Exhibit 99.1
Collectors Universe Reports First Quarter Fiscal 2004 Financial Results
NEWPORT BEACH, Calif., Nov. 13 /PRNewswire-FirstCall/ -- Collectors
Universe, Inc. (Nasdaq: CLCT), the leading provider of value-added grading and
authentication services and products to dealers and collectors of high-end
collectibles, today announced financial results for the first quarter of
fiscal 2004 ended September 30, 2003. The Company reported first quarter
pre-tax income of $774,000 and net income of $431,000 or $0.07 per diluted
share. This compares to pre-tax income of $296,000 or $0.05 per diluted
share (before the cumulative effect of an accounting change), in the first
quarter of fiscal 2003. As previously reported, the Company incurred a net
loss in the first quarter of fiscal 2003 of $8,677,000, or $1.38 per diluted
share, as a result of a non-cash goodwill impairment charge of $8,973,000, or
$1.43 per diluted share, recorded as the cumulative effect of a change in
accounting principle.
First Fiscal Quarter Operating Performance
Net revenues for the first quarter of fiscal 2004 increased 36% to
$17,187,000, from net revenues of $12,593,000 for the first quarter of fiscal
2003. Strong year-over-year revenue growth reflected (i) continued strength
in the coin market which positively impacted both grading and authentication
services and auction and direct collectibles sales business, and (ii)
increased auction fees earned at the annual American Numismatic Association
auction in Baltimore for which the Company's Bowers & Merena unit was the
exclusive auctioneer in 2003.
The revenue mix for the first quarter of fiscal 2004 was 35% for grading
and authentication services and 65% for auctions and collectibles sales, as
compared with 44% and 56% for the same business units, respectively, for the
first quarter of fiscal 2003. The shift in mix was attributable to increased
auction fees and direct collectibles sales during the first quarter of fiscal
2004 in conjunction with three auctions conducted by the Company.
Gross profit for the three months ended September 30, 2003 increased 15%
to $6,277,000 from $5,474,000 for the three months ended September 30, 2002
due to the increase in both grading and collectibles sales revenues. However,
gross profit margin in the three months ended September 30, 2003 declined to
37% from 43% in the comparable prior-year period. That decline was due to a
combination of factors including (i) a greater increase in the Company's
auction and direct collectibles sales than in its higher margin grading and
authentication services, and (ii) a decrease in the gross margin earned on the
Company's auction and direct collectibles sales resulting from both the
Company's decision to reduce slower moving inventories by selling them at a
discount and the Company's reduction of the average rate charged for auction
fees in an effort to increase consignments and thereby increase the average
size of its auctions.
Selling, general and administrative (SG&A) expenses represented 32% of net
revenues for the first quarter of fiscal 2004 compared with 39% for the first
quarter of fiscal 2003, primarily as a result of the increase in net revenues.
Pre-tax income increased 51% to $774,000 for the first quarter of fiscal
2004, from $512,000 for the first quarter of fiscal 2003.
Net income was $431,000, or $0.07 per diluted share, for the quarter ended
September 30, 2003, compared with net income of $296,000, or $0.05 per diluted
share, before the cumulative effect of change in accounting principle, for the
first quarter of fiscal 2003. As previously reported, in the first quarter of
fiscal 2003, the Company recorded a non-cash goodwill impairment charge of
$8,973,000 (net of income tax benefit), recorded as the cumulative effect of a
change in accounting principle, which resulted in a net loss of $8.7 million,
or $1.38 per diluted share, for the quarter ended September 30, 2002.
Financial Condition
At September 30, 2003, cash and cash equivalents totaled $8,681,000
compared with cash and cash equivalents of $4,482,000 at June 30, 2003,
primarily reflecting a reduction in collectibles inventory and collection of
refundable income taxes. Net cash provided by operating activities was
$4,333,000 for the three months ended September 30, 2003, compared with net
cash provided by operating activities of $95,000 for the three months ended
September 30, 2002.
Inventories totaled $7,232,000 at September 30, 2003, compared with total
inventories of $8,541,000 at June 30, 2003. Assets totaled $35,570,000 at
September 30, 2003, compared with $32,291,000 at June 30, 2003.
Total stockholders' equity was $26,933,000 at September 30, 2003, compared
with $26,319,000 at June 30, 2003. Total working capital was $19,043,000 at
September 30, 2003, compared with total working capital of $18,369,000 at June
30, 2003. The Company currently has no debt to a commercial bank or other
lender.
Commentary and Outlook
Chief Executive Officer Michael Haynes commented, "We are relatively
pleased with our first quarter performance which reflected a 10% increase in
grading and authentication revenue and a 57% increase in auction and
collectibles sales revenues year over year. The collectibles sales revenue
increase was driven primarily by some very large auctions held during the
quarter. Notably, we recognized continued strength in coin grading
submissions which was attributable, in part, to our introduction of new
marketing programs, along with an increase in demand for rare coins. We
believe that our return to profitability for the fiscal first quarter
indicates that our marketing and business strategies are beginning to generate
results.
"For the second quarter of fiscal 2004, which is seasonally our most
challenging quarter, we expect auctions and collectibles sales revenue to
decline as we revert to a more normal auction schedule," Haynes continued.
"As a result, we expect that grading and authentication services will grow as
a percentage of our total revenues for the second quarter. We expect the
quarterly contribution from the grading and authentication segment will be
somewhat higher in this year's second quarter as compared with the same period
last year given the expected continuing strength of the rare coin market and
our marketing emphasis on the growth of this segment."
First Quarter Highlights
Collectors Universe conducted three major auctions during the first
quarter of fiscal 2004 that derived record revenues for auction sales,
contributing to the Company's improved operating performance for the period.
The first auction was held in conjunction with the August 2003 National Sports
Collectors Convention in Atlantic City, New Jersey, at which the Company's
Superior Sports Auctions unit auctioned $1.2 million of sportscards and sports
memorabilia, making that auction one of the four largest conducted by Superior
Sports Auctions since its inception in 1999 and the largest since
December 2001.
The second of the three auctions was held in conjunction with the August
2003 American Numismatic Association (ANA) annual convention held in
Baltimore, Maryland, which featured the Company's Bowers & Merena unit as the
exclusive coin auctioneer for that auction. The Company auctioned
$12.8 million of rare coins and currency at that auction, making it the
largest conducted by Bowers and Merena since it became part of Collectors
Universe in 2000. Prior to 2003, Bowers & Merena had last been selected as
exclusive auctioneer for the ANA annual coin auction in 2000. Bowers & Merena
was not selected as exclusive auctioneer for the 2004 ANA auction.
In September 2003, the Company's Odyssey Auctions unit completed a sale of
over $850,000 in entertainment and historical memorabilia including the sale
of George Harrison's guitar used in The Beatles' recording "Let It Be." This
sale was the largest sale by Odyssey Auctions in its history.
In addition to increased auction sales revenues, the Company's PSA and
PCGS business units, which are the industry leaders in the authentication and
grading of sportscards and coins, generated significant aggregate revenues
from on site authentication and grading of sportscards and coins at the
National Sports Collectors Convention and the American Numismatic Association
annual convention, respectively.
As previously reported, on September 17, 2003, the Company sold its
currency auction business, operated by its wholly owned subsidiary, Lyn Knight
Currency Auctions, Inc., to Collectible Properties, Inc., a private company
owned by Lyn F. Knight who, until the sale, had served as President of that
subsidiary and had managed that business for Collectors Universe. In that
transaction, Collectors Universe sold all of the assets of that business other
than approximately $2,000,000 of collectible currencies and approximately
$2,200,000 of accounts receivable which were retained, and Collectible
Properties has assumed certain outstanding contractual obligations of the
currency business. Collectors Universe plans to sell the collectible
currencies and collect on those accounts receivable through customary
channels. The purchase price for the assets sold is the Company's net book
value of the assets sold and an additional amount which is based on future
sales revenues of Collectible Properties. Collectors Universe did not record
a gain or loss on the sale.
Conference Call and Webcast
Management will host a conference call and simultaneous webcast today at
2:00 p.m. Pacific/5:00 p.m. Eastern to discuss first quarter fiscal 2004
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 , click on 'Investor Home' under the
Investor Information menu, and find the webcast link under 'Conference Calls.'
An online replay will be available for 12 months on www.collectors.com ,
or a phone replay will be available through November 20, 2003, by dialing
303-590-3000 or 800-405-2236 and entering the passcode 559304#.
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 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, 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 web site, 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. Forward-looking
statements can be identified by the use of words such as "believe," "expect,"
"anticipate," "intend," "plan," "estimate," "project," or words of similar
meaning, or future or conditional verbs such as "will," "would," "should,"
"could," or "may." Our actual results in the future may differ, possibly
materially, from our current expectations as set forth in the forward looking
statements contained in this release 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 the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2003,
as filed with the Securities and Exchange Commission. 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
(in thousands, except per share data)
(unaudited)
Three Months Ended
September 30,
2003 2002
Net revenues $17,187 $12,593
Cost of revenues 10,910 7,119
Gross profit 6,277 5,474
Selling, general and administrative expenses 5,447 4,962
Provision for doubtful accounts 83 59
Amortization of goodwill and intangibles 5 19
Total operating expenses 5,535 5,040
Operating income 742 434
Interest income, net 39 79
Other expenses (7) (1)
Income before income taxes 774 512
Provision for income taxes 343 216
Net income before cumulative effect of
change in accounting principle $431 $296
Cumulative effect of change in accounting
principle, net of taxes of $4,511 -- (8,973)
Net income (loss) $431 $(8,677)
INet income (loss) per common share - basic
Before cumulative effect of accounting change $0.07 $0.05
Cumulative effect of accounting change -- (1.45)
Net Income (loss) - basic $0.07 $(1.40)
Net income (loss) per common share - diluted
Before cumulative effect of accounting change $0.07 $0.05
Cumulative effect of accounting change -- (1.43)
Net income (loss) - diluted $0.07 $(1.38)
Weighted average shares outstanding:
Basic 6,172 6,193
Diluted 6,288 6,288
* 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
CONDENSED CONSOLIDATED BALANCE SHEETS
as of September 30, 2003 and June 30, 2003
(in thousands, except share data)
(unaudited)
September June
30, 30,
2003 2003
ASSETS
Current assets:
Cash and cash equivalents $8,681 $4,482
Accounts receivable, net of allowance
for doubtful accounts of $1,071
(September) and 1,009 (June) 6,907 4,652
Auction consignment advances 1,152 1,511
Inventories, net 7,232 8,541
Prepaid expenses and other 1,022 1,041
Notes receivable 640 1,474
Refundable income taxes 584 1,183
Deferred income taxes 1,066 1,066
Total current assets 27,284 23,950
Property and equipment, net 1,443 1,332
Notes receivable, net of current portion 142 224
Deferred income taxes 6,467 6,467
Other assets 234 318
$35,570 $32,291
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $795 $917
Consignors payable 3,574 895
Accrued liabilities 1,802 1,583
Accrued compensation and benefits 850 773
Deferred revenue 1,220 1,413
Total current liabilities 8,241 5,581
Deferred rent 396 391
Commitment and contingencies
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 6,312 at September 30, 2003
and 6,255 at June 30, 2003 25 25
Additional paid-in capital 41,062 40,879
Accumulated deficit (13,133) (13,564)
Treasury stock, at cost (125 shares) (1,021) (1,021)
Total stockholders' equity 26,933 26,319
$35,570 $32,291
COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share data)
(unaudited)
Three Months Ended
September 30,
2003 2002
OPERATING ACTIVITIES:
Net income (loss) $431 $(8,677)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 192 203
Loss on disposal of fixed assets 7 5
Cumulative effect of accounting change -- 8,973
Stock-based compensation 12 --
Interest on note receivable from an officer -- (8)
Provision for doubtful accounts 83 59
Provision for inventory write down and reserve (98) (36)
Changes in operating assets and liabilities:
Accounts receivable (2,338) (1,925)
Auction consignment advances 359 2,071
Inventories 1,407 640
Prepaid expenses and other assets 19 (269)
Refundable income taxes 599 216
Notes receivable 916 131
Other assets 79 49
Accounts payable and accrued liabilities 2,858 (1,253)
Deferred revenue (193) (84)
Net cash provided by operating activities 4,333 95
INVESTING ACTIVITIES:
Capital expenditures (305) (54)
Proceeds from sale of fixed assets -- 3
Net cash used in investing activities (305) (51)
FINANCING ACTIVITIES:
Proceeds from employee stock purchase plan 16 8
Proceeds from exercise of stock options 155 2
Net cash provided by financing activities 171 10
Net increase in cash and cash equivalents 4,199 54
Cash and cash equivalents at beginning of period 4,482 4,947
Cash and cash equivalents at end of period $8,681 $5,001
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $- $-
Income taxes paid $- $-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION:
During the three months ended September 30, 2002, an officer of the
Company transferred to the Company 130,207 shares of the Company's
common stock owned by him, with a fair value of $386,000 in full
satisfaction of the then outstanding balance on a note receivable due
from the officer.
In connection with the adoption of Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets, the Company
completed the initial impairment test and concluded that certain of
its goodwill was impaired, resulting in an impairment charge of
$13,484,000, net of a tax benefit of $4,511,000 which was recorded in
the three months ended September 30, 2002.
SOURCE Collectors Universe, Inc.
-0- 11/13/2003
/CONTACT: Michael Lewis, Chief Financial Officer of Collectors Universe,
Inc., +1-949-567-1375, lewism@collectors.com ; or Kristen McNally, General
Information, +1-310-407-6548, kmcnally@financialrelationsboard.com ; or
Investor/Analyst Information, Brandi Piacente., +1-415-248-3430,
bpiacente@financialrelationsboard.com , both of at Financial Relations Board /
/Web site: http://www.collectors.com /
(CLCT)
CO: Collectors Universe, Inc.
ST: California
IN: HOU REA
SU: ERN