(Mark
One)
|
|
ý
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the quarter ended September 30, 2007
|
|
OR
|
|
q
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934 [NO FEE REQUIRED]
|
For
the transition period from _______ to _____
|
|
Commission
file number 0-27887
|
|
COLLECTORS
UNIVERSE, INC.
(Exact
name of Registrant as specified in its
charter)
|
Delaware
|
33-0846191
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
Incorporation
or organization)
|
|
1921
E. Alton Avenue, Santa Ana, California 92705
|
|
(address
of principal executive
offices and zip code)
|
|
Registrant's
telephone number, including area code: (949)
567-1234
|
Large
accelerated filer o
|
Accelerated
filer ý
|
Non-accelerated
filer o
|
Class
|
Outstanding
at October 22,
2007
|
||
Common
Stock $.001 Par Value
|
8,527,312
|
||
PART
I
|
Financial
Information
|
Page
|
|
Item
1.
|
|||
1
|
|||
2
|
|||
3
|
|||
4
|
|||
6
|
|||
Item
2.
|
18
|
||
18
|
|||
19
|
|||
20
|
|||
20
|
|||
22
|
|||
23
|
|||
27
|
|||
28
|
|||
Item
2A.
|
30
|
||
Item
3
|
30
|
||
PART
II
|
Other
Information
|
||
Item
1
|
31
|
||
Item
1A.
|
32
|
||
Item
2.
|
32
|
||
Item
6.
|
32
|
||
S-1
|
|||
E-1
|
|||
EXHIBITS
|
|||
Exhibit
31.1
|
Certifications
of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley
Act of
2002
|
||
Exhibit
31.2
|
Certifications
of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley
Act of
2002
|
||
Exhibit
32.1
|
Chief
Executive Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
||
Exhibit
32.2
|
Chief
Financial Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
September
30,
|
June
30,
|
|||||||
2007
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash
equivalents
|
$ |
37,577
|
$ |
42,386
|
||||
Accounts
receivable, net of
allowance for doubtful accounts of $60
|
1,671
|
1,276
|
||||||
Refundable
income
taxes
|
1,220
|
1,220
|
||||||
Inventories,
net
|
426
|
442
|
||||||
Prepaid
expenses and other current
assets
|
1,073
|
1,060
|
||||||
Customer
notes receivable, net of
allowance of $23
|
3,696
|
2,536
|
||||||
Net
deferred income tax
asset
|
1,050
|
1,020
|
||||||
Receivables
from sale of net
assets of discontinued operations
|
92
|
92
|
||||||
Total
current
assets
|
46,805
|
50,032
|
||||||
Property
and equipment,
net
|
4,141
|
4,081
|
||||||
Goodwill
|
12,879
|
12,884
|
||||||
Intangible
assets,
net
|
10,456
|
10,365
|
||||||
Note
receivable from sale of
discontinued operation
|
206
|
229
|
||||||
Other
assets
|
514
|
510
|
||||||
$ |
75,001
|
$ |
78,101
|
|||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ |
1,106
|
$ |
1,435
|
||||
Accrued
liabilities
|
2,130
|
2,154
|
||||||
Accrued
compensation and
benefits
|
1,448
|
1,988
|
||||||
Income
taxes
payable
|
297
|
14
|
||||||
Deferred
revenue
|
1,889
|
2,233
|
||||||
Current
liabilities of
discontinued operations
|
23
|
-
|
||||||
Total
current
liabilities
|
6,893
|
7,824
|
||||||
Deferred
rent
|
464
|
477
|
||||||
Other
long-term liabilities
|
40
|
40
|
||||||
Net
deferred income tax liability
|
810
|
869
|
||||||
Commitments
and contingencies
|
-
|
-
|
||||||
Preferred
stock, $.001 par value;
5,000 shares authorized; no shares issued or outstanding
|
-
|
-
|
||||||
Common
stock, $.001 par value;
45,000 shares authorized; outstanding 8,521 at September 30, 2007
and
8,496 at June 30, 2007
|
9
|
9
|
||||||
Additional
paid-in
capital
|
77,049
|
76,737
|
||||||
Accumulated
deficit
|
(10,264 | ) | (7,855 | ) | ||||
Total
stockholders'
equity
|
66,794
|
68,891
|
||||||
$ |
75,001
|
$ |
78,101
|
Three
Months Ended
|
||||||||
September
30,
|
||||||||
2007
|
2006
|
|||||||
Net
revenues
|
$ |
10,825
|
$ |
9,898
|
||||
Cost
of revenues
|
5,200
|
4,356
|
||||||
Gross
profit
|
5,625
|
5,542
|
||||||
Selling
and marketing expenses
|
2,018
|
1,262
|
||||||
General
and administrative expenses
|
3,948
|
3,979
|
||||||
Amortization
of intangible assets
|
270
|
171
|
||||||
Total
operating
expenses
|
6,236
|
5,412
|
||||||
Operating
income (loss)
|
(611 | ) |
130
|
|||||
Interest
income, net
|
444
|
567
|
||||||
Other
income
|
1
|
4
|
||||||
Income
(loss) before provision (benefit) for income taxes
|
(166 | ) |
701
|
|||||
Provision
(benefit) for income taxes
|
(66 | ) |
318
|
|||||
Income
(loss) from continuing operations
|
(100 | ) |
383
|
|||||
Income
(loss) from discontinued operations, net of gain on sales of discontinued
businesses
(net of income taxes)
|
(10 | ) |
11
|
|||||
Net
income (loss)
|
$ | (110 | ) | $ |
394
|
|||
Net
income (loss) per basic share:
|
||||||||
Income
(loss) from continuing operations
|
$ | (0.01 | ) | $ |
0.05
|
|||
Income
(loss) from discontinued
operations, net of gain on sales of discontinued businesses
(net of income taxes)
|
-
|
-
|
||||||
Net
income (loss)
|
$ | (0.01 | ) | $ |
0.05
|
|||
Net
income (loss) per diluted share:
|
||||||||
Income
(loss) from continuing
operations
|
$ | (0.01 | ) | $ |
0.04
|
|||
Income
(loss) from
discontinued operations, net of gain on sales of discontinued businesses
(net of income taxes)
|
-
|
-
|
||||||
Net
income (loss)
|
$ | (0.01 | ) | $ |
0.04
|
|||
Weighted
average shares outstanding:
|
||||||||
Basic
|
8,463
|
8,351
|
||||||
Diluted
|
8,463
|
8,628
|
||||||
Dividends
declared per common
share
|
$ |
0.25
|
$ |
0.08
|
Common
Stock
|
Additional
Paid-in
|
Accumulated
|
Treasury
Stock
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Shares
|
Amount
|
Total
|
||||||||||||||||||||||
Balance
at June 30, 2005
|
8,610
|
$ |
9
|
$ |
78,594
|
$ | (7,016 | ) | (125 | ) | $ | (1,021 | ) | $ |
70,566
|
|||||||||||||
Exercise
of stock options
|
47
|
-
|
243
|
-
|
-
|
-
|
243
|
|||||||||||||||||||||
Stock-based
compensation expense
|
-
|
-
|
670
|
-
|
-
|
-
|
670
|
|||||||||||||||||||||
Tax
benefit on exercise of stock options
|
-
|
-
|
29
|
-
|
-
|
-
|
29
|
|||||||||||||||||||||
Shares
repurchased and cancelled under
the
Stock Repurchase Plan
|
(182 | ) | (1 | ) | (2,627 | ) |
-
|
-
|
-
|
(2,628 | ) | |||||||||||||||||
Net
income
|
-
|
-
|
-
|
3,700
|
-
|
-
|
3,700
|
|||||||||||||||||||||
Dividends
paid to common stockholders
|
-
|
-
|
-
|
(674 | ) |
-
|
-
|
(674 | ) | |||||||||||||||||||
Balance
at June 30, 2006
|
8,475
|
8
|
76,909
|
(3,990 | ) | (125 | ) | (1,021 | ) |
71,906
|
||||||||||||||||||
Exercise
of stock options
|
161
|
1
|
275
|
-
|
-
|
-
|
276
|
|||||||||||||||||||||
Stock-based
compensation expense
|
-
|
-
|
726
|
-
|
-
|
-
|
726
|
|||||||||||||||||||||
Issuance
of restricted shares
|
57
|
-
|
164
|
-
|
-
|
-
|
164
|
|||||||||||||||||||||
Tax
benefit on exercise of stock options
|
-
|
-
|
633
|
-
|
-
|
-
|
633
|
|||||||||||||||||||||
Shares
repurchased and cancelled
under
the Stock repurchase
Plan
|
(72 | ) |
-
|
(949 | ) |
-
|
-
|
-
|
(949 | ) | ||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
(515 | ) |
-
|
-
|
(515 | ) | |||||||||||||||||||
Retirement
of treasury shares
|
(125 | ) |
-
|
(1,021 | ) |
-
|
125
|
1,021
|
-
|
|||||||||||||||||||
Dividends
paid ($0.40 per share)
|
-
|
-
|
-
|
(3,350 | ) |
-
|
-
|
(3,350 | ) | |||||||||||||||||||
Balance
at June 30, 2007
|
8,496
|
$ |
9
|
$ |
76,737
|
$ | (7,855 | ) |
-
|
$ |
-
|
$ |
68,891
|
|||||||||||||||
Cumulative
effect of adoption of
FIN
48 (see note
8)
|
-
|
-
|
-
|
(170 | ) |
-
|
-
|
(170 | ) | |||||||||||||||||||
Exercise
of stock options
|
25
|
-
|
72
|
-
|
-
|
-
|
72
|
|||||||||||||||||||||
Stock-based
compensation expense
|
-
|
-
|
240
|
-
|
-
|
-
|
240
|
|||||||||||||||||||||
Dividends
paid ($0.25 per share)
|
-
|
-
|
-
|
(2,129 | ) |
-
|
-
|
(2,129 | ) | |||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
(110 | ) |
-
|
-
|
(110 | ) | |||||||||||||||||||
Balance
at September 30, 2007
|
8,521
|
$ |
9
|
$ |
77,049
|
$ | (10,264 | ) |
-
|
$ |
-
|
$ |
66,794
|
Three
Months Ended
September
30,
|
||||||||
2007
|
2006
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
income (loss)
|
$ | (110 | ) | $ |
394
|
|||
Adjustments
to reconcile net income (loss) to net cash (used in) provided by
operating activities:
|
||||||||
Depreciation
and
amortization
|
574
|
390
|
||||||
Impairment
of fixed
assets
|
1
|
-
|
||||||
Stock-based
compensation
expense
|
246
|
200
|
||||||
Tax
benefit from exercising of
stock options
|
-
|
7
|
||||||
Interest
on note
receivable
|
(3 | ) |
-
|
|||||
Provision
for inventory write
down
|
10
|
(12 | ) | |||||
Discontinued
operations
|
10
|
(10 | ) | |||||
Deferred
income
taxes
|
19
|
(17 | ) | |||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(395 | ) | (121 | ) | ||||
Inventories
|
5
|
7
|
||||||
Prepaid
expenses and other
current assets
|
(11 | ) |
158
|
|||||
Income
taxes
payable
|
10
|
(228 | ) | |||||
Other
assets
|
(8 | ) | (66 | ) | ||||
Accounts
payable
|
(329 | ) | (106 | ) | ||||
Accrued
liabilities
|
(30 | ) |
66
|
|||||
Deferred
rent and other
long-term liabilities
|
(13 | ) |
66
|
|||||
Accrued
compensation and
benefits
|
(540 | ) |
48
|
|||||
Deferred
revenue
|
(344 | ) | (316 | ) | ||||
Net
cash (used in) provided by
operating activities
|
$ | (908 | ) | $ |
460
|
|||
Net
cash provided by operating activities of discontinued
businesses
|
13
|
14
|
||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital
expenditures
|
(361 | ) | (1,387 | ) | ||||
Collection
of receivables from sales of discontinued businesses
|
22
|
128
|
||||||
Advances
on customer notes receivables
|
(1,926 | ) | (2,421 | ) | ||||
Proceeds
from customer notes receivables
|
769
|
631
|
||||||
Purchase
of businesses, net of cash acquired
|
-
|
(6,182 | ) | |||||
Purchase
of patents and other intangible assets
|
-
|
(343 | ) | |||||
Capitalized
software
|
(361 | ) | (383 | ) | ||||
Net
cash used in investing
activities
|
(1,857 | ) | (9,957 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
from exercise of stock options
|
72
|
21
|
||||||
Payments
for retirement of common stock
|
-
|
(378 | ) | |||||
Dividends
paid to common stockholders
|
(2,129 | ) | (668 | ) | ||||
Net
cash used in financing
activities
|
(2,057 | ) | (1,025 | ) | ||||
Net
decrease in cash and cash equivalents
|
(4,809 | ) | (10,508 | ) | ||||
Cash
and cash equivalents at beginning of period
|
42,386
|
52,110
|
||||||
Cash
and cash equivalents at end of period
|
$ |
37,577
|
$ |
41,602
|
||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Interest
paid
|
$ |
-
|
$ |
7
|
||||
Income
taxes paid
|
$ |
-
|
$ |
507
|
Three
Months Ended
September
30,
|
||||||||
2007
|
2006
|
|||||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION (CONTINUED):
|
||||||||
Effective
July 1, 2006, the Company acquired Expos Unlimited, LLC in a transaction
summarized
as follows:
|
||||||||
Fair
value of net liabilities
assumed
|
$ |
-
|
$ | (385 | ) | |||
Intangible
assets
|
-
|
1,810
|
||||||
Goodwill
|
1,001
|
|||||||
Purchase
price, net of $49 cash
acquired
|
$ |
-
|
$ |
2,426
|
||||
Effective
August 18, 2006, the Company acquired American Gemological Laboratories,
Inc. in
a transaction summarized as follows:
|
||||||||
Fair
value of net liabilities
assumed
|
$ |
-
|
$ | (42 | ) | |||
Deferred
tax liability
recognized at acquisition
|
-
|
(1,205 | ) | |||||
Intangible
assets
|
-
|
3,030
|
||||||
Goodwill
|
-
|
2,083
|
||||||
Purchase
price, net of $81 cash
acquired
|
$ |
-
|
3,866
|
Business
|
Acquisition
Date
|
Purchase
Price
|
Expos
Unlimited, LLC
|
July
1, 2006
|
$2.5
million
|
American
Gemological Laboratories, Inc.
|
August
18, 2006
|
$3.9
million
|
(Dollars
in thousands)
|
||||||||
Three
Months Ended
September
30,
|
||||||||
2007
|
2006
|
|||||||
Included
in:
|
||||||||
Cost
of revenues
|
$ |
61
|
$ |
76
|
||||
Selling
and marketing expenses(1)
|
(7 | ) |
1
|
|||||
General
and administrative expenses(2)
|
192
|
123
|
||||||
Stock-based
compensation
expense
|
246
|
200
|
||||||
Income
tax
benefit
|
$ | - | $ | (5 | ) |
|
(1)
|
Includes
$8,000 related to a forfeiture of stock options during the first
quarter
of fiscal 2008.
|
|
(2)
|
Includes
$82,000 and $3,000 in the three months ended September 30, 2007 and
2006,
respectively, for amortization of compensation expense related to
issuance
of restricted stock (see below).
|
Three
Months Ended
September
30,
|
||||||||
2007
|
2006
|
|||||||
Dividend
yield
|
-
|
2.3 | % | |||||
Expected
volatility
|
-
|
52.0 | % | |||||
Risk-free
interest rate
|
-
|
4.69 | % | |||||
Expected
term
|
-
|
5.1
years
|
Options
|
Shares
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual Term
|
Aggregate
Intrinsic
Value
|
|||||||||
Outstanding
at June 30, 2007
|
912,000
|
$ |
12.98
|
||||||||||
Granted(1)
|
-
|
-
|
|||||||||||
Exercised
|
(25,000 | ) |
5.96
|
||||||||||
Forfeited
or cancelled
|
(11,000 | ) |
13.82
|
||||||||||
Outstanding
at September 30, 2007
|
876,000
|
$ |
13.17
|
6.2
yrs.
|
$ |
2,304,000
|
|||||||
Exercisable
at September 30, 2007
|
631,000
|
$ |
12.79
|
5.7
yrs.
|
$ |
2,140,000
|
|||||||
Unvested
at September 30, 2007
|
245,000
|
$ |
14.15
|
7.5
yrs.
|
$ |
166,000
|
|||||||
Expected
to vest at September 30, 2007
|
216,000
|
$ |
14.16
|
7.4
yrs.
|
$ |
155,000
|
|
(1)
|
No
options were granted during the three months ended September 30,
2007.
|
Non-Vested
Shares:
|
Shares
|
Weighted
Average
Grant-Date
Fair
Value
|
||||||
Non-vested
at June 30, 2007
|
50,230
|
$ |
13.68
|
|||||
Granted
|
-
|
-
|
||||||
Vested
|
(9,815 | ) |
13.63
|
|||||
Forfeited
or
Cancelled
|
-
|
-
|
||||||
Non-vested
at September 30, 2007
|
40,415
|
$ |
13.69
|
|
Concentrations
|
Coins
|
CGAL
including
Gemprint
|
AGL
|
Expos
|
CCE
and
Other
|
Total
|
|||||||||||||||||||
Goodwill:
|
||||||||||||||||||||||||
Balance
at June 30, 2007
|
$ |
515
|
$ |
8,168
|
$ |
2,083
|
$ |
1,001
|
$ |
1,117
|
$ |
12,884
|
||||||||||||
Purchase
price adjustment since
June 30, 2007:
|
||||||||||||||||||||||||
CCE
|
-
|
-
|
-
|
-
|
(5 | ) | (5 | ) | ||||||||||||||||
Balance
at September 30, 2007
|
$ |
515
|
$ |
8,168
|
$ |
2,083
|
$ |
1,001
|
$ |
1,112
|
$ |
12,879
|
||||||||||||
Intangible
Assets, Net:
|
||||||||||||||||||||||||
Balance
at June 30, 2007
|
$ |
412
|
$ |
4,013
|
$ |
2,916
|
$ |
1,700
|
$ |
1,324
|
$ |
10,365
|
||||||||||||
Capitalized
software costs
|
-
|
111
|
-
|
-
|
250
|
361
|
||||||||||||||||||
Less:
amortization for three
months
ended
September 30, 2007
|
(38 | ) | (124 | ) | (28 | ) | (28 | ) | (52 | ) | (270 | ) | ||||||||||||
Balance
at September 30,
2007
|
$ |
374
|
$ |
4,000
|
$ |
2,888
|
$ |
1,672
|
$ |
1,522
|
$ |
10,456
|
2008
(for Q2-Q4)
|
$ |
976,000
|
||
2009
|
$ |
1,376,000
|
||
2010
|
$ |
1,364,000
|
||
2011
|
$ |
981,000
|
||
2012
|
$ |
563,000
|
Three
Months Ended
September
30,
|
||||||||
2007
|
2006
|
|||||||
Revenue
|
$ |
10,825
|
$ |
9,975
|
||||
Operating
income (loss)
|
(611 | ) |
99
|
|||||
Interest
income, net
|
444
|
546
|
||||||
Other
income
|
1
|
4
|
||||||
Income
(loss) before provision (benefit) for income taxes
|
(166 | ) |
649
|
|||||
Provision
(benefit) for income taxes
|
(66 | ) |
297
|
|||||
Income
(loss) from continuing operations
|
(100 | ) |
352
|
|||||
Income
(loss) from discontinued operations
|
(10 | ) |
11
|
|||||
Net
income (loss)
|
$ | (110 | ) | $ |
363
|
|||
Net
income (loss) per diluted share:
|
||||||||
Income
(loss) from continuing
operations
|
$ | (0.01 | ) | $ |
0.04
|
|||
Income
(loss) from discontinued
operations
|
$ |
-
|
$ |
-
|
||||
Net
income
(loss)
|
$ | (0.01 | ) | $ |
0.04
|
4.
|
INVENTORIES
|
Inventories
consist of the following:
|
||||||||
(in
thousands)
|
||||||||
September
30,
|
June
30,
|
|||||||
2007
|
2007
|
|||||||
Coins
|
$ |
265
|
$ |
253
|
||||
Other
collectibles
|
36
|
33
|
||||||
Grading
raw materials consumable inventory
|
226
|
247
|
||||||
527
|
533
|
|||||||
Less
inventory
reserve
|
(101 | ) | (91 | ) | ||||
Inventories,
net
|
$ |
426
|
$ |
442
|
Property
and equipment consist of the following:
|
||||||||
(in
thousands)
|
||||||||
September
30,
|
June
30,
|
|||||||
2007
|
2007
|
|||||||
Coins
and stamp grading reference sets
|
$ |
354
|
$ |
222
|
||||
Computer
hardware and equipment
|
1,678
|
1,664
|
||||||
Computer
software
|
1,030
|
1,027
|
||||||
Equipment
|
3,556
|
3,366
|
||||||
Furniture
and office
equipment
|
1,089
|
1,064
|
||||||
Leasehold
improvements
|
1,449
|
1,452
|
||||||
Trading
card reference
library
|
52
|
52
|
||||||
9,208
|
8,847
|
|||||||
Less
accumulated depreciation and amortization
|
(5,067 | ) | (4,766 | ) | ||||
Property
and equipment, net
|
$ |
4,141
|
$ |
4,081
|
Accrued
liabilities consist of the following:
|
(in
thousands)
|
|||||||
September
30,
|
June
30,
|
|||||||
2007
|
2007
|
|||||||
Warranty
costs
|
$ |
763
|
$ |
735
|
||||
Professional
fees
|
227
|
183
|
||||||
Other
|
1,140
|
1,236
|
||||||
$ |
2,130
|
$ |
2,154
|
(in
thousands)
|
||||||||
Three
Months Ended
September
30,
|
||||||||
2007
|
2006
|
|||||||
Warranty
reserve, beginning of period
|
$ |
735
|
$ |
710
|
||||
Charged
to cost of revenue
|
107
|
121
|
||||||
Payments
|
(79 | ) | (83 | ) | ||||
Warranty
reserve, end of period
|
$ |
763
|
$ |
748
|
7.
|
DISCONTINUED
OPERATIONS
|
(in
thousands)
|
||||||||
Three
Months Ended
September
30,
|
||||||||
2007
|
2006
|
|||||||
Net
revenues
|
$ |
4
|
$ |
3
|
||||
Income
(loss)
|
(17 | ) |
11
|
|||||
Gain
on sale of discontinued businesses
|
-
|
6
|
||||||
(17 | ) |
17
|
||||||
Income
tax expense (benefit)
|
(7 | ) |
6
|
|||||
Net
income (loss) from discontinued operations
|
$ | (10 | ) | $ |
11
|
8.
|
INCOME
TAXES
|
|
Income tax benefit or expense was provided for at rates of 40% and
45% for
the three-month periods ended September 30, 2007 and September 30,
2006,
respectively. The decreased effective tax rate for the three
months ended September 30, 2007, as compared to the same three month
period in 2006, reflects an anticipated favorable tax impact in fiscal
year 2008 due to the Company’s decision in the first quarter of 2008 to
invest approximately $32.6 million in a tax-free municipal money-market
fund. Following the adoption of SFAS No. 123(R) in fiscal 2006,
the recognition of stock-based compensation has had a generally adverse
effect on the effective tax rates due to the non-deductibility of
certain
stock-based compensation expense.
|
(In
thousands,
except
share data)
|
||||||||
Three
Months Ended
September
30,
|
||||||||
2007
|
2006
|
|||||||
Income
(loss) from continuing operations
|
$ | (100 | ) | $ |
383
|
|||
Income
(loss) from discontinued operations, net of gain on sales of discontinued
businesses (net of income taxes)
|
(10 | ) |
11
|
|||||
Net
income (loss)
|
$ | (110 | ) | $ |
394
|
|||
NET
INCOME (LOSS) PER SHARE – BASIC:
|
||||||||
Income
(loss) from continuing
operations
|
$ | (0.01 | ) | $ |
0.05
|
|||
Income
(loss) from discontinued
operations, net of gain on sales of discontinued
businesses (net of income taxes)
|
-
|
-
|
||||||
Total
|
$ | (0.01 | ) | $ |
0.05
|
|||
NET
INCOME (LOSS) PER SHARE – DILUTED:
|
||||||||
Income
(loss) from continuing
operations
|
$ | (0.01 | ) | $ |
0.04
|
|||
Income
(loss) from discontinued
operations, net of gain on sales of discontinued
businesses (net of income taxes)
|
-
|
-
|
||||||
Total
|
$ | (0.01 | ) | $ |
0.04
|
|||
WEIGHTED
AVERAGE SHARES OUTSTANDING:
|
||||||||
Basic
|
8,463
|
8,351
|
||||||
Effect
of dilutive
shares
|
-
|
277
|
||||||
Diluted
|
8,463
|
8,628
|
10.
|
BUSINESS
SEGMENTS
|
Three
Months Ended September 30,
|
||||||||
2007
|
2006
|
|||||||
Net
revenues from external customers
|
||||||||
Coins
|
$ |
6,038
|
$ |
5,590
|
||||
Sportscards
|
2,292
|
2,251
|
||||||
Jewelry
|
380
|
241
|
||||||
Other
|
2,115
|
1,816
|
||||||
Total
revenue
|
$ |
10,825
|
$ |
9,898
|
||||
Amortization
and depreciation
|
||||||||
Coins
|
$ |
56
|
$ |
40
|
||||
Sportscards
|
23
|
21
|
||||||
Jewelry
|
314
|
108
|
||||||
Other
|
98
|
140
|
||||||
Total
|
491
|
309
|
||||||
Unallocated
amortization and
depreciation
|
83
|
81
|
||||||
Consolidated
amortization and
depreciation
|
$ |
574
|
$ |
390
|
||||
Stock-based
compensation
|
||||||||
Coins
|
$ |
34
|
$ |
49
|
||||
Sportscards
|
5
|
16
|
||||||
Jewelry
|
3
|
-
|
||||||
Other
|
28
|
37
|
||||||
Total
|
70
|
102
|
||||||
Unallocated
stock-based
compensation
|
176
|
98
|
||||||
Consolidated
stock-based
compensation
|
$ |
246
|
$ |
200
|
||||
Operating
income (loss) before unallocated expenses
|
||||||||
Coins
|
$ |
2,484
|
$ |
2,384
|
||||
Sportscards
|
518
|
439
|
||||||
Jewelry
|
(1,810 | ) | (641 | ) | ||||
Other
|
310
|
271
|
||||||
Total
|
1,502
|
2,453
|
||||||
Unallocated
operating
expenses
|
(2,113 | ) | (2,323 | ) | ||||
Consolidated
operating income
(loss)
|
$ | (611 | ) | $ |
130
|
At
September 30,
|
At
June 30,
|
|||||||
Identifiable
Assets
|
2007
|
2007
|
||||||
Coins
|
$ |
2,994
|
$ |
2,622
|
||||
Sportscards
|
506
|
582
|
||||||
Jewelry
|
20,471
|
20,453
|
||||||
Other
|
8,820
|
7,866
|
||||||
Total
|
32,791
|
31,523
|
||||||
Unallocated
assets
|
42,210
|
46,578
|
||||||
Consolidated
assets
|
$ |
75,001
|
$ |
78,101
|
11.
|
LINE
OF CREDIT
|
12.
|
LEGAL
MATTERS
|
13.
|
SUBSEQUENT
EVENT
|
Three
Months Ended September 30,
|
||||||||
2007
|
2006
|
|||||||
Net
revenues
|
100.0 | % | 100.0 | % | ||||
Cost
of revenues
|
48.0 | % | 44.0 | % | ||||
Gross
profit
|
52.0 | % | 56.0 | % | ||||
Operating
expenses:
|
||||||||
Selling
and marketing
expenses
|
18.7 | % | 12.8 | % | ||||
General
and administrative
expenses
|
36.4 | % | 40.2 | % | ||||
Amortization
of
intangibles
|
2.5 | % | 1.7 | % | ||||
Total
operating
expenses
|
57.6 | % | 54.7 | % | ||||
Operating
income (loss)
|
(5.6 | %) | 1.3 | % | ||||
Interest
income, net
|
4.1 | % | 5.7 | % | ||||
Other
income
|
0.0 | % | 0.1 | % | ||||
Income
(loss) before provision (benefit) for income taxes
|
(1.5 | %) | 7.1 | % | ||||
Provision
(benefit) for income taxes
|
(0.6 | %) | 3.2 | % | ||||
Income
(loss) from continuing operations
|
(0.9 | %) | 3.9 | % | ||||
Income
(loss) from discontinued operations, net of gain on sales
of discontinued businesses (net of income taxes)
|
(0.1 | %) | 0.1 | % | ||||
Net
income (loss)
|
(1.0 | %) | 4.0 | % |
Units
Processed
Three
Months Ended September 30,
|
Declared
Value (000)
Three
Months Ended September 30,
|
|||||||||||||||||||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||||||||||||||||||
Coins
|
367,100
|
47 | % |
481,300
|
56 | % | $ |
333,351
|
80 | % | $ |
464,922
|
85 | % | ||||||||||||||||||
Sportscards
|
338,500
|
43 | % |
321,500
|
37 | % |
20,534
|
5 | % |
22,595
|
4 | % | ||||||||||||||||||||
Autographs
|
44,800
|
6 | % |
34,200
|
4 | % |
5,811
|
1 | % |
10,475
|
2 | % | ||||||||||||||||||||
Stamps
|
19,700
|
2 | % |
12,300
|
1 | % |
4,351
|
1 | % |
3,059
|
1 | % | ||||||||||||||||||||
Currency
|
11,000
|
1 | % |
9,100
|
1 | % |
9,349
|
2 | % |
8,442
|
2 | % | ||||||||||||||||||||
Diamonds
|
7,700
|
1 | % |
6,000
|
1 | % |
31,963
|
8 | % |
23,209
|
4 | % | ||||||||||||||||||||
Colored
Gemstones*
|
900
|
-
|
100
|
-
|
10,986
|
3 | % |
13,145
|
2 | % | ||||||||||||||||||||||
Total
|
789,700
|
100 | % |
864,500
|
100 | % | $ |
416,345
|
100 | % | $ |
545,847
|
100 | % |
Three
Months Ended September 30,
|
||||||||||||||||||||||||
2007
|
2006
|
Increase
|
||||||||||||||||||||||
Amount
|
%
of Net
Revenues
|
Amount
|
%
of Net
Revenues
|
Amount
|
%
of Net
Revenues
|
|||||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||||||
Grading
and authentication fees
|
$ |
8,971
|
82.9 | % | $ |
8,315
|
84.0 | % | $ |
656
|
7.9 | % | ||||||||||||
Other
related services
|
1,854
|
17.1 | % |
1,583
|
16.0 | % |
271
|
17.1 | % | |||||||||||||||
Total
net revenues
|
$ |
10,825
|
100.0 | % | $ |
9,898
|
100.0 | % | $ |
927
|
9.4 | % |
Three
Months Ended September 30,
|
||||||||||||||||||||||||||||||||
2007
|
2006
|
2007
vs. 2006
|
||||||||||||||||||||||||||||||
Increase
(Decrease)
|
||||||||||||||||||||||||||||||||
%
of Net
|
%
of Net
|
Revenues
|
Units
Processed
|
|||||||||||||||||||||||||||||
Amount
|
Revenues
|
Amount
|
Revenues
|
Amounts
|
Percent
|
Number
|
Percent
|
|||||||||||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||||||||||||||
Coins
|
$ |
6,038
|
55.8 | % | $ |
5,590
|
56.5 | % | $ |
448
|
8.0 | % | (114,200 | ) | (23.7 | %) | ||||||||||||||||
Sportscards
|
2,292
|
21.2 | % |
2,251
|
22.7 | % |
41
|
1.8 | % |
17,000
|
5.3 | % | ||||||||||||||||||||
Other
(1)
|
2,495
|
23.0 | % |
2,057
|
20.8 | % |
438
|
21.3 | % |
22,400
|
36.3 | % | ||||||||||||||||||||
$ |
10,825
|
100.0 | % | $ |
9,898
|
100.0 | % | $ |
927
|
9.4 | % | (74,800 | ) | (8.7 | %) |
(1)
|
Consists
of autographs, stamps, currency, diamonds and colored gemstones,
CCE
subscription business, our CFC dealer financing business, and our
collectibles convention business.
|
Three
Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
|||||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
|||||||||||||
Gross
profit
|
$ |
5,625,000
|
52.0 | % | $ |
5,542,000
|
56.0 | % |
Three
Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
|||||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
|||||||||||||
Selling
and
Marketing
|
$ |
2,018,000
|
18.7 | % | $ |
1,262,000
|
12.8 | % |
Three
Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
|||||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
|||||||||||||
General
and
Administrative
|
$ |
3,948,000
|
36.4 | % | $ |
3,979,000
|
40.2 | % |
Three
Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
|||||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
|||||||||||||
Amortization
of
Intangibles
|
$ |
270,000
|
2.5 | % | $ |
171,000
|
1.7 | % |
Three
Months Ended September 30,
|
||||||||
2007
|
2006
|
|||||||
Included
in:
|
||||||||
Cost
of revenues
|
$ |
61,000
|
$ |
76,000
|
||||
Selling
and marketing expenses
|
(7,000 | ) |
1,000
|
|||||
General
and administrative expenses
|
192,000
|
123,000
|
||||||
$ |
246,000
|
$ |
200,000
|
Three
Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
|||||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
|||||||||||||
Interest
income,
net
|
$ |
444,000
|
4.1 | % | $ |
567,000
|
5.7 | % |
Three
Months Ended September 30,
|
||||||||
2007
|
2006
|
|||||||
Income
tax expense (benefit)
|
$ | (66,000 | ) | $ |
318,000
|
Three
Months Ended September 30,
|
||||||||
2007
|
2006
|
|||||||
Income
(loss) from discontinued operations, net
of gain on sales of discontinued businesses
(net of income taxes).
|
$ | (10,000 | ) | $ |
11,000
|
Fiscal
Year
|
||||
2008 (remaining
9 months)
|
$ |
1,357,000
|
||
2009
|
1,804,000
|
|||
2010
|
899,000
|
|||
2011
|
433,000
|
|||
2012
|
415,000
|
|||
Thereafter
|
1,386,000
|
|||
$ |
6,294,000
|
·
|
changes
in general economic conditions or changes in conditions in the
collectibles or high-value assets markets in which we operate, such
as a
possible decline in the popularity of some high-value collectibles
or
assets, either of which could reduce the volume of authentication
and
grading submissions and, therefore, the grading fees we
generate;
|
·
|
a
lack of diversity in our sources of revenues and, more particularly,
our
dependence on collectible coin authentication and grading for a
significant percentage of our total revenues, which makes us more
vulnerable to adverse changes in economic conditions, including declines
in the value of precious metals or recessionary or other conditions
that
could lead to reduced coin and other collectibles submissions that
would,
in turn, result in reductions in our revenues and
income;
|
·
|
our
dependence on certain key executives and collectibles experts, the
loss of
the services of any of which could adversely affect our ability to
obtain
authentication and grading submissions and, therefore, could harm
our
operating results;
|
·
|
the
fact that for the fiscal year ended June 30, 2007 and the three months
ended September 30, 2007, our top 5 coin authentication and grading
customers accounted for approximately 14% of our net revenues, which
means
that the loss of any of those customers, or a reduction in their
grading
submissions to us, would result in a decline in our revenues and
a
reduction in our operating income;
|
·
|
increased
competition from other collectibles’ authentication and grading companies
that could result in reductions in collectibles submissions to us
or could
require us to reduce the prices we charge for our services, either
of
which could result in reductions in our revenue and
income;
|
·
|
the
risk that we will incur unanticipated liabilities under our authentication
and grading warranties that would increase our operating
expenses;
|
·
|
the
risk that new collectibles service offerings and business initiatives,
such as autograph, stamp and paper currency grading services, diamonds
and
colored gemstones, and our dealer financing program, will not gain
market
acceptance or will be unsuccessful and will, as a result, increase
our
operating expenses and reduce our overall profitability or cause
us to
incur losses;
|
·
|
the
risks involved in acquiring existing or commencing new authentication
and
grading businesses, including the risks that we will be unable to
successfully integrate new businesses into our operations; that our
new
businesses (in particular our diamond and colored gemstones businesses)
may not gain market acceptance; that business expansion may result
in a
costly diversion of management time and resources from our existing
businesses and increase our operating expenses; that acquisition-related
goodwill and intangible assets may become impaired, which could adversely
impact our financial statements and results of operations; and that
we
will not achieve adequate returns on the investments we may make
in
acquiring other or establishing new businesses, any of which would
harm
our profitability or cause us to incur
losses;
|
·
|
the
risks that we will encounter problems with or failures of our computer
systems that would interrupt our services or result in loss of data
that
we need for our business; and
|
·
|
the
potential of increased government regulation of our businesses that
could
cause operating costs to increase.
|
ITEM
1.
|
ITEM
1A.
|
ITEM
6.
|
(a)
|
Exhibits:
|
|
Exhibit
31.1
|
Certification
of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley
Act of
2002
|
|
Exhibit
31.2
|
Certification
of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley
Act of
2002
|
|
Exhibit
32.1
|
Chief
Executive Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
|
Exhibit
32.2
|
Chief
Financial Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
COLLECTORS
UNIVERSE, INC.
|
||
Date: November
8, 2007
|
/s/
MICHAEL R. HAYNES
|
|
Michael
R. Haynes
|
||
Chief
Executive Officer
|
COLLECTORS
UNIVERSE, INC.
|
||
Date: November
8, 2007
|
/s/
JOSEPH J. WALLACE
|
|
Joseph
J. Wallace
|
||
Chief
Financial Officer
|
Number
|
Description
|
Exhibit
31.1
|
Certification
of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley
Act of
2002
|
Exhibit
31.2
|
Certification
of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley
Act of
2002
|
Exhibit
32.1
|
Chief
Executive Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
Exhibit
32.2
|
Chief
Financial Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|