Point.360 Announces First Fiscal Quarter Results

BURBANK, Calif., Nov. 12, 2010 /PRNewswire via COMTEX/ -- Point.360 (Nasdaq: PTSX), a leading provider of integrated media management services, today announced results for the three month period ended September 30, 2010.

Haig S. Bagerdjian, the Company's Chairman, President and Chief Executive Officer said: "We are now entering the next phase for our Movie>Q project. The upcoming holiday season will help us validate the revenue and cost assumptions of the operating model. Based on the results, we will structure the next phase." Mr. Bagerdjian continued: "Results for the first quarter of fiscal 2011 reflect the effects of consolidating facilities and settling several legal actions.

Revenues of our newly branded Point.360 Digital Film Lab (formerly IVC) increased significantly in the quarter when compared to last year's first quarter. We are looking forward to better results for the reminder of fiscal 2011." Revenues Revenue for the quarter ended September 30, 2010 totaled $8.3 million compared to $9.4 million in the same quarter last year. The decline was due to approximately $0.3 million lower Media Center storage revenues resulting from a lawsuit settlement, $0.2 million due to the closing of our New York facility and $0.9 million due to the consolidation of our Highland facility into our West Los Angeles location. Movie>Q and our digital film location revenues increased $0.1 million and $0.4 million, respectively, during the quarter when compared to the prior year's period.

Gross Margin In the first quarter of fiscal 2011, gross margin was $1.9 million (23% of sales), compared to $2.1 million (22% of sales) in the prior year's first quarter.

Selling, General and Administrative and Other Expenses For the first quarter of fiscal 2011, SG&A expenses were $3.6 million, or 44% of sales, compared to $3.8 million, or 40% of sales, in the first quarter of last year. During the current quarter, the Company incurred $0.1 million of expenses associated with the prosecution, defense and settlement of legal actions.

Research and development costs associated with Movie>Q and other projects were $0.3 million and $0.1 million in the three month periods ended September 30, 2010 and 2009, respectively.

Interest expense was $0.2 million for both three month periods ended September 30, 2010 and 2009. In the current quarter, the Company received $0.1 million of interest income from the Internal Revenue Service associated with a $1.5 million tax refund.

Other income represents sublease income.

Operating (Loss) Operating loss was $2.0 million in the first quarter of fiscal 2011 compared to a loss of $1.8 million in last year's first quarter.

Net (Loss) For the first quarter of fiscal 2011, the Company reported a net loss of $2.0 million ($0.19 per share) compared to a net loss of $2.0 million ($0.19 per share) in the same period last year.

Consolidated Statements of Operations (unaudited) * The table below summarizes results for the three month periods ended September 30, 2009 and 2010: Three Months Ended ------------------ September 30, ------------- 2009 2010 ---- ---- Revenues $9,419,000 $8,272,000 -------- ---------- ---------- Cost of services sold (7,360,000) (6,406,000) --------------------- ---------- ---------- Gross profit 2,059,000 1,866,000 ------------ --------- --------- Selling, general and administrative expense (3,788,000) (3,641,000) ----------------------- ---------- ---------- Research and development expense (109,000) (274,000) ------------------------ -------- -------- Operating (loss) (1,838,000) (2,049,000) ---------------- ---------- ---------- Interest expense (222,000) (202,000) ---------------- -------- -------- Interest income 9,000 61,000 --------------- ----- ------ Other income 79,000 176,000 ------------ Loss before income taxes (1,972,000) (2,014,000) ------------------------ ---------- ---------- Benefit from income taxes ------------------- --- --- Net loss $(1,972,000) $(2,014,000) -------- =========== =========== Loss per share: --------------- Basic: ------ Net loss $(0.19) $(0.19) -------- ------ ------ Weighted average number of shares 10,152,422 10,532,188 ----------------------- ========== ========== Diluted: -------- Net loss $(0.19) $(0.19) -------- ------ ------ Weighted average number of shares 10,152,422 10,532,188 ----------------------- ========== ========== including the dilutive effect of stock ---------------------- options ------- Selected Balance Sheet Statistics (unaudited)* June 30, September 30, 2010 2010 ---- ---- Working Capital $2,445,000 $882,000 Property and equipment, net 20,157,000 19,676,000 Total assets 31,144,000 29,705,000 Current portion of long term debt 1,197,000 1,124,000 Long-term debt, net of current portion 9,646,000 9,589,000 Shareholder's equity 11,830,000 10,383,000 -------------------- ---------- ---------- * The consolidated statements of operations 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 useful 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, creates virtual effects 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.

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