Point.360 Announces Fourth Fiscal Quarter And Fiscal 2014 Results

Point.360 Announces Fourth Fiscal Quarter And Fiscal 2014 Results

LOS ANGELES, Sept. 11, 2014 /PRNewswire/ -- Point.360 (NASDAQ: PTSX), a leading provider of integrated media management services, today announced results for the three and twelve month periods ended June 30, 2014. For the twelve month period ending June 30, 2014 sales were $25.7 million, and the loss per share was $0.25. For the quarter ended June 30, 2014, the Company's sales were $6.5 million, generating a loss of $0.03 per share. The Company also reported $0.2 million of earnings before interest, taxes, depreciation and amortization and non-cash charges (non-GAAP EBITDAN) for the three-month period.

Haig S. Bagerdjian, the Company's Chairman, President and Chief Executive Officer said: "Lower fiscal 2014 revenues are the result of our decision to terminate our computer graphics business in October 2013 and lower orders from a major customer who brought "in house" some of the work previously outsourced to Point.360."

Mr. Bagerdjian continued: "We have just completed the installation of a 10-gig Ethernet, 8-gig fiber channel and HD-SDI customized private network that gives Point.360 the advantages of state-of-the-art rapid internal and external communication and response, content distribution and security capabilities for our customers. In this file-based environment, deliveries of both feature and television content to digital portal platforms such as Google and Netflix are increasing. Content localization for international deliveries on behalf of our studio clients is growing. Additionally, the network allows us to more fully utilize our facility investments. We look forward to improvement in fiscal 2015."

Revenues

Revenue for the quarter ended June 30, 2014 totaled $6.5 million compared to $7.2 million in the same quarter last year. Revenues for the twelve months ended June 30, 2014 were $25.7 million compared to $30.9 million last year. Declines were due primarily to lower content distribution orders by a major customer and our decision in the second quarter of fiscal 2014 to terminate our inconsistent computer graphics business.

Gross Margin

In the fourth quarter of fiscal 2014, gross margin was $2.3 million (36% of sales), compared to $2.2 million (31% of sales) in the prior year's fourth quarter. For fiscal 2014, gross margin was $8.4 million or 33% of sales, compared to $10.5 million, or 34% of sales in last year.

Selling, General and Administrative and Other Expenses

For the fourth quarter of fiscal 2014, SG&A expenses were $2.7 million, or 41% of sales, compared to $3.1 million, or 43% of sales, in the fourth quarter of last year. For the twelve months ended June 30, 2014, SG&A expenses were $11.3 million (44% of sales) compared to $12.0 million (39% of sales) last year.

Interest expense was $0.1 million and $0.3 million for the three and twelve month periods ended June 30, 2014, and $0.1 million and $0.4 million in the three and twelve month periods ended June 30, 2013.

Other income in all periods includes sublease income. In the fiscal 2014 twelve month period, other income includes $0.3 million from the settlement of a lawsuit. In the fiscal 2013 twelve month period, other income included a $332,000 discount received on the payoff of a mortgage, offset by the write offs of $90,000 of deferred financing costs related to that mortgage and a $30,000 fee to terminate a revolving credit agreement, in addition to income of $131,000 associated with a change in accounting estimate related to a customer rebate program.

Operating Loss

Operating loss was $0.4 million in the fourth quarter of fiscal 2014 compared to $0.9 million in last year's fourth quarter. For the twelve month period ended June 30, 2014, operating loss was $3.0 million compared to $1.5 million in the prior year's twelve month period.

Net Loss

For the fourth quarter of fiscal 2014, the Company reported a net loss of $0.4 million ($0.03 per share) compared to $0.9 million ($0.08 per share) in the same period last year. For the twelve months ended June 30, 2014, the Company reported a net loss of $2.7 million ($0.25 per share) compared to $1.2 million ($0.12 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 non-GAAP EBITDAN (unaudited)*


Three Months Ended Twelve Months Ended

June 30, June 30,
-------- --------

2013 2014 2013 2014
---- ---- ---- ----

Net income (loss) $(889,000) $(358,000) $(1,234,000) $(2,650,000)
---------------- --------- --------- ----------- -----------

Interest (net) 78,000 70,000 394,000 285,000
------------- ------ ------ ------- -------

Income taxes 23,000 3,000 23,000 3,000
------------ ------ ----- ------ -----

Depreciation & amortization 551,000 411,000 2,405,000 1,841,000
--------------------------- ------- ------- --------- ---------

Other non-cash charges:
-----------------------

Bad debt expense 7,000 7,000 31,000 (99,000)
---------------- ----- ----- ------ -------

Stock based compensation 64,000 66,000 222,000 272,000
------------------------ ------ ------ ------- -------



EBITDAN $(166,000) $199,000 $1,841,000 $(348,000)
------- --------- -------- ---------- ---------



Consolidated Statements of Operations (unaudited) *


The table below summarizes results for the three and twelve month periods ended June 30, 2013 and 2014:


Three Months Ended Twelve Months Ended

June 30, June 30,
-------- --------

2013 2014 2013 2014
---- ---- ---- ----


Revenues $7,235,000 $6,540,000 $30,937,000 $25,733,000
-------- ---------- ---------- ----------- -----------

Cost of services sold (5,000,000) (4,217,000) (20,419,000) (17,347,000)
--------------------- ---------- ---------- ----------- -----------


Gross profit 2,235,000 2,323,000 10,518,000 8,386,000
------------ --------- --------- ---------- ---------

Selling, general and
administrative
expense (3,099,000) (2,704,000) (11,982,000) (11,336,000)
-------------------- ---------- ---------- ----------- -----------


Operating income
(loss) (864,000) (381,000) (1,464,000) (2,950,000)
---------------- -------- -------- ---------- ----------

Interest expense (78,000) (70,000) (394,000) (285,000)
---------------- ------- ------- -------- --------

Interest income - - - -
--------------- --- --- --- ---

Other income 76,000 96,000 647,000 588,000
------------ ------ ------ ------- -------


Income (loss) before
income taxes (866,000) (355,000) (1,211,000) (2,647,000)
-------------------- -------- -------- ---------- ----------

Provision for income
taxes (23,000) (3,000) (23,000) (3,000)
-------------------- ------- ------ ------- ------

Net income (loss) $(889,000) $(358,000) $(1,234,000) $(2,650,000)
---------------- --------- --------- ----------- -----------


Income (loss) per share:
------------------------

Basic:
------

Net income (loss) $(0.08) $(0.03) $(0.12) $(0.25)
---------------- ------ ------ ------ ------

Weighted average
number of shares 10,513,166 10,536,906 10,513,166 10,532,875
----------------- ---------- ---------- ---------- ----------

Diluted:
--------

Net income (loss) $(0.08) $(0.03) $(0.12) $(0.25)
---------------- ------ ------ ------ ------

Weighted average
number of shares 10,513,166 10,536,906 10,513,166 10,532,875

including the dilutive effect of stock

options
------- ---



Selected Balance Sheet Statistics (unaudited)*


June 30, June 30,

2013 2014
---- ----

Working
Capital $3,420,000 $(1,723,000)
-------- ---------- -----------

Property
and
equipment,
net 15,993,000 10,173,000
----------- ---------- ----------

Total
assets 23,652,000 17,049,000
------- ---------- ----------

Current
portion of
long term
debt 490,000 5,485,000
----------- ------- ---------

Long-term
debt, net
of current
portion 8,267,000 -
----------- --------- ---

Shareholder's
equity 9,219,000 6,861,000
------------- --------- ---------


*The consolidated statements of
operations, computation of non-GAAP
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 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: COMPANY: Alan Steel, Executive Vice President, (818) 565-1444

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


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