-----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, ILxO+JE6/+h4qOAKriUB4Z5Io6ruD9m5nDhhznsHO+pdc6P/hc06JZD9kDnRerKY n315C7dp3DwaCGZMJuPfmg== 0001144204-07-009510.txt : 20070222 0001144204-07-009510.hdr.sgml : 20070222 20070222111905 ACCESSION NUMBER: 0001144204-07-009510 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070222 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070222 DATE AS OF CHANGE: 20070222 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: 07640889 BUSINESS ADDRESS: STREET 1: 2777 NORTH ONTARIO STREET CITY: BURBANK STATE: CA ZIP: 91504 BUSINESS PHONE: 818-565-1440 MAIL ADDRESS: STREET 1: 2777 NORTH ONTARIO STREET CITY: BURBANK STATE: CA ZIP: 91504 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 v066620_8k.htm
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 22, 2007
 

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.)


2777 North Ontario Street, Burbank, CA
91504
(Address of principal executive offices)
(Zip Code)
   

(818) 565-1400
 (Registrant's telephone number, including area code)
 

 (Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

__ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

__ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

__ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

__ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
Page 1
 
 
Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On February 22, 2007, Point.360 issued a press release announcing financial results for the fourth quarter and twelve months ended December 31, 2006. 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 in assessing the financial condition and results of operations and because they present certain cash flow and balance sheet statistics, and the effects of unusual transactions.

A copy of the press release follows as Exhibit 99.


Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

99     Press release dated February 22, 2007.


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 22, 2007
By: /s/ Alan R. Steel                                                
 
       Alan R. Steel
 
       Executive Vice President,
 
       Finance and Administration,
 
       Chief Financial Officer


 
 
Page 2
 
 EX-99.1 2 v066620_ex99-1.htm
NEWS BULLETIN         RE:
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, February 22, 2007

POINT.360 ANNOUNCES FOURTH QUARTER AND ANNUAL RESULTS.

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, 2006.

Haig S. Bagerdjian, the Company’s Chairman, President and Chief Executive Officer, said: “During the fourth quarter, we continued to enhance our digital high definition capabilities. Our geographically dispersed facilities are becoming better integrated to provide customers with a broader range of services. Our goal is to become the best solution for our customers’ post production and content distribution needs while continuing to make our operations more cost efficient.”

Revenues 

Revenue for the quarter ended December 31, 2006, totaled $16.6 million compared to $16.4 million in the same quarter of 2005. Revenues for the twelve months ended December 31, 2006 were $64.2 million, down 3% from $66.2 million in the 2005 period.

Gross Margin

In the fourth quarter of 2006, gross margin on sales was $5.5 million (33% of sales), compared to $6.0 million (37% of sales) in the prior year’s fourth quarter.

For all of 2006, gross margin was 33% of sales, as compared to 35% in 2005. The Company achieved $21.1 million of gross profit in 2006 compared to $23.0 million in 2005.

Selling, General and Administrative and Other Expenses

For the fourth quarter of 2006, SG&A expenses were $5.2 million, or 32% of sales, compared to $5.4 million, or 33% of sales in the fourth quarter of 2005. For all of 2006, SG&A was $20.0 million (31% of sales) compared to $21.4 million (32% of sales) in 2005.

Interest expense decreased $0.4 million in the fourth quarter and $0.7 million in for all of 2006 compared to the same periods of last year due to the effects of the sale/leaseback described below.

Operating Income

Operating income was $0.2 million in the fourth quarter of 2006 compared to $0.6 million in the same period last year due principally to lower sales. For all of 2006, operating income was $1.1 million compared to $1.6 million in 2005.

 
 
Point.360
 
Net Income (Loss)

For the fourth quarter of 2006, the Company reported a net loss of $14,000 ($0.00 per share) compared to a net loss of $1,000 ($0.00 per share) in the same period last year. For all of 2006, the Company reported net income of $0.1 million ($0.01 per diluted share) compared to $14,000 last year.

EBITDA (A)

In the fourth quarter, the Company’s EBITDA (earnings before interest, taxes, depreciation and amortization) was $1.7 million (10% of sales) compared to $2.0 million (12% of sales) in the 2005 period. For all of 2006, the Company’s EBITDA was $6.7 million (10% of sales) compared to $7.7 million (12% of sales) in 2005.

Quarterly Financial Statistics (A)

The following table reconciles the Company’s EBITDA to net income which is the most directly comparable financial measure under Generally Accepted Accounting Principles (“GAAP”), as well as selected balance sheet and income statement statistics (in thousands):

Computation of EBITDA (unaudited) (A)

   
Three Months Ended
 
Twelve Months Ended
 
 
 
December 31,
 
December 31,
 
 
 
2005
 
2006
 
2005
 
2006
  
(in thousands)
                  
Net Income
 
$
(1
)
$
(14
)
$
14
  
$
76
  
Interest
    
525
   
156
   
1,524
   
846
 
Income taxes
   
60
   
101
   
70
   
188
 
Depreciation
    
1,399
   
1,408
   
6,051
   
5,540
 
                           
EBITDA
  
$
1,983
  
$
1,651
  
$
7,659
  
$
6,650
  

 
On March 29, 2006, the Company sold and leased back its Media Center real estate. In the three and twelve-month periods ended December 31, 2006, the effect of the transaction was to lower depreciation and interest costs, and to increase rental expense. Assuming the sale/leaseback had not occurred in March 2006, EBITDA in the 2006 three and twelve-month periods would have been (in thousands):

   
Three Months
 
Twelve Months
  
(in thousands)
          
Non-GAAP income (see below)
  
$
(1
)
$
11
  
Interest
    
419
   
1,634
 
Income Taxes
    
11
   
26
 
Depreciation
    
1,454
   
5,679
 
EBITDA
  
$
1,883
  
$
7,350
  
 
 
 
-2-
Point.360

Selected Balance Sheet Statistics (in thousands - unaudited) (A)

   
December 31,
 
December 31,
 
 
 
2005
 
2006
  
           
Working Capital
  
$
1,275
  
$
3,988
  
Property and equipment, net(1)
    
28,079
   
14,138
 
Total assets(1) 
    
75,459
   
64,094
 
Borrowings under revolving credit agreement
    
4,054
   
3,006
 
Current portion of long term debt
    
2,373
   
1,174
 
Long-term debt, net of current portion(1) 
    
13,790
   
3,474
 
Net debt (revolving credit, current portion
              
of notes payable and long-term debt,
              
minus cash on hand)(1)
    
19,622
   
7,654
 
Shareholders equity
    
39,510
   
40,021
 
               
(1) Reductions due primarily to the sale/leaseback transaction.


 
 
-3-
Point.360

Consolidated Statements of Income (Loss) (unaudited)(A)

The table below summarizes results for the three and twelve month periods ended December 31, 2005 and 2006, showing the effects of the Media Center sale/leaseback in 2006 (in thousands except per share amounts):

   
Quarter Ended
  
   
December 31, 2005
  
December 31, 2006
  
   
GAAP
 
Pro Forma
 
(1)
 
GAAP
  
                   
Revenues
  
$
16,377
  
$
16,154
  
$
-
  
$
16,564
  
Cost of services
    
(10,354
)
  
(10,910
)
  
(173
)
  
(11,083
)
                           
Gross profit
    
6,024
   
5,654
   
(173
)
  
5,481
 
Selling, general and
                          
administrative expense
    
(5,440
)
  
(5,225
)
  
(14
)
  
(5,239
)
Operating income
   
584
   
429
   
(187
)
  
242
 
Interest expense, net
    
(525
)
  
(419
)
  
264
   
(155
)
Income
                         
before income taxes
    
59
   
10
   
77
   
87
 
Provision for
                          
income taxes
    
(60
)
  
(11
)
  
(90
)
  
(101
)
Net income (loss)
  
$
(1
)
$
(1
)
$
(13
)
$
(14
)
                           
Earnings per share:
                          
Basic:
  
$
-
  
$
-
  
$
-
  
$
-
  
Diluted:
  
$
-
  
$
-
  
$
-
  
$
-
  

 
   
Twelve Months Ended
 
 
 
December 31,2005
 
December 31, 2006
  
   
GAAP
 
Proforma
 
(1)
 
GAAP
  
                   
Revenues
  
$
66,199
  
$
64,218
  
$
-
  
$
64,218
  
Cost of services
    
(43,167
)
$
(42,552
)
  
(519
)
  
(43,071
)
                           
Gross profit
    
23,032
   
21,666
   
(519
)
  
21,147
 
Selling, general and
                          
administrative expense
    
(21,424
)
  
(19,995
)
  
(42
)
  
(20,037
)
Operating income
   
1,608
   
1,671
   
(561
)
  
1,110
 
Interest expense, net
    
(1,524
)
  
(1,634
)
  
788
   
(846
)
Income
                         
before income taxes
    
84
   
37
   
227
   
264
 
Provision for
                          
income taxes
    
(70
)
  
(26
)
  
(162
)
  
(188
)
Net income
 
$
14
  
$
11
  
$
65
  
$
76
  
                           
Earnings per share:
                          
Basic:
  
$
-
  
$
-
  
$
0.01
  
$
0.01
  
Diluted:
  
$
-
  
$
-
  
$
0.01
  
$
0.01
  
(1)      
Effect of sale/leaseback transaction. The adjustments reflect the decrease in depreciation and the increase in rent associated with the real estate and lower interest expense resulting from the pay off approximately $13.9 million of the mortgage and other debt with the sale proceeds.
________________________________________________
 
 
-4-
Point.360

(A)  
The consolidated statements of income, computation of EBITDA 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 one of the largest providers of high definition and standard definition digital mastering, data conversion and 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, 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; 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; (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.
 

 
-5-
 

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