(Mark
One)
|
|
ý
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the quarter ended September 30, 2006
|
|
OR
|
|
q
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934 [NO FEE REQUIRED]
|
For
the transition period from _______ to _____
|
|
Commission
file number 0-27887
|
|
COLLECTORS
UNIVERSE, INC.
(Exact
name of Registrant as specified in its
charter)
|
Delaware
|
33-0846191
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
Incorporation
or organization)
|
|
1921
E. Alton Avenue, Santa Ana, California 92705
|
|
(address
of principal executive offices and zip code)
|
|
Registrant's
telephone number, including area code: (949)
567-1234
|
Class
|
Outstanding
at October 29, 2006
|
||
Common
Stock $.001 Par Value
|
8,352,902
|
||
PART
I
|
Financial
Information
|
Page
|
|
Item
1.
|
|||
1
|
|||
2
|
|||
3
|
|||
5
|
|||
Item
2.
|
21
|
||
21
|
|||
21
|
|||
22
|
|||
24
|
|||
24
|
|||
27
|
|||
31
|
|||
33
|
|||
33
|
|||
Item
3.
|
35
|
||
Item
4.
|
35
|
||
PART
II
|
Other
Information
|
||
Item
1A.
|
36
|
||
Item
2.
|
36
|
||
Item
6.
|
36
|
||
S-1
|
|||
E-1
|
|||
EXHIBITS
|
|||
Exhibit
31.1
|
Certifications
of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley
Act of
2002
|
||
Exhibit
31.2
|
Certifications
of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley
Act of
2002
|
||
Exhibit
32.1
|
Chief
Executive Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
||
Exhibit
32.2
|
Chief
Financial Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
September
30,
|
June
30,
|
||||||
2006
|
2006
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
41,602
|
$
|
52,110
|
|||
Accounts
receivable, net of allowance for doubtful accounts of $61 (September)
and
$37 (June)
|
1,815
|
1,753
|
|||||
Inventories,
net
|
452
|
437
|
|||||
Prepaid
expenses and other current assets
|
875
|
1,010
|
|||||
Customer
notes receivable, net of allowance of $16
|
5,587
|
3,797
|
|||||
Deferred
tax assets
|
1,414
|
1,414
|
|||||
Receivables
from sale of net assets of discontinued operations
|
92
|
196
|
|||||
Current
assets of discontinued operations held for sale
|
73
|
83
|
|||||
Total
current assets
|
51,910
|
60,800
|
|||||
Property
and equipment, net
|
3,180
|
1,897
|
|||||
Note
receivable
|
115
|
-
|
|||||
Goodwill
|
15,074
|
9,799
|
|||||
Intangible
assets, net
|
6,843
|
4,674
|
|||||
Note
receivable from sale of discontinued operations
|
298
|
321
|
|||||
Deferred
tax assets
|
216
|
342
|
|||||
Other
assets
|
512
|
388
|
|||||
$
|
78,148
|
$
|
78,221
|
||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
880
|
$
|
907
|
|||
Accrued
liabilities
|
2,178
|
2,043
|
|||||
Accrued
compensation and benefits
|
1,200
|
1,075
|
|||||
Income
taxes payable
|
351
|
496
|
|||||
Deferred
revenue
|
1,547
|
1,384
|
|||||
Current
liabilities of discontinued operations held for sale
|
2
|
8
|
|||||
Total
current liabilities
|
6,158
|
5,913
|
|||||
Deferred
rent
|
468
|
402
|
|||||
Other
long-term liabilities
|
40
|
-
|
|||||
Commitments
and contingencies
|
-
|
-
|
|||||
Stockholders'
equity:
|
|||||||
Preferred
stock, $.001 par value; 5,000 shares authorized; no shares issued
or
outstanding
|
-
|
-
|
|||||
Common
stock, $.001 par value; 45,000 shares authorized; issued 8,478 at
September 30, 2006 and 8,475 at June 30, 2006
|
8
|
8
|
|||||
Additional
paid-in capital
|
76,759
|
76,909
|
|||||
Accumulated
deficit
|
(4,264
|
)
|
(3,990
|
)
|
|||
Treasury
stock, at cost (125 shares)
|
(1,021
|
)
|
(1,021
|
)
|
|||
Total
stockholders' equity
|
71,482
|
71,906
|
|||||
$
|
78,148
|
$
|
78,221
|
Three
Months Ended
|
|||||||
September
30,
|
|||||||
2006
|
2005
|
||||||
Net
revenues
|
$
|
9,898
|
$
|
8,825
|
|||
Cost
of revenues
|
4,356
|
3,372
|
|||||
Gross
profit
|
5,542
|
5,453
|
|||||
Selling
and marketing expenses
|
1,262
|
1,090
|
|||||
General
and administrative expenses
|
3,979
|
3,200
|
|||||
Amortization
of intangible assets
|
171
|
20
|
|||||
Total
operating expenses
|
5,412
|
4,310
|
|||||
Operating
income
|
130
|
1,143
|
|||||
Interest
income, net
|
567
|
542
|
|||||
Other
income
|
4
|
8
|
|||||
Income
before income taxes
|
701
|
1,693
|
|||||
Provision
for income taxes
|
(318
|
)
|
(714
|
)
|
|||
Income
from continuing operations
|
383
|
979
|
|||||
Income
(loss) from discontinued operations, net of gain on sales of discontinued
businesses
(net of income taxes)
|
11
|
(12
|
)
|
||||
Net
income
|
$
|
394
|
$
|
967
|
|||
Net
income per basic share:
|
|||||||
Income
from continuing operations
|
$
|
0.05
|
$
|
0.11
|
|||
Income
(loss) from discontinued operations, net of gain on sales of discontinued
businesses
(net of income taxes)
|
-
|
-
|
|||||
Net
income
|
$
|
0.05
|
$
|
0.11
|
|||
Net
income per diluted share:
|
|||||||
Income
from continuing operations
|
$
|
0.04
|
$
|
0.11
|
|||
Income
(loss) from discontinued operations, net of gain on sales of discontinued
businesses
(net of income taxes)
|
-
|
-
|
|||||
Net
income
|
$
|
0.04
|
$
|
0.11
|
|||
Weighted
average shares outstanding:
|
|||||||
Basic
|
8,351
|
8,486
|
|||||
Diluted
|
8,628
|
8,806
|
Three
Months Ended
September
30,
|
|||||||
2006
|
2005
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income
|
$
|
394
|
$
|
967
|
|||
Adjustments
to reconcile net income to net cash (used in) provided by
operating activities:
|
|||||||
Depreciation
and amortization
|
390
|
121
|
|||||
Loss
on disposal of fixed assets
|
-
|
3
|
|||||
Loss
on termination of sublease
|
-
|
83
|
|||||
Stock-based
compensation expense
|
195
|
127
|
|||||
Tax
benefit from exercising of stock options
|
7
|
-
|
|||||
Provision
for bad debts and credits
|
-
|
25
|
|||||
Provision
for inventory write down
|
(12
|
)
|
-
|
||||
Discontinued
operations
|
(10
|
)
|
12
|
||||
Deferred
income taxes
|
(12
|
)
|
698
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(121
|
)
|
296
|
||||
Inventories
|
7
|
(1
|
)
|
||||
Prepaid
expenses and other current assets
|
158
|
39
|
|||||
Customer
notes receivable (CFC)
|
(1,790
|
)
|
1,483
|
||||
Income
taxes payable
|
(228
|
)
|
-
|
||||
Other
assets
|
(66
|
)
|
-
|
||||
Accounts
payable
|
(106
|
)
|
(361
|
)
|
|||
Accrued
liabilities
|
66
|
(67
|
)
|
||||
Deferred
rent and other long-term liabilities
|
66
|
17
|
|||||
Accrued
compensation and benefits
|
48
|
(200
|
)
|
||||
Deferred
revenue
|
(316
|
)
|
176
|
||||
Net
cash (used in) provided by operating activities
|
(1,330
|
)
|
3,418
|
||||
Net
cash provided by operating activities of discontinued
businesses
|
14
|
173
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Capital
expenditures
|
(1,387
|
)
|
(99
|
)
|
|||
Collection
of receivables from sales of discontinued businesses
|
128
|
48
|
|||||
Purchase
of businesses, net of cash acquired
|
(6,182
|
)
|
(2,279
|
)
|
|||
Purchase
of patents and other intangible assets
|
(343
|
)
|
-
|
||||
Capitalized
software
|
(383
|
)
|
-
|
||||
Net
cash used in investing activities
|
(8,167
|
)
|
(2,330
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Proceeds
from exercise of stock options
|
21
|
14
|
|||||
Payments
for retirement of common stock
|
(378
|
)
|
-
|
||||
Dividends
paid to common stockholders
|
(668
|
)
|
-
|
||||
Net
cash (used in) provided by financing activities
|
(1,025
|
)
|
14
|
||||
Net
(decrease) increase in cash and cash equivalents
|
(10,508
|
)
|
1,275
|
||||
Cash
and cash equivalents at beginning of period
|
52,110
|
65,439
|
|||||
Cash
and cash equivalents at end of period
|
$
|
41,602
|
$
|
66,714
|
|||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|||||||
Interest
paid
|
$
|
7
|
$
|
3
|
|||
Income
taxes paid
|
$
|
507
|
$
|
16
|
Three
Months Ended
September
30,
|
|||||||
2006
|
2005
|
||||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION (CONTINUED):
|
|||||||
Effective
July 14, 2005, the Company acquired CoinFacts.com in a transaction
summarized as follows:
|
|||||||
Goodwill
|
$
|
-
|
$
|
515
|
|||
Cash
paid
|
-
|
515
|
|||||
Effective
September 2, 2005, the Company acquired CCE in a transaction summarized
as
follows:
|
|||||||
Fair
value of net liabilities assumed
|
-
|
(70
|
)
|
||||
Deferred
taxes recognized at acquisition
|
-
|
(423
|
)
|
||||
Transition
costs
|
-
|
27
|
|||||
Intangible
assets
|
-
|
947
|
|||||
Fair
value of CTP, including net assets
|
-
|
501
|
|||||
Goodwill
|
-
|
1,282
|
|||||
Purchase
price, net of cash acquired
|
-
|
2,264
|
* | ||||
Effective
July 1, 2006, the Company acquired Expos Unlimited, LLC in a transaction
summarized
as follows:
|
|||||||
Fair
value of net liabilities assumed
|
$
|
(471
|
)
|
$
|
-
|
||
Intangible
assets
|
988
|
-
|
|||||
Goodwill
|
1,894
|
-
|
|||||
Purchase
price, net of cash acquired
|
2,411
|
** |
-
|
||||
Effective
August 18, 2006, the Company acquired American Gemological Laboratories,
Inc.
in a transaction summarized as follows:
|
|||||||
Fair
value of net assets acquired
|
$
|
7
|
$
|
-
|
|||
Deferred
taxes recognized at acquisition
|
(137
|
)
|
-
|
||||
Intangible
assets
|
646
|
-
|
|||||
Goodwill
|
3,360
|
-
|
|||||
Purchase
price, net of cash acquired
|
3,876
|
*** |
-
|
||||
*
$500,000
of the purchase price was payable subsequent to September 30, 2005
and was
included
in accrued
liabilities at September 30,
2005.
|
|||||||
**
Includes
$30,000 unpaid as of September 30, 2006, pending settlement of the
working
capital
provisions,
of the purchase agreement.
|
|||||||
***
Includes $75,000 of direct costs accrued at September 30,
2006.
|
|||||||
Business
|
Acquisition
Date
|
Purchase
Price
|
CoinFacts.com
|
July
14, 2005
|
$0.5
million
|
Certified
Coin Exchange
|
September
2, 2005
|
$2.4
million
|
Gem
Certification & Appraisal Lab, LLC
|
November
8, 2005
|
$3.3
million
|
Gemprint
Corporation
|
December
22, 2005
|
$8.6
million
|
Business
|
Acquisition
Date
|
Purchase
Price
|
Expos
Unlimited, LLC
|
July
1, 2006
|
$2.5
million
|
American
Gemological Laboratories, Inc.
|
August
18, 2006
|
$3.9
million
|
(Dollars
in thousands)
|
|||||||
Three
Months Ended
September
30,
|
|||||||
2006
|
2005
|
||||||
Included
in:
|
|||||||
Cost
of revenues
|
$
|
76
|
$
|
56
|
|||
Selling
and marketing expenses
|
1
|
1
|
|||||
General
and administrative expenses(1)
|
123
|
75
|
|||||
Pre-tax
stock-based compensation expense
|
200
|
132
|
|||||
Income
tax benefits
|
(5
|
)
|
(5
|
)
|
|||
Stock-based
compensation expense
|
$
|
195
|
$
|
127
|
(1)
|
Includes
$3,000 and $0 in the three months ended September 30, 2006 and 2005,
respectively, for amortization of deferred compensation expense related
to
issuance of restricted stock (see
below).
|
2006
|
2005
|
||||||
Dividend yield
|
2.3%
|
|
-
|
||||
Expected
volatility
|
52.0%
|
|
61.0%
|
|
|||
Risk-free
interest rate
|
4.69%
|
|
3.99%
|
|
|||
Expected
lives
|
5.1
years
|
5.1
years
|
Coins
|
CGAL
&
Gemprint
|
AGL
|
Expos
|
CCE
and
Other
|
Total
|
||||||||||||||
Goodwill:
|
|||||||||||||||||||
Balance
at June 30, 2006
|
$
|
515
|
$
|
8,167
|
$
|
-
|
$
|
-
|
$
|
1,117
|
$
|
9,799
|
|||||||
Acquired
during FY2007:
|
|||||||||||||||||||
AGL
Acquisition
|
-
|
-
|
3,360
|
-
|
-
|
3,360
|
|||||||||||||
Expos
Unlimited
|
-
|
-
|
-
|
1,894
|
-
|
1,894
|
|||||||||||||
Purchase
price adjustment since June 30, 2006:
|
-
|
||||||||||||||||||
Gemprint
|
-
|
21
|
-
|
-
|
-
|
21
|
|||||||||||||
Balance
at September 30, 2006
|
$
|
515
|
$
|
8,188
|
$
|
3,360
|
$
|
1,894
|
$
|
1,117
|
$
|
15,074
|
|||||||
Intangible
Assets, Net
|
|||||||||||||||||||
Balance
at June 30, 2006
|
$
|
29
|
$
|
3,365
|
$
|
-
|
$
|
-
|
$
|
1,280
|
$
|
4,674
|
|||||||
Acquired
during FY2007 with indefinite lives:
|
|||||||||||||||||||
AGL
Acquisition
|
-
|
-
|
522
|
-
|
-
|
522
|
|||||||||||||
Expos
Unlimited
|
-
|
-
|
-
|
134
|
-
|
134
|
|||||||||||||
Acquired
during FY2006 with definite lives:
|
|||||||||||||||||||
AGL
Acquisition
|
-
|
-
|
124
|
-
|
-
|
124
|
|||||||||||||
Expos
Unlimited
|
-
|
-
|
-
|
854
|
-
|
854
|
|||||||||||||
Diamond
I.D.
|
-
|
323
|
-
|
-
|
-
|
323
|
|||||||||||||
Capitalized
software costs
|
-
|
-
|
-
|
-
|
383
|
383
|
|||||||||||||
Less:
amortization for FY2007
|
(12
|
)
|
(66
|
)
|
(2
|
)
|
(22
|
)
|
(69
|
)
|
(171
|
)
|
|||||||
Balance
at September 30, 2006
|
$
|
17
|
$
|
3,622
|
$
|
644
|
$
|
966
|
$
|
1,594
|
$
|
6,843
|
2007
(for Q2-Q4)
|
$
|
664,000
|
||
2008
|
$
|
627,000
|
||
2009
|
$
|
600,000
|
||
2010
|
$
|
610,000
|
||
2011
|
$
|
576,000
|
2. |
BUSINESS
ACQUISITIONS
|
Expos
|
AGL
|
DID
|
Total
|
||||||||||
Cost
of Investment:
|
|||||||||||||
Purchase
Price
|
$
|
2,400
|
$
|
3,500
|
$
|
295
|
$
|
6,195
|
|||||
Other
direct costs
|
60
|
167
|
28
|
255
|
|||||||||
Investment
banking fees
|
-
|
50
|
-
|
50
|
|||||||||
Liability
assumed
|
-
|
214
|
-
|
214
|
|||||||||
2,460
|
3,931
|
323
|
6,714
|
||||||||||
Value
Assigned to Assets and Liabilities:
|
|||||||||||||
Current
assets
|
133
|
101
|
-
|
234
|
|||||||||
Current
liabilities
|
(147
|
)
|
(39
|
)
|
-
|
(186
|
)
|
||||||
Customer
deposits
|
(479
|
)
|
-
|
-
|
(479
|
)
|
|||||||
Property,
plant and equipment
|
70
|
-
|
-
|
70
|
|||||||||
Other
assets
|
1
|
-
|
-
|
1
|
|||||||||
Deferred
tax liabilities
|
-
|
(137
|
)
|
-
|
(137
|
)
|
|||||||
Intangible
Assets with Finite Lives
|
|||||||||||||
Exhibitor
list
|
681
|
-
|
-
|
681
|
|||||||||
Website
|
25
|
25
|
-
|
50
|
|||||||||
Contract
|
49
|
-
|
-
|
49
|
|||||||||
Covenant
not to compete
|
-
|
81
|
32
|
113
|
|||||||||
Patent
|
-
|
-
|
291
|
291
|
|||||||||
Trade
name
|
99
|
18
|
-
|
117
|
|||||||||
Intangible
Assets with Indefinite Lives:
|
|||||||||||||
Database
|
134
|
-
|
-
|
134
|
|||||||||
Reference
set
|
-
|
500
|
-
|
500
|
|||||||||
Customer
list
|
-
|
22
|
-
|
22
|
|||||||||
Excess
of purchase price over fair value of net assets acquired
(goodwill)
|
$
|
1,894
|
$
|
3,360
|
$
|
0
|
$
|
5,254
|
Three
Months Ended
September
30,
|
|||||||
2006
|
2005
|
||||||
Revenue
|
$
|
9,975
|
$
|
9,723
|
|||
Operating
income
|
130
|
1,134
|
|||||
Interest
income, net
|
567
|
545
|
|||||
Other
income
|
4
|
8
|
|||||
Income
before provision for income taxes
|
701
|
1,687
|
|||||
Provision
for income taxes
|
318
|
711
|
|||||
Income
from continuing operations
|
383
|
976
|
|||||
Income
(loss) from discontinued operations
|
11
|
(28
|
)
|
||||
Net
income
|
$
|
394
|
$
|
948
|
|||
Net
income per diluted share:
|
|||||||
Income
from continuing operations
|
$
|
0.04
|
$
|
0.11
|
|||
Income
(loss) from discontinued operations
|
$
|
-
|
$
|
-
|
|||
Net
income
|
$
|
0.04
|
$
|
0.11
|
4. |
INVENTORIES
|
Inventories
consist of the following:
|
|||||||
(in
thousands)
|
|||||||
September
30,
|
June
30,
|
||||||
2006
|
2006
|
||||||
Coins
|
$
|
330
|
$
|
346
|
|||
Other
collectibles
|
35
|
37
|
|||||
Grading
raw materials consumable inventory
|
185
|
160
|
|||||
550
|
543
|
||||||
Less
inventory reserve
|
(98
|
)
|
(106
|
)
|
|||
Inventories,
net
|
$
|
452
|
$
|
437
|
Property
and equipment consist of the following:
|
|||||||
(in
thousands)
|
|||||||
September
30,
|
June
30,
|
||||||
2006
|
2006
|
||||||
Coins
and stamp grading reference sets
|
$
|
90
|
$
|
62
|
|||
Computer
hardware and equipment
|
1,366
|
1,271
|
|||||
Computer
software
|
975
|
972
|
|||||
Equipment
|
2,459
|
2,020
|
|||||
Furniture
and office equipment
|
1,023
|
793
|
|||||
Leasehold
improvements
|
1,265
|
607
|
|||||
Trading
card reference library
|
52
|
52
|
|||||
7,230
|
5,777
|
||||||
Less
accumulated depreciation and amortization
|
(4,050
|
)
|
(3,880
|
)
|
|||
Property
and equipment, net
|
$
|
3,180
|
$
|
1,897
|
Accrued
liabilities consist of the following:
|
(in
thousands)
|
||||||
September
30,
|
June
30,
|
||||||
2006
|
2006
|
||||||
Warranty
costs
|
$
|
748
|
$
|
710
|
|||
Professional
fees
|
323
|
189
|
|||||
Amount
withheld for Expos’ acquisition (note 2)
|
30
|
-
|
|||||
Other
|
1,077
|
1,144
|
|||||
$
|
2,178
|
$
|
2,043
|
(in
thousands)
|
|||||||
Three
Months Ended September 30,
|
Three
Months Ended
September
30,
|
||||||
2006
|
2005
|
||||||
Warranty
reserve, beginning of period
|
$
|
710
|
$
|
609
|
|||
Charged
to cost of revenue
|
121
|
116
|
|||||
Payments
|
(83
|
)
|
(142
|
)
|
|||
Warranty
reserve, end of period
|
$
|
748
|
$
|
583
|
7. |
DISCONTINUED
OPERATIONS
|
(in
thousands)
|
|||||||
Three
Months Ended
September
30,
|
|||||||
2006
|
2005
|
||||||
Net
revenues
|
$
|
3
|
$
|
61
|
|||
Income
(loss)
|
11
|
(36
|
)
|
||||
Gain
on sale of discontinued businesses
|
6
|
4
|
|||||
17
|
(32
|
)
|
|||||
Income
tax (expense) benefit
|
(6
|
)
|
20
|
||||
Net
loss from discontinued operations
|
$
|
11
|
$
|
(12
|
)
|
(in
thousands)
|
|||||||
September
30,
2006
|
June
30,
2006
|
||||||
Current
assets:
|
|||||||
Accounts
receivable
|
$
|
-
|
$
|
10
|
|||
Inventories
|
37
|
37
|
|||||
Notes
receivable
|
36
|
36
|
|||||
$
|
73
|
$
|
83
|
||||
Current
liabilities:
|
|||||||
Consignors
payable
|
$
|
1
|
$
|
1
|
|||
Other
current liabilities
|
1
|
7
|
|||||
$
|
2
|
$
|
8
|
8. |
INCOME
TAXES
|
9. |
NET
INCOME PER SHARE
|
(In
thousands,
except
share data)
|
|||||||
Three
Months Ended
September
30,
|
|||||||
2006
|
2005
|
||||||
Income
from continuing operations
|
$
|
383
|
$
|
979
|
|||
Income
(loss) from discontinued operations, net of gain on sales of discontinued
businesses (net of income taxes)
|
11
|
(12
|
)
|
||||
Net
income
|
$
|
394
|
$
|
967
|
|||
NET
INCOME (LOSS) PER SHARE - BASIC:
|
|||||||
Income
from continuing operations
|
$
|
0.05
|
$
|
0.11
|
|||
Income
(loss) from discontinued operations, net of gain on sales of discontinued
businesses (net of income taxes)
|
-
|
-
|
|||||
Total
|
$
|
0.05
|
$
|
0.11
|
|||
NET
INCOME (LOSS) PER SHARE - DILUTED:
|
|||||||
Income
from continuing operations
|
$
|
0.04
|
$
|
0.11
|
|||
Income
(loss) from discontinued operations, net of gain on sales of discontinued
businesses (net of income taxes)
|
-
|
-
|
|||||
Total
|
$
|
0.04
|
$
|
0.11
|
|||
WEIGHTED
AVERAGE SHARES OUTSTANDING:
|
|||||||
Basic
|
8,351
|
8,486
|
|||||
Effect
of dilutive shares
|
277
|
320
|
|||||
Diluted
|
8,628
|
8,806
|
10. |
BUSINESS
SEGMENTS
|
Three
Months Ended September 30,
|
|||||||
2006
|
2005
|
||||||
Net
revenues from external customers
|
|||||||
Coins
|
$
|
5,590
|
$
|
5,753
|
|||
Sportscards
|
2,251
|
2,106
|
|||||
Jewelry
|
241
|
-
|
|||||
Other
|
1,816
|
966
|
|||||
Total
revenue
|
$
|
9,898
|
$
|
8,825
|
|||
Amortization
and depreciation
|
|||||||
Coins
|
$
|
40
|
$
|
23
|
|||
Sportscards
|
21
|
21
|
|||||
Jewelry
|
108
|
-
|
|||||
Other
|
140
|
12
|
|||||
Total
|
309
|
56
|
|||||
Unallocated
amortization and depreciation
|
81
|
65
|
|||||
Consolidated
amortization and depreciation
|
$
|
390
|
$
|
121
|
|||
Stock-based
compensation
|
|||||||
Coins
|
$
|
49
|
$
|
30
|
|||
Sportscards
|
16
|
3
|
|||||
Jewelry
|
-
|
-
|
|||||
Other
|
37
|
30
|
|||||
Total
|
102
|
63
|
|||||
Unallocated
stock-based compensation
|
98
|
69
|
|||||
Consolidated
stock-based compensation
|
$
|
200
|
$
|
132
|
|||
Operating
income before unallocated expenses
|
|||||||
Coins
|
$
|
2,384
|
$
|
2,733
|
|||
Sportscards
|
439
|
321
|
|||||
Jewelry
|
(641
|
)
|
-
|
||||
Other
|
271
|
60
|
|||||
Total
|
2,453
|
3,114
|
|||||
Unallocated
operating expenses
|
(2,323
|
)
|
(1,971
|
)
|
|||
Consolidated
operating income
|
$
|
130
|
$
|
1,143
|
At
September 30,
|
At
June 30,
|
||||||
Identifiable
Assets
|
2006
|
2006
|
|||||
Coins
|
$
|
2,845
|
$
|
2,647
|
|||
Sportscards
|
571
|
541
|
|||||
Jewelry
|
18,285
|
12,611
|
|||||
Other
|
10,859
|
6,284
|
|||||
Total
|
32,560
|
22,083
|
|||||
Unallocated
assets
|
45,588
|
56,138
|
|||||
Consolidated
assets
|
$
|
78,148
|
$
|
78,221
|
11. |
LINE
OF CREDIT
|
12. |
LEGAL
MATTERS
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Units
Processed
Three
Months Ended September 30,
|
Declared
Value (000)
Three
Months Ended September 30,
|
|||||||||||||||||||||||||
2006
|
2005
|
2006
|
2005
|
|||||||||||||||||||||||
Coins
|
481,300
|
56
|
%
|
395,000
|
53
|
%
|
$
|
464,922
|
85
|
%
|
$
|
352,707
|
89
|
%
|
||||||||||||
Sportscards
|
321,500
|
37
|
%
|
283,000
|
38
|
%
|
22,595
|
4
|
%
|
17,246
|
5
|
%
|
||||||||||||||
Autographs
|
34,200
|
4
|
%
|
55,000
|
7
|
%
|
10,475
|
2
|
%
|
3,188
|
1
|
%
|
||||||||||||||
Stamps
|
12,300
|
1
|
%
|
9,200
|
1
|
%
|
3,059
|
1
|
%
|
5,169
|
1
|
%
|
||||||||||||||
Currency
|
9,100
|
1
|
%
|
9,300
|
1
|
%
|
8,442
|
2
|
%
|
16,009
|
4
|
%
|
||||||||||||||
Diamonds*
|
6,000
|
1
|
%
|
-
|
-
|
23,209
|
4
|
%
|
-
|
-
|
||||||||||||||||
Colored
Gemstones*
|
100
|
-
|
-
|
-
|
13,145
|
2
|
%
|
-
|
-
|
|||||||||||||||||
Total
|
864,500
|
100
|
%
|
751,500
|
100
|
%
|
$
|
545,847
|
100
|
%
|
$
|
394,319
|
100
|
%
|
Three
Months Ended September 30,
|
|||||||
2006
|
2005
|
||||||
Net
revenues
|
100.0
|
%
|
100.0
|
%
|
|||
Cost
of revenues
|
44.0
|
%
|
38.2
|
%
|
|||
Gross
profit
|
56.0
|
%
|
61.8
|
%
|
|||
Operating
expenses:
|
|||||||
Selling
and marketing expenses
|
12.8
|
%
|
12.3
|
%
|
|||
General
and administrative expenses
|
40.2
|
%
|
36.3
|
%
|
|||
Amortization
of intangibles
|
1.7
|
%
|
0.2
|
%
|
|||
Total
operating expenses
|
54.7
|
%
|
48.8
|
%
|
|||
Operating
income
|
1.3
|
%
|
13.0
|
%
|
|||
Interest
income, net
|
5.7
|
%
|
6.1
|
%
|
|||
Other
income
|
0.1
|
%
|
0.1
|
%
|
|||
Income
before provision for income taxes
|
7.1
|
%
|
19.2
|
%
|
|||
Provision
for income taxes
|
(3.2
|
%)
|
(8.1
|
%)
|
|||
Income
from continuing operations after income taxes
|
3.9
|
%
|
11.1
|
%
|
|||
Income
(loss) from discontinued operations, net of gain on sales
of discontinued businesses (net of income taxes)
|
0.1
|
%
|
(0.1
|
%)
|
|||
Net
income
|
4.0
|
%
|
11.0
|
%
|
Three
Months Ended September 30,
|
|||||||||||||||||||
2006
|
2005
|
Increase
|
|||||||||||||||||
Amount
|
%
of Net
Revenues
|
Amount
|
%
of Net
Revenues
|
Amount
|
%
of Net
Revenues
|
||||||||||||||
(Dollars
in thousands)
|
|||||||||||||||||||
Grading
and authentication fees
|
$
|
8,315
|
84.0
|
%
|
$
|
8,062
|
91.4
|
%
|
$
|
253
|
3.1
|
%
|
|||||||
Other
related services
|
1,583
|
16.0
|
%
|
763
|
8.6
|
%
|
820
|
107.5
|
%
|
||||||||||
Total
net revenues
|
$
|
9,898
|
100.0
|
%
|
$
|
8,825
|
100.0
|
%
|
$
|
1,073
|
12.2
|
%
|
Three
Months Ended September 30,
|
|||||||||||||||||||||||||
2006
|
2005
|
2006
vs. 2005
|
|||||||||||||||||||||||
Increase
(Decrease)
|
|||||||||||||||||||||||||
%
of Net
|
%
of Net
|
Revenues
|
Units
Processed
|
||||||||||||||||||||||
Amount
|
Revenues
|
Amount
|
Revenues
|
Amounts
|
Percent
|
Number
|
Percent
|
||||||||||||||||||
(Dollars
in thousands)
|
|||||||||||||||||||||||||
Coins
|
$
|
5,590
|
56.5
|
%
|
$
|
5,753
|
65.2
|
%
|
$
|
(163
|
)
|
(2.8
|
%)
|
86,300
|
21.8
|
%
|
|||||||||
Sportscards
|
2,251
|
22.7
|
%
|
2,106
|
23.9
|
%
|
145
|
6.9
|
%
|
38,500
|
13.6
|
%
|
|||||||||||||
Other
(1)
|
2,057
|
20.8
|
%
|
966
|
10.9
|
%
|
1,091
|
112.9
|
%
|
(11,800
|
)
|
(16.1
|
%)
|
||||||||||||
$
|
9,898
|
100.0
|
%
|
$
|
8,825
|
100.0
|
%
|
$
|
1,073
|
12.2
|
%
|
113,000
|
15.0
|
%
|
(1)
|
Consists
of autographs, stamps, currency, diamonds and colored gemstones,
CCE
subscription business and our collectibles convention business in
fiscal
2006; and autographs, stamps, currency and one month of our CCE revenues
in fiscal 2005.
|
Three
Months Ended September 30,
|
|||||||||||||
2006
|
2005
|
||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
||||||||||
Gross
profit
|
$
|
5,542,000
|
56.0
|
%
|
$
|
5,453,000
|
61.8
|
%
|
Three
Months Ended September 30,
|
|||||||
2006
|
2005
|
||||||
Selling
and marketing expenses
|
$
|
1,262,000
|
$
|
1,090,000
|
|||
Percent
of net revenues
|
12.8
|
%
|
12.3
|
%
|
Three
Months Ended September 30,
|
|||||||
2006
|
2005
|
||||||
General
and administrative expense
|
$
|
3,979,000
|
$
|
3,200,000
|
|||
Percent
of net revenues
|
40.2
|
%
|
36.3
|
%
|
Three
Months Ended September 30,
|
|||||||
2006
|
2005
|
||||||
Amortization
expense
|
$
|
171,000
|
$
|
20,000
|
|||
Percent
of net revenues
|
1.7
|
%
|
0.2
|
%
|
Three
Months Ended September 30,
|
|||||||
2006
|
2005
|
||||||
Included
in:
|
|||||||
Cost of revenues
|
$
|
76,000
|
$
|
56,000
|
|||
Selling
and marketing expenses
|
1,000
|
1,000
|
|||||
General
and administrative expenses
|
123,000
|
75,000
|
|||||
$
|
200,000
|
$
|
132,000
|
FY
2007 (for Q-2 - Q-4)
|
$
|
594,000
|
||
FY
2008
|
751,000
|
|||
FY
2009
|
458,000
|
|||
FY
2010
|
147,000
|
|||
FY
2011
|
26,000
|
|||
Total
|
$
|
1,976,000
|
Three
Months Ended September 30,
|
|||||||
2006
|
2005
|
||||||
Interest
income, net
|
$
|
567,000
|
$
|
542,000
|
|||
Percent
of net revenues
|
5.7
|
%
|
6.1
|
%
|
Three
Months Ended September 30,
|
|||||||
2006
|
2005
|
||||||
Income
tax
expense
|
$
|
318,000
|
$
|
714,000
|
Three
Months Ended September 30,
|
|||||||
2006
|
2005
|
||||||
Income
(loss) from discontinued operations, net
of gain on sales of discontinued businesses
(net of income taxes).
|
$
|
11,000
|
$
|
(12,000
|
)
|
Fiscal
Year
|
||||
2007 (remaining
9 months)
|
$
|
1,058,000
|
||
2008
|
1,594,000
|
|||
2009
|
1,585,000
|
|||
2010
|
840,000
|
|||
2011
|
393,000
|
|||
Thereafter
|
1,756,000
|
|||
$
|
7,226,000
|
Declaration
Date
|
|
Record
Date
|
|
Dividend
Payment Date
|
|
Amount
|
||||
May
31, 2006
|
June
14, 2006
|
June
28, 2006
|
$
|
674,000
|
||||||
August
15, 2006
|
August
29, 2006
|
September
12, 2006
|
$
|
668,000
|
· |
changes
in general economic conditions or changes in conditions in the
collectibles or high-value assets markets in which we operate, such
as a
possible decline in the popularity of some high-value collectibles
or
assets, either of which could reduce the volume of authentication
and
grading submissions and, therefore, the grading fees we generate;
|
· |
a
lack of diversity in our sources of revenues and, more particularly,
our
dependence on collectible coin authentication and grading for a
significant percentage of our total revenues, which makes us more
vulnerable to adverse changes in economic conditions, including declines
in the value of precious metals or recessionary or other conditions
that
could lead to reduced coin and other collectibles submissions that
would,
in turn, result in reductions in our revenues and income;
|
· |
our
dependence on certain key executives and experts, the loss of the
services
of any of which could adversely affect our ability to obtain
authentication and grading submissions and, therefore, could harm
our
operating results;
|
· |
the
fact that for the year ended June 30, 2006 and the three months ended
September 30, 2006, our top 5 customers accounted for approximately
22%
and 14%, respectively, of our net revenues, which means that the
loss of
any of those customers, or a reduction in their grading submissions
to us,
would result in a decline in our revenues and a reduction in our
operating
income;
|
· |
increased
competition from other collectibles’ authentication and grading companies
that could result in reductions in collectibles submissions to us
or could
require us to reduce the prices we charge for our services, either
of
which could result in reductions in our revenue and income;
|
· |
the
risk that we will incur unanticipated liabilities under our authentication
and grading warranties that would increase our operating expenses;
|
· |
the
risk that new collectibles service offerings and business initiatives,
such as autograph, stamp and paper currency grading services, diamonds
and
colored gemstones, and our dealer financing program, will not gain
market
acceptance or will be unsuccessful and will, as a result, increase
our
operating expenses and reduce our overall profitability or cause
us to
incur losses;
|
· |
the
risks involved in acquiring existing or commencing new authentication
and
grading businesses, including the risks that we will be unable to
successfully integrate new businesses into our operations; that our
new
businesses (in particular our diamond and colored gemstones businesses)
may not gain market acceptance; that business expansion may result
in a
costly diversion of management time and resources from our existing
businesses and increase our operating expenses; that acquisition-related
goodwill and intangible assets may become impaired, which could adversely
impact our financial statements and results of operations; and that
we
will not achieve adequate returns on the investments we may make
in
acquiring other or establishing new businesses, any of which would
harm
our profitability or cause us to incur losses;
|
· |
the
risks that we will encounter problems with or failures of our computer
systems that would interrupt our services or result in loss of data
that
we need for our business; and
|
· |
the
potential of increased government regulation of our businesses that
could
cause operating costs to increase.
|
(a)
|
(b)
|
(c)
|
(d)
|
||||||||||
Monthly
Periods
Through
September 30, 2006
|
Total
Number
of
Shares Purchased
|
Average
Price Paid per Share
|
Total
Number
of
Shares Purchased
as
Part
of Publicly Announced
Programs
|
Approximate
Dollar Value
of
Shares that
May
Yet Be
Purchased
Under
the
Programs
|
|||||||||
July
1 to July 31, 2006
|
0
|
$
|
0
|
0
|
$
|
7,381,584
|
|||||||
August
1 to August 31, 2006
|
0
|
$
|
0
|
0
|
$
|
7,381,584
|
|||||||
September
1 to September 30, 2006
|
27,117
|
$
|
13.86
|
27,117
|
$
|
7,005,780
|
|||||||
Total
|
27,117
|
$
|
13.86
|
27,117
|
(a)
|
Exhibits:
|
|
Exhibit
31.1
|
Certification
of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley
Act of
2002
|
|
Exhibit
31.2
|
Certification
of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley
Act of
2002
|
|
Exhibit
32.1
|
Chief
Executive Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
|
Exhibit
32.2
|
Chief
Financial Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
COLLECTORS
UNIVERSE, INC.
|
||
Date: November
9, 2006
|
/s/
MICHAEL R. HAYNES
|
|
Michael
R. Haynes
|
||
Chief
Executive Officer
|
COLLECTORS
UNIVERSE, INC.
|
||
Date: November
9, 2006
|
/s/
JOSEPH J. WALLACE
|
|
Joseph
J. Wallace
|
||
Chief
Financial Officer
|
Number
|
Description
|
Exhibit
31.1
|
Certification
of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley
Act of
2002
|
Exhibit
31.2
|
Certification
of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley
Act of
2002
|
Exhibit
32.1
|
Chief
Executive Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
Exhibit
32.2
|
Chief
Financial Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|