Collectors Universe, Inc.
Aug 27, 2009
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Collectors Universe Reports Results for Fourth Quarter Ended June 30, 2009

Continuing Operations EPS for Fourth Quarter at $0.15

NEWPORT BEACH, Calif., Aug. 27 /PRNewswire-FirstCall/ -- 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 fourth fiscal quarter and year ended June 30, 2009. As previously reported, the Company exited the jewelry grading businesses as of March 2, 2009. In addition, in the fourth quarter, the Company decided to discontinue the further development of its Gemprint business. 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 and Gemprint, have been classified as discontinued operations for all periods presented.

Overview

Continuing Operations Fourth Quarter and Fiscal Year 2009

For the fourth fiscal quarter of 2009, the Company reported net service revenues of $9.7 million, operating income of $1.2 million and after tax income from continuing operations of $1.4 million, or $0.15 per diluted share. This compares to net service revenues of $9.5 million, operating income of $497,000 and an after tax loss from continuing operations of $648,000, or $0.07 per diluted share for the fourth quarter of 2008.

For the year ended June 30, 2009, the Company's net service revenues were $35.5 million, operating income was $2.1 million and after tax income from continuing operations was $1.2 million, or $0.13 per diluted share. This compares to net service revenues of $38.5 million, operating income of $1.3 million and after tax income from continuing operations of $0.3 million, or $0.03 per diluted share, for fiscal year 2008.

The above results were achieved despite a non cash impairment loss of $649,000 recognized in the fourth quarter and fiscal 2009 associated with a write down of capitalized software costs for the Company's autograph business.

Discontinued Fourth Quarter and Fiscal Year 2009

For the three months and fiscal year ended June 30, 2009, losses from discontinued operations were $1.3 million, or $0.14 per diluted share, and $18.1 million, or $1.98 per diluted share, respectively, as compared to losses from discontinued operations, net of taxes, of $12.5 million or $1.34 per diluted share and $15.9 million or $1.69 per diluted share, respectively, for the corresponding periods of fiscal 2008. Our discontinued operations are discussed in more detail below.

Net Income for the Fourth Quarter and Loss for Fiscal Year 2009

The resulting net income for the fourth quarter ended June 30, 2009 was $87,000, or $0.01 per diluted share and the net loss for fiscal year 2009 was $16.9 million or $1.85 per diluted share as compared to a net loss of $13.1 million, or $1.41 per diluted share and $15.6 million or $1.66 per diluted share for the fourth quarter and fiscal year ended June 30, 2008, respectively.

Operational and Financial Highlights:

Michael McConnell, Chief Executive Officer, stated, "We're encouraged by the Company's financial performance during the quarter. The results demonstrate a commitment by all of our employees to both tactical initiatives to drive revenue as well as a keen focus on cost controls throughout the Company."

Results of Operations of our Continuing Businesses

The 2% increase in net service revenues in the current fourth quarter compared to the same quarter of the prior year was comprised of a $0.2 million or 8% increase in related services with grading and authentication fees at approximately the same level as in the prior fourth quarter. Grading and authentication fees comprised an increase $0.6 million or 12% in coins offset by declines of 16% in cards and autographs and 46% in stamps. The increase in other related services included increases in advertising and collector club memberships.

Net service revenues for fiscal year 2009 declined by 8% compared to fiscal 2008 and comprised a $2.9 million or 9% decline in grading and authentication fees with other related services substantially the same as fiscal 2008. The decline in grading and authentication fees was comprised of $1.2 million or 6% in coins, $1.2 million or 12% in cards and autographs and the balance of $0.5 million or 34% for stamps.

The gross profit margin on service revenues increased to 58% and 56% in the fourth quarter and fiscal 2009 respectively compared with 52% and 53% for the same periods of the prior year, when the prior year is adjusted for the unusually large coin warranty claims of $822,000 recognized in the second quarter of that period. The increased gross profit margin was due to cost savings resulting from a cost reduction program implemented in the current fiscal year.

Operating expenses for the fourth quarter and fiscal 2009 before the impairment of $649,000 were down to $3.8 million and $16.8 million, respectively, compared to $4.4 million and $18.4 million for the same periods of the prior year. The $0.6 million and $1.6 million reductions in our operating expenses was attributable to reductions in both selling and marketing expenses and general and administrative ("G&A) expenses as a result of the cost reduction programs in fiscal 2009. The fiscal 2009 G&A expense reduction was achieved despite a severance cost of $0.4 million related to the departure of the Company's former chief executive officer.

Income Taxes

The income tax expense of $1.2 million for fiscal 2009 represented an increase in a non-cash valuation allowance established against deferred tax assets, due to uncertainty as to their realization, partially offset by a tax benefit of $0.1 million recognized in the current fourth quarter, due to the resolution of some of the Company's uncertain tax positions. For fiscal 2008, the income tax expense reflected the effective tax rate for those periods and a valuation allowance established in the fourth quarter of fiscal 2008 for California Enterprise Zone Credits due to uncertainty of realization.

Discontinued Operations

Losses from discontinued operations for the fourth quarter and fiscal 2009 totaled $1.3 million and $18.1 million, respectively. The 2009 fourth quarter loss of $1.3 million included the $0.9 million recognized for the New York lease obligations, costs associated with operating Gemprint through June 2009 and other exit costs. For fiscal year 2009, the loss from discontinued operations of $18.1 million comprised (i) losses of $5.1 million from the operations of the jewelry, currency grading businesses and Gemprint through the respective dates of sale or closure, (ii) losses of $5.3 million recognized in the third and fourth quarters, resulting from the discontinuance of primarily the jewelry grading businesses and was inclusive of $4.0 million for the New York lease obligations and (iii) non-cash impairment losses recognized in the second quarter of fiscal 2009, totaling $7.7 million, attributable to the write-off of goodwill and other long-lived assets of the jewelry businesses.

The losses from discontinued operations of $12.5 million and $15.9 million in the fourth quarter and fiscal 2008 respectively, comprised losses from the then on-going operations of our jewelry and currency businesses, net of taxes and impairment losses of $11.2 million recognized in the fourth quarter of fiscal 2008.

Financial Condition

At June 30, 2009, cash and cash equivalents totaled $23.9 million compared with $20.8 million at March 31, 2009 and $23.3 million at June 30, 2008. Net cash generated in fiscal 2009 of $0.5 million included cash generated from continuing operations of $5.8 million and from the net repayment of CFC notes receivable of $3.3 million reduced by net cash used in discontinued operations of $5.8 million, the payment of dividends to stockholders of $2.1 million, the net buyback of shares of $0.3 million and capital expenditures of $0.4 million. At June 30, 2009, the Company had working capital of $21.4 million.

Outlook

McConnell continued, "Looking forward into 2010, our focus is to build upon the solid performance achieved in the current quarter."

Conference Call and Webcast

Collectors Universe will host a conference call to discuss results on Thursday, August 27, 2009 at 5:00 p.m. Eastern/2:00 p.m. Pacific. Interested parties may participate in the conference call by dialing 888-549-7750 or 480-629-9867, five to ten minutes prior to the initiation of the call. A replay of the conference call will be available through September 11, 2009, by dialing 800-406-7325 or 303-590-3030 and entering access code 4148865#. 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 web site, 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 the current economic recession and credit crisis will lead to longer term changes in the spending habits of consumers and in the availability and use of credit by of smaller businesses, such as collectibles dealers, to fund purchases of collectibles, which could lead to longer term declines in collectibles commerce and, therefore, in the demand for our services; the risk that our strategy to offer new services in our continuing collectibles 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 formerly occupied by our jewelry businesses within the time periods and for the rents currently expected, causing our rental payment obligations to be significantly higher than currently expected which could lead to reductions in cash flows and cause us to incur additional losses from discontinued operations in future periods.

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 third quarter ended March 31, 2009 filed with the Securities and Exchange Commission, which will be supplemented and updated by the discussion of risk factors in our on Annual Report on Form 10-K for our fiscal year ended June 30, 2009. 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 our Annual Reports, 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 -

                      COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                        (in thousands, except per share data)
                                     (unaudited)


                                   Three Months Ended        Year Ended
                                        June 30,               June 30,
                                 ----------------------  -------------------
                                   2009         2008       2009       2008
                                 --------     --------   --------   --------
    Net Revenues:
      Grading, authentication
       and related services      $9,659        $9,505    $35,520    $38,459
      Product sales                  95           133        394      1,046
                                -------       -------    -------    -------
                                  9,754         9,638     35,914     39,505
    Cost of Revenues:
      Grading, authentication
       and related services       4,034         4,587     15,790     18,805
      Product sales                  87           147        595        974
                                -------       -------    -------    -------

                                  4,121         4,734     16,385     19,779
                                -------       -------    -------    -------

      Gross profit                5,633         4,904     19,529     19,726
    Operating expenses:
      Selling and marketing
       expenses                   1,031         1,172      4,306      5,137
      General and
       administrative expenses    2,472         3,096     11,615     12,793
      Impairment loss               649             -        649          -
      Amortization of
       intangible assets            251           139        871        490
                                -------       -------    -------    -------

      Total operating expenses    4,403         4,407     17,441     18,420
                                -------       -------    -------    -------

    Operating income              1,230           497      2,088      1,306
    Interest income, net             29           155        284      1,138
    Other income                      -             3         14          6
                                -------       -------    -------    -------

    Income before income taxes    1,259           655      2,386      2,450
    Provision (benefit) for
     income taxes                  (136)        1,303      1,183      2,155
                                -------       -------    -------    -------

    Income (loss) from
     continuing operations        1,395          (648)     1,203        295
    Loss from discontinued
     operations, including
     loss on sale of
     discontinued businesses
     (net of income taxes)       (1,308)      (12,465)   (18,126)   (15,927)
                                -------       -------    -------    -------
    Net loss                        $87      $(13,113)  $(16,923)  $(15,632)
                                =======      ========   ========   ========

    Net income (loss) per
     basic share:
      Income (loss) from
       continuing operations      $0.15        $(0.07)     $0.13      $0.03
      Loss from discontinued
       operations, including
       loss on sale of
       discontinued businesses
       (net of income taxes)      (0.14)        (1.35)     (1.99)     (1.71)
                                -------       -------    -------    -------

    Net income (loss)             $0.01        $(1.42)    $(1.86)    $(1.68)
                                =======      ========   ========   ========

    Net income (loss) per
     diluted share:
      Income (loss) from
       continuing operations      $0.15        $(0.07)     $0.13      $0.03
      Loss from discontinued
       operations, including
       loss on sale of
       discontinued businesses
       (net of income taxes)      (0.14)        (1.34)     (1.98)     (1.69)
                                -------       -------    -------    -------
    Net loss                      $0.01        $(1.41)    $(1.85)    $(1.66)
                                =======      ========   ========   ========


    Weighted average shares
     outstanding:
      Basic                       9,102         9,211      9,103      9,295
      Diluted                     9,140         9,274      9,135      9,419
    Dividends declared per
     common share                    $-         $0.23      $0.23      $0.91
                      COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                        (in thousands, except per share data)
                                      (unaudited)

                                                          June 30,   June 30,
                                                            2009       2008
                                                          --------   -------
    ASSETS
    Current assets:
      Cash and cash equivalents                           $23,870    $23,345
      Accounts receivable, net of allowance of $63 at
       June 30, 2009 and $27 at June 30, 2008               1,252      1,211
      Refundable income taxes                                   -        575
      Inventories, net                                        497        961
      Prepaid expenses and other current assets               868        804
      Customer notes receivable, net of allowance of
       $31 at June 30, 2009 and 2008                        2,340      2,062
      Net deferred income tax asset                             -        486
      Customer notes receivables held for sale                  -      3,579
      Notes receivable from sale of net assets of
       discontinued operations                                212         92
      Current assets from discontinued operations             102        450
                                                          -------    -------
          Total current assets                             29,141     33,565

      Property and equipment, net                           1,174      1,617
      Goodwill                                              2,626      2,626
      Intangible assets, net                                2,776      4,035
      Net deferred income tax assets                            -        909
      Note receivable from sale of net assets of
       discontinued operations                                300        138
      Other assets                                             74        127
      Non-current assets of discontinued operations           182      9,001
                                                          -------    -------
                                                          $36,273    $52,018
                                                          =======    =======
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                                     $1,051     $1,348
      Accrued liabilities                                   1,344      1,357
      Accrued compensation and benefits                     1,341      1,269
      Income taxes payable                                    252        368
      Deferred income tax liability                            60          -
      Deferred revenue                                      1,883      2,002
      Current liabilities of discontinued operations        1,827      1,224
                                                          -------    -------
          Total current liabilities                         7,758      7,568
    Deferred rent                                             220        174
    Net deferred income tax liability                         208          -
    Long-term liabilities of discontinued operations        3,308        446
    Commitments and contingencies                               -          -

    Stockholders equity:
    Preferred stock, $.001 par value; 3,000 shares
     authorized at June 30, 2009;  5,000 at June 30,
     2008; no shares issued or outstanding                      -          -
    Common stock, $.001 par value; 20,000 shares
     authorized at June 30, 2009 and 45,000 at June 30,
     2008; outstanding  9,158 at June 30,  2009 and
     8,361 at June 30, 2008                                     9          8
    Additional paid-in capital                             75,957     75,996
    Accumulated deficit                                   (51,187)   (32,174)
                                                          -------    -------
          Total stockholders' equity                       24,779     43,830
                                                          -------    -------
                                                          $36,273    $52,018
                                                          =======    =======

SOURCE Collectors Universe, Inc.