EX-99.1 2 v113696_ex99-1.htm
 
NEWS BULLETIN
POINT.360
2777 N. ONTARIO STREET
BURBANK, CA 91504
Nasdaq: PTSX
 
FOR FURTHER INFORMATION:
AT THE COMPANY:
 
Alan Steel
 
Executive Vice President
 
(818) 565-1444
  
   

FOR IMMEDIATE RELEASE - BURBANK, CA, May 13, 2008

POINT.360 ANNOUNCES THIRD QUARTER AND NINE-MONTH RESULTS.

Point.360 (NASDAQ: PTSX), a leading provider of integrated media management services, today announced results for the three and nine-month periods ended March 31, 2008.

Haig S. Bagerdjian, the Company’s Chairman, President and Chief Executive Officer said: “We have made progress in identifying a number of potential acquisition candidates. Negotiations often require extended time to be sure there is a service, economic and cultural fit. We are continuing this effort as a major strategic goal over the next year.”

Mr. Bagerdjian continued: “Recently, we announced a Point.360 stock repurchase program. We will continue to consider repurchases from time to time in light of alternate uses of our cash including acquisitions.”

The nine month results reflect the sum of the periods July 1-August 13, 2007 and August 14, 2007 (the date of the Spin-off) - March 31, 2008. Results for the prior year’s first quarter and nine-month results have been carved out of Old Point.360 for comparative purposes.

Revenues

Revenue for the quarter ended March 31, 2008 totaled $11.3 million compared to $10.3 million in the same quarter last year. Revenues for the nine months ended March 31, 2008 were $33.8 million, up 5% from last year.

Gross Margin

In the third quarter of fiscal 2008, gross margin was $3.9 million (35% of sales), compared to $2.8 million (27% of sales) in the prior year’s third quarter. For the nine months ended March 31, 2008, gross margin was $10.2 million (30% of sales) compared to $9.6 million (30% of sales) last year.

Selling, General and Administrative and Other Expenses

For the third quarter of fiscal 2008, SG&A expenses were $3.7 million, or 33% of sales, compared to $3.4 million, or 33% of sales in the third quarter of last year. For the nine months ended March 31, 2008, SG&A expenses were $10.9 million (32% of sales) compared to $10.0 million (31% of sales) last year. The increase is due to the addition of Eden FX, costs associated with the divestiture of our advertising distribution business and the need for an additional audit for filing a transitional Form 10-K due to the change in our fiscal year.

In the first quarter for 2008, the Company recorded a restructuring charge of $0.5 million related to the August 13, 2007 decision to vacate one of its facilities and certain other reorganization costs. These charges are shown separately in the consolidated statement of income (loss).

Interest expense decreased $0.1 million and $0.2 million, respectively, in the third quarter and first nine months of fiscal 2008 compared to the same periods of last year due to lower debt levels.

1
 
Operating Income (Loss)

Operating income was $0.2 million in the third quarter of 2008 compared to a $0.6 million operating loss in last year’s third quarter. Operating loss was $1.2 million in the first nine months of 2008 compared to a loss of $0.4 million in the same period last year. The increased loss was due principally to the effects of the Eden FX acquisition and restructuring charges.

Net Income (Loss)

For the third quarter of 2008, the Company reported net income of $0.2 million ($0.01 per share) compared to net loss of $0.5 million ($0.04 per share) in the same period last year. In the nine-month period ended March 31, 2008, the Company reported a net loss of $1.0 million compared to a loss of $0.3 million in 2007.


Selected Balance Sheet Statistics (in thousands - unaudited)*
 
 
   
June 30,
2007
 
March 31,
2008
  
Working Capital
  
$
9,814
  
$
16,972
  
Property and equipment, net
    
11,330
    
9,202
  
Total assets
    
38,565
    
42,304
  
Due to parent company
    
5,871
    
-
  
Current portion of long term debt
    
-
    
1,797
  
Long-term debt, net of current portion
    
-
    
3,296
  
Shareholders equity
    
20,587
    
26,710
  


2
 
Consolidated Statements of Income ( Loss) (unaudited) *

The table below summarizes results for the three and nine-month periods ended March 31, 2007 and 2008 (in thousands except per share amounts):
 
 
     
Three Months Ended
March 31,
 
 
Nine Months Ended
March 31,
 
 
 
 
2007
 
 
2008
 
 
2007
 
 
2008
  
                           
Revenues
  
$
10,307,000
  
$
11,284,000
  
$
32,147,000
  
$
33,785,000
  
Cost of services
   
(7,505,000
)
  
(7,361,000
)
  
(22,532,000
)
  
(23,600,000
)
                           
Gross profit
   
2,802,000
    
3,923,000
    
9,615,000
    
10,185,000
  
Selling, general and administrative expense
   
(3,439,000
)
  
(3,713,000
)
  
(9,999,000
)
  
(10,858,000
)
Restructuring costs
    
-
    
-
   
-
   
(513,000
)
                           
Operating income (loss)
    
(637,000
)
  
210,000
    
(384,000
)
  
(1,186,000
)
Interest expense
    
(121,000
)
  
(49,000
)
  
(401,000
)
  
(398,000
)
Interest income
    
1,000
    
7,000
    
72,000
    
293,000
  
Other income (expense)
    
-
    
100,000
    
-
   
100,000
  
                           
Income (loss) before income taxes
    
(757,000
)
  
269,000
    
(713,000
)
  
(1,191,000
)
(Provision for) benefit from income taxes
    
303,000
    
(119,000
)
  
364,000
   
159,000
  
Net income (loss)
    
(454,000
)
$
150,000
  
$
(349,000
)
$
(1,032,000
)
                           
Earnings (loss) per share:
                          
Basic:
                          
Net income (loss)
  
$
(0.04
)
$
0.01
  
$
(0.03
)
$
(0.10
)
Weighted average number of shares
    
10,553,410
    
10,553,410
    
10,553,410
    
10,553,410
  
                           
Diluted:
                          
Net income (loss)
  
$
(0.04
)
$
0.01
  
$
(0.03
)
$
(0.10
)
Weighted average number of shares
including the dilutive effect of stock options
    
10,553,410
  
10,553,410
 
  
10,553,410
    
10,553,410
  


* The consolidated statements of income (loss) and presentation of balance sheet statistics do not represent the results of operations or the financial position of the Company in accordance with generally accepted accounting principles (GAAP), and are not to be considered as alternatives to the balance sheet or statement of income, operating income, net income or any other GAAP measurements as an indicator of operating performance or financial position. Not all companies calculate such statistics in the same fashion and, therefore, the statistics may not be comparable to other similarly titled measures of other companies. Management believes that these computations provide useful information to investors.

About Point.360

Point.360 is a leading integrated media management services company providing film, video and audio post-production, archival, duplication, computer graphics and distribution services to motion pictures studios, television networks, independent production companies and multinational companies. Point.360 provides the services necessary to edit, master, reformat and archive clients’ audio and video content, including television programming, feature films and movie trailers.

3
Point.360’s interconnected facilities provide service coverage to all major U.S. media centers. Clients include major motion pictures studios, advertising agencies and corporations.

Forward-looking Statements

Certain statements in Point.360 press releases may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation (i) statements concerning the Company’s projected revenues, earnings, cash flow and EBITDA; (ii) statements of the Company’s management relating to the planned focus on internal growth and acquisitions; (iii) statements concerning reduction of facilities and actions to streamline operations; (iv) statements on actions being taken to reduce costs and improve customer service; (v) statements regarding new business and new acquisitions; (vi) statements of Point.360’s management relating to the Spin-off and merger of its post-production and spot advertising distribution business, respectively; (vii) statements concerning expected operating efficiencies that may be achieved after the spin-off transaction and (viii) the potential creation of additional shareholder value after completing the transactions described in the preceding phrases. Such statements are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievement of Point.360 to be materially different from those expected or anticipated in the forward-looking statements. Please also refer to the risk factors described in the Company’s SEC filings, including its quarterly reports on Form 10-Q, its Form S-1 registration statement filed on July 26, 2007 and Form 10-K/T filed on November 12, 2007. Such statements are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from those expected or anticipated in the forward- looking statements. In addition to the factors described in the Company’s SEC filings, including its quarterly reports on Form 10-Q, its registration statement on Form S-1 and Form 10-K/T, the following factors, among others, could cause actual results to differ materially from those expressed herein; (a) lower than expected net sales, operating income and earnings; (b) less than expected growth; (c) actions of competitors including business combinations, technological breakthroughs, new product offerings and marketing promotional successes; (d) the risk that anticipated new business may not occur or be delayed; (e) the risk of inefficiencies that could arise due to top level management changes and (f) general economic and political conditions that adversely impact the Company’s customers’ willingness or ability to purchase or pay for services from the Company. The Company has no responsibility to update forward-looking statements contained herein to reflect events or circumstances occurring after the date of this release.
 
4