Point.360 Announces Third Fiscal Quarter And First Nine Month Results

Point.360 Announces Third Fiscal Quarter And First Nine Month Results

BURBANK, Calif., May 10, 2012 /PRNewswire/ -- 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, 2012, including sales of $26.0 million and loss per share of $0.02 for the nine months ended March 31, 2012. For the quarter ended March 31, 2012, the Company's sales were $8.5 million generating a loss of $0.03 per share. The Company also reported $3.0 million of earnings before interest, taxes, depreciation and amortization and non-cash charges (EBITDAN) for the nine-month period, and EBITDAN of $0.7 million for the three-month period.

Haig S. Bagerdjian, the Company's Chairman, President and Chief Executive Officer said: "During the quarter, we completed the move of our corporate headquarters and Digital Film Labs to our Media Center location, which will reduce costs by approximately $1.2 million annually beginning in April 2012. The move has helped us position the Company to better serve our file-based post production business while maintaining ongoing traditional services. We are also considering re-entering Hollywood through the build-out of our Vine facility."

Mr. Bagerdjian continued: "With respect to Movie>Q, we are planning to open two more stores within the next six months. We are also reviewing several alternatives for a rapid expansion of the concept."

Revenues

Revenue for the quarter ended March 31, 2012 totaled $8.5 million compared to $9.3 million in the same quarter last year. Revenues for the nine months ended March 31, 2012 were $26.0 million compared to $26.6 million last year. Fluctuations between the periods were due to the timing of service deliveries.

Gross Margin

In the third quarter of fiscal 2012, gross margin was $2.8 million (33% of sales), compared to $3.3 million (35% of sales) in the prior year's third quarter. For the first nine months of fiscal 2012, gross margin was $9.3 million or 36% of sales, compared to $8.1 million, or 31% of sales in last year's period.

Selling, General and Administrative and Other Expenses

For the third quarter of fiscal 2012, SG&A expenses were $3.0 million, or 36% of sales, compared to $3.2 million, or 35% of sales, in the third quarter of last year. For the nine months ended March 31, 2012, SG&A expenses were $9.2 million (35% of sales) compared to $10.2 million (38% of sales) last year. SG&A personnel costs have been reduced by $0.1 million and $0.6 million in each of the current and nine month periods, respectively, when compared to the prior year periods.

Research and development costs associated with Movie>Q and other projects were $18,000 and $0.4 million in the three and nine month periods ended March 31, 2011.

As of March 31, 2011, the Company decided not to use a portion of the originally-acquired Movie>Q assets, specifically those related to kiosk (vending) machines, in the Movie>Q project. In the three and nine month periods ended March 31, 2011, the Company recorded a related $684,000 non-cash impairment charge.

Interest expense was $0.2 million and $0.6 million for the three and nine month periods ended March 31, 2012, and $0.2 million and $0.6 million in the three and nine month periods ended March 31, 2011. In last year's nine-month period, the Company received $0.1 million of interest income from the Internal Revenue Service associated with a $1.5 million tax refund.

Other income in all periods represents sublease income and gain on sale of fixed assets. In the 2012 nine month period, other income also included a $0.1 million discount on debt repayment. In the prior year three and nine-month periods, the Company also received $1.0 million from the settlement of a claim. In the prior year nine-month period, other income was partially offset by a put option expense of $0.1 million.



Operating Income (Loss)

Operating loss was $0.2 million in the third quarter of fiscal 2012 compared to a loss of $0.7 million in last year's third quarter. For the nine month period ended March 31, 2012, operating income was $0.1 million compared to a loss of $3.1 million in the prior year's nine month period.

Net Income (Loss)

For the third quarter of fiscal 2012, the Company reported a net loss of $0.3 million ($0.03 per share) compared to a net profit of $0.2 million ($0.02 per share) in the same period last year. For the nine months ended March 31, 2012, the Company reported a net loss of $0.2 million ($0.02 per share) compared to a net loss of $2.4 million ($0.22 per share) in the prior year period.

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

The following table reconciles the Company's EBITDAN to net income (loss) which is the most directly comparable financial measure under Generally Accepted Accounting Principles ("GAAP"):

Computation of EBITDAN (unaudited)*

Three Months Ended Nine Months Ended

March 31, March 31,
--------- ---------
2012 2011 2012 2011
---- ---- ---- ----

Net income (loss) $(327,000) $212,000 $(167,000) $(2,391,000)
Interest (net) 199,000 216,000 617,000 549,000
Income taxes -- -- -- --
Depreciation & amortization 728,000 889,000 2,264,000 2,752,000
Other non-cash charges:
Bad debt expense 9,000 9,000 26,000 27,000
Stock option compensation 65,000 76,000 252,000 232,000
Impairment charges -- 684,000 -- 684,000
--- ------- --- -------

EBITDAN $674,000 $2,086,000 $2,993,000 $1,853,000
======== ========== ========== ==========


In the three and nine month periods ended March 31, 2011, the Company recognized $1 million of income from the settlement of a claim. Excluding the claim income, EBITDAN for the three and nine month periods ended March 31, 2011 was $1,086,000 and $853,000, respectively.

Consolidated Statements of Operations (unaudited) *



The table below summarizes results for the three and nine month periods ended March 31, 2012 and 2011:

Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
2012 2012
2011 2011
---- ----

Revenues $8,497,000 $9,258,000 $26,008,000 $26,600,000
-------- ---------- ---------- ----------- -----------
Cost of services sold (5,657,000) (5,990,000) (16,696,000) (18,485,000)
--------------------- ---------- ---------- ----------- -----------

Gross profit 2,840,000 3,268,000 9,312,000 8,115,000
------------ --------- --------- --------- ---------
Selling, general and
administrative
expense (3,045,000) (3,221,000) (9,209,000) (10,182,000)
-------------------- ---------- ---------- ---------- -----------
Research and
development expense - (18,000) - (352,000)
-------------------- --- ------- --- --------
Impairment of long
lived assets - (684,000) - (684,000)
------------------ --- -------- --- --------

Operating income
(loss) (205,000) (655,000) 103,000 (3,103,000)
---------------- -------- -------- ------- ----------
Interest expense (199,000) (216,000) (637,000) (611,000)
---------------- -------- -------- -------- --------
Interest income - - 20,000 62,000
--------------- --- --- ------ ------
Other income 77,000 1,083,000 347,000 1,261,000
------------ ------ --------- ------- ---------

Income (loss) before
income taxes (327,000) 212,000 (167,000) (2,391,000)
-------------------- -------- ------- -------- ----------
Provision for income
taxes - - - -
-------------------- --- --- --- ---
Net income (loss) $(327,000) $212,000 $(167,000) $(2,391,000)
---------------- --------- -------- --------- -----------

Income (loss) per
share:
-----------------
Basic:
------
Net income (loss) $(0.03) $0.02 $(0.02) $(0.22)
---------------- ------ ----- ------ ------
Weighted average
number of shares 10,513,166 10,763,166 10,513,166 10,685,611
----------------- ---------- ---------- ---------- ----------
Diluted:
--------
Net income (loss) $(0.03) $0.02 $(0.02) $(0.22)
---------------- ------ ----- ------ ------
Weighted average
number of shares 10,513,166 10,763,166 10,513,166 10,685,611
including the
dilutive effect of
stock
options
-------
Selected Balance Sheet Statistics (unaudited)*

March 31, June 30,
2012 2011
---- ----
Working Capital $3,185,000 $2,885,000
--------------- ---------- ----------
Property and equipment, net 18,055,000 17,153,000
--------------------------- ---------- ----------
Total assets 27,174,000 25,395,000
------------ ---------- ----------
Current portion of long term debt 1,538,000 1,709,000
--------------------------------- --------- ---------
Long-term debt, net of current
portion 9,302,000 9,711,000
------------------------------ --------- ---------
Shareholder's equity 9,574,000 9,489,000
-------------------- --------- ---------

* 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 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 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.

SOURCE Point.360

Point.360

CONTACT: Alan Steel, Executive Vice President, +1-818-565-1444

Web Site: http://www.point360.com


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