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) June 27, 2003
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POINT.360
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(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation)
0-21917 95-4272619
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(Commission File Number) (IRS Employer Identification No.)
7083 Hollywood Boulevard, Suite 200, Hollywood, CA 90028
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(Address of principal executive offices) (Zip Code)
(323) 957-7990
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
Item 5. OTHER EVENTS.
On June 27, 2003, Point.360 (the Company") announced that it had
terminated negotiations to acquire three subsidiaries of Alliance Atlantis
Communications Inc. ("AACI"). Concurrently, the Company stopped negotiations
with potential lenders with respect to a loan package that would provide for the
financing of the acquisition. Additionally, the Company is currently evaluating
deferred costs related to a Company-wide enterprise software initiative that may
be written off if it is determined that such costs will not benefit future
periods. The adjustment amounts to be recorded as a charge to selling, general
and administrative expenses in the quarter ending June 30, 2003 are expected to
range from $1.1 million to $2.3 million.
As a consequence of the adjustments, the Company may, in the future, be
required to make principal payments on its existing term loan in excess of
scheduled payments. A financial covenant in the term loan agreement provides
that the ratio of funded debt to trailing twelve month ("TTM") earnings before
interest, taxes, depreciation and amortization ("EBITDA") cannot exceed a
specified percentage. Such principal payments will reduce the funded debt,
thereby reducing the ratio of funded debt to TTM EBITDA. The amount of such
payments, if any, cannot be determined at this time, but may total as much as
$2.3 million through the December 31, 2004 term loan maturity date assuming that
the monthly EBITDA achieved for the remainder of the term loan approximates
performance of the past 18 months.
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
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(Registrant)
Date: June 30, 2003 By: /s/ Alan R. Steel
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Alan R. Steel
Executive Vice President,
Finance and Administration,
Chief Financial Officer