Point.360 Announces Second Quarter And First Half Results

BURBANK, Calif., Feb. 11 /PRNewswire-FirstCall/ -- Point.360 (Nasdaq: PTSX), a leading provider of integrated media management services, today announced results for the three and six month periods ended December 31, 2009.

Haig S. Bagerdjian, the Company's Chairman, President and Chief Executive Officer said: "We continue to make progress toward the completion of the Movie>Q proof of concept research and development project.  During the second fiscal quarter, we purchased intellectual property and designs for Movie>Q's automated inventory management system which will accept orders, retrieve and dispense inventory (DVD's, games and CDs) to the customer.  Each 50 to 55-foot long system will house up to 15,000 units and will be accessible through eight customer interface centers (terminals).  The project is on time and within budget for a third fiscal quarter opening."

Mr. Bagerdjian continued: "Our other just-completed R&D project for the core business is for a new proprietary service designed to remove undesired grain, video and camera noise from new and legacy content.  Initial tests have been very encouraging, and service is now available."

The Company indicated that sales were down from the prior year's quarter and that the reported loss included R&D costs related to the above projects.

Revenues

Revenue for the quarter ended December 31, 2009 totaled $10.3 million compared to $11.8 million in the same quarter last year.  Revenues for the six months ended December 31, 2009 were $19.7 million, down from $23.4 million last year.  The decline reflects a slowdown in work from several major studio customers and the effects of the move of one of our facilities.

Gross Margin

In the second quarter of fiscal 2010, gross margin was $3.3 million (32% of sales), compared to $3.9 million (34% of sales) in the prior year's second quarter.  For the six months ended December 31, 2009, gross margin was $5.3 million (27% of sales) compared to $7.9 million (34% of sales) last year.

Selling, General and Administrative and Other Expenses

For the second quarter of fiscal 2010, SG&A expenses were $3.7 million, or 36% of sales, compared to $4.0 million, or 34% of sales, in the second quarter of last year. For the six months ended December 31, 2009, SG&A expenses were $7.5 (38% of sales) compared to $7.7 million (33% of sales) last year.  R&D costs in the current year three and six month periods were $0.3 million and $0.4 million, respectively.

Interest expense was $0.2 million and $0.4 million in the three and six month periods of fiscal 2010 compared to $0.2 million and $0.3 million, respectively last year due to additional mortgage debt.

Other income represents sublease income.