the military flat panel displays and the continued development of
AMEL miniature displays. The principal acquisitions during fiscal 1996 were
related to additional capacity improvements at both Planar America and Planar
International. The principal acquisitions during fiscal 1995 were related to
upgrading the production facility and equipment at Planar International and
additional research and development equipment at Planar America and the
renovation costs associated with the acquired facility.
 
     At September 26, 1997, the Company had a bank line of credit agreement with
a borrowing capacity available of $8 million and credit facilities for financing
equipment of $19.5 million. A similar bank line of credit was in place as of
September 27, 1996. As of September 26, 1997 and September 27, 1996, no
borrowings were outstanding under the credit line and approximately $5.4 million
and $5.2 million was outstanding under the equipment financing lines,
respectively. In addition, as part of the acquisition of Standish Industries,
Inc., the Company assumed debt of $3.2 million.

     The Company believes its existing cash and investments together with cash
generated from operations and existing borrowing capabilities will be sufficient
to meet the Company's working capital requirements for the foreseeable future.

OUTLOOK: ISSUES AND UNCERTAINTIES

     Planar does not provide forecasts of future financial performance. While
Planar's management is optimistic about the Company's long-term prospects, the
following issues and uncertainties, among others, should be considered in
evaluating its growth outlook.

COMPETITION

     The market for information displays is highly competitive, and the Company
expects this to continue. The Company believes that over time this competition
will have the effect of reducing average selling prices of flat panel displays.
Certain of the Company's competitors have substantially greater name recognition
and financial, technical, marketing and other resources than the Company, and
competitors of the Company have made and continue to make significant
investments in the construction of manufacturing facilities for AMLCDs and other
advanced displays. There can be no assurance that the Company's competitors will
not succeed in developing or marketing products that would render the Company's
products obsolete or noncompetitive. To the extent the Company is unable to
compete effectively against its competitors, whether due to such practices or
otherwise, its financial condition and results of operations would be materially
adversely affected.

                                       18

<PAGE>
 
DEVELOPMENT OF NEW PRODUCTS AND RISKS OF TECHNOLOGICAL CHANGE

     The Company's future results of operations will depend upon its ability to
improve and market its existing products and to successfully develop,
manufacture and market new products. There can be no assurance that the Company
will be able to continue to improve and market its existing products or develop
and market new products, or that technological developments will not cause the
Company's products or technology to become obsolete or noncompetitive. Even
successful new product introductions typically result in pressure on gross
margins during the initial phases as costs of manufacturing start-up activities
are spread over lower initial sales volumes.

     A portion of the Company's flat panel products rely on EL technology, which
currently constitutes only a small portion of the information display market.
The Company's future success with EL technology will depend in part upon
increasing acceptance of EL products in the marketplace. In that regard, the
Company's competitors are investing substantial resources in the development and
manufacture of displays using a number of alternative technologies. In the event
these efforts result in the development of products that offer significant
advantages over the Company's products, and the Company is unable to improve its
technology or develop or acquire alternative technology that is more
competitive, the Company's business and results of operations will be adversely
affected.

    The Company's military product sales are principally based on CRT
technology. Military avionics contractors are increasingly focused on
incorporating displays, primarily AMLCDs, into cockpit applications that have
traditionally used CRTs. The Company's ability to transition the military
product line to flat panel displays over the next few years will be important to
the long term success of Planar's military avionics business. The Company
entered into an agreement with dpiX (a Xerox company) to jointly develop,
manufacture and market AMLCDs into military applications. However, there can be
no assurance that this business arrangement will be successful.

LEVEL OF ADVANCED RESEARCH AND DEVELOPMENT FUNDING

     The Company's advanced research and development activities have
significantly been funded by outside sources, including agencies of the United
States and Finnish governments and private sector companies. The Company's
recently funded research and development activities have principally focused on
multi-color and full color displays, miniature displays, advanced packaging and
other applications. The actual funding that will be recognized in future periods
is subject to wide fluctuation due to a variety of factors including government
appropriation of the necessary funds and the level of effort spent on contracts
by the Company.

     As Congress has become more serious about balancing the federal budget,
there has been significant debate on the level of funding to be made available
to programs that have historically supported the Company's research activities.
Additionally, government research and development funding has been gradually
shifting to a more commercial approach, and

                                       19

<PAGE>
 
contractors are increasingly required to share in the development costs. This
trend is likely to continue, which could increase the Company's net research and
development expenses. While the Company has historically not experienced any
loss or decline of external research funding, the loss or substantial reduction
of such funding could adversely affect the Company's results of operations and
its ability to continue research and development activities at current levels.
See Note 1 in the "Notes to Consolidated Financial Statements".

RELIANCE ON MEDICAL EQUIPMENT MARKET

     Over one third of the Company's sales in fiscal 1997 were made to customers
that manufacture and sell medical equipment to health care providers worldwide,
and the Company believes that sales in this market will continue to be important
to the Company. As a result, developments that adversely impact the market for
medical equipment produced by the Company's customers could, in turn, adversely
affect the Company's business and results of operations. In addition, the
Company's sales have been and may in future periods be adversely affected due to
delays in approvals by foreign or domestic government regulatory agencies which
prevent a customer of the Company from introducing, producing or marketing
products.

INTERNATIONAL OPERATIONS AND CURRENCY EXCHANGE RATE FLUCTUATIONS

     Shipments to customers outside of North America accounted for approximately
26.6%, 37.1%, and 34.5% of the Company's sales in fiscal 1997, fiscal 1996 and
fiscal 1995, respectively. The Company anticipates that international shipments
will continue to account for a significant portion of its sales. As a result,
the Company is subject to risks associated with international operations,
including trade restrictions, overlapping or differing tax structures, changes
in tariffs, export license requirements and difficulties in staffing and
managing international operations (including, in Finland, relations with
national labor unions). See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

DECLINING MILITARY EXPENDITURES

     As a result of the Company's acquisition of Planar Advance, the Company's
sales for military applications have increased. Military capital expenditure
levels have been declining for several years and depend largely on factors
outside of the Company's control. Although the Company believes that its
dependence on military sales will decrease as the Company continues to expand
its customer base, no assurance can be given that military sales will continue
at current levels. In addition, as a result of the reduction in military CRT
sales, several key CRT suppliers have threatened to halt production of critical
components. Although the Company believes it has reached agreement with each of
its critical vendors, no assurance can be given that critical material supply
will be available when needed.

EFFECTS OF QUARTERLY FLUCTUATIONS IN OPERATING RESULTS

     Results of operations have fluctuated significantly from quarter to quarter
in the past, and may continue to fluctuate in the future. Various factors,
including timing of new product

                                       20

<PAGE>
 
introductions by the Company or its competitors, foreign currency exchange rate
fluctuations, disruption in the supply of components for the Company's products,
changes in product mix, capacity utilization, the timing of orders from major
customers, production delays or inefficiencies, seasonality, the timing of
expenses and other factors affect results of operations. Quarterly fluctuations
may adversely affect the market price of the Common Stock.

     The Company's backlog at the beginning of each quarter does not normally
include all orders needed to achieve expected sales for the quarter.
Consequently, the Company is dependent upon obtaining orders for shipment in a
particular quarter to achieve its sales objectives for that quarter. The
Company's expense levels are based, in part, on expected future sales. If sales
levels in a particular quarter do not meet expectations, operating results may
be adversely affected.

                                       21

<PAGE>
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                             PLANAR SYSTEMS, INC.

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
 
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Independent Auditors' Report..............................................   23
Consolidated Balance Sheets...............................................   24
Consolidated Statements of Operations.....................................   25
Consolidated Statements of Shareholders' Equity...........................   26
Consolidated Statements of Cash Flows.....................................   27
Notes to Consolidated Financial Statements................................   28
 
</TABLE>
                                      22
<PAGE>
 
                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Planar Systems, Inc. and Subsidiaries:

     We have audited the accompanying consolidated balance sheets of Planar
Systems, Inc. and subsidiaries as of September 26, 1997 and September 27, 1996,
and the related consolidated statements of operations, shareholders' equity and
cash flows for each of the years in the three year period ended September 26,
1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based upon 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Planar
Systems, Inc. and subsidiaries as of September 26, 1997 and September 27, 1996,
and the results of their operations, and their cash flows for each of the years
in the three-year period ended September 26, 1997 in conformity with generally
accepted accounting principles.

KPMG PEAT MARWICK LLP

Portland, Oregon
November 7, 1997

                                      23
<PAGE>
 
                              PLANAR SYSTEMS, INC.
                                AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE> 
<CAPTION>
                                                                   September 26,    September 27, 
                                                                        1997            1996
                                                                   -------------    ------------- 
<S>                                                                  <C>              <C>
                                     ASSETS
Current assets:
Cash and cash equivalents (Note 1)...............................     $ 21,777         $23,089
Short-term investments (Note 1 and 2)............................        8,170           7,111
Accounts receivable, net of allowance for doubtful
accounts of $478 at 1997 and $130 at 1996 (Note 2 and 6).........       21,001          15,267
Inventories (Note 1 and 6).......................................       21,517          17,134
Other current assets (Note 1 and 3)..............................        8,471           5,634
                                                                      --------         -------
  Total current assets...........................................       80,936          68,235
Plant and equipment, net (Note 1 and 5)..........................       16,584          12,848
Long-term investments (Note 1 and 2).............................        2,445          12,838
Goodwill (Note 1 and 3)..........................................        5,878             --
Other............................................................        8,353           3,374
                                                                      --------         -------
                                                                      $114,196         $97,295
                                                                      ========         =======

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Line of credit...................................................     $  1,130         $   --
Accounts payable.................................................       13,011           3,900
Accrued compensation.............................................        5,261           2,979
Current portion of long term debt (Note 6).......................        1,698           1,039
Deferred revenue.................................................        1,406              65
Other current liabilities (Note 2 and 7).........................        5,083           2,852
Current portion of excess fair market value of acquired
  net assets over purchase price (Note 1)........................          476             476
                                                                      --------         -------
  Total current liabilities......................................       28,065          11,311
Deferred taxes (Note 8)..........................................          263             291
Long term debt, less current portion (Note 6)....................        6,878           4,123
Other long-term liabilities......................................          638              53
Long-term portion of excess fair market value of
  acquired net assets over purchase price (Note 1)...............        1,072           1,548
                                                                      --------         -------
  Total liabilities..............................................       36,916          17,326
Shareholders' equity:
Preferred stock, $.01 par value. Authorized 10,000,000
  shares, no shares issued at 1997 or 1996
Common stock, no par value. Authorized 30,000,000 shares; 
  issued 11,075,730 and 10,925,218 shares at 1997 and 1996, 
  respectively...................................................       73,190          71,867
Unrealized gain (loss) on marketable securities (Note 1).........            7             (10)
Retained earnings................................................       10,486          10,579
Foreign currency translation adjustment..........................       (6,403)         (2,467)
                                                                      --------         -------
  Total shareholders' equity.....................................       77,280          79,969
                                                                      --------         -------
                                                                      $114,196         $97,295
                                                                      ========         =======
</TABLE>
          See accompanying notes to consolidated financial statements.

                                      24
<PAGE>
 
                             PLANAR SYSTEMS, INC.
                               AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
 
                                                               Fiscal Year Ended
                                               -------------------------------------------------
                                               September 26,     September 27,     September 29,
                                                   1997              1996              1995    
                                               -------------     -------------     -------------              
<S>                                            <C>               <C>               <C>
Sales.......................................      $88,850           $80,371           $78,523
Cost of sales...............................       60,362            52,383            50,135
                                                  -------           -------           -------
Gross profit................................       28,488            27,988            28,388
Operating expenses:
  Research and development, net (Note 1)....        7,638             7,044             4,987
  Purchased research and development 
   (Note 4).................................        8,305               --                --
  Sales and marketing.......................        8,095             7,097             6,652
  General and administrative................        6,293             5,219             5,123
  Amortization of excess fair market value 
   of acquired net assets over purchase 
   price (Note 1)...........................         (448)             (476)             (476)
                                                  -------           -------           -------
    Total operating expenses................       29,883            18,884            16,286
                                                  -------           -------           -------
Income (loss) from operations...............       (1,395)            9,104            12,102
 
Non-operating income (expense):
  Interest income...........................        1,734             1,880             1,516
  Interest expense..........................         (381)             (383)              (48)
  Foreign exchange, net.....................        1,543               242              (690)
  Other, net................................       (2,011)              --                --
                                                  -------           -------           -------
    Net non-operating income................          885             1,739               778
                                                  -------           -------           -------
 
Income (loss) before income taxes...........         (510)           10,843            12,880
Provision (benefit) for income taxes
 (Note 1 and 8).............................         (784)            2,171             2,343
                                                  -------           -------           -------
    Net income..............................      $   274           $ 8,672           $10,537
                                                  =======           =======           =======
 Net income per share (Note 1):
    Net income..............................      $  0.02           $  0.77           $  0.98
                                                  =======           =======           =======
Weighted average number of common and common 
  equivalent shares outstanding (Note 1)....       11,247            11,216            10,760
</TABLE>
          See accompanying notes to consolidated financial statements.

                                      25
<PAGE>
 
                             PLANAR SYSTEMS, INC.
                               AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                     (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                   Unrealized                    Foreign
                                             Common Stock          Gain (Loss)     Retained      Currency          Total
                                        ----------------------    on Marketable    Earnings     Translation    Shareholders'
                                          Shares       Amount      Securities      (Deficit)     Adjustment       Equity 
                                        ----------    --------    -------------    ---------    -----------    ------------    
<S>                                     <C>           <C>         <C>               <C>          <C>            <C>
Balance, September 30, 1994.........    10,120,191     61,768         (106)         (8,630)        (3,630)        49,402
Shares issued in public offering                                                                           
 (Note 9)...........................       446,988      8,072                                                      8,072
Unrealized gain on long term                                                                               
 investments........................                                   105                                           105
Proceeds from issuance of                                                                                  
 common stock.......................       271,727        803                                                        803
Tax benefit from stock option                                                                              
 exercises (Note 8).................                      561                                                        561
Foreign currency translation                                                                               
 adjustment.........................                                                                2,876          2,876
Net income..........................                                                10,537                        10,537
                                        ----------    -------         ----         -------        -------        -------
Balance, September 29, 1995.........    10,838,906     71,204           (1)          1,907           (754)        72,356
Unrealized loss on long term                                                                               
 investments........................                                    (9)                                           (9)
Proceeds from issuance of                                                                                  
 common stock.......................        86,312        520                                                        520
Tax benefit from stock option                                                                              
 exercises (Note 8).................                      143                                                        143
Foreign currency translation                                                                               
 adjustment.........................                                                               (1,713)        (1,713)
Net income..........................                                                 8,672                         8,672
                                        ----------    -------         ----         -------        -------        -------
Balance, September 27, 1996.........    10,925,218     71,867          (10)         10,579         (2,467)        79,969
Unrealized gain on long term                                                                               
 investments........................                                    17                                            17
Proceeds from issuance of                                                                                  
 common stock.......................        97,195        395                                                        395
Issuance of common stock in                                                                                
 connection with acquistion.........        89,126        891                                                        891
Tax benefit from stock option                                                                              
 exercises (Note 8).................                       37                                                         37
Stock repurchase....................       (35,809)                                   (367)                         (367)
Foreign currency translation                                                                               
 adjustment.........................                                                               (3,936)        (3,936)
Net income..........................                                                 274                           274
                                        ----------    -------         ----         -------        -------        -------
Balance, September 26, 1997.........    11,075,730    $73,190         $  7         $10,486         (6,403)       $77,280
                                        ==========    =======         ====         =======        =======        =======
</TABLE>

         See accompanying notes to consolidated financial statements.

                                      26
<PAGE>
 
                             PLANAR SYSTEMS, INC.
                               AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
 
                                                                    Fiscal Year Ended
                                                    -------------------------------------------------
                                                    September 26,     September 27,     September 29, 
                                                        1997              1996              1995    
                                                    -------------     -------------     -------------                 
 <S>                                                <C>               <C>               <C>
Cash flows from operating activities 
Net income.........................................   $    274            $ 8,672          $ 10,537
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Depreciation and amortization....................      3,232              2,003             1,636
  Amortization of excess market value of acquired
   net assets over purchase price..................       (476)              (476)             (476)
  Goodwill.........................................         28                --                --
  Gain on sale of equipment........................         (3)               (20)              --
  Loss on investment...............................      2,011                --                --
  Increase in deferred taxes.......................          4                119                69
  Foreign exchange (gain) loss.....................     (1,100)              (263)              398
  Purchased research and development...............      8,305                --                --
  Tax benefit of stock option exercised............         37                143               561
  Increase in accounts receivable..................     (2,879)            (1,777)           (2,557)
  (Increase) decrease in inventories...............     (1,444)            (5,870)            1,274
  Increase in other current assets.................     (3,225)            (1,187)           (2,558)
  Increase (decrease) in accounts payable..........      4,227               (983)              456
  Increase (decrease) in accrued.compensation......      1,069                 (6)              465
  Increase in deferred revenue.....................      1,389                --                --
  Increase (decrease) in other current                 
   liabilities.....................................      1,199              1,095              (270)
                                                      --------            -------          --------
Net cash provided by operating activities..........     12,648              1,450             9,535
 
Cash flows from investing activities:
Purchase of plant and equipment....................     (2,511)            (3,416)           (6,911)
Purchase of a business.............................    (13,897)               --                --
Equipment and rent deposits........................     (6,286)              (429)             (392)
Payment of long term liability.....................        (35)              (209)             (187)
Purchase of equity security........................        --              (2,011)              -- 
Net sales (purchase) of short-term investments.....     (1,059)             5,681            (7,367)
Net sales (purchase) of long-term  investments.....      8,399             (5,234)           (1,281)
                                                      --------            -------          --------
Net cash used by investing activities..............    (15,389)            (5,618)          (16,138)

Cash flows from financing activities:
Net proceeds of long term debt.....................        895              2,363             2,799
Net proceeds (repayments) of long term receivable..        574             (2,131)              --
Net proceeds from issuance of capital stock........        395                520             8,875
Stock repurchase...................................       (367)               --                --
                                                      --------            -------          --------
Net cash provided by financing activities                1,497                752            11,674
Effect of exchange rate changes on cash
 and cash equivalents..............................        (68)              (184)              463
                                                      --------            -------          --------
Net increase (decrease) in cash and cash
 equivalents.......................................     (1,312)            (3,600)            5,534
Cash and cash equivalents at beginning of period...     23,089             26,689            21,155
                                                      --------            -------          --------
Cash and cash equivalents at end of period.........   $ 21,777            $23,089          $ 26,689
                                                      ========            =======          ========
 
Supplemental cash flow disclosure:
 Cash paid for interest............................   $    381            $   383           $     48
 Cash paid for income taxes........................   $  2,999            $ 2,171           $  1,391
</TABLE>
          See accompanying notes to consolidated financial statements.

                                      27
<PAGE>
 
                             PLANAR SYSTEMS, INC.
                               AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   SEPTEMBER 26, 1997 AND SEPTEMBER 27, 1996

               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

OPERATIONS

     Planar Systems, Inc. was incorporated on April 27, 1983 and commenced
operations in June 1983. Planar Systems, Inc., and its wholly-owned subsidiaries
(collectively, the "Company") are engaged in developing, manufacturing and
marketing of electronic display products. These display products primarily
include electroluminescent (EL), liquid crystal displays (LCD) and high
performance taut shadow mask cathode ray tubes (CRT) technologies.

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the financial statements
of Planar Systems, Inc. and its wholly-owned subsidiaries, Planar International
Ltd., Planar America, Inc., Planar Standish, Inc., Planar Flat Candle, Inc. and
Planar Advance, Inc. All significant intercompany accounts and transactions are
eliminated in consolidation.

FISCAL YEAR

     The Company's fiscal year ends on the last Friday in September. The last
day of fiscal 1997, 1996 and 1995 was September 26, September 27 and September
29, respectively. Due to statutory requirements, Planar International's fiscal
year-end is September 30. All references to a year in these notes are to the
Company's fiscal year ended in the period stated which includes the fiscal year
results of Planar International.

USE OF ESTIMATES

     The preparation of the 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
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of sales and expenses during the reporting
period. Actual results could differ from those estimates.

                                      28
<PAGE>
 
FOREIGN CURRENCY TRANSLATION

     The local currency is the functional currency of the Company's foreign
subsidiary. Assets and liabilities of the foreign subsidiary are translated into
U.S. dollars at current rates of exchange, and revenues and expenses are
translated using weighted average rates, in accordance with Statement of
Financial Accounting Standards (SFAS) No. 52, "Foreign Currency Translation".
Adjustments from foreign currency translation are included as a separate
component of shareholders' equity. Foreign currency transaction gains and losses
are included as a component of non-operating income.

STATEMENT OF CASH FLOWS

     Cash and cash equivalents consist of highly liquid instruments with
original maturities of three months or less in accordance with SFAS No. 95,
"Statement of Cash Flows".

     In accordance with SFAS No. 95, cash flows from the Company's operations in
Finland are calculated based upon its functional currency. As a result, amounts
related to assets and liabilities reported on the Statement of Consolidated Cash
Flows will not necessarily agree with changes in the corresponding balances on
the Consolidated Balance Sheets. The effect of exchange rate changes on cash
balances held in foreign currencies is reported as a separate line item in the
Consolidated Statements of Cash Flows.

INVESTMENTS

     Management determines the appropriate classification of its investments in
debt and equity securities at the time of purchase and reevaluates such
determination at each balance sheet date. Debt securities for which the Company
does not have the intent or ability to hold to maturity are classified as
available for sale, along with the Company's investment in equity securities.
Securities available for sale are carried at fair value, with unrealized gains
and losses, net of tax, reported in a separate component of shareholders'
equity. At September 26, 1997, the Company had no investments that qualified as
trading or held to maturity.

     The amortized cost of debt securities classified as available for sale is
adjusted for amortization of premiums and accretion of discounts to maturity.
Such amortization and interest are included in interest income. The cost of
securities sold is based upon specific identification.

     At September 26, 1997, the Company's investments in debt and equity
securities were classified as cash and cash equivalents and short-term
investments. These investments are diversified among high credit quality
securities in accordance with the Company's investment policy. As of September
26, 1997, all debt securities are invested in federal and state and municipal
securities. These securities have been reported at their fair market value of
$14,561 compared to historical cost of $14,554. The unrealized gains of $7 are
reported as a separate component of shareholders' equity, net of deferred taxes.

                                      29
<PAGE>
 
     The estimated fair value of debt securities available for sale by
contractual maturities at September 26, 1997 is as follows:

<TABLE>
<CAPTION>
 
     <S>                                         <C>
     Due in three months or less...............  $ 4,043
     Due after three months through one year...    8,170
     Due after one year through three years....    2,348
                                                 -------
                                                 $14,561
                                                 ======= 
</TABLE>

INVENTORIES

     Inventories are stated at the lower of cost (first in, first out method) or
market, net of reserves for estimated inventory obsolescence based upon the
Company's best estimate of future product demand. Inventories consist of:

<TABLE>
<CAPTION>
 
                                     September 26,    September 27,  
                                         1997             1996       
                                     -------------    -------------  
     <S>                             <C>              <C>            
     Raw materials................      $12,118          $10,616     
     Work in process..............        4,165            3,323     
     Finished goods...............        5,234            3,195     
                                        -------          -------     
                                        $21,517          $17,134     
                                        =======          =======      
</TABLE>

PLANT AND EQUIPMENT

     Depreciation of equipment is computed on a straight line basis over the
estimated useful lives of the assets, generally five years. Leasehold
improvements are amortized on a straight line basis over the lesser of the life
of the leases or the estimated useful lives of the assets. Depreciation of the
building is computed on a straight line basis over the estimated useful life of
the building, estimated to be 39 years.

INCOME TAXES

     Under SFAS No. 109, deferred tax assets and liabilities are established for
the temporary differences between the financial reporting basis and the tax
basis of the Company's assets and liabilities at the enacted tax rates expected
to be in effect when such amounts are realized or settled. Under SFAS No. 109,
the effect on deferred taxes of a change in tax rates is recognized in income in
the period that includes the enactment date. Income tax credits will be
recognized as reductions of the provision for income taxes in the year the
credits are realized (the "flow-through method").

REVENUE RECOGNITION

     The Company recognizes revenue from product sales upon shipment.

                                      30
<PAGE>
 
RESEARCH AND DEVELOPMENT COSTS

     Research and development costs are expensed as incurred. The Company
periodically enters into research and development contracts with certain
governmental agencies and private sector companies. These contracts generally
provide for reimbursement of costs. Funding from research and development
contracts is recognized as a reduction in operating expenses during the period
in which the services are performed and related direct expenses are incurred, as
follows:

<TABLE>
<CAPTION>
 
                                                          Fiscal Year Ended
                                            ---------------------------------------------
                                            September 26,   September 27,   September 29, 
                                                1997            1996            1995 
                                            -------------   -------------   -------------
<S>                                         <C>             <C>             <C>
Research and development expense.......        $17,274         $16,493         $14,084
Contract funding.......................          9,636           9,449           9,097
                                               -------         -------         -------
Research and development, net..........        $ 7,638         $ 7,044         $ 4,987
                                               =======         =======         =======
</TABLE>

As of September 26, 1997 and September 27, 1996, included in other current
assets is $2,656 and $2,964, respectively, related to these research and
development contracts.

PRODUCT WARRANTY

     The Company provides a warranty for its products and establishes an
allowance at the time of sale adequate to cover warranty costs during the
warranty period. The warranty period is generally between twelve and fifteen
months. This reserve is included in other current liabilities (Note 7).

GOODWILL AND EXCESS FAIR MARKET VALUE OF ACQUIRED NET ASSETS OVER PURCHASE PRICE

     Goodwill and the excess of fair market value of acquired net assets over
purchase price are being amortized over a ten-year period using the straight
line method.

NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE

     Net income per common and common equivalent share is computed using the
weighted average number of common and dilutive common equivalent shares assumed
to be outstanding during the period, using the treasury stock method. Common
equivalent shares consist of options to purchase common stock.

FINANCIAL INSTRUMENTS
 
     The recorded amount of financial instruments approximates the fair market
value.

STOCK-BASED COMPENSATION PLANS

     The Company accounts for its stock-based plans under Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). In
fiscal 1997, the

                                      31
<PAGE>
 
Company adopted the disclosure provisions of SFAS No. 123, "Accounting for 
Stock-Based Compensation".

RECENT ACCOUNTING PRONOUNCEMENTS

     In February 1997, the FASB issued SFAS No. 128, "Earnings per Share". This
statement specifies the standard for computing and presenting earnings per
share. Adoption of SFAS No. 128 is required for fiscal years beginning after
December 15, 1996. The Company believes that implementation of this statement
will not have a material effect on the financial position or results of
operations of the Company.

     In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Earnings" and and No. 131, "Disclosures about Segments of an Enterprise and
Related Information". SFAS No. 130 established standards for reporting
comprehensive income and its components. SFAS No. 131 establishes the standards
for reporting information about operating segments. Adoption of both standards
is required for fiscal years beginning after December 15, 1997. The Company
believes that implementation for these standards will not have a material effect
on the financial position or results of operations of the Company.

NOTE 2 -- CONCENTRATION OF CREDIT RISK

     Financial instruments that potentially subject the Company to concentration
of credit risk consist principally of trade receivables and investments. The
risk in trade accounts receivable is limited due to the credit worthiness of the
companies comprising the Company's customer base and their dispersion across
many different sectors of the electronics industry and geographies. The risk in
investments is limited due to the credit worthiness of investees comprising the
portfolio, the diversity of the portfolio and relative low risk of municipal
securities. At September 26, 1997, the Company does not believe it had any
significant credit risks.

NOTE 3 - BUSINESS ACQUISITIONS

     On June 4, 1997, the Company acquired Flat Candle Corporation for $1,128
cash. Flat Candle Corporation's primary business is that of developing,
manufacturing and marketing of back lights. The transaction was accounted for as
a purchase. Intangibles of $803 were recorded, which are being amortized over
ten years. The financial statements include the operating results of Flat Candle
Corporation from the date of acquisition. Pro forma results of operations have
not been presented because the effect of this acquisition is not significant.

     On September 26, 1997, the Company acquired all of the outstanding capital
stock of Standish Industries, Inc. for approximately $15 million in cash and
stock. Standish Industries' primary business is that of developing,
manufacturing, and marketing electronic displays. The transaction was accounted
for as a purchase. Intangibles of $5,714 were recorded, after adjusting for
purchased research and development costs (Note 4), which are being amortized
over ten years. The financial statements include the operating results of
Standish Industries, Inc. from the date of acquisition.

                                      32
<PAGE>
 
     The following summary, prepared on a pro forma basis, combines the
consolidated results of  operations as if Standish Industries, Inc. had been
acquired as of the beginning of the periods presented, after including the
impact of certain adjustments, such as amortization of intangibles and the
related income tax effects.

<TABLE>
<CAPTION>
                                               1997         1996
                                            -----------  -----------
                                            (Unaudited)  (Unaudited)
     <S>                                    <C>          <C>
     Sales................................   $119,939     $105,216
     Net income (loss)....................   $   (307)    $  7,079
     Net income (loss) per share..........   $  (0.03)    $   0.63
</TABLE>

     The pro forma results are not necessarily indicative of what actually would
have occurred had the acquisition been in effect for the entire periods
presented. In addition, they are not intended to be a projection of future
results and do not reflect synergies that might be achieved from combined
operations.

NOTE 4 - PURCHASED RESEARCH AND DEVELOPMENT EXPENSE

     In connection with the acquisition of Standish Industries, Inc. at
September 26, 1997 (Note 3), the Company allocated $8,305 of the purchase price
to in-process research and development projects as determined by independent
appraisal. Accordingly, these costs were expensed as of the acquisition date.
These allocations represent the estimated fair value based on risk adjusted cash
flows (assuming a 23% discount rate) related to incomplete projects. The
development of these projects had not yet reached technological feasibility, and
the technology has no alternative future use. The technology acquired in these
acquisitions will require substantial additional development by the Company.

NOTE 5 -- PLANT AND EQUIPMENT

     Plant and equipment, at cost, consists of:

<TABLE>
<CAPTION>
 
                                              1997          1996
                                            --------      --------
     <S>                                    <C>           <C>
     Land................................   $    115      $    --
     Buildings and improvements..........      3,731         1,331
     Machinery and equipment.............     28,048        24,026
                                            --------      --------
     Total plant and equipment...........     31,894        25,357
     Less accumulated depreciation.......    (15,310)      (12,509)
                                            --------      --------
     Net plant and equipment.............   $ 16,584      $ 12,848
                                            ========      ========
</TABLE>

NOTE 6 -- BORROWINGS

LINE OF CREDIT

     The Company has a bank line of credit which allows for borrowings up to $8
million. The line bears interest at the bank's prime rate (8.5% at September 26,
1997) and is unsecured with a negative pledge on accounts receivable and
inventories. The agreement is subject to review at

                                      33
<PAGE>
 
September 30, 1998. There were no borrowings outstanding on this line at
September 26, 1997 or September 27, 1996.

LONG TERM DEBT

The Company has entered into credit facilities with several financial
institutions to borrow up to $19.5 million to finance equipment purchases. These
loans are secured by the financed equipment, mature in 2000 and bear interest at
an average rate of 7.5%. As of September 26, 1997 and September 27, 1996, the
company has $5.4 million and $5.2 million outstanding under these loans. As a
result of the acquisition discussed at note 3, the Company assumed additional
debt with of $3,157, maturing over the next several years at an average rate of
9.6%.  Aggregate maturities over the next five years are $1,698, $2,270, $2,017,
$1,022, $279 and $1,290 thereafter. Covenants under these agreements are not
considered restrictive to normal operations.

NOTE 7 -- OTHER CURRENT LIABILITIES

     Other current liabilities consist of:

<TABLE>
<CAPTION>
                                            1997       1996
                                          ---------  --------
<S>                                       <C>        <C>
Warranty reserve........................  $    930   $   643
Income taxes payable....................     2,415       542
Deferred income taxes...................       262       448
Royalty payable.........................       297       --
Duty payable............................       308       --
Current portion of long term 
 contingent payable.....................        32       176
Other...................................       839     1,043
                                          --------   ------- 
     Total............. ................  $  5,083   $ 2,852
                                          ========   =======
</TABLE> 
 
NOTE 8 -- INCOME TAXES
 
     The components of income(loss) before income taxes and extraordinary item
consist of the following:
 

<TABLE>
<CAPTION>
                                            1997      1996      1995
                                          --------   -------   -------
<S>                                       <C>        <C>       <C>
Domestic................................  $ (8,803)  $ 5,484   $ 7,778
Foreign.................................     8,293     5,359     5,102
                                          --------   -------   -------
     Total..............................  $   (510)  $10,843   $12,880
                                          ========   =======   =======
</TABLE>
 
     The following table summarizes the provision for US federal, state and
foreign taxes on income.
 
<TABLE>
<CAPTION>
                                            1997      1996      1995
                                          --------   -------   -------
<S>                                       <C>        <C>       <C>
Current:
   Federal..............................  $    266   $   660   $ 1,268
   State................................       242       170       455
   Foreign..............................     2,425     1,137       695
                                          --------   -------   -------
                                             2,933     1,967     2,418
Deferred:
   Federal..............................    (3,638)     (195)     (200)

</TABLE>

                                      34
<PAGE>
 
<TABLE>
<S>                                       <C>        <C>       <C>
State...................................        --        --        --
Foreign.................................       (79)      399       125
                                          --------   -------   -------
                                          $   (784)  $ 2,171   $ 2,343
                                          ========   =======   =======
</TABLE>
 
     The differences between the U.S. federal statutory tax rate and the
Company's effective rate are as follows:

<TABLE>
<CAPTION>
                                            1997       1996     1995
                                           ------      ----     ----- 
<S>                                        <C>         <C>      <C>
Computed statutory rate.................    (34.0)%    34.0%     34.0%
State income taxes, net of federal tax    
 benefits...............................     23.7       0.6       2.3    
Effect of foreign tax rates.............    (97.6)     (2.7)     (3.2)
Permanent differences resulting from      
 purchase accounting....................     24.0      (0.8)     (1.3)   
Change in valuation reserve.............     37.6      (8.5)    (12.2)
Benefit of tax exempt interest earned...    (59.6)     (3.0)     (2.4)
Other, net..............................     (0.4)      0.4       1.0
                                           ------      ----     -----
Effective tax rate......................   (153.7)%    20.0%     18.2%
                                           ======      ====     =====
</TABLE>

     The tax effects of temporary differences and carryforwards which gave rise
to significant portions of the deferred tax assets and liabilities as of
September 26, 1997 and September 27, 1996 were as follows:

<TABLE>
<CAPTION>
                                            1997       1996
                                          ---------  --------
<S>                                       <C>        <C>
Deferred tax assets:
Inventory valuation reserve..............  $ 1,413   $   449
Allowance for doubtful accounts..........      162        62
Valuation of intangibles.................       29        29
Accrued vacation and other compensation..      315       240
Basis difference in intangibles..........    2,824       --
Accrued warranty reserve.................      219       194
Capital loss carryforwards...............      600        47
General business credits.................      553       --
Net operating loss carryforwards.........    2,580     3,280
                                           -------   -------
Gross deferred tax assets................    8,695     4,301
  Valuation allowance....................   (3,660)   (3,468)
                                           -------   -------
    Deferred tax assets..................    5,035       833

Deferred tax liabilities:
Inventory valuation reserve..............     (305)     (448)
Accumulated depreciation.................     (753)     (438)
Operating reserves.......................     (185)     (291)
                                           -------   -------
    Deferred tax liabilities.............   (1,243)   (1,177)
                                           -------   -------
Net deferred tax asset (liability).......  $ 3,792     ($344)
                                           =======   =======
</TABLE>

     During fiscal year 1997 and 1996, the Company recognized tax benefits of
$37 and $143 respectively, related to differences between financial and tax
reporting of stock option transactions. This difference was credited to common
stock.

     The Company has established a valuation allowance for certain deferred tax
assets, including net operating loss and tax credit carryforwards. SFAS No. 109
requires that such a valuation allowance be recorded when it is more likely than
not that some portion of the deferred tax assets will not be realized. For
fiscal year 1997 and 1996, the valuation reserve increased by $192 and decreased
by $1,166, respectively.

                                      35
<PAGE>
 
     At September 26, 1997, the Company has net operating loss carryforwards of
approximately $7,590 available to reduce future federal taxable income. The
carryforwards expire at various dates through 2004. Utilization of the
carryforwards is subject to certain limitations due to the change in ownership
of the Company which occurred in conjunction with the acquisition of Planar
International. As a result of the acquisition, utilization of available net
operating loss carryforwards is limited to approximately $2,100 per year.

NOTE 9 -- SHAREHOLDERS' EQUITY

PREFERRED STOCK

     The Company is authorized to issue up to 10,000,000 shares of preferred
stock at $.01 par value. At September 26, 1997, no shares of preferred stock
have been issued; however the following series of preferred stock had been
designated and reserved - Series D Junior Participating Preferred Stock 200,000.
Additional series of preferred stock may be designated and the related rights
and preferences fixed by action of the Board of Directors.

STOCK OPTIONS

     In fiscal 1994, the Company adopted the 1993 Stock Incentive Plan which
provides for the granting of options to buy shares of Common Stock. These
options are intended to either qualify as "incentive stock options" under the
Internal Revenue Code or "non-qualified stock options" not intended to qualify.
Under the 1993 plan, options generally become exercisable 25% one year after
grant and 6.25% per quarter thereafter, and expire ten years after grant. During
fiscal 1997, the Company adopted the 1996 Stock Incentive Plan with the same
provisions and guidelines as the aforementioned 1993 plan. The Company reserved
1,200,000 shares of common stock for issuance under this plan. The option price
under all plans is the fair market value as of the date of the grant. Total
shares reserved under these plans are 2,758,735 shares.

     The Company also adopted a 1993 stock option plan for nonemployee directors
that provides an automatic annual grant to each outside director of the Company.
Total annual grants under this plan cannot exceed 60,000 shares per year. Terms
of this plan generally follow the 1993 Stock Incentive Plan. Information
regarding these option plans is as follows:

<TABLE>
<CAPTION>
                                                           Number of Shares  Weighted Average
                                                                 Shares        Option Prices
                                                           ----------------  ----------------
<S>                                                        <C>               <C>
Options outstanding at September 30, 1994...............        863,166            $ 4.64
  Granted...............................................        178,000             22.26
  Exercised.............................................        261,894              2.82
  Canceled..............................................         13,967             10.56
                                                              ---------            ------
Options outstanding at September 29, 1995...............        765,305              9.26
  Granted...............................................        822,700             13.58
  Exercised.............................................         71,942              4.97
  Canceled..............................................        344,199             19.99
                                                              ---------            ------
Options outstanding at September 27, 1996...............      1,171,864              9.42
  Granted...............................................        271,450             13.46
  Exercised.............................................         71,916              3.28
  Canceled..............................................         10,074             13.44
                                                              ---------            ------
</TABLE>

                                      36
<PAGE>
 
<TABLE>
<S>                                                        <C>               <C>
Options outstanding at September 26, 1997...............      1,361,324             $10.49
                                                              =========             ======
Exercisable at September 26, 1997.......................        690,079
                                                              =========
</TABLE>

STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 123

     During 1995, the Financial Accounting Standards Board issued SFAS No. 123
"Accounting for Stock-Based Compensation" which defines a fair value based
method of accounting for an employee stock option or similar equity instrument.
As is permitted under SFAS No. 123, the Company has elected to continue to
account for its stock based compensation plans under APB Opinion No. 25. The
Company has computed, for pro forma disclosure purposes, the value of all
options granted during 1997 and 1996 using the Black-Scholes option pricing
model as prescribed by SFAS No. 123 using the following weighted average
assumptions for grants:

<TABLE>
<CAPTION>
                                                         1997     1996
                                                        -----    -----
           <S>                                          <C>      <C>
           Risk free interest rate....................    6.0%     6.0%
           Expected dividend yield....................      0        0
           Expected lives.............................    4.2      4.2
           Expected volatility........................   55.7     54.3
</TABLE>

     Using the Black-Scholes methodology, the total value of options granted
during 1997 and 1996 was $1,363 and $3,567, respectively, which would be
amortized on a pro forma basis over the vesting period of the options. The
weighted average fair value of options granted during 1997 and 1996 was $13.46
per share and $13.58 per share, respectively. If the Company accounted for its
stock based compensation plans in accordance with SFAS No 123, the Company's net
income and net income per share would approximate the pro forma disclosures
below:

<TABLE>
<CAPTION>
                                  1997                      1996
                        -----------------------   ----------------------
                        As reported  Pro Forma    As reported  Pro Forma
                        -----------  ----------   -----------  ---------
<S>                     <C>          <C>          <C>          <C>
Net income.............     $ 274      $ (581)       $8,672      $8,232
                                                  
Net income per share...     $0.02      $(0.05)       $ 0.77      $ 0.75

</TABLE>

     The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts. SFAS No. 123 does not apply to awards prior to
January 1, 1995, and additional awards are anticipated in future years.

The following table summarizes information about stock options outstanding at
September 26, 1997:

<TABLE>
<CAPTION>
                        Options Outstanding                                      Options Exercisable
---------------------------------------------------------------------    ------------------------------------
                       Number       Weighted Average      Weighted       Number of Shares      
    Range of       Outstanding at      Remaining           Average        Exercisable at     Weighted Average
Exercises Prices       9/26/97      Contractual Life    Exerice Price        9/26/97          Exercise Price
----------------   --------------   ----------------    -------------    ----------------    ----------------
<S>                <C>              <C>                 <C>              <C>                 <C>
 $2.50 - $9.88          677,422            6.78             $ 7.13             445,246            $ 5.74
$10.25 - $13.13         153,200            8.86             $11.95              60,000            $11.46
$14.13 - $23.38         530,702            8.60             $14.34             184,833            $14.74
---------------       ---------            ----             ------             -------            ------
 $2.25 - $23.38       1,361,324            7.72             $10.49             690,079            $ 8.65
===============       =========            ====             ======             =======            ======

</TABLE>

EMPLOYEE STOCK PURCHASE PLAN

     In fiscal 1995, the Company adopted the 1994 Employee Stock Purchase Plan
which provides that eligible employees may contribute, through payroll
deductions, up to 10% of their

                                      37
<PAGE>
 
earnings toward the purchase of the Company's Common Stock at 85 percent of the
fair market value at specific dates. At September 26, 1997, 224,914 shares
remain available for purchase through the plan and there were 492 employees
eligible to participate in the plan, of which 121, or 24.5 percent, were
participants. Employees purchased 36,283 shares, at an average price of $8.58
per share during the year. Total receipts to the company were $311. Since the
plan is noncompensatory, no charges to operations have been recorded.

SHAREHOLDERS RIGHTS PLAN

     In February 1996, the Board of Directors approved a shareholder rights plan
and declared a dividend of one preferred share purchase right for each
outstanding common share. Each right represents the right to purchase one
hundredth of a share of Preferred Stock, at an exercise price of $60.00, subject
to adjustment. The rights are only exercisable ten days after a person or group
acquires, or commences a tender or exchange offer to acquire, beneficial
ownership of 15% or more of the Company's outstanding common stock. Subject to
the terms of the shareholder rights plan and the discretion of the Board of
Directors, each right would entitle the holder to purchase one share of Common
Stock of the Company for each right at one-half of the then-current price. The
rights expire in February 2006, but may be redeemed by action of the Board of
Directors prior to that time at $.01 per right.

NOTE 10 - COMMITMENTS

OPERATING LEASES

     Most of Company's office and manufacturing facilities are subject to long-
term operating leases. In addition, regional sales offices and automobiles are
subject to leases with terms ranging from one to twelve months.

     At September 26, 1997, the approximate minimum annual operating lease
payments are:

<TABLE>
<CAPTION>
                Fiscal year ending in September:
                --------------------------------
                <S>                                <C>
                1998.............................  $2,021
                1999.............................   2,027
                2000.............................   1,764
                2001.............................   1,769
                2002.............................   1,776
                                                   ------
                                                   $9,357
                                                   ======
</TABLE>

     Total rent expense was $1,920, $1,921 and $1,880 for the years ended
September 26, 1997, September 27, 1996 and September 29, 1995, respectively.

NOTE 11 -- GEOGRAPHIC INFORMATION

     The Company operates in one industry. Operations include developing,
manufacturing, and marketing EL displays, LCD and high performance CRTs.

                                      38
<PAGE>
 
     Information concerning geographic area for fiscal year 1995, 1996 and 1997
is summarized below:

<TABLE>
<CAPTION>
                        North America   Rest of World   Eliminations   Consolidated
                        -------------   -------------   ------------   ------------
<S>                     <C>             <C>             <C>            <C>
1995:
 Sales................     $ 57,062         $40,244       $(18,783)      $ 78,523
 Net income...........        6,299           3,801            437         10,537
 Identifiable assets..       78,589          31,393        (21,308)        88,674
1996:
 Sales................     $ 60,351         $39,516       $(19,496)      $ 80,371
 Net income...........        4,715           3,492            465          8,672
 Identifiable assets..       90,115          31,727        (24,547)        97,295
1997:
 Sales................     $ 71,558         $38,280       $(20,988)      $ 88,850
 Net income...........       (4,747)          5,947           (926)           274
 Identifiable assets..      101,898          36,050        (23,752)       114,196
</TABLE>

     North American sales include all sales made in Canada, the United States
and Mexico. Rest of the World sales includes all sales made in countries outside
of North America, which in fiscal years 1997, 1996 and 1995 principally
consisted of sales made in Europe and Japan.

     No customer accounted for 10 percent or more of revenue in fiscal years
1997, 1996 or 1995.

NOTE 12 -- 401(k) AND PROFIT SHARING

     All employees in North America over 21 years of age who have completed at
least three months of service are eligible to participate in the 401(k) savings
and profit sharing plan. Employees can contribute between 0% and 15% of their
gross pay subject to statutory maximums. The Company matches 50% of the first
10% of each participating employee's contributions, also subject to statutory
maximums. Employer contributions vest over four years. The 401(k) plan expense
amounted to $466, $438 and $332 for the years ended September 26, 1997,
September 27, 1996 and September 29, 1995, respectively.

                                      39
<PAGE>
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
 
     None.

PART III
--------

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF PLANAR SYSTEMS, INC.

     The information set forth under the captions "Election of Directors" and
"Management" appearing on pages 2 through 5 of the Proxy Statement to be used in
connection with the Annual Meeting of Shareholders on February 12, 1998, is
incorporated by reference into this Report.

ITEM 11.  EXECUTIVE COMPENSATION

     The information set forth under the caption "Executive Compensation"
appearing on pages 5 through 8 of the Proxy Statement to be used in connection
with the Annual Meeting of Shareholders on February 12, 1998, is incorporated by
reference into this Report.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information set forth under the caption "Stock Owned by Management and
Principal Shareholders" appearing on page 10 of the Proxy Statement to be used
in connection with the Annual Meeting of Shareholders on February 12, 1998, is
incorporated by reference into this Report.

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     None.

PART IV
-------

ITEM 14: EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON 8-K

(a)  Financial Statements and Schedules
 
     The financial statements of Planar Systems, Inc. as set forth under Item 8
are filed as part of this report.
 
     Financial statement schedules have been omitted since the information
called for is not present in amounts sufficient to require submission of the
schedules.

     The independent auditors' report with respect to the above-listed financial
statements appears on page 19 of this report.

                                      40
<PAGE>
 
(b)  Reports on 8-K

     8-K report filed on October 10, 1997

(c)  Exhibits

<TABLE> 
<CAPTION> 
Exhibit
Number                                 Title
-------                                -----
<S>       <C> 
3.1       Second Restated Articles of Incorporation of Planar Systems, Inc./(1)/

3.2       First Restated Bylaws of Planar Systems, Inc./(1)/

3.3       Amendment to Second Restated Articles of Incorporation of Planar
          Systems, Inc./(2)/

4.1       Specimen stock certificate/(1)/

4.4       Rights Agreement dated as of February 1, 1996 between Planar Systems,
          Inc. and First Interstate Bank of Oregon, N.A. (Incorporated by
          reference to the Company's Form 8-K filed as of February 21, 1996)
          /(3)/

10.1      Form of Indemnity Agreement between Planar Systems, Inc. and each of
          its executive officers and directors/(1)/

10.2      Amended and Restated 1983 Incentive Stock Option Plan/(1)/

10.3      1993 Stock Option Plan for Nonemployee Directors/(1)/

10.4      1993 Incentive Stock Option Plan/(1)/

10.5      1994 Employee Stock Purchase Plan/(4)/

10.6      Registration Rights Agreement dated December 30, 1990/(1)/

10.7      Lease agreement dated as of September 30, 1993 between Science Park
          Limited Partnership I and Planar Systems, Inc./(1)/

10.8      Lease agreement between Metra Corporation and Planar International,
          Ltd (English translation)/(1)/

10.9      Lease agreement dated as of August 26, 1994 between Tektronix, Inc.
          and Planar Systems, Inc./(5)/
</TABLE> 

                                      41
<PAGE>
 
<TABLE> 
<S>       <C> 
10.10     Asset Purchase Agreement dated August 26, 1994 between Tektronix, Inc.
          and Tektronix Federal Systems, Inc. and Planar Systems, Inc and Planar
          Advance /(5)/

10.11     Stock Purchase Agreement dated August 25, 1997 by and among Planar
          Systems, Inc., Standish Industries, Inc., Standish International,
          Inc., Charles P. Hoke, Elizabeth A. Hoke and William R. Steinmetz,
          Trustee of the Steven Hoke Management Trust, the Catherine Hoke
          Management Trust, the Lauren Hoke Management Trust and the Charles D.
          Hoke Management Trust ("the Agreement") (certain schedules to the
          Agreement and its exhibits are omitted). /(6)/

10.12     Amendment to Stock Purchase Agreement dated August 26, 1997 /(6)/

10.13     1996 Stock Incentive Plan

10.14     Lease agreement dated as of May 30, 1997 between Pacific Realty 
          Associates, L.P., and Planar America, Inc.

21        Subsidiaries of Planar Systems, Inc.

23        Consent of KPMG Peat Marwick LLP dated December 19, 1997

24        Power of Attorney (included on Signature Page)

27        Financial Data Schedule

</TABLE> 

/(1)/  Incorporated by reference to the Company's Registration Statement on Form
       S-1 (Reg. No. 33-71020), declared effective on December 15, 1993.
/(2)/  Incorporated by reference to the Company's Annual Report on Form 10-K for
       the year ended September 27, 1996.
/(3)/  Incorporated by reference to the Company's Current Report on Form 8-K
       files on February 21, 1996.
/(4)/  Incorporated by reference to the Company's Annual Report on Form 10-K
       filed as of for the year ended September 30, 1994.
/(5)/  Incorporated by reference to the Company's Current Report on Form 8-K
       filed as of September 12, 1994.
/(6)/  Incorporated by reference to the Company's Current Report on Form 8-K
       files on October 10, 1997.

                                      42
<PAGE>
 
                                  SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                         PLANAR SYSTEMS, INC.

December 22, 1997                        By: /s/ JACK RAITON
                                             ---------------
                                         Jack Raiton
                                         Vice President
                                         Chief Financial Officer

                               POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jack Raiton and James M. Hurd, and each of them
singly, as his true and lawful attorneys-in-fact, with full power of
substitution, for him in any and all capacities, to sign any amendments to this
Report on Form 10-K, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.

<TABLE>
<S>                        <C>                                            <C>
 
/s/ JAMES M. HURD          President, Chief Executive Officer,            December 22, 1997
-------------------------  Director (Principal Executive Officer)
James M. Hurd              
 
/s/ JACK RAITON            Vice President, Chief Financial Officer,       December 22, 1997
-------------------------  (Principal Financial and Accounting Officer)
Jack Raiton                
 
/s/ WILLIAM D. WALKER      Chairman of the Board                          December 22, 1997
-------------------------
William D. Walker
 
/s/ STEVEN E. WYNNE        Director                                       December 22, 1997
-------------------------
Steven E. Wynne
 
/s/ HEIKKI T. HORSTIA      Director                                       December 22, 1997
-------------------------
Heikki T. Horstia
 
/s/ GREGORY H. TURNBULL    Director                                       December 22, 1997
-------------------------
Gregory H. Turnbull
 
/s/ HEINRICH STENGER       Director                                       December 22, 1997
-------------------------
Heinrich Stenger
</TABLE>