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, 2011
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 LOGO)
VALUE LINE, INC.
(Exact name of registrant as specified in its charter)

 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. (I.R.S. Employer Identification No.)

220 East 42nd Street, New York, New York 10017-5891
(Address of principal executive offices) (Zip(Zip Code)
(212) 907-1500
(Registrant’s telephone number, including area 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��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

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

ClassOutstanding at February 28,August 31, 2011
  
Common stock, $.10 par value
9,974,8819,940,881 Shares
(VALUE LINE LOGO)
VALUE LINE INC.
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
Item 1.
Consolidated Condensed Financial Statements
Consolidated Condensed Balance Sheets as of July 31, 2011 and April 30, 2011
3
Consolidated Condensed Statements of Income for the three months ended July 31, 2011 and 2010
4
Consolidated Condensed Statements of Cash Flows for the three months ended July 31, 2011 and 2010
5
Consolidated Condensed Statement of Changes in Shareholders’ Equity for the three months ended July 31, 2011
6
Consolidated Condensed Statement of Changes in Shareholders’ Equity for the three months ended July 31, 2010
7
Notes to Consolidated Condensed Financial Statements
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
21
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
32
Item 4.
Controls and Procedures
34
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings
34
Item 1A.
Risk Factors
34
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
34
Item 5.
Other Information
35
Item 6.
Exhibits
35
Signatures
36
 
 
 
 
 

VALUE LINE INC.
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
Consolidated Condensed Balance Sheets as of January 31, 2011 and April 30, 20103
Consolidated Condensed Statements of Income for the three and nine months ended January 31, 2011 and 20104
Consolidated Condensed Statements of Cash Flows for the nine months ended January 31, 2011 and 20105
Consolidated Condensed Statement of Changes in Shareholders’ Equity for the nine months ended January 31, 20116
Consolidated Condensed Statement of Changes in Shareholders’ Equity for the nine months ended January 31, 20107
Notes to Consolidated Condensed Financial Statements8
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations20
Item 3.Quantitative and Qualitative Disclosures About Market Risk33
Item 4.Controls and Procedures35
PART II. OTHER INFORMATION
Item 1.Legal Proceedings36
Item 1A.Risk Factors36
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds36
Item 5.Other Information.37
Item 6.Exhibits37
Signatures38
EX-10.16EAM Trust Agreement
EX-14.1Code of Business Conduct and Ethics
EX-14.2Code of Ethics Regarding Securities Transactions and Insider Trading Policy
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-31.3(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)
EX-99.1Press release dated March 24, 2011
Part I - Financial Information
Item 1. Financial Statements
Value Line, Inc.

Consolidated Condensed Balance Sheets
(in thousands, except share amounts)

       
  July 31,  April 30, 
  2011  2011 
  (unaudited)    
Assets      
Current Assets:      
Cash and cash equivalents (including short term investments of $6,615 and $6,158, respectively) $7,186  $6,802 
Securities available-for-sale  9,596   12,674 
Accounts receivable, net of allowance for doubtful accounts of $45 and $45, respectively
  1,298   1,599 
Receivable from affiliates  1   38 
Prepaid and refundable income taxes  217   59 
Prepaid expenses and other current assets  992   1,028 
Deferred income taxes  1,806   3,022 
Total current assets  21,096   25,222 
         
Long term assets:        
Investment in EAM Trust  56,226   56,367 
Property and equipment, net  4,019   4,084 
Capitalized software and other intangible assets, net  3,621   2,130 
         
Total long term assets  63,866   62,581 
         
Total assets $84,962  $87,803 
         
Liabilities and Shareholders’ Equity
        
Current Liabilities:        
Accounts payable and accrued liabilities $3,391  $4,266 
Accrued salaries  781   913 
Dividends payable  1,993   1,995 
Accrued taxes payable  336   336 
Reserve for settlement expenses  1,384   1,464 
Unearned revenue  21,103   22,442 
Total current liabilities  28,988   31,416 
         
Long term liabilities:        
Unearned revenue  4,296   4,559 
Deferred income taxes  18,548   18,574 
Total long term liabilities  22,844   23,133 
         
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  31,727   31,644 
Treasury stock, at cost (36,819 shares on 7/31/11 and 25,119 shares on 4/30/11)
  (602)  (444)
Accumulated other comprehensive income, net of tax  14   63 
Total shareholders’ equity
  33,130   33,254 
         
Total liabilities and shareholders’ equity
 $84,962  $87,803 
  Jan. 31,  Apr. 30, 
  2011  2010 
  (unaudited)    
       
Assets      
Current Assets:      
Cash and cash equivalents (including short term investments of $7,004 and $15,946, respectively) $7,575  $16,435 
Securities available for sale  10,025   23,529 
Accounts receivable, net of allowance for doubtful accounts of $46 and $47, respectively  1,429   1,681 
Receivable from affiliates  25   1,520 
Prepaid and refundable income taxes  488   2,086 
Prepaid expenses and other current assets  854   995 
Deferred income taxes  5,291   8,690 
         
Total current assets  25,687   54,936 
         
Long term assets        
Investment in EAM Trust  56,668   - 
Property and equipment, net  4,147   4,257 
Capitalized software and other intangible assets, net  1,074   792 
         
Total long term assets  61,889   5,049 
         
Total assets $87,576  $59,985 
         
Liabilities and Shareholders' Equity        
Current Liabilities:        
Accounts payable and accrued liabilities $3,340  $4,982 
Accrued salaries  842   1,351 
Dividends payable  1,996   - 
Accrued taxes payable  780   780 
Reserve for settlement expenses including fair fund  3,483   4,247 
Unearned revenue  21,611   22,314 
         
Total current liabilities  32,052   33,674 
         
Long term liabilities        
Unearned revenue  4,178   4,863 
Deferred income taxes  18,880   - 
         
Total long term liabilities  23,058   4,863 
         
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  30,878   19,813 
Treasury stock, at cost (22,698 shares on 1/31/11 and 18,400 shares on 4/30/10)  (411)  (354)
Accumulated other comprehensive income/(loss), net of tax  8   (2)
         
Total shareholders' equity  32,466   21,448 
         
Total liabilities and shareholders' equity $87,576  $59,985 

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 Income
(in thousands, except share & per share amounts)
(unaudited)
 
 Three months ended  Nine months ended 
 Jan. 31,  Jan. 31,  
For the three
months ended
July 31,
 
 2011  2010  2011  2010  2011  2010 
                  
Revenues:                  
Investment periodicals and related publications $8,669  $8,864  $25,853  $27,343  $8,398  $8,617 
Copyright data fees  954   883   2,596   2,477   972   777 
Investment management fees & services  2,412   4,825   10,693   14,407   -   4,215 
                        
Total revenues  12,035   14,572   39,142   44,227   9,370   13,609 
                        
Expenses:                        
Advertising and promotion  1,366   2,440   5,443   6,933   1,121   1,718 
Salaries and employee benefits  5,322   4,084   13,587   12,634   3,640   3,877 
Production and distribution  1,238   1,330   3,518   3,895   1,229   1,138 
Office and administration  2,283   2,135   6,970   7,825   1,742   3,330 
Expenses related to restructuring  1,302   -   3,764   - 
Provision for settlement  -   -   -   47,706 
                        
Total expenses  11,511   9,989   33,282   78,993   7,732   10,063 
                        
Income/(loss) from operations  524   4,583   5,860   (34,766)
Income from operations  1,638   3,546 
                        
Gain on deconsolidation of subsidiaries  50,510   -   50,510   - 
Revenues and profits interest from EAM Trust  724   -   724   - 
Revenues and profits interests in EAM Trust  1,572   - 
Income from securities transactions, net  (40)  185   48   553   11   37 
                        
Income/(loss) before income taxes  51,718   4,768   57,142   (34,213)
Provision for income taxes/(benefit)  20,101   1,198   22,121   (8,580)
Income before income taxes  3,221   3,583 
Income tax provision  1,145   1,266 
                        
Net income/(loss) $31,617  $3,570  $35,021  $(25,633)
Net income $2,076  $2,317 
                        
Earnings/(loss) per share, basic & fully diluted $3.17  $0.36  $3.51  $(2.57)
Earnings per share, basic & fully diluted $0.21  $0.23 
                        
Weighted average number of common shares  9,981,447   9,981,600   9,981,549   9,981,600   9,965,021   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
Value Line, Inc.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
  For the three
months ended		 
  
July 31,
2011
  
July 31,
2010
 
Cash flows from operating activities:      
Net income $2,076  $2,317 
         
Adjustments to reconcile net income to net cash provided by operating activities:
        
Depreciation and amortization  135   152 
Amortization of bond premium  -   13 
Revenues and profits interests in EAM Trust  (1,572)  - 
Realized losses on sales of securities available for sale  5   - 
Deferred income taxes  1,216   1,266 
         
Changes in assets and liabilities:        
(Decrease) in unearned revenue  (1,602)  (1,023)
(Decrease) in reserve for settlement  (80)  (229)
(Decrease) in operating lease exit obligation  (145)  - 
(Decrease) in accounts payable & accrued expenses  (730)  (1,096)
(Decrease) in accrued salaries  (132)  (196)
(Increase)/decrease in prepaid and refundable income taxes  (70)  1,598 
(Increase)/decrease in prepaid expenses and other current assets  36   (28)
Decrease in accounts receivable  301   452 
Decrease in receivable from affiliates  36   141 
         
Total adjustments  (2,602)  1,050 
         
Net cash (used in)/provided by operating activities  (526)  3,367 
         
Cash flows from investing activities:        
Purchases and sales of securities classified as available for sale: 
Proceeds from sales of fixed income securities  2,998   6,706 
Purchase of fixed income securities  -   (12,011)
Revenues and profits distributions received from EAM Trust  1,626   - 
Acquisition of property and equipment  (4)  (22)
Expenditures for capitalized software  (1,557)  (41)
         
Net cash provided by /(used in) investing activities  3,063   (5,368)
         
Cash flows from financing activities:        
Purchase of treasury stock at cost  (158)  - 
Dividends paid  (1,995)  - 
         
Net cash used in financing activities  (2,153)  - 
         
Net increase /(decrease) in cash and cash equivalents    384   (2,001)
Cash and cash equivalents at beginning of year  6,802   16,435 
         
Cash and cash equivalents at end of period $7,186  $14,434 
The accompanying notes are an integral part of these consolidated condensed financial statements.
 
 
45
 
 
Part I - Financial Information
Item 1. Financial Statements
Value Line, Inc.
Consolidated Condensed StatementsStatement of Cash FlowsChanges in Shareholders’ Equity
For the Three Months Ended July 31, 2011
(in thousands)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, 2011  9,974,881  $1,000  $991  $(444)    $31,644  $63  $33,254 
                                
Comprehensive income
Net income
                 $2,076   2,076       2,076 
                              
Other comprehensive income/ (loss),
net of tax:
                             
Change in unrealized
gains/ (losses) on securities, net of taxes
 
       (49)      (49)  (49)
                                 
Comprehensive income                 $2,027             
                                 
Purchase of treasury stock  (11,700)          (158)              (158)
                                 
Dividends declared                      (1,993)      (1,993)
                                 
Balance at July 31, 2011  9,963,181  $1,000  $991  $(602)     $31,727  $14  $33,130 
The accompanying notes are an integral part of these consolidated condensed financial statements.
6
 
Part I - Financial Information
  For the nine months 
  ended 
  Jan. 31,  Jan. 31, 
  2011  2010 
Cash flows from operating activities:      
Net income/(loss) $35,021  $(25,633)
         
Adjustments to reconcile net income/(loss) to net cash        
provided by/(used in) operating activities:        
Depreciation and amortization  439   548 
Amortization of bond premium  13   853 
Gain on deconsolidation of subsidiaries  (50,510)  - 
Postemployment non-cash compensation  1,475   - 
Revenues and profits interest in EAM Trust  (724)  - 
(Gains)/losses on sales of trading securities        
and securities classified as available for sale  64   (71)
Unrealized gains/(losses) on securities  (5)  201 
Deferred income taxes  22,121   (8,326)
Writedown of software  -   720 
         
Changes in assets and liabilities:        
Proceeds from sales of trading securities  -   10,511 
(Decrease) in unearned revenue  (1,388)  (3,427)
(Decrease)/increase in reserve for settlement  (764)  4,000 
(Decrease)/increase in accounts pay. & accrued exp.  (1,536)  844 
(Decrease) in accrued salaries  (389)  (122)
Increase/(decrease) in accrued taxes payable  161   (392)
Decrease/(increase) in prepaid and refundable income taxes  1,598   (1,920)
Decrease in prepaid exp. and other current assets  139   27 
Decrease in accounts receivable  252   114 
Decrease/(increase) in receivable from affiliates  1,358   (585)
         
Total adjustments  (27,696)  2,975 
         
Net cash provided by/(used in) operating activities  7,325   (22,658)
         
Cash flows from investing activities:        
Purchases/sales of securities classified as available for sale:        
Proceeds from sales of fixed income securities  34,024   30,202 
Purchase of fixed income securities  (21,314)  (28,748)
Purchase of equity securities  (790)  - 
Cash contributed to deconsolidated subsidiary capital  (5,484)  - 
Revenues and profits distribution from EAM Trust  156   - 
Acquisition of property and equipment  (98)  (55)
Expenditures for capitalized software  (662)  (466)
         
Net cash provided by investing activities  5,832   933 
         
Cash flows from financing activities:        
Purchase of treasury stock at cost  (57)  - 
Dividends paid  (21,960)  (6,987)
         
Net cash used in financing activities  (22,017)  (6,987)
         
Net (decrease) in cash and cash equivalents  (8,860)  (28,712)
Cash and cash equivalents at beginning of year  16,435   42,936 
         
Cash and cash equivalents at end of period $7,575  $14,224 
Item 1. Financial Statements
 
Value Line, Inc.
Consolidated Condensed Statement of Changes in Shareholders’ Equity
For the Three Months Ended July 31, 2010
(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/(loss)  Total 
                         
Balance at April 30, 2010  9,981,600  $1,000  $991  $(354)    $19,813  $(2) $21,448 
                                
Comprehensive income                               
Net income                 $2,317   2,317       2,317 
Other comprehensive income/ (loss), net of tax:
 
                             
Change in unrealized gains/ (losses) on securities, net of taxes
 
 
       (10)      (10)  (10)
                                 
Comprehensive income                 $2,307             
                                 
Dividends declared                      (1,996)      (1,996)
                                 
Balance at July 31, 2010  9,981,600  $1,000  $991  $(354)     $20,134  $(12) $21,759 
 
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.
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED JANUARY 31, 2011
(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/(loss)  Total 
                         
Balance at April 30, 2010  9,981,600  $1,000  $991  $(354)    $19,813  $(2) $21,448 
                                
Comprehensive income                               
Net income                 $35,021   35,021       35,021 
Other comprehensive income, net of tax:                                
Change in unrealized gains on securities, net of taxes                  10       10   10 
                                 
Comprehensive income                 $35,031             
                                 
Purchase of treasury stock  (4,298)          (57)              (57)
                                 
Dividends declared                      (23,956)      (23,956)
                                 
Balance at January 31, 2011  9,977,302  $1,000  $991  $(411)     $30,878  $8  $32,466 

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, 2010
(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/(loss)  Total 
                         
Balance at April 30, 2009  9,981,600  $1,000  $991  $(354)    $78,935  $297  $80,869 
                                
Comprehensive income/(loss)                               
Net income/(loss)                 $(25,633)  (25,633)      (25,633)
Other comprehensive income/(loss), net of tax:                                
Change in unrealized gains on securities, net of taxes                  (77)       (77)  (77) 
                                 
Comprehensive income/(loss)                 $(25,710)            
                                 
Dividends declared                      (5,989)      (5,989)
                                 
Balance at January 31, 2010  9,981,600  $1,000  $991  $(354)     $47,313  $220  $49,170 

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 - Organization1-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”, “Value Line”, or "VLI"“VLI”), 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'sCompany’s annual report on Form 10-K, dated July 15, 201029, 2011 for the fiscal year ended April 30, 2010.2011. Results of operations covered by this report may not be indicative of the results of operations for the entire year.

VLI
Value Line is incorporated in the State of New York.  The Company'sCompany’s primary businesses arebusiness is producing investment related periodical publications and making available copyright data including 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.  Prior to December 23, 2010 the restructuring date,(the “Restructuring Date”), VLI, through its direct subsidiary EULAV Asset Management LLC (“EAM LLC”), provided investment management services to the Value Line Mutual Funds ("(“Value Line Funds"Funds” or the “Funds”), institutions and individual accounts, and, through EAM LLC’s subsidiary EULAV Securities, Inc. (“ESI”), provided distribution, marketing, and administrative services to the Value Line Funds.  On December 23, 2010, the Company deconsolidated the asset management and broker-dealermutual fund distribution subsidiaries and exchanged its controlling interest in these subsidiaries for a nonvotingnon-voting revenues interest and a non-voting profits interest in EULAV Asset Management, a Delaware business trust ("EAM"(“EAM”), the successor to the asset management businessEAM LLC and the sole member of EULAV Securities LLC ("ES" or the "Distributor"(“ES”), the distributor of the Value Line Funds,successor to ESI, (the "Restructuring Transaction"“Restructuring Transaction”).  VLI also recorded as post-employment compensation expense the value of a voting profits interest in EAM granted to one of the Trustees of EAM, a former VLI employee.  Pursuant to the EAM Declaration of Trust Agreement,dated as of December 23, 2010 (the “EAM Trust Agreement”), VLI granted EAM the right to use the Value Line name for all existing Value Line Mutual Funds and agreed to supply, without charge or expense, the Value Line Proprietary Ranking information to EAM for use in managing the Value Line Funds.  The name "Value Line"“Value Line” as used to describe the Company, its products, and its subsidiaries, is a registered trademark of the Company.  Additional rights of the Company under the EAM Trust Agreement are discussed in Note 11 - Legal Proceedings and Restructuring.

Principles of consolidation:  The consolidated condensedCompany follows the guidance in the Financial Accounting Standards Board’s (“FASB”) Topic 810 “Consolidation” to determine if it should consolidate its investment in a variable interest entity (“VIE”). A VIE is a legal entity in which either (i) equity investors do not have sufficient equity investment at risk to enable the entity to finance its activities independently or  (ii) the equity holders at risk lack the obligation to absorb losses, the right to receive residual returns or the right to make decisions about the entity’s activities that most significantly affect the entity’s economic performance.  A holder of a variable interest in a VIE is required to consolidate the entity if it is determined that it has a controlling financial statements includeinterest in the accountsVIE and is therefore the primary beneficiary.  The determination of a controlling financial interest in a VIE is based on a qualitative assessment to indentify the variable interest holder, if any, that has (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) either the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE.  The accounting guidance requires the Company and allto perform an ongoing assessment of its subsidiaries.  whether the Company is the primary beneficiary of a variable interest entity.  For fiscal 2012, the Company has determined it is not the primary beneficiary of a VIE.
In accordance with FASB'sFASB’s Topic 810, the assets, liabilities, and results of operations of subsidiaries in which the Company has a controlling interest have been consolidated. All significant intercompany accounts and transactions have been eliminated in consolidation. On December 23, 2010, the Company completed the Restructuring Transaction and deconsolidated the related affiliates in accordance with FASB'sFASB’s Topic 810. As part of the Restructuring Transaction, the Company received a significant nonvotingnon-voting revenues interest in the revenues (excluding distribution revenues) and a non-voting profits ofinterest in the new entity, EAM. The Company relied on the guidance in FASBFASB’s ASC Topics 323 and 810 in its determination not to not consolidate its investment in EAM and to account for itsuch investment under the equity method of accounting. The Company reports the amount it receives for its nonvoting revenuenon-voting revenues and nonvoting profitnon-voting profits interests as a separate line item below operating income in the Consolidated Condensed Statement of Income.

Accounting Standards Codification:

During fiscal year 2010, the Company adopted the Financial Accounting Standards Board's ("FASB's") FASB’s Accounting Standards Codification ("ASC"(“ASC”). The FASB'sFASB’s ASC is the source of authoritative U.S. accounting and reporting standards for nongovernmental entities, in addition to guidance issued by the Securities and Exchange Commission ("SEC").SEC. The FASB'sFASB’s ASC reorganizesreorganized the thousands of U.S. GAAP pronouncements into roughly 90 accounting topics and displays all topics using a consistent structure. Although not the official source, it also includes relevant portions of authoritative SEC guidance that follows the same topical structure in separate sections in the Codification. The financial statements of the Company have been updated to reflect the relevant references to the FASB'sFASB’s ASC.

8
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
Revenue Recognition:

Depending upon the product, subscription fulfillment for Value Line publications 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.

Copyright data revenues are derived from providing 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. The Company earns asset-based copyright data fees as specified in the individual agreements. Revenue is recognized monthly over the term of the agreement and, because it is asset-based, will fluctuate as the market value of the underlying portfolio increases or decreases in value.

Prior to the restructuring,Restructuring Date, the Company earned investment management fees that consistconsisted of management fees from the Value Line Funds and from asset management clients. Investment management fees for the mutual fundsFunds were earned on a monthly basis as services were performed. The fees were calculated based on average daily net assets of the mutual fundsFunds in accordance with each fund'sFund’s advisory agreement.agreement (see Notes 7 and 11).  

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 Value Line Funds.
 
8
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

The Value Line Funds are open-end management companies registered under the Investment Company Act of 1940.1940 (the “1940 Act”). Shareholder transactions for the Value Line 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 open. Prior to December 1, 2010, EAM LLC, in addition to managing the Value Line Funds, separately managed accounts of institutions and high net worth individuals for which it was paid an advisory fee. EAM had no separately managed accounts as of July 31, 2011. Assets within the separately managed accounts arewere held at third party custodians and were subject to the terms of eachthe applicable advisory agreement and dodid not have any advance notice requirement for withdrawals, although they generally have a 30 day advance notice requirement for termination of the account.withdrawals.

Also, prior to the Restructuring Transaction,Date, service and distribution fees were received from the Value Line Funds in accordance with service and distribution plans under rule 12b-1 of the Investment Company Act of 1940. TheThese 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 ES,ESI, the distributor of the Value Line Funds includeprior to the Restructuring Date, included payments to securities dealers, banks, financial institutions and other organizations that provideprovided distribution, marketing, and administrative services with respect to the distribution of the Value Line Funds. Service and distribution fees are received by the distributor on a monthly basis and calculated onbased upon the average daily net assets of the respective mutual fundFund in accordance with each fundFund prospectus (see Note 6)Notes 7 and 11).

Investment in Unconsolidated Entities:

The Company accounts for its investments in unconsolidated entities (EAM) using the equity method of accounting in accordance with FASB’s ASC 323. The equity method is an appropriate means of recognizing increases or decreases measured by generally accepted accounting principles ("GAAP"(“GAAP”) in the economic resources underlying the investments. Under the equity method, an investor recognizes its share of the earnings or losses of an investee in the periods for which they are reported by the investee in its financial statements rather than in the period in which an investee declares a dividend or distribution. An investor adjusts the carrying amount of an investment for its share of the earnings or losses recognized inby the investee.

The Company’s “interests”Company’s “interests” in EAM, the investment adviser to and the sole member of the distributor of the Value Line Funds, are evidenced byconsist of a “revenue interest”“non-voting revenues interest” and “nonvotinga “non-voting profits interest”interest” in EAM. The revenuenon-voting revenues interest entitles the Company to receive a range of 41% to 55% (depending on the amount of revenues) of EAM’sEAM’s adjusted gross revenues (excluding ES’s distribution revenues). The nonvotingnon-voting profits interest entitles the Company to receive 50% (subject to certain limited adjustments) of the profits (as defined in the EAM Trust agreement)Agreement) of EAM. The revenuerevenues interest and at least 90% of the profits interest are to be distributed each quarter to all interest holders of EAM, including Value Line. Subsequent to December 23, 2010, the Company's revenueCompany’s revenues interest in EAM excludes participation in ES' (EAM's subsidiary)the service and distribution fees.fees of EAM’s subsidiary ES. The Company reflects its nonvotingnon-voting revenues and nonvotingnon-voting profits interests in EAM as non-operating income under the equity method of accounting subsequent to the Restructuring Transaction. Although the Company willdoes not have control over the operating and financial policies of EAM, pursuant to the EAM Trust Agreement, it does have a contractual right to receive these revenues and profits.  On December 23, 2010, VLI agreed
9
Value Line, Inc.
Notes to distribute a Class A voting profits interest in EAM to one of the Trustees of EAM, a former employee of VLI.  As such, the Company has recorded postemployment compensation expense in its Consolidated Condensed Statement of Income of $1,475,000, the value assigned to the voting profits interest granted to the former VLI employee, Mr. Mitchell E. Appel.Financial Statements

Valuation of Securities:

The Company'sCompany’s securities classified as available-for-salecash equivalents and cash equivalentsavailable-for-sale consist of shares of U.S. Government Money Market Funds ("USGMMF"),that invest primarily in short-term U.S. Government securities, investments in exchange traded equity funds, shares of equity securities in various publicly traded companies, government debt securities, and FDIC insured commercial paper accounted forand are valued in accordance with the requirements of the Fair Value Measurements Topic of the FASB'sFASB’s ASC 820. The securities available-for-sale reflected in the consolidated condensed balance sheetsConsolidated Condensed Balance Sheets 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'Shareholders’ Equity. 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 liquid assets available-for-sale 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 exchange traded funds shares is based upon the publicly quoted price of the shares listed on a securities exchange. The market value of the Company'sCompany’s fixed maturity government debt obligations is determined utilizing publicly quoted market prices or other observable inputs.prices. Cash equivalents consist of investments in USGMMF and areMoney Market Funds that invest primarily in U.S. Government securities valued at $1 per share in accordance with rule 2a-7 ofunder the Investment Company Act of 1940.1940 Act.

The Fair Value Measurements Topic of FASB'sFASB’s ASC defines fair value 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. The  Fair Value Measurements Topic 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. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
 
9
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

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 nine months ended January 31, 2011 for Level 1 securities consisted exclusively of quoted prices.

The securities valued as Level 2 investments consist primarily of U.S. Treasury Bills and Notes, and FDIC insured commercial paper. 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 data such as trades of comparable bond issues, broker/dealer quotations for the same or similar investmentsprices in active markets and other observable inputs.  When necessary, the third party services may use discounted future cash flows to calculate the net present value.

for identical assets.
The following is a summary of the inputs used as of JanuaryJuly 31, 2011 in valuing the Company’s investments carried at fair value:

  (in thousands) 
       Investments in 
       Securities 
 (in thousands)     Cash  Available-for- 
Valuation Inputs 
Total
Investments
  
Cash
Equivalents
  
Investments in
Securities
Available-for-
Sale
  Total Investments  Equivalents  Sale 
Level 1 - quoted prices $7,818  $7,004  $814  $16,211  $6,615  $9,596 
Level 2 - other significant observable inputs  9,211   -   9,211   -   -   - 
Level 3 - significant unobservable inputs  -   -   -   -   -   - 
Total $17,029  $7,004  $10,025  $16,211  $6,615  $9,596 

10
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
The following is a summary of the inputs used as of April 30, 2011 in valuing the Company’s investments carried at fair value:
   (in thousands) 
        Investments in 
        Securities 
     Cash  Available-for- 
Valuation Inputs Total Investments  Equivalents  Sale 
Level 1 - quoted prices $18,832  $6,158  $12,674 
Level 2 - other significant observable inputs  -   -   - 
Level 3 - significant unobservable inputs  -   -   - 
Total $18,832  $6,158  $12,674 
The Company had no other financial instruments including futures, forwards and swap contracts. For the periodperiods ended JanuaryJuly 31, 2011 and April 30, 2011, there were no Level 2 nor Level 3 investments. The Company does not have any liabilities subject to Fair Value Measurement.

Advertising expenses:  The Company expenses advertising costs as incurred.

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

Income Taxes:

The Company computes its income tax provision in accordance with the Income Tax Topic of the FASB'sFASB’s ASC. Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been reflected in the Consolidated Condensed Financial Statements. Deferred tax liabilities and assets are determined based on the differences between the book values and the tax bases of particular assets and liabilities, using tax rates currently in effect for the years in which the differences are expected to reverse.

The Income Tax Topic of the FASB'sFASB’s ASC 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. As of JanuaryJuly 31, 2011, management has reviewed the tax positions for the years still subject to tax audit under the statute of limitations, evaluated the implications, and determined that there is no material impact to the Company'sCompany’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 period.

Cash and Cash Equivalents: For purposes of the Consolidated Condensed Statements of Cash Flows, the Company considers all cash held at banks and short term liquid investments with an original maturity of less than three months to be cash and cash equivalents. As of JanuaryJuly 31, 2011 and April 30, 2010,2011, cash equivalents included $7,004,000$6,615,000 and $15,943,000,$6,158,000, respectively, invested in USGMMFs.mutual funds that invest in U.S. Government Securities and bank certificates of deposits.

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.

Expenses associatedAssociated with restructuring:

Restructuring:
The Company expensesexpensed all costs associated with the Restructuring Transaction as incurred (see Note 10)11 - Legal Proceedings and Restructuring).  In addition, as mentioned above, the Company recorded as compensation expense the value of the Class A voting profits interest in EAM granted to its former employee.
 
10
Note 2-Investments:
 
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

Note 2 - Investments:

Securities Available-for-Sale:

Securities held by the Company and its subsidiaries are classified as available-for-sale securities in accordance with FASB'sFASB’s ASC 320, Investments - Debt and Equity Securities.

Equity Securities:

As of JanuaryJuly 31, 2011 and April 30, 2011, the aggregate cost of the equity securities classified as available-for-sale, which consist of investments in the First Trust Value Line Dividend, PGF PowerShares preferred stock and S&P Dividend ETFs, and certain shares of equity securities was $790,000$1,360,000 for both periods and the market value was $814,000. The Company did not hold any equity securities as of April 30, 2010. The total gains for equity securities with net gains included in Accumulated Other Comprehensive Income on  the Consolidated Condensed Balance Sheet$1,392,000 and $1,466,000, respectively. There were $24,000, net of deferred taxes of $9,000 as of January 31, 2011.

The increase in gross unrealized gains on equity securities classified as available-for-sale due to changes in market conditions of $24,000, net of deferred  taxes of $9,000, was included in Shareholders' Equity at January 31, 2011.

Government Debt Securities (Fixed Income Securities):

Government debt securities consist of securities issued by federal, state, and local governments within the United States. The aggregate cost and fair value at January 31, 2011 for government debt securities classified as available-for-sale were as follows:

  (in thousands) 
   Amortized Historical     Gross Unrealized 
Maturity Cost  Fair Value  Holding Losses 
Due within 1 year $9,222  $9,211  $(11)
Total investment in government debt securities $9,222  $9,211  $(11)

The aggregate cost and fair value at April 30, 2010 for government debt securities classified as available-for-sale were as follows:

  (in thousands) 
   Amortized Historical     Gross Unrealized 
Maturity Cost  Fair Value  Holding Gains/(Losses) 
Due within 1 year $22,012  $22,014  $2 
Due 1 year through 5 years  1,520   1,515   (5)
Total investment in government debt securities $23,532  $23,529  $(3)

The increase in gross unrealized  losses of $8,000 and $461,000 on fixed income securities classified as available-for-sale net of deferred income tax of $3,000 and $162,000, respectively, were included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheets as of January 31, 2011 and April 30, 2010, respectively.

The average yield on the Government debt securities classified as available-for-sale at January 31, 2011 and April  30, 2010, was 0.38% and 0.54%, respectively.

Proceedsno sales or proceeds from sales of government debtequity securities classified as available-for-sale during the ninethree months ended JanuaryJuly 31, 2011 and 2010 were $34,024,000 and $30,202,000, respectively.  During the nine months ended Januaryor July 31,  2011 and 2010, capital losses on sales of fixed income securities of $64,000 and $20,000, respectively, were reclassified from Accumulated Other Comprehensive Income in the Balance Sheet to the Consolidated Condensed Statement of Income.

For the  nine months ended January 31, 2011 and 2010, income from securities transactions also included $7,000 and $3,000 of dividend income; $109,000 and $728,000 of interest income, net of bond amortization of $14,000 and $853,000, respectively.  During the  nine months ended January 31, 2011 and 2010, income from securities transactions also included $2,000 and $20,000 of related interest expense, respectively.2010.
 
 
11
 
 
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
 
The decrease in gross unrealized gains on equity securities classified as available-for-sale due to changes in market conditions of $74,000, net of deferred taxes of $26,000, was included in Shareholders’ Equity at July 31, 2011. The increase in gross unrealized gains on equity securities classified as available-for-sale due to changes in market conditions of $106,000, net of deferred taxes of $37,000, was included in Shareholders’ Equity at  April 30, 2011.
Investment in Unconsolidated Entities:
Equity Method Investment:
The Company has recorded an asset, Investment in EAM, on its consolidated condensed balance sheet of $56,100,000 as a result of the deconsolidation of EULAV Asset Management LLC ("EULAV Asset Management") and EULAV Securities, Inc. ("ESI"), the former asset management and broker-dealer subsidiaries.  In accordance with the Consolidation Topic of the FASB’s ASC, the Company recognized a pre-tax gain in net income of $50,510,000 measured as the difference between the fair value of the consideration received, including satisfaction of its postemployment compensation obligation of $1,475,000, less the carrying value of the former subsidiaries’ assets and liabilities. In addtion, the Company incurred expenses of $3,764,000 associated with the divestiture. The value of VLI's investment in EAM at January 31, 2011 reflects the fair value of the nonvoting revenues and profits interest received in the Transaction, plus the $7,000,000 of cash and liquid securities contributed to EAM's capital account by VLI, and $568,000 of undistributed earnings from EAM. EAM is an investment adviser and through its wholly owned subsidiary ES, is the distributor of the Value Line Funds.
The Company utilized the services of valuation consultants to determine the fair value of the EAM asset and the value of the Class A voting profits interest granted to its former employee.  The methodology utilized by the third party valuation consultants was the discounted cash flows method to determine the fair value of VLI's nonvoting revenues and profits interest and the fair value of the Class A voting profits interest granted to a former employee. Based upon the results of the valuation and cash and other assets transferred by VLI to EAM in the transaction, the Company recorded a fair value of $56,100,000 for VLI's nonvoting EAM Trust investment. The obligation for postemployment compensation granted to the former employee was valued at $1,475,000 for the Class A voting profits interest.
The Company evaluates this asset for impairment which requires a determination as to whether an event or change in circumstances has occurred in the period that may have a significant adverse effect on the fair value of the investment.  Impairment indicators include, but are not limited to the following: (a) a significant deterioration in the earnings performance, asset quality, or business prospects of the investee, (b) a significant adverse change in the regulatory, economic, or technological environment of the investee, (c) a significant adverse change in the general market condition of the industry in which the investee operates, or (d) factors that raise significant concerns about the investee’s ability to continue as a going concern such as negative cash flows, working capital deficiencies, or noncompliance with statutory capital requirements.  The Company did not record any impairment losses on its equity method investment in EAM during fiscal year 2011.
EAM's overall results before distributions to all interest holders including Value Line for the period from December 23, 2010 through January 31, 2011 consist of  total management fees earned from the Value Line Funds of $1,388,000 and service and distribution 12b-1 fees of $390,000.  For the same period, total management fee waivers were $72,000 and 12b-1 fee waivers were $213,000.  After revenue distributions of $665,000 to VLI, total revenues were $1,113,000 for the period from December 23, 2010 to January 31, 2011. Operating expenses of EAM for the period from December 23, 2010 through January 31, 2011, were $994,000 and EAM's net income was $119,000 before distribution to interest holders.   At January 31, 2011, EAM's total assets were $57,413,000, total liabilities were $1,221,000 and total equity was $56,192,000.
Note 3 - Supplementary Cash Flow Information:
Cash payments for income taxes were $262,000 and $2,401,000 for the nine months ended January 31, 2011 and 2010, respectively.  The Company also received $1,598,000 of federal income tax refunds during the first quarter of fiscal 2011, which was included as prepaid and refundable income taxes as of April 30, 2010.
On December 23, 2010, the Company completed the Restructuring Transaction which included the receipt of a nonvoting revenues and profits interest in EAM in exchange for VLI's voting shares in EULAV Asset Management and ESI. This investment, classified as Investment in EAM on the Consolidated Condensed Balance Sheet was valued at $56,100,000, which included cash of $5,484,000 and $1,516,000 of FDIC insured corporate notes, contributed by VLI to EAM as part of the Transaction. The Company satisfied its postemployment compensation obligation valued at $1,475,000 by granting a Class A voting profits interest to VLI's former employee in connection with the transaction.
Government Debt Securities (Fixed Income Securities):
Government debt securities consist of securities issued by the United States federal government. The aggregate cost and fair value at July 31, 2011 for government debt securities classified as available-for-sale were as follows:
  (in thousands) 
Maturity  
Historical
Cost
  Fair Value  
Gross Unrealized
Holding Gains/(Losses)
 
Due within 1 year $8,214  $8,204  $(10)
Total investment in government debt securities $8,214  $8,204  $(10)
The aggregate cost and fair value at April 30, 2011 for government debt securities classified as available-for-sale were as follows:
  (in thousands) 
Maturity  
Historical
Cost
  Fair Value  
Gross Unrealized
Holding Gains/(Losses)
 
Due within 1 year $11,217  $11,208  $(9)
Total investment in government debt securities $11,217  $11,208  $(9)
The increase in gross unrealized losses of $6,000 and $74,000 on fixed income securities classified as available-for-sale net of deferred income tax of $2,000 and $26,000, respectively, were included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheets as of July 31, 2011 and April 30, 2011, respectively.
Proceeds from sales of government debt securities classified as available-for-sale during the three months ended July 31, 2011 and July 31, 2010 were $2,998,000 and $6,706,000, respectively. During the three months ended July 31, 2011, losses on sales of fixed income securities of $5,000 were reclassified from Accumulated Other Comprehensive Income in the Balance Sheet to the Consolidated Condensed Statement of Income. During the three months ended July 31, 2010 there were no realized gains or losses on fixed income securities.
The average yield on the Government debt securities classified as available-for-sale at July 31, 2011 and April 30, 2011 was 0.23% and 0.24%, respectively.
During the three months ended July 31, 2011 and 2010, income from securities transactions also included $12,000 and $0 of dividend income; $8,000 and $39,000 of interest income, respectively.
Investment in Unconsolidated Entities:
Equity Method Investment:
The Company recorded an asset, Investment in EAM, on its Consolidated Condensed Balance Sheet with an initial valuation as of December 23, 2010 of $55,805,000 as a result of the deconsolidation of EAM LLC and ESI, the former asset management and mutual fund distribution subsidiaries.  In accordance with the Consolidation Topic of the FASB’s ASC, the Company recognized a pre-tax gain in net income of $50,510,000 measured as the difference between the fair value of the consideration received, valued at $51,690,000, and the carrying value of the former subsidiaries’ assets and liabilities, which was comprised of $1,180,000 of working capital (cash), transferred pursuant to the Restructuring Transaction. The value of VLI’s investment in EAM at July 31, 2011 and April 30, 2011 reflects the fair value at December 23, 2010 of the non-voting revenues and profits interest received in the Restructuring Transaction, plus $5,820,000 of cash and liquid securities in excess of working capital requirements contributed to EAM’s capital account by VLI on December 23, 2010, plus earnings from EAM less earnings distributed to VLI by EAM, during the period from December 23, 2010 through the balance sheets dates.
In accordance with the EAM Trust Agreement and as mentioned above, EAM received $7,000,000 in cash and liquid securities from VLI pursuant to the Restructuring Transaction which included $1,180,000 of working capital deemed needed for operations and $5,820,000 in excess of working capital needs. It is anticipated that EAM will have sufficient liquidity and earn enough profit to conduct its current and future operations so the management of EAM will not need additional funding. Although the distributor had historically received, from the Value Line Funds under the compensation plans it had in place with the Funds, amounts in excess of its actual expenditures, in more recent years the distributor has been spending amounts on promotion of the Value Line Funds in excess of the compensation received from the Funds. Over time, EAM anticipates that its total future expenditures on such promotion will equal or exceed its total future revenues under the Funds’ distribution plans. However, if that should not occur, EAM has no obligation to reimburse the Value Line Funds.
 
12
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
The Company monitors this asset for impairment to determine whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. Impairment indicators include, but are not limited to the following: (a) a significant deterioration in the earnings performance, asset quality, or business prospects of the investee, (b) a significant adverse change in the regulatory, economic, or technological environment of the investee, (c) a significant adverse change in the general market condition of the industry in which the investee operates, or (d) factors that raise significant concerns about the investee’s ability to continue as a going concern such as negative cash flows, working capital deficiencies, or noncompliance with statutory capital requirements.  EAM did not record any impairment losses for its assets during the first quarter of fiscal year 2012.
The overall results of EAM’s investment management operations during the three months ended July 31, 2011, before interest holder distributions, include total investment management fees earned from the Value Line Funds of $3,301,000, 12b-1 fees of $928,000 and other income of $4,000. For the same period, total investment management fee waivers were $230,000 and 12b-1 fee waivers were $618,000.  During the three months ended July 31, 2011, EAM’s net income was $162,000, after giving effect to Value Line’s non-voting revenues interest of $1,491,000, but before distributions to voting profits interest holders and to the Company in respect of its non-voting profits interest. During the three months ended July 31, 2011, the Company recorded income of $1,491,000 and profits of $81,000 from its non-voting revenues and its non-voting profits interests in EAM without incurring any directly related expenses. Operating expenses of EAM during the three months ended July 31, 2011, were $2,580,000 and EAM’s net income was $162,000 available for distribution to profit interest holders. At July 31, 2011, EAM’s total assets were $58,091,000, total liabilities were $1,471,000 and total equity was $56,620,000.
Note 43: Variable Interest Entity
As discussed in Note 11 - Employees'Legal Proceedings and Restructuring, as part of the Restructuring Transaction, the Company retained a non-voting revenues interest and a 50% non-voting profits interest in EAM, which was formed to carry on the asset management and mutual fund distribution businesses formerly conducted by Value Line and its subsidiaries. EAM is considered to be a variable interest entity. The Company makes its determination for consolidation of EAM as a variable interest entity based on a qualitative assessment of the purpose and design of EAM, the terms and characteristics of the variable interests in EAM, and the risks EAM is designed to originate and pass through to holders of variable interests. Other than EAM, the Company does not have an interest in any other variable interest entities.
Value Line has determined that it does not have a controlling financial interest in EAM because it does not have the power to direct the activities of EAM that most significantly impact its economic performance. Value Line does not hold any voting stock of EAM and it does not have any involvement in the day to day activities or operations of EAM. Although the EAM Trust Agreement provides Value Line with certain consent rights and contains certain restrictive covenants related to the activities of EAM, these are considered to be protective rights and therefore Value Line does not maintain control over EAM.
In addition, although EAM is expected to be profitable, there is a risk that it could operate at a loss. While all of the profit interest shareholders in EAM are subject to variability based on EAM’s operations risk, Value Line’s revenue interest in EAM is a preferred interest in the revenues of EAM, rather than a profits interest in EAM, and Value Line accordingly believes it is subject to proportionately less risk than other holders of the profits interests.
The Company has not provided any explicit or implicit financial or other support to EAM other than what was contractually agreed to in the EAM Trust Agreement. Value Line has no obligation to fund EAM in the future and as a result has no exposure to loss beyond its initial investment and any undistributed revenues and profits interests retained in EAM. The following table presents the total assets of EAM, the maximum exposure to loss due to involvement with EAM, as well as the value of the assets and liabilities the Company has recorded for its interest in EAM.
               
         (In thousands)     
      Maximum        
      Exposure to  Investment     
   VIE Assets  Loss   (1) (2)  Liabilities  
                
EAM Trustat July 31, 2011 $58,091  $56,226  $56,226  $-  
                   
EAM Trustat April 30, 2011 $57,780  $56,367  $56,367  $-  
(1)  Reported within Long Term Assets on Consolidated Condensed Balance Sheets.
(2) Revenues receivable from EAM of $514,000 previously reported within Current Assets at April 30, 2011 on the Form 10-K, filed on July 29, 2011, were reclassified from Receivables from Affiliates to Investment in EAM Trust at July 31, 2011 on the Consolidated Condensed Balance Sheet.
13
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
Note 4-Supplementary Cash Flow Information:
There were no income tax payments during the three months ended July 31, 2011. Cash payments for income taxes were $10,000 for the three months ended July 31, 2010. The Company also received $1,598,000 of federal income tax refunds during the first quarter of fiscal 2011.
Note 5-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"“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 and the amount of consolidated net operating income as defined in the Plan. The estimated profit sharing plan contribution, which is included as an expense in salaries and employee benefits in the Consolidated Condensed Statement of Income, was $300,000 and $0$150,000 for the ninethree months ended JanuaryJuly 31, 2011 and 2010, respectively.2011.
 
12
Note 6-Comprehensive Income:
 
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

Note 5 - Comprehensive Income:

The FASB'sFASB’s ASC Comprehensive Income topic 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 JanuaryAs of July 31, 2011, and 2010, the Company held both equity and U.S. Government debt securities that are classified as available-for-sale on the Consolidated Condensed Balance Sheets. At July 31, 2010, the Company held U.S. Government debt securities that are classified as available-for-sale on the Consolidated Condensed Balance Sheets. The change in valuation of these securities, net of deferred income taxes, has been recorded in Accumulated Other Comprehensive Income in the Company'sCompany’s Consolidated Condensed Balance Sheets.

The components of comprehensive income that are included in the Statement of Changes in Shareholders'Shareholders’ Equity are as follows:

  (in thousands) 
  Before  Tax Expense  Net of 
Nine months ended January 31, 2011 Tax Amount  (Benefit)  Tax Amount 
Unrealized gains/(losses) on securities:         
Unrealized holding losses arising during the period $(48) $17  $(31)
Add: Reclassification adjustments for            
losses realized in net income  64   (23)  41 
             
Other comprehensive income $16  $(6) $10 
             
  (in thousands) 
  Before  Tax Expense  Net of 
Nine months ended January 31, 2010 Tax Amount  (Benefit)  Tax Amount 
Unrealized gains/(losses) on securities:            
Unrealized holding losses arising during the period $(139) $50  $(89)
Add: Reclassification adjustments for            
losses realized in net income  20   (8)  12 
             
Other comprehensive income $(119) $42  $(77)
     (in thousands)    
  Before  Tax  Net of 
  Tax  (Expense)  Tax 
  Amount  or Benefit  Amount 
Three months ended July 31, 2011         
Unrealized losses on securities:         
Unrealized holding losses arising during the         
period $(80) $28  $(52)
Add: Reclassification adjustments            
for losses realized in net income  5   (2)  3 
Other comprehensive loss $(75) $26  $(49)
Three months ended July 31, 2010            
Unrealized losses on securities:            
Unrealized holding losses arising during the            
period $(15) $5  $(10)
Other comprehensive loss $(15) $5  $(10)

Note 6 - Related7-Related Party Transactions:

Investment Management Segment:(overview):

The Company's
As discussed previously in Note 1 - Organization and Summary of Significant Accounting Policies, prior to December 23, 2010, the Company’s former direct subsidiary EULAV Asset Management,EAM LLC was the investment adviser and manager for the Value Line Funds, and EAM LLC’s subsidiary ESI was the distributor for the Funds. EULAV Asset ManagementEAM LLC earned investment management fees based upon the average daily net asset values of the respective Value Line Funds. As discussed in Note 1, serviceService and distribution fees were received by ESI from the Value Line Funds in accordance with service and distribution plans under rule 12b-1 of the Investment Company Act of 1940. TheThese plans are compensation plans, which means that the distributor’sdistributor’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 plans. Expenses incurred by ESI includeincluded payments to securities dealers, banks, financial institutions and other organizations which provideprovided distribution, marketing, and administrative services (including payments by ESI to VLI for allocated compensation and administration expenses) with respect to the distribution of the funds’Funds’ shares. Service and distribution fees were received on a monthly basis and calculated onbased upon the average daily net assets of the respective fundFund in accordance with each fund'sFund’s prospectus.

For the period from May 1, 2010 through December 23, 2010 and nine months ended January 31, 2010, investment management fees and 12b-1 service and distribution fees amounted to $10,584,000 and $14,237,000, respectively, which took into account fee waivers for certain of the Value Line Funds. These amounts included service and distribution fees of $2,308,000 and $3,140,000, earned by ESI for the  period from May 1, 2010 through December 23, 2010 and nine months ended January 31, 2010, respectively.  For the period from May 1, 2010 through December 23, 2010 and nine months ended January 31, 2010, total management fee waivers were $513,000 and $712,000, respectively.  For the period from May 1, 2010 through December 23, 2010 and nine months ended January 31, 2010, 12b-1 fee waivers were $1,651,000 and $2,014,000, respectively.  The Company and its former subsidiary, ESI, had no right to recoup the previously waived amounts of management fees and 12b-1 fees, except for waived management fees for the Value Line U.S. Government Money Market Fund.  Any recoupment is subject to the provisions of the prospectus.

For the period from May 1, 2010 through December 23, 2010 and nine months ended January 31, 2010, separately managed account revenues were $109,000 and $170,000, respectively.

The related receivables from Value Line Funds included in Receivables from affiliates were $1,516,000 at April 30, 2010.
 
 
1314
 
 
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

As of the Restructuring Date, December 23, 2010, the Company deconsolidated its asset management and mutual fund distribution businesses and its interest in these businesses was restructured as a non-voting revenues and non-voting profits interest in EAM. Accordingly, the Company no longer reports this operation as a separate business segment, although it still maintains a significant interest in the cash flows generated by this business. Total assets in the Value Line Funds managed by EAM at July 31, 2011 were $2.15 billion, 2% above total assets of $2.1 billion in the Value Line Funds managed by EAM LLC, the predecessor of EAM, at July 31, 2010. Overall assets in the Value Line Funds at July 31, 2011 increased $50 million, or 2% since July 31, 2010 as a result of market appreciation that more than offset net redemptions within the equity funds.
During the three months ended July 31, 2010, investment management fees and distribution service fees (which we sometimes refer to as “12b-1 fees”) amounted to $4,215,000, after giving effect to account fee waivers for certain of the Value Line Funds. These amounts included 12b-1 fees of $910,000. For the same period total investment management fee waivers were $186,000 and total 12b-1 fee waivers were $620,000. With limited exceptions, the Company, EAM LLC and ESI had no right to recoup the previously waived amounts of investment management fees and 12b-1 fees. Any such recoupment of waived investment management fees is subject to the provisions of the applicable prospectus. During the three months ended July 31, 2010, separately managed accounts revenues were $51,000. Separately managed accounts had $44 million in assets as of July 31, 2010. Of the $44 million, $21 million was affiliated with Arnold Bernhard & Co., Inc. (“AB&Co.” or the “Parent”). During the third quarter of fiscal 2011, the affiliated entities cancelled their separately managed account agreements with EAM LLC.
The non-voting revenues and profits distributions due from EAM to the Company for income earned through the balance sheet date, which is included in the Investment in EAM Trust on the Consolidated Condensed Balance Sheets were $587,000 and $514,000 at July 31, 2011 and April 30, 2011, respectively. The non-voting revenues and non-voting profits interests due from EAM are payable quarterly under the provisions of the EAM Trust Agreement.
EAM Trust - VLI's nonvoting revenueVLI’s non-voting revenues and profits interests:

As a result of the Restructuring Transaction, on December 23, 2010, the Company no longer receivesengages, through subsidiaries, in the investment management or mutual fund distribution services revenues.businesses. The Company received monthlydoes hold non-voting revenues interestand non-voting profits interests in investment management fees in a range ofEAM which entitle the Company to receive from EAM an amount ranging from 41% to 55% of EAM'sEAM’s investment management fee revenues from its mutual fund and separate accounts business revenues.business. EAM currently has no separately managed account clients. During the three months ended July 31, 2011, the Company recorded revenues of $1,491,000 and profits of $81,000 from its non-voting interests in EAM without incurring any directly related expenses. During the period from December 23, 2010 through January 31,until May 28, 2011, the Company recorded as nonvoting revenues and profits interest from EAM Trust $665,000 and $59,000, respectively as non-operating income from its equity investment in EAM.  On a transitional basis EAM and ES occupyoccupied a portion of the premises that the Company leases from a third party. The Company has received $56,000 during$44,000 for the period from December 23, 2010 to January 31,month of May, 2011 for rentalrent and certain accounting and other administrative support services.  In accordance with the terms of the restructuring plan and EAM Trust Agreement, the Company has given noticeservices provided to EAM to vacate the Company's premisesand ES on or before June 1, 2011.a transitional basis during such period.

On March 11, 2010, VLI and the Boards of Trustees/Directors of the Value Line Funds entered into an agreement providing for VLI to reimburse the Funds in the aggregate amount of $917,302 for various past expenses incurred by the Funds in connection with the SEC Settlement referred to in Note 10. The payable for this expense reimbursement was included in the reserve for settlement expenses on the Consolidated Condensed Balance Sheet of the Company.  The reimbursement was paid in full by VLI in October 2010.

As of January 31, 2011, the Company had $2,789,000 invested in the USGMMF held at brokers and $4,215,000 invested in the Value Line USGMMF representing 4% of that fund's total net assets.

Transactions with Parent:

ForDuring the ninethree months ended JanuaryJuly 31, 2011 and 2010, the Company was reimbursed $275,000$101,000 and $1,471,000,$75,000, respectively, for payments it made on behalf of and services it provided to its majority shareholder, Arnold Bernhard & Co., Inc. ("the Parent").Parent. At JanuaryJuly 31, 2011 and April 30, 2010,2011, the Receivables from affiliates included  a receivablereceivables from the Parent of $25,000$1,000 and $5,000,$38,000, respectively.

The Company is a party to a tax-sharing arrangement with the Parent which allocates the tax liabilities of the two Companies between them. The Company made no Federal tax payments to the Parent during the three months ended July 31, 2011. For the three months ended July 31, 2010, the Company received $1,598,000 from the Parent for prepaid Federal income taxes.  
From time to time, the Parent has purchased additional shares of common stock 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 theThe Parent may make additional purchases of common stock of the Company from time to time in the future. Thefuture, although the Parent has suspended purchases of Value Line shares until Value Line'sLine’s share repurchase program is completeconcluded (see Note 9)10 - Treasury Stock and Repurchase Program). TheAs at July 31, 2011, the Parent owns approximately 86.5%86.7% of the issued and outstanding shares of common stock of the Company.

15
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
Note 7 - Federal,8-Federal, State and Local Income Taxes:

The Company computes its income tax provision in accordance with the requirements of the Income Tax Topic of the FASB'sFASB’s ASC.

The provision for income taxes includes the following: Nine months ended January 31, 
  2011  2010 
  (in thousands) 
Current tax expense:      
Federal $248  $- 
State and local  -   - 
   248   - 
Deferred tax expense/(benefit):        
Federal  19,282   (6,662)
State and local  2,591   (1,918)
   21,873   (8,580)
Provision for income taxes/(benefit) $22,121  $(8,580)
The provision for income taxes includes the following:

  Three months ended July 31, 
  2011  2010 
  (in thousands) 
Current tax expense/(benefit):      
Federal $50  $125 
State and local  (92)  - 
   (42)  125 
Deferred tax expense:        
Federal  1,006   1,064 
State and local  181   77 
   1,187   1,141 
Income tax provision: $1,145  $1,266 
Deferred income taxes are provided for temporary differences between the financial reporting basis and the tax basis of the Company'sCompany’s assets and liabilities. The tax effect of temporary differences giving rise to the Company'sCompany’s deferred tax assets is primarily the result of theasset and deferred tax benefit from itsliability are as follows:
  July 31,  April 30, 
  2011  2011 
  (in thousands) 
Short term deferred tax asset      
       
Federal tax benefit from net operating loss $1,220  $2,226 
State and city tax benefit from net operating loss  87   268 
Unrealized gains on securities held for sale  (34)  (34)
Depreciation and amortization  -   - 
Tax benefit on operating lease exit obligation  182   211 
Deferred professional fees  109   109 
Deferred charges  192   192 
Other, net  50   50 
Deferred tax asset $1,806  $3,022 
         
  July 31,  April 30, 
   2011   2011 
  (in thousands) 
Long term deferred tax liability        
         
Federal tax liability for deferred gain on EAM $17,679  $17,679 
Federal tax benefit deferred non-cash compensation  (619)  (619)
Federal tax benefit on lease exit obligation  (108)  (108)
Federal tax benefit on depreciation and amortization  (390)  (364)
State and local tax liability for deferred gain on EAM  2,132   2,132 
State and local tax benefit deferred non-cash compensation  (62)  (62)
State and local tax benefit on lease exit obligation  (25)  (25)
State and local tax benefit on depreciation and amortization  (45)  (45)
State and local tax benefit on deferred professional fees  (14)  (14)
Deferred tax liability $18,548  $18,574 
The Company’s net operating loss carryover from fiscal year 2010carryforward of approximately $19,169,000 which the Company expects$6,361,000 is expected to be fully utilized by the first quarter ofduring the fiscal year ending April 30, 2012. The tax effect of temporary differences giving rise to the Company's long termCompany’s long-term deferred tax liability of $18,880,000 is primarily a result of the federal, state, and local taxes related to the $50,510,000 gain from deconsolidation of the Company'sCompany’s asset management and broker-dealer subsidiaries.mutual fund distribution subsidiaries partially offset by the long-term tax benefit related to the non-cash post-employment compensation of $1,770,000 granted to VLI’s former employee and the benefit related to the Company’s exit lease obligation of $914,000 all recognized in fiscal 2011.

16
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
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 reflect the tax 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 income, for the nine months ended January 31, 2011 and 2010 was 38.71% and 25.08%, respectively. The non-deductible portion of the provision for settlement included in fiscal 2010 and the change in the non-taxable investment income, events that do not have tax consequences, significantly contributed to the increase in the fiscal 2011 versus fiscal 2010 tax rate.  The fluctuation in the effective income tax rate is also attributable to the alternative minimum tax on the Company's net operating loss carry forward in fiscal 2011.  Additionally, the state and local tax provision has increased approximately 2% after consideration of the federal tax benefit as a result of the classification of the gain on deconsolidation of the Company's asset management and broker-dealer subsidiaries.
14
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

The annual effective tax rate forduring fiscal 2011 could change2012 changes due to a number of factors including but not limited to an increase or decrease in the ratio of income or loss to pre-tax income for items that do not have tax consequences, the Company'sCompany’s geographic profit mix between tax jurisdictions, new tax laws, new interpretations of existing tax law and rulings by and settlements with tax authorities. For
The overall effective income tax rate, as a percentage of pre-tax income, during the ninethree months ended JanuaryJuly 31, 2011 and 2010, were 35.55% and 35.33%, respectively.
The Company believes that, as at July 31, 2011, there were no new material uncertain tax positions.positions that would require disclosure under GAAP.

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:

 Nine months ended January 31,  Three months ended July 31, 
 2011  2010  2011  2010 
            
U.S. statutory federal rate  35.00%  35.00%  35.00%  35.00%
Increase/(decrease) in tax rate from:                
Tax effect of non-deductible portion of provision for settlement  -   -11.97%
State and local income taxes, net of federal income tax benefit  2.95%  3.59%  1.58%  1.39%
Effect of tax exempt income and dividend deductions  -   0.69%  -0.09%  0%
Alternative minimum tax - net operating loss limitation  0.96%  - 
Domestic production tax credit  -0.94%  0%
Other, net  -0.20%  -2.23%  0%  -1.06%
Effective income tax rate  38.71%  25.08%  35.55%  35.33%

The Company is included in the consolidated federal income tax return of the Parent. The Company has a tax sharing agreement which requires it to make tax payments to the Parent equal to the Company'sCompany’s liability/(benefit) as if it filed a separate return.

The Company'sCompany’s federal income tax returns (included in the Parent'sParent’s consolidated returns) and state and city tax returns for fiscal years ended April 30, 2008, 2009, and 2010 are subject to examination by the tax authorities, generally for three years after they were filed. The IRS and NYSNew York State tax authorities have recently concluded an examination for the years ended through April 30, 2008. The examinations by the IRS and NYS2008, which resulted in no changes that had any adverse effect on the Company'sCompany’s financial statements. The Company received a refund from NYS inMore recently, the amountIRS commenced an audit of $264,546 for the years under audit.fiscal year 2010.

Note 8 - Business9-Business Segments:

ThePrior to December 23, 2010, the Company operated two reportable business segments: (1) Investment Periodicals, Publishing & Copyright Data and (2) Investment Management. The Investment Periodicals, Publishing & Copyright Data segment produces investment related periodical publications (retail and institutional) in both print and electronic form, and includes copyright data fees for Value Line proprietary ranking system information and other proprietary information. ThePrior to December 23, 2010, the Investment Management segment providesprovided advisory services to the Value Line Funds, as well as 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 revenues and profits derived from EAM Trust accounted for under the equity method and depreciation and income from securities transactions related to corporate assets, between the two reportable segments.

As more fully described in Note 1 - Organization and Summary of Significant Accounting Policies, the Company deconsolidated its investment management business on December 23, 2010 and therefore will no longer reportreports the investment management operation as a separate business unit. Although VLI will continue to receive significant revenues and cash flows from these operations through its non-controlling investment in EAM, it no longer considers this to be a reportable business segment subsequent to the Restructuring Transaction due to its lack of control over the operating and financial policies of EAM. Accordingly, the investment management segment reflects activity only through the date of the Restructuring Transaction.

15
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
Disclosure of Reportable Segment Revenues, Profit/(Loss) and Segment Assets (in thousands)
          
  Nine months ended January 31, 2011 
  Investment       
  Periodicals,       
  Publishing &  
Investment
    
  Copyright Data  Management  Total 
          
Revenues from external customers $28,449  $10,693  $39,142 
Intersegment revenues  7   -   7 
Income/(loss) from securities transactions  (3)  6   3 
Gain from deconsolidation of subsidiaries*  -   50,510   50,510 
Depreciation and amortization  425   14   439 
Segment profit/(loss) from operations *  6,866   (1,006)  5,860 
Segment assets  12,101   -   12,101 
Expenditures for segment assets  750   10   760 
             
  Nine months ended January 31, 2010 
  Investment         
  Periodicals,       
  Publishing &  
Investment
     
  Copyright Data  Management  Total 
Revenues from external customers $29,820  $14,407  $44,227 
Intersegment revenues  15   -   15 
Income/(loss) from securities transactions  (57)  167   110 
Depreciation and amortization  514   33   547 
Segment profit/(loss) from operations *  8,017   (42,783)  (34,766)
Segment assets  12,467   12,189   24,656 
Expenditures for segment assets  516   5   521 
             
Reconciliation of Reportable Segment Revenues, Profit/(Loss) Before Income Taxes and Assets
       (in thousands) 
       Nine months ended January 31, 
        2011   2010 
Revenues             
Total revenues for reportable segments     $39,149  $44,242 
Elimination of intersegment revenues      (7)  (15)
     Total consolidated revenues     $39,142  $44,227 
Profit/(loss) before income taxes *            
Total profit/(loss) for reportable segments     $56,373  $(34,656)
Add:  Revenues and profits interest from EAM Trust      724   - 
Add: Income from securities transactions related to corporate assets   45   444 
Less: Depreciation related to corporate assets      -   (1)
     Profit/(loss) before income taxes     $57,142  $(34,213)
Assets             
Total assets for reportable segments     $12,101  $24,656 
Corporate assets      75,475   61,105 
     Consolidated total assets     $87,576  $85,761 
              
* Included in the Investment Management segment in fiscal 2011 is the gain of $50,510,000 from deconsolidation of the asset management and broker-dealer subsidiaries, expenses of $3,764,000 associated with the Company’s restructure of its asset management business segment, and postemployment compensation expense of $1,475,000 related to the value of the Class A voting profits interest in EAM granted by VLI to a former employee of the Company who is presently the CEO of EAM.. During fiscal year 2010 the operating loss from the Investment Management segment includes a provision for settlement of approximately $47.7 million.

16
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

Note 9 - Treasury Stock and Repurchase Program:

On January 20, 2011,  the Company's Board of Directors approved the repurchase of shares of the Company’s common stock up to an aggregate purchase price not to exceed $3,200,000.  Based on current market prices, the Company believes that the repurchase program is in the best interests of the shareholders.  The repurchases will be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market within the Rule 10b-18 Safe Harbor rule. The repurchase program is expected to continue through January 15, 2012 unless extended or shortened by the Board of Directors.
Treasury stock, at cost, consists of the following:

(in thousands except for
shares and cost per share)
 Date Shares  
Total Average
Cost Assigned
  
Average Cost
per Share
 
            
Balance April 30, 2010    18,400  $354    
Purchases effected in open market January, 2011  4,298   57  $13.26 
Balance January 31, 2011    22,698  $411     

Note 10 - Legal Proceedings & Restructuring:

During the period from 1986 until voluntarily suspended by VLI in November 2004, VLI had arrangements with several of the Value Line Funds managed by VLI pursuant to which, acting through an affiliated broker in respect of certain securities trades, it charged the Funds commission rates of $0.0488 per share, forwarded such transactions to unaffiliated brokerage firms for execution, clearance and settlement at a commission rate that varied from $.02 to $.01 per share.  The SEC alleged that VLI’s affiliated broker retained the excess without providing any brokerage services. On November 4, 2009, the Company, its former brokerage subsidiary and Jean Bernhard Buttner and David T. Henigson, who were former officers and directors of the Company concluded a settlement with the SEC as a result of an investigation into the brokerage practices discussed above (the “Settlement”).
The Settlement required that the two former officers and directors no longer be directors or officers of any publicly traded company in the U.S. that has a class of securities registered pursuant to section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) or is required to file reports pursuant to section 15(d) of the Exchange Act and disassociate themselves from the Company’s investment management and brokerage business.  In the case of the Company’s former CEO and indirect controlling shareholder, Jean Bernhard Buttner, the Settlement expressly permitted her to continue to exercise control until November 4, 2010, which date was extended by the Commission to December 24, 2010, for the purpose of engaging in one or more transactions that would result in her terminating her affiliated person status with respect to the Company’s then broker-dealer and investment adviser subsidiaries.  This was achieved on December 23, 2010 upon the closing of the Restructuring Transaction in which EAM succeeded to the regulated businesses formerly conducted by the Company.
The Settlement with the SEC that resolved the Commission’s investigation resulted in VLI being precluded from receiving the revenue, through its brokerage subsidiary, from commissions charged for securities trading by the Value Line Funds. VLI had suspended this practice in 2004, five years prior to the Settlement, so this aspect of the Settlement will not result in any change in revenue compared to more recent fiscal years. The Settlement also resulted in the investment adviser business being transferred to EAM. However, VLI continues to have both a nonvoting revenues interest and a nonvoting profits interest in EAM.
The outstanding provision for settlement in the amount of $3,483,000 reflected as liability in the consolidated condensed balance sheet as of January 31, 2011, includes anticipated costs of Fair Fund administration as well as certain fees and costs arising from reaching and implementing the Settlement.
On December 23, 2010, EULAV Asset Management, LLC was restructured as a Delaware statutory trust and renamed EULAV Asset Management (which we refer to as the “Adviser” or "EAM").  In accordance with the Investment Company Act of 1940 (the “1940 Act”), at the time of the restructuring, each Fund’s prior investment advisory agreement terminated and the Adviser entered into a new investment advisory agreement with each Fund.  The services provided by the Adviser under each new agreement and the rates at which fees are paid by each Fund under its new agreement are the same as under that Fund’s prior investment advisory agreement.  In addition, the other terms of each Fund’s new investment advisory agreement are the same as that Fund’s prior investment advisory agreement, except for the date of execution, the two-year initial term, immaterial updating changes and immaterial changes in form. Neither VLI nor EAM provided any guarantees as it relates to the Funds and/or the new investment advisory agreements.
Each Fund has a distribution agreement with EULAV Securities LLC (the “Distributor" or "ES"), a wholly-owned subsidiary of the Adviser, pursuant to which the Distributor acts as principal underwriter and distributor of the Value Line Funds for the sale and distribution of their shares.  On May 5, 2009, the Distributor changed its name from “Value Line Securities, Inc.” to “EULAV Securities, Inc.”  As part of the restructuring described above, EULAV Securities, Inc. was restructured as a Delaware limited liability company and changed its name to EULAV Securities LLC.  No other changes were made to the Distributor’s organization, including its operations and personnel.  For its services under the agreements, the Distributor is not entitled to receive any compensation, although it is entitled to receive fees under each Fund’s Service and Distribution Plan.
 
 
17
 
 
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

As part of the restructuring, the predecessor Adviser’s capital structure was revised so that VLI owns only nonvoting revenue and profits interests and five individuals each owns 20% of the voting profits interests of the Adviser.  The holders of the Adviser’s voting profits interests have the right to elect five trustees of the Adviser, who manage the combined company consisting of the Adviser and the Distributor much like a board of directors.  The five initial holders of the Adviser’s voting profits interests are:  Mr. Appel, Avi T. Aronovitz, Richard Berenger, Howard B. Sirota and R. Alastair Short.  These persons elected themselves as the five initial Trustees of the Adviser. Mr. Sirota subsequently resigned as a Trustee but continues to hold 20% of the voting profits interests, and the Company understands he has not yet been replaced as a Trustee as of this writing. The Trustees initially delegated the authority to manage the day-to-day business of the Adviser and the Distributor to the Adviser’s senior executive, Mitchell E. Appel, who is one of the Trustees.
Each of these five individuals was granted a voting profits interest having 20% of the voting power for the election of Trustees and other matters submitted for approval by the holders of the voting profits interests of the Adviser in exchange for the agreement by such individual to act as an initial voting profits interest holder and, in the case of Mr. Appel, as the initial senior executive officer, of EAM in order to enable VLI to complete the required disassociation with EAM and ES.  Collectively, the voting profits interests receive 50% of the residual profit of the business, in which the share of Mr. Appel is 45% and the others each 1.25%, subject to temporary adjustments in certain circumstances.  VLI retains a nonvoting profits interest representing 50% of residual profits, subject to temporary adjustments in certain circumstances and has no power to vote for the election, removal or replacement of the trustees of the Adviser. VLI also has an interest in non-distribution revenues of the business ranging from 41% at non-distribution fee revenue levels of $9 million or less to 55% at such revenue levels of $35 million or more.  In the event the business is sold or liquidated, the first $56.1 million of net proceeds (the value of the business at the time the Restructuring Transaction was approved as determined by the directors of Value Line after reviewing a valuation report by the directors’ financial advisors) plus any additional capital contributions (VLI or any holder of a voting profits interest, at its discretion, may make future contributions to its capital account in EAM), which contributions would increase its capital account but not its percentage interest in operating profits, will be distributed in accordance with capital accounts; 20% of the next $56.1 million will be distributed to the holders of the voting profits interests and 80% to the holders of the nonvoting profits interests (initially VLI); and the excess will be distributed 45% to the holders of the voting profits interests and 55% to the holders of the nonvoting profits interests.
When VLI contributed its investment advisory business to EULAV Asset Management in June 2008, it granted EULAV Asset Management the right to have the existing Value Line Funds use the name "Value Line" inasmuch as the then existing investment advisory agreements gave the Value Line Funds that right, agreed to continue its access to Value Line's ranking information and agreed to maintain a stated level of liquid capital.  In connection with the Restructuring Transaction in 2010 VLI re-granted such license of the Value Line name to EAM for use by the existing Value Line Funds with certain new conditions not in effect in 2008 and also imposed certain conditions for continued use of the Value Line name in the new investment advisory agreements, extended its agreement to provide access to the ranking information and capitalized the business with $7 million while disclaiming any agreement to provide any future capital support.VLI has not provided any guarantee with respect to any aspect of EAM's operations, including but not limited to future debt agreements. VLI has not assumed and does not assume any liability of the Company for any period on or after the effective date of the restructuring, December 23, 2010.
The EAM Trust has no fixed term, but in the event that control of the Company’s majority shareholder changes or the majority shareholder no longer owns 5% or more of the voting securities of the Company, then the Company has the right, but not the obligation, to buy the voting profits interests at a fair market value to be determined by an independent valuation firm in accordance with the terms of the EAM Trust Agreement.
The Company has with respect to the Adviser the benefit of certain consent rights involving extraordinary events, such as a proposed sale of all or a significant part of the Adviser, material acquisitions, entering into businesses other than asset management and fund distribution, paying compensation in excess of the mandated limit of 22.5%-30% of non-distribution fee revenues (depending on the level of such revenues), declaring voluntary bankruptcy, making material changes in tax or accounting policies or making substantial borrowings, and entering into related party transactions. These rights were established to protect the Company’s nonvoting revenues and nonvoting profits interests in EAM.
As a result of the restructuring, the Company ceased to “control” (as that term is defined in the 1940 Act) the Adviser or the Distributor.  Under the terms of the settlement with the SEC stemming from the Company’s brokerage practices with certain Value Line Funds prior to November 2004, Jean Bernhard Buttner, who controls Arnold Bernhard & Co., Inc., which owns 86.5% of the Company’s common stock (the “Control Person”), and David Henigson, a former officer and director of the Company were barred from association with any broker, dealer, or investment adviser and were prohibited from serving or acting in various capacities, including as an “affiliated person” (as that term is defined in the 1940 Act) of the Value Line Funds, the Adviser or the Distributor (due to Mrs. Buttner’s control over the Company, the requirement of disassociation on her part was postponed until December 24, 2010). The required “disassociation” was accomplished when the Company transferred 100% of the voting control over the regulated investment adviser and broker-dealer subsidiaries to the five individual voting profits interest holders of the Adviser, none of whom is under the control of the Company, its majority shareholder or Mrs. Buttner.
Disclosure of Reportable Segment information for the quarter ended July 31, 2010 is as follows:
 
     (in thousands)    
  Investment       
  Periodicals,       
  Publishing &  
Investment
    
  Copyright Data  Management  Total 
Revenues from external customers $9,394  $4,215  $13,609 
Intersegment revenues  2   -   2 
Income/(loss) from securities transactions  -   3   3 
Depreciation and amortization  146   6   152 
Segment profit/(loss) from operations*  3,238   308   3,546 
Segment assets  13,969   7,430   21,399 
Expenditures for segment assets  63   -   63 
 A reconciliation of reportable segment revenues, operating profit and assets for the quarter ended July 31, 2010 is as follows:
(in thousands)   
  2010 
Revenues   
Total revenues for reportable segments $13,611 
Elimination of intersegment revenues  (2)
Total consolidated revenues $13,609 
Profit/(loss) before income taxes *    
Total profit/(loss) for reportable segments $3,549 
Add: Income from securities transactions related to corporate assets  34 
Profit/(loss) before income taxes $3,583 
Assets    
Total assets for reportable segments $21,399 
Corporate assets  38,349 
Consolidated total assets $59,748 
Note 10 - Treasury Stock and Repurchase Program:
On January 20, 2011, the Company’s Board of Directors approved the repurchase of shares of the Company’s common stock, at such times and prices as management determined to be advisable up to an aggregate purchase price of $3,200,000. During fiscal 2011, the Company repurchased an aggregate of 6,719 shares of the Company’s common stock for $89,812, at an average price of $13.37 per share. During the three months ended July 31, 2011, the Company repurchased 11,700 shares of the Company’s common stock for $158,353, at an average price of $13.53 per share. Under the January 20, 2011 authorization, $2,951,835 remains available for additional share repurchases. The repurchase authorization extends through January 15, 2012, unless further extended or earlier terminated by the Board of Directors.
Treasury stock, at cost, consists of the following:         
(in thousands except for         
shares and cost per   Total Average Average Cost 
share) Shares Cost Assigned  per Share 
Balance April 30, 2011  25,119  $444    
Purchases effected in open market  11,700   158  $13.53 
Balance July 31, 2011  36,819  $602     
 
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Note 11-Legal Proceedings and Restructuring:
 
As more fully disclosed under the caption Legal Proceedings and Restructuring under Part I, item 3 in the Company’s Form 10-K filed with the SEC on July 29, 2011, the Company concluded a negotiated settlement with the SEC as a result of an investigation into former brokerage practices (the “Settlement”). Value Line Inc.had voluntarily suspended the brokerage activity in 2004, five years prior to the Settlement, so the Settlement will not result in any change in such revenue compared to more recent fiscal years. As further described below, the Settlement also resulted in the investment adviser business (including the distributor) being transferred to EAM. Value Line continues to have both a non-voting revenues interest and a non-voting profits interest in EAM. As a result of the Restructuring Transaction, Value Line ceased to “control” (as that term is defined in the 1940 Act) the Adviser or the Distributor. Under the terms of the Settlement with the SEC, two individuals who participated in the Settlement were barred from association with any broker, dealer, or investment adviser and were prohibited from serving or acting in various capacities, including as an “affiliated person” (as that term is defined in the 1940 Act) of the Funds, the Adviser or the Distributor subject to a limited exception until December 24, 2010. The required “disassociation” was accomplished on December 23, 2010 upon the closing of the Restructuring Transaction whereby EAM, a Delaware business trust, succeeded to the regulated businesses and the Company transferred 100% of the voting control over the regulated investment adviser and broker-dealer subsidiaries formerly conducted by the Company to five individual voting profits interest holders of EAM, none of whom is under the control of the Company or its direct or indirect majority shareholder.
Notes
In connection with the Settlement, the Company without admitting or denying the SEC charges, paid $43,706,000 to Consolidated Condensed Financial Statementsthe SEC in November 2009. Subsequent to the Settlement and pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, the Company’s disgorgement, interest and penalty payments were placed into a Fair Fund created by the SEC. The Fair Fund will be used to reimburse shareholders who owned shares in the affected Value Line Funds in the period covered by the Settlement. The Company is required to bear all costs associated with the Fair Fund distribution, including compensating a third party consultant appointed by the SEC to administer the Fair Fund distribution. During fiscal 2011, the SEC appointed A.B. Data, Ltd. as the Administrator of the Fair Fund. A.B. Data, Ltd. has no affiliation with the Company. In connection with its ongoing administration of the Fair Fund, A.B. Data, Ltd and the Company estimated that the costs of administration for settlement of the Fair Fund and other costs associated with the Settlement and the Restructuring Transaction would be approximately $2,633,000 of which the unpaid amount of $1,384,000 and $1,464,000 are reflected as a liability in the consolidated condensed balance sheets as of and July 31, 2011 and April 30, 2011, respectively.
In connection with the Restructuring Transaction, in accordance with the requirements of the 1940 Act, at the time of the Restructuring Transaction, each Fund’s prior investment advisory agreement terminated and EAM entered into a new investment advisory agreement with each Fund. The services provided by EAM under each new agreement and the rates at which fees are paid by each Fund under its new agreement are the same as under that Fund’s prior investment advisory agreement. In addition, the other terms of each Fund’s new investment advisory agreement are the same as that Fund’s prior investment advisory agreement, except for the date of execution, the two-year initial term, immaterial updating changes and immaterial changes in form.

On a short-term transitional basis, EAM and ES occupy a portion of the premises that the Company leases from a third party.  The Company receives rental payments from EAM and provides certain accounting and other administrative support services to EAM.  In accordance with the terms of the restructuring plan, the Company has given notice to EAM to vacate the Company’s premises on or before June 1, 2011.
Set forth below is brief biographical information with respect to the five individuals who have been issued all of the voting profits interests in the Adviser, including information with respect to association with the Company as an employee or director prior to the transaction:
- Mr. A. Short, the first Chairman of the Trustees of EAM, is a former practicing attorney with an extensive background in the mutual funds industry and interests in private equity firms.  He served as (executive) Vice Chairman of W. P. Stewart & Co., Inc. and serves as an independent director and Audit Chair of an unrelated funds group.
- Mr. A. Aronovitz is an experienced accountant and financial executive and served as interim chief financial officer of Comverse Technologies, a public company, after being appointed to the position following a securities investigation.
- Mr. R. Berenger is a highly experienced compliance official, principally in the brokerage industry.
- Mr. H. Sirota is a New York City securities attorney who was employed by the NASD before entering private law practice.
- Mr. M. Appel was the Chief Financial Officer of VLI from April 2008 to December 2010 and from September 2005 to November 2007; President of each of the Value Line Funds since June 2008; President of EULAV Asset Management and ESI from February 2009 until the restructuring on December 23, 2010; Treasurer of VLI from June to September 2005; and Chief Financial Officer, XTF Asset Management from November 2007 to April 2008. Mr. Appel served as a Director on the Company's Board from February 2010 to October 2010. He earned his MBA from New York University.
On September 3, 2008, VLI was served with a derivative shareholder's suit filed in New York County Supreme Court naming certain current and former directors of the Company and alleging breach of fiduciary duty and related allegations, all arising from the SEC matter. The complaint sought return of remuneration by the Directors and other remedies. A second derivative shareholder's suit was filed in New York County Supreme Court on or about November 9, 2009, naming certain current and former VLI Directors and the Parent as defendants. This suit primarily restates the same or similar allegations and seeks similar remedies as were sought in the earlier derivative shareholder's suit served in September 2008. By order dated January 8, 2010, the Court granted Plaintiffs' motion to consolidate the two cases. VLI has advised its insurance carriers of these developments and it is not possible to estimate an amount or range of loss on VLI's financial statements.
The present and former directors of VLI who are defendants in the consolidated cases filed in 2008 and 2009 are Howard A. Brecher, Edgar A. Buttner, Jean Bernhard Buttner and David Henigson.  The complaints do not specify a basis for calculating remuneration that the actions seek to have returned to the Company, nor do the original or amended complaints state a total of such remuneration.  In a document filed in 2011, the plaintiffs indicated an amount at issue in the case of $5 million. The defendants responded to the complaint in the consolidated case on August 20, 2010, and the case is proceeding in New York County.
Following mediation under the auspices of the court, on March 22, 2011, an agreement was reached by the parties to settle the litigation.  The settlement in principle is subject to the parties’ execution of a settlement agreement and court approval.  Provided the settlement agreement is consummated and approved, the settlement in principle calls for payment of settlement funds in an aggregate sum of $2.9 million for the benefit of the Company’s minority shareholders (that is, exclusive of the Parent and all other defendants).  That sum is inclusive of any and all costs and expenses of the plaintiffs in relation to the case, including but not limited to legal fees and related charges and court costs.    The settlement in principle calls for payment of settlement funds by parties other than the Company for the benefit of the Company’s minority shareholders. The settlement, therefore, will have no material effect on the financial condition, results of operations or cash flows of the Company.
Each Fund had a distribution agreement with ESI (the “Distributor”), a wholly-owned subsidiary of EAM LLC, pursuant to which the Distributor acted as principal underwriter and distributor of the Funds. As part of the Restructuring Transaction ESI was restructured as a Delaware limited liability company and changed its name to EULAV Securities LLC (which we sometimes refer to as “ES”). No other changes were made to the Distributor’s organization, including its operations and personnel. For its services under the agreements, the Distributor is not entitled to receive any compensation, although it is entitled to receive fees under each Fund’s Service and Distribution Plan.
As part of the Restructuring Transaction, EAM’s capital structure was revised so that Value Line owns only a non-voting revenues interest and a non-voting profits interest in EAM and five individuals each own 20% of the voting profits interests of the Adviser (“EAM”). The holders of EAM’s voting profits interests elect five individual trustees and a Delaware resident trustee of EAM. The trustees of EAM other than the Delaware trustee manage the combined company consisting of the Adviser and the Distributor much like a board of directors. EAM’s holders of the voting profits interests elected themselves as the five initial individual trustees of the Adviser and the Corporation Trust Company as the Delaware resident trustee. The Trustees initially delegated the authority to manage the day-to-day business of the Adviser and the Distributor to the Adviser’s senior executive, Mitchell E. Appel, who is one of the Trustees and is also a Director of the Funds.
Each of the five individuals holding voting profits interests in EAM was granted 20% of the voting power for the election of trustees and other matters submitted for approval by the holders of the profits interests of the Adviser in exchange for the agreement by such individual to act as an initial voting profits interest holder and, in the case of Mr. Appel, as the initial senior executive officer, of EAM in order to enable Value Line to complete the required disassociation from the Company’s regulated entities. Collectively, the holders of the voting profits interests are entitled to receive 50% of the residual profits of the business, in which the share of Mr. Appel is 45% and the others each 1.25%, subject to temporary adjustments in certain circumstances. Value Line retains a non-voting profits interest representing 50% of residual profits, subject to temporary adjustments in certain circumstances and has no power to vote for the election, removal or replacement of the trustees of EAM. Value Line also has a non-voting revenues interest in EAM pursuant to which it is entitled to receive a portion of the non-distribution revenues of the business ranging from 41% at non-distribution fee revenue levels of $9 million or less to 55% at such revenue levels of $35 million or more. In the event the business is sold or liquidated, the first $56.1 million of net proceeds (the value of the business at the time the Restructuring Transaction was approved as determined by the directors of Value Line after reviewing a valuation report by the directors’ financial advisors) plus any additional capital contributions (Value Line or any holder of a voting profits interest, at its discretion, may make future contributions to its capital account in EAM), which contributions would increase its capital account but not its percentage interest in operating profits, will be distributed in accordance with capital accounts; 20% of the next $56.1 million will be distributed to the holders of the voting profits interests and 80% to the holders of the non-voting profits interests (initially Value Line); and the excess will be distributed 45% to the holders of the voting profits interests and 55% to the holders of the non-voting profits interests.
 
 
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In connection with the Restructuring Transaction, Value Line (1) granted the Adviser, the Distributor and each Fund use of the name “Value Line” so long as the Adviser remains the Fund’s adviser and on the condition that the Fund does not alter its investment objectives or fundamental policies as they exist on the date of the investment advisory agreement, provided also the Funds do not use leverage for investment purposes, short selling or other complex or unusual investment strategies that create a risk profile similar to that of so-called hedge funds, (2) agreed to provide the Adviser its ranking information without charge on as favorable a basis as to its best institutional customers and (3) agreed to capitalize the business with $7 million of cash and cash equivalents.
The EAM trust entity has no fixed term, but in the event that control of the Company’s majority shareholder changes, or in the event that the majority shareholder no longer beneficially owns 5% or more of the voting securities of the Company, then the Company has the right, but not the obligation, to buy the voting profits interests in EAM at a fair market value to be determined by an independent valuation firm in accordance with the terms of the EAM Trust Agreement.
 Value Line also has certain consent rights with respect to extraordinary events involving EAM, such as a proposed sale of all or a significant part of EAM, material acquisitions, entering into businesses other than asset management and fund distribution, paying compensation in excess of the mandated limit of 22.5%-30% of non-distribution fee revenues (depending on the level of such revenues), declaring voluntary bankruptcy, making material changes in tax or accounting policies or making substantial borrowings, and entering into related party transactions. These rights were established to protect Value Line’s non-voting revenues and non-voting profits interests in EAM.
On a short-term transitional basis, EAM and the Distributor occupied a portion of the premises that the Company leases from a third party. The Company received rental payments from EAM and provided certain accounting and other administrative support services to EAM on a transitional basis. In accordance with the terms of the Restructuring Transaction, EAM vacated the Company’s premises before June 1, 2011.
On September 3, 2008, the Company was served with a derivative shareholder’s suit filed in New York County Supreme Court (the “Court”) naming certain current and former directors of the Company and alleging breach of fiduciary duty and related allegations, most of which arise from the SEC matter. The complaint sought return of remuneration by the directors and other remedies. A second derivative shareholder’s suit was filed in New York County Supreme Court on or about November 9, 2009, naming certain current and former Value Line Directors and the Parent as defendants. This suit primarily restates the same or similar allegations and seeks similar remedies as were sought in the earlier derivative shareholder’s suit served in September 2008. By order dated January 8, 2010, the Court granted plaintiffs’ motion to consolidate the two cases. The Company has advised its insurance carriers of these developments. It is not possible to estimate accurately an amount or range of loss on the Company’s financial statements.
The present and former directors who are defendants in the consolidated cases filed in 2008 and 2009 are Howard A. Brecher, Edgar A. Buttner, Jean B. Buttner and David T. Henigson. The complaints do not specify a basis for calculating remuneration that the actions seek to have returned to the Company, nor do the original or amended complaints state a total of such remuneration.
Following mediation under the auspices of the Court, on March 22, 2011, an agreement in principle was reached by the parties to settle the litigation. The settlement in principle is subject to the parties’ execution of a settlement agreement and Court approval. Provided the settlement agreement is consummated and approved, the settlement in principle calls for payment of settlement funds in an aggregate sum of $2.9 million for the benefit of the Company’s minority shareholders (the Company’s shareholders other than AB&Co., all other named defendants and members of their immediate families). That sum is inclusive of any and all costs and expenses of the plaintiffs in relation to the case, including but not limited to legal fees and other charges and court costs.  Since the settlement in principle calls for payment of settlement funds by parties other than the Company, the settlement of these cases on the terms contemplated by the settlement in principle, if completed, will have no material effect on the financial condition, results of operations or cash flows of the Company.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS.
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 for Value Line, Inc. (“Value Line” or “the Company”) 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 published products;
 ·
●
protection of intellectual property rights;
 ·
●
changes in market and economic conditions, including global financial uncertainty;issues;
 ·
●
dependence on non-voting revenues and non-voting profits interests in EULAV Asset Management Trust, a Delaware business trust (“EAM”), which provides investment management and distribution, marketing and administrative services to the Value Line branded mutual funds;
●
fluctuations in the Company’sEAM’s assets under management due to broadly based changes in the values of equity and debt securities, redemptions by investors and other factors;
 ·dependence for revenue and profits from EULAV Asset Management Trust, a Delaware business trust (“EAM”), which provides investment management and distribution, marketing and administrative services to the Value Line Funds;
●
·competition in the fields of publishing, copyright data and investment management;
 ·
●
the impact of government regulation on the Company’s and EAM’s business and the uncertainties of litigation and regulatory proceedings;
 ·
●
availability of free or low cost investment data through discount brokers or generally over the internet;
 ·
●
there is athe risk that, while the Company believes that the restructuring transaction that closed on December 23, 2010, was and is believed to complyachieved compliance with the requirements of the Settlement,order issued by the Securities and Exchange Commission on November 4, 2009, the Company might be required to take additional steps to insure compliance, which could have negative consequences toadversely affect the Company’s consolidatedresults of operations or the Company’s financial statements;condition;
 ·
●
terrorist attacks and natural disasters; 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, 20102011 and in Part II, Item 1A of this Quarterly Report on Form 10-Q for the period ended July 31, 2011, and
●
other risks and uncertainties arising 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.

DescriptionExecutive Summary of the Business

Value Line is a New York corporation. The Company'sCompany’s primary businesses arebusiness is producing investment related periodical publications and making available copyright data including 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.  Prior to December 23, 2010, the date of the restructuring discussed below undercompletion of  the Restructuring Transaction (see “Restructuring of asset managementAsset Management and broker-dealer businesses”Mutual Fund Distribution Businesses” below), the Company provided investment management services to the Value Line Mutual Funds ("(“Value Line Funds"Funds”), institutions and individual accounts and provided distribution, marketing, and administrative services to the Value Line Funds.
Value Line markets under well known brands including The Value Line Investment Survey, The Value Line Research Center, and The Most Trusted Name in Investment Research.The name "Value Line"“Value Line” as used to describe the Company, its products, and its subsidiaries, is a registered trademark of the Company.
 
 
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  The Company’s target audiences within the investment related periodical publications field are individual investors, colleges, libraries, and investment management professionals. Individuals come to Value Line for complete research in one package.  Institutional subscribers, such as libraries and universities, offer the Company’s detailed research to their patrons and students.  Investment management professionals use the research and historical information in their day to day businesses.

  Depending upon the product, the Company offers three months or less, annual and/or multi-year subscriptions.  Generally, all subscriptions are paid for in advance of fulfillment.  Renewal orders for the retail market are solicited primarily through a series of efforts that include letters, emails, and telemarketing.  New orders are generated primarily from targeted direct mail campaigns for specific products.  Other sales channels used by the Company include advertising in media publications, the Internet, cross selling via telesales efforts and Internet promotions through third parties.

   Institutional subscribers consist of corporations, financial professionals, colleges, and municipal libraries.  The Company has a dedicated department that solicits institutional subscriptions.  Fees for institutional services vary by the university or college enrollment, number of users, and the number of products purchased.

   Cash received and the value of receivables for amounts billed to retail and institutional customers is recorded as unearned revenue until the order is fulfilled.  As the subscriptions are fulfilled, the Company recognizes revenue in equal installments over the life of the particular 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.

   Until December 23, 2010, the Company’s businesses consolidated into two business segments.  The investment related periodical publications (retail and institutional) and fees from copyright data including proprietary ranking system information and other proprietary information consolidate into one segment entitled Investment Periodicals, Publications and Copyright Data.  Until December 23, 2010, the investment management services to the Value Line Funds and other managed accounts were consolidated into a second business segment entitled Investment Management.  As of July 31, 2011, the Investment Periodicals, Publications and Copyright Data segment constitutes the Company’s only reportable business segment.

Restructuring of Asset Management and Broker-DealerMutual Fund Distribution Businesses

As of December 23, 2010,more fully discussed in the Company’s Form 10-K for the fiscal year ended April 30, 2011 as filed with the SEC on July 31, 2011, the Company completed its previously announcedthe restructuring of its asset management and broker-dealermutual fund distribution businesses (the “Restructuring Transaction”). on December 23, 2010.  As part of the Restructuring  Transaction: (1) EULAV Securities, Inc. (“ESI”, a New York corporation and wholly-owned subsidiary of the Company that acted as the distributor of the 14fourteen Value Line Funds (“ESI”), was restructured into EULAV Securities LLC (“ES”), a Delaware limited liability company named EULAV Securities LLC (“ES”);company; (2) the Company transferred 100% of its interest in ES to EULAV Asset Management LLC (“EAM”EAM LLC”), a wholly-owned subsidiary of the Company that acted as the investment adviser to the Value Line Funds and certain separate accounts (“EULAV Asset Management”);accounts; (3) EULAV Asset ManagementEAM LLC was converted into EULAV Asset Management Trust,(“EAM”), a Delaware statutory trust; and (4) EAM admitted Mitchell Appel, Avi T. Aronovitz, Richard Berenger, Howard B. Sirota and R. Alastair Shortfive individuals (the “Voting Profits Interest Holders”), as the initial holders of voting profits interests and Value Line restructured its ownership interests in EAM, as described below. Pursuantwith each of such individuals owning 20% of the voting profits interests of EAM, and (5) pursuant to EAM’s Declarationthe EAM Trust Agreement, the Company received an interest in certain revenues of Trust (the “EAM Trust Agreement”),EAM and a portion of the Companyresidual profits of EAM but has no voting authority with respect to the election or removal of the trustees of EAM and holds an interest in certain revenues of EAM and a portion of the residual profits of EAM.  The Voting Profits Interest Holders, who were selected by the independent directors of the Company, and hold residual profits interests in EAM.  The Voting Profits Interest Holders paid no consideration in exchange for their interests in EAM.  The Company recorded as compensation expense, the value of the voting profits interest granted to its former employee, Mr. Appel.

The business and affairs of EAM will beis managed by the five individual trustees and a Delaware resident trustee (collectively, the “Trustees”) and by its officers subject to the direction of the Trustees.  The initial Trustees are Mitchell Appel, Avi T. Aronovitz, Richard Berenger, Howard B. Sirota, R. Alastair Shortwere elected by the Voting Profits Interest Holders, who elected themselves as the individual trustees and a Delaware resident trustee, The Corporation Trust Company that exercises no authority.as Delaware resident trustee.  The Company holds nonvotingCompany’s non-voting revenues and non-voting profits interests in EAM that entitle the Companyit to receive a range of 41% to 55% of EAM’s revenues (excluding distribution revenues) from EAM’s mutual fund and separate account business.  In addition, the Company will receivebusiness and 50% of the residual profits of EAM (subject to temporary increase in certain limited circumstances).  The Voting Profits Interest Holders will receive the other 50% of residual profits of EAM.  EAM has elected to be taxed as a pass-through entity similar to a partnership.   The EAM Trust Agreement also provides for distribution of proceeds in the event of a full or partial sale of EAM in accordance with capital accounts (currently approximately $56($56 million held entirely by the Company)Company on December 23, 2010) and then in accordance with a sharing formula set forth in the EAM Trust Agreement.

22
Pursuant to the EAM Trust Agreement, the Company granted EAM the right to use the Value Line name for all existing Value Line Funds and willagreed to supply without charge or expense the Value Line Proprietary Ranking information.information to EAM without charge or expense.

Mitchell Appel, formerly the Chief Financial Officer of the Company and a director of the Company, as well as president of ESI and EULAV Asset Management as well as ofEAM LLC and each of the Value Line Funds, is one of the Voting Profits Interest Holders of EAM and, effective December 23, 2010, was appointed by the Trustees of EAM as the first Chief Executive Officer of EAM by the Trustees of EAM.  As previously disclosed in Value Line’s Form 10-Q for the fiscal quarter ended October 31, 2010, filed with the SEC on December 14, 2010, Mitchell Appel resigned his positions as Chief Financial Officer and a director of the Company on December 9, 2010 and resigned from the Company on December 22, 2010.

Consummating the Restructuring Transaction involved EAM entering into new investment advisory agreements with the Value Line Funds that were approved by the shareholders of the Value Line Funds and do not differ in substance from the previous investment advisory agreements.  The Restructuring Transaction was approved by the Board of Directors of the Company (with Messrs. Appel and Sarkany abstaining), as being in the best interest of the Company and its shareholders. The new investment advisory agreements with the Value Line Funds that were necessary for the Restructuring Transaction to proceed were approved by the board of trustees/directors of the Value Line Funds, who were not asked to and did not approve the Restructuring Transaction or its terms.

21
The Restructuring Transaction enabled the Company and the indirect holder of a majority of its voting stock to comply with a Securities and Exchange Commission (“SEC”) order issued on November 4, 2009 (the “Settlement”) that required the indirect shareholder to disassociate from the Company’s regulated entities.  By order dated November 2, 2010, the SEC extended the deadline for compliance until December 24, 2010.

Business Environment

During the nine monthsCompany’s first quarter ended JanuaryJuly 31, 2011, the global financial markets had positivenegative performance. For the ninethree months ended JanuaryJuly 31, 2011, the NASDAQ and Dow Jones Industrial Average were up 10%down 4% and 8%5%, respectively.  Value Line top ranked stocks (Timeliness Rank 1 and 2) gained 32.5% in the twelve months ended January 31, 2011 versus 18.1% for the S&P 500 Index.  The NASDAQ and the Dow Jones Industrial Average declined 39.1% and 38.6% respectively from the end of September 2008 to March 9, 2009.  From that pointMarch 9, 2009 to JanuaryJuly 31, 2011, those indices have rallied nearly 113%increased 117% and 82%85%, respectively, with the NASDAQ 32% and the Dow Jones Industrial Average 10% higher and the NASDAQ reaching over 30%12% above thetheir respective September 2008 levels, respectively.levels. Nevertheless, the severe downturn experienced in the September 2008 to March 2009 period and continued volatility in the financial markets throughout the prior fiscal yearshave resulted in many individual investors withdrawing money from equity investments, including equity mutual funds and continuefunds. This risk averse temperament of investors continues to negatively impact both the Company’s revenues primarily by a 13% declinefrom its research periodicals and publications and the Company’s cash flows derived from its non-voting revenues and non-voting profits interests in average mutual fund assets under management as compared to the nine months of the previous fiscal year.EAM.  In response, the Company continues to be diligent in seeking new business, operational and marketing execution, and in managing expenses.
expense management.
Results of Operations for the Three Months Ended July 31, 2011 and 2010.

The operating results of the Company for the thirdfirst quarter of the fiscal year 2011 improved2012 deteriorated from the previous year.  The following table illustrates the key earnings figures for the three and nine months ended JanuaryJuly 31, 2011 and 2010.

  Three Months Ended January 31,  Nine Months Ended January 31, 
(in thousands, 2011  2010  Percentage Change  2011  2010  Percentage Change 
except earnings/(loss) per share)       FY 11 vs. 10        FY 11 vs. 10 
Earnings/(loss) per share $3.17  $0.36   780.6% $3.51  $(2.57)  236.6%
Net income/(loss) $31,617  $3,570   785.6% $35,021  $(25,633)  236.6%
Operating income/(loss) $524  $4,583   -88.6% $5,860  $(34,766)  116.9%
Operating expenses $11,511  $9,989   15.2% $33,282  $78,993   -57.9%
Gain from de-consolidation of subsidiaries $50,510   -   #N/A  $50,510   -   #N/A 
Revenues and profits interests from EAM Trust $724   -   #N/A  $724   -   #N/A 
Income/(loss) from securities transactions, net $(40) $185   -121.6% $48  $553   -91.3%
  Three Months Ended July 31, 
  2011  2010  Percentage
Change		 
          
(in thousands, except earnings per share)       FY 12 vs. 11 
             
Earnings per share $0.21  $0.23   -8.7%
             
Net income $2,076  $2,317   -10.4%
             
Operating income $1,638  $3,546   -53.8%
             
Operating expenses $7,732  $10,063   -23.2%
             
Revenues and profits interests from EAM Trust $1,572   -   #N/A 
             
Income from securities transactions, net $11  $37   -70.3%
 
 
2223
 
For
During the ninethree months ended JanuaryJuly 31, 2011, the Company’s net income of $35,021,000$2,076,000, or $3.51$0.21 per share, compared to thewas $241,000 or 10% below net lossincome of $25,633,000$2,317,000, or $2.57$0.23 per share, for the ninethree months ended JanuaryJuly 31, 2010.  Net income for the third quarter ended January 31, 2011 of $31,617,000 or $3.17 per share was $28,047,000 above net income of $3,570,000 or $0.36 per share for the third quarter of the prior fiscal year.  Operating income of $5,860,000$1,638,000 for the nine months ended January 31, 2011 compared to anfirst quarter of fiscal 2012 was $1,908,000 or 54% below operating lossincome of $34,766,000$3,546,000 for the nine months ended January 31, 2010. The netfirst quarter of fiscal 2011.  Operating income of the Company during the three and nine months ended January 31, 2011 includes a $50,510,000 pre-tax gain from deconsolidation of the Company’s EULAV Asset Management and ESI subsidiaries, restructuring expenses of $1,302,000 for the three months ended July 31, 2011, does not include the non-voting revenues and $3,764,000profits interests from EAM of $1,572,000, while operating income for the ninefirst three months of fiscal 2011 includes $4,215,000 of operating revenues and postemployment compensation expense$308,000 of $1,475,000 relatedoperating profit from the former Value Line subsidiaries, EULAV Asset Management LLC and EULAV Securities, Inc., that performed the operations of the investment management business prior to deconsolidation of these subsidiaries on December 23, 2010. Income before income taxes, which is inclusive of the grant of a votingnon-voting revenues and profits interest infrom EAM to a former employee.  The operating and net losses of the Company during the first nine months of the prior fiscal year were a result of the Company recording a provision for the SEC Settlement discussed in Item 3 of the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2010 of $47,706,000.  Operating income of $524,000 for the third quarter ended Januarythrough July 31, 2011, was $4,059,000 or 89% below operating income of $4,583,000$3,221,000 as compared to $3,583,000 for the third quarterthree months ended July 31, 2010, a decrease of the prior fiscal year due largely to $1,302,000 of expenses related to the Restructuring Transaction and the aforementioned postemployment compensation expense.  $362,000 or 10%.
 
Operating revenues

  Three Months Ended July 31, 
  2011  2010  Percentage
Change		 
          
(in thousands)       FY 12 vs. 11 
Investment periodicals and related publications $8,398  $8,617   -2.5%
             
Copyright data fees  972   777   25.1%
     Operating revenues from investment
     periodicals, related publications and copyright data
 $9,370  $9,394   -0.3%
             
Investment management fees and services  -   4,215   -100.0%
             
     Total operating revenues $9,370  $13,609   -31.1%

Operating revenues from investment periodicals and related publications and investmentincluding copyright data fees were slightly below the operating revenues from the previous fiscal year.  Investment management fees and services (this segment was discontinued as of December 23, 2010) declined for the three months and nine months ended JanuaryJuly 31, 2011, while copyright data fees increased aboveare no longer considered operating revenues as a result of the prior fiscal year.EAM Restructuring Transaction completed on December 23, 2010.

  Operating revenues 
  Three Months Ended January 31,  Nine Months Ended January 31, 
  2011  2010  Percentage Change  2011  2010  Percentage Change 
(in thousands)       FY 11 vs. 10        FY 11 vs. 10 
Investment periodicals and related publications $8,669  $8,864   -2.2% $25,853  $27,343   -5.4%
Copyright data fees  954   883   8.0%  2,596   2,477   4.8%
Investment management fees and services  2,412   4,825   -50.0%  10,693   14,407   -25.8%
     Total operating revenues $12,035  $14,572   -17.4% $39,142  $44,227   -11.5%
Investment periodicals and related publications revenues
 
               Investment periodicals and related publications revenues were down $195,000$219,000, or 2% and $1,490,000 or 5%3%, for the three months and nine months ended JanuaryJuly 31, 2011, respectively, as compared to the prior fiscal year.  While the Company continuescontinued its efforts to attract new subscribers through various marketing channels, primarily direct mail and the internet for retail users, and by the efforts of our sales personnel in the institutional market, total product line circulation remains belowlower than in past years.  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 direct cost to their clients.  As of JanuaryJuly 31, 2011, total company-wide circulation has declined 4%2% compared to the previous fiscal year.  Overalltotal circulation at July 31, 2010.  Although renewal rates for the flagship product, The Value Line Investment Survey, are 76%78%, up from 72% a70% for the prior fiscal year, earlier, although the Company is not adding enough new subscribers to offset the subscribers that choose not to renew the flagship product and other Value Line products.  The Company has been successful in growing revenues from electronic investment periodicals within institutional sales, with earned revenues increasing $122,000$106,000 or 6% and $432,000 or 8% for the three and nine months ended January 31, 2011, respectively, as compared to the previous year. Gross institutional sales5% for the three months ended JanuaryJuly 31, 2011, were $1,427,000, a decreaseas compared to the first quarter of $167,000 or 11% from the prior year, and $6,021,000 for the nine months ended January 31, 2011, anfiscal 2011. This increase of $414,000 or 7% from the previous fiscal year.  This continues to be a positive growth trend for Institutional Sales, but is not sufficient to wholly offset the lost revenues from retail subscribers.
 
 
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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.

  Subscription Revenues 
  Three Months Ended January 31,  Nine Months Ended January 31, 
  2011  2010  Percentage Change  2011  2010  Percentage Change 
(in thousands)       FY 11 vs. 10        FY 11 vs. 10 
Print publication revenues $5,468  $5,799   -5.7% $16,347  $17,874   -8.5%
 Electronic publication revenues  3,201   3,067   4.4%  9,506   9,469   0.4%
Total investment periodicals and related publications revenues $8,669  $8,866   -2.2% $25,853  $27,343   -5.4%
Subscription Revenues

  Three Months Ended July 31, 
  2011  2010  Percentage
Change		 
          
(in thousands)       FY 12 vs. 11 
             
Print publication revenues $5,195  $5,502   -5.6%
             
Electronic publication revenues  3,203   3,115   2.8%
             
Total investment periodicals and related publications revenues $8,398  $8,617   -2.5%
 
  Sources of Subscription Revenues 
  Three Months Ended January 31,  Nine Months Ended January 31, 
  2011  2010  2011  2010 
  Print  Electronic  Print  Electronic  Print  Electronic  Print  Electronic 
New Subscribers  10.8%  29.3%  10.3%  31.4%  11.0%  29.9%  10.3%  30.7%
 Renewals  89.2%  70.7%  89.7%  68.6%  89.0%  70.1%  89.7%  69.3%
Total Subscribers  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%
Sources of Subscription Revenues
 

  Three Months Ended July 31, 
  2011  2010 
  Print  Electronic  Print  Electronic 
                 
New Subscribers  11.4%  27.8%  11.1%  32.5%
Renewals  88.6%  72.2%  88.9%  67.5%
                 
Total Subscribers  100.0%  100.0%  100.0%  100.0%
At January 31, 2011  2010  Percentage Change 
(in thousands)       FY 11 vs. 10 
Unearned revenues (short and long term) $25,789  $25,570   0.9%
 
 
  At July 31, 
  2011  2010  Percentage
Change		 
(in thousands)       FY 12 vs. 11 
             
Unearned revenues (short and long term) $25,399  $26,154   -2.9%
For the three months and nine months ended JanuaryJuly 31, 2011, print publication revenues decreased $329,000$307,000, or 6% and $1,527,000 or 9%, respectively, from the last fiscal year2011 for the reasons described earlier.  Print circulation, which has always dominated the Company’s subscription base, has fallen 7%4% as of JanuaryJuly 31, 2011 as compared to the last fiscal year.  Electronic publications revenues were up 4% or $134,000 forprint circulation at July 31, 2010.  For the three months ended January 31, 2011 as compared to the prior fiscal year.  For the nine months ended JanuaryJuly 31, 2011, electronic publications revenues were slightly3% higher than lastfor the first quarter of fiscal year.2011.  The electronic publication revenues are broken down into institutional accounts and retail subscribers.  For the three months and nineended July 31, 2011, earned revenues from institutional electronic publications increased $106,000, or 5%, as compared to the first quarter of fiscal 2011.  However, gross institutional sales of $2,001,000 for the three months ended JanuaryJuly 31, 2011, institutional revenues increased $122,000were $200,000 or 6% and $432,000 or 8%, respectively.  9% below gross sales of $2,201,000 during the first quarter of fiscal 2011.  For the three months ended January 31, 2011 electronic publications revenues from retail subscribers were 1% above last fiscal year.  For the nine months ended JanuaryJuly 31, 2011, electronic publications revenues from retail subscribers were down $395,000$18,000, or 11%2%, as compared to the priorfirst quarter of fiscal year.2011.  The Company has relied more on its institutional sales marketing efforts, and the increase in institutional revenues is a direct result of a focused effort to sell to colleges, libraries and corporate accounts.  The decrease in electronic retail publications revenues is primarily attributable to the decrease in circulation within the Company’s software products, which have not had a major update recently.
 
 
2425
 
 
The majority of the Company’s subscribers have traditionally been individual investors who generally receive printed publications via USU.S. Mail on a weekly basis. Consistent with the experience of other print publishers in many fields, the Company found that its universe of customers has been declining as individuals migrate to online delivered services.
Investors interested in online investment information have access to free equity research from many sources.  For example, most retail broker-dealers with online trading capabilities offer their customers free or low cost research services that directly compete with the Company’s services.
Revenues from retail electroniconline services have also declined because many competing electroniconline products offer more currentdynamic features.

The Company also believes that the volatility of the equity market and the severe economic recession, which economics authorities say ended during the second quarter of calendar 2009, have to a degreesome extent eroded retail investor interest in equities.  Additionally,The Company also believes that the negative trend in overall subscription revenue is likely to continue, albeit at a slower rate comparable to that of previousthan the decline experienced in recent years, until new products have been developed and marketed.

The Company has established the goal of developing competitive electronic products and marketing them effectively through traditional and electronic channels. Towards that end, the Company has been working closely with a third-party firm with expertise both in crafting effective online marketing strategies and modernizing legacy information technology systems.  The Company is not able to predict when these efforts will result in the launch of new services or whether they will be successful in affectingreversing the trend of declining retail publishing revenues.
 
The Value Line Timeliness Ranking SystemTM (“the Ranking System”), a component in the Company’s flagship product, The Value Line Investment Survey, is also an important part of the Company’s copyright data business.  The Ranking System is designed to be predictive over a six to twelve month period.  During the twelve months, six months and three months ended JanuaryJuly 31, 2011, the combined Ranking System “Rank 1 & 2” stock performance of 32.5%27.1%, 21.2%4.9% and 10.4%-5.5%, allowing for weekly changes in Ranks, compares favorably to the S&P 500 index performance of 18.1%14.3%, 14.2%0.1% and 8.6%-5.5%, respectively.  As stated in recent quarterly filings, the rapid and severe price actions in the markets in 2009 appear to have favored short-term investing, as investors bought well known names whose earnings have plunged and whose stock prices were depressed in hopes the stock prices would rebound.  Such stocks are generally not well ranked by the Company because the Ranking System emphasizes among other data points, earnings results and price momentum.  Accordingly, while the Company recommended “Rank 1” and “Rank 2” stocks did well, low-rated “Rank 5” stocks did better. The Ranking System is designedalso required to be predictive over a sixmade available to twelve month period.  Nevertheless the top ranked stocks performed very well against the S&P 500 Index.EAM for specific uses.
 
Copyright data fees

Copyright data fees have increased $71,000$195,000, or 8% and $119,000 or 5% for25%, during the three months and nine months ended JanuaryJuly 31, 2011, respectively, as compared to the priorfirst quarter of fiscal year.2011.  As of JanuaryJuly 31, 2011, total third party sponsored assets were attributable to four contracts for copyright data and represent $3.2representing $3.4 billion in various products, as compared to four contracts and $2.3$2.4 billion in assets last fiscal year,at July 31,  2010, representing a 38%41% increase in assets year over year.assets.  The Company believes the growth of this part of the business is dependent upon the desire of third parties to use the Value Line trademarks and proprietary research for their products. Today thisThis market ishas become significantly more competitive as a result of product diversification and growth of theincreased use of indices by portfolio managers.  Copyright data fees have been a critical component of the Company’s plan to replace shrinking publishing revenues but no new products have been added in fiscal year 2011. One account was added and one lost during the first quarter of fiscal 2011, and there was no net change in June 2010.the number of revenue-producing accounts during the first quarter of fiscal 2012.

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Investment management segment(overview)

EffectiveAs of the Restructuring Date, December 23, 2010, the companyCompany deconsolidated its asset management and broker-dealermutual fund distribution businesses and its interest in these businesses was restructured its investment intoas a nonvotingnon-voting revenues and non-voting profits interest through EAM and therefore willin EAM.  Accordingly, the Company no longer reportreports this operation as a separate business segment. segment, although it still maintains a significant interest in the cash flows generated by this business.  Total assets in the Value Line Funds managed by EAM at July 31, 2011 were $2.15 billion, 2% above total assets of $2.1 billion in the Value Line Funds managed by EAM LLC, the predecessor of EAM, at July 31, 2010.  Overall assets in the Value Line Funds at JanuaryJuly 31, 2011 under management by EAM, the successor to the Company’s investment management business, decreased $139increased $50 million, or 2% since JanuaryJuly 31, 2010 primarily as a result of market appreciation that more than offset net redemptions fromwithin the Value Line equity mutual funds and a decline in revenues and assets in the U.S. Government Money Market Fund (the “USGMMF”). The decline in short term interest rates significantly decreased the revenue received by this fund. The decline in assets in the USGMMF resulted primarily from the Company’s withdrawal of its assets for payment of approximately $44 million in November 2009 in connection with the Settlement and payment of a special $3.00 per share dividend, approximately $30 million, declared and paid to all shareholders during April 2010 and a $2.00 per share dividend, approximately $20 million, in lieu of the Company’s regularly scheduled $.20 per share dividend, declared during October 2010 and paid during November 2010. Total net assets in the Value Line Funds now under management by EAM have fallen from $2.29 billion at fiscal 2010 year end to $2.15 billion at January 31, 2011 primarily as a result of net redemptions in certain Value Line Funds.funds.
  Total Net Assets 
At January 31, 2011  2010  Percentage Change 
(in thousands)       FY 11 vs. 10 
Equity funds $1,809,711  $1,913,592   -5.4%
Fixed income funds  241,391   251,067   -3.9%
U.S. Government Money Market Fund  102,018   127,174   -19.8%
     Total net assets $2,153,120  $2,291,833   -6.1%

For the period from May 1, 2010 through December 23, 2010 and nine months ended January 31, 2010, investment management fees and 12b-1 service and distribution fees amounted to $10,584,000 and $14,237,000, respectively, which took into account fee waivers for certain of the Value Line Funds. These amounts included service and distribution fees of $2,308,000 and $3,140,000, earned by ESI for the period from May 1, 2010 through December 23, 2010 and nine months ended January 31, 2010, respectively.  For the period from May 1, 2010 through December 23, 2010 and nine months ended January 31, 2010, total management fee waivers were $513,000 and $712,000, respectively.  For the period from May 1, 2010 through December 23, 2010 and nine months ended January 31, 2010, 12b-1 fee waivers were $1,651,000 and $2,014,000, respectively.  The Company and its former subsidiary, ESI, had no right to recoup the previously waived amounts of management fees and 12b-1 fees, except for waived management fees for the USGMMF.  Any recoupment is subject to the provisions of the prospectus.  For the period from May 1, 2010 through December 23, 2010 and nine months ended January 31, 2010, separately managed account revenues were $109,000 and $170,000, respectively.

As of January 31, 2011, the Company had $4,215,000 invested in the USGMMF representing 4% of that fund's total net assets.

 
26
 

EAM - The Company’s nonvoting revenue and profits interest
Value Line Mutual Funds

As a result of restructuring of its asset management and broker-dealer businesses and disassociation from EULAV Asset Management and ESI on December 23, 2010, the Company’s distribution services revenues have discontinued and the Company’s interest in monthly investment management fees revenues decreased to a range of 41% to 55% of EAM's fee revenues from its mutual fund and separate accounts business.    During the period from December 23, 2010 through January 31, 2011 the Company earned revenues of $665,000 and profits of $59,000 from EAM with no related direct expenses in accordance with the EAM Trust Agreement.  On a transitional basis EAM and ES occupy a portion of the premises that the Company leases from a third party.  The Company has received $56,000 during the period from December 23, 2010 to January 31, 2011 for rental and certain accounting and other administrative support services.  In accordance with the terms of the restructuring plan, the Company has given notice to EAM to vacate the Company's premises on or before June 1, 2011.Total Net Assets

EAM - Results of operations subsequent to restructuring
At July 31, 2011  2010  
Percentage
Change
 
          
(in thousands)       FY 12 vs. 11 
             
Equity funds $1,838,756  $1,734,426   6.0%
             
Fixed income funds  235,242   246,891   -4.7%
             
U.S. Government Money Market Fund  77,393   120,223   -35.6%
             
     Total net assets $2,151,391  $2,101,540   2.4%

Subsequent to the restructuring of the Company’s investment management and broker-dealer businesses into a nonvoting revenues and profits interest in EAM, the overall results of EAM’s investment management operations for the period from December 23, 2010 through January 31, 2011, before interest holder distributions, include total management fees earned from the Value Line Funds of $1,388,000 and service and distribution (12b-1) fees received of $390,000. For the same period, total management fee waivers were $72,000 and 12b-1 fee waivers were $213,000.  For the period from December 23, 2010 through January 31, 2011, EAM's net income was $119,000 before distributions to voting and nonvoting (VLI) interest holders.

Twelve of the fourteen Value Line Funds have all or a portion of the 12b-1 fees being waived and five of the fourteen funds have partial management fee waivers in place.  Although the Company no longer receives or shares in the revenues from the 12b-1 distribution fees under the EAM Trust Agreement, these waivers effectively reduce the Value Line Funds expense ratios enhancing performance of the Funds in an attempt to attract new assets.

Of the fourteen funds, shares of Value Line Strategic Asset Management Trust (“SAM”) and Value Line Centurion Fund (“Centurion”) 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”).  The next table below showsprovides a breakdown of the major distribution channels for the Value Line Funds.
  At July 31,    
  2011  2010  
Percentage
Change
 
          
(in thousands)       FY 12 vs. 11 
             
Variable annuity assets (GIAC) $491,769  $461,032   6.7%
             
All other open end equity fund assets  1,346,987   1,273,394   5.8%
             
   Total equity fund net assets $1,838,756  $1,734,426   6.0%
During the three months ended July 31, 2010, investment management fees and distribution service fees (which we sometimes refer to as “12b-1 fees”) amounted to $4,215,000, after giving effect to account fee waivers for certain of the Value Line Funds. These amounts included 12b-1 fees of $910,000.  For the same period total investment management fee waivers were $186,000 and total 12b-1 fee waivers were $620,000.  With limited exceptions, the Company, EAM LLC and ESI had no right to recoup the previously waived amounts of investment management fees and 12b-1 fees.  Any such recoupment of waived investment management fees is subject to the provisions of the applicable prospectus.  During the three months ended July 31, 2010, separately managed accounts revenues were $51,000.  Separately managed accounts had $44 million in assets as of July 31, 2010.  Of the $44 million, $21 million was affiliated with AB&Co.  During the third quarter of fiscal 2011, the affiliated entities cancelled their separately managed account agreements with EAM LLC.

EAM - Results of operations before distribution to interest holders

The overall results of EAM’s investment management operations during the three months ended July 31, 2011, before interest holder distributions, include total investment management fees earned from the Value Line Funds of $3,301,000, 12b-1 fees of $928,000 and other income of $4,000. For the same period, total investment management fee waivers were $230,000 and 12b-1 fee waivers were $618,000.  During the three months ended July 31, 2011, EAM’s net income was $162,000, after giving effect to Value Line’s non-voting revenues interest of $1,491,000, but before distributions to voting interest holders and to the Company in respect of its non-voting profits interest.
27
As of July 31, 2011 twelve of the fourteen Value Line Funds have all or a portion of the 12b-1 fees being waived and five of the fourteen funds have partial investment management fee waivers in place.  Although, under the terms of the EAM Trust Agreement, the Company no longer receives or shares in the equity funds broken down intorevenues from 12b-1 distribution fees, the two categoriesCompany could benefit from the fee waivers to the extent that the resulting reduction of equity funds.
Equity Fund Net Assets (Variable Annuity and Open End Equity Funds) 
At January 31, 2011  2010  Percentage Change 
(in thousands)       FY 11 vs. 10 
Variable annuity assets (GIAC) $490,942  $472,441   3.9%
All other open end equity fund assets  1,318,769   1,441,151   -8.5%
   Total equity fund net assets $1,809,711  $1,913,592   -5.4%
expense ratios and enhancement of the performance of the Value Line Funds attracts new assets.

 As of JanuaryJuly 31, 2011, three of the six Value Line equity mutual funds, excluding SAM and Centurion, had an overall four star rating by Morningstar, Inc. The equity funds experienced net redemptions for the nine months ended January 31, 2011 and January 31, 2010. The largest distribution channel for the Value Line Funds remains the fund supermarket platforms such as Charles Schwab & Co., Inc., TD Ameritrade and Fidelity.

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The Value Line fixed income mutual fundFund assets (excluding the USGMMF)Value Line U.S. Government Money Market Fund (“USGMMF”)), represent approximately 11% of total mutual fund assets under management (“AUM”) at JanuaryJuly 31, 2011, the same as the previous year.a decrease from 12% of total mutual fund assets at July 31, 2010.  The USGMMF assets represent 5%4% of the total fund assetsFund AUM at JanuaryJuly 31, 2011, a decrease from 6% of the total Fund AUM at July 31, 2010.  Fixed income assets decreased by 5% and have decreased 20% from the previous yearthere was a decrease of 36% in USGMMF AUM.  The main reason for the previously mentioned reasons.decline in USGMMF AUM was due to redemptions by the Company, and the Value Line Profit Sharing Plan liquidating its account of approximately $12 million during May 2011. Management fees from the USGMMF were essentially zero with EAM having waived all fees for the Company waiving nearly all its feesFund since the end of November 2009, until December 23, 2010 and substantially subsidizing the USGMMF expenses, because of the historically low interest rate environment and new regulations restricting investments.investments, substantially subsidizing the USGMMF expenses.

Shareholder transactions for the Value Line Funds are processed each business day by the third party transfer agentEAM - The Company’s non-voting revenues and profits interests

As a result of the Funds. Shares can be redeemedRestructuring Transaction, the Company no longer engages, through subsidiaries, in the investment management or mutual fund distribution businesses.  The Company does hold non-voting revenues and non-voting profits interests in EAM which entitle the Company to receive from EAM an amount ranging from 41% to 55% of EAM’s investment management fee revenues from its mutual fund and separate accounts business.  EAM currently has no separately managed account clients.  During the three months ended July 31, 2011, the Company recorded revenues of $1,491,000 and profits of $81,000 from its non-voting interests in EAM without advance notice upon request of the shareholders each day that the New York Stock Exchange is open.incurring any directly related expenses.

Expenses

Expenses within the Company are categorized into advertising and promotion, salaries and employee benefits, production and distribution, and office and administration. Operating expenses of $33,282,000 for$7,732,000 during the ninethree months ended JanuaryJuly 31, 2011 were $45,711,000$2,331,000, or 58%23%, below operating expenses of $78,993,000 last fiscal year. Operating expenses of $11,511,000$10,063,000 for the thirdfirst quarter ended January 31, 2011 were $1,522,000 or 15% above operating expenses of $9,989,000 last fiscal year.2011. During the three and nine months ended JanuaryJuly 31, 2011,2010, expenses included approximately $1.3 million and $3.8 millioncosts of costs$1,300,000 associated with the Restructuring Transaction, respectively. Also included in the third quarter and nine month period of fiscal year 2011 is postemployment compensation expense of $1,475,000 related to the grant by VLI of a voting profits interest in EAM to a former employee.  During the nine months ended January 31, 2010, expenses included a provision for the SEC Settlement of $47,706,000.  Excluding expenses associated with the Restructuring Transaction in fiscal year 2011 and the provision for the SEC Settlement last fiscal year, operating expenses for the nine months ended January 31, 2011 were 6% below operating expenses for the nine months ended January 31, 2010.Transaction.

Advertising and promotion

 Three Months Ended July 31, 
         
 Three Months Ended January 31,  Nine Months Ended January 31,  2011  2010  Percentage Change 
 2011  2010  Percentage Change  2011  2010  Percentage Change          
(in thousands)       FY 11 vs. 10        FY 11 vs. 10        FY 12 vs. 11 
Advertising and promotion $1,366  $2,440   -44.0% $5,443  $6,933   -21.5% $1,121  $1,718   -34.7%

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Advertising and promotion expenses forduring the three and nine months ended JanuaryJuly 31 2011, decreased $1,074,000$597,000, or 44% and $1,490,000 or 22%35%, respectively, as compared to the priorfirst quarter of fiscal year. Since2011. As a result of the disassociation from EAM, the Company eliminatedand deconsolidation of the investment management segment andbusiness on December 23, 2010, the Company discontinued advertising expenses associated with the distribution of the mutual funds by $1,925,000Value Line Funds, resulting in a decline in expenses of $974,000, or 48% for100%, during the first nine monthsquarter of fiscal 20112012 as compared to the prior fiscal year.  Within the publishing segment, costs for the three months ended July 2011 associated with direct mail decreased 5% and 1% below lastincreased $151,000 or 59% above the first quarter of fiscal year for the three months and nine months, respectively.2011. Media print advertising and promotional costs during the first quarter of fiscal 2012 increased $209,000 and $792,000, respectively, for the three months and nine months ended January 31, 2011$334,000 as compared to the priorfirst quarter of fiscal year.  Media print advertising and promotional costs include expenses related2011, with the increase relating to the digital product and software promotion project, of $233,000 and $533,000, respectively, for the three and nine months ended January 31, 2011.which was partially offset by a $67,000 decrease in public relations costs.

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Salaries and employee benefits

 Three Months Ended July 31, 
         
 Three Months Ended January 31,  Nine Months Ended January 31,  2011  2010  Percentage Change 
 2011  2010  Percentage Change  2011  2010  Percentage Change          
(in thousands)       FY 11 vs. 10        FY 11 vs. 10        FY 12 vs. 11 
Salaries and employee benefits $5,322  $4,084   30.3% $13,587  $12,634   7.5% $3,640  $3,877   -6.1%

Salaries and employee benefits increaseddecreased by $1,238,000 and by $953,000$237,000 during the three and nine months ended JanuaryJuly 31, 2011, respectively, as compared to the previous year primarilyfirst quarter of fiscal 2011, as a result of the $1,475,000 post employment compensation expense discussed above.  Additionally, duringelimination of approximately $262,000 related to the second halfdeconsolidation of fiscal year 2010, there was consolidation at the executive level further reducing salaries and employee benefits, whichinvestment management business.  The decrease in expenses was partially offset inby the fiscal year 2011 by $300,000recording of $150,000 of accrued profit sharing expense and anexpense. The increase of the Information Technology staff$208,000 to assist insupport upgrades to the Company’s digital and software products and fulfillment system.system was offset by $270,000 capitalization of the development costs during the three months ended July 31, 2011.  Over the past several years, the Company has saved money by combining the roles and responsibilities of various personnel and by selective outsourcing.

Production and distribution

 Three Months Ended July 31, 
         
 Three Months Ended January 31,  Nine Months Ended January 31,  2011  2010  Percentage Change 
 2011  2010  Percentage Change  2011  2010  Percentage Change          
(in thousands)       FY 11 vs. 10        FY 11 vs. 10        FY 12 vs. 11 
Production and distribution $1,238  $1,330   -6.9% $3,518  $3,895   -9.7% $1,229  $1,138   8.0%
 
Production and distribution expenses forduring the three months and nine months ended JanuaryJuly 31, 2011, were $92,000 and $377,000, respectively, below expenses for$91,000, or 8%, above the comparable periodsfirst quarter of the prior fiscal year.  The decline in expenses during the nine months was2011 primarily due to the discontinuance of a third party fulfillmentan increase in printing, distribution and distribution provider during the latter part of the prior fiscal year and volume reductions in paper, printing and mailing that resulted primarily from a decrease in circulation of the print products.service mailers costs.

Office and administration

 Three Months Ended July 31, 
         
 Three Months Ended January 31,  Nine Months Ended January 31,  2011  2010  Percentage Change 
 2011  2010  Percentage Change  2011  2010  Percentage Change          
(in thousands)       FY 11 vs. 10        FY 11 vs. 10        FY 12 vs. 11 
Office and administration $2,283  $2,135   6.9% $6,970  $7,825   -10.9% $1,742  $3,330   -47.7%
 
Office and administration expenses forduring the three months and nine months ended JanuaryJuly 31, 2011, were $148,000 above and $855,000$1,588,000, or 48%, below respectively, expenses for the three months and nine months ended January 31, 2010.  During the secondfirst quarter of fiscal 2010,2011. Professional fees associated with the Company expensed $720,000restructuring of capitalized development coststhe Company’s assets management business segment decreased approximately $1,300,000 and were the largest component of the change in expenses during the first quarter of fiscal 2012 as compared to the first quarter of fiscal 2011.  Additionally, office and administration expenses declined by $353,000 during the first quarter of fiscal 2012 as a result of the elimination of funds accounting support expenses related to a software production project that it determined was no longer viable.the deconsolidation of the investment management business.  Professional fees fluctuate year to year based on the level of operations, litigation or regulatory activity requiring the use of outside professionalsprofessionals.  During the period from December 23, 2010 until May 28, 2011, EAM and accountES occupied a portion of the premises that the Company leases from a third party.  The Company received $44,000 for the remaining variance in the Officemonth of May, 2011 for rent and Administrative expenses.a payment for certain accounting and other administrative support services provided to EAM and ES on a transitional basis during such period.
 
 
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Expenses related to restructure

  Three Months Ended January 31,  Nine Months Ended January 31, 
  2011  2010  Percentage Change  2011  2010  Percentage Change 
(in thousands)       FY 11 vs. 10        FY 11 vs. 10 
Expenses related to restructuring $1,302   -   #N/A  $3,764   -   #N/A 
Provision for Settlement

 
Professional feesOn November 4, 2009, the Company, its former Chief Executive Officer and another former officer of $1.3 million during the third quarter and $3.8 million forCompany concluded a Settlement with the nine months ended JanuarySEC as a result of an investigation regarding the execution of portfolio transactions on behalf of the Value Line Funds (see Part II, Item 1, “Legal Proceedings”).  During fiscal 2011, the SEC appointed A.B. Data, Ltd as the Administrator of the Fair Fund. In connection with its ongoing administration of the Fair Fund, A.B. Data, Ltd estimated that the remaining costs of administration would be $1,767,000 which the company has reflected as a liability in its Consolidated Condensed Balance Sheets at July 31, 2011 and April 30, 2011, respectively.  Subsequent to the Settlement and pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, the Company’s disgorgement, interest and penalty payments to the SEC in the aggregate amount of $43,706,000 were to be placed into a Fair Fund created by the SEC. The Fair Fund will be used to reimburse shareholders who owned shares in the affected Value Line Funds in the period covered by the Settlement and to complete prescribed claims procedures.  The Company is required to bear all the costs associated with the restructuring ofFair Fund distribution, including retaining a third party consultant appointed by the Company’s asset managementSEC to administer the Fair Fund administration and broker-dealer businesses that was completed on December 23, 2010. The Company’s policy is to expense these costs as incurred.distribution.
 
Segment Operating Profit
 
The Company’s primary business is producing investment related periodical publications and making available copyright data including certain Value Line trademarks and Value Line marketed investment products.  Prior to December 23, 2010, the date of the completion of the Restructuring Transaction  (see Note 11 - Legal Proceeding and Restructuring of the Consolidated Condensed Financial Statements), the Company operates in two business segments, Investment Periodicals, Publishing & Copyright Dataprovided investment management services to the Value Line Funds, institutions and Investment Management.individual accounts and provided distribution, marketing and administrative services to the Value Line Funds.

 
Investment Periodicals, Publishing
& Copyright Data
  Investment Management 
 Three Months Ended July 31,  Three Months Ended July 31, 
 Investment Periodicals, Publishing & Copyright Data  Investment Management                   
 Nine Months Ended January 31,  Nine Months Ended January 31,  2011  2010  
Percentage
Change
  2011  2010  
Percentage
Change
 
 2011  2010  Percentage Change  2011  2010  Percentage Change                   
(in thousands)       FY 11 vs. 10        FY 11 vs. 10        FY 11 vs. 10  (1)     FY 11 vs. 10 
Segment revenues from external customers $28,449  $29,820   -4.6% $10,693  $14,407   -25.8% $9,370  $9,394   -0.3%  n/a  $4,215   -100%
Segment profit/(loss) from operations $6,866  $8,017   -14.4% $(1,006) $(42,783)  97.6%
Segment profit from operations $1,638  $3,238   -49.4%  n/a  $308   -100%
Segment profit margin from operations  24.1%  26.9%  -10.2%  -9.4%  -297.0%  96.8%  17.5%  34.5%  -49.3%  n/a   7.3%  -100%

The decline in operating margins resulted primarily from certain asset based revenue declines with no offsetting reductions in expense. Investment management fees and distribution revenues declined as compared to the prior year. This decline was partially offset by an increase in copyright data revenues, which are asset based, during the three months and nine months ended January 31, 2011 while the Company’s costs to provide the copyright data are relatively fixed.    Most of the decline consisted of management fees which also are asset based and for which there were no corresponding reductions in expenses to offset the lost revenue. Similarly, the decline in investment publication and periodicals revenues also contributed to the decline in profit margins because the cost reductions do not proportionately decrease in relation to the decline in the investment periodicals and publications revenues.
(1)  
From December 23, 2010, the date of the Restructuring Transaction, described in Note 11 - Legal Proceedings and Restructuring of the Consolidated Condensed Financial Statements, the Company no longer considers Investment Management a reportable business segment. See EAM - The Company’s non-voting revenues and profits interests, above under Results of Operations.
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Investment Periodicals, Publishing & Copyright Data

Segment revenues, operating profit and operating profit margins from the Company’s Investment Periodicals, Publishing & Copyright Data segment declined significantly from the previous fiscal year for the three months and nine months ended January 31, 2011 primarily due to the continued deterioration in circulation of the total product line. As previously mentioned, the ranking system performance is sometimes inconsistent 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 only provides research on mutual fund and ETF vehicles. Investment Periodicals, Publishing & Copyright Data segment profit margin from operations decreased as a direct result of the decline in revenue with virtually no offset in the Company’s fixed costs to support this product line.revenue.
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Investment Management
 
Revenues for the period from May 1, 2010 through December 23, 2010and profits from the Company’s former Investment Management business segment declined from the previous fiscal year primarily due to discontinuance of this business segment on December 23, 2010 and the decline in investment management fees from the Company’s family of mutual funds that wasas a direct result of the deterioration incompletion of the underlying assets under managementRestructuring Transaction and fee waivers.  Thethe Company no longer operates the Investment Management segment.  In fiscal 2011, the Company waived management fees of $352,000 for the period from May 1, 2010 through December 23, 2010$130,000 in the USGMMFU.S. Government Money Market Fund due to the low interest rate environment which resulted in the fund’s generating insufficient portfolio income to cover its normalized expenses.  Segment operating profit and operating profit margin for fiscal 2011 through December 23, 2010, the date of consummation of the Restructuring Transaction, includes $1,475,000 of postemployment compensation expense related to the grant of the voting profits interest in EAM to a former employee in the restructuring of the investment management and broker-dealer businesses and are negative for the nine months ended January 31, 2010 due to the $47.7 million provision for the Settlement.

Income from Securities Transactions, net

During the ninethree months ended JanuaryJuly 31, 2011, the Company’s income from securities transactions, net, of $48,000$11,000 was $505,000$26,000 or 91%70% below income from securities transactions, net, of $553,000$37,000 during the nine months ended January 31, 2010.  During the three months ended January 31, 2011, lossfirst quarter of $40,000 compared to income of $185,000 the prior fiscal year.2011. Income from securities transactions, net, for the three months and nine months ended January 31, 2011 includes dividend and interest income of $24,000$20,000 and $116,000, respectively, that is $178,000 or 88% and $615,000 or 84% below dividend and interest income of $202,000 and $731,000, respectively, for$39,000 earned during the three months and nine months ended January 31, 2010. The decline is primarily due to the decrease in available cash for investing during fiscal 2011 that resulted from the payment for the Settlement in November 2009 and the special dividends of $3.00 and $2.00 per share paid in April 2010 and November 2010, respectively. The maturity of higher yielding fixed income investments during the prior fiscal year also contributed to the decline.  Capital losses, net of capital gains, during the nine months ended JanuaryJuly 31, 2011 and 2010, respectively.  Capital losses during the three months ended July 31, 2011, were $59,000 and $130,000, respectively.$5,000 primarily from the sale of fixed income obligations. There were no capital gains or losses, during the three months ended July 31, 2010.

Effective income tax rate

The overall effective income tax rate, as a percentage of pre-tax ordinary income for the nine months ended January 31, 2011 and January 31, 2010 was 38.71% and 25.08%, respectively. The fluctuation in the income tax rate is primarily attributable to the non-deductible portion of the provision for the Settlement included in the prior year, the alternative minimum tax on the Company’s net operating loss carry forward in fiscal year 2011, and the change in the non-taxable investment income. Additionally, the state and local tax provision has increased approximately 2% after consideration of the federal tax benefit, as a result of the gain on deconsolidation of the Company’s asset management and broker-dealer subsidiaries.
The overall effective income tax rate, as a percentage of pre-tax ordinary income for the three months ended JanuaryJuly 31, 2011 and JanuaryJuly 31, 2010 was 38.87%35.53% and 25.13%35.33%, respectively. The fluctuation in the income tax rate is attributable to the same factors as previously mentioned for the nine months of fiscal 2011 and 2010.

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Liquidity and Capital Resources

The Company had negative working capital of $6,365,000$7,892,000 as of JanuaryJuly 31, 2011 and $45,865,000 of working capital of $20,884,000 as of JanuaryJuly 31, 2010, which2010.  These amounts include currentshort-term unearned revenue of $21,611,000$21,103,000 and $21,311,000, respectively. The fulfillment of the subscription giving rise to the unearned revenue requires the use of significantly fewer$22,069,000 reflected in total current assets than the amount of the unearned revenue. Cash and short-term securities were $17,600,000 as of Januaryliabilities at July 31, 2011 and $64,886,000 as of JanuaryJuly 31, 2010.2010, respectively.  The decrease in working capital and cash and short term securitiesfor fiscal 2012 resulted primarily from the payment in November 2010 of a special $3.00 per share dividend, approximately $30 million, declared and paid to all shareholders during April 2010 and a $2.00 per share dividend, aggregating approximately $20 million, in lieu of the Company’s regularly scheduled $.20$0.20 per share dividend, declareddividend.  Also in October 2010 and paid during November 2010. In addition,fiscal 2011, in connection with the Restructuring Transaction, the Company transferred cash and marketable securities of $7,000,000 intoto EAM, paidand incurred restructuring related expenses of $2,785,000 and recognized current liabilities of approximately $1 million. Shareholders’ equity of $32,466,000 at January 31, 2011 was 34% lower than shareholders’ equity of $49,170,000 at January 31, 2010, primarily as a result of the payments of the special $3.00 per share dividend during April 2010 and the special $2.00 per share dividend declared in October 2010 and paid during November 2010.  Shareholders’ equity at January 31, 2011 increased by $27,697,000 primarily as a result of the recognition of the gain from deconsolidation of its former investment management subsidiaries.

The Company’s cash and cash equivalents include $7,004,000 at January 31, 2011 and $13,805,000 at January 31, 2010 invested in the USGMMF and brokerage accounts.  The USGMMF operates under Rule 2a-7 of the Investment Company Act of 1940.  The Fund’s portfolio includes U.S. government agency securities, U.S. Treasuries, certificates of deposit, and repurchase agreements collateralized with U.S. Treasuries in which the custodian physically takes possession of the collateral.$3,764,000.

Cash from operating activities

The Company’sCompany had cash inflowoutflows from operations was $7,325,000 forof $526,000 during the ninethree months ended JanuaryJuly 31, 2011, as compared to the cash outflowinflows from operations of $22,658,000 for$3,367,000 during the ninethree months ended JanuaryJuly 31, 2010.  The change in cash flows from fiscal 20102011 to fiscal 2011was2012 was primarily due to the resultrestructuring of earningsthe investment management business that resulted in fiscal year 2011the cessation of this operating activity and cash outflows during fiscal 2010 of $43,700,000 in connection with the Settlement reduced by cash inflows of $10,511,000 from the liquidationinclusion of the Company’s trading portfolio duringnon-voting revenues and non-voting profits interest in EAM Trust as investing activities in fiscal 2010.2012.  Fiscal 2011 includesincluded cash inflows from the receipt of $1,598,000 in federal income tax refunds, payments of $764,000 and $2,785,000 in Settlement and Restructuring Transaction related expenses, respectively, and the payments made during fiscal 2011 for expenses incurred during fiscal 2010.refunds.

Cash from investing activities

The Company’s cash inflowsinflow from investing activities of $5,832,000 for$3,063,000 during the ninethree months ended JanuaryJuly 31, 2011, were $4,899,000 or 525% higher thancompared to cash inflowsoutflows from investing activities of $933,000$5,368,000 for the ninethree months ended JanuaryJuly 31, 2010.  The increaseCash inflows for the three months ended July 31, 2011, were higher due to the Company’s lower level of invested cash assets in cash inflowsfiscal 2012, the receipt of $1,626,000 of non-voting revenues interest and non-voting profits interest distributions from EAM Trust, offset by the Company’s investment of $1.6 million in capitalized software costs for upgrading its product capabilities.  Cash outflows in fiscal 2011 was primarily the result of the proceedsresulted from sales ofcash redeployment into fixed income government debt securities that were not reinvested, reduced byduring the transferfirst quarter of $5,484,000 of cash to EAM.fiscal year 2011.

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Cash from financing activities

The Company’s fiscal 2012 net cash outflow for financing activities was $2,153,000. There was no cash flow from financing activities in the first quarter of $22,017,000 as of January 31, 2011 was $15,030,000 or 215% higher thanfiscal 2011. During fiscal 2012, cash outflow fromoutflows for financing activities consisted of $6,987,000$158,000 for the nine months ended January 31, 2010.  During fiscal year 2011, the Company paid a dividend of $.20 per share during August 2010 and $2.00 per share during November 2010.  During fiscal 2010 the Company paid a quarterly dividend of $.30 per share in May 2009 and $.20 per share dividends during August 2009 and November 2009.
On January 20, 2011, the Company's Board of Directors approved the repurchase of shares of the Company’s common stock up to an aggregate purchase price not to exceed $3,200,000.  Based on current market prices,under the Company believes that theboard approved repurchase program is in the best interestsand dividend payments of the shareholders.  The repurchases will be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market within the Rule 10b-18 Safe Harbor rule. The repurchase program is expected to continue through January 15, 2012 unless extended or shortened by the Board of Directors.$0.20 per share.

During the third quarter of fiscal 2011, the Company paid $57,000 for purchases of 4,298 shares of its common stock on the open market. The Company believes it will have the liquidity to purchase the remaining $3,143,000 of its stock under the repurchase program.
Management believes that the Company’s cash and other liquid asset resources used in its business together with the future cash flows from operations and from the Company’s non-voting revenues and non-voting profits interests in EAM will be sufficient to finance current and forecasted liquidity.liquidity needs for the next twelve months.  Management does not anticipate making any borrowingborrowings in fiscal 2012. Retained earnings were about $32 million and liquid assets approximately $17 million at July 31, 2011.
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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, 2010.2011.

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 equity price risk.  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 strategyobjective, 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 in short-term obligations maturing withinin six months to one year.

       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.
 
 
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      Estimated Fair Value after
Hypothetical Change in Interest Rates
  
   
($ in thousands)
 
     
   (bp = basis points) 
     
   6 mos. 6 mos. 1 yr. 1 yr. 
           
Fixed Income Securities 
Fair
Value
 
50bp
increase
 
50bp
decrease
 
100bp
increase
 
100bp
decrease
 
           
As of July 31, 2011
Investments in securities with fixed maturities		 $8,204  $8,200  $8,200  $8,200  $8,200 
                     
As of April 30, 2011
Investments in securities with fixed maturities		 $11,208.0  $11,199.6  $11,199.7  $11,199.5  $11,199.7 
 
Fixed Income Securities

  Estimated Fair Value after 
  Hypothetical Change in Interest Rates 
  (in thousands) 
  (bp = basis points) 
     6 mos.  6 mos.  1 yr.  1 yr. 
  Fair  50bp  50bp  100bp  100bp 
  Value  increase  decrease  increase  decrease 
                
As of January 31, 2011               
Investments in securities with fixed maturities $9,211  $9,197  $9,200  $9,197  $9,200 
As of April 30, 2010                    
Investments in securities with fixed maturities $23,532  $23,468  $23,470  $23,463  $23,463 

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.

Equity Price Risk

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

              As of July 31, 2011, the aggregate cost of the equity securities classified as available-for-sale, which consist of investments in the First Trust Value Line Dividend (ticker symbol FVD), S&P Dividend (ticker symbol SDY) and Powershares Preferred stock (ticker symbol PGF) ETFs and other equity securities was $1,360,000 and the market value was $1,392,000. The Company invests from time to time its assets in equity securities.  As of January 31, 2011,did not hold any equity securities consisted primarily of exchange traded funds (ETF’s).  Each ETF invests in a variety of positions that may include equity and non-equity positions.

       The table below summarizes the Company’s equity price risks as of JanuaryJuly 31, 2011 and shows the effects of a hypothetical 30% increase and a 30% decrease in market prices as of those dates. The Company had no equity holdings as of April 30, 2010.  The selected hypothetical changes do not reflect what could be considered the best or worst case scenarios.
Equity Securities
(in thousands)
       Estimated    
        Fair Value after  Hypothetical Percentage 
     Hypothetical Hypothetical  Increase (Decrease) in 
   Fair Value Price Change Change in Prices  Shareholders’ Equity 
           
As of January 31, 2011 $814 30% increase $1,058   0.49%
     30% decrease $570   (0.49)%
              
Equity Securities Fair Value 
Hypothetical
Price Change
 
Estimated
Fair Value after
Hypothetical
Change in Prices
 
Hypothetical Percentage
Increase (Decrease) in
Shareholders’ Equity
 
($ in thousands)         
As of July 31, 2011 $1,392  30% increase $1,809  0.82%
      30% decrease $974  (0.82)%
              
As of April 30, 2011 $1,466  30% increase $1,906  0.86%
      30% decrease $1,026  (0.86)%
 
 
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Credit Worthiness of Issuer

The Company’s fixed income investments consist primarily of U.S. Treasury Bills and Notes and FDIC insured commercial paper.

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

The Company’s management has evaluated, with the participation of the Company’s Acting Chief Executive Officer and Principal 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 Acting Chief Executive Officer and Principal 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.

The Company’s management has evaluated, with the participation of the Company’s Acting Chief Executive Officer and Principal 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 Acting Chief Executive Officer and Principal 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 1011 - Legal Proceedings and Restructuring of the consolidated condensed financial statementsConsolidated Condensed Financial Statements for discussion of legal proceedings and restructuring, which is incorporated herein by reference.

Item 1A. Risk Factors

The following risk factor is hereby addedThere 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, 2010.

There is a risk that, while the restructuring transaction that closed on December 23, 2010, was and is believed to comply2011 filed with the requirements of the Settlement, the Company might be required to take additional steps to insure compliance, which could have negative consequences to the Company’s consolidated financial statements.SEC on July 29, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c)On January 20, 2011, the Company's Board of Directors approved the repurchase of shares of the Company’s common stock up to an aggregate purchase price not to exceed $3,200,000.  Based on current market prices,( c )        Purchases of Equity Securities by the Company believes that the repurchase program is in the best interests of the shareholders.  The repurchases will be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market within the Rule 10b-18 Safe Harbor rule. The repurchase program is expected to continue through January 15, 2012 unless extended or shortened by the Board of Directors.

The following table provides information with respect to all purchasesrepurchases of common stock made by or on behalf of the Company of its common equity shares that are registered byduring the Company pursuant to section 12 of the Exchange Act. fiscal quarter ended July 31, 2011. All purchases listed below were made in the open market at prevailing market prices.

ISSUER PURCHASES OF EQUITY SECURITIES 
Period 
(a) Total
Number of
Shares (or
Units)
Purchased
  
(b) Average
Price Paid per
Share (or
Unit)
  
(c) Total
Number of
Shares (or
Units)
Purchased as
Part of Publicly
Announced
Plans or
Programs
  
(d) Maximum
Number (or
Approximate
Dollar Value) of
Shares (or Units)
that May Yet Be
Purchased Under
the Plans or
Programs
 
November 1, 2010 through November 30, 2010  0   0   0   0 
December 1, 2010 through December 31, 2010  0   0   0   0 
January 1, 2011 through January 31, 2011  4,298  $13.26   4,298  $3,143,000 
Total  4,298  $13.26   4,298  $3,143,000 
 
3634
 
 
ISSUER PURCHASES OF EQUITY SECURITIES 
Period 
(a) Total
Number of
Shares (or
Units)
Purchased
  
(b) Average
Price Paid per
Share (or
Unit)
  
(c) Total
Number of
Shares (or
Units)
Purchased as
Part of Publicly
Announced
Plans or
Programs
  
(d) Maximum
Number (or
Approximate
Dollar Value) of
Shares (or Units)
that May Yet Be
Purchased Under
the Plans or
Programs
 
                 
  May 1, 2011 through
  May 31, 2011
  11,700   $13.53   11,700   $2,951,835 
                 
  June 1, 2011 through
  June 30, 2011
  0   0   0   0 
                 
  July 1, 2011 through
  July 31, 2011
  0   0   0   0 
                 
  Total  11,700   $13.53   11,700   $2,951,835 
(1)All shares represent shares repurchased pursuant to authorization of the Board of Directors. In January 2011 the Company’s Board of Directors authorized the repurchase of shares of the Company’s common stock, at such times and prices as management determined to be advisable, up to an aggregate purchase price of $3,200,000. The repurchase authorization extends through January 15, 2012 unless extended by the Board of Directors.
Item 5. Other Information

Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

On December 9, 2010, Mitchell Appel, president of ESI and EULAV Asset Management as well as of each of the Value Line Funds, resigned his positions as Chief Financial Officer and Director of the Company in connection with the Restructuring Transaction which closed on December 23, 2010.

On December 9, 2010, Thomas Sarkany resigned his position as Secretary of Value Line, Inc. in connection with the Restructuring Transaction.
Amendments to Registrant’s Code of Business Conduct and Ethics, or Waiver of a Provision of Code of Business Conduct and Ethics.

On March 22, 2011, the Board of Directors Executive Committee adopted an updated “Code of Business Conduct and Ethics” and “Code of Ethics Regarding Securities Transactions and Insider Trading Policy”.  The two Codes are based on the principles and practices of earlier Codes, with adjustments to account for the restructuring.
 
Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.None.
 
The Company received notice dated March 23, 2011 from The NASDAQ Stock Market (“Nasdaq”) that, because the Company had failed to file this quarterly report on Form 10-Q in a timely manner (the quarterly report would have been timely filed if it had been filed by March 22, 2011), the Company no longer complies with Nasdaq Listing Rule 5250(c)(1) for continued listing on the Nasdaq Global Market.  Rule 5250(c)(1) requires listed issuers to timely file all required periodic financial reports with the SEC. Pursuant to Nasdaq' s  Rules, the Company has 60 calendar days to submit a plan to Nasdaq to regain compliance.
The Company believes that it has regained compliance with the continued listing requirements by the filing of this quarterly report on Form 10-Q with the SEC.  The Company will consult with Nasdaq to determine if any further action is necessary.
Nasdaq Marketplace Rule 5810(c)(2)(A)(iv) requires a listed company that receives a notification of deficiency related to the requirement to file a periodic report contained in Rule 5250(c)(1) to make a public announcement by issuing a press release disclosing receipt of the notification and the Rule(s) upon which the deficiency is based, in addition to filing any Form 8-K required by SEC rules.  The Company issued the required press release on March 24, 2011 and, pursuant to General Instruction B.3 of Form 8-K, is disclosing the receipt from Nasdaq of the notification of deficiency in this current report on Form 10-Q rather than filing a Form 8-K.
A copy of the press release issued by the Company on March 24, 2011, disclosing receipt of the notification of deficiency is included in this report as Exhibit 99.1.Item 6. Exhibits
Item 6.Exhibits
10.16EAM Trust Agreement
14.1Code of Business Conduct and Ethics
14.2Code of Ethics Regarding Securities Transactions and Insider Trading Policy
  
31.1Certificate of Acting Chief Executive Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.
  
31.2Certificate of Principal Financial Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.
  
31.3Certificate of Principal Accounting Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.
  
32.1Joint Acting Chief Executive Officer/Principal Financial Officer/Principal Accounting Officer Certificate Required Under Section 906 of the Sarbanes-Oxley Act of 2002.
  
101.INSXBRL Instance Document
 
99.1101.SCHXBRL Taxonomy Extension Schema Document
 
Press release dated March 24, 2011101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
 
 
3735
 
 
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)
Value Line, Inc.
(Registrant)
Date:  March 24,September 13, 2011By:/s/Howard A. Brecher
  Howard A. Brecher
  Acting Chief Executive Officer
  (Principal Executive Officer)
 
Date:  March 24,September 13, 2011By:/s/John A. McKay
  John A. McKay
  Chief Financial Officer
  (Principal Financial Officer)
 
Date:  March 24,September 13, 2011By:/s/Stephen R. Anastasio
  Stephen R. Anastasio
  Vice President and Treasurer
  (Principal Accounting Officer)

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