Form 8-K COLLECTORS UNIVERSE INC For: May 05

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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 5, 2016

 

COLLECTORS UNIVERSE, INC.

 

(Exact name of registrant as specified in its charter)

 

Delaware	1-34240	33-0846191
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

 

1921 E. Alton Avenue, Santa Ana, California		92705
(Address of principal executive offices)		(Zip Code)

 

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)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	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 5, 2016, Collectors Universe, Inc. (the “Company”) issued a press release announcing its consolidated financial results for its third quarter of fiscal year 2016, which ended on March 31, 2016. 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 Report, and Exhibit 99.1 hereto, are being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall such information or such Exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”).

 

Item 9.01

Financial Statements and Exhibits.

 

(d)       Exhibits.

 

Exhibit No.		Description
99.1		Press release issued May 5, 2016 by Collectors Universe, Inc. announcing its consolidated financial results for its third quarter of fiscal year 2016, ended March 31, 2016.

 

 

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.

 

		COLLECTORS UNIVERSE, INC.
Dated: May 9, 2016	By:	/s/ JOSEPH J. WALLACE
		Joseph J. Wallace, Chief Financial Officer

 

 

EXHIBIT INDEX

 

 

Exhibit No.		Description
99.1		Press release issued on May 5, 2016 by Collectors Universe, Inc. announcing its consolidated financial results for the third quarter of fiscal 2016, ended March 31, 2016.

 

 

Exhibit 99.1

  

 

 

Collectors Universe Reports Record Revenues and Operating Income for Third Quarter of Fiscal 2016

 

 

NEWPORT BEACH, CA – May 5, 2016 — 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 record operating results for its third quarter of fiscal year 2016, ended March 31, 2016.

 

Operational and Financial Highlights:

 

■

Services revenues in the third quarter increased by 8% to a quarterly record of $17.3 million from $16.0 million in last year’s third quarter and comprised of record quarterly revenues for both our coins and trading cards and autographs businesses. In the United States, we generated record quarterly modern coin revenues driven by a 44% increase in the number of modern coins authenticated and graded in the quarter, which we believe was the result of more competitive pricing for modern coins that we introduced on January 1, 2016.

 

■

Overseas, we generated record quarterly revenue in both our China and France operations, where revenues increased by 167% and 114%, respectively, in this year’s third quarter as compared to the same quarter of last year. Coin service revenues generated by our overseas operations increased to 8% of service revenues in this year’s three and nine month periods as compared to 4% and 6% of service revenues in last year’s three and nine month periods, respectively.

 

■

The service revenue decline of 4% in the nine months ended March 31, 2016 as compared to last year’s nine months, was primarily attributable to the previously disclosed decrease in the first half of fiscal 2016, in submissions from the U.S. Mint’s Baseball Hall of Fame and 50th Anniversary Kennedy modern coin programs.

 

■

The services gross profit margin was 64% and 63% in this year’s third quarter and nine months, respectively, as compared to 63% and 64% in last year’s third quarter and nine months. The current year periods benefited from a $0.7 million reduction in our warranty expense, recognized in this year’s third quarter, resulting from a trend of lower warranty payments.

 

■

Operating income increased to a quarterly record of $4.4 million in this year’s third quarter from $3.7 million in the same quarter of the prior year. In the nine months ended March 31, 2016, operating income was unchanged at $9.3 million from the same nine months of the fiscal 2015. The operating results include our continued investment in the Collectors.com search tool, which we brought to market in September 2015.

 

■

Income from continuing operations was $2.7 million, or $0.32 per diluted share, and $5.7 million, or $0.66 per diluted share, respectively, in the three and nine months ended March 2016, as compared to $2.2 million, or $0.26 per diluted share, and $5.6 million or $0.66 per diluted share, respectively, in the corresponding periods of the prior year.

 

■

The Company’s cash position as of March 31, 2016 was $12.6 million as compared to $17.3 million as of June 30, 2015. Net cash used of $4.7 million in the nine months, included $6.3 million of cash generated from continuing operations offset by cash of $9.0 million used to pay dividends to stockholders and $1.7 million used for capital expenditures.

 

■

On April 21, 2016, we announced our quarterly cash dividend of $0.35 per share, which will be paid on May 27, 2016 to stockholders of record on May18, 2016.

 

 

Collectors Universe, Inc.

Page 2 of 6

 

 

Commentary and Outlook

 

Robert Deuster, Chief Executive Officer, stated, “We are very pleased with our operating results this quarter. Market activity overall was robust, but especially in the US modern coin segment. The record coin revenue was the result of grading 250,000 more coins this quarter than in the same quarter last year. We believe that this was primarily due to our more competitive pricing to dealers, who responded very favorably with significantly more new issue coin submissions. Likewise in China, we processed a record number of coins during the quarter, which is further evidence that our grading brand continues to gain traction there. Our sports and autograph businesses also saw record quarterly revenue during this year’s third quarter. Additionally, our focus on operational efficiency allowed us to grade many more items this quarter without significantly adding headcount.

 

All of this has set a more positive tone for the balance of calendar 2016, compared to the latter half of 2015 and we are optimistic about our initiatives around the world strengthening Collectors Universe as the premier source for grading services and information.”

 

 

Conference Call and Webcast

 

Collectors Universe will host a conference call to discuss results on Thursday, May 5, 2016 at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time. Interested parties may participate in the conference call by dialing 800-533-7619 or 785-830-1923, five to ten minutes prior to the initiation of the call. A replay of the conference call will be available through May 19, 2016 by dialing 888-203-1112 or 719-457-0820 and entering access code 6802264#. A live webcast of the conference call will also be available on the Collectors Universe website, www.collectorsuniverse.com under Investor Relations: Events and Presentations. 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, trading cards, event tickets, autographs and memorabilia (“collectibles”). The Company also compiles and publishes authoritative information about United States and world coins, collectible trading cards and sports memorabilia (“collectibles”), 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.collectorsuniverse.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 and trends in our business and in our markets, which constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward looking statements can often 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 and our markets are subject, our future financial performance may differ, possibly significantly, from expectations regarding our future financial performance that are expressed in, or that may be implied or inferred from the discussion of our operating results in this news release. Those risks and uncertainties, and their possible impact on our future financial performance, include, but are not limited to, the following: our continued dependence on our coin business which historically has generated more than 60% of our consolidated revenues and a substantial portion of our operating income, making our operating results more vulnerable to conditions that could adversely affect or cause stagnation in the prices of precious metals and collectible coins; the variability of the modern coin market, which can lead to period-over-period fluctuations in our service revenues; the risks that the economic recovery may stall, or that domestic or international economic conditions may deteriorate as a result of events outside of our control, that could lead to reductions in the demand for our collectibles authentication and grading services and, consequently, in our revenues and operating results; the risk that the weakness or volatility of economic conditions in the United States and worldwide will lead to longer-term changes in the spending habits of consumers and in the availability and use of credit by 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 risks that claims under our coin and trading card authentication and grading warranties will increase substantially and that the warranty reserves we maintain for such claims, will, prove to be inadequate, which could cause our gross margin and operating results to decline or cause us to incur operating losses; the risk that our strategies of offering new services and expanding our collectibles authentication and grading business into new geographic areas, such as Europe and Asia will not be successful in enabling us to improve our profitability or may even cause us to incur significant losses; the risks and added complexity of conducting business overseas; the risk that it may become necessary for us to reduce the amount of, or suspend or discontinue the payment of cash dividends in the future, due to conditions or circumstances outside of our control, such as adverse economic or general market conditions, as well as our future financial performance and the cash needs of our business in the future.

 

 

Collectors Universe, Inc.

Page 3 of 6

 

 

Additional information regarding these risks and other risks and uncertainties to which our business is subject is contained in Item 1A, entitled “Risk Factors”, in our Annual Report on Form 10-K for our fiscal year ended June 30, 2015 which we filed with the Securities and Exchange Commission on August 27, 2015 and readers of this news release are urged to review the discussion of those risks and uncertainties in that Report. Also, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. 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 or Quarterly Reports filed with the Securities and Exchange Commission, which speak only as of their respective dates. We also disclaim any obligation to update or revise any of the forward-looking statements contained in this news release or in our Annual Report on Form 10-K, 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: [email protected]

- tables to follow - 

 

Collectors Universe, Inc.

Page 4 of 6

 

COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, except per share data)

(Unaudited)

 

 

		Three Months Ended March 31,								Nine Months Ended March 31,
		2016				2015				2016				2015
Net revenues:
Grading, and authentication and related services		$	17,267			$	15,987			$	44,515			$	46,304
Product Sales			62				-				68				9
			17,329				15,987				44,583				46,313
Cost of revenues:
Grading, authentication and related services			6,217				5,865				16,361				16,692
Product sales			71				10				83				46
			6,288				5,875				16,444				16,738
Gross profit			11,041				10,112				28,139				29,575
Operating expenses:
Selling and marketing expenses			2,132				2,285				6,341				6,799
General and administrative expenses			4,504				4,155				12,508				13,433
Total operating expenses			6,636				6,440				18,849				20,232
Operating income			4,405				3,672				9,290				9,343
Interest income and other expense, net			3				(40	)			(39	)			(42	)
Income before provision for income taxes			4,408				3,632				9,251				9,301
Provision for income taxes			1,695				1,450				3,600				3,670
Income from continuing operations			2,713				2,182				5,651				5,631
Income (loss) from discontinued operations, net of income taxes			65				(12	)			47				(3	)
Net income		$	2,778			$	2,170			$	5,698			$	5,628
Net income per basic share:
Income from continuing operations		$	0.32			$	0.26			$	0.67			$	0.68
Income from discontinued operations			0.01				-				-				(0.01	)
Net income per basic share		$	0.33			$	0.26			$	0.67			$	0.67
Net income per diluted share:
Income from continuing operations		$	0.32			$	0.26			$	0.66			$	0.66
Loss from discontinued operations			-				(0.01	)			0.01				-
Net income per diluted share		$	0.32			$	0.25			$	0.67			$	0.66
Weighted average shares outstanding:
Basic			8,447				8,353				8,441				8,339
Diluted			8,549				8,531				8,544				8,517
Dividends declared per common share		$	0.35			$	0.35			$	1.05			$	1.00
Note: Non-cash stock-based compensation included above		$	159			$	438			$	449			$	1,803

 

  

Collectors Universe, Inc.

Page 5 of 6

 

COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, except per share data)

(Unaudited) 

 

ASSETS		March 31, 2016				June 30, 2015
Current assets:
Cash and cash equivalents		$	12,581			$	17,254
Accounts receivable, net of allowance of $34 and $33 at March 31, 2016 and June 30, 2015, respectively			3,620				2,460
Inventories, net			1,835				1,619
Prepaid expenses and other current assets			1,253				940
Deferred income tax assets			1,599				1,599
Total current assets			20,888				23,872
Property and equipment, net			2,773				2,326
Goodwill			2,083				2,083
Intangible assets, net			1,795				1,558
Deferred income tax assets			1,945				1,945
Other assets			267				236
Non-current assets of discontinued operations			79				182
Total assets		$	29,830			$	32,202
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	2,509			$	1,961
Accrued liabilities			2,030				2,898
Accrued compensation and benefits			2,930				3,890
Income taxes payable			2,543				521
Deferred revenue			2,730				2,621
Current liabilities of discontinued operations			609				778
Total current liabilities			13,351				12,669
Deferred rent			407				422
Non-current liabilities of discontinued operations			329				642
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value; 3,000 shares authorized; no shares issued or outstanding			-				-
Common stock, $.001 par value; 20,000 shares authorized; 8,898 and 8,882 issued and outstanding at March 31, 2016 and June 30, 2015, respectively.			9				9
Additional paid-in capital			80,295				79,848
Accumulated deficit			(64,561	)			(61,388	)
Total stockholders’ equity			15,743				18,469
Total liabilities and stockholders’ equity		$	29,830			$	32,202

 

 

Collectors Universe, Inc.

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COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

		Nine Months Ended March 31,
		2016				2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	5,698			$	5,628
Discontinued operations			(47	)			3
Income from continuing operations			5,651				5,631
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization expense			1,094				974
Stock-based compensation expense			449				1,803
Provision for bad debts			5				5
Provision for inventory write-down			46				184
Provision for warranty			(293	)			380
Gain on sale of property and equipment			(2	)			(1	)
Loss on sale of business			-				1
Change in operating assets and liabilities:
Accounts receivable			(1,213	)			(261	)
Inventories			(262	)			(536	)
Prepaid expenses and other			(313	)			463
Other assets			(31	)			125
Accounts payable and accrued liabilities			47				(904	)
Accrued compensation and benefits			(960	)			(605	)
Income taxes payable			2,020				404
Deferred revenue			109				204
Deferred rent			(15	)			(25	)
Net cash provided by operating activities of continuing operations			6,332				7,842
Net cash used in operating activities of discontinued businesses			(331	)			(471	)
Net cash provided by operating activities			6,001				7,371
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(1,113	)			(624	)
Capitalized software			(615	)			(250	)
Purchase of business			-				(200	)
Proceeds from sale of business			49				80
Patents and other intangibles			(4	)			(40	)
Proceeds from sale of property and equipment			-				2
Net cash used in investing activities			(1,683	)			(1,032	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to common stockholders			(8,991	)			(8,415	)
Payments for retirement of common stock			-				(504	)
Net cash used in financing activities			(8,991	)			(8,919	)
Net decrease in cash and cash equivalents			(4,673	)			(2,580	)
Cash and cash equivalents at beginning of period			17,254				19,909
Cash and cash equivalents at end of period		$	12,581			$	17,329
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Income taxes paid during the period		$	1,609			$	3,264

 

 

 

 

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