#58593 - 02/05/03 07:47 AM
CU Tacks Up .07/sh Loss.
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vayank
The Amazing Card-Man
Registered: 04/13/02
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Press Release Source: Collectors Universe, Inc.
Collectors Universe Announces Second Quarter Fiscal 2003 Financial Results
Tuesday February 4, 4:31 pm ET
NEWPORT BEACH, Calif., Feb. 4 /PRNewswire-FirstCall/ -- Collectors Universe, Inc. (Nasdaq: CLCT - News), the leading provider of value-added grading and authentication services and products to dealers and collectors of high-end collectibles, today reported financial results for the second quarter of fiscal 2003 ended December 31, 2002.
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Second Fiscal Quarter Operating Performance
Net revenues for the second fiscal quarter of 2003 increased 7% to $11,300,000, from $10,600,000 in the year-ago quarter. For the six months ended December 31, 2002 net revenues increased 20.1% to $23,900,000 from $19,900,000 in the six months ended December 31, 2002. The increases were primarily the result of continued strength in coin grading submissions and growth in auction businesses and sports memorabilia authentication services.
The Company reported a pre-tax loss of $1,416,000 for the second quarter of fiscal 2003, compared with a pre-tax loss of $1,100,000 for the second quarter of fiscal 2002. However, due to a tax benefit of $967,000 for the second quarter of fiscal 2003, which included a net benefit of $374,000 for California Enterprise Zone (EZ) Hiring Tax Credits resulting from agency approval during the quarter for eligibility covering the period from 1999 to 2002, the net loss for the quarter ended December 31, 2002 was $449,000, or $0.07 per basic and diluted share. This compares to a net loss of $1,100,000, or $0.18 per basic and diluted share for the second quarter of fiscal 2002.
For the six months ended December 31, 2002, the Company had a pre-tax loss of $904,000 as compared to a pre-tax loss of $3,300,000 for the six months ended December 31, 2001. Due to a tax benefit of $751,000, which also includes the aforementioned California Enterprise Zone Credits, the net loss for the six months ended December 31, 2002 was $153,000 (before the cumulative effect of a previously reported accounting change of $8,973,000 for goodwill impairment, which was recorded in the first quarter of the current fiscal year). By comparison, for the six months ended December 31, 2001, the Company reported a net loss of $2,200,000.
During the quarter and six months ended December 31, 2002, gross profit was 36.8% and 40.3%, respectively, as compared to 41.1% and 38.9%, respectively, for the corresponding quarter and six months ended December 31, 2001. The increase in cost of revenues in the quarter ended December 31, 2002 over the prior year quarter includes a $316,000 write down to adjust inventory to fair market value.
Selling, general and administrative (SG&A) expenses increased as a percent of net revenues to 50% for the second fiscal quarter of 2003, compared with 48% in the year-ago quarter. That increase was primarily attributable to a $500,000 increase in bad debt reserves and a $175,000 consulting fee in connection with obtaining of the California State Enterprise Zone Credits that contributed to the tax benefit recorded in the quarter and six months ended December 31, 2002. For the six months ended December 31, 2002, SG&A expense declined to 44.7% of net revenues from 51.8% in the first six months of 2001, when the Company incurred severance expenses related to staff reductions and expenses associated with the implementation of a new enterprise software system.
Balance Sheet Summary
At December 31, 2002, Collectors Universe had cash and cash equivalents totaling $6,600,000 compared with $4,900,000 at June 30, 2002. Assets totaled $34,600,000 at December 31, 2002, compared with $45,500,000 at June 30, 2002. Total stockholders' equity was $27,600,000 at December 31, 2002, compared with $37,100,000 at June 30, 2002. The declines in total assets and in stockholders equity were primarily attributable to the goodwill impairment charge recognized in the first quarter of the current fiscal year as a result of the Company's adoption of SFAS 142. The Company has no debt.
Commentary and Outlook
"During the fiscal second quarter, we took several key measures aimed at strengthening the balance sheet that will help support the Company's return to profitable growth," said Michael Haynes, Chief Executive Officer of Collectors Universe. "Our primary short-term objective is to enhance our capacity to achieve strong returns on the current inventories of each of our business units and enhance our revenue streams. Longer term, it is my goal to guide the ongoing development of the Company's diversified revenue sources in order to more fully maximize our core competency of expertise and working knowledge in collectibles toward a wider customer base."
Commenting on market dynamics and business outlook, Haynes continued, "We are observing a strengthening in the coin market, which is expected to be favorable for both our coin sales and coin grading services. Increased demand for metals and other tangibles is counter-cyclical as such assets can serve as a hedge against widespread weakness in the economy and worldwide political uncertainty. The positive effects on our operating results of the strengthening of the coin market have been partially offset by a continued softness in sportscard sales and grading services, which was exacerbated in the second quarter as a result of seasonal weakness that is primarily attributable to the affects on sales and grading submissions of baseball cards of the baseball off-season. While our fiscal second quarter corresponds to what is typically the weakest period for the collectibles industry, historically the Company's third and fourth quarters have been stronger. Taking into account industry demand levels, and the actions taken in the second quarter, we currently expect increased sales for the third quarter of fiscal 2003 and a resumption of operating profitability for the remaining quarters of the year."
Michael Haynes joined Collectors Universe as Chief Executive Officer and Director on January 1, 2003. Haynes brings more than 25 years of experience in managing the growth and development of fast growing companies, which includes over 19 years experience in managing both public and private companies engaged in the business of selling collectibles at auction, retail and wholesale.
Conference Call and Webcast
Management of Collectors Universe will host a conference call with a simultaneous webcast today at 1:30 p.m. Pacific/4:30 p.m. Eastern to discuss second quarter fiscal 2003 operating performance. The conference call, featuring Chief Executive Officer Michael Haynes and Chief Financial Officer Mike Lewis, will be available live via the Internet. To listen to the live Internet webcast, log on to the Company's web site at www.collectors.com and click on the link under the Investor Information menu.
An online replay will be available for 90 days on www.collectors.com, or a phone replay will be available through February 11, 2003, by dialing (800) 405-2236 or (303) 590-3000 and entering the passcode 524476.
About Collectors Universe
Collectors Universe, Inc. is the leading provider of products and essential services to the high-end collectibles market. The Collectors Universe brands, including Professional Sports Authenticator (PSA) are among the strongest and best known in their respective markets. The Company grades and authenticates collectible coins, sportscards, stamps, and autographs. The Company engages in collectibles commerce, selling coins, currency, sportscards and sports memorabilia, and entertainment memorabilia through direct sales, auctions, catalogs, and the Internet. The Company also compiles and publishes authoritative information about collectible sports cards and sports memorabilia, United States and world coins, and entertainment memorabilia. This information is accessible to collectors and dealers at the Company's website, www.collectors.com, and is also published in print.
Forward-Looking Statements
This news release contains statements regarding our expectations about our future financial performance that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Our actual results in the future may differ, possibly materially, due to a number of risks and uncertainties. Those risks and uncertainties include, but are not limited to: changes in general economic conditions, including a potential further slowing of the economy and changes in conditions in the collectibles markets in which we operate, such as a possible decline in the popularity of some high-end collectibles, either of which could reduce the volume of grading submissions and therefore the grading fees we generate and the volume of collectible sales that we are able to make; increases in competition for and difficulties in obtaining consignments of collectibles that could reduce the size and profitability of our auctions; potential losses on owned collectible merchandise or the need to adjust these inventories to fair market value through inventory write downs; our dependence on a limited number of key management personnel the loss of any of which could adversely affect future financial performance; and seasonality and potential fluctuations in quarterly operating results and quarterly cash flows. Certain of these risks and uncertainties, in addition to other risks, are more fully described in our Prospectus dated November 4,1999, which was part of our Registration Statement on Form S-1 filed with the Securities and Exchange Commission and the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2002. These forward-looking statements are made only as of the date of this news release, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
Collectors Universe, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Unaudited
(in thousands, except share and per share data)
Three Months Ended Six Months Ended
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
Net revenues $11,312 $10,615 $23,905 $19,944
Cost of revenues 7,144 6,254 14,263 12,170
Gross profit 4,168 4,361 9,642 7,774
Selling, general and
administrative expenses 5,675 5,125 10,696 10,329
Amortization of goodwill
and intangibles 18 411 37 823
Stock-based compensation 13 26
Total operating expenses 5,693 5,549 10,733 11,178
Operating loss (1,525) (1,188) (1,091) (3,404)
Interest income, net 100 38 179 127
Other income 9 7 8 13
Loss before income taxes (1,416) (1,143) (904) (3,264)
Benefit from income taxes (967) (43) (751) (1,078)
Net loss before cumulative
effect of change in
accounting principle (449) (1,100) (153) (2,186)
Cumulative effect of
change in accounting
principle,
Net of taxes of $4,511 -- -- (8,973) --
Net loss $(449) $(1,100) $(9,126) $(2,186)
Loss per common share -
basic
Before cumulative
effect of accounting
change $(0.07) $(0.18) $(0.03) $(0.35)
Cumulative effect of
accounting change -- -- (1.45) --
Net loss - basic $(0.07) $(0.18) $(1.48) $(0.35)
Loss per common share -
diluted
Before cumulative
effect of accounting
change $(0.07) $(0.18) $(0.03) $(0.35)
Cumulative effect of
accounting change -- -- (1.45) --
Net loss - diluted $(0.07) $(0.18) $(1.48) $(0.35)
Weighted average shares
outstanding:
Basic 6,129 6,249 6,172 6,249
Diluted 6,129 6,249 6,172 6,249
* All share and per share data have been adjusted for the one-for-four
reverse stock split effective December 9, 2002
Collectors Universe, Inc. and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2002 and June 30, 2002
(in thousands, except share and per share data)
Unaudited
December 31, June 30,
2002 2002
ASSETS
Current Assets:
Cash and cash equivalents $6,633 $4,947
Accounts receivable, net 6,060 7,291
Auction consignment advances 2,213 3,359
Inventories, net 7,645 8,166
Prepaid expenses and other 664 513
Notes receivable 481 481
Note receivable from an officer -- 381
Refundable income taxes 965 1,191
Deferred income taxes, current
portion 648 648
Total current assets 25,309 26,977
Property and equipment, net 1,488 1,736
Notes receivable, net of current
portion 243 476
Goodwill 1,477 14,961
Intangible assets, net 55 93
Deferred income taxes 5,759 1,074
Other assets 265 192
$34,596 $45,509
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $704 $878
Consignor payable 3,445 4,598
Accrued liabilities 761 736
Accrued compensation and benefits 831 967
Deferred revenue 850 921
commitment and contingencies -- --
Total current liabilities 6,591 8,100
Deferred rent 379 281
Stockholders' equity:
Preferred stock, $.001 par value;
3,000 shares authorized; no
shares issued or outstanding -- --
Common stock, $.001 par value;
30,000 shares authorized; issued
6,129 at December 31, 2002 and
6,381 at June 30, 2002 25 26
Additional paid-in capital 40,873 41,248
Accumulated deficit (12,251) (3,125)
Treasury stock, at cost
(500 shares) (1,021) (1,021)
Total stockholders' equity 27,626 37,128
$34,596 $45,509
--------------------------------------------------------------------------------
_________________________
----
Matthew T. Natale
Alexandria, Virginia
Completed 1977 Topps Baseball SGC Graded Set, Average Grade 92.89
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#58597 - 02/05/03 03:07 PM
Re: CU Tacks Up .07/sh Loss.
[Re: aconte]
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vayank
The Amazing Card-Man
Registered: 04/13/02
Posts: 948
Loc: Alexandria, Va
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You'll note that the filing specifically cites strong performance in coin and other, but "softness" in card grading revenues.
_________________________
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Matthew T. Natale
Alexandria, Virginia
Completed 1977 Topps Baseball SGC Graded Set, Average Grade 92.89
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#58598 - 02/10/03 04:01 PM
How big is the hole? How fast is the ship sinking? *DELETED*
[Re: vayank]
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MW1
veteran
Registered: 07/30/02
Posts: 1358
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Post deleted by dena
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#58600 - 02/11/03 01:28 AM
Re: How big is the hole? How fast is the ship sinking?
[Re: Lothar52]
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srs1a
Old, dense-headed hammers are cool. Best nail pounders.
Registered: 08/15/02
Posts: 987
Loc: NY
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What suprises me most is that the 4th quarter was "soft" for PSA at exactly the same time that they were running their $5 a pop, post-72 registry special. As far as I can tell, ALOT of cards were being submitted during this timeframe...so soft seems like a bad adjective.
I think that this says that at $5 a pop, their business is not break even...which is very suprising to me. If this is correct, they need to hire a business consultant and get their act together...or not, their choice.
I say this because, given PSA's official posts on their board indicated that a card passes before a graders eyes for 1.25 minutes, on average. At $5/card, this is a revenue generation rate of $240/hour or close to $10k/week. Say that the graders make $250k/year (nice paying job, huh?) which is $5k/week...and this says that they are running at 100% overhead above their core competency (card grading), assuming a very generous salary for the graders. This seems very high to me and should/could be easily fixed.
my 2 cents
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#58601 - 04/01/03 07:20 PM
Re: How big is the hole? How fast is the ship sinking?
[Re: srs1a]
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vayank
The Amazing Card-Man
Registered: 04/13/02
Posts: 948
Loc: Alexandria, Va
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I noticed CU stock is down to $2.56, even after a 4 to 1 split, heading down to the lethal $1 threshold again. They seem to be heading to another delisting notice.
_________________________
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Matthew T. Natale
Alexandria, Virginia
Completed 1977 Topps Baseball SGC Graded Set, Average Grade 92.89
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