SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended OctoberJanuary 31, 20052006
Commission file number 0-113060-11306

VALUE LINE, INC.
(Exact name of registrant as specified in its charter)

New York13-3139843
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)


220 East 42nd Street, New York, New York10017-5891
(address of principal executive offices)(zip code)


Registrant's telephone number including area code (212) 907-1500

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer (as definedor a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act). YesAct. (Check one):
Large accelerated filer o NoAccelerated filer o Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


Class
Outstanding at OctoberJanuary 31, 20052006
Common stock, $.10 par value
9,981,600 Shares



Part I - Financial Information
Item 1. Financial Statements
Value Line, Inc.
Consolidated Condensed Balance Sheets
(in thousands, except share amounts)
(unaudited)
Part I - Financial Information 
Item 1. Financial Statements 
Value Line, Inc.
 
Consolidated Balance Sheets
 
(in thousands, except share amounts)
 
(unaudited)
 
      
  
Jan. 31,
 
 Apr. 30,
 
  
 2006
 
 2005
 
  
(unaudited)
    
        
Assets       
Current Assets:       
Cash and cash equivalents (including short term       
investments of $9,828 and $5,654, respectively) $10,674 $5,971 
Trading securities  22,407  0 
Securities available for sale  64,244  76,274 
Accounts receivable, net of allowance for doubtful       
accounts of $74 and $52, respectively  2,597  3,096 
Receivable from affiliates  2,834  2,557 
Prepaid expenses and other current assets  1,469  1,468 
Deferred income taxes  32  32 
        
Total current assets  104,257  89,398 
        
Long term assets       
Property and equipment, net  5,549  5,984 
Capitalized software and other intangible assets, net  2,486  3,483 
        
Total long term assets  8,035  9,467 
        
Total assets $112,292 $98,865 
        
Liabilities and Shareholders' Equity       
Current Liabilities:       
Accounts payable and accrued liabilities $4,974 $4,331 
Accrued salaries  1,335  1,247 
Dividends payable  2,495  2,495 
Unearned revenue  30,418  29,748 
Deferred income taxes  7,952  6,176 
        
Total current liabilities  47,174  43,997 
        
Long term liabilities       
Unearned revenue  7,054  10,344 
Deferred charges  381  381 
        
Total long term liabilities  7,435  10,725 
        
Shareholders' Equity:       
Common stock, $.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  41,040  30,798 
Treasury stock, at cost (18,400 shares on 1/31/06       
and 4/30/05)  (354) (354)
Accumulated other comprehensive income, net of tax  15,006  11,708 
        
Total shareholders' equity  57,683  44,143 
        
Total liabilities and shareholders' equity $112,292 $98,865 
 
  
Oct. 31,
 
Apr. 30,
 
  
2005
 
2005
 
  
(unaudited)
   
Assets     
Current Assets:     
Cash and cash equivalents (including short term     
investments of $9,756 and $5,654, respectively) $9,970 $5,971 
Securities available for sale  78,426  76,274 
Accounts receivable, net of allowance for doubtful       
accounts of $66 and $52, respectively  2,163  3,096 
Receivable from affiliates  2,903  2,557 
Prepaid expenses and other current assets  1,201  1,468 
Deferred income taxes  520  32 
Total current assets  95,183  89,398 
        
Long term assets       
Property and equipment, net  5,673  5,984 
Capitalized software and other intangible assets, net  2,814  3,483 
Total long term assets  8,487  9,467 
Total assets $103,670 $98,865 
        
Liabilities and Shareholders' Equity       
Current Liabilities:       
Accounts payable and accrued liabilities $3,287 $4,331 
Accrued salaries  1,281  1,247 
Dividends payable  2,495  2,495 
Unearned revenue  29,317  29,748 
Deferred income taxes  7,417  6,176 
Total current liabilities  43,797  43,997 
        
Long term liabilities       
Unearned revenue  6,999  10,344 
Deferred charges  381  381 
Total long term liabilities  7,380  10,725 
        
Shareholders' Equity:       
Common stock, $.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  36,841  30,798 
Treasury stock, at cost (18,400 shares on 10/31/05       
and 4/30/05)  (354) (354)
Accumulated other comprehensive income, net of tax  14,015  11,708 
Total shareholders' equity  52,493  44,143 
Total liabilities and shareholders' equity $103,670 $98,865 
        
        
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
 
2

Part I - Financial Information
Item 1. Financial Statements
Value Line, Inc.
Consolidated Condensed Statements of Income
(in thousands, except per share amounts)
(unaudited)
Part I - Financial Information
 
Item 1. Financial Statements
 
          
Value Line, Inc.
 
Consolidated Condensed Statements of Income
 
(in thousands, except per share amounts)
 
(unaudited)
 
          
  Three months ended Nine months ended 
  Jan. 31, Jan. 31, 
  2006 2005 2006 2005 
          
Revenues:         
Investment periodicals and         
related publications $11,890 $12,525 $35,963 $37,556 
Licensing fees  1,442  648  3,335  1,716 
Investment management fees & svcs  8,250  7,885  24,160  24,088 
              
Total revenues  21,582  21,058  63,458  63,360 
              
Expenses:             
Advertising and promotion  3,826  5,455  9,902  16,245 
Salaries and employee benefits  4,747  4,812  14,605  15,337 
Production and distribution  1,712  2,106  5,314  6,615 
Office and administration  3,260  2,248  7,967  6,613 
              
Total expenses  13,545  14,621  37,788  44,810 
              
Income from operations  8,037  6,437  25,670  18,550 
Income from securities transactions, net  2,858  1,104  3,571  8,033 
              
Income before income taxes  10,895  7,541  29,241  26,583 
Provision for income taxes  4,201  2,884  11,514  10,187 
              
Net income $6,694 $4,657 $17,727 $16,396 
              
Earnings per share, basic & fully diluted $0.67 $0.46 $1.78 $1.64 
              
Weighted average number of common shares  9,981,600  9,981,600  9,981,600  9,981,600 
          
  Three months ended Six months ended 
  October 31, October 31, 
   2005  2004  2005  2004 
Revenues:             
Investment periodicals and             
related publications $12,906 $12,953 $25,966 $26,099 
Investment management fees & svcs  8,096  7,969  15,910  16,203 
Total revenues  21,002  20,922  41,876  42,302 
              
Expenses:             
Advertising and promotion  3,470  5,424  6,076  10,790 
Salaries and employee benefits  4,695  5,192  9,858  10,525 
Production and distribution  1,827  2,198  3,602  4,509 
Office and administration  2,540  2,240  4,707  4,365 
Total expenses  12,532  15,054  24,243  30,189 
              
Income from operations  8,470  5,868  17,633  12,113 
Income from securities transactions, net  428  3,569  713  6,929 
Income before income taxes  8,898  9,437  18,346  19,042 
Provision for income taxes  3,513  3,639  7,313  7,303 
Net income $5,385 $5,798 $11,033 $11,739 
              
Earnings per share, basic & fully diluted $0.54 $0.58 $1.11 $1.18 
              
              
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
 
3

Part I - Financial Information
Part I - Financial Information
 
Part I - Financial Information
Item 1. Financial Statements
Item 1. Financial Statements
 
Item 1. Financial Statements
 
Value Line, Inc.
Value Line, Inc.
 
Value Line, Inc.
Consolidated Condensed Statements of Cash Flows
Consolidated Condensed Statements of Cash Flows
 
Consolidated Condensed Statements of Cash Flows
(in thousands)
(in thousands)
 
(in thousands)
(unaudited)
(unaudited)
 
(unaudited)
      
 For the six months    For the nine months 
 ended    ended 
 
Oct. 31,
 
Oct. 31,
  
Jan. 31,
 
Jan. 31,
 
 
2005
 
2004
  
2006
 
2005
 
Cash flows from operating activities:
          
Net income $11,033 $11,739  $17,727 $16,396 
              
Adjustments to reconcile net income to net cash              
provided by operating activities:              
Depreciation and amortization  1,119  1,231   1,659  1,800 
Gains on sales of trading securities and              
securities available for sale  —  (6,419)  (2,430) (8,726)
Unrealized losses on trading securities  
—
  (331)  125  1,055 
Deferred income taxes  
—
  116   (44) (369)
              
Changes in assets and liabilities:              
Proceeds from sales of trading securities  
—
  23,638   —  42,205 
Purchases of trading securities  
—
  (16,985)  (4,365) (21,815)
(Decrease) in unearned revenue  (3,776) (3,309)  (2,621) (19)
(Decrease) in deferred charges  (42) (42)  (63) (63)
(Decrease)/increase in accounts payable and accrued expenses  (1,002) 90 
Increase/(decrease) in accounts payable and accrued expenses  706  (143)
Increase/(decrease) in accrued salaries  34  (200)  88  (242)
Decrease in accrued taxes payable  (488) (538)  0  (556)
Decrease in prepaid expenses and other current assets  267  243   43  578 
Decrease/(increase) in accounts receivable  933  (351)  499  (332)
(Increase)/decrease in receivable from affiliates  (346) 283   (277) 90 
       
Total adjustments  (3,301) (2,574)  (6,680) 13,463 
       
Net cash provided by operations
  7,732  9,165   11,047  29,859 
              
Cash flows from investing activities:
              
Purchase of equity securities  (5) 
—
   (2,463) (1,037)
Proceeds from sales of equity securities  
—
  12,672   2,430  12,669 
Proceeds from sales of fixed income securities  9,650  8,019   9,650  9,019 
Purchases of fixed income securities  (8,249) (23,680)  (8,249) (23,680)
Acquisition of property and equipment  (29) (153)  (64) (189)
Expenditures for capitalized software  (110) (383)  (163) (563)
       
Net cash provided by/(used in) investing activities
  1,257  (3,525)  1,141  (3,781)
              
Cash flows from financing activities:
              
Dividends paid  (4,990) (179,667)  (7,485) (182,162)
       
Net cash used in financing activities
  (4,990) (179,667)  (7,485) (182,162)
       
Net increase/(decrease) in cash and cash equivalents  3,999  (174,027)  4,703  (156,084)
Cash and cash equivalents at beginning of year
  5,971  178,108   5,971  178,108 
       
Cash and cash equivalents at end of period
 $9,970 $4,081  $10,674 $22,024 
       
       
The accompanying notes are an integral part of these consolidated financial statements.       
The accompanying notes are an integral part of these consolidated financial statements.
 
4

Part I - Financial Information
Part I - Financial Information
 
Part I - Financial Information
 
Item 1. Financial Statements
Item 1. Financial Statements
 
Item 1. Financial Statements
 
 
VALUE LINE, INC.
VALUE LINE, INC.
 
VALUE LINE, INC.
 
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
 
FOR THE SIX MONTHS ENDED OCTOBER 31, 2005
 
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
 
FOR THE NINE MONTHS ENDED JANUARY 31, 2006
FOR THE NINE MONTHS ENDED JANUARY 31, 2006
 
(in thousands, except share amounts)
(in thousands, except share amounts)
 
(in thousands, except share amounts)
 
(unaudited)
(unaudited)
 
(unaudited)
 
  Common stock             
 Common stock                            Accumulated   
             Accumulated    Number   Additional       Other   
 Number   Additional       Other    of   paid-in Treasury Comprehensive Retained Comprehensive   
 of Par paid-in Treasury Comprehensive Retained Comprehensive    shares Amount capital Stock income earnings income Total 
 shares 
Value
 capital Stock income earnings income Total                  
Balance at April 30, 2005  9,981,600 $1,000 $991  ($354)   $30,798 $11,708 $44,143   9,981,600 $1,000 $991 ($354)   $30,798 $11,708 $44,143 
                                           
Comprehensive income                                           
Net income             $11,033  11,033     11,033           $17,727 17,727   17,727 
Other comprehensive income,                                           
net of tax:                                           
Change in unrealized                                           
gains on securities, net of taxes              2,307     2,307  2,307 
gains on securities,                  
net of taxes           3,298   3,298 3,298 
Comprehensive income             $13,340                    $21,025       
Dividends declared                 (4,990)    (4,990)             (7,485)   (7,485)
Balance at October 31, 2005  9,981,600 $1,000 $991  ($354)   $36,841 $14,015 $52,493 
                         
                         
The accompanying notes are an integral part of these consolidated financial statements.
Balance at January 31, 2006  9,981,600 $1,000 $991 ($354)   $41,040 $15,006 $57,683 
The accompanying notes are an integral part of these consolidated financial statements.
 
5

Part I - Financial Information
Part I - Financial Information
 
Part I - Financial Information
 
Item 1. Financial Statements
Item 1. Financial Statements
 
Item 1. Financial Statements
 
 
VALUE LINE, INC.
VALUE LINE, INC.
 
VALUE LINE, INC.
 
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
 
FOR THE SIX MONTHS ENDED OCTOBER 31, 2004
 
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
 
FOR THE NINE MONTHS ENDED JANUARY 31, 2005
FOR THE NINE MONTHS ENDED JANUARY 31, 2005
 
(in thousands, except share amounts)
(in thousands, except share amounts)
 
(in thousands, except share amounts)
 
(unaudited)
(unaudited)
 
(unaudited)
 
  Common stock             
 Common stock                            Accumulated   
             Accumulated    Number   Additional       Other   
 Number   Additional       Other    of   paid-in Treasury Comprehensive Retained Comprehensive   
 of Par paid-in Treasury Comprehensive Retained Comprehensive    shares Amount capital Stock income earnings income Total 
 shares Value capital Stock income earnings income Total                  
Balance at April 30, 2004  9,981,600 $1,000 $991  ($354)   $19,459 $14,202 $35,298   9,981,600 $1,000 $991 ($354)   $19,459 $14,202 $35,298 
                                           
Comprehensive income                                           
Net income             $11,739  11,739     11,739           $16,396 16,396   16,396 
Other comprehensive income,                                           
net of tax:                                           
Change in unrealized                                           
gains on securities, net of taxes              (3,022)    (3,022) (3,022)           (1,668)   (1,668) (1,668)
Comprehensive income             $8,717                    $14,728       
Dividends declared                 (4,990)    (4,990)             (7,485)   (7,485)
Balance at October 31, 2004  9,981,600 $1,000 $991  ($354)   $26,208 $11,180 $39,025 
                         
                         
The accompanying notes are an integral part of these consolidated financial statements.
Balance at January 31, 2005  9,981,600 $1,000 $991 ($354)   $28,370 $12,534 $42,541 
The accompanying notes are an integral part of these consolidated financial statements.
 
6

VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
        
Significant Accounting Policies - Note 1:
        
In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of normal recurring accruals except as noted below) considered necessary for a fair presentation. This report should be read in conjunction with the financial statements and footnotes contained in the Company's annual report on Form 10-K, dated July 29, 2005 and Form 10-K Amended, dated August 26, 2005 for the fiscal year ended April 30, 2005. Results of operations covered by this report may not be indicative of the results of operations for the entire year.
 
Value Line, Inc. (the "Company") is incorporated in New York State and carries on the investment periodicals and related publications and investment management activities formerly performed by Arnold Bernhard & Co., Inc. (the "Parent") which owns approximately 86% of the issued and outstanding common stock of the Company.
        
Principles of Consolidation:
The consolidated condensed financial statements include the accounts of the Company and all of its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
        
Revenue Recognition:
Subscription revenues are recognized ratably over the terms of the subscriptions. Accordingly, the amount of subscription fees to be earned by servicing subscriptions after the date of the balance sheet is shown as unearned revenue.
 
Investment management fees (except 12b-1 fees) are recorded as the related services are performed (see note 6). Service and distribution fees collected under rule 12b-1are12b-1 are recorded in the Consolidated Condensed Statements of Income based upon the average daily net asset values of the respective Value Line mutual funds.
        
Valuation of Securities:
The Company's securities classified as available for sale consist of shares of the Value Line Mutual Funds and government debt securities accounted for in accordance with Statement of Financial Accounting Standards No.115, "Accounting for Certain Investments in Debt and Equity Securities". The securities are valued at market with unrealized gains and losses on these securities reported, net of applicable taxes, as a separate component of Shareholders' Equity. Realized gains and losses on sales of the securities available for sale are recorded in earnings on trade date and are determined on the identified cost method.
 
The Company classifies its securities available for sale as current assets. It does so to properly reflect its liquidity and to recognize the fact that it has assets available for sale to fully satisfy its current liabilities should the need arise.
        
Trading securities held by the Company are valued at market with unrealized gains and losses included in earnings.
 
Market valuation of securities listed on a securities exchange and over-the-counter securities traded on the NASDAQ national market is based on the closing sales prices on the last business day of each month. In the absence of closing sales prices for such securities, and for other securities traded in the over-the-counter market, the security is valued at the midpoint between the latest available and representative asked and bid prices.
        
Valuation of open-ended mutual fund shares are based upon the daily net asset values of the shares as calculated by such funds.
        
The market valueMarket valuation of the Company's fixed maturity government debt obligations are valued utilizing quoted prices at the end of each day provided by an outsidea third party pricing service.
        
Advertising Expenses:
The Company expenses advertising costs as incurred.
 
7
7
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Reclassification:
Certain items in the prior year financial statements have been reclassified to conform to the current year presentation.
        
Income Taxes:
The Company computes its income tax provision in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been reflected in the Consolidated Condensed Financial Statements. Deferred tax liabilities and assets are determined based on the differences between the book values and the tax bases of particular assets and liabilities, using tax rates currently in effect for the years in which the differences are expected to reverse. Deferred state and local taxes on securities classified as available for sale are not significant and have not been provided for in the Consolidated Condensed Balance Sheets.
        
Earnings per Share, basic & fully diluted:
Earnings per share are based on the weighted average number of shares of common stock and common stock equivalents outstanding during each year.
        
Cash and Cash Equivalents:
For purposes of the Consolidated Condensed Statements of Cash Flows, the Company considers all cash held at banks and short term liquid investments with an original maturity of less than three months to be cash and cash equivalents. As of OctoberJanuary 31, 20052006 and April 30, 2005, cash equivalents included $9,712,000$9,784,000 and $5,546,000 respectively, invested in the Value Line money market funds.
        
Use of Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
        
Marketable Securities - Note 2:
        
Trading Securities:
Securities held by the Company had an aggregate cost of $22,403,000 and a fair market value $22,407,000 at January 31, 2006. There were no trading securities held at October 31, 2005 or April 30, 2005. There were no sales of trading securities in fiscal 2006. The proceeds from sales of trading securities, during the sixnine months ended OctoberJanuary 31, 2004,2005, were $23,638,000$42,205,000 and the related gains on these sales were $247,000. The net increase in unrealized$2,425,000. Unrealized gains on the trading securities portfolio of $330,000$4,000 and unrealized losses of $1,055,000 for the sixnine months ended OctoberJanuary 31, 2004 was2006 and 2005, respectively, were included in the Consolidated Condensed Statements of Income.
        
Securities Available for Sale:
Equity Securities:
The aggregate cost of the equity securities classified as available for sale, which are invested in the Value Line mutual funds, was $19,172,000$21,632,000 and the market value was $41,063,000$44,916,000 at OctoberJanuary 31, 2005.2006. The aggregate cost of the equity securities classified as available for sale at April 30, 2005 was $19,169,000 and the market value was $37,209,000. The total gains for equity securities with net gains included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheet were $21,890,000$23,284,000 and $18,157,000, net of deferred federal income taxes of $7,661,000$8,149,000 and $6,355,000, as of OctoberJanuary 31, 20052006 and April 30, 2005, respectively. Losses on equity securities included in Accumulated Other Comprehensive Income at April 30, 2005 were $117,000, net of deferred federal income taxes of $41,000. The net increase in gross unrealized holding gains on these securities of $3,849,000$5,244,000 and the decrease of $4,561,000,$2,503,000, net of deferred federal income taxes of $1,347,000$1,835,000 and $1,628,000,$875,000, were included in Shareholders' Equity at OctoberJanuary 31, 2006 and 2005, and 2004, respectively.
8
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
There were no sales of equity securities during the first six months of fiscal 2006. Realized capital gains from the sales of equity securities classified as available for sale during the sixnine months ended OctoberJanuary 31, 20042006 and January 31, 2005 were $6,172,000$2,430,000 and $6,301,000, of which $5,738,000$2,355,000 and $5,861,000, respectively, were reclassified out of Accumulated Other Comprehensive Income into earnings. The proceeds received from the sales of these securities during the sixnine months ended OctoberJanuary 31, 20042006 and January 31, 2005 were $12,672,000.
8
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
$2,430,000 and $12,669,000, respectively. Proceeds and capital gains included $75,000 and $433,000 from an installment sale of an investment in a privately held Company, in fiscal 2006 and 2005, respectively.
 
Government Debt Securities:
The Company's investments in debt securities are available for sale and valued at market value. The aggregate cost and market value at OctoberJanuary 31, 2006 for U.S. Government debt securities classified as available for sale were as follows:
    (In Thousands)   
  Historical Market Gross Unrealized 
Maturity Cost Value Holding Losses 
Due in less than 2 years $15,103 $14,974  ($129)
Due in 2-5 years  4,420  4,354  (66)
Total investment in debt securities $19,523 $19,328  ($195)
The aggregate cost and market value at April 30, 2005 for U.S. Government debt securities classified as available for sale were as follows:

   (In Thousands)      (In Thousands)   
 Historical Market Gross Unrealized  Historical Market Gross Unrealized 
Maturity Cost Value Holding Losses  Cost Value Holding Losses 
Due in less than 2 years $29,929 $29,748  ($181) $34,506 $34,481  ($25)
Due in 2-5 years  7,762  7,615  (147)  4,587  4,584  (3)
Total investment in debt securities $37,691 $37,363  ($328) $39,093 $39,065  ($28)
 
The aggregate cost and market value at April 30, 2005 for U.S. Government debt securities classified as available for sale were as follows: 
    (In Thousands)   
  Historical Market Gross Unrealized 
Maturity Cost Value Holding Losses 
Due in less than 2 years $34,506 $34,481  ($25)
Due in 2-5 years  4,587  4,584  (3)
Total investment in debt securities $39,093 $39,065  ($28)
There are no gains on U.S. Government debt securities included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheets as of October 31, 2005 and April 30, 2005. The unrealized losses of $328,000$195,000 and $28,000 on U.S. government debt securities net of deferred federal income taxes of $115,000$66,000 and $10,000, respectively, were included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheets as of OctoberJanuary 31, 20052006 and April 30, 2005.
During the third quarter of fiscal 2006, the Company reclassified $18,038,000 of US Government debt securities from the classification of available for sale to trading securities that resulted in the recognition and reclassification of an unrealized loss of $129,000 from Accumulated Other Comprehensive Income to the Consolidated Condensed Statement of Income.
        
The average yield on the U.S. Government debt securities classified as available for sale at OctoberJanuary 31, 2006 and 2005 and 2004 was 2.55%1.85% and 1.31%, respectively.
        
Proceeds from sales of government debt securities classified as available for sale were $9,650,000 and $5,019,000$9,019,000 during the first sixnine months of fiscal year 2006 and 2005, respectively. There were no related gains or losses.
        
For the sixnine months ended OctoberJanuary 31, 2005,2006, and 2004,2005, income from securities transactions, net also included $177,000$358,000 and $78,000$161,000 of dividend income; $551,000$957,000 and $96,000$199,000 of interest income; and $11,000 and $7,000 of related interest expense, respectively.
9
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Supplemental Disclosure of Cash Flow Information - Note 3:
        
Cash payments for income taxes were $7,649,000$11,406,000 and $7,960,000$11,111,000 during the sixnine months ended OctoberJanuary 31, 2006 and 2005, and 2004, respectively.
9
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
Employees' Profit Sharing and Savings Plan - Note 4:
        
Substantially all employees of the Company and its subsidiaries are members of the Value Line, Inc. Profit Sharing and Savings Plan (the "Plan"). In general, this is a qualified, contributory plan which provides for a discretionary annual Company contribution which is determined by a formula based upon the salaries of eligible employees and the amount of consolidated net operating income as defined in the Plan. The estimated profit sharing plan contribution, which is included as an expense in salaries and employee benefits in the Consolidated Condensed Statement of Income, was $586,000$911,000 and $600,000$797,000 for the sixnine months ended OctoberJanuary 31, 20052006 and 2004,2005, respectively.
        
Comprehensive Income - Note 5:
        
Statement of Financial Accounting Standards no. 130 requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.
        
At OctoberJanuary 31, 20052006 and April 30, 2005 the Company held both equity securities and U.S. Government debt securities that are classified as Available for Sale on the Consolidated Condensed Balance Sheets. The change in valuation of these securities, net of deferred federal income taxes, has been recorded in Accumulated Other Comprehensive Income in the Company's Consolidated Condensed Balance Sheets.
The components of comprehensive income that are included in the Statement of Changes in Shareholders' Equity are as follows: 
    
    (In Thousands)   
Six months ended 10-31-05 
Before Tax
Amount
 
Tax (Expense)
or Benefit
 
Net of Tax
Amount
 
Unrealized Gains on Securities:
       
Unrealized Holding Gains/(Losses) arising during the period $3,798  ($1,329)$2,469 
Less: Reclassification adjustments for gains realized in net income  0  0  0 
Other Comprehensive income $3,798  ($1,329)$2,469 
        
Six months ended 10-31-04       
Unrealized Gains on Securities:
       
Unrealized Holding Gains/(Losses) arising during the period $1,089  ($381)$708 
Less: Reclassification adjustments for gains realized in net income  (5,738) 2,008  (3,730)
Other Comprehensive income  ($4,649)$1,627  ($3,022)
10
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Related Party Transactions - Note 6:
        
The components of comprehensive income that are included in the Statement of Changes in Shareholders' Equity are as follows:
        
    (In Thousands)   
Nine months ended 1-31-06 
Before Tax
Amount
 
Tax (Expense)
or Benefit
 
Net of
Tax Amount
 
Unrealized Gains on Securities:
       
Unrealized Holding Gains/(Losses) arising during the period $7,303  ($2,563)$4,740 
Add: Reclassification adjustments for losses realized in net income  129  (45) 84 
Less: Reclassification adjustments for gains realized in net income  (2,355) 829  (1,526)
Other Comprehensive income $5,077  ($1,779)$3,298 
Nine months ended 1-31-05       
Unrealized Gains on Securities:
       
Unrealized Holding Gains/(Losses) arising during the period $3,296  ($1,166)$2,130 
Less: Reclassification adjustments for gains realized in net income  (5,861) 2,063  (3,798)
Other Comprehensive income  ($2,565)$897  ($1,668)
10
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Related Party Transactions - Note 6:
The Company acts as investment adviser and manager for fourteen open-ended investment companies, the Value Line Family of Funds. The Company earns investment management fees based upon the average daily net asset values of the respective Value Line mutual funds. In addition, effective July 1, 2000, certaintwelve of the fourteen Value Line Mutual Funds adopted a service and distribution plan under rule 12b-1 of the Investment Company Act of 1940 for twelve of the fourteen mutual funds for which Value Line is the adviser.1940. Effective September 18, 2002, the remaining two funds for which Value Line is the adviser adopted a service and distribution plan under rule 12b-1 of the Investment Company Act of 1940. Further, the Company earned brokerage commission income on securities transactions executed by Value Line Securities, Inc. (VLS) on behalf of the funds that cleared on a fully disclosed basis through non-affiliated brokers, who received a portion of the gross commission. Pending a review of effecting trades for the Value Line Funds, VLS in November 2004 suspended effectuation of trades through VLS for any of the Value Line Funds.
 
For the sixnine months ended OctoberJanuary 31, 20052006 investment management fees and 12b-1 service and distribution fees amounted to $15,403,000.$23,362,000, which includes fee waivers for certain of the Value Line Mutual Funds. For the sixnine months ended OctoberJanuary 31, 2004,2005, investment management fees, 12b-1 service and distribution fees and brokerage commission income amounted to $15,291,000.$23,164,000. The amounts for service and distribution fees during the sixnine months ended OctoberJanuary 31, 2006 and 2005 were $7,498,000 and 2004 were $4,995,000 and $4,744,000,$7,214,000, respectively. The related receivables from the funds for management advisory fees and 12b-1 service fees included in Receivable from affiliates on the Consolidated Condensed Balance Sheet were $2,577,000$2,721,000 and $2,406,000 at OctoberJanuary 31, 20052006 and April 30, 2005, respectively.
 
For the sixnine months ended OctoberJanuary 31, 20052006 and 2004,2005, the Company was reimbursed $345,000$700,000 and $275,000,$387,000, respectively, for payments it made on behalf of and services it provided to Arnold Bernhard and Company, Inc. ("Parent"). At OctoberJanuary 31, 20052006 and April 30, 2005, Receivable from affiliates on the Consolidated Condensed Balance Sheet also were included a receivable from the Parent of $218,000$83,000 and $107,000, respectively.
 
From time to time, the Parent has purchased additional shares of Value Line, Inc. in the market when and as the Parent has determined it to be appropriate. As stated several times in the past, the public is reminded that the Parent may make additional purchases from time to time in the future.
        
Federal, State and Local Income Taxes - Note 7:
        
The Company computes its tax in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes".
 
The provision for income taxes includes the following:
    
  Nine months ended January 31, 
  2006 2005 
  (in thousands) 
Current:
     
Federal $9,492 $9,051 
State and local  2,210  1,522 
  $11,702 $10,573 
Deferred:
       
Federal  ($271) ($371)
State and local  83  (15)
   ($188) ($386)
        
Total: $11,514 $10,187 
 
    
  Six months ended October 31, 
  2005 2004 
  (in thousands) 
Current:
     
Federal $5,949 $6,144 
State and local  1,550  1,043 
  $7,499 $7,187 
Deferred:
     
Federal  ($154)$118 
State and local  (32) (2)
   ($186)$116 
         
Total: $7,313 $7,303 
11
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
Deferred income taxes are provided for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. The tax effect of temporary differences giving rise to the Company's deferred tax liability are primarily a result of unrealized gains on the Company's available for sale securities portfolios.
11
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
Business Segments - Note 8:
        
The Company operates two reportable business segments: Publishing and Investment Management Services. The publishing segment produces investment related periodicals in both print and electronic form.form, and licensing fees. The investment management segment provides advisory services to the Value Line family of mutual funds, as well as institutional and individual clients. The segments are differentiated by the products and services they offer.
 
The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company allocates all revenues and expenses, except for depreciation and income from securities transactions related to corporate assets, between the two reportable segments.
Disclosure of Reportable Segment Profit and Segment Assets (in thousands)
 
    
  Nine months ended January 31, 2006 
  Publishing 
Investment Management
Services
 Total 
        
Revenues from external customers $39,298 $24,160 $63,458 
Intersegment revenues  64  0  64 
Income from securities transactions, net  124  327  451 
Depreciation and amortization  1,581  66  1,647 
Segment operating profit  13,408  12,274  25,682 
Segment assets  17,490  73,937  91,427 
Expenditures for segment assets  227  0  227 
Disclosure of Reportable Segment Profit and Segment Assets (in thousands)
        
   Six months ended October 31, 2005  Nine months ended January 31, 2005 
   Publishing 
Investment
Management
Services
 Total  Publishing 
Investment Management
Services
 Total 
                
Revenues from external customersRevenues from external customers$25,966 $15,910 $41,876  $39,272 $24,088 $63,360 
Intersegment revenuesIntersegment revenues 43  0  43   167  0  167 
Income from securities transactions, netIncome from securities transactions, net 26  78  104   2  8,031  8,033 
Depreciation and amortizationDepreciation and amortization 1,064  47  1,111   1,717  71  1,788 
Segment operating profitSegment operating profit 11,915  5,726  17,641   10,466  8,096  18,562 
Segment assetsSegment assets 13,692  51,756  65,448   16,140  60,910  77,050 
Expenditures for segment assetsExpenditures for segment assets 139  0  139   613  139  752 
      
     Six months ended October 31, 2004 
   Publishing 
Investment
Management
Services
 Total 
         
Revenues from external customers$26,099 $15,939 $42,038 
Intersegment revenues 97  0  97 
Income from securities transactions, net 7  6,922  6,929 
Depreciation and amortization 1,180  43  1,223 
Segment operating profit 7,019  5,102  12,121 
Segment assets 13,726  53,900  67,626 
Expenditures for segment assets 406  130  536 
 
12
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
VALUE LINE, INC.
Reconciliation of Reportable Segment Revenues,
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Operating Profit and Assets (in thousands)

Reconciliation of Reportable Segment Revenues,
Operating Profit and Assets (in thousands)
    
  Six months ended October 31, 
  2005 2004 
Revenues     
Total revenues for reportable segments $41,919 $42,135 
Elimination of intersegment revenues  (43) (97)
Total consolidated revenues $41,876 $42,038 
      
Segment profit     
Total profit for reportable segments $17,745 $19,050 
Add: Income from securities transactions related to corporate assets  609  0 
Less: Depreciation related to corporate assets  (8) (8)
Income before income taxes $18,346 $19,042 
      
Assets     
Total assets for reportable segments $65,448 $67,626 
Corporate assets  38,222  22,837 
Consolidated total assets $103,670 $90,463 
Revenues      
    
  Nine months ended January 31, 
  2006 2005 
Revenues     
Total revenues for reportable segments $63,522 $63,527 
Elimination of intersegment revenues  (64) (167)
Total consolidated revenues $63,458 $63,360 
        
Segment profit       
Total profit for reportable segments $26,133 $26,595 
Add: Income from securities transactions related to corporate assets  3,120  0 
Less: Depreciation related to corporate assets  (12) (12)
Income before income taxes $29,241 $26,583 
        
Assets       
Total assets for reportable segments $91,427 $77,050 
Corporate assets  20,865  20,654 
Consolidated total assets $112,292 $97,704 
 
Contingencies - Note 9:
      
On September 17, 2003 the Company commenced an action in New York Supreme Court, seeking damages in an unspecified amount, against a small mutual fund company pertaining to a contemplated transaction. The Company was countersued for alleged damages in excess of $5,000,000. The action was settled in November, 2004 without a material adverse effect on the Company. A related entity of the defendant in the New York action brought suit against the Company and certain Directors in Federal Court in Texas in March, 2004 based on the same transaction. On the Company's motion, that action has been transferred from Texas to New York. On March 2, 2006 the Federal Judge in New York granted the Company's motion dismissing three causes of action. The court allowed one cause of action to continue at this time. Although the ultimate outcome of the litigation is subject to the inherent uncertainties of any legal proceeding, based upon Counsel's analysis of the factual and legal issues and the Company's meritorious defenses, it is management's belief that the expected outcome of this matter will not have a material adverse effect on the Company's consolidated results of operations and financial condition.
 
By letter dated June 15, 2005, the staff of the Securities and Exchange Commission requested the Company as part of a preliminary inquiry to provide documents relating to, among other things, trades for the Company's proprietary accounts, and the effectuation and execution of trades through VLS for the Value Line Funds. The Company is cooperating with the preliminary inquiry.

13

Item 2.
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 
Liquidity and Capital Resources

The Company had working capital as of OctoberJanuary 31, 20052006 of $51,386,000$57,083,000 which included cash and short-term securities at market value of $88,396,000.$74,918,000.
 
The Company’s cash flows from operations of $7,732,000$11,047,000 for the sixnine months ended OctoberJanuary 31, 20052006 was 16%63% lower than cash flow of $9,165,000$29,859,000 for the comparable period of the prior fiscal year. The decrease in cash flow from operations was primarily due to the liquidation of the Company’s trading securities portfolio during the prior fiscal year. Exclusive of the net cash flows from the trading securities portfolio activity, cash flows from operations were $5,220,000$5,943,000 higher than the prior fiscal year.year’s. Net cash inflows of $1,257,000$1,141,000 from investing activities during the first sixnine months of fiscal 2006 primarily resulted from proceeds received from sales of callable U.S. Government debt securities. Net cash outflows of $3,525,000$3,781,000 during the first sixnine months of the prior fiscal year resulted from sales of equity securities to partially finance the payment of the Company’s special dividend offset by a redeployment of the net proceeds from sales of trading securities and callable fixed income securities into fixed income, government debt obligations. Cash outflows from financing activities of $4,990,000$7,485,000 during the first sixnine months of fiscal year 2006 represent the payment of the Company’s quarterly dividend of $0.25 per share for each of the first twothree quarters. Cash outflows from financing activities for the same period of fiscal year 2005 of $179,667,000$182,162,000 reflect the Company’s normal quarterly dividends of $.25 per share for botheach of the first and secondthree quarters as well as a special $17.50 dividend paid to all shareholders on May 19, 2004.

Management believes that the Company’s cash and other liquid asset resources used in its business together with the future cash flows from operations will be sufficient to finance current and forecasted operations. Management anticipates no borrowing for fiscal year 2006. 

Operating Results
 
Net income for the sixnine months ended OctoberJanuary 31, 20052006 of $11,033,000$17,727,000 or $1.11$1.78 per share was 6% below$1,331,000 or 8% above net income of $11,739,000$16,396,000 or $1.18$1.64 per share in fiscal 2005. Net income for the secondthird quarter of fiscalended January 31, 2006 of $5,385,000$6,694,000 or $0.67 per share was 7% below$2,037,000 or 44% above net income of $5,798,000 for$4,657,000 or $0.46 per share in the comparable periodthird quarter of fiscal 2005. Operating income of $17,633,000$25,670,000 for the sixnine months ended OctoberJanuary 31, 20052006 was 46%$7,120,000 above operating income of $12,113,000$18,550,000 for the same period of the last fiscal year.year, a 38% increase for the period. Operating income of $8,470,000$8,037,000 for the three months ended OctoberJanuary 31, 20052006 was 44%$1,600,000 or 25% above the operating income of $5,868,000$6,437,000 for the second quartersame period of the last fiscal year. The Company’s income from securities transactions of $3,571,000 was 56% below last year’s for the nine months ended January 31, 2006. For the third quarter of fiscal 2006, income from securities transactions of $2,858,000 was 159% above last fiscal year’s third quarter income (see last paragraph). Shareholders’ equity of $52,493,000$57,683,000 at OctoberJanuary 31, 20052006 was 35%36% higher than shareholders’ equity of $39,025,000$42,541,000 at OctoberJanuary 31, 2004.2005.
 
Subscription revenues of $25,966,000$35,963,000 for the sixnine months ended OctoberJanuary 31, 20052006 were less than 1%4% below revenues for the comparable period of the prior fiscal year. Revenues from allElectronic publications revenues of $8,240,000 were up $168,000 or 2% compared to $8,072,000 for the prior fiscal year. Within electronic publications for the six months ended October 31, 2005revenues are revenues generated by institutional subscribers and retail subscribers. Institutional revenues increased $698,000 or 35%, while revenues from retail subscribers were up 4% while licensing feesdown $530,000 or 9%. Print subscription revenues of $27,723,000 were 77% higherdown $1,761,000 or 6% compared to the same period of fiscal 2005. Revenues from all print products were down 5% compared to$29,484,000 for the last fiscal year. Subscription revenues of $12,906,000 for the second quarter of fiscal 2006 were slightly below revenues of $12,953,000$11,890,000 for the three months ended OctoberJanuary 31, 2004. 2006 were 5% below revenues for the comparable period of the prior fiscal year. Electronic publications revenues of $2,697,000 were down $55,000 or 2% compared to $2,752,000 for the prior fiscal year. Institutional electronic publications revenues increased $26,000 or 3%, while revenues from retail electronic publication subscribers were down $81,000 or 4%. Print subscription revenues of $9,193,000 were down $580,000 or 6% compared to $9,773,000 for the last fiscal year.
14
Licensing fees for the nine months ended January 31, 2006 of $3,335,000 were up $1,619,000 or 94% compared to $1,716,000 for the same period of fiscal 2005. Licensing fees for the third quarter ended January 31, 2006 of $1,442,000 increased $794,000 or 123% from the comparable period of last fiscal year.
Investment management fees and service revenues of $15,910,000$24,160,000 for the sixnine months ended OctoberJanuary 31, 20052006 were 2% belowup $72,000, which is less than 1% above the prior fiscal year’s revenues of $16,203,000, primarily because beginning$24,088,000. Beginning November 2004, Value Line Securities, Inc. suspended its business of effecting trades for any of the Value Line Funds, from which it had earned net commission revenues. The decline in brokerage revenuerevenues was mostly offset by higher investment advisory and 12b-1 fees due tothat resulted primarily from a 9%10% increase in the net assets of the Value Line equity funds. Investment management fees and service revenuesfamily of $8,096,000mutual funds, which includes fee waivers for certain of the second quarter ended OctoberValue Line Mutual Funds. Total mutual funds net assets as of January 31, 20052006 were 2% above revenues of $7,969,000 for the three months ended October 31, 2004.$3,604,391,000.
14
 
Operating expenses for the sixnine months ended OctoberJanuary 31, 20052006 of $24,243,000$37,788,000 were 20%16% below expenses of $30,189,000$44,810,000 for the comparable period of the previous fiscal year. Operating expenses for the secondthird quarter ended OctoberJanuary 31, 20052006 of $12,532,000$13,545,000 were 17%7% below expenses of $15,054,000$14,621,000 for the same period last fiscal year. Total advertising and promotional expenses of $6,076,000$9,902,000 for the nine months ended January 31, 2006 were 44%39% below the prior year’s expenses of $10,790,000.$16,245,000. Advertising and promotional expenses for the third quarter ended January 31, 2006 of $3,826,000 were 30% below expenses of $5,455,000 for the prior year. The decrease in advertising expenses resulted primarily from the reduction in the frequency of marketing campaigns in fiscal 2006 for the Company'sCompany’s investment periodicals. Salaries and employee benefit expenses of $9,858,000$14,605,000 for the third quarter of fiscal 2006 were 6%5% below expenses of $10,525,000 recorded in$15,337,000 for the prior fiscal year primarily as a result of staff consolidations in the Company. Production and distribution costsexpenses for the sixnine months ended OctoberJanuary 31, 20052006 of $3,602,000$5,314,000 were 20% below expenses of $4,509,000 at October 31, 2004.$6,615,000 for the same period of fiscal 2005. Production and distribution expenses for the third quarter of fiscal 2006 of $1,712,000 were 19% below fiscal 2005 expenses. The decline in expenses wasfor the nine months and third quarter were primarily due to lower paper, printing and distribution costs that resulted in part from a decrease in circulation of the print products and the elimination of brokerage execution fees. Office and administrative expenses for the first nine months of $4,707,000fiscal 2006 of $7,967,000 were 8%20% higher than the prior fiscal year’s expenses of $4,365,000.$6,613,000 and expenses of $3,260,000 for the third quarter of fiscal 2006 were 45% higher than the last fiscal year’s expenses. The increase in administrative expenses was primarily due to an increase in professional fees and the additional costs associated with outsourcing certain of the mutual fund administration functions.
 
For the sixnine months ended OctoberJanuary 31, 2005,2006, the Company’s income from securities transactions, net, of $713,000$3,571,000 was 90%56% below securities transactions income of $6,929,000$8,033,000 for the same period of the last fiscal year. Income from securities transactions, net, for the sixnine months ended OctoberJanuary 31, 20052006 included dividend and interest income of $728,000. There$1,315,000. Capital gains during the first nine months of fiscal 2006 were no capital gains or losses$2,310,000, of which $2,355,000 represented distributions during the quarter ended January 31, 2006 from the Value Line Mutual Funds and $75,000 from an installment sale of an investment in a privately held Company. The income from securities transactions for the first nine months of fiscal 2006. This2006 compares to dividend and interest income of $174,000$360,000 and capital gains of $6,750,000 from sales of securities included in the Company’s trading and available for sale portfolios forincluded in the sixnine months ended OctoberJanuary 31, 2004.2005. The first sixnine months of the prior fiscal year included capital gains that resulted from partial sales of the Company’s equity securities in preparation for payment on May 19, 2004 of a special dividend of $17.50 per share to all common shareholders of record as of May 7, 2004 and redeployment of the remaining proceeds in fixed income government obligations. Capital gains for the sixnine months and second quarter of fiscal 2005 also included $433,000 from the initial proceeds from an installment sale of an investment in a privately held Company.
 
15
For the secondthird quarter ended OctoberJanuary 31, 2005,2006, the Company’s income from securities transactions, net, was $428,000, 88% below$2,858,000, 159% above securities transactions income of $3,569,000$1,104,000 for the same period of the last fiscal year. Income from securities transactions, net, for the three months ended OctoberJanuary 31, 20052006 included dividend and interest income of $390,000. There were no$587,000 and capital gains or losses in fiscal 2006.of $2,271,000 of which $2,355,000 represented capital gain distributions from the Value Line Mutual Funds. This compares to dividend and interest income of $109,000$186,000 and capital gains of $3,450,000$918,000 from sales of securities included in the Company’s trading and available for sale portfolios, the proceeds of which were reinvested in fixed income government obligations during the three months ended OctoberJanuary 31, 2004.2005.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This report contains statements (including certain projections and business trends) accompanied by such phrases as “believe”, “estimate”, “expect”, “anticipate”, “will”, “intend” and other similar or negative expressions, that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to the following:

·demand for and market acceptance of the Company’s new and existing products;
·renewals of subscriptions for the Company’s products;
·adaptation of the Company’s products to new technologies;
·fluctuations in the Company’s assets under management due to broadly based changes in the values of equity and debt securities, redemptions by investors and other factors;
·competitive product and pricing pressures;
·the impact of government regulation on the Company’s business and the uncertainties of litigation and regulatory initiatives and inquiries; and
·other risks and uncertainties, including but not limited to those detailed from time to time in our SEC filings.

15
Any forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3.
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market Risk Disclosures
 
Value Line, Inc.’s Consolidated Balance Sheet includes a substantial amount of assets and liabilities whose fair values are subject to market risks. Value Line’s significant market risks are primarily associated with interest rates and equity prices. The following sections address the significant market risks associated with Value Line’s business activities.
 
Interest Rate Risk

Value Line’s management prefers to investLine concentrates its fixed income investments in highly liquid debt securities with extremely low credit risk. Value Line’s strategy is to acquire securities that are attractively priced in relation to the perceived credit risk. Management recognizes and accepts that losses may occur. To limit the price fluctuation in these securities from interest rate changes, Value Line’s management invests primarily in short-term obligations maturing in 1 to 5 years.

The fair values of Value Line’s fixed maturity investments will fluctuate in response to changes in market interest rates. Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values of those instruments. Additionally, fair values of interest rate sensitive instruments may be affected by prepayment options, relative values of alternative investments, and other general market conditions.
16

The following table summarizes the estimated effects of hypothetical increases and decreases in interest rates on assets that are subject to interest rate risk. It is assumed that the changes occur immediately and uniformly to each category of instrument containing interest rate risks. The hypothetical changes in market interest rates do not reflect what could be deemed best or worst case scenarios. Variations in market interest rates could produce significant changes in the timing of repayments due to prepayment options available. For these reasons, actual results might differ from those reflected in the table. Dollars are in thousands.

 Estimated Fair Value After Estimated Fair Value After 
 
Hypothetical Change in Interest Rates
 Hypothetical Change in Interest Rates 
     
  (bp = basis points) (bp = basis points) 
 Fair 50bp 50bp 100bp 100bp  Fair 50bp 50bp 100bp 100bp 
Fixed Income Securities
 
Value
 
increase
 
decrease
 
increase
 
decrease
  Value increase decrease increase decrease 
                      
As of October 31, 2005           
As of January 31, 2006           
Investments in securities with fixed maturities $37,363 $37,254 $37,553 $37,310 $37,603  $41,735 $41,550 $41,890 $41,560 $41,943 
                            
As of April 30, 2005                            
Investments in securities with fixed maturities $39,065 $38,927 $39,253 $38,911 $39,326  $39,065 $38,927 $39,253 $38,911 $39,326 
 
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Equity Price Risk

The carrying values of investments subject to equity price risks are based on quoted market prices or management’s estimates of fair value as of the balance sheet dates. Market prices are subject to fluctuation and, consequently, the amount realized in the subsequent sale of an investment may significantly differ from the reported market value. Fluctuation in the market price of a security may result from perceived changes in the underlying economic characteristics of the issuer, the relative price of alternative investments and general market conditions. Furthermore, amounts realized in the sale of a particular security may be affected by the relative quantity of the security being sold.

Value Line invests a significant level of its assets in equity securities, primarily the Value Line family of equity mutual funds. Each mutual fund invests in a variety of equity positions of various companies thereby diversifying Value Line’s risk. The Company’s objectives include maintenance of a greater weighting in large and mid capitalization companies in its equity portfolio to moderate price risk. Value Line has also utilized derivative financial instruments in the past to minimize market price risk, although no such derivative financial instruments were utilized during fiscal years 2006 and 2005.

The table below summarizes Value Line’s equity price risks as of OctoberJanuary 31, 20052006 and April 30, 2005 and shows the effects of a hypothetical 30% increase and a 30% decrease in market prices as of those dates. The selected hypothetical changes do not reflect what could be considered the best or worst case scenarios. Dollars are in thousands.
 
 Equity Securities
 
Fair Value 
 
Hypothetical
Price Change
 
Estimated
Fair Value after Hypothetical
Change in Prices
 
Hypothetical
Percentage
Increase
(Decrease) in
Shareholders’ Equity
 
              
As of Oct. 31, 2005 $41,063  30% increase $53,382  15.3% 
     30% decrease $28,744  (15.3)% 
            
As of April 30, 2005 $37,209  30% increase $48,372  16.4% 
     30% decrease $26,046  (16.4)% 
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      Estimated Hypothetical 
      Fair Value after Percentage 
     Hypothetical Hypothetical Increase (Decrease) in 
Equity Securities Fair Value Price Change Change in Prices Shareholders’ Equity 
          
As of January 31, 2006 $44,916  30% increase $58,390  15.1%
      30% decrease $31,441  (15.1
)%
              
As of April 30, 2005 $37,209  30% increase $48,372  16.4%
      30% decrease $26,046  (16.4
)%
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Item 4.
Item 4. Disclosure Controls and Procedures

(a)The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Exchange Act Rule 13a - 15(e)), based on their evaluation of these controls and procedures as of the end of the period covered by this report, are appropriately designed to ensure that material information relating to the registrant is made known to such officers and are operating effectively.

(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 has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
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Part II - Other Information
Item 4.Submission of Matters to a Vote of Security Holders
(a)An Annual Meeting of Shareholders of the Registrant was held on October 10, 2005.

(b)The following were elected Directors:
  Votes Cast   
  For Against Withheld 
Jean Bernhard Buttner  8,172,064  0  456,025 
Dr. Edgar A. Buttner  8,169,864  0  458,225 
Samuel Eisenstadt  8,169,864  0  458,225 
Howard A. Brecher  8,155,328  0  472,761 
David T. Henigson  8,155,528  0  472,561 
Dr. Herbert Pardes  8,516,186  0  111,903 
Edward J. Shanahan  8,515,586  0  112,503 
An additional candidate, Harold Bernard, Jr., was not elected. 185,301 votes were cast for him, 8,009,800 votes were cast against him and 432,988 votes were withheld.
Item 5.Other Information
Item 5.02 -
Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers
On December 13, 2005, Marion Ruth was elected a Director of the Registrant by the unanimous written consent of the Board of Directors. Mrs. Ruth was also elected a member of the Audit Committee.
 
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VALUE LINE, INC.

Signatures


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10Q10-Q report for the period ended OctoberJanuary 31, 20052006 to be signed on its behalf by the undersigned thereunto duly authorized.

   
 
Value Line, Inc.
(Registrant)
 
 		 
 		 
 
Date: December 14, 2005March 17, 2006By:  /s/ Jean Bernhard Buttner
 
Jean Bernhard Buttner
 Chairman & Chief Executive Officer

   
Date: December 14, 2005March 17, 2006By:  /s/ Mitchell E. Appel
 
Mitchell E. Appel
 Chief Financial Officer

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