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, May 13, 2003
POINT.360 REPORTS $1.0 MILLION ($0.11 PER SHARE) FIRST QUARTER 2003 PROFIT.
Profit represents $0.4 million ($0.04 per share)
increase over first quarter 2002 results.
Point.360 (Nasdaq: PTSX), a leading provider of integrated media management
services, today announced significantly improved results for the quarter ended
March 31, 2003.
Haig S. Bagerdjian, Chairman, President and CEO, said: "On a 3% sales increase
in the first quarter compared to last year's same quarter, our net income
increased 52% to $0.11 per share. We are continuing to keep costs under control
while we build the business. Concurrently, we are making progress toward
purchasing three post production entities in Canada and finalization of a new
financing arrangement."
Revenues
Revenue for the first quarter ended March 31, 2003, totaled $17.3 million
compared to $16.8 million in the same quarter of 2002, an increase of 3%.
Gross Margin
In the first quarter of 2003, gross margin improved by $0.2 million. Gross
margin on sales was 37.2% in the 2003 first quarter compared to 37.1% in the
prior year's first quarter.
Selling, General and Administrative and Other Expenses
In the first quarter, selling, general and administrative expenses ("SG&A")
decreased by 2% of sales compared to first quarter of the prior year. For the
first quarter of 2003, SG&A expenses were $4.4 million, or 25.3% of sales,
compared to $4.6 million, or 27.3% of sales in the first quarter of 2002.
Interest expense decreased $0.1 million in the first quarter compared to the
same period last year because of lower debt levels due to principal payments
made during the last twelve months.
During the quarter ended March 31, 2003, the Company realized a non-cash credit
of $145,000 compared to a first quarter 2002 non-cash credit of $176,000 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. These amounts were recorded as required by Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities ("SFAS 133"). By the end of the hedge contract in November 2003, the
amounts recognized as expense during the contract period will be taken back into
income as the contract will then have no further theoretical value, provided
that the contract continues to the end of the term.
Operating Income
The Company achieved operating income of $2.0 million in the first quarter of
2003 as compared to $1.6 million in the same quarter of the previous year which
represents an increase of $0.4 million or 25% compared to the first quarter of
the prior year.
Net Income
For the first quarter of Fiscal 2003, the Company reported a net profit of $1.0
million ($0.11 per share) compared to net income of $0.6 million ($0.07 per
share) in the same period last year. The Company recorded income tax expense of
$0.7 million in the 2003 quarter as compared to a $0.5 million in the first
quarter of last year.
Deferred Acquisition and Financing Costs
In connection with the proposed acquisition of three post-production
subsidiaries of Alliance Atlantis Communications Inc., the Company issued a
warrant to Alliance Atlantis to acquire 500,000 shares of the Company's common
stock for the option to purchase the subsidiaries, paid $300,000 of the proposed
purchase price as a deposit toward the acquisition, and expended $0.3 million in
due diligence costs as of March 31, 2003. These amounts were capitalized on the
balance sheet.
A condition to the acquisition is to obtain the financing to replace the
Company's current lender and to pay the cash portion of the acquisition. As of
March 31, 2003, $0.1 million has been paid to the proposed financial
institutions, which amount has been capitalized on the balance sheet.
If the transactions with Alliance and the proposed banks are not completed,
these amounts will be written off.
EBITDA and Free Cash Flow
In the first quarter, the Company's EBITDA (earnings before interest, taxes,
depreciation and amortization) increased by 5% to $3.5 million compared to $3.3
million in the 2002 period.
In the 2003 first quarter, the Company's free cash flow (EBITDA less interest,
taxes and capital expenditures) was $1.8 million, the same as that achieved in
the first quarter of 2002.
The following table reconciles the Company's EBITDA and free cash flow to the
Company's net income which is the most directly comparable financial measure
under Generally Accepted Accounting Principles ("GAAP").
Computation of EBITDA and Free Cash Flow (A)
Three Months Ended
March 31,
2002 2003
---- ----
Net income $ 651 $ 992
Add back:
Interest 678 521
Income taxes 492 689
Depreciation 1,485 1,268
Amortization 22 17
------- -------
EBITDA $ 3,328 $ 3,487
Deduct:
Interest (678) (521)
Income taxes (492) (689)
Capital expenditures (287) (466)
------- --------
Free cash flow $ 1,812 $ 1,811
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(A) The measurements of EBITDA and free cash flow do not represent cash
generated from operating activities in accordance with GAAP, are not to
be considered as an alternative to 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 EBITDA and free cash flow in the same fashion and,
therefore, EBITDA and free cash flow as presented may not be comparable
to other similarly titled measures of other companies. Management
believes that EBITDA and free cash flow provide useful information to
investors because they are measures of 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.
POINT.360
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
2002 2003
---- ----
Revenues $ 16,846,000 $ 17,293,000
Cost of goods sold (10,594,000) (10,854,000)
------------ ------------
Gross profit 6,252,000 6,439,000
Selling, general and administrative expense (4,607,000) (4,382,000)
------------ ------------
Operating income 1,645,000 2,057,000
Interest expense, net (678,000) (521,000)
Derivative fair value change 176,000 145,000
------------ ------------
Income before income taxes 1,143,000 1,681,000
Provision from income taxes (492,000) (689,000)
------------ ------------
Net income $ 651,000 $ 992,000
============ ============
Earnings per share:
Basic:
Net income $ 0.07 $ 0.11
Weighted average number of shares 9,011,324 9,023,440
============ ============
Diluted:
Net income $ 0.07 $ 0.11
Weighted average number of shares
including the dilutive effect of
stock options 9,069,172 9,289,476
============ ============
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.