UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q
(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended JanuaryJuly 31, 2009
or

¨oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________________________ to __________________________________

Commission File Number:   0-11306


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

New York13-3139843
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
  
220 East 42nd Street, New York, New York10017-5891
(Address of principal executive offices)(Zip Code)

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

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 has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)”.           Yes o   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨o
Accelerated filer ¨o
Non-accelerated filer x
Smaller reporting company ¨o
  (Do not check if a smaller reporting company)

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
Yes ¨  No x

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

ClassOutstanding at JanuaryAugust 31, 2009
  
Common stock, $.10 par value9,981,600 Shares

 
VALUE LINE INC.
TABLE OF CONTENTS
 
   Page No.
PART I. FINANCIAL INFORMATION 
   
Item 1.
Condensed Consolidated Financial Statements:Statements 
   
 Consolidated Condensed Balance Sheets as of JanuaryJuly 31, 2009 and April 30, 200820093
   
 Consolidated Condensed Statements of Income for the three and nine months ended JanuaryJuly 31, 2009 and 20084
   
  Consolidated Condensed Statements of Cash Flows for the three and nine months ended JanuaryJuly 31, 2009 and 20085
   
 Consolidated Condensed Statement of Changes in Shareholders’ Equity for the ninethree months ended JanuaryJuly 31, 20096
   
 Consolidated Condensed Statement of Changes in Shareholders’ Equity for the ninethree months ended JanuaryJuly 31, 20087
   
  Notes to Consolidated Condensed Financial Statements8
   
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations1415
   
Item 3.Quantitative and Qualitative Disclosures About Market Risk2023
   
Item 4.Controls and Procedures2124
   
PART II. OTHER INFORMATION  
  
Item 1.Legal Proceedings2225
   
Item 1A.Risk Factors2225
   
Item 6.Exhibits2225
   
 Signatures2326
 
EX-31.1 (Certifications required under Section 302 of the Sarbanes-Oxley Act of 2002) 
EX-31.2 (Certifications required under Section 302 of the Sarbanes-Oxley Act of 2002) 
EX-32.1 (Certifications required under Section 906 of the Sarbanes-Oxley Act of 2002) 

 
Part I - Financial Information
Item 1. Financial StatementsValue Line, Inc.
Consolidated Condensed Balance Sheets
(in thousands, except share amounts)

  Jan. 31,  Apr. 30, 
  2009  2008 
  (unaudited)    
Assets      
Current Assets:      
Cash and cash equivalents (including short term investments of $47,755 and $8,159, respectively) $48,699  $8,955 
Trading securities  17,369   19,857 
Securities available for sale  41,714   97,043 
Accounts receivable, net of allowance for doubtful accounts of $47, and $107, respectively  2,609   2,733 
Receivable from affiliates  1,679   2,445 
Prepaid expenses and other current assets  962   1,048 
Deferred income taxes  655   155 
         
Total current assets  113,687   132,236 
         
Long term assets        
Property and equipment, net  4,501   4,709 
Capitalized software and other intangible assets, net  862   1,008 
         
Total long term assets  5,363   5,717 
         
Total assets $119,050  $137,953 
         
Liabilities and Shareholders' Equity        
Current Liabilities:        
Accounts payable and accrued liabilities $4,003  $5,135 
Accrued salaries  1,532   1,471 
Dividends payable  3,993   2,995 
Accrued taxes payable  484   129 
Unearned revenue  23,816   26,610 
Deferred income taxes  0   7,839 
         
Total current liabilities  33,828   44,179 
         
Long term liabilities        
Unearned revenue  5,360   5,920 
         
Total long term liabilities  5,360   5,920 
         
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  78,312   70,954 
Treasury stock, at cost (18,400 shares on 1/31/09 and 4/30/08)  (354)  (354)
Accumulated other comprehensive income (loss), net of tax  (87)  15,263 
         
Total shareholders' equity  79,862   87,854 
         
Total liabilities and shareholders' equity $119,050  $137,953 

The accompanying notes are an integral part of these consolidated condensed financial statements.

3

Part I - Financial Information
Item 1. Financial Statements
Value Line, Inc.
Consolidated Condensed Balance Sheets
(in thousands, except share amounts)

  July 31,  Apr. 30, 
  2009  2009 
  (unaudited)    
       
Assets      
Current Assets:      
Cash and cash equivalents (including short term investments of $52,041 and $42,068, respectively) $52,506  $42,936 
Trading securities  15,902   17,203 
Securities available for sale  38,066   46,526 
Accounts receivable, net of allowance for doubtful accounts of $47 and $47, respectively  2,199   2,353 
Receivable from affiliates  1,564   1,312 
Prepaid expenses and other current assets  884   1,047 
Deferred income taxes  11,942   493 
         
Total current assets  123,063   111,870 
         
Long term assets        
Property and equipment, net  4,443   4,474 
Capitalized software and other intangible assets, net  1,392   1,211 
         
Total long term assets  5,835   5,685 
         
Total assets $128,898  $117,555 
         
Liabilities and Shareholders' Equity        
Current Liabilities:        
Accounts payable and accrued liabilities $2,876  $2,865 
Payable to parent company  163   - 
Accrued salaries  1,352   1,438 
Dividends payable  1,996   2,994 
Accrued taxes payable  -   392 
Reserve for settlement  47,706   - 
Unearned revenue  23,126   23,742 
         
Total current liabilities  77,219   31,431 
         
Long term liabilities        
Unearned revenue  4,366   5,255 
         
Total long term liabilities  4,366   5,255 
         
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  45,359   78,935 
Treasury stock, at cost (18,400 shares on 7/31/09 and 4/30/09)  (354)  (354)
Accumulated other comprehensive income, net of tax  317   297 
         
Total shareholders' equity  47,313   80,869 
         
Total liabilities and shareholders' equity $128,898  $117,555 

The accompanying notes are an integral part of these consolidated condensed financial statements.

3
Part I - Financial Information
Item 1. Financial Statements

Value Line, Inc.
Consolidated Condensed Statements of IncomeIncome/(Loss)
(in thousands, except share & per share amounts)
(unaudited)

 Three months ended  Nine months ended  Three months ended 
 Jan. 31,  Jan. 31,  July 31, 
 2009  2008  2009  2008  2009  2008 
                  
Revenues:                  
Investment periodicals and related publications $10,048  $10,601  $30,341  $32,424  $9,321  $10,337 
Licensing fees  683   2,072   3,603   5,517 
Copyright data fees 767  1,681 
Investment management fees & services  5,125   8,407   20,452   25,050   4,700   8,195 
                        
Total revenues  15,856   21,080   54,396   62,991   14,788   20,213 
                        
Expenses:                        
Advertising and promotion  2,435   3,253   9,004   10,327   2,080   3,241 
Salaries and employee benefits  4,499   4,535   14,165   13,668   4,287   4,857 
Production and distribution  1,445   1,424   4,434   4,698   1,177   1,530 
Office and administration  2,857   2,531   8,442   6,580   2,324   3,120 
Provision for settlement  47,706   - 
                        
Total expenses  11,236   11,743   36,045   35,273   57,574   12,748 
                        
Income from operations  4,620   9,337   18,351   27,718 
Income/(loss) from operations  (42,786)  7,465 
Income from securities transactions, net  927   4,097   11,643   5,683   218   632 
                        
Income before income taxes  5,547   13,434   29,994   33,401 
Provision for income taxes  1,815   4,963   10,658   12,628 
Income/(loss) before income taxes  (42,568)  8,097 
Income tax (benefit)/provision      (10,988)  3,035 
                        
Net income $3,732  $8,471  $19,336  $20,773 
Net income/(loss) $(31,580) $5,062 
                        
Earnings per share, basic & fully diluted $0.38  $0.85  $1.94  $2.08 
Earnings/(loss) per share, basic & fully diluted $(3.16) $0.51 
                        
Weighted average number of common shares  9,981,600   9,981,600   9,981,600   9,981,600   9,981,600   9,981,600 

The accompanying notes are an integral part of these consolidated condensed financial statements.

4

Part I - Financial Information
Item 1. Financial Statements
Item 1. Financial StatementsValue Line, Inc.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)

 For the nine months  For the three months 
 ended  ended 
 Jan. 31,  Jan. 31,  July 31,  July 31, 
 2009  2008  2009  2008 
Cash flows from operating activities:            
Net income $19,336  $20,773 
Net income/(loss) $(31,580) $5,062 
                
Adjustments to reconcile net income to net cash provided by operating activities:        
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:        
Depreciation and amortization  882   1,230   211   375 
Gains on sales of trading securities and securities classified as available for sale
  (9,162)  (2,800)
Unrealized gains on trading securities  (81)  (277)
Amortization of bond premium  314   - 
Losses on sales of trading securities and securities available for sale 81   191 
Unrealized (gains) on trading securities  (20)  (31)
Deferred income taxes  28   (147)  (11,452)  11 
                
Changes in assets and liabilities:                
Proceeds from sales of trading securities  9,026   -   1,164   3,155 
Purchases of trading securities  (6,583)  (3,926)
(Decrease) in unearned revenue  (3,354)  (1,845)
Increase/(decrease) in deferred charges  110   (174)
(Decrease) in accounts payable and accrued expenses  (1,242)  (952)
Increase/(decrease) in accrued salaries  61   (234)
Increase in accrued taxes payable  355   634 
Decrease in unearned revenue  (1,505)  (2,350)
Increase in deferred charges  -   110 
Increase in reserve for settlement  47,706   - 
Increase/(decrease) in accounts payable and accrued expenses  11   (2,007)
Decrease in accrued salaries  (86)  (27)
(Decrease)/increase in accrued taxes payable  (392)  2,634 
Decrease in prepaid expenses and other current assets  58   275   156   58 
Decrease in prepaid and refundable income taxes  -   510 
Decrease in accounts receivable  124   54 
Decrease in receivable from affiliates  766   483 
(Increase)/decrease in accounts receivable  154   (772)
Increase in receivable from affiliates  (89)  (208)
                
Total adjustments  (9,012)  (7,169)  36,253   1,139 
                
Net cash provided by operations  10,324   13,604 
Net cash provided by operating activities  4,673   6,201 
                
Cash flows from investing activities:                
Purchases and sales of securities classified as available for sale:                
Proceeds from sales of fixed income securities  28,603   5,137   26,502   3,165 
Proceeds from sales of equity securities  37,755   2,793 
Purchase of fixed income securities  (25,421)  (10,603)  (18,250)  - 
Purchases of equity securities  (9)  (4,228)  -   (3)
Acquisition of property and equipment  (152)  (251)  (47)  (7)
Expenditures for capitalized software  (376)  (40)  (314)  (16)
                
Net cash provided by/(used in) investing activities  40,400   (7,192)
Net cash provided by investing activities  7,891   3,139 
                
Cash flows from financing activities:                
Dividends paid  (10,980)  (8,984)  (2,994)  (2,995)
                
Net cash used in financing activities  (10,980)  (8,984)  (2,994)  (2,995)
                
Net increase/(decrease) in cash and cash equivalents  39,744   (2,572)
Net increase in cash and cash equivalents  9,570   6,345 
Cash and cash equivalents at beginning of year  8,955   20,605   42,936   8,955 
                
Cash and cash equivalents at end of period $48,699  $18,033  $52,506  $15,300 

The accompanying notes are an integral part of these consolidated condensed financial statements.

5

Part I - Financial Information
Item 1. Financial Statements

Value Line, Inc.
VALUE LINE, INC.Consolidated Condensed Statement of Changes in Shareholders' Equity
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED JANUARYFor the Three Months Ended July 31, 2009
(in thousands, except share amounts)
(unaudited)

  Common stock                   
                    Accumulated    
  Number     Additional           Other    
  of     paid-in  Treasury  Comprehensive  Retained  Comprehensive    
  shares  Amount  capital  Stock  income/(loss)  earnings  income  Total 
                         
Balance at April 30, 2009  9,981,600  $1,000  $991  $(354)    $78,935  $297  $80,869 
                                
Comprehensive income                               
Net (loss)                 $(31,580)  (31,580)      (31,580)
Other comprehensive income, net of tax:
                                
Change in unrealized gains on securities, net of taxes                  20       20   20 
                                 
Comprehensive income/(loss)                 $(31,560)            
                                 
Dividends declared                      (1,996)      (1,996)
                                 
Balance at July 31, 2009  9,981,600  $1,000  $991  $(354)     $45,359  $317  $47,313 

The accompanying notes are an integral part of these consolidated condensed financial statements.

6
Part I - Financial Information
Item 1. Financial Statements
Value Line, Inc.
Consolidated Condensed Statement of Changes in Shareholders' Equity
For the Three Months Ended July 31, 2008
(in thousands, except share amounts)
(unaudited)

 Common stock                   
 Common stock              Accumulated                       Accumulated    
 Number     Additional           Other     Number     Additional           Other    
 of     paid-in  Treasury  Comprehensive  Retained  Comprehensive     of     paid-in  Treasury  Comprehensive  Retained  Comprehensive    
 
shares
  
Amount
  
capital
  
Stock
  
income
  
earnings
  
income
  
Total
  shares  Amount  capital  Stock  income  earnings  income  Total 
                                                
Balance at April 30, 2008  9,981,600  $1,000  $991  $(354)    $70,954  $15,263  $87,854   9,981,600  $1,000  $991  $(354)    $70,954  $15,263  $87,854 
                                                              
Comprehensive income                                                              
Net income                 $19,336   19,336       19,336                  $5,062   5,062       5,062 
Other comprehensive income, net of tax:                                                                
Change in unrealized gains on securities, net of taxes                  (15,350)      (15,350)  (15,350)                   (1,212)       (1,212)   (1,212)
                                
Comprehensive income                 $3,986                              $3,850             
                                                                
Dividends declared                      (11,978)      (11,978)                      (3,993)      (3,993)
                                                                
Balance at January 31, 2009  9,981,600  $1,000  $991  $(354)     $78,312  $(87) $79,862 
Balance at July 31, 2008  9,981,600  $1,000  $991  $(354)     $72,023  $14,051  $87,711 

The accompanying notes are an integral part of these consolidated condensed financial statements.

6

Part I - Financial Information
Item 1. Financial Statements

VALUE LINE, INC.
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED JANUARY 31, 2008
(in thousands, except share amounts)
(unaudited)

  Common stock              Accumulated    
  Number     Additional           Other    
  of     paid-in  Treasury  Comprehensive  Retained  Comprehensive    
  
shares
  
Amount
  
capital
  
Stock
  
income
  
earnings
  
income
  
Total
 
                         
Balance at April 30, 2007  9,981,600  $1,000  $991  $(354)    $57,383  $16,552  $75,572 
                                
Comprehensive income                               
Net income                 $20,773   20,773       20,773 
Other comprehensive income, net of tax:                                
Change in unrealized gains on securities, net of taxes                  (1,892)      (1,892)  (1,892)
Comprehensive income                 $18,881             
                                 
Dividends declared                      (8,984)      (8,984)
                                 
Balance at January 31, 2008  9,981,600  $1,000  $991  $(354)     $69,172  $14,660  $85,469 

The accompanying notes are an integral part of these consolidated condensed financial statements.

7

Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

Note 1-Organization and Summary of Significant Accounting Policies:

The interim consolidated condensed financial statements of Value Line, Inc., together with its subsidiaries (collectively referred to as the “Company”), are unaudited. 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 17, 200816, 2009 for the fiscal year ended April 30, 2008.2009. Results of operations covered by this report may not be indicative of the results of operations for the entire year.

Value Line, Inc. ("VLI"(the "Company", "VLI") is incorporated in the State of New York. The Company's primary businesses are producing investment related periodical publications and making available copyright data licensingincluding certain Value Line trademarks and Value Line proprietary ranking system information to third parties under written agreements for use in third party managed and marketed investment products, providing investment management services to the Value Line Funds, institutions and individual accounts and providing distribution, marketing, and administrative services to the Value Line Funds. The name "Value Line" as used to describe the Company, its products, and its subsidiaries, is a registered trademark 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:

Depending upon the product, subscription fulfillment is available in print, via internet access and CD-ROM. The length of a subscription varies by product and offer received by the subscriber. Generally, subscriptions are available as trial subscriptions, annual subscriptions and/or multi-year subscriptions. Subscription revenues are recognized on a straight line basis over the life of the subscription. Accordingly, the amount of subscription fees to be earned by fulfilling subscriptions after the date of the balance sheet is shown as unearned revenue within current and long-term liabilities. Changes in unearned revenue generally indicate the trend for subscription revenues over the following year as the current portion of deferred revenue is expected to be recognized as revenue within 12 months.

LicensingCopyright data revenues are derived from licensingproviding certain Value Line trademarks and Value Line proprietary ranking system information to third parties under written agreements for use in selecting securities for third party marketed products, including unit investment trusts, annuities and exchange traded funds. Value Line earns an asset based licensing feecopyright data fees as specified in the individual licensing agreements. Revenue is recognized monthly over the term of the agreement and will fluctuate as the market value of the underlying portfolio increases or decreases in value.

Investment management fees consist of management fees from the Value Line Mutual Funds ("Value Line Funds"), and from asset management clients. Investment management fees for the mutual funds are earned on a monthly basis as services are performed and the fee is calculated based on average daily net assets of the mutual funds in accordance with each fund's advisory agreement. Investment management fees for the asset management accounts are earned on a monthly basis as services are performed and the fee is calculated on assets in accordance with each of the management agreements (see note 6).
The management fees and average daily net assets for the Value Line Funds are calculated by State Street Bank, which serves as the fund accountant, fund administrator, and custodian of the Funds. The management fees for the non-mutual fund asset management clients are calculated by the Company based on the asset valuations provided by third party custodians.
The Value Line Funds are open-end management companies registered under the Investment Company Act of 1940. Shareholder transactions for the Value Line Mutual Funds are processed each business day by the third party transfer agent of the Funds. Shares can be redeemed without advanced notice upon request of the shareowners each day that the New York Stock Exchange is open. Assets within the separately managed accounts are held at third party custodians, are subject to the terms of each advisory agreement and do not have any advance notice requirement for withdrawals, although they have a 30 day advance notice requirement for termination of the account.

Service and distribution fees are received from the Value Line Funds in accordance with service and distribution plans under rule 12b-1 of the Investment Company Act of 1940. The plans are compensation plans, which means that the distributor’s fees under the plans are payable without regard to actual expenses incurred by the distributor, and therefore the distributor may earn a profit under the plan. Expenses incurred by EULAV Securities, Inc. ("ESI") (formerly, Value Line Securities, Inc. ("VLS"), the distributor of the Value Line Funds, include payments to securities dealers, banks, financial institutions and other organizations (including an allocation of VLI expenses), that provide distribution, marketing, and administrative services with respect to the distribution of the mutual funds’ shares.Value Line Funds. Service and distribution fees are received on a monthly basis and calculated on the average daily net assets of the respective mutual fund in accordance with each fund prospectus (see note 6).

8

Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

Valuation of Securities:

The Company's securities classified as available for sale consist of shares of the Value Line Funds and/orand 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 available for sale and trading securities reflected in the consolidated condensed financial statements at fair value are valued at market and unrealized gains and losses on securities classified as available for sale, net of applicable taxes, are reported as a separate component of Shareholders' Equity. Unrealized gains and losses on trading securities are included in the Statement of Income. Realized gains and losses on sales of the securities classified as 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.

Market valuation of securities listed on a securities exchange is based on the closing sales prices on the last business day of each month. Valuation of open-end mutual fund shares is based upon the publicly quoted net asset value of the shares. The market value of the Company's fixed maturity government debt obligations are determined utilizing publicly quoted market prices or other observable inputs.

Effective for fiscal 2009, the Company adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157"). In accordance with FAS 157, fair value is defined as the price that the Company would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market for the investment. FAS 157 established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the information that market participants would use in pricing the asset or liability, including assumptions about risk. Examples of risks include those inherent in a particular valuation technique used to measure fair value such as the risk inherent in the inputs to the valuation technique. Inputs are classified as observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the factors market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
8

Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

Level 1 – quoted prices in active markets for identical investments

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments)

The valuation techniques used by the Company to measure fair value during the ninethree months ended JanuaryJuly 31, 2009 for Level 1 securities consisted exclusively of quoted pricesprices.

The securities valued as Level 2 investments consist of municipal bonds (that are pre-refunded by U.S. Treasury securities) and when quotedother U.S. Treasury securities. Valuation techniques used by the Company to measure fair value for government securities during the period consisted primarily of third party pricing services that utilized actual market pricesdata such as trades of comparable bond issues, broker/dealer quotations for the same or similar investments in active markets are not available,and other observable inputs. When necessary, the Companythird party service uses a number of methodologiesdiscounted future cash flows to establish fair value estimates, including discounted cash flow models, prices from recently executed transactions of similar securities or broker/dealer quotes, utilizing market observable information tocalculate the extent possible. In conjunction with modeling activities, the Company may use external data as inputs.net present value.

The following is a summary of the inputs used as of JanuaryJuly 31, 2009 in valuing the Company’s investments carried at fair value:

       (In Thousands)           (In Thousands)    
Valuation Inputs 
Total
Investments
  Cash Equivalents  
Investments in
Trading Securities
  
Investments in
Securities
Available for Sale
  
Total
Investments
  
Cash 
Equivalents
  
Investments in
Trading 
Securities
  
Investments in 
Securities
Available for
Sale
 
Level 1 - Quoted Prices $47,755  $47,755  -  -  $52,041  $52,041  -  - 
Level 2 - Other Significant Observable Inputs $59,083  -  $17,369   41,714  $53,968  -  $15,902  $38,066 
Level 3 - Significant Unobservable Inputs  -   -   -   -   -   -   -   - 
Total  $106,838  $47,755  $17,369  $41,714  $106,009  $52,041  $15,902  $38,066 

The Company had no other financial instruments including futures, forwards and swap contracts. For the period ended JanuaryJuly 31, 2009, there were no Level 3 investments. The Company does not have any liabilities subject to FAS 157.

Advertising expenses:
The Company expenses advertising costs as incurred.

Reclassification: Certain items in the prior year financial statements have been reclassified to conform to the current year presentation.

9

Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

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.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.

In July 2006, the Financial Accounting Standards Board issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109" (the "Interpretation" or "FIN 48"). The Interpretation establishes for all entities, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. The Interpretation is effective for fiscal years beginning after December 15, 2006, and is to be applied to all open tax years as of the date of effectiveness. ManagementAs of July 31, 2009, management has reviewed the tax positions for the years still subject to tax audit under the statute of limitations, evaluated the implications of FIN 48, and determined that there is no impact to the Company's financial statements.

Earnings per share:
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 condensedConsolidated 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 JanuaryJuly 31, 2009 and April 30, 2008,2009 cash equivalents included $47,755,000$52,041,000 and $8,159,000,$42,068,000, respectively, invested in the Value Line U.S. Government Money Market Fund. The Value Line Cash Fund.Fund was renamed the U.S. Government Money Market Fund in August 2009.

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.

9

Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

Note 2-Investments:

Securities held by the Company are classified as Trading Securities and Available-for-Sale Securities. All securities held in VLS,ESI, as a broker/dealer, are classified as trading securities. Securities held by the Company and its other subsidiaries, are classified as available-for-sale securities.
 
Trading Securities:

Trading securities held by the Company at JanuaryJuly 31, 2009 had an aggregate cost of $17,472,000$15,811,000 and a market value of $17,369,000.$15,902,000. Trading securities held by the Company at April 30, 20082009 had an aggregate cost of $20,042,000$17,133,000 and a market value of $19,857,000.$17,203,000. The proceeds from sales of trading securities during the first ninethree months of fiscalended July 31, 2009 were $9,026,000$1,164,000 and the related net realized trading losses amounted to $61,000. The proceeds from sales of trading securities during the three months ended July 31, 2008 were $3,155,000 and the related net of realized trading gainslosses amounted to $126,000. There were no sales and no realized trading gains or losses during the first nine months of fiscal year 2008.$125,000. The decreasenet changes in unrealized losses of $81,000 and the increase in unrealized gains of $277,000 for the periods ended JanuaryJuly 31, 2009 and 2008, of $20,000 and $31,000, respectively, were included in the Consolidated Condensed StatementsStatement of Income.

Securities Available-for-Sale:Available for Sale
Equity Securities:

As of April 30, 2008, the aggregate cost of the equity securities classified as available for sale, which consist of investments in the Value Line Funds, was $28,149,000 and the market value was $51,870,000. The Company sold its portfolio of equity securities subsequent to April 30, 2008during the second quarter of fiscal 2009 and did not hold any equity securities as of JanuaryJuly 31, and April 30, 2009. The total
During the three months ended July 31, 2008 there were no sales and no realized gains foror losses on equity securities, with netfor which unrealized gains and losses were included in Accumulated Other Comprehensive Income on  the Consolidated Condensed Balance Sheet were $23,972,000, net of deferred taxes of $8,438,000, as of April 30,July 31, 2008. The total losses for equity securities with net losses included in Accumulated Other Comprehensive Income on  the Consolidated Condensed Balance Sheet were $251,000, net of deferred tax benefit of $89,000, as of April 30, 2008.
The proceeds from sales of equity securities classified as available for sale during the nine months ended January 31, 2009 and 2008, were $37,755,000 and $2,793,000 and the related capital gains net of capital losses were $9,600,000 and $2,793,000, respectively, which were reclassified to net income from Accumulated Other Comprehensive Income. The decreasesdecrease in gross unrealized gains on equity securities classified as available for sale due to changes in market conditions of $14,121,000 and $3,405,000,$1,690,000, net of deferred taxestax benefit of $4,971,000 and $1,199,000,$595,000, were included in Shareholders' Equity during the nine months ended Januaryat July 31, 2009 and 2008, respectively.2008.

Government Debt Securities:Securities (Fixed Income Securities):

Government debt securities consist of federal, state, and local government securities within the United States. The aggregate cost and fair value at JanuaryJuly 31, 2009 for government debt securities classified as available for sale were as follows:

    (In Thousands)     (In Thousands) 
 Historical     Gross Unrealized  Amortized Historical     Gross Unrealized 
Maturity  Cost  Fair Value  Holding Losses  Cost  Fair Value  Holding Gains 
Due in less than 2 years $32,664  $32,258  $(406)
Due in 2 - 5 years  9,184   9,456   272 
         
Total investment in government debt securities $41,848  $41,714  $(134)
Due within 1 year $15,299  $15,355  $56 
Due 1 year through 5 years  22,278   22,711   433 
Total investment in government debt securities
 $37,577  $38,066  $489 

10

Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

The aggregate cost and fair value at April 30, 20082009 for government debt securities classified as available for sale were as follows:

    (In Thousands)        (In Thousands)    
 Historical     Gross Unrealized  Amortized Historical     Gross Unrealized 
Maturity  Cost  Fair Value  Holding Losses  Cost  Fair Value  
Holding Gains
 
Due in less than 2 years $24,261  $23,921  $(340)
Due in 2 - 5 years  21,079   21,252   173 
         
Total investment in government debt securities $45,340  $45,173  $(167)
Due within 1 year $8,593  $8,598  $5 
Due 1 year through 5 years  37,474   37,927   453 
Total investment in government debt securities
 $46,067  $46,525  $458 

The increase in gross unrealized lossesgain on fixed income securities classified as available for sale of $134,000$11,000 and $167,000 in government debt securities$625,000 net of deferred income tax benefits of $47,000$4,000 and $59,000,$220,000, respectively, were included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheets as of JanuaryJuly 31, 2009 and April 30, 2008,2009, respectively. The increase in gross unrealized losses on government debt securities classified as available for sale due to changes in market conditions of $279,000, net of deferred  taxes of $98,000, was included in Shareholders' Equity during the nine months ended January 31, 2009.
The average yield on the Government debt securities classified as available for sale at JanuaryJuly 31, 2009 and April 30, 20082009 was 2.23%2.28% and 2.91%2.52%, respectively.

Proceeds from sales of government debt securities classified as available for sale during the ninethree months ended JanuaryJuly 31, 2009 and 2008 were $28,603,000$26,502,000 and $5,137,000,$3,165,000, respectively. The company recognized total capital losses net of capital gains of $312,000 and a capital gain of $7,000 onDuring the sales of government debt securities during the ninethree months ended JanuaryJuly 31, 2009 and 2008, losses on sales of fixed income securities of $20,000 and $66,000, respectively, which were reclassified to net income from Accumulated Other Comprehensive Income in the Balance Sheet to the Consolidated Condensed Statement of Income.
For the ninethree months ended JanuaryJuly 31, 2009 and 2008, income from securities transactions also included $215,000$1,000 and $834,000$58,000 of dividend incomeincome; $274,000 and $2,208,000 and $1,770,000$736,000 of interest income.  There was noincome, net of bond amortization of $314,000 and $0, respectively. In the first quarter of fiscal years 2010 and 2009 income from securities transactions also included $2,000 and $0 of related interest expense, during the nine months of fiscal 2009 or 2008.respectively.

 
10

Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

Note 3-Supplementary Cash Flow Information:

Cash payments for income taxes were $10,305,000$863,000 and $12,239,000$401,000 for the ninethree months ended JanuaryJuly 31, 2009 and 2008, respectively.

Note 4-Employees' Profit Sharing and Savings Plan:

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 on the salaries of eligible employees 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 and $690,000 for the nine months ended January 31, 2009 and 2008, respectively.contribution.

Note 5-Comprehensive Income:

Financial Accounting Standards No. 130, "Reporting Comprehensive Income", 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 otherwise would not be recognized in the calculation of net income.

At JanuaryJuly 31, 2009 and January 31, 2008, 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.  At April 30, 2008 and January 31, 2008, the Company held equity securities  that were classified as Available for Sale on the Consolidated Condensed Balance Sheets. The change in valuation of these securities, net of deferred 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)    
  Before  Tax  Net of 
  Tax  (Expense)  Tax 
  Amount  or Benefit  Amount 
Nine months ended January 31, 2009         
Unrealized Gains on Securities:         
Decrease in Unrealized Holding Gains arising during the period $(14,400) $5,068  $(9,332)
Add:  Reclassification adjustments for losses realized in net income  364   (128)  236 
Less: Reclassification adjustments for gains realized in net income  (9,652)  3,398   (6,254)
             
Change in Other Comprehensive Income $(23,688) $8,338  $(15,350)
             
Nine months ended January 31, 2008            
Unrealized Gains on Securities:            
Change in Unrealized Holding Gains arising during the period $(119) $41  $(78)
Less: Reclassification adjustments for gains realized in net income  (2,800)  986   (1,814)
             
Change in Other Comprehensive Income $(2,919) $1,027  $(1,892)
  (in thousands) 
  Before  Tax  Net of 
  Tax  (Expense)  Tax 
Three months ended July 31, 2009 Amount  or Benefit  Amount 
          
Unrealized Gains/(Losses) on Securities:         
Unrealized Holding Gains/(Losses) $11   (4) $7 
Add: Reclassification adjustments for losses realized in net income  20   (7)  13 
Less: Reclassification adjustments for gains realized in net income  -   -   - 
Other Comprehensive income $31  $(11) $20 

11
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
  (in thousands) 
Three months ended July 31, 2008 
Before
Tax
Amount
  
Tax
(Expense)
or Benefit
  
Net of
Tax
Amount
 
          
Unrealized Gains/(Losses) on Securities:         
Unrealized Holding Gains/(Losses) $(2,061) $725  $(1,336)
Add: Reclassification adjustments for losses realized in net income  205   (72)  133 
Less: Reclassification adjustments for gains realized in net income  (14)  5   (9)
Other Comprehensive income $(1,870) $658  $(1,212)
Note 6-Related Party Transactions:

The Company's subsidiary, EULAV Asset Management, LLC ("EULAV") acts as investment adviser and manager for fourteen open-end investment companies, the Value Line Funds. EULAV earns investment management fees based upon the average daily net asset values of the respective Value Line Funds. As discussed in noteNote 1, service and distribution fees are received by VLSESI from the Value Line Funds in accordance with service and distribution plans under rule 12b-1 of the Investment Company Act of 1940. The plans are compensation plans, which means that the distributor’s fees under the plans are payable without regard to actual expenses incurred by the distributor, and therefore the distributor may earn a profit under the plan.plans. Expenses incurred by VLSESI include payments to securities dealers, banks, financial institutions and other organizations which provide distribution, marketing, and administrative services (including payments by VLSESI to VLI for allocated compensation and administration expenses) with respect to the distribution of the mutual funds’ shares. Service and distribution fees are received on a monthly basis and calculated on the average daily net assets of the respective mutual fund in accordance with each fund's prospectus.
On June 30, 2008, Company reorganized its investment management division into EULAV Asset Management, LLC (“EULAV”), a newly formed, wholly-owned subsidiary. As part of the reorganization, each advisory agreement was transferred from Value Line, Inc. to EULAV and EULAV replaced Value Line, Inc. as the Fund’s investment adviser. The portfolio managers, who are now employees of EULAV, have not changed as a result of the reorganization.
For the ninethree months ended JanuaryJuly 31, 2009 and 2008, investment management fees and 12b-1 service and distribution fees amounted to $19,763,000$4,647,000 and $24,139,000,$7,932,000, respectively, which includedtook into account fee waivers for certain of the Value Line Funds. These amounts included service and distribution fees of $4,447,000$1,010,000 and $5,397,000$1,808,000 earned by VLS in fiscal yearsESI during the three months ended July 31, 2009 and 2008, respectively. The related receivables from the funds for investment management fees and service and distribution fees included in Receivables from affiliates were $1,647,000$1,559,000 and $2,557,000$1,475,000 at JanuaryJuly 31 2009 and April 30, 2008,2009, respectively.

For the ninethree months ended JanuaryJuly 31, 2009 and 2008, total management fee waivers were $142,000$192,000 and $174,000$53,000, respectively, and service and distribution fee waivers were $2,280,000$674,000 and $2,943,000,$873,000, respectively. The Company and its subsidiariessubsidiary, ESI, have no right to recoup the previously waived amounts of management fees and 12b-1 fees.

11

Value Line, Inc.
Notesfees, excluding waived management fees for the U.S. Government Money Market Fund. Any recoupment is subject to Consolidated Condensed Financial Statementsthe provisions of the prospectus.

As of JanuaryJuly 31, 2009, the Company had $47,755,000$52,041,000 invested in the Value Line CashU.S. Government Money Market Fund ("Cash Fund"), which represents approximatelyrepresenting 23% of the fund's assets and 2% of total assets of theall Value Line Funds and 24% of the Cash Fund.assets. Purchases and redemptions routinely occur in the Value Line CashU.S. Government Money Market Fund as part of business operations.
For the ninethree months ended JanuaryJuly 31, 2009 and 2008, the Company was reimbursed $893,000$204,000 and $739,000,$216,000, respectively, for payments it made on behalf of and services it provided to the Parent. At July 31, 2009 and April 30, 2009, the Payable to the Parent amounted to $163,000 and $164,000, respectively. These transactions are in accordance with the expense sharing agreement with the parent and tax sharing arrangement as described in Note 7.

From time to time, Arnold Bernhard & Co., Inc. (the "Parent"). At January 31, 2009, Receivables from affiliates included a Receivable from the Parent of $31,000. At April 30, 2008, Receivables from affiliates were reduced by a Payable to the Parent in the amount of $130,000.  These transactions are in accordance with the tax sharing arrangement described in Note 7.
From time to time, the Parent has purchased additional shares of the Company 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. The Parent owns approximately 86.5% of the issued and outstanding common stock of the Company. For the nine months ended January 31, 2009, the Parent made no purchases of the Company's shares.

Note 7-Federal, State and Local 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".
The provision for income taxes includes the following:

The provision for income taxes includes the following: Three months ended July 31, 
 Nine months ended January 31,  
2009
  
2008
 
 2009  2008  (in thousands) 
Current Tax Expense:      
 (in thousands)       
Current:      
Federal $9,281  $10,142  $-  $2,508 
State and local  1,430   2,633   -   565 
 10,711  12,775   -   3,073 
Deferred:        
Deferred Tax Expense (Benefit):        
        
Federal (19) (78)  (8,844)  (24)
State and local  (34)  (69)  (2,144)  (14)
  (53)  (147)  (10,988)  (38)
Provision for income taxes $10,658  $12,628  $(10,988) $3,035 

12

Value Line, Inc.
Notes to 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)/assets areis primarily athe result of unrealized gainsthe tax benefit from its net operating loss to be utilized within the next year.
At the end of each interim reporting period, the Company estimates the effective income tax rate to apply for the full year. The Company uses the effective income tax rate determined to provide for income taxes on a year-to-date basis and we reflect the Company's availabletax effect of any tax law changes and certain other discrete events in the period in which they occur.

The overall effective income tax rate, as a percentage of pre-tax ordinary income, for sale securities portfolios.the three months ended July 31, 2009 and 2008 was 25.81% and 37.48%, respectively. The fluctuation in the effective income tax rate is attributable to the non-deductible portion of the provision for settlement and non-taxable investment income, events that do not have tax consequences, recorded during the three months ended July 31, 2009.

The annual effective tax rate for FY2010 could change due to a number of factors including but not limited to an increase or decrease in the ratio of income to pre-tax items that do not have tax consequences, our geographic profit mix between local tax jurisdictions, new tax laws, new interpretations of existing tax law and rulings by and settlements with tax authorities. For the three months ended July 31, 2009, there were no new material uncertain positions.

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. federal statutory income tax rate to pretax income as a result of the following:

  Three months ended July 31, 
  2009  2008 
       
U.S. statutory federal rate  35.00%  35.00%
Increase/(decrease) in tax rate from:        
Tax effect of non-deductible portion of provision for settlement  -12.90%  0.00%
State and local income taxes, net of federal income tax benefit  2.61%  4.42%
Effect of tax exempt income and dividend deductions  0.45%  -2.54%
Other, net  0.65%  0.60%
Effective income tax rate  25.81%  37.48%
  Nine months ended January 31, 
  2009  2008 
  (in thousands) 
       
Tax expense at the U.S. statutory rate $10,498  $11,690 
Increase (decrease) in tax expense from:        
State and local income taxes, net of federal income tax benefit  908   1,667 
Effect of tax exempt income and dividend exclusion  (618)  (616)
Other, net  (130)  (113)
Provision for income taxes $10,658  $12,628 

The Company is included in the consolidated federal income tax return of the Parent. The Company has a tax sharing arrangement which requires it to make tax payments to the Parent equal to the Company's liability as if it filed a separate return.

Note 8-Business Segments:

The Company operates two reportable business segments: (1) Investment Periodicals, Publishing & LicensingCopyright Data and (2) Investment Management. The Investment Periodicals, Publishing & LicensingCopyright Data segment produces investment related periodical publications (retail and institutional) in both print and electronic form, and receives licensingincludes copyright data fees for Value Line proprietary ranking system information and Value Line trademarks.other proprietary information. The Investment Management segment provides advisory services to the Value Line Funds, as well as to institutional and individual accounts. 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)

  Three months ended July 31, 2009 
  Investment       
  Periodicals,       
  Publishing &  
Investment
    
  Copyright Data  Management  Total 
Revenues from external customers $10,088  $4,700  $14,788 
Intersegment revenues  5   -   5 
Income from securities transactions  5   76   81 
Depreciation and amortization  197   14   211 
Segment profit (loss) from operations*  3,756   (46,542)  (42,786)
Segment assets  13,607   22,227   35,834 
Expenditures for segment assets  361   -   361 

  Three months ended July 31, 2008 
  Investment       
  Periodicals,       
  Publishing &  
Investment
    
  Copyright Data  Management  Total 
Revenues from external customers $12,018  $8,195  $20,213 
Intersegment revenues  6   -   6 
Income from securities transactions  5   149   154 
Depreciation and amortization  291   11   302 
Segment profit from operations  4,743   2,726   7,469 
Segment assets  9,829   79,132   88,961 
Expenditures for segment assets  23   -   23 

 
1213
 

Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

Disclosure of Reportable Segment Profit and Segment Assets (in thousands)

  Nine months ended January 31, 2009 
  Investment       
  Periodicals,       
  Publishing &  
Investment
    
  Licensing  Management  Total 
Revenues from external customers $33,944  $20,452  $54,396 
Intersegment revenues  133   -   133 
Income from securities transactions  (10)  707   697 
Depreciation and amortization  840   30   870 
Segment profit from operations  11,890   6,473   18,363 
Segment assets  11,011   23,622   34,633 
Expenditures for segment assets  528   -   528 

  Nine months ended January 31, 2008 
  Investment        
  Periodicals,       
  Publishing &  
Investment
    
  Licensing  Management  Total 
Revenues from external customers $37,941  $25,050  $62,991 
Intersegment revenues  74   -   74 
Income from securities transactions  205   4,088   4,293 
Depreciation and amortization  1,170   48   1,218 
Segment profit from operations  15,622   12,108   27,730 
Segment assets  16,439   81,652   98,091 
Expenditures for segment assets  291   -   291 

Reconciliation of Reportable Segment Revenues, Operating Profit and Assets

  (in thousands) 
  2009  2008 
Revenues      
Total revenues for reportable segments $54,529  $63,065 
Elimination of intersegment revenues  (133)  (74)
Total consolidated revenues $54,396  $62,991 
         
Segment profit        
Total profit for reportable segments  19,060   32,023 
Add:  Income from securities transactions related to corporate assets  10,946   1,390 
Less: Depreciation related to corporate assets  (12)  (12)
Income before income taxes $29,994  $33,401 
         
Assets        
Total assets for reportable segments  34,633   98,091 
Corporate assets  84,417   36,926 
Consolidated total assets $119,050  $135,017 

Note 9-Contingencies:
  (in thousands) 
  2009  2008 
Revenues      
Total revenues for reportable segments $14,793  $20,219 
Elimination of intersegment revenues  (5)  (6)
Total consolidated revenues $14,788  $20,213 
         
Segment profit*        
Total profit (loss) for reportable segments $(42,705)  7,623 
Add: Income from securities transactions related to corporate assets  137   478 
Less: Depreciation related to corporate assets  -   (4)
Income before income taxes $(42,568) $8,097 
         
Assets        
Total assets for reportable segments $35,834  $88,961 
Corporate assets  93,064   47,549 
Consolidated total assets $128,898  $136,510 
 
By letter dated June 15, 2005, the staff*Includes provision for settlement of the Northeast Regional Office ofapproximately $48 million.

Note 9-Contingencies:
The Company has made an offer to settle the Securities and Exchange Commission ("SEC") informedinvestigation which was previously reported in public filings from back to 2005.  The settlement offer, in which the Company neither admits nor denies the investigation’s findings, relates to commissions paid by nine Value Line equity mutual funds to an affiliated brokerage subsidiary from1986 through November 2004.  The settlement offer will not be effective unless approved by the Securities and Exchange Commission and no assurance can be given that it was conductingsuch approval will be obtained.

The Company has restructured its investment management subsidiary and brokerage relationships and is confident that they conform to applicable regulatory requirements.  Company management ended the mutual funds’ use of affiliated brokerage in 2004.

The Company has established a reserve of approximately $48 million which includes additional costs that may arise from the settlement. Based on the settlement offer, approximately $43.7 million of the reserve would be paid by Value Line into a Fair Fund to reimburse shareholders who owned shares in the affected mutual funds in the period covered by the settlement. In addition, under the settlement offer, the CEO and former CCO would be barred from serving as an informal inquiry primarily regardingofficer or director of a public company and from association with an investment adviser, broker-dealer or registered investment company subject, in the executioncase of portfolio transactions by VLSthe CEO, to a limited exception from the associational bar for a period of one year from the entry of the settlement Order to enable steps to be taken that will terminate her association with the Value Line Funds. The Company thereafter supplied numerous documents tomutual funds, asset management and distribution businesses. Howard A. Brecher, Chief Legal Officer of Value Line, Inc., would become the SEC in response to its requestsActing Chairman and various employees and former employeesActing Chief Executive Officer after entry of the Company provided testimony to the SEC.  On May 8, 2008, the SEC issued a formal order of private investigation regarding whether the VLS brokerage charges and related expense reimbursements during periods prior to 2005 were excessive and whether adequate disclosure was made to the SEC and the boards of directors and shareholders of the Value Line Funds. Thereafter, certain senior officers of the Company asserted their constitutional privilege not to provide testimony. Management believes that the SEC has completed the fact finding phase of its investigation and the Companysettlement Order. He has been in discussions with the staff of the SEC in an effort to settle the foregoing investigation. There can be no assurance that the Company and the SEC will be able to reach a mutually agreeable settlement. Although management of the Company cannot determine the effect that the investigation will have on the Company’s financial statements,Board of Directors for 17 years and is deeply knowledgeable about all our businesses.  Mr. Brecher is a graduate of Harvard University, Harvard Business School and Harvard Law School.  He also holds a Master’s Degree in light of settlement discussions to date, it believes that any settlement is likely to be material.tax law from New York University.

On September 3, 2008, the Company was served with a derivative shareholder's suit filed in New York County Supreme Court naming all of the Company's Directors and alleging breach of fiduciary duty and related allegations, all arising from the above SEC matter. The complaint seeks return of remuneration by the Directors and other remedies. Plaintiff's counsel has agreed from time to time, most recently until April 1,October 6, 2009, to extend the defendants' time to answer, move, or otherwise respond to the complaint. Based on an evaluation of the case at this early stage, including communications with the Company's insurance carrier, it doesis not appear that the case will have a material impactpossible to estimate an amount or range of loss on the Company's financial statements and the Company  has not recognized an accrual for this contingency.statements.

 
1314
 
Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS
OF OPERATIONS.

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

This report contains statements that are predictive in nature, depend upon or refer to future events or conditions (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:

 ·dependence on key personnel;
 ·maintaining revenue from subscriptions for the Company’s products;
 ·protection of intellectual property rights;
 ·changes in market and economic conditions;
 ·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;
 ·dependence on Value Line Funds for investment management and related fees;
 ·competition in the fields of publishing, licensingcopyright data and investment management;
 ·the impact of government regulation on the Company’s business and the uncertainties of litigation and regulatory proceedings;
 ·terrorist attacks; and
 ·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, 2008,2009, and other risks and uncertainties from time to time.

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.

Results of Operations

The severe downturn and volatility within the financial markets and the economy continued throughout the Company’s third quarter that ended January 31, 2009 and hasprior fiscal year continued to negatively impactedimpact the Company’s assets under management and the assets attributable to third party licensingcopyright data partners.  The severe asset decline has led to lower asset based management and licensing fees collected by the Company for the quarter and into the fourth quarter.  This trend can be seen across the asset management industry.  According to the Investment Company Institute (“ICI”), the combined assets of the mutual funds in the United States (excluding money market funds) declined by $3.1 trillion or 36% for the nine months ended January 31, 2009.  Although we have not suffered a fundamental change in our business model, the collateral damage from the global economic decline significantly reduced our assets under management and related advisoryinvestment management and licensingcopyright data revenues.  In response we have beencontinue to be diligent about our expense control and have taken initiatives to reduce costs.  The Company continues to be debt free with substantial liquidity sufficient to endure the current economic crisis andin terms of anticipated liquidity needs.

For the ninethree months ended JanuaryJuly 31, 2009 the Company’s net incomeloss of $19,336,000$31,580,000 or $1.94$3.16 per share was $1,437,000 or 7%$36,642,000 below net income of $20,773,000$5,062,000 or $2.08$0.51 per share for the nine months ended January 31, 2008. Net income for the three months ended JanuaryJuly 31, 20092008. Operating loss of $3,732,000 or $0.38 per share was $4,739,000 or 56% below net income of $8,471,000 or $0.85 per share for the third quarter of the prior fiscal year. Operating income of $18,351,000 for the nine months ended January 31, 2009 was $9,367,000 or 34% below operating income of $27,718,000 last fiscal year. Operating income of $4,620,000$42,786,000 for the three months ended JanuaryJuly 31, 2009 was $4,717,000 or 50%$50,251,000 below operating income of $9,337,000 for the third quarter of the prior$7,465,000 last fiscal year. The Company’s income from securities transactionsoperating and net losses of $11,643,000the Company were a result of the Company recording a provision for settlement of $47,706,000 for potential settlement and related costs associated with the nine months ended JanuarySecurities and Exchange (“SEC”) investigation. Please refer to Note 9-Contingencies within the notes to Consolidated Condensed Financial Statements. With this provision for settlement, shareholders’ equity of $47,313,000 at July 31, 2009 was 105% above last year’s income of $5,683,000 due to the sale of the equity portfolio in the second quarter of fiscal year 2009.  The Company redeployed the proceeds from the equity portfolio into short term fixed income investments or cash equivalents.  For the three months ended January 31, 2009, income from securities transactions of $927,000 was down $3,170,000 or 77% from the same three months of the previous year.  The third quarter of previous fiscal year third quarter included capital gains of $3,077,000.  Shareholders’ equity of $79,862,000 at January 31, 2009 was 7%46% lower than shareholders’ equity of $85,469,000$87,711,000 at JanuaryJuly 31, 2008.

 
1415
 

The following table illustrates the key earnings figures for the three months ended July 31, 2009 and 2008.

  Three Months Ended July 31, 
  2009  2008  
Percentage
Change
 
(in thousands, except earnings per share)       
FY 10 vs. 09*
 
Earnings / (Loss) Per Share $(3.16) $0.51   NMF 
Net Income / (Loss) $(31,580) $5,062   NMF 
Operating Income / (Loss) $(42,786) $7,465   NMF 
Operating Expenses $57,574  $12,748   NMF 
Income from Securities Transactions, net $218  $632   -65.5%
*NMF = not meaningful figure
 
Operating revenues, which consist of investment periodicals, and related publications revenues, licensingcopyright data fees, and investment management fees and services, all declined for the three and nine months ended JanuaryJuly 31, 2009:2009.

 
Operating Revenues
 
 Three Months Ended January 31,  Nine Months Ended January 31,  Three Months Ended July 31, 
       
Percentage
Change
        
Percentage
Change
  2009  2008  
Percentage
Change
 
(in thousands) 2009  2008  FY 09 vs. 08  2009  2008  FY 09 vs. 08        FY 10 vs. 09 
Investment periodicals and related publications $10,048  $10,601   -5.2% $30,341  $32,424   -6.4% $9,321  $10,337   -9.8%
Licensing fees $683  $2,072   -67.0% $3,603  $5,517   -34.7%
Copyright data fees $767  $1,681   -54.4%
Investment management fees and services $5,125  $8,407   -39.0% $20,452  $25,050   -18.4% $4,700  $8,195   -42.6%
Total Operating Revenues $15,856  $21,080   -24.8% $54,396  $62,991   -13.6% $14,788  $20,213   -26.8%

Investment periodicals and related publications revenues

Investment periodicals and related publications revenues were down $2,083,000$1,016,000 or 6%10% for the ninethree months ended JanuaryJuly 31, 2009 as compared to the first nine monthsquarter of the prior fiscal year.  While the Company continues to attract new subscribers through various marketing channels, primarily direct mail and the Internet, total product line circulation continues to decline.  Factors that have contributed to the decline in the investment periodicals and related publications revenues include competition in the form of free or low cost investment research on the Internet and research provided by brokerage firms at no cost to their clients. The recession and turmoil in the markets have also contributedAs of July 31, 2009, total company-wide circulation has dropped approximately 12% compared to the decline in subscriptions as individuals reduced many forms of discretionary spending,previous fiscal year.  Overall renewal rates for the flagship product, The Value Line Investment Survey are 70%, down slightly from 71% a year earlier.  The Company is not adding enough new subscribers to offset the subscribers that choose not to renew.  The Company has been fortunate that electronic investment periodicals revenues from institutional sales have increased $161,000 or have shifted investments to fixed income, for which10% from the Company does not provide research.previous year. Fiscal year institutional sales through July 31, 2009 were $1,999,000, up $435,000 or 28% from the previous fiscal year.


16
 
Within investment periodicals and related publications are subscription revenues derived from print and electronic products.  The following chart illustrates the year-to-year change in the revenues associated with print and electronic subscriptions.

Nine Months Ended January 31,       
Percentage
Change
 
 Subscription Revenues 
Three Months Ended July 31, 2009  2008  
Percentage
Change
 
(in thousands) 2009  2008  FY 09 vs. 08        FY 10 vs. 09 
Print publication revenues $20,659  $23,393   -11.7% $6,138  $7,150   -14.2%
Electronic publication revenues $9,682  $9,031   7.2% $3,183  $3,187   -0.1%
Total Investment periodicals and related publications revenues $30,341  $32,424   -6.4%
            
Total investment periodicals and related publications revenues $9,321  $10,337   -9.8%
Unearned Revenues (Short and Long Term) $29,176  $32,655   -10.7% $27,492  $30,180   -8.9%

For the ninethree months ended JanuaryJuly 31, 2009 print publication revenues decreased $2,734,000$1,012,000 or 12%14% below last fiscal year for the reasons described above.  Print circulation, which has always dominated our subscription base, has fallen 14% from the last fiscal year.  Electronic publications revenues grew by $651,000 or 7%were down $4,000 for the ninethree months ended JanuaryJuly 31, 2009.  With the exception of The Value Line Investment Survey Online Edition, all other retail electronic services have seen declines in circulation from the prior fiscal year.
The electronic publication revenues are broken down into institutional accounts and retail subscribers.  For the ninethree months ended JanuaryJuly 31, 2009, institutional revenues increased $1,102,000$161,000 or 26%10%, while revenues from retail subscribers were down $451,000$165,000 or 9%11% as compared to the ninethree months ended JanuaryJuly 31, 2008.  The decrease in electronic retail publications revenues is primarily attributable to the decrease in circulation within the Company’s software products.  Circulation of The Value Line Investment Analyzer decreased 24%, which resulted in a $338,000 decline in revenues from this product.  The Company has successfully expanded its institutional sales marketing efforts, and the increase in institutional revenues is a direct result of a focused effort to boost sales to colleges, libraries and money managers.  The decrease in electronic retail publications revenues is primarily attributable to the decrease in circulation within the Company’s software products.  As of July 31, 2009, circulation of The Value Line Investment Analyzer
15
decreased 17%, which resulted in a $129,000 decline in revenues from this product as compared to July 31, 2008. In March 2009, the Company released its version 4.0 of this product.  The Company has received mixed results from subscribers to the product and as of July 31, 2009, has not seen any change in the negative circulation trend for this product.
 
LicensingThe Value Line Timeliness Ranking SystemTM (“the Ranking System”) has historically been one of the key components in the Company’s flagship product, The Value Line Investment Survey, and is also the foundation on which much of the Company’s copyright data business is derived.  Unfortunately, in the volatile market of the past year and fiscal quarter, the Ranking System has not performed up to historical standards.  Although it has gone through brief periods of underperformance before, the rapid and severe price actions in the markets appear to have favored short-term investing, as investors buy well known names whose earnings have plunged but whose stock prices are cheap, hoping the stock prices will rebound.  Such stocks are generally not well ranked by Value Line because the Ranking System emphasizes earnings results and price momentum.  The Ranking System is designed to be predictive over a six to 12 month period.  Over the year ended July 31, 2009, the ranking system results were in perfect reverse order, with the rank 5 stocks (lowest ranks) rebounding quickly after being beaten down most of last year, to outperform the rank 1, 2, 3 and 4 stocks.  If the market remains as volatile in the coming quarters as it was last year, or if fundamental market factors result in longer-term deterioration of the Ranking System’s predictive performance, the Company believes the ranking system may continue to struggle. This may negatively impact subscription revenues and copyright data fees.  The Company and its quantitative research staff continue to work diligently to improve the Ranking System’s predictive performance although no assurances are possible.

           Licensing fee revenuesCopyright Data Fees

Copyright Data fees have decreased $1,914,000$914,000 or 35%54% for the ninethree months ended JanuaryJuly 31, 2009 as compared to the ninethree months ended JanuaryJuly 31, 2008.  As of JanuaryJuly 31, 2009, total third party sponsored assets are attributable to the licensing businessfour contracts for copyright data and represent $2.1$2.3 billion in various products.products as compared to three contracts and $5.5 billion in assets last fiscal year, representing a 60% decline in assets year over year.  The combination of the underperformance by the Ranking System and the broad and deep declines throughout the equity markets have significantly impacted assets of the third party sponsors attributable to the licensingthat are customers of our copyright data business and have resulted in lower asset based fees paid to the Company.  While the third party sponsors continue to raise assets the broad market decline has eroded those assets as well as previous appreciation in existing assets. The Company is in discussiondiscussions with new sponsors in an effort to increase products offered, but no new agreements have been signedrevenues in fiscal 2009.this area.  The Company believes the growth of the business is dependent upon the desire of third party marketersparties to use the Value Line trademarks and proprietary research for their products, signing new licensing agreements, and the marketplace’s acceptance of new products. As stated in the past, Value Line believes it was an early entrant into this new market eight years ago. Today this market hasis significantly broadenedmore competitive as a result of product diversification and growth of the use of indexes by portfolio managers, andmanagers.  Copyright Data fees have been a critical component of the Company and its third party sponsors face more competition inCompany’s plan to replace shrinking publishing revenues.  Unless the marketplace.Ranking System’s predictive performance improves, we anticipate Copyright Data revenues will underperform the previous year’s revenues from that source.

17
Investment management fees and distribution services revenues

The financialWhile the rebound in assets during the quarter has boosted overall assets, the decline in the markets have experienced unprecedented volatility and declines over the pastfrom a year some of which have not been seen in decades.  Equity indexes such as the DJIA, NASDAQ, and S&P 500 are down 37%, 38%, and 40% respectively for the year ended January 31, 2009.  Such market pressures have resulted inago show a contraction of 32%  in totalthe net assets withinof the Value Line Funds of 36% as compared to a year ago.Funds.  The following tables illustrate the total fund assets as of JanuaryJuly 31, 2009 as compared to JanuaryJuly 31, 2008.

At January 31,       
Percentage
Change
 
 Total Net Assets 
At July 31, 2009  2008  
Percentage
Change
 
(in thousands) 2009  2008  FY 09 vs. 08        FY 10 vs. 09 
Equity funds $1,894,890  $3,221,732   -41.2% $2,018,263  $3,180,492   -36.5%
Fixed income funds $240,995  $271,562   -11.3% $253,063  $257,356   -1.7%
Money market fund $196,465  $167,625   17.2%
            
U.S. Government Money Market Fund $225,248  $237,336   -5.1%
Total net assets $2,332,350  $3,660,919   -36.3% $2,496,574  $3,675,184   -32.1%

As a result of the decline in assets under management occurring over the course of the year, investment management fees and distribution services revenues for the ninethree months ended JanuaryJuly 31, 2009 were $4,598,000down $3,495,000 or 18%43% below the prior fiscal year.  Management fees for the first ninethree months of fiscal yearended July 31, 2009 were down $3,427,000$2,488,000 or 18%41% as compared to the first nine months ofprior fiscal year 2008.year. There was a net decrease of $950,000$797,000 or 18%44% in distribution services revenues.revenues (12b-1 fees).  During the period, contractual fee waivers existhave existed for certainmost of the Value Line Funds. For the ninethree months ended JanuaryJuly 31, 2009 and 2008, 12b-1 fee waivers were $2,280,000$674,000 and $2,943,000,$873,000, respectively.  For the ninethree months ended JanuaryJuly 31, 2009 and 2008, management fee waivers were $142,000$192,000 and $174,000,$53,000, respectively.  TheTwelve of the fourteen funds have all or a portion of or the full amount of the 12b-1 fees being waived and five of the fourteen funds have partial management fee waivers in place.  With very limited exception, the Company and its subsidiaries have no right to recoup the previously waived management fees and 12b-1 fees.  Separately managed accounts revenues decreased $222,000$209,000 or 24%80% for the ninethree months ended JanuaryJuly 31, 2009 as compared to the ninethree months ended JanuaryJuly 31, 2008 primarily due to market decline in the portfolios.portfolios and the loss of the New York State Common Retirement Fund account last fiscal year.

16
Of the 14fourteen funds managed by the Company, shares of Value Line Strategic Asset Management Trust (“SAM”) and Value Line Centurion Fund are available to the public only through the purchase of certain variable annuity and variable life insurance contracts issued by The Guardian Insurance & Annuity Company, Inc. (“GIAC”).
18

The table below shows the assets in the equity funds broken down into the two channels in which the equity funds are available.

At January 31,       
Percentage
Change
 
(in thousands) 2009  2008  FY 09 vs. 08 
Equity fund assets sold through GIAC $455,140  $812,361   -44.0%
All other equity fund assets $1,439,750  $2,409,371   -40.2%
   Total equity fund net assets $1,894,890  $3,221,732   -41.2%
Equity Fund Net Assets (Variable Annuity and Open End Equity Funds) 
At July 31, 2009  2008  
Percentage
Change
 
(in thousands)       FY 10 vs. 09 
Variable annuity assets (GIAC) $475,107  $749,148   -36.6%
All other open end equity fund assets $1,543,156  $2,431,344   -36.5%
   Total equity fund net assets $2,018,263  $3,180,492   -36.5%

As of JanuaryJuly 31, 2009, 67%only one of the six equity mutual funds, excluding SAM and Centurion, had a four star ratingsrating by Morningstar, Inc. as compared to five of the six equity funds, which had four or five stars a year ago.  The equity funds had net redemptions for the three months ended July 31, 2009, as compared to net sales the previous year.  Shareholder accounts for the three months ended July 31, 2009 declined to 172,118 from 209,107 for the previous year, representing a 17.6% decline.  The largest distribution channel for the Value Line Funds remains the fund supermarket platforms such as Charles Schwab & Co., Inc.  The Company has received inquiries from various platforms concerning the SEC investigation described in the Contingencies Footnote 9.  The Company believes the platforms will continueaccounts that are held at fund supermarkets may be vulnerable based on poor performance and concerns about the SEC investigation of discontinued brokerage activities, as investment advisors or prospects may choose to grow as a percentage of assets under management as more shareholders come into the Value Line Funds through intermediaries rather than by opening direct accounts.redeem existing investments or not make further investments.

The Value Line fixed income mutual fund assets (excluding the Value Line CashU.S. Government Money Market Fund), represent 10% of total mutual fund assets at JanuaryJuly 31, 2009 and are down 11%2% from the previous year.  CashValue Line U.S. Government Money Market Fund assets represent 8%9% of the total fund assets at JanuaryJuly 31, 2009 and have increased 17%decreased 5% from the previous year.  The increase inyear, primarily since the Company and its Parent redeployed cash into other fixed income investments such as pre-refunded municipal bonds and U.S. Treasury securities.

Shareholder transactions for the Value Line Cash FundMutual Funds are processed each business day by the third party transfer agent of the Funds. Shares can be redeemed without advance notice upon request of the shareowners each day that the New York Stock Exchange is primarily due to purchases by Value Line, Inc. duringopen. During the secondfirst quarter of fiscal year2010 the financial markets continue to be volatile, but the markets have improved.

The Company’s separately managed accounts as of July 31, 2009 whenhave $49 million in assets, down from $210 million at July 31, 2008.  Of the $49 million, $24 million is affiliated with the Parent.  Assets within the separately managed accounts are held at third party custodians, are subject to the terms of each advisory agreement and do not have any advance notice requirement for withdrawals, although they have a 30 day advance notice requirement for termination of the account.  As of April 30, 2009, the Company sold its equity investments.lost a $93 million account from the New York State Common Retirement Fund as their five-year contract expired and was not renewed based on a reallocation of investments by the state.  The Company did not add any new accounts thus far during the fiscal year 2010.

 
Since the close of the third quarter and as of this filing, the market has continued its decline, further impacting overall assets under management.  Overall assets under management declined approximately 8% or $180 million from February 2, 2009 to March 12, 2009, with decreases in the equity funds partially offset by an increase in assets within the fixed income funds.  Even though assets declined, the equity funds outperformed the Dow Jones Industrial Average and the S&P 500 for the post-quarter period.
19
 

Expenses

Expenses within the Company are categorized into advertising and promotion, salaries and employee benefits, production and distribution, and office and administration. For fiscal 2010, expenses include a Provision for Settlement of $47,706,000, which is described earlier in Results of Operations and in Note 9 of the Consolidated Condensed Financial Statements. Operating expenses of $36,045,000 for the nine months ended January 31, 2009 were $772,000 or 2% above operating expenses of $35,273,000 last fiscal year.  Operating expenses of $11,236,000$57,574,000 for the three months ended JanuaryJuly 31, 2009 were $507,000 or 4% below$44,826,000 above operating expenses of $11,743,000 for the third quarter of the prior$12,748,000 last fiscal year.

Advertising and promotion
 Three Months Ended January 31,  Nine Months Ended January 31,  Three Months Ended July 31, 
       
Percentage
Change
        
Percentage
Change
  2009  2008  
Percentage
Change
 
(in thousands) 2009  2008  FY 09 vs. 08  2009  2008  FY 09 vs. 08        FY 10 vs. 09 
Advertising and promotion $2,435  $3,253   -25.1% $9,004  $10,327   -12.8% $2,080  $3,241   -35.8%

       Advertising and promotion expenses for the ninethree months ended JanuaryJuly 31, 2009 decreased $1,323,000$1,161,000 as compared to the first ninethree months ended JanuaryJuly 31, 2008. Within the investment management segment, supermarket and Guardian (GIAC) platform expenses associated with the distribution of the mutual funds decreased $559,000$544,000 or 13%27% below the prior year due to the decline in assets under management.  In the last quarter,fiscal 2010, the Company reduced its print advertising promoting the mutual funds due to the volatility in the marketplace.  For the ninethree months ended JanuaryJuly 31, 2009, printmedia advertising increased $126,000decreased $333,000, from the ninethree months ended JanuaryJuly 31, 2008.  Within the publishing segment, costs associated with direct mail decreased $837,000$130,000 or 31%28% below last fiscal year, due to an ongoing targetedincreased efficiency in the selection of direct mail lists and a reduction in the overall number of pieces mailed year to year.
17
Salaries and employee benefits

 Three Months Ended January 31,  Nine Months Ended January 31,  Three Months Ended July 31, 
       
Percentage
Change
        
Percentage
Change
  2009  2008  
Percentage
Change
 
(in thousands) 2009  2008  FY 09 vs. 08  2009  2008  FY 09 vs. 08        FY 10 vs. 09 
Salaries and employee benefits $4,499  $4,535   -0.8% $14,165  $13,668   3.6% $4,287  $4,857   -11.7%

 Over the past several years, the Company has increased productivitysaved money by combining the roles and responsibilities of various personnel and by selective outsourcing.  Some duplication of effort has been eliminated and certain tasks, such as some data entry, have been outsourced to third party vendors that the Company believes can provide better controls and results at a favorable cost. Even so, salariesSalaries and employee benefits are higherdecreased by $497,000$570,000 from the previous year, primarily due to cost of living increasesthe Company’s decision to not contribute to the Value Line Profit Sharing Plan for fiscal year 2009 and overall staff and additional targeted hiring.reductions.

Production and distribution

 Three Months Ended January 31,  Nine Months Ended January 31,  Three Months Ended July 31, 
       
Percentage
Change
        
Percentage
Change
  2009  2008  
Percentage
Change
 
(in thousands)  2009   2008  FY 09 vs. 08   2009   2008  FY 09 vs. 08        FY 10 vs. 09 
Production and distribution $1,445  $1,424   1.5% $4,434  $4,698   -5.6% $1,177  $1,530   -23.1%
 
Production and distribution expenses for the ninethree months ended JanuaryJuly 31, 2009 were $264,000$353,000 below expenses for the ninethree months ended JanuaryJuly 31, 2008.  Amortized software costs decreased $300,000$127,000 below last fiscal year due to a reduction in prior year expenditures for capitalized costs.  In addition, the decline in expenses was due to volume reductions in paper, printing and mailing that resulted primarily from a decrease in circulation of the print products.
20
Partially offsetting the savings during the ninethree months ended JanuaryJuly 31, 2009 was an approximate 8%a $45,000 increase in the costcosts of paper during fiscal year 2008data feeds, and an 8%a 6% increase in postagepostal rates.  The Company continues to look atseek purchasing alternatives, more economical delivery methods for the products, and additional ways to reduce the costs of production and distribution costs.distribution.

Office and administration

 Three Months Ended January 31,  Nine Months Ended January 31,  Three Months Ended July 31, 
       
Percentage
Change
        
Percentage
Change
  2009  2008  
Percentage
Change
 
(in thousands)  2009   2008  FY 09 vs. 08   2009   2008  FY 09 vs. 08        FY 10 vs. 09 
Office and administration $2,857  $2,531   12.9% $8,442  $6,580   28.3% $2,324  $3,120   -25.5%
 
       Office and administration expenses for the ninethree months ended JanuaryJuly 31, 2009 were $1,862,000 above$796,000 below expenses for the ninethree months ended JanuaryJuly 31, 2008.  Professional fees significantly increaseddecreased as compared to fiscal year 2008 primarily as a result of the SEC investigation.2009.  Professional fees fluctuate year to year based on the level of operations, litigation or regulatory activity requiring the use of outside professionals.
 
Segment Operating Profit
  
Investment Periodicals,
Publishing & Licensing
  Investment Management 
  
Nine Months
Ended January 31,
  
Nine Months
Ended January 31,
 
        
Percentage
Change
        
Percentage
Change
 
(in thousands) 2009  2008  FY 09 vs. 08  2009  2008  FY 09 vs. 08 
                   
Segment Revenues from extrenal customers $33,944  $37,941   -11% $20,452  $25,050   -18%
                         
Segment Profit from Operations $11,890  $15,622   -24% $6,473  $12,108   -47%
                         
Segment Profit margin from operations  35%  41%  -15%  32%  48%  -33%

 
The Company operates in two business segments, Investment Periodicals, Publishing & LicensingCopyright Data and Investment Management.
  
Investment Periodicals, Publishing
& Copyright Data
  Investment Management 
  Three Months Ended July 31,  Three Months Ended July 31, 
  2009  2008  
Percentage
Change
  2009  2008  
Percentage
Change
 
(in thousands)       FY 10 vs. 09        FY 10 vs. 09 
Segment revenues from external customers $10,088  $12,018   -16.1% $4,700  $8,195   -42.6%
Segment profit from operations $3,756  $4,743   -20.8% $(46,542) $2,726   NMF 
Segment profit margin from operations  37.2%  39.5%  -5.7%  NMF   33.3%  NMF 

Investment Periodicals, Publishing & LicensingCopyright Data

Segment revenues, operating profit and operating profit margins from the Company’s Investment Periodicals, Publishing & LicensingCopyright Data segment declined significantly from the previous fiscal year primarily due to the continued deterioration in circulation of the total product line. As previously mentioned, sub-par ranking system performance and competition in the form of free or low cost investment research on the Internet and research provided by brokerage firms at no cost to their clients contributed to the decline in revenue. The recession and turmoil in the markets have also contributed to the decline in subscriptions as individuals reduced many forms of discretionary spending, or have shifted investments to fixed income, for which the Company does not provide research. Investment Periodicals, Publishing & LicensingCopyright Data segment profit margin from operations decreased as a direct result of the decline in revenue.
 
Investment Management
 
Segment revenues, operating profit and operating profit marginsRevenues from the Company’s Investment Management business segment declined significantly from the previous fiscal year primarily due to the decline in investment management fees from the Company’s family of mutual funds that was a direct result of the deterioration in the underlying assets under management. The declineSegment operating profit and operating profit margin are negative for the quarter ended July 31, 2009 due to the provision for settlement relating to the SEC investigation described in assets under management was primarilyNote 9 – Contingencies within the result of the impact by the recession and declining equity markets.notes to consolidated condensed financial statements.

 
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Income from securities transactions,Securities Transactions, net
 
During the ninethree months ended JanuaryJuly 31, 2009 the Company’s income from securities transactions, net, of $11,643,000$218,000 was $5,960,000 higher than$414,000 below income from securities transactions, net, of $5,683,000$632,000 during the ninethree months ended JanuaryJuly 31, 2008.  Income from securities transactions, net, includes dividend and interest income of $2,423,000$275,000 at JanuaryJuly 31, 2009 that was $181,000$519,000 below income of $2,604,000$794,000 for the ninethree months ended JanuaryJuly 31, 2008.  Capital gains,losses, net of capital lossesgains during the ninethree months ended JanuaryJuly 31, 2009 were $9,243,000, which included a realized capital gain of $9,600,000 from the sale of equity securities within the Company’s portfolio. Capital gains, net of capital losses during the first nine months of fiscaland 2008 were $3,077,000,$61,000 and $160,000, respectively.
Liquidity and Capital Resources
Effective income tax rate
The overall effective income tax rate, as a percentage of which $2,793,000 represented distributions frompre-tax ordinary income for the Value Line Mutual Funds.three months ended July 31, 2009 and July 31, 2008 was 25.81% and 37.48%, respectively. The fluctuation in the income tax rate is attributable to the non-deductible portion of the provision for settlement described in Note 9-Contingencies to the Consolidated Condensed Financial Statements as of July 31, 2009 and the change in the non-taxable investment income, events that do not have tax consequences.

Liquidity and Capital Resources

The Company had working capital of $79,859,000$45,844,000 as of JanuaryJuly 31, 2009 and $86,365,000$88,173,000 as of JanuaryJuly 31, 2008.  Working capital as of July 31, 2009 has been reduced by a settlement reserve provision of $47,706,000 relating to the SEC investigation.  Cash and short-term securities were $107,782,000$106,474,000 as of JanuaryJuly 31, 2009 and $121,688,000$123,853,000 as of JanuaryJuly 31, 2008.

The Company’s cash and cash equivalents includes $52,041,000 at July 31, 2009 which is invested in the Value Line U.S. Government Money Market Fund.  The U.S. Government Money Market Fund operates under Rule 2a-7 of the Investment Company Act of 1940 and has a portfolio average maturity of under 90 days.  The Company’s U.S. Government Money Market Fund also participates in the Treasury Guarantee Program for money market funds through September 18, 2009.  There have been no delays in redemption payments from this fund.  The fund’s portfolio primarily includes U.S. government agency securities, U.S. Treasuries, certificate of deposits fully backed by the FDIC, and repurchase agreements collateralized with U.S. Treasuries in which the custodian physically takes possession of the collateral.

Cash from operating activities

The Company’s cash flow from operations of $10,324,000$4,673,000 for the ninethree months ended JanuaryJuly 31, 2009 was 24%25% below cash flow from operations of $13,604,000$6,201,000 for the ninethree months ended JanuaryJuly 31, 2008.  The primary change was the timing of purchases and maturity of fixed income securities within the Company’s trading portfolio, a declinepartially offset by an increase in the Company’s unearned revenue andaccrued expenses due to the timing of payments to vendors.

Cash from investing activities

The Company’s cash inflow from investing activities was $40,400,000of $7,891,000 for the ninethree months ended JanuaryJuly 31, 2009 compared towas 151% higher than cash outflowinflow from investing activities of $7,192,000$3,139,000 for the ninethree months ended JanuaryJuly 31, 2008.  The significant increase in cash inflows is a result of proceeds from the sales in the equity portfolio and the maturity of fixed income securities during the ninefirst three months ended July 31, 2009.  A portion of these proceeds was redeployed into fixed income government debt securities during the first quarter of fiscal year 2009.2010.

Cash from financing activities

The Company’s net cash outflow from financing activities of $10,980,000$2,994,000 as of July 31, 2009 didn’t change from the prior fiscal year. It represents a quarterly dividend of $.30 per share paid in May 20082009 for the dividend declared during the last quarter of fiscal 2008 and $.40 per share dividend paid for the first and second quarters of fiscal 2009. At the July 20082009 board meeting, the board approved a reduced quarterly dividend of $.40$.20 per share, an increasea decrease of $.10$0.10 or 33% per share, or 33%. Therefore, fiscal 2009 net cash outflow from financing activities representing dividends paid was 22% higher than cash outflow from financing activities of $8,984,000 in the prior fiscal year.August 2009.

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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.liquidity needs including operations and the provision for the SEC investigation.  Management does not anticipate any borrowing in fiscal 2009.2010.

Critical Accounting Estimates and Policies

The Company’s Critical Accounting Estimates and Policies have not changed from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Form 10-K for the fiscal year ended April 30, 2008.

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2009.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market Risk Disclosures

The Company’s Consolidated Condensed Balance Sheet includes a substantial amount of assets whose fair values are subject to market risks.  The Company’s significant market risks are primarily associated with interest rates and the credit worthiness of the issuer.  The following sections address the significant market risks associated with the Company’s business activities.

Interest Rate Risk

The Company’s strategy has been to acquire debt securities with low credit risk.  Despite this strategy management recognizes and accepts the possibility that losses may occur.  To limit the price fluctuation in these securities from interest rate changes, the Company’s management invests primarily if not exclusively in short-term obligations maturing in less than 53 years.

The fair values of the Company’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.

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  (in thousands) 
 (bp = basis points)     6 mo.  6 mo.  1 yr.  1 yr. 
    6 mos.  6 mos.  1 yr.  1 yr.                
 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 January 31, 2009               
As of July 31, 2009                   
Investments in securities with fixed maturities $59,083  $58,756  $59,214  $58,027  $58,584  $53,968  $53,063  $53,360  $52,686  $52,974 
                                        
As of April 30, 2008                    
As of April 30, 2009                    
Investments in securities with fixed maturities $65,030  $63,947  $64,753  $63,146  $64,250  $63,729  $62,573  $62,966  $61,796  $62,222 

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In addition to interest rate risk, the Company also limits its risk of default by only investing in U.S. Government or U.S. Government backed securities.  Management regularly monitors the maturity structure of the Company’s investments in debt securities in order to maintain an acceptable price risk associated with changes in interest rates.

Credit Worthiness of Issuer

The Company’s investments consist primarily of U.S. Treasury Notes and prerefundedpre-refunded municipal securities backed by U.S. Treasury Notes.  Total investment and trading portfolios consist of 78% prerefunded municipal bonds and 22% U.S. Treasury Notes.

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Item 4.  CONTROLS AND PROCEDURES

(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 Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure.

The Company’s management has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

(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.

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Part II - Other Information

Item 1.  Legal Proceedings

Refer to Note 9 (Contingencies) of the consolidated condensed financial statements for discussion of legal proceedings.

Item 1A.  Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A – Risk Factors in the Company’s Annual Report on Form 10-K for the year ended April 30, 2008.2009.

Item 6.  Exhibits

31.1 Certificate of Chief Executive Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certificate of Chief Financial Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Joint Chief Executive Officer/Chief Financial Officer Certificate Required Under Section 906 of the Sarbanes-Oxley Act of 2002.

 
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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 report to be signed on its behalf by the undersigned thereunto duly authorized.

 Value Line, Inc.
 (Registrant)
  
Date:  March 13,September 11, 2009By:s/Jean Bernhard Buttner
 Jean Bernhard Buttner
 Chairman & Chief Executive Officer
 (Principal Executive Officer)
  
Date:  March 13,September 11, 2009By:s/Mitchell E. Appel
 Mitchell E. Appel
 
Chief Financial Officer
(Principal Financial Officer)

 
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