UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 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): May 11, 2009
COLLECTORS
UNIVERSE, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
0-27887
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33-0846191
|
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(State
or other jurisdiction
of
incorporation)
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(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
|
1921
E. Alton Avenue, Santa Ana, California
|
92705
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|
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(Address
of principal executive offices)
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(Zip
Code)
|
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Registrant’s telephone number,
including area code: (949) 567-1234
N/A
(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)
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|
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 2.02 Results
Of Operations and Financial Condition
On May
11, 2009, Collectors Universe, Inc. (the “Company”) issued a press release
announcing its financial results for its third fiscal quarter of 2009 ended
March 31, 2009. A copy of that press release is attached as Exhibit 99.1, and by
this reference is incorporated into, this Current Report on Form
8-K.
In
accordance with General Instruction B.2 of Form 8-K, the information in this
Item 2.02 of this Current Report, including Exhibit 99.1 hereto, is being
furnished and shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that Section, nor shall such information be deemed incorporated
by reference in any filing under the Securities Act of 1933, as
amended.
Item 2.05 Costs
Associated with Exit or Disposal Activities.
On March
5, 2009, the Company filed a Current Report on Form 8-K announcing its decision
to exit the business of authenticating and grading diamonds and colored
gemstones (the “jewelry business”) and undertaking to provide, through an
amendment to that Current Report, information relating to the types or amounts
of costs that can be expected to be incurred or the future cash expenditures
that will be required in connection with the Company’s exit from the jewelry
businesses, in accordance with paragraphs (b), (c) and (d) of Item 2.05 of
Form 8-K. That information was provided in Item 5 of
Part II of the Company’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2009, which was filed with the SEC on May 11,
2009.
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Item 9.01
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Financial
Statements and Exhibits.
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(d)
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Exhibits.
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Exhibit
No.
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Description
|
|
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99.1
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Press
release of Collectors Universe, Inc. issued May 11, 2009, announcing its
financial results for its third fiscal quarter of 2009 ended March 31,
2009.
|
2
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this Current Report to be signed on its behalf by the undersigned
hereunto duly authorized.
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COLLECTORS
UNIVERSE, INC.
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||
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Dated:
May 13, 2009
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By:
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/s/ JOSEPH J.
WALLACE
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|
Joseph
J. Wallace, Chief Financial
Officer
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||
S-1
EXHIBIT
INDEX
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Exhibit
No.
|
Description
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|
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99.1
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Press
release of Collectors Universe, Inc. issued May 11, 2009, announcing its
financial results for its third fiscal quarter of 2009 ended March 31,
2009.
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E-1
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Exhibit
99.1
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Collectors
Universe Reports Results for Third Quarter Ended March 31, 2009
Continuing
Operations EPS for Third Quarter at $0.08
Results
Reflect Jewelry Grading Businesses as Discontinued Operations
NEWPORT
BEACH, CA – May 11, 2009 - Collectors Universe, Inc. (NASDAQ: CLCT), a leading
provider of value-added authentication and grading services to dealers and
collectors of high-value collectibles, today announced financial results for its
third fiscal quarter and nine months ended March 31, 2009. As previously
reported, the Company exited the jewelry grading businesses as of March 2,
2009. As a result, the remaining assets and liabilities of the
jewelry grading businesses have been classified as held for sale and their
related operating results, as well as the operating results of the currency
grading business which was sold in the third quarter, have been classified as
discontinued operations.
Overview
Continuing Third Quarter and Nine
Months of 2009
For the
third fiscal quarter of 2009, the Company reported net service revenues of
$9.1 million and after tax income from continuing operations of $754,000,
or $0.08 per diluted share. This compares to net service revenues of
$10.3 million and income from continuing operations of $271,000, or $0.03 per
diluted share for the third fiscal quarter of 2008.
For the
nine months ended March 31 2009, the Company’s net service revenues were $25.9
million and the Company incurred a loss from continuing operations of $2.2
million, or $0.25 per diluted share. This compares to net service
revenues of $29.0 million and income from continuing operations of $723,000, or
$0.08 per diluted share, for the same nine months of fiscal 2008.
Discontinued
Third Quarter and First Nine Months of 2009
For the
three and nine months ended March 31, 2009, losses from discontinued
operations were $5.5 million, or $0.61 per diluted share, and
$14.8 million, or $1.62 per diluted share, respectively, as compared to
losses from discontinued operations, net of taxes, of $1.2 million or $0.13
per diluted share and $3.2 million or $0.35 per diluted share,
respectively, for the corresponding periods of fiscal 2008. Our
discontinued operations are discussed in more detail below.
Net
Loss for the Third Quarter and Nine Months of 2009
The
resulting net losses for the three and nine months ended March 31, 2009 was
$4.8 million, or $0.53 per diluted share and $17.0 million or $1.87 per
diluted share, respectively, as compared to a net loss of $966,000, or $0.10 per
diluted share and $2.5 million or $0.27 per diluted share for same periods of
fiscal 2008.
Operational and Financial
Highlights:
|
§
|
Although
service revenues declined by 12% in the current third quarter, the Company
earned operating income of $808,000 from continuing operations (which
includes severance obligations of $400,000 to the Company’s former chief
executive officer).
|
|
§
|
The
Company exited the jewelry grading and authentication businesses effective
March 2, 2009, but retained its Gemprint licensing
business.
|
|
§
|
As
previously reported, Michael J. McConnell, a member of the board of
directors, was appointed Interim Chief Executive Officer, effective April
1, 2009.
|
1
|
§
|
The
results of our discontinued operations for the quarter and nine months
include estimated losses of $4.2 million associated with exiting the
jewelry businesses.
|
|
§
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Cash
and cash equivalents at March 31, 2009 were $20.8 million, up from $19.6
million at December 31, 2008.
|
Michael
McConnell, Chief Executive Officer, stated, “The economic climate is difficult
and uncertain in the Company’s core collectibles markets. Net service revenues
declined by 12% compared to the third quarter of fiscal 2008; however, as a
result of on-going aggressive cost reduction and efficiency initiatives, the
Company reported operating income from continuing operations of $0.8
million.
Our exit
from the jewelry businesses is largely complete, with the notable exceptions of
two sizable lease obligations. Given the softness in the New York
Midtown commercial office market, we believe it will take time to mitigate the
significant future cash outlays associated with these lease obligations.
Recognizing these facts, management has established accruals for estimated
losses for these obligations at March 31, 2009. ”
Results
of Operations of our Continuing Businesses
The 12%
decline in net service revenues in the third quarter of the current year
compared to the same quarter of the prior year was comprised of a $1.2 million
or 14% decline in grading and authentication fees while related services were
essentially at the same level as in the prior third quarter. The
decline in grading and authentication fees comprised decreases of 11% in coins,
17% in trading cards and a 28% decline in our other grading businesses
(consisting of autographs and stamps). Consistent with the earlier
quarters of fiscal 2009, the reductions in our coin grading fees was mainly
attributable to lower trade show and modern coin submissions.
Net
service revenues in the nine months ended March 31, 2009 declined by 11%,
compared to the same nine month period of fiscal 2008 and was comprised of
(i) a $2.9 million or 12% decline in grading and authentication fees and
(ii) a $137,000 or 3% decline in revenues from other related
services. The decline in grading and authentication fees was
comprised of 12% in coins, 10% in trading cards and 19% in our other grading
businesses.
The gross
profit margin on service revenues increased to 57% in the third quarter of the
current year from 52% in the same quarter of fiscal 2008, primarily due to cost
savings as a result of a cost reduction program that we have been implementing
in the current fiscal year. The gross profit margin on service
revenues in the nine months ended March 31, 2009 increased to 55% from 54% when
the prior nine months are adjusted for the unusually large coin warranty claims
of $822,000 recognized in that period.
Operating
expenses for the third quarter of fiscal 2009 were $4.4 million, compared to
$5.0 million for the same quarter of last year. For the current nine
month period, operating expenses before impairment losses of $1.5 million were
$13.6 million, compared with $14.4 million in the prior nine months to March 31,
2008. The $0.6 million and $0.8 million decrease in our operating
expenses was attributable to reductions in both selling and marketing expenses
and general and administrative (“G&A) expenses.
Operating
expenses for the current nine months includes a non-cash impairment loss of $1.5
million related to reductions in the carrying values of certain long-lived and
other intangible assets of the Company’s Gemprint business that were recognized
in the second quarter of the current year.
Due to
the improvement in our gross profit margin and the reductions in operating
expenses, we generated operating income of $808,000 in the third quarter of
fiscal 2009, as compared to $416,000 for the same quarter of last
year. For the first nine months of fiscal 2009, due to the
above-mentioned $1.5 million impairment loss, we incurred an operating loss
of $1.2 million, as compared to operating income of $0.4 million for the
same nine months of fiscal 2008.
Income
Taxes
The
income tax expense of $109,000 and $1.3 million recorded in the three and nine
months ended March 31, 2009, respectively, represented an increase in a non-cash
valuation allowances against deferred tax assets due to uncertainty of the
realization of those assets. Under the applicable accounting rules, the
increased valuation allowances are required to be allocated entirely to our
continuing operations. For the three and nine months ended March 31,
2008, the income tax expense reflects the effective tax rate for those
periods.
2
Discontinued
Operations
Losses
from discontinued operations for the three and nine months ended March 31, 2009
totaled $5.5 million and $14.8 million, respectively. Those
losses were comprised of (i) losses from the operations of the jewelry and
currency grading businesses through the respective dates of sale or closure,
(ii) losses of $4.2 million recognized in this year’s third quarter as
a result of the discontinuance of the jewelry grading businesses and
(iii) non-cash impairment losses totaling $6.2 million, recognized in
the nine months ended March 31, 2009 that were attributable to the write
off of goodwill and long-lived and other intangible assets of the jewelry
grading businesses.
The
losses of $4.2 million resulting from the discontinuance of the jewelry
businesses include estimated losses on the sale of assets, severance costs and
accruals for losses on jewelry facility leases in New York City. Due
to current economic conditions, the market for rental space in New York City is
uncertain.
Financial
Condition
At March
31, 2009, cash and cash equivalents totaled $20.8 million compared with
$19.6 million at December 31, 2008 and $23.3 million at June 30,
2008. Net cash usage of $2.6 million for the nine months ended
March 31, 2009, includes $2.7 million of cash generated by our continuing
operations, net repayments of $2.4 million under loans made to collectibles
dealers which was more than offset by cash used for discontinued operations of
$5.5 million, and the payment of $2.1 million of cash dividends to
stockholders. At March 31, 2009, the Company had working capital of
$19.5 million.
Outlook
McConnell
continued, “Our current belief is that economic conditions will remain
challenging for the foreseeable future. Accordingly, our focus is to
continue to aggressively manage costs and increase efficiencies.”
Conference
Call and Webcast
Collectors
Universe will host a conference call to discuss results on Monday, May 11, 2009
at 5:00 p.m. Eastern/2:00 p.m. Pacific. Interested parties
may participate in the conference call by dialing 888-561-1721 or 480-629-9868,
five to ten minutes prior to the initiation of the call. A replay of
the conference call will be available through May 25, 2009, by dialing
800-406-7325 or 303-590-3030 and entering access code 4074262#. A
live webcast of the conference call will also be available on the Collectors
Universe website, www.collectors.com, under Investor Relations: Earnings
Conference Calls. The webcast will be archived for 12
months.
About
Collectors Universe
Collectors
Universe, Inc. is a leading provider of value added services to the high-value
collectibles markets. The Company authenticates and grades
collectible coins, sports cards, autographs and stamps. The Company also
compiles and publishes authoritative information about United States and world
coins, collectible trading cards and sports memorabilia and collectible stamps
and operates its CCE dealer-to-dealer Internet bid-ask market for certified
coins and its Expos trade show and conventions business. This information is
accessible to collectors and dealers at the Company's website, http://www.collectors.com,
and is also published in print.
Cautionary
Statements Regarding Forward-Looking Information
This news
release contains statements regarding our expectations, beliefs or views about
our future financial performance, which constitute "forward-looking statements"
as defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by the use of words such as
"believe," "expect," "anticipate," "intend," "plan," "estimate," "project," or
future or conditional verbs such as "will," "would," "should," "could," or
"may."
Due to a
number of risks and uncertainties to which our business is subject, our future
financial performance may differ, possibly significantly, from our expected
financial performance as set forth in the forward looking statements contained
in this news release. Information regarding those risks and
uncertainties, and their possible impact on our future financial performance,
include, but are not limited to, the risk that economic conditions in the United
States will not improve for some time and may even deteriorate further, which
could result in further reductions in the demand for our collectible grading
services and, consequently, in our revenues; the risk that our strategy to offer
new services in our continuing markets will not be successful in enabling us to
improve our profitability or may even cause us to incur significant losses; and
the risk that the commercial real estate market in New York City will
deteriorate further, in which case we may not be able to sublease the offices
and laboratory facilities in New York City within the time period and for the
rents currently expected, causing our rental payment obligations to be
significantly higher than currently expected.
3
Additional
information regarding these risks and information regarding other risks and
uncertainties to which our business is subject is contained in our Annual Report
on Form 10-K for our fiscal year ended June 30, 2008 and our Quarterly Report on
Form 10-Q for the quarter ended March 31, 2009 filed with the Securities
and Exchange Commission. Due to these risks and uncertainties,
readers are cautioned not to place undue reliance on the forward-looking
statements contained in this news release or in that Annual Report, which speak
only as of their respective dates. We also disclaim any obligation to
update or revise any of the forward-looking statements as a result of new
information, future events or otherwise, except as may be required by law or
NASDAQ rules.
|
Contact:
Joseph
Wallace
Chief
Financial Officer
Collectors
Universe
949-567-1245
Email:
jwallace@collectors.com
|
- tables
to follow -
4
COLLECTORS
UNIVERSE, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in
thousands, except per share data)
(unaudited)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
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March
31,
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March
31,
|
|||||||||||||||
|
2009
|
2008
|
2009
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2008
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|||||||||||||
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Net
Revenues:
|
||||||||||||||||
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Grading, authentication and
related services
|
$ | 9,119 | $ | 10,326 | $ | 25,875 | $ | 28,958 | ||||||||
|
Product sales
|
196 | 21 | 299 | 913 | ||||||||||||
| 9,315 | 10,347 | 26,174 | 29,871 | |||||||||||||
|
Cost
of Revenues:
|
||||||||||||||||
|
Grading, authentication and
related services
|
3,910 | 4,908 | 11,770 | 14,218 | ||||||||||||
|
Product sales
|
200 | 20 | 506 | 827 | ||||||||||||
| 4,110 | 4,928 | 12,276 | 15,045 | |||||||||||||
|
Gross profit
|
5,205 | 5,419 | 13,898 | 14,826 | ||||||||||||
|
Operating
expenses:
|
||||||||||||||||
|
Selling and marketing
expenses
|
1,058 | 1,514 | 3,304 | 3,980 | ||||||||||||
|
General and administrative
expenses
|
3,086 | 3,287 | 9,552 | 9,900 | ||||||||||||
|
Impairment
loss
|
- | - | 1,516 | - | ||||||||||||
|
Amortization of intangible
assets
|
253 | 202 | 717 | 543 | ||||||||||||
|
Total operating
expenses
|
4,397 | 5,003 | 15,089 | 14,423 | ||||||||||||
|
Operating
income (loss)
|
808 | 416 | (1,191 | ) | 403 | |||||||||||
|
Interest
income, net
|
53 | 238 | 252 | 978 | ||||||||||||
|
Other
income
|
2 | 1 | 14 | 4 | ||||||||||||
|
Income
(loss) before income taxes
|
863 | 655 | (925 | ) | 1,385 | |||||||||||
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Provision
for income taxes
|
109 | 384 | 1,319 | 662 | ||||||||||||
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Income
(loss) from continuing operations
|
754 | 271 | (2,244 | ) | 723 | |||||||||||
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Loss
from discontinued operations, net of loss on sales of
discontinued businesses (net of
income taxes)
|
(5,542 | ) | (1,237 | ) | (14,765 | ) | (3,242 | ) | ||||||||
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Net
loss
|
$ | (4,788 | ) | $ | (966 | ) | $ | (17,009 | ) | $ | (2,519 | ) | ||||
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Net
income (loss) per basic share:
|
||||||||||||||||
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Income (loss) from continuing
operations
|
$ | 0.08 | $ | 0.03 | $ | (0.25 | ) | $ | 0.08 | |||||||
|
Loss from discontinued
operations, net of loss on
sales of discontinued
businesses (net of income taxes)
|
(0.61 | ) | (0.13 | ) | (1.62 | ) | (0.35 | ) | ||||||||
|
Net
loss
|
$ | (0.53 | ) | $ | (0.10 | ) | $ | (1.87 | ) | $ | (0.27 | ) | ||||
|
Net
income (loss) per diluted share:
|
||||||||||||||||
|
Income (loss) from continuing
operations
|
$ | 0.08 | $ | 0.03 | $ | (0.25 | ) | $ | 0.08 | |||||||
|
Loss from discontinued
operations, not of loss on sales of
discontinued businesses (net
of income taxes)
|
(0.61 | ) | (0.13 | ) | (1.62 | ) | (0.35 | ) | ||||||||
|
Net
loss
|
$ | (0.53 | ) | $ | (0.10 | ) | $ | (1.87 | ) | $ | (0.27 | ) | ||||
|
Weighted
average shares outstanding:
|
||||||||||||||||
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Basic
|
9,083 | 9,317 | 9,103 | 9,322 | ||||||||||||
|
Diluted
|
9,110 | 9,406 | 9,103 | 9,468 | ||||||||||||
|
Dividends
declared per common share
|
$ | - | $ | 0.25 | $ | 0.25 | $ | 0.75 | ||||||||
5
COLLECTORS
UNIVERSE, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
thousands, except per share data)
(unaudited)
|
March
31,
|
June
30,
|
|||||||
|
2009
|
2008
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash and cash
equivalents
|
$ | 20,771 | $ | 23,345 | ||||
|
Accounts receivable, net of
allowance of $24 at March 31, 2009 and $29 at June 30,
2008
|
1,325 | 1,214 | ||||||
|
Refundable income
taxes
|
142 | 575 | ||||||
|
Inventories, net
|
533 | 961 | ||||||
|
Prepaid expenses and other current
assets
|
1,054 | 803 | ||||||
|
Customer notes receivable, net of
allowance of $31 at March 31, 2009 and at June 30, 2008
|
3,015 | 2,062 | ||||||
|
Net deferred income tax
asset
|
63 | 486 | ||||||
|
Customer notes receivables held
for sale
|
- | 3,579 | ||||||
|
Receivables from sale of net
assets of discontinued operations
|
142 | 92 | ||||||
|
Current assets from discontinued
operations held for sale
|
800 | 448 | ||||||
|
Total current
assets
|
27,845 | 33,565 | ||||||
|
Property and equipment,
net
|
1,224 | 1,628 | ||||||
|
Goodwill
|
2,626 | 2,626 | ||||||
|
Intangible assets,
net
|
3,676 | 5,732 | ||||||
|
Net deferred income tax
assets
|
- | 909 | ||||||
|
Customer note receivable, net of
current portion
|
175 | - | ||||||
|
Note receivable from sale of
discontinued operations
|
323 | 138 | ||||||
|
Other assets
|
65 | 126 | ||||||
|
Non-current assets of discontinued
operations held for sale
|
152 | 7,294 | ||||||
| $ | 36,086 | $ | 52,018 | |||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts payable
|
$ | 1,147 | $ | 1,349 | ||||
|
Accrued
liabilities
|
1,431 | 1,546 | ||||||
|
Accrued compensation and
benefits
|
1,297 | 1,269 | ||||||
|
Income taxes
payable
|
347 | 368 | ||||||
|
Deferred revenue
|
2,195 | 2,002 | ||||||
|
Current liabilities of
discontinued operations held for sale
|
1,923 | 1,034 | ||||||
|
Total current
liabilities
|
8,340 | 7,568 | ||||||
|
Deferred
rent
|
193 | 195 | ||||||
|
Net
deferred income tax liability
|
305 | - | ||||||
|
Long-term
liabilities of discontinued operations held for sale
|
2,632 | 425 | ||||||
|
Commitments
and contingencies
|
- | - | ||||||
|
Preferred
stock, $.001 par value; 3,000 shares authorized at March 31, 2009;
5,000
at June 30, 2008; no shares issued or outstanding
|
- | - | ||||||
|
Common
stock, $.001 par value; 20,000 shares authorized at March 31, 2009 and
45,000 at
June 30, 2008;
outstanding 9,158 at March 31, 2009 and 8,361 at June 30,
2008
|
9 | 8 | ||||||
|
Additional
paid-in capital
|
75,881 | 75,996 | ||||||
|
Accumulated
deficit
|
(51,274 | ) | (32,174 | ) | ||||
|
Total stockholders'
equity
|
24,616 | 43,830 | ||||||
| $ | 36,086 | $ | 52,018 | |||||
6