8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): May 14, 2015

Point.360

(Exact name of registrant as specified in its charter)

California	0-21917	01-0893376
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)
2701 Media Center Drive Los Angeles, CA 90065		91504
(Address of principal executive offices)		(Zip Code)

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

(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))

Item 2.02.   RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On May 14, 2015, Point.360 issued a press release announcing financial results for the three and nine month periods ended March 31, 2015. Included in the press release issued by the Company and furnished herewith as Exhibit 99.1 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 effects of unusual transactions.

A copy of the press release follows as Exhibit 99.1.

Item 9.01.   FINANCIAL STATEMENTS AND EXHIBITS.

99.1 Press release dated May 14, 2015

SIGNATURE

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
May 14, 2015	By:	/s/ Alan R. Steel
		Name:  Alan R. Steel
		Title:    Executive Vice President
		Finance and Administration
		Chief Financial Officer

EX-99.1

Exhibit 99.1

NEWS BULLETIN

POINT.360 2701 MEDIA CENTER DRIVE LOS ANGELES, CA 90065 OCTQX: PTSX 

FOR FURTHER INFORMATION:

AT THE COMPANY:

Alan Steel

Executive Vice President

(818) 565-1444

FOR IMMEDIATE RELEASE – LOS ANGELES, CA, MAY 14, 2015

POINT.360 ANNOUNCES THIRD FISCAL QUARTER AND NINE MONTH RESULTS

Point.360 (OTCQX: PTSX), a leading provider of integrated media management services, today announced results for the three and nine month periods ended March 31, 2015, including sales of $5.3 million for the three months, resulting in earnings before interest, taxes, depreciation and amortization and non-cash charges (EBITDAN*) of $20,000 for the period. The net loss for the three-month period was $0.5 million.

Haig S. Bagerdjian, the Company’s Chairman, President, and Chief Executive Officer said: “While third quarter revenues were similar to the previous two quarters, the Company achieved its first positive EBITDAN* since the fourth quarter of fiscal 2014. In the third quarter, we completed the move of our West Los Angeles operations to our Burbank and Media Center locations and achieved significant cost savings for the future. We also entered into a new bank line of credit. These actions have streamlined operations and provided us with added flexibility to compete in today’s digital environment.”

Mr. Bagerdjian continued: “We are currently seeing increased consolidation activity in our industry which may provide opportunities for Point.360. We intend to evaluate possibilities for the Company. We look forward to better financial results in the future.”

Revenues

Revenue for the quarter ended March 31, 2015 totaled $5.3 million compared to $6.1 million in the same quarter last year. Revenues for the nine months ended March 31, 2015 were $15.8 million compared to $19.2 million last year. Declines were due primarily to lower orders by a major customer, and our decision in the second quarter of the last fiscal year to terminate our inconsistent computer graphics business.

Gross Margin

In the third quarter of fiscal 2015, gross margin was $1.9 million (36% of revenues), compared to $1.8 million (30% of revenues) in the prior year’s quarter. For the first nine months of fiscal 2015, gross margins were $4.8 million (31% of revenues), compared to $6.1 million, (32% of revenues) in last year’s period.

Selling, General and Administrative (“SG&A”) and Other Expenses

For the third quarter of fiscal 2015, SG&A expenses were $2.5 million, or 46% of revenues, compared to $2.8 million, or 45% of revenues, in the third quarter of last year. For the current nine month period, SG&A expenses were $7.7 million (49% of revenues), compared to $8.6 million (45% of revenues) last year.

Interest expense was $0.1 million and $0.2 million in the three and nine month periods ended March 31, 2015, respectively, and $0.1 million and $0.2 million in last year’s three and nine month periods, respectively.

Other income in the fiscal 2015 and 2015 three and nine month periods includes sublease income. In the fiscal 2014 three and nine month periods, other income includes $0.3 million from the settlement of a lawsuit.

1

Operating Loss

The operating loss was $0.5 million in the third quarter of fiscal 2015 compared to an operating loss of $0.9 million in last year’s third quarter. For the nine months ended March 31, 2015, the operating loss was $2.9 million compared to an operating loss of $2.6 million in the comparable period last year.

Net Loss

For the third quarter and first nine months of fiscal 2015, the Company reported net losses of $0.5 million ($0.05 per share) and $2.8 million ($0.27 per share), respectively, compared to net losses of $0.7 million ($0.06 per share) and $2.3 million ($0.22 per share) in the same periods last year, respectively.

Earnings Before Interest, Taxes, Depreciation, Amortization and Non-Cash Charges (EBITDAN)*

The following table reconciles the Company’s EBITDAN* to net loss which is the most directly comparable financial measure under Generally Accepted Accounting Principles (“GAAP”):

Computation of EBITDAN* (unaudited)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2014			2015			2014			2015
Net loss	$	(662,000	)	$	(515,000	)	$	(2,292,000	)	$	(2,804,000	)
Interest (net)		70,000			60,000			215,000			150,000
Income taxes		--			--			--			--
Depreciation & amortization		437,000			406,000			1,430,000			1,062,000
Other non-cash charges:
Bad debt expense (recovery)		6,000			5,000			(106,000	)		16,000
Stock based compensation		66,000			64,000			206,000			203,000
EBITDAN	$	(83,000	)	$	20,000		$	(547,000	)	$	(1,373,000	)

2

Consolidated Statements of Operations (unaudited) *

The table below summarizes results for the three month periods ended March 31, 2014 and 2015.

	Three Months Ended March 31,						Nine Months Ended March 31,
	2014			2015			2014			2015
Revenues	$	6,134,000		$	5,325,000		$	19,193,000		$	15,810,000
Cost of services sold		(4,296,000	)		(3,409,000	)		(13,130,000	)		(10,987,000	)
Gross profit		1,838,000			1,916,000			6,063,000			4,823,000
Selling, general and administrative expense		(2,767,000	)		(2,456,000	)		(8,632,000	)		(7,722,000	)
Operating loss		(929,000	)		(540,000	)		(2,569,000	)		(2,899,000	)
Interest expense		(70,000	)		(60,000	)		(215,000	)		(150,000	)
Other income		337,000			85,000			492,000			245,000
Loss before income taxes		(662,000	)		(515,000	)		(2,292,000	)		(2,804,000	)
Provision for income taxes		-			-			-			-
Net loss	$	(662,000	)	$	(515,000	)	$	(2,292,000	)	$	(2,804,000	)
Loss per share:
Basic
Net loss	$	(0.06	)	$	(0.05	)	$	(0.22	)	$	(0.27	)
Weighted average number of shares		10,536,906			10,536,906			10,531,536			10,536,906
Diluted:
Net loss	$	(0.06	)	$	(0.05	)	$	(0.22	)	$	(0.27	)
Weighted average number of shares including the dilutive effect of stock options		10,536,906			10,536,906			10,531,536			10,536,906

Selected Balance Sheet Statistics (unaudited)*

	June 30, 2014			March 31, 2015
Working capital deficit (1)	$	(1,723,000	)	$	(3,773,000	)
Property and equipment, net		10,173,000			9,449,000
Total assets		17,049,000			14,200,000
Current portion of long term debt		5,485,000			5,048,000
Long-term debt, net of current portion		-			102,000
Shareholder’s equity		6,861,000			4,260,000

⁽¹⁾ Reflects the classification of long-term debt as a current liability due to previous financial covenant default conditions under the Company’s prior credit agreements.

3

*The consolidated statements of operations, computation of EBITDAN 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, statement of operations, operating loss, net loss 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 additional useful analytical information to investors.

About Point.360

Point.360 (PTSX) is a value add service organization specializing in content creation, manipulation and distribution processes integrating complex technologies to solve problems in the life cycle of Rich Media. With locations in greater Los Angeles, Point.360 performs high and standard definition audio and video post production, creates virtual effects and archives and distributes physical and electronic Rich Media content worldwide, serving studios, independent producers, corporations, non-profit organizations and governmental and creative agencies. 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. Point.360’s interconnected facilities provide service coverage to all major U.S. media centers. The Company also rents and sells DVDs and video games directly to consumers through its Movie>Q retail stores. See www.Point360.com and www.MovieQ.com.

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. Forward-looking statements include, without limitation, statements regarding (i) the Company’s projected revenues, earnings, cash flow and EBITDA; (ii) planned focus on internal growth and acquisitions; (iii) reduction of facilities and actions to streamline operations; (iv) actions being taken to reduce costs and improve customer service and (v) new business and new acquisitions. Please also refer to the risk factors described in the Company’s SEC filings, including its annual reports on Form 10-K. 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, 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 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