-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kpl7zPTQo65YQ/ZnyujpbcsbHhyPj+v+JkVbMtu2UFCzh6ePdlh1xG68593tXXMe xhLAC44nYLul/8RZxqa4yQ== 0001014733-04-000005.txt : 20040226 0001014733-04-000005.hdr.sgml : 20040226 20040225204854 ACCESSION NUMBER: 0001014733-04-000005 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031231 ITEM INFORMATION: Other events FILED AS OF DATE: 20040226 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POINT 360 CENTRAL INDEX KEY: 0001014733 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ALLIED TO MOTION PICTURE PRODUCTION [7819] IRS NUMBER: 954272619 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-21917 FILM NUMBER: 04628767 BUSINESS ADDRESS: STREET 1: 7083 HOLLYWOOD BLVD SUITE 200 STREET 2: SUITE 200 CITY: HOLLYWOOD STATE: CA ZIP: 90028 BUSINESS PHONE: 3239577990 MAIL ADDRESS: STREET 1: 7083 HOLLYWOOD BLVD SUITE 200 STREET 2: SUITE 200 CITY: HOLLYWOOD STATE: CA ZIP: 90028 FORMER COMPANY: FORMER CONFORMED NAME: VDI MULTIMEDIA DATE OF NAME CHANGE: 19991115 FORMER COMPANY: FORMER CONFORMED NAME: VDI MEDIA DATE OF NAME CHANGE: 19960516 8-K 1 f8k2004-1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) February 26, 2004 ------------------------------- POINT.360 - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 0-21917 95-4272619 - ------------------------------- ---------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 7083 Hollywood Boulevard, Suite 200, Hollywood, CA 90028 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (323) 957-7990 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) ---------------------------------------------------------- (Former name or former address, if changed since last report) Item 7. FINANCIAL STATEMENTS AND EXHIBITS. 99 Press release dated February 26, 2004. Item 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. Point.360 today issued a press release announcing fourth quarter and year end results. Included in the press release issued by the Company and furnished herewith as Exhibit 99 are certain non-GAAP financial measures. Management of the Company believes such non-GAAP financial measures are useful to investors assessing the financial condition and results of operations and because they exclude special charges which management believes are atypical and unlikely to occur with regularity in the future. A copy of the press release follows as Exhibit 99. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Point.360 ---------------------------------- (Registrant) Date: February 26, 2004 By: /s/ Alan R. Steel ---------------------------------- Alan R. Steel Executive Vice President, Finance and Administration, Chief Financial Officer 2 EX-99 3 newsfeb2604.txt NEWS BULLETIN EXHIBIT 99 FOR FURTHER INFORMATION: POINT.360 7083 HOLLYWOOD BLVD. SUITE 200 HOLLYWOOD, CA 90028 Nasdaq: PTSX AT THE COMPANY: Alan Steel Executive Vice President (323) 860-6206 FOR IMMEDIATE RELEASE - HOLLYWOOD, CA, February 26, 2004 POINT.360 ANNOUNCES FOURTH QUARTER AND YEAR-END 2003 RESULTS Point.360 reports net income for calendar 2003 of $3.7 million ($0.39 per share) before special charges ($3.1 million or $0.33 per share after special charges) vs. $2.8 million ($0.30 per share) in the prior year. Point.360 (Nasdaq: PTSX), a leading provider of integrated media management services, today announced results for the three- and twelve-month periods ended December 31, 2003. Haig S. Bagerdjian, the Company's Chairman, President and Chief Executive Officer, said: "We are pleased with the Company's performance. Our profitability and strong positive cash flow have enabled us to reduce our net debt position by $9 million during the year. Our focus in 2004 will be to build revenues to leverage the full extent of our service offering." REVENUES Revenue for the fourth quarter ended December 31, 2003, totaled $15.1 million compared to $17.9 million in the same quarter of 2002. The decline in the 2003 quarter is due to lower spot advertising distribution for studio film releases as the result of delays of new feature introductions, and the late 2002/early 2003 completion of a large film re-mastering project which contributed to higher fourth quarter 2002 sales. Revenues for the year ended December 31, 2003 were $64.9 million, down 5% from $68.4 million in the 2002 period. Sales to studio and advertising clients are dependent on the number and timing of motion picture and advertising campaign release schedules, which releases can vary from year to year. GROSS MARGIN In the fourth quarter of 2003, gross margin on sales was 39% compared to 40% in the prior year's fourth quarter. For the entire year, gross margin was 39% of sales as compared to 38% in 2002. In 2003, the Company achieved $25.2 million of gross profit vs. $26.2 million in 2002. SELLING, GENERAL AND ADMINISTRATIVE AND OTHER EXPENSES In the fourth quarter, selling, general and administrative expenses ("SG&A") decreased by 16% from the same period last year. For the fourth quarter of 2003, SG&A expenses were $4.4 million, or 29% of sales, compared to $5.2 million, or 29% of sales in the fourth quarter of 2002. For all of 2003, SG&A dollars spent decreased by 8% to 27% of sales as compared to the prior year 28% of sales. In June 2003, the Company also wrote off approximately $1.0 million of previously deferred expenses related to a proposed acquisition and financing package, which is excluded from the above 2003 annual percentage. Interest expense decreased $0.2 million in the fourth quarter and $0.4 million for all of 2003 compared to the same periods of last year because of lower debt levels due to principal payments made since December 31, 2002. During the quarter ended December 31, 2003, the Company realized a non-cash credit of $119,000 compared to a fourth quarter 2002 non-cash credit of $117,000 for changes in the fair value of a derivative interest rate swap contract between the beginning and end of each period and amortization of a cumulative-effect adjustment made in 2001. For all of 2003, the Company realized a non-cash credit of $611,000 compared to a non-cash credit of $82,000 in the 2002 period. These amounts were recorded as required by Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities. The hedge contract expired in November 2003 and there will be no further accounting charges or credits related to the swap contract after that date. OPERATING INCOME (A) Operating income decreased $0.4 million or 20% in the fourth quarter of 2003 compared to the same period last year due to lower sales. The Company's operating income was $1.6 million in the 2003 quarter as compared to $2.0 million in the same quarter of the previous year. For all of 2003, operating income before the special charge was $7.7 million, up approximately 6% or $0.4 million from the $7.3 million achieved in the 2002 period. After the special charge, operating income was $6.7 million in the 2003 period. NET INCOME (A) For the fourth quarter of 2003, the Company reported net income of $0.8 million ($0.08 per diluted share) compared to a net profit of $0.9 million ($0.10 per diluted share) in the same period last year. The Company recorded income tax expense of $0.5 million in the 2003 quarter as compared to a $0.6 million expense in the fourth quarter of last year. For all of 2003, the Company reported net income of $3.1 million ($0.33 per diluted share) compared to net income of $2.8 million ($0.30 per diluted share) last year. The income tax expense in 2003 was $2.1 million (a 40% effective rate); in 2002 the Company's tax expense was $2.0 million (a 42% effective rate). Before special charges, the Company's net income was $3.7 million, or $0.39 per share, in the 2003 period. EBITDA AND FREE CASH FLOW BEFORE SPECIAL CHARGES (A) In the fourth quarter, the Company's EBITDA (earnings before interest, taxes, depreciation and amortization) was $3.1 million (21% of sales) compared to $3.4 million (19.0% of sales) in the 2002 period. For all of 2003, the Company's EBITDA before special charges was $13.8 million (21% of sales) compared to $12.7 million (19.0% of sales) in 2002. Special charges refer to the write-off during the 2003 period of deferred acquisition and financing costs. In the 2003 fourth quarter, the Company's free cash flow (EBITDA before special charges less interest, taxes and capital expenditures) was $2.0 million compared to $1.2 million in the same quarter last year. Free cash flow before special charges for all of 2003 was $8.4 million compared to $6.1 million in 2002. The following table reconciles the Company's operating income, net income, EBITDA and free cash flow before special charges to the Company's operating income and net income which are the most directly comparable financial measures under Generally Accepted Accounting Principles ("GAAP"). COMPUTATION OF OPERATING INCOME, NET INCOME, EBITDA AND FREE CASH FLOW BEFORE SPECIAL CHARGES (A)
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------ ----------------- 2002 2003 2002 2003 ---- ---- ---- ---- (in thousands) GAAP operating income $ 1,964 $ 1,576 $ 7,270 $ 6,708 Add back: Special charge - - - 1,002 -------- -------- -------- -------- Non-GAAP operating income before special charges $ 1,964 $ 1,576 $ 7,270 $ 7,710 ======== ======== ======== ======== GAAP net income $ 920 $ 812 $ 2,817 $ 3,149 Add back: Special charges, net of tax benefit - - - 600 -------- -------- -------- -------- Non-GAAP net income before special charges $ 920 $ 812 $ 2,817 $ 3,749 ======== ======== ======== ======== GAAP net income $ 920 $ 812 $ 2,817 $ 3,149 Interest 585 427 2,528 2,056 Income taxes 576 456 2,007 2,114 Depreciation 1,316 1,453 5,258 5,464 Amortization 13 - 81 35 -------- -------- -------- -------- Non-GAAP EBITDA 3,410 3,148 12,691 12,818 Special charges - - - 1,002 -------- -------- -------- -------- Non-GAAP EBITDA before special charges $ 3,410 $ 3,148 $ 12,691 $ 13,820 ======== ======== ======== ======== Non-GAAP EBITDA $ 3,410 $ 3,148 $ 12,691 $ 12,818 Deduct: Interest (585) (427) (2,528) (2,056) Income taxes (576) (456) (2,007) (2,114) Capital expenditures (1,014) (240) (2,018) (1,223) -------- -------- -------- --------- Non-GAAP free cash flow 1,235 2,025 6,138 7,425 Special charges - - - 1,002 -------- -------- -------- --------- Non-GAAP free cash flow before special charges $ 1,235 $ 2,025 $ 6,138 $ 8,427 ======== ======== ======== =========
- ------------------------------------ (A) The measurements of operating income and net income before special charges, and EBITDA and free cash flow before and after special charges do not represent the results of operations or cash generated from operating activities in accordance with GAAP, are not to be considered as an alternative to operating income, net income or any other GAAP measurements as a measure of operating performance and are not necessarily indicative of cash available to fund all cash needs. 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 because they are measures of the Company's operations before special charges and cash flow available to the Company to pay interest, repay debt, make acquisitions or invest in new technologies. The Company is currently committed to use a portion of its cash flows to service existing debt, if outstanding, and, furthermore, anticipates making certain capital expenditures as part of its business plan. Additionally, 2003 operating income, net income, EBITDA and free cash flow amounts before special charges represent more comparable figures to the same periods in 2002 since in the opinion of management such charges are unusual items. POINT.360 CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------ ----------------- 2002 2003 2002 2003 ---- ---- ---- ---- Revenues $ 17,903,000 $ 15,125,000 $ 68,419,000 $ 64,900,000 Cost of goods sold (10,763,000) (9,191,000) (42,172,000) (39,670,000) ------------ ------------ ------------ ------------ Gross profit 7,140,000 5,934,000 26,247,000 25,230,000 Selling, general and administrative expense (5,176,000) (4,358,000) (18,977,000) (17,520,000) Write-off of deferred acquisition and financing costs - - - (1,002,000) ------------ ------------ ------------ ------------ Operating income 1,964,000 1,576,000 7,270,000 6,708,000 Interest expense, net (585,000) (427,000) (2,528,000) (2,056,000) Derivative fair value change 117,000 119,000 82,000 611,000 ------------ ------------ ------------ ------------ Income (loss) before income taxes 1,496,000 1,268,000 4,824,000 5,263,000 (Provision for) benefit from income taxes (576,000) (456,000) (2,007,000) (2,114,000) ------------ ------------ ------------ ------------ Net income (loss) $ 920,000 $ 812,000 $ 2,817,000 $ 3,149,000 ============ ============ ============ ============ Earnings (loss) per share: Basic: Net income (loss) $ 0.10 $ 0.09 $ 0.31 $ 0.35 Weighted average number of shares 9,014,232 9,111,399 9,013,224 9,067,446 ============ ============ ============ ============ Diluted: Net income (loss) $ 0.10 $ 0.08 $ 0.30 $ 0.33 Weighted average number of shares including the dilutive effect of stock options 9,233,651 9,866,290 9,376,707 9,554,847 ============ ============ ============ ============
ABOUT POINT.360 Point.360 is one of the largest providers of video and film asset management services to owners, producers and distributors of entertainment and advertising content. Point.360 provides the services necessary to edit, master, reformat, archive and ultimately distribute its clients' film and video content, including television programming, spot advertising, feature films and movie trailers. The Company delivers commercials, movie trailers, electronic press kits, infomercials and syndicated programming, by both physical and electronic means, to hundreds of broadcast outlets worldwide. The Company provides worldwide electronic distribution, using fiber optics, satellites, and the Internet. Point.360's interconnected facilities in Los Angeles, New York, Chicago, Dallas and San Francisco provide service coverage in each of the major U.S. media centers. Clients include major motion picture studios such as Universal, Disney, Fox, Sony Pictures, Paramount, MGM, and Warner Bros. and advertising agencies TBWA Chiat/Day, Saatchi & Saatchi and Young & Rubicam. 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; and (v) statements regarding new business and new acquisitions. 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 and its annual reports on Form 10-K, 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, even following the refocus of the Company on sales and streamlined operations; (c) actions of competitors including business combinations, technological breakthroughs, new product offerings and marketing and 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. -----END PRIVACY-ENHANCED MESSAGE-----