Interesting take on suit.
BigtimeBowmanfan
Posts: 191
I think I speak for many here in saying: November 9 2005, 4:22 PM
1. I LMFAO when I read this. 14,000+ bad certs? OUCH!
2. Just when you think the slime can't be any deeper...Couldn't happen to nicer guys.
3. Out of an abundance of caution I would urge people here NOT to send ANYTHING to PSA until this is all sorted out because the items may end up in limbo. $10.5 million is a heck of a lot of money for such a shaky company to have to pony up, and it is enforceable virtually immediately. An appeal bond for that verdict would be about $15 million plus appellate costs and attorneys' fees, and the bonding company would require PSA to post clear collateral equal to that sum. Absent a bond, the sheriff's collectors can be sent into PSA's offices to start stripping checks from the incoming slabbing items, their bank accounts can be drained, all property seized and/or liened, etc. This usually has the effect of either forcing a company to file a bankruptcy petition (which requires court approval to continue operations) or it throws a hell of a monkey wrench into their operations as they are stripped of cash. Regardless of what you think of PSA, the victims of this are likely to extend to anyone with cards there now or in the near future.
1. I LMFAO when I read this. 14,000+ bad certs? OUCH!
2. Just when you think the slime can't be any deeper...Couldn't happen to nicer guys.
3. Out of an abundance of caution I would urge people here NOT to send ANYTHING to PSA until this is all sorted out because the items may end up in limbo. $10.5 million is a heck of a lot of money for such a shaky company to have to pony up, and it is enforceable virtually immediately. An appeal bond for that verdict would be about $15 million plus appellate costs and attorneys' fees, and the bonding company would require PSA to post clear collateral equal to that sum. Absent a bond, the sheriff's collectors can be sent into PSA's offices to start stripping checks from the incoming slabbing items, their bank accounts can be drained, all property seized and/or liened, etc. This usually has the effect of either forcing a company to file a bankruptcy petition (which requires court approval to continue operations) or it throws a hell of a monkey wrench into their operations as they are stripped of cash. Regardless of what you think of PSA, the victims of this are likely to extend to anyone with cards there now or in the near future.
Scott
T206's are always being bought.
aloof1003@comcast.net
T206's are always being bought.
aloof1003@comcast.net
0
Comments
Bowman Baseball -1948-1955
Fleer Baseball-1923, 1959-2007
Al
I don't think it is time to panic just yet. There are post trial motions that could be made and won that could reduce the verdict amount. an appeal is also possible. However, without knowing the case details, I can't comment further.
Again, what about us? Nothing but questions and no answers.
I doubt Joe or anyone at PSA can comment to us since this issue is still in litigation. Also I doubt they will kill these posts about the scandal since it will look even more shady.
I agree with Bowmanfan. We need to see how this plays out. I doubt cards will be affected, but autos are another question.
earnings were reported after the bell today:
Collectors Universe, Inc. CLCT, a leading provider of value-added authentication and grading services to dealers and collectors of high-value collectibles, today announced financial results for the first quarter of fiscal 2006 ended September 30, 2005.
Net revenues for the quarter increased 7.7% to $8.8 million from $8.2 million in the same period last year, while income from continuing operations declined to $979,000 or $0.11 per diluted share in the first quarter this year from $1.3 million or $0.20 per diluted share in the same quarter last year. The loss from discontinued operations narrowed to $12,000, as compared to the loss of $69,000 or $0.01 loss per diluted share in the first quarter last year. As a result, net income for the first quarter was $967,000 or $0.11 per diluted share compared to $1.2 million or 0.19 per diluted share in the same quarter of fiscal 2005.
Income from continuing operations and net income per diluted share were computed on 8.8 million weighted average shares outstanding for the first quarter this year, which represented a 34% increase from the 6.6 million weighted average shares outstanding for the first quarter last year. This increase was a result of the completion in the third quarter of fiscal 2005 of a public offering in which we sold 2,195,856 new shares.
Since the completion of that offering, the Company has commenced a number of new business initiatives in its existing markets and completed three business acquisitions for an aggregate purchase price of $5.8 million, including an established diamond grading business in furtherance of its strategy to extend its authentication and grading operations into new high value asset markets.
Fiscal 2006 First Quarter Results
Continuing operations during the quarters ended September 30, 2005 and 2004, consisted primarily of grading and authentication services for coins, sportscards, autographs, stamps, and currency. Other revenue generating services provided in these segments included publishing, sales of advertising space on our websites and in our publications and the sale of subscription- based collectors club memberships.
Net Revenues. Net revenues increased 7.7% to $8.8 million in the first quarter of fiscal 2006, the second highest quarterly revenue in the history of the Company, just below our revenue for the third quarter of fiscal 2005 when the Company launched its First Strike coin grading program. Driving the top-line growth was a 13.3% increase in total number of collectible units graded to 751,000. While our coins and sportscards revenues each increased by about 3%, our other collectibles (currency, stamps and autographs) revenues increased by 79% over the first quarter of last year and constituted 11% of total revenues in this year's first quarter as compared to 7% in the first quarter last year. The growth in coin revenues in the first quarter of 2006 was hampered by a reduction in coin submissions by one of our larger customers, because its owner became seriously ill in the fourth quarter of fiscal 2005. That customer accounted for approximately 4% of our revenue in the first quarter this year, down from 10% of revenues in the first quarter of 2005.
Gross Profit. Gross profits increased 2.6% to $5.5 million from the same period last year. Gross profit margin for this year's first quarter was 62.4% compared to 65.5% in the corresponding period last year, primarily due to an increase in the direct costs of authenticating and grading coins and a change in the mix of collectibles graded to a higher proportion in this year's first quarter of modern submissions, the prices for which are lower than for vintage collectibles.
Selling and Marketing and General and Administrative Expenses. Selling and marketing expenses in the first quarter of fiscal 2006 totaled $1,089,000 and represented 12.3% of net revenues as compared to $957,000 and 11.7% of revenues, respectively, in the same period last year. This increase in selling and marketing costs was directly related to programs designed to promote the Company's support of and participation in, and its on-site authentication and grading services at, large collectibles trade shows, and the addition of sales and customer service personnel to support the growth of our business. General and administrative expenses in the first quarter of fiscal 2006 increased by $858,000 to $3,145,000 or 35.6% of net revenues compared to $2,287,000 or 27.9% in the first quarter of fiscal 2005. Included in these costs were (i) $435,000 of professional fees and other costs and expenses associated with the documentation, testing and audit of the effectiveness of the Company's internal control over financial reporting as required by Section 404 of the Sarbanes Oxley Act of 2002, (ii) $191,000 related to business development and infrastructure costs as the Company focused on entry into new markets and expansion of existing markets, (iii) $85,000 related to increased litigation costs in defending a lawsuit and (iv) an $83,000 non cash charge associated with the termination of a sublease at our corporate headquarters.
Stock based compensation. As a result of adopting Statement of Financial Accounting Standard ("SFAS") No. 123R Share based Payments, the Company recognized stock based compensation of $132,000 in the first quarter of fiscal 2006. No comparable cost was required to be recognized in the same period of the prior year.
Interest Income. Interest income increased to $542,000 from $66,000, primarily as a result of the Company's investment of cash and cash equivalent balances that were comprised primarily of the proceeds from the public stock offering that the Company completed in the third quarter of 2005 and the proceeds from the sales of the discontinued businesses and disposition of certain of their assets, principally accounts receivable and inventories.
Income Taxes. The Company's effective rate of income taxes increased to 42% in the first quarter of fiscal 2006 compared to 40% in the first quarter of fiscal 2005, due to the non-deductibility for income tax purposes of stock compensation expense associated with the grant of incentive stock options under our stock incentive plans.
Financial Condition
As of September 30, 2005, Collectors Universe had cash and cash equivalents of $66.7 million compared with cash and cash equivalents of $65.4 million as of June 30, 2005. Continuing operations provided net cash of $1.9 million during the three-month period ended September 30, 2005, compared with $2.4 million in the three-month period ended September 30, 2004.
Total stockholders' equity was $71.7 million as of September 30, 2005, compared with $70.6 million as of June 30, 2005.
Business Acquisitions
As previously reported, in the first quarter of fiscal 2006, the Company purchased substantially all of the assets of CoinFacts.com, which operates an internet website on which it publishes detailed proprietary information and history on rare U.S. coins. The Company also acquired the common stock of CCE, a subscription-based dealer-to-dealer Internet bid-ask market for third party certified coins with two membership levels, and a related business, CTP. The Company paid $500,000 cash for the assets of CoinFacts.com and $2.18 million cash for CCE and CTP and, in connection with those acquisitions, recorded goodwill and intangible assets of $2.8 million as of September 30, 2005. For accounting purposes, those acquired businesses were consolidated with the operations of the Company from their respective dates of acquisition. The Company intends to and is in the process of selling CTP and, as such, the results of CTP for the quarter ended September 30, 2005 have been classified as part of the loss from discontinued operations and its assets have been classified as held for sale.
On November 8, 2005, the Company completed the acquisition of Gem Certification & Appraisal Lab (GCAL), an international forensic gemological certification and grading laboratory and officially entered the diamond market for third party authentication and grading. As part of the transaction, the Company also acquired all of the outstanding shares of Diamond Profile Laboratory, Inc. (DPL), a scientific diamond light performance analysis laboratory, and the ownership and publishing rights to "Palmieri's Market Monitor," an educational and informative industry publication that had been published by the Gemological Appraisal Association, Inc. The Company paid a total purchase price of $3 million in cash for GCAL, DPL and the rights to "Palmieri's Market Monitor."
Fiscal 2006 Outlook
Michael Haynes, Chief Executive Officer, stated, "During the first quarter, we successfully increased units authenticated and graded in our autograph business, without substantially increasing the corresponding costs, by providing more simplified services on modern autographs and large volume, single signature items. While we are pleased with our unit and revenue growth in our stamp and currency authentication and grading businesses, our coin unit and revenue growth continues to be hampered by the reduced activity from one of our larger customers, whose owner is now beginning to recover from a serious illness. With regard to our acquisitions, we have completed two strategic acquisitions to strengthen our leadership position in our core business segments and grow our revenue base. With our recent acquisition of Gem Certification & Appraisal Lab (GCAL), we have now entered the diamond authentication and grading market and believe this is a very important first step in applying our high value asset expertise to the diamond market which, although highly competitive, offers us an opportunity for further growth due to the relative size of that market. We continue to examine other opportunities for other acquisitions to improve our market position in what is now a total of six markets that we serve. We also continue to look for new markets where we will be able to leverage our strong authentication and grading expertise in order to capture higher growth and maximize our resources."
Link To Scanned 1952 Topps Cards Set is now 90% Complete Plus Slideshows of the 52 Set
In the December 2004 Mastronet Auction, long time hobbyist and show promoter Bill Daniels won lot 2322, which was advertised as over 2,000 8x10 autographed photos authenticated by PSA/DNA with Letters of Authenticity.
When his package arrived, upon inspection he found that the advertised "mother lode of autographed 8x10 color photos average nm/mt 9-10 signatures" -- Translation: condition on a scale of 1-10 condition is 9-10 and photos are near mint to mint -- was not to be.
Over 80 percent of the photos were damaged, more than 50 autographs were smeared and the photos in lesser sizes than 8x10. The photos were shipped in a box with no packing protection.
Daniels had big questions for Mastronet.
It has since turned up that PSA/DNA did not view each item, did not tag each item with their serial numbers or DNA, did not photograph or catalog each item or issue full letters of authenticity. PSA/DNA has released a statement that "the items are presented for a cursory review only prior to the sale. In addition, PSA/DNA Auction Letters contain text written by the auction house, not PSA/DNA."
Daniels has retained a lawyer in this matter. In addition, Ohio attorney Barbara Smith is advertising weekly in trade publications for Ohio residents who have purchased items through auction houses with PSA/DNA certificates and doubt authenticity to contact her.
While we are pleased with our unit and revenue growth in our stamp and currency authentication and grading businesses, our coin unit and revenue growth continues to be hampered by the reduced activity from one of our larger customers, whose owner is now beginning to recover from a serious illness.
talk about all of your eggs in one basket, what if the guy decides to stop submitting all together, or switches grading companies?
(iii) $85,000 related to increased litigation costs in defending a lawsuit
is this the one they are talking about or are there others?
Link To Scanned 1952 Topps Cards Set is now 90% Complete Plus Slideshows of the 52 Set
Sadly there is no one else in the market.
but the worst case scenario has clearly presented itself, even if you trust a dealer, those LOAs aren't even worth the paper they're written on.
lsuconnman@yahoo.com
GO MARLINS! Home of the best fans in baseball!!
As an outsider, this all sounds very confusing. Why would PSA/DNA ever allow its name to be associated with items that did not go through the full authentication process by their own experts? Cursory review - are you kidding me??? Doing anything halfway in this racket will get you killed. And trusting auction houses to watch your back will get you killed even quicker.
It's real simple - if you didn't fully authenticate it with your leading experts, if you aren't 100% sure that the item is as described, then don't allow your name to be associated IN ANY WAY with the product. That's common sense.
I guess this shows that big submitters are more important to grading companies' financial health than we thought, especially when you consider that their coin revenue is supposedly much greater than their card revenue.
I work for a relatively large company and if 2 or 3 accounts were to close tomorrow, there would be 20 people laid off the next day.
My guess is that if DSL and 4SC were to stop summiting cards ...The damaged might be in the 20-25% loss of cards to be graded at PSA.
At the same time though ...while these big players represent a lot of revenue ...its the small guys that represent a lot of profit.
Groucho Marx
To DabigH--If you are going to smoke that stuff--please share.
How the future of the company and the stock price performs, will be determined by how PSA responds to what the lawsuit entailed. I would have to believe that PSA will learn from this and become a better company. If they don't learn, then the stock price will continue to fall and that would indicate a real problem. It's all up to the management of PSA to get it together and get the company moving in the right direction. I believe they will do so.
lsuconnman@yahoo.com
lsuconnman@yahoo.com