EXHIBIT 99
NEWS BULLETIN
FOR FURTHER INFORMATION:
POINT.360
2777 NORTH ONTARIO STREET
BURBANK, CA 91504
Nasdaq: PTSX
AT THE COMPANY:
Alan Steel
Executive Vice President
(818) 565-1443
FOR IMMEDIATE RELEASE - BURBANK, CA, May 6, 2005
POINT.360 REPORTS FIRST QUARTER 2005 SALES OF $17.2 MILLION.
o Sales increased 11% over the first quarter of 2004.
Point.360 (Nasdaq: PTSX), a leading provider of integrated media management
services, today announced results for the three-month period ended March 31,
2005.
Haig S. Bagerdjian, the Company's Chairman, President and Chief Executive
Officer, said: "Sales volume in the first quarter of 2005 reflected not only the
addition of IVC but the second sequential quarterly revenue increase in our
other facilities. While margins continue to be pressured by lower pricing and
underutilization of capacity at certain of our facilities, our new sales team is
gaining momentum and beginning to bring in some sizable new accounts. Some of
this new business positively affected the first quarter, and we expect
additional benefits to begin in the latter part of the second quarter. Although
we cannot accurately predict sales volume from the new relationships, we believe
the trend is positive."
REVENUES
Revenue for the first quarter ended March 31, 2005, totaled $17.2 million
compared to $15.5 million in the same quarter of 2004. Revenues of $2.7 million
in the 2005 first quarter resulted from the inclusion of International Video
Conversions, Inc., which was acquired on July 1, 2004. Without IVC, first
quarter 2005 sales declined $1.0 million from the same period last year to $14.5
million. Revenues without the inclusion of IVC have increased in each of the
last two fiscal quarters.
GROSS MARGIN
In the first quarter of 2005, gross margin on sales was 34% compared to 37% in
the prior year's first quarter. The decline in gross margin was due to an
increase in delivery costs and a shift in the business mix between post
production and spot advertising distribution.
SELLING, GENERAL AND ADMINISTRATIVE AND OTHER EXPENSES
For the first quarter of 2005, SG&A expenses were $5.4 million, or 31% of sales,
compared to $4.6 million, or 30% of sales in the first quarter of 2004. The
increase was due to the cost of additional sales resources and consulting
expenses related to the Company's Sarbanes-Oxley implementation project.
Interest expense increased $0.1 million in the first quarter compared to the
same period last year because of higher debt levels due to the purchase of IVC
and real property in the third quarter of 2004.
OPERATING INCOME (A)
Operating income was $0.4 million in the first quarter of 2005, down $0.6
million from last year's first quarter.
NET INCOME (LOSS) (A)
For the first quarter of 2005, the Company reported net income of $0.1 million
($0.01 per share) compared to a net profit of $0.5 million ($0.05 per share) in
the same period last year.
EBITDA (A)
In the first quarter, the Company's EBITDA (earnings before interest, taxes,
depreciation and amortization) was $2.0 million (12% of sales) compared to $2.4
million (16% of sales) in the 2004 period. The following table reconciles the
Company's EBITDA to net income which is the most directly comparable financial
measure under Generally Accepted Accounting Principles ("GAAP"):
COMPUTATION OF EBITDA (IN THOUSANDS) (A)
THREE MONTHS ENDED
MARCH 31,
2004 2005
---- ----
in thousands)
Net income $ 493 $ 69
Interest 223 307
Income taxes 344 45
Depreciation 1,391 1,564
------- -------
EBITDA $ 2,451 $ 1,985
======= =======
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (A)
The table below summarizes pro forma results for the three-month periods ended
March 31, 2004 and 2005, without the effects of IVC's contribution in 2005. IVC
was purchased on July 1, 2004 (in thousands except per share amounts):
QUARTER ENDED
----------------------------------------------------------------------------------
MARCH 31, 2004 MARCH 31, 2005
------------------------------------- ----------------------------------------
PRO FORMA (2) GAAP PRO FORMA (1) GAAP
--------- --- ---- --------- --- ----
Revenues $ 15,468 $ - $ 15,468 $ 14,515 $ 2,668 $ 17,183
Cost of goods sold (9,819) - (9,819) (9,478) (1,924) (11,402)
-------- -------- -------- -------- --------- --------
Gross profit 5,649 - 5,649 5,037 744 5,781
Selling, general and
administrative expense (4,595) - (4,595) (4,716) (644) (5,360)
-------- -------- -------- -------- --------- ---------
Operating income 1,054 1,054 321 100 421
Interest expense, net (217) - (217) (249) (58) (307)
-------- -------- -------- -------- --------- --------
Income before
income taxes 837 - 837 72 42 114
Provision for income taxes (344) - (344) (28) (17) (45)
-------- -------- -------- -------- --------- --------
Net income $ 493 $ - $ 493 $ 44 $ 25 $ 69
======== ======== ======== ======== ========= ========
Earnings per share:
Basic $ 0.05 $ - $ 0.05 $ 0.01 $ 0.00 $ 0.01
Diluted $ 0.05 $ - $ 0.05 $ 0.01 $ 0.00 $ 0.01
Weighted average shares
outstanding - diluted 9,890 9,890 9,890 9,867 9,867 9,867
======== ======== ======== ======== ========= ========
(1) Contribution of IVC.
- -----------------------------
(A) The consolidated statements of income, the measurements of operating
income and net income before the effect of the IVC acquisition, and
EBITDA do not represent the results of operations or cash generated from
operating activities in accordance with generally accepted accounting
principles (GAAP), are not to be considered as an alternative to the
statements of income, operating income, 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 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
useful information to investors because they illustrate the effect of
acquisitions and/or are measures of the Company's operations and 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
and, furthermore, anticipates making certain capital expenditures as
part of its business plan.
ABOUT POINT.360
Point.360 is one of the largest providers of high definition and standard
definition digital mastering, data conversion and 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, advertising agencies and
corporations.
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; (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.