x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
|
VALUE LINE, INC. | ||
(Exact name of registrant as specified in its charter) |
New York | 13-3139843 | |||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
220 East 42nd Street, New York, New York | 10017-5891 | |||
(Address of principal executive offices) | (Zip Code) |
(212) 907-1500 | ||
(Registrant’s telephone number, including area code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x | Smaller reporting company o |
(Do not check if a smaller reporting company) |
Yes o No x |
Class | Outstanding at March 12, 2013 |
Common stock, $0.10 par value | 9,880,051 Shares |
|
Page No.
|
||
PART I. FINANCIAL INFORMATION
|
|
||
Item 1.
|
Consolidated Condensed Financial Statements
|
|
|
Consolidated Condensed Balance Sheets as of January 31, 2013 and April 30, 2012
|
|
3
|
|
Consolidated Condensed Statements of Income for the three and nine months ended January 31, 2013 and 2012
|
|
4
|
|
Consolidated Condensed Statements of Comprehensive Income for the three and nine months ended January 31, 2013 and 2012
|
|
5
|
|
Consolidated Condensed Statements of Cash Flows for the nine months ended January 31, 2013 and 2012
|
|
6
|
|
Consolidated Condensed Statement of Changes in Shareholders’ Equity for the nine months ended January 31, 2013
|
7
|
||
Consolidated Condensed Statement of Changes in Shareholders’ Equity for the nine months ended January 31, 2012
|
8
|
||
Notes to Consolidated Condensed Financial Statements
|
|
9
|
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Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
20
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Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
32
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|
|||
Item 4.
|
Controls and Procedures
|
|
33
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PART II. OTHER INFORMATION
|
|
||
Item 1.
|
Legal Proceedings
|
|
33
|
Item 1A.
|
Risk Factors
|
|
33
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
34
|
|
Item 5.
|
Other Information
|
34
|
|
Item 6.
|
Exhibits
|
|
34
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Signatures
|
|
35
|
January 31,
|
April 30,
|
|||||||
2013
|
2012
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents (including short term
|
||||||||
investments of $7,751 and $10,848, respectively)
|
$ | 8,743 | $ | 12,042 | ||||
Securities available-for-sale
|
5,152 | 3,881 | ||||||
Accounts receivable, net of allowance for doubtful
|
||||||||
accounts of $35 and $44, respectively
|
1,211 | 902 | ||||||
Prepaid and refundable income taxes
|
- | 779 | ||||||
Prepaid expenses and other current assets
|
1,004 | 1,071 | ||||||
Deferred income taxes
|
320 | 442 | ||||||
Total current assets
|
16,430 | 19,117 | ||||||
Long term assets:
|
||||||||
Investment in EAM Trust
|
57,465 | 56,331 | ||||||
Property and equipment, net
|
3,765 | 3,854 | ||||||
Capitalized software and other intangible assets, net
|
5,674 | 5,067 | ||||||
Total long term assets
|
66,904 | 65,252 | ||||||
Total assets
|
$ | 83,334 | $ | 84,369 | ||||
Liabilities and Shareholders
’
Equity
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable and accrued liabilities
|
$ | 2,138 | $ | 2,673 | ||||
Accrued salaries
|
992 | 1,108 | ||||||
Dividends payable
|
1,482 | 1,484 | ||||||
Accrued taxes on income
|
631 | 96 | ||||||
Reserve for settlement expenses
|
252 | 275 | ||||||
Unearned revenue
|
21,001 | 21,548 | ||||||
Total current liabilities
|
26,496 | 27,184 | ||||||
Long term liabilities:
|
||||||||
Unearned revenue
|
3,032 | 4,447 | ||||||
Deferred income taxes
|
20,949 | 20,424 | ||||||
Total long term liabilities
|
23,981 | 24,871 | ||||||
Total liabilities
|
50,477 | 52,055 | ||||||
Shareholders' Equity:
|
||||||||
Common stock, $0.10 par value; authorized 30,000,000
|
||||||||
shares; issued 10,000,000 shares
|
1,000 | 1,000 | ||||||
Additional paid-in capital
|
991 | 991 | ||||||
Retained earnings
|
32,272 | 31,628 | ||||||
Treasury stock, at cost (119,949 and 103,619 shares, respectively)
|
(1,537 | ) | (1,390 | ) | ||||
Accumulated other comprehensive income, net of tax
|
131 | 85 | ||||||
Total shareholders
’
equity
|
32,857 | 32,314 | ||||||
Total liabilities and shareholders
’
equity
|
$ | 83,334 | $ | 84,369 |
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
January 31,
|
January 31,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Revenues:
|
||||||||||||||||
Investment periodicals and related publications
|
$ | 7,938 | $ | 8,145 | $ | 23,793 | $ | 24,870 | ||||||||
Copyright data fees
|
1,008 | 851 | 2,900 | 2,636 | ||||||||||||
Total revenues
|
8,946 | 8,996 | 26,693 | 27,506 | ||||||||||||
Expenses:
|
||||||||||||||||
Advertising and promotion
|
1,017 | 622 | 2,916 | 2,731 | ||||||||||||
Salaries and employee benefits
|
3,683 | 3,638 | 11,096 | 10,988 | ||||||||||||
Production and distribution
|
1,422 | 1,143 | 4,236 | 3,530 | ||||||||||||
Office and administration
|
1,736 | 1,770 | 5,085 | 5,278 | ||||||||||||
Total expenses
|
7,858 | 7,173 | 23,333 | 22,527 | ||||||||||||
Income from operations
|
1,088 | 1,823 | 3,360 | 4,979 | ||||||||||||
Revenues and profits interests in EAM Trust
|
1,625 | 1,456 | 4,627 | 4,371 | ||||||||||||
Income from securities transactions, net
|
37 | 3 | 93 | 34 | ||||||||||||
Income before income taxes
|
2,750 | 3,282 | 8,080 | 9,384 | ||||||||||||
Income tax provision
|
1,003 | 1,438 | 2,985 | 3,549 | ||||||||||||
Net income
|
$ | 1,747 | $ | 1,844 | $ | 5,095 | $ | 5,835 | ||||||||
Earnings per share, basic & fully diluted
|
$ | 0.18 | $ | 0.19 | $ | 0.52 | $ | 0.59 | ||||||||
Weighted average number of common shares
|
9,884,308 | 9,896,381 | 9,891,826 | 9,930,225 |
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
January 31,
|
January 31,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Net income
|
$ | 1,747 | $ | 1,844 | $ | 5,095 | $ | 5,835 | ||||||||
Other comprehensive income, net of tax:
|
||||||||||||||||
Change in unrealized gains on securities, net of taxes
|
19 | 43 | 46 | 13 | ||||||||||||
Other comprehensive income
|
19 | 43 | 46 | 13 | ||||||||||||
Comprehensive income
|
$ | 1,766 | $ | 1,887 | $ | 5,141 | $ | 5,848 |
For the Nine Months Ended
|
||||||||
January 31,
|
||||||||
2013
|
2012
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 5,095 | $ | 5,835 | ||||
Adjustments to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation and amortization
|
1,136 | 399 | ||||||
Non-voting revenues interest in EAM Trust
|
(4,280 | ) | (4,251 | ) | ||||
Non-voting profits interest in EAM Trust
|
(347 | ) | (120 | ) | ||||
Realized losses on securities available-for-sale
|
- | 22 | ||||||
Deferred income taxes
|
673 | 3,262 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Unearned revenue
|
(1,962 | ) | (1,262 | ) | ||||
Reserve for settlement
|
(23 | ) | (1,163 | ) | ||||
Operating lease exit obligation
|
(329 | ) | (329 | ) | ||||
Accounts payable & accrued expenses
|
(206 | ) | (1,716 | ) | ||||
Accrued salaries
|
(116 | ) | (3 | ) | ||||
Accrued taxes on income
|
484 | 35 | ||||||
Prepaid and refundable income taxes
|
779 | 59 | ||||||
Prepaid expenses and other current assets
|
67 | 44 | ||||||
Accounts receivable
|
(309) | 886 | ||||||
Receivable from affiliates
|
- | 38 | ||||||
Total adjustments
|
(4,433 | ) | (4,099 | ) | ||||
Net cash provided by operating activities
|
662 | 1,736 | ||||||
Cash flows from investing activities:
|
||||||||
Purchases/sales of securities classified as available-for-sale:
|
||||||||
Maturities and sales of fixed income securities
|
- | 11,196 | ||||||
Purchases of equity securities
|
(1,200 | ) | (1,598 | ) | ||||
Distributions received from EAM Trust
|
3,493 | 4,339 | ||||||
Acquisition of property and equipment
|
(108 | ) | (31 | ) | ||||
Expenditures for capitalized software
|
(1,546 | ) | (2,992 | ) | ||||
Net cash provided by investing activities
|
639 | 10,914 | ||||||
Cash flows from financing activities:
|
||||||||
Purchase of treasury stock at cost
|
(147 | ) | (946 | ) | ||||
Dividends paid
|
(4,453 | ) | (5,968 | ) | ||||
Net cash used by financing activities
|
(4,600 | ) | (6,914 | ) | ||||
Net change in cash and cash equivalents
|
(3,299 | ) | 5,736 | |||||
Cash and cash equivalents at beginning of year
|
12,042 | 6,802 | ||||||
Cash and cash equivalents at end of period
|
$ | 8,743 | $ | 12,538 |
Common stock |
Additional
paid-in |
Treasury Stock | Retained |
Accumulated Other
Comprehensive |
||||||||||||||||||||||||||||
Shares
|
Amount
|
capital
|
Shares
|
Amount
|
earnings
|
income/(loss)
|
Total
|
|||||||||||||||||||||||||
Balance at April 30, 2012
|
10,000,000 | $ | 1,000 | $ | 991 | (103,619 | ) | $ | (1,390 | ) | $ | 31,628 | $ | 85 | $ | 32,314 | ||||||||||||||||
Net income
|
5,095 | 5,095 | ||||||||||||||||||||||||||||||
Change in unrealized gains on securities, net of taxes
|
46 | 46 | ||||||||||||||||||||||||||||||
Purchase of treasury stock
|
(16,330 | ) | (147 | ) | (147 | ) | ||||||||||||||||||||||||||
Dividends declared
|
(4,451 | ) | (4,451 | ) | ||||||||||||||||||||||||||||
Balance at January 31, 2013
|
10,000,000 | $ | 1,000 | $ | 991 | (119,949 | ) | $ | (1,537 | ) | $ | 32,272 | $ | 131 | $ | 32,857 |
Common stock
|
Additional
paid-in |
Treasury Stock
|
Retained
|
Accumulated Other
Comprehensive |
||||||||||||||||||||||||||||
Shares
|
Amount
|
capital
|
Shares
|
Amount
|
earnings
|
income/(loss)
|
Total
|
|||||||||||||||||||||||||
Balance at April 30, 2011
|
10,000,000 | $ | 1,000 | $ | 991 | (25,119 | ) | $ | (444 | ) | $ | 31,644 | $ | 63 | $ | 33,254 | ||||||||||||||||
Net income
|
5,835 | 5,835 | ||||||||||||||||||||||||||||||
Change in unrealized gains on securities, net of taxes
|
13 | 13 | ||||||||||||||||||||||||||||||
Purchase of treasury stock
|
(78,500 | ) | (946 | ) | (946 | ) | ||||||||||||||||||||||||||
Dividends declared
|
(5,457 | ) | (5,457 | ) | ||||||||||||||||||||||||||||
Balance at January 31, 2012
|
10,000,000 | $ | 1,000 | $ | 991 | (103,619 | ) | $ | (1,390 | ) | $ | 32,022 | $ | 76 | $ | 32,699 |
As of January 31, 2013
|
||||||||||||||||
($ in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Cash equivalents
|
$ | 7,751 | $ | - | $ | - | $ | 7,751 | ||||||||
Securities available-for-sale
|
5,152 | - | - | 5,152 | ||||||||||||
$ | 12,903 | $ | - | $ | - | $ | 12,903 |
As of April 30, 2012
|
||||||||||||||||
($ in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Cash equivalents
|
$ | 10,848 | $ | - | $ | - | $ | 10,848 | ||||||||
Securities available-for-sale
|
3,881 | - | - | 3,881 | ||||||||||||
$ | 14,729 | $ | - | $ | - | $ | 14,729 |
($ in thousands)
|
Cost |
Gross Unrealized
Gains |
Gross
Unrealized
|
Fair Value
|
||||||||||||
Common stocks
|
$ | 103 | $ | 19 | $ | (11 | ) | $ | 111 | |||||||
ETFs - equities
|
2,969 | 419 | - | 3,388 | ||||||||||||
Inverse ETFs - equities
|
1,878 | - | (225 | ) | 1,653 | |||||||||||
$ | 4,950 | $ | 438 | $ | (236 | ) | $ | 5,152 |
($ in thousands)
|
Cost |
Gross Unrealized
Gains |
Gross
Unrealized
|
Fair Value | ||||||||||||
Common stocks
|
$ | 103 | $ | 14 | $ | (5 | ) | $ | 112 | |||||||
ETFs - equities
|
2,257 | 201 | (5 | ) | 2,453 | |||||||||||
Inverse ETFs - equities
|
1,389 | - | (73 | ) | 1,316 | |||||||||||
$ | 3,749 | $ | 215 | $ | (83 | ) | $ | 3,881 |
Three Months Ended January 31,
|
Nine Months Ended January 31,
|
|||||||||||||||
($ in thousands)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Dividend income
|
$ | 34 | $ | 19 | $ | 91 | $ | 46 | ||||||||
Interest income
|
3 | 2 | 4 | 16 | ||||||||||||
Realized losses on securities available-for-
sale (1)
|
- | (18 | ) | - | (22 | ) | ||||||||||
Other
|
- | - | (2 | ) | (6 | ) | ||||||||||
Total income from securities transactions, net
|
$ | 37 | $ | 3 | $ | 93 | $ | 34 |
Three Months Ended January 31,
|
Nine Months Ended January 31,
|
|||||||||||||||
($ in thousands)
(unaudited)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Investment management fees earned from the
Value Line Funds, net of waivers shown below
|
$ | 3,252 | $ | 3,038 | $ | 9,481 | $ | 9,296 | ||||||||
12b-1 fees and other fees, net of waivers
shown below
|
$ | 992 | $ | 838 | $ | 2,868 | $ | 2,588 | ||||||||
Other income
|
$ | 5 | $ | 5 | $ | 5 | $ | 14 | ||||||||
Investment management fee waivers (1)
|
$ | 16 | $ | 179 | $ | 362 | $ | 636 | ||||||||
12b-1 fee waivers (1)
|
$ | 545 | $ | 534 | $ | 1,633 | $ | 1,700 | ||||||||
Value Line’s non-voting revenues interest
|
$ | 1,472 | $ | 1,430 | $ | 4,280 | $ | 4,251 | ||||||||
EAM’s net income (2)
|
$ | 306 | $ | 52 | $ | 694 | $ | 240 |
January 31,
|
April 30,
|
|||||||
($ in thousands)
|
2013
|
2012
|
||||||
(unaudited) | ||||||||
EAM’s total assets
|
$ | 59,141 | $ | 57,482 | ||||
EAM’s total liabilities (1)
|
(2,664 | ) | (663 | ) | ||||
EAM’s total equity
|
$ | 56,477 | $ | 56,819 |
Value Line | |||||||||||||||
($ in thousands)
|
VIE Assets
|
Investment in
EAM Trust
(1)
|
Liabilities
|
Maximum
Exposure to
Loss |
|||||||||||
As of January 31, 2013 (unaudited)
|
$ | 59,141 | $ | 57,465 | $ | - | $ | 57,465 | |||||||
As of April 30, 2012
|
$ | 57,482 | $ | 56,331 | $ | - | $ | 56,331 |
Nine Months Ended January 31,
|
||||||||
($ in thousands)
|
2013
|
2012
|
||||||
State and local income tax payments
|
$ | (20 | ) | $ | (84 | ) | ||
Federal income tax payments to the Parent
|
$ | (1,030 | ) | $ | (245 | ) |
($ in thousands)
|
Amount Before
Tax
|
Tax Expense
|
Tax Benefit
|
Amount Net of
Tax
|
||||||||||||
Change in unrealized gains on securities
|
$ | 70 | $ | (78 | ) | $ | 54 | $ | 46 | |||||||
$ | 70 | $ | (78 | ) | $ | 54 | $ | 46 |
($ in thousands)
|
Amount Before
Tax
|
Tax Expense
|
Tax Benefit |
Amount Net of
Tax
|
||||||||||||
Change in unrealized losses on securities
|
$ | (1 | ) | $ | - | $ | - | $ | (1 | ) | ||||||
Add: Losses realized in net income
|
22 | (8 | ) | - | 14 | |||||||||||
$ | 21 | $ | (8 | ) | $ | - | $ | 13 |
Three Months Ended January 31,
|
Nine Months Ended January 31,
|
|||||||||||||||
($ in thousands)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Non-voting revenues interest in EAM
|
$ | 1,472 | $ | 1,430 | $ | 4,280 | $ | 4,251 | ||||||||
Non-voting profits interest in EAM
|
153 | 26 | 347 | 120 | ||||||||||||
$ | 1,625 | $ | 1,456 | $ | 4,627 | $ | 4,371 |
Three Months Ended January 31,
|
Nine Months Ended January 31,
|
|||||||||||||||
($ in thousands) | 2013 |
2012
|
2013 |
2012
|
||||||||||||
Current tax expense (benefit):
|
|
|||||||||||||||
Federal
|
$ | 727 | $ | 414 | $ | 2,054 | $ | 371 | ||||||||
State and local
|
156 | 131 | 258 | (84 | ) | |||||||||||
883 | 545 | 2,312 | 287 | |||||||||||||
Deferred tax expense (benefit):
|
||||||||||||||||
Federal
|
97 | 448 | 533 | 2,784 | ||||||||||||
State and local
|
23 | 445 | 140 | 478 | ||||||||||||
120 | 893 | 673 | 3,262 | |||||||||||||
Income tax provision:
|
$ | 1,003 | $ | 1,438 | $ | 2,985 | $ | 3,549 |
($ in thousands)
|
January 31,
2013 |
April 30,
2012 |
||||||
Federal tax benefit (liability):
|
||||||||
Net operating loss
|
$ | - | $ | 126 | ||||
Unrealized gains on securities available-for-sale
|
(71 | ) | (46 | ) | ||||
Operating lease exit obligation
|
51 | 153 | ||||||
Deferred professional fees
|
75 | 80 | ||||||
Deferred charges
|
222 | 76 | ||||||
Total federal tax benefit
|
277 | 389 | ||||||
State and local tax benefits:
|
||||||||
Net operating loss
|
- | 15 | ||||||
Other
|
43 | 38 | ||||||
Total state and local tax benefits
|
43 | 53 | ||||||
Deferred tax asset, short term
|
$ | 320 | $ | 442 |
Value Line, Inc.
|
Notes to Consolidated Condensed Financial Statements
|
January 31, 2013
|
(Unaudited)
|
January 31,
|
April 30,
|
|||||||
($ in thousands)
|
2013
|
2012
|
||||||
Federal tax liability (benefit):
|
||||||||
Deferred gain on deconsolidation of EAM
|
$ | 17,679 | $ | 17,679 | ||||
Deferred non-cash post-employment compensation
|
(619 | ) | (619 | ) | ||||
Depreciation and amortization
|
1,400 | 1,032 | ||||||
Other
|
217 | 120 | ||||||
Total federal tax liability
|
18,677 | 18,212 | ||||||
State and local tax liabilities (benefits):
|
||||||||
Deferred gain on deconsolidation of EAM
|
2,185 | 2,182 | ||||||
Deferred non-cash post-employment compensation
|
(76 | ) | (76 | ) | ||||
Depreciation and amortization
|
173 | 127 | ||||||
Deferred professional fees
|
(10 | ) | (21 | ) | ||||
Total state and local tax liabilities
|
2,272 | 2,212 | ||||||
Deferred tax liability, long term
|
$ | 20,949 | $ | 20,424 |
Nine Months Ended January 31,
|
||||||||
2013
|
2012
|
|||||||
U.S. statutory federal rate
|
35.00 | % | 35.00 | % | ||||
Increase (decrease) in tax rate from:
|
||||||||
State and local income taxes, net of federal income tax benefit
|
2.78 | % | 2.73 | % | ||||
Effect of dividends received deductions
|
-0.26 | % | -0.11 | % | ||||
Domestic production tax credit
|
-0.58 | % | - | |||||
Other, net
|
- | 0.20 | % | |||||
Effective income tax rate
|
36.94 | % | 37.82 | % |
Value Line, Inc.
|
Notes to Consolidated Condensed Financial Statements
|
January 31, 2013
|
(Unaudited)
|
January 31,
|
April 30,
|
|||||||
($ in thousands)
|
2013
|
2012
|
||||||
Land
|
$ | 726 | $ | 726 | ||||
Building and leasehold improvements
|
7,325 | 7,283 | ||||||
Furniture and equipment
|
11,021 | 10,955 | ||||||
19,072 | 18,964 | |||||||
Accumulated depreciation and amortization
|
(15,307 | ) | (15,110 | ) | ||||
Total property and equipment, net
|
$ | 3,765 | $ | 3,854 |
(in thousands except for shares and cost
per share) |
Shares
|
Total Average
Cost Assigned |
Average Cost per Share
|
Aggregate Purchase Price
Remaining Under the Program |
||||||||||||
Balance as of April 30, 2012 (1)(2)
|
103,619 | $ | 1,390 | $ | 13.41 | $ | - | |||||||||
Purchases effected in open market during the quarters ended :
|
||||||||||||||||
October 31, 2012
|
3,440 | 30 | 8.84 | $ | 2,970 | |||||||||||
January 31, 2013
|
12,890 | 117 | 9.11 | $ | 2,853 | |||||||||||
Balance as of January 31, 2013
|
119,949 | $ | 1,537 | $ | 12.81 |
Value Line, Inc.
|
Notes to Consolidated Condensed Financial Statements
|
January 31, 2013
|
(Unaudited)
|
Fiscal Years ended April 30,
|
Current Lease
|
New Sublease
|
Total
|
|||||||||
($ in thousands)
|
||||||||||||
2014
|
$ | 1,326 | $ | 490 | $ | 1,816 | ||||||
2015
|
- | 1,468 | 1,468 | |||||||||
2016
|
- | 1,468 | 1,468 | |||||||||
2017
|
- | 1,224 | 1,224 | |||||||||
$ | 1,326 | $ | 4,650 | $ | 5,976 |
|
●
|
dependence on key personnel;
|
|
●
|
maintaining revenue from subscriptions for the Company’s digital and print published products;
|
|
●
|
protection of intellectual property rights;
|
|
●
|
changes in market and economic conditions, including global financial issues;
|
|
●
|
dependence on non-voting revenues and non-voting profits interests in EULAV Asset Management, a Delaware statutory trust (“EAM” or “EAM Trust”), which serves as an investment advisor to the Value Line Funds and engages in related distribution, marketing and administrative services;
|
|
●
|
fluctuations in EAM’s assets under management due to broadly based changes in the values of equity and debt securities, redemptions by investors and other factors, and the effect these changes may have on the valuation of EAM’s intangible assets;
|
|
●
|
competition in the fields of publishing, copyright data and investment management;
|
|
●
|
the impact of government regulation on the Company’s and EAM’s business;
|
|
●
|
availability of free or low cost investment data through discount brokers or generally over the internet;
|
|
●
|
terrorist attacks, cyber security attacks and natural disasters;
|
|
●
|
other risks and uncertainties, including but not limited to the risks described in Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended April 30, 2012 and in Part II, Item 1A of this Quarterly Report on Form 10-Q for the period ended January 31, 2013; and
other risks and uncertainties arising from time to time.
|
Three Months Ended January 31,
|
Nine Months Ended January 31,
|
|||||||||||||||||||||||
($ in thousands, except earnings per share)
|
2013
|
2012
|
Change
|
2013
|
2012
|
Change
|
||||||||||||||||||
Income from operations
|
$ | 1,088 | $ | 1,823 | -40.3 | % | $ | 3,360 | $ | 4,979 | -32.5 | % | ||||||||||||
Revenues and profits interests from EAM Trust
|
$ | 1,625 | $ | 1,456 | 11.6 | % | $ | 4,627 | $ | 4,371 | 5.9 | % | ||||||||||||
Income from operations plus non-voting revenues and non-voting profits interests from EAM Trust
|
$ | 2,713 | $ | 3,279 | -17.3 | % | $ | 7,987 | $ | 9,350 | -14.6 | % | ||||||||||||
Operating expenses
|
$ | 7,858 | $ | 7,173 | 9.5 | % | $ | 23,333 | $ | 22,527 | 3.6 | % | ||||||||||||
Income from securities transactions, net
|
$ | 37 | $ | 3 | 1133.3 | % | $ | 93 | $ | 34 | 173.5 | % | ||||||||||||
Income before income taxes
|
$ | 2,750 | $ | 3,282 | -16.2 | % | $ | 8,080 | $ | 9,384 | -13.9 | % | ||||||||||||
Net income
|
$ | 1,747 | $ | 1,844 | -5.3 | % | $ | 5,095 | $ | 5,835 | -12.7 | % | ||||||||||||
Earnings per share
|
$ | 0.18 | $ | 0.19 | -5.3 | % | $ | 0.52 | $ | 0.59 | -11.9 | % |
Three Months Ended January 31,
|
Nine Months Ended January 31,
|
|||||||||||||||||||||||
($ in thousands)
|
2013
|
2012
|
Change
|
2013
|
2012
|
Change
|
||||||||||||||||||
Investment periodicals and related publications:
|
||||||||||||||||||||||||
Print
|
$ | 4,709 | $ | 5,117 | -8.0 | % | $ | 14,344 | $ | 15,417 | -7.0 | % | ||||||||||||
Digital
|
3,229 | 3,028 | 6.6 | % | 9,449 | 9,453 | -0.0 | % | ||||||||||||||||
Total investment periodicals and related publications
|
7,938 | 8,145 | -2.5 | % | 23,793 | 24,870 | -4.3 | % | ||||||||||||||||
Copyright data fees
|
1,008 | 851 | 18.4 | % | 2,900 | 2,636 | 10.0 | % | ||||||||||||||||
Total publishing revenues
|
$ | 8,946 | $ | 8,996 | -0.6 | % | $ | 26,693 | $ | 27,506 | -3.0 | % |
Three Months Ended January 31,
|
||||||||||||||||
2013
|
2012
|
|||||||||||||||
Print
|
Digital
|
Print
|
Digital
|
|||||||||||||
New Sales Orders
|
17.9 | % | 26.2 | % | 19.4 | % | 17.1 | % | ||||||||
Conversion and Renewal Sales Orders
|
82.1 | % | 73.8 | % | 80.6 | % | 82.9 | % | ||||||||
Total Gross Sales Orders
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Nine Months Ended January 31,
|
||||||||||||||||
2013
|
2012
|
|||||||||||||||
Print
|
Digital
|
Print
|
Digital
|
|||||||||||||
New Sales Orders
|
17.9 | % | 23.5 | % | 15.5 | % | 19.2 | % | ||||||||
Conversion and Renewal Sales Orders
|
82.1 | % | 76.5 | % | 84.5 | % | 80.8 | % | ||||||||
Total Gross Sales Orders
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
As of January 31,
|
||||||||||||
($ in thousands)
|
2013
|
2012
|
Change
|
|||||||||
Unearned subscription income (current and long term liabilities)
|
$ | 24,033 | $ | 25,739 | -6.6 | % |
As of January 31,
|
||||||||||||
($ in millions)
|
2013
|
2012
|
Change
|
|||||||||
Equity funds
|
$ | 1,872 | $ | 1,779 | 5.2 | % | ||||||
Fixed income funds
|
197 | 225 | -12.4 | % | ||||||||
U.S. Government Money Market Fund (“USGMMF”)
|
- | 72 | -100.0 | % | ||||||||
Total EAM managed net assets
|
2,069 | 2,076 | -0.3 | % | ||||||||
Daily Income Fund managed by Reich & Tang Asset Management LLC (“Reich & Tang”)
|
62 | - | n/a | |||||||||
Total net assets
|
$ | 2,131 | $ | 2,076 | 2.6 | % |
As of January 31, | ||||||||||||
($ in millions)
|
2013
|
2012
|
Change
|
|||||||||
Variable annuity assets (GIAC)
|
$ | 470 | $ | 468 | 0.4 | % | ||||||
All other open end equity fund assets
|
1,402 | 1,311 | 6.9 | % | ||||||||
Total equity fund net assets
|
$ | 1,872 | $ | 1,779 | 5.2 | % |
Three Months Ended January 31,
|
Nine Months Ended January 31,
|
|||||||||||||||||||||||
($ in thousands)
|
2013
|
2012
|
Change
|
2013
|
2012
|
Change
|
||||||||||||||||||
Non-voting revenues interest
|
$ | 1,472 | $ | 1,430 | 2.9 | % | $ | 4,280 | $ | 4,251 | 0.7 | % | ||||||||||||
Non-voting profits interest
|
153 | 26 | 488.5 | % | 347 | 120 | 189.2 | % | ||||||||||||||||
$ | 1,625 | $ | 1,456 | 11.6 | % | $ | 4,627 | $ | 4,371 | 5.9 | % |
Three Months Ended January 31,
|
Nine Months Ended January 31,
|
|||||||||||||||||||||||
($ in thousands)
|
2013
|
2012
|
Change
|
2013
|
2012
|
Change
|
||||||||||||||||||
Advertising and promotion
|
$ | 1,017 | $ | 622 | 63.5 | % | $ | 2,916 | $ | 2,731 | 6.8 | % | ||||||||||||
Salaries and employee benefits
|
3,683 | 3,638 | 1.2 | % | 11,096 | 10,988 | 1.0 | % | ||||||||||||||||
Production and distribution
|
1,422 | 1,143 | 24.4 | % | 4,236 | 3,530 | 20.0 | % | ||||||||||||||||
Office and administration
|
1,736 | 1,770 | -1.9 | % | 5,085 | 5,278 | -3.7 | % | ||||||||||||||||
Total expenses
|
$ | 7,858 | $ | 7,173 | 9.5 | % | $ | 23,333 | $ | 22,527 | 3.6 | % |
Hypothetical
|
||||||||||||||
($ in thousands)
|
Estimated Fair
|
Percentage
|
||||||||||||
Value after
|
Increase
|
|||||||||||||
Hypothetical
|
Hypothetical
|
(Decrease) in
|
||||||||||||
Equity Securities
|
Fair Value
|
Price Change
|
Change in Prices
|
Shareholders’ Equity
|
||||||||||
As of January 31, 2013
|
Equity Securities
|
$ | 3,499 | 30% increase | $ | 4,549 | 2.08 | % | ||||||
and ETFs held
|
||||||||||||||
for dividend yield
|
30% decrease
|
$ | 2,449 | -2.08 | % | |||||||||
As of January 31, 2013
|
Inverse ETF
|
$ | 1,653 |
30% increase
|
$ | 1,157 | -0.98 | % | ||||||
Holdings
|
30% decrease
|
$ | 2,149 | 0.98 | % | |||||||||
As of January 31, 2013
|
Total
|
$ | 5,152 |
30% increase
|
$ | 5,706 | 1.10 | % | ||||||
30% decrease
|
$ | 4,598 | -1.10 | % |
Hypothetical
|
||||||||||||||
($ in thousands)
|
Estimated Fair
|
Percentage
|
||||||||||||
Value after
|
Increase
|
|||||||||||||
Hypothetical
|
Hypothetical
|
(Decrease) in
|
||||||||||||
Equity Securities
|
Fair Value
|
Price Change
|
Change in Prices
|
Shareholders’ Equity
|
||||||||||
As of April 30, 2012
|
Equity Securities
|
$ | 2,565 |
30% increase
|
$ | 3,334 | 1.54 | % | ||||||
and ETFs held
|
||||||||||||||
for dividend yield
|
30% decrease
|
$ | 1,796 | -1.54 | % | |||||||||
As of April 30, 2012
|
Inverse ETF
|
$ | 1,316 |
30% increase
|
$ | 921 | -0.79 | % | ||||||
Holdings
|
30% decrease
|
$ | 1,710 | 0.79 | % | |||||||||
As of April 30, 2012
|
Total
|
$ | 3,881 |
30% increase
|
$ | 4,255 | 0.75 | % | ||||||
30% decrease
|
$ | 3,506 | -0.75 | % |
|
(a)
|
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding disclosure.
|
|
(b)
|
The registrant’s Principal Executive Officer and Principal Financial Officer have determined that there have been no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
ISSUER PURCHASES OF EQUITY SECURITIES
|
||||||||||||||||
( in thousands except for shares and cost per share)
|
(a) Total Number of
Shares (or Units) Purchased |
(b) Average Price Paid
per Share (or Unit) |
(c) Total Number
of Shares (or Units) Purchased
as Part of Publicly
Announced Plans or Programs |
(d) Maximum Number (or
Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
||||||||||||
November 1 - 30, 2012
|
8,149 | $ | 9.06 | 8,149 | $ | 2,896,000 | ||||||||||
December 1 - 31, 2012
|
4,741 | 9.19 | 4,741 | $ | 2,853,000 | |||||||||||
Total
|
12,890 | $ | 9.11 | 12,890 |
10.1
|
Agreement of Sublease, dated as of February 7, 2013, for the Company’s premises at 485 Lexington Ave., New York, NY.*
|
10.2
|
Fourth Lease Modification Agreement, dated as of February 7, 2013.*
|
31.1
|
Certificate of Principal Executive Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certificate of Principal Financial Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Joint Principal Executive Officer/Principal Financial Officer Certificate Required Under Section 906 of the Sarbanes-Oxley Act of 2002.
|
Date: March 12, 2013 | By: /s/Howard A. Brecher | ||
Howard A. Brecher | |||
Chief Executive Officer | |||
(Principal Executive Officer) | |||
Date: March 12, 2013 | By: /s/Stephen R. Anastasio | ||
Stephen R. Anastasio | |||
Vice President & Treasurer | |||
(Principal Financial Officer) |
AGREEMENT OF SUBLEASE
between
Citibank N.A., Sublandlord
and
Value Line, Inc., Subtenant
Premises
:
9
th
Floor
485 Lexington Avenue
New York, New York
Dated:
As of February 7, 2013
|
SUBLANDLORD:
CITIBANK, N.A.
|
|||
|
By:
|
/s/ Stephen P. Snell | |
Name: Stephen P. Snell | |||
Title: Vice President |
SUBTENANT:
VALUE LINE, INC.
|
|||
|
By:
|
/s/ Howard A. Brecher | |
Name: Howard A. Brecher | |||
Title: President |
Sublandlord
CITIBANK, N.A.
|
Subtenant
VALUE LINE, INC.
|
||||||||
By:
|
|
By:
|
|
||||||
Name:
|
Name:
|
||||||||
Title:
|
Title:
|
|
Re:
|
(i) That certain Lease Agreement (the “
Original Lease
”) dated as of October 12, 2005, between Green 485 Owner LLC, 485 EAT Owner LLC and Green 485 TIC LLC, as Tenants in Common, successor in interest to 485 Lexington Owner, LLC, as landlord (“
Landlord
”), and Citibank, N.A., as tenant (“
Tenant
”), covering the entire ninth (9
th
), tenth (10
th
), eleventh (11
th
), twelfth (12
th
), fourteenth (14
th
), fifteenth (15
th
), sixteenth (16
th
) and seventeenth (17
th
) floors and portions of the Ground Floor and Basement (the “
Original Premises
”) in the building known as 485 Lexington Avenue, New York, New York (the “
Building
”), as amended by that certain: (i) First Amendment to Lease dated as of March 1, 2006 whereby Tenant added Additional Basement Space containing 370 rentable square feet to the Original Premises (the “
Additional Space
”) and (ii) First Amendment to Lease and Stairwell License Agreement dated as of August 6, 2007 granting Tenant the right to use certain fire stairs serving the premises (said lease agreement as so modified, is hereinafter referred to as the “
Lease
” and the premises demised thereunder, i.e., the Original Premises and the Additional Space, are collectively hereinafter referred to as the “
Premises
”); and
(ii) Sublease (the “
Sublease
”) dated as of February 7, 2013, between
Tenant, as sublandlord and Value Line, Inc., as subtenant, (“
Subtenant
”)
covering a certain portion of the Premises.
|
Very truly yours,
S.L. Green Management Corp., as Agent for Landlord
|
|||
|
By:
|
/s/ Steven Durels | |
Name: Steven Durels | |||
Title: Executive Vice President |
By:
|
/s/ Stephen P. Snell | |
Name: Stephen P. Snell | ||
Title: Vice President |
By:
|
/s/ Howard A. Brecher | |
Name: Howard A. Brecher | ||
Title: President |
SLG 220 NEWS OWNER LLC, as Landlord
|
|||
|
|||
|
By:
|
/s/ Steven Durels | |
Name: Steven Durels
|
|||
Title: Executive Vice President
|
|||
Witness:
|
|||
/s/ Larry Swiger
|
|||
Name: Larry Swiger
|
|||
Title: Senior Vice President
|
|||
VALUE LINE, INC., as Tenant
|
|||
By:
|
/s/ Howard A. Brecher | ||
Name: Howard A. Brecher | |||
Title: President | |||
Witness:
|
|||
/s/ Lena Kempe
|
|||
Name: Lena Kempe
|
|||
Title: Secretary
|
Exhibit 31.1 |
|
1.
|
I have reviewed this report on Form 10-Q of Value Line, Inc. for the quarter ended January 31, 2013;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 12, 2013
|
By:
|
/s/Howard A. Brecher | |
Howard A. Brecher | |||
Chairman and Chief Executive Officer | |||
(Principal Executive Officer) |
Exhibit 31.2 |
1.
|
I have reviewed this report on Form 10-Q of Value Line, Inc. for the quarter ended January 31, 2013;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 12, 2013
|
By:
|
/s/Stephen R. Anastasio | |
Stephen R. Anastasio | |||
Vice President & Treasurer | |||
(Principal Financial Officer) |
Exhibit 32.1 |
Date: March 12, 2013
|
By:
|
/s/ Howard A. Brecher | |
Howard A. Brecher | |||
Chairman and Chief Executive Officer | |||
(Principal Executive Officer) |
Date: March 12, 2013
|
By:
|
/s/Stephen R. Anastasio | |
Stephen R. Anastasio | |||
Vice President & Treasurer | |||
(Principal Financial Officer) |