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) March 30, 2006
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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.)
2777 North Ontario Street, Burbank, California 91504
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(Address of principal executive offices) (Zip Code)
(818) 565-1400
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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)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
__ Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
__ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
__ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
__ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On March 28, 2006, Point.360 (the "Company") sold land a building to
United Trust Fund Limited Partnership ("UTF LLC"), an unaffiliated entity,
pursuant to an Agreement of Purchase and Sale dated December 30, 2005. The
Company received approximately $14.5 million in cash from the sale. The 64,600
square foot building, located in Los Angeles, California, was simultaneously
leased from UTF LLC. Proceeds from the sale were used to pay down the previously
existing mortgage ($6.0 million), term loan debt ($4.0 million), expenses of the
sale (approximately $0.5 million), and the Company's revolving line of credit
($4.0 million.)
Item 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
1. On March 28, 2006, the Company entered into a Lease Agreement with UTF
LLC, an unaffiliated entity, for the lease of the building described in
Item 2.01 above. The 15-year lease provides for rental of $1,111,000 in
each of the first five years of the lease and increasing at a rate equal
to the positive consumer price index in years six through fifteen. The
lease contains four five-year options to extend the initial 15-year
term. The lease provides that the Company pay all costs of occupancy
(i.e., triple net costs) including maintenance and repairs, insurance,
property taxes, etc.
The maximum undiscounted potential amount of future lease payments for
the initial 15-year lease term, assuming that annual rent increases
2.75% in each of years six through 15, is $18,492,000.
2. On March 29, 2006, the Company entered into a Revolving Credit Agreement
with Bank of America, N.A., which provides up to $10 million of
revolving credit based on eligible accounts receivable. The two-year
agreement provides for interest of LIBOR plus 1.85% for the first six
months of the agreement, and thereafter, either (i) prime minus 0% to
1.00% or (ii) LIBOR plus 1.50% to 2.5%, depending on the level of the
Company's ratio of outstanding debt to fixed charges (as defined). The
facility is secured by all of the Company's assets.
The revolving credit agreement requires the Company to comply with various
financial and business covenants.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
10.1 Agreement of Purchase and Sale between United Trust Fund Limited
Partnership and the Company dated December 30, 2005.
10.2 Lease Agreement between UTFLA LLC and the Company dated March 28, 2006.
10.3 Revolving Credit Agreement between Bank of America, N.A. and the Company
dated March 29, 2006.
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: March 30, 2006 By: /s/ Alan R. Steel
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Alan R. Steel
Executive Vice President,
Finance and Administration,
Chief Financial Officer
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