Value Line, Inc.
Investment in Unconsolidated Entities: | | | | |
Equity Method Investment: | | | | | |
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As of October 31, 2012, and April 30, 2012, the Company's investment in EAM Trust, on the Consolidated Condensed Balance Sheet was $57,354,000 and $56,331,000, respectively. |
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The value of VLI’s investment in EAM at October 31, 2012 and April 30, 2012 reflects the fair value of contributed capital of $55,805,000 at inception, plus $5,820,000 of cash and liquid securities in excess of working capital requirements contributed to EAM’s capital account by VLI, plus VLI's share of non-voting revenues and non-voting profits from EAM less distributions, made quarterly to VLI by EAM, during the period subsequent to its initial investment through the dates of the Consolidated Condensed Balance Sheets. |
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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. |
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The Company monitors its Investment in EAM Trust 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 and regulatory requirements. EAM did not record any impairment losses for its assets during the fiscal years 2013 or 2012. |
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The components of EAM’s investment management operations were as follows: | | |
| | Three Months Ended October 31, | | | Six Months Ended October 31, | |
($ in thousands) | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
Investment management fees earned from the Value Line Funds, net of waivers shown below | | $ | 3,149 | | | $ | 2,957 | | | $ | 6,229 | | | $ | 6,258 | |
12b-1 fees, net of waivers shown below | | $ | 985 | | | $ | 822 | | | $ | 1,876 | | | $ | 1,750 | |
Other income | | $ | - | | | $ | 5 | | | $ | - | | | $ | 9 | |
Investment management fee waivers (1) | | $ | 167 | | | $ | 227 | | | $ | 346 | | | $ | 457 | |
12b-1 fees waivers (1) | | $ | 547 | | | $ | 548 | | | $ | 1,088 | | | $ | 1,166 | |
Value Line’s non-voting revenues interest | | $ | 1,414 | | | $ | 1,330 | | | $ | 2,808 | | | $ | 2,821 | |
EAM's net income (2) | | $ | 230 | | | $ | 26 | | | $ | 388 | | | $ | 188 | |
(1) For the six months ended October 31, 2012, investment management fee waivers primarily related to the U.S. Government Money Market Fund ("USGMMF") and the 12b-1 fee waivers related to nine of the Value Line Mutual Funds. For the six months ended October 31, 2011, investment management fee waivers primarily related to the USGMMF and the 12b-1 fee waivers related to eleven of the Value Line Mutual Funds. |
(2) Represents EAM's net income, after giving effect to Value Line’s non-voting revenues interest, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest. |
As of July 31, 2012, and April 30, 2012, the Company’s investment in EAM Trust, on the Consolidated Condensed Balance Sheet was $57,306,000 and $56,331,000, respectively.
| | October 31, | | | October 31, | |
($ in thousands) | | 2012 | | | 2011 | |
EAM's total assets | | $ | 58,999 | | | $ | 57,493 | |
EAM's total liabilities (1) | | | (2,580 | ) | | | (796 | ) |
EAM's total equity | | $ | 56,419 | | | $ | 56,697 | |
The value of VLI’s investment in EAM at July 31, 2012 and April 30, 2012 reflects the fair value of contributed capital of $55,805,000 at inception, plus $5,820,000 of cash and liquid securities in excess of working capital requirements contributed to EAM’s capital account by VLI, plus VLI’s share of non-voting revenues and non-voting profits from EAM less distributions, made quarterly to VLI by EAM, during the period subsequent to its initial investment through the dates of the Consolidated Condensed Balance Sheets.
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.
The Company monitors its Investment in EAM Trust 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 and regulatory requirements. EAM did not record any impairment losses for its assets during the fiscal years 2013 or 2012.
The overall results of EAM’s investment management operations during the three months ended July 31, 2012, before interest holder distributions, include total investment management fees earned from the Value Line Funds of $3,080,000 and 12b-1 fees of $891,000. For the three months ended July 31, 2012, total investment management fee waivers primarily related to the USGMMF, were $179,000 and 12b-1 fee waivers related to nine of the Value Line Mutual Funds, were $541,000. During the three months ended July 31, 2012, EAM’s net income was $158,000 after giving effect to Value Line’s non-voting revenues interest of $1,394,000, but before distributions to voting interest holders and to the Company in respect of its non-voting profits interest. At July 31, 2012, EAM’s total assets were $58,838,000, total liabilities were $2,472,000, including a payable to VLI for its accrued non-voting revenues and non-voting profits interests of $1,482,000, and total equity was $56,366,000, exclusive of EAM’s quarterly obligation of $1,539,000 for distributions to all interest holders.
Total results of EAM’s investment management operations during the three months ended July 31, 2011, before interest holder distributions, included 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 primarily related to the USGMMF, were $230,000 and 12b-1 fee waivers related to eleven of the Value Line Mutual Funds, 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. 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 3 - Variable Interest Entity
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 the Company. EAM is considered to be a VIE. The Company makes its determination for consolidation of EAM as a VIE 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 VIEs.
The Company 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 non-voting revenues 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.
(1) At October 31, 2012, EAM's total liabilities included a payable to VLI for its accrued non-voting revenues and non-voting profits interests of $1,513,000. |
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Note 3 - Variable Interest Entity | | | | | |
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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 the Company. EAM is considered to be a VIE. The Company makes its determination for consolidation of EAM as a VIE 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 VIEs. |
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
July
October 31, 2012
(Unaudited)
(Unaudited
The Company 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. |
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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 non-voting revenues 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. |
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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 on its Consolidated Condensed Balance Sheets for its interest in EAM. |
| | | | | Value Line | |
($ in thousands) | | VIE Assets | | | Investment in EAM Trust (1) | | | Liabilities | | | Maximum Exposure to Loss |
As of October 31, 2012 | | $ | 58,999 | | | $ | 57,354 | | | $ | - | | | $ | 57,354 | |
As of April 30, 2012 | | $ | 57,482 | | | $ | 56,331 | | | $ | - | | | $ | 56,331 | |
(1) Reported within Long Term Assets on the Consolidated Condensed Balance Sheets. | |
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Note 4 - Supplementary Cash Flow Information: | | | | |
| | | | | Value Line | |
($ in thousands) | | VIE Assets | | | Investment in EAM Trust (1) | | | Liabilities | | | Maximum Exposure to Loss | |
As of July 31, 2012 | | $ | 58,838 | | | $ | 57,306 | | | $ | - | | | $ | 57,306 | |
As of April 30, 2012 | | $ | 57,482 | | | $ | 56,331 | | | $ | - | | | $ | 56,331 | |
| | Six Months Ended October 31, | |
($ in thousands) | | 2012 | | | 2011 | |
State and local income tax payments | | $ | (19 | ) | | $ | (60 | ) |
Federal income tax payments to the Parent | | $ | (230 | ) | | $ | (245 | ) |
(1) Reported within Long Term Assets on the Consolidated Condensed Balance Sheets.
Note 4 - Supplementary Cash Flow Information:
The Company did not make any income tax payments during the three months ended July 31, 2012 or 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”). 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. For the three months ended July 31, 2012 and 2011, the estimated profit sharing plan contribution, which is included as an expense in salaries and employee benefits in the Consolidated Condensed Statements of Income, was $115,000 and $150,000, respectively.
Note 6 - Comprehensive Income:
The FASB’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.
In May 2012, the Company adopted the provisions of Accounting Standards Update 2011-05 to reflect comprehensive income in two statements which include the components of net income and total net income in the first statement, immediately followed by a financial statement that presents the components of other comprehensive income, a total for other comprehensive income and a total for comprehensive income.
As of July 31, 2012, the Company held equity securities consisting primarily of ETFs and select common stock holdings of blue chip companies with a concentration on large capitalization companies with high relative dividend yields that are classified as securities available-for-sale on the Consolidated Condensed Balance Sheets. Additionally, as of July 31, 2012, the Company held non-leveraged ETFs, classified as securities available-for-sale, whose performance inversely corresponds to the market value changes of investments in other ETF securities held in the equity portfolio for dividend yield. As of July 31, 2011, the Company held both equity and U.S. Government debt securities that are classified as available-for-sale on the Consolidated Condensed Balance Sheets. The change in valuation of these securities, net of deferred income taxes, has been recorded in accumulated other comprehensive income in the Company’s Consolidated Condensed Balance Sheets.
For the three months ended July 31, 2012 and 2011, comprehensive income was $1,803,000 and $2,027,000, respectively.
The components of comprehensive income included in the Consolidated Condensed Statements of Income and Changes in Shareholders’ Equity for the three months ended July 31, 2012 are as follows:
($ in thousands) | | Amount Before Tax | | | Tax Expense | | | Tax Benefit | | | Amount Net of Tax | |
Change in unrealized gains on securities | | $ | 42 | | | $ | (18 | ) | | $ | 3 | | | $ | 27 | |
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| | $ | 42 | | | $ | (18 | ) | | $ | 3 | | | $ | 27 | |
The components of comprehensive income that are included in the Consolidated Condensed Statements of Income and Changes in Shareholders’ Equity for the three months ended July 31, 2011 are as follows:
($ in thousands) | | Amount Before Tax | | | Tax Expense | | | Tax Benefit | | | Amount Net of Tax | |
Change in unrealized losses on securities | | $ | (80 | ) | | $ | - | | | $ | 28 | | | $ | (52 | ) |
Add: Losses realized in net income | | | 5 | | | | (2 | ) | | | - | | | | 3 | |
| | $ | (75 | ) | | $ | (2 | ) | | $ | 28 | | | $ | (49 | ) |
See Note 7-Related Party Transactions for amounts associated with the Parent. | |
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Note 5 - Employees' Profit Sharing and Savings Plan: | | | |
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Substantially all employees of the Company and its subsidiaries are members of the Value Line, Inc. Profit Sharing and Savings Plan (the "Plan"). In general, this is a qualified, contributory plan which provides for a discretionary annual Company contribution which is determined by a formula based on the salaries of eligible employees and the amount of consolidated net operating income as defined in the Plan. For the six months ended October 31, 2012 and 2011, the estimated profit sharing plan contribution, which is included as an expense in salaries and employee benefits in the Consolidated Condensed Statements of Income, was $70,000 and $230,000, respectively. |
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Note 6 - Comprehensive Income: | | | | | |
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The FASB'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. |
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In May 2012, the Company adopted the provisions of Accounting Standards Update 2011-05 to reflect comprehensive income in two statements which include the components of net income and total net income in the first statement, immediately followed by a financial statement that presents the components of other comprehensive income, a total for other comprehensive income and a total for comprehensive income. |
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As of October 31, 2012, the Company held equity securities consisting primarily of ETFs and select common stock holdings of blue chip companies with a concentration on large capitalization companies with high relative dividend yields that are classified as securities available-for-sale on the Consolidated Condensed Balance Sheets. Additionally, as of October 31, 2012, the Company held non-leveraged ETFs, classified as securities available-for-sale, whose performance inversely corresponds to the market value changes of investments in other ETF securities held in the equity portfolio for dividend yield. As of October 31, 2011, the Company held both equity and U.S. Government debt securities that are classified as available-for-sale on the Consolidated Condensed Balance Sheets. The change in valuation of these securities, net of deferred income taxes, has been recorded in accumulated other comprehensive income in the Company's Consolidated Condensed Balance Sheets. |
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
July
October 31, 2012
(Unaudited)
(Unaudited
The components of comprehensive income included in the Consolidated Condensed Statements of Income and Changes in Shareholders' Equity for the six months ended October 31, 2012 are as follows: |
Note 7 - Related Party Transactions:
($ in thousands) | | Amount Before Tax | | | Tax Expense | | | Tax Benefit | | | Amount Net of Tax | |
Change in unrealized gains on securities | | $ | 41 | | | $ | (26 | ) | | $ | 12 | | | $ | 27 | |
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| | $ | 41 | | | $ | (26 | ) | | $ | 12 | | | $ | 27 | |
The components of comprehensive loss that are included in the Consolidated Condensed Statements of Income and Changes in Shareholders' Equity for the six months ended October 31, 2011 are as follows: |
Investment Management (overview):
($ in thousands) | | Amount Before Tax | | | Tax Expense | | | Tax Benefit | | | Amount Net of Tax | |
Change in unrealized losses on securities | | $ | (50 | ) | | $ | - | | | $ | 18 | | | $ | (32 | ) |
Add: Losses realized in net income | | | 5 | | | | (2 | ) | | | - | | | | 3 | |
| | $ | (45 | ) | | $ | (2 | ) | | $ | 18 | | | $ | (29 | ) |
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Note 7 - Related Party Transactions: | | | | |
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Investment Management (overview): | | | | |
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On 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 interests 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 and will receive non-voting revenues and non-voting profits interests going forward, as discussed below. Total assets in the Value Line Funds managed and/or distributed by EAM at October 31, 2012, were $2.05 billion, 0.8% above total assets of $2.03 billion in the Value Line Funds managed by EAM at October 31, 2011, as a result of net appreciation in equity assets under management partially offset by redemptions within the funds. |
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The USGMMF in accordance with a plan approved by the Fund Board merged into a third party fund, the Daily Income Fund, managed by Reich & Tang Asset Management LLC ("Reich & Tang"), effective October 19, 2012. Final documentation was approved at the fund board meeting held during June 2012. EAM will distribute the Daily Income Fund on behalf of Reich & Tang and maintain the shareholder accounts on behalf of the Value Line Funds shareholders who invest in the Daily Income Fund, but EAM is no longer subsidizing the expenses of the money market fund resulting from the low interest rate economic environment. In addition, the merger of the USGMMF will eliminate the cost of administration and fund accounting. |
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The non-voting revenues and 90% of the Company's non-voting profits interests due from EAM to the Company are payable each quarter under the provisions of the EAM Trust Agreement. The distributable amounts earned through the balance sheet date, which is included in the Investment in EAM Trust on the Consolidated Condensed Balance Sheets, and not yet paid, were $1,513,000 and $497,000 at October 31, 2012 and April 30, 2012, respectively. |
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EAM Trust - VLI's non-voting revenues and non-voting profits interests: | | |
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The Company holds 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 period from December 23, 2010 until May 28, 2011, EAM occupied a portion of the premises that the Company leases from a third party. The Company received $44,000 for the month of May, 2011 for rent and certain accounting and other administrative support services provided to EAM on a transitional basis during such period. The Company recorded income from its non-voting revenues interest and its non-voting profits interests in EAM as follows: |
On 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 interests 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 and will receive non-voting revenues and non-voting profits interests going forward, as discussed below. Total assets in the Value Line Funds managed by EAM at July 31, 2012, were $2.0 billion, 6.0% below total assets of $2.15 billion in the Value Line Funds managed by EAM at July 31, 2011, as a result of net redemptions within the funds. The decrease in Value Line U.S. Government Money Market Fund (“USGMMF”) assets is primarily a result of the low interest rate environment.
| | Three Months Ended October 31, | | | Six Months Ended October 31, | |
($ in thousands) | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
Non-voting revenues interest in EAM | | $ | 1,414 | | | $ | 1,330 | | | $ | 2,808 | | | $ | 2,821 | |
Non-voting profits interest in EAM | | | 115 | | | | 13 | | | | 194 | | | | 94 | |
| | $ | 1,529 | | | $ | 1,343 | | | $ | 3,002 | | | $ | 2,915 | |
The non-voting revenues and 90% of the Company’s non-voting profits interests due from EAM to the Company are payable each quarter under the provisions of the EAM Trust Agreement. The distributable amounts earned through the balance sheet date, which is included in the Investment in EAM Trust on the Consolidated Condensed Balance Sheets, and not yet paid, were $1,482,000 and $497,000 at July 31, 2012 and April 30, 2012, respectively.
EAM Trust - VLI’s non-voting revenues and non-voting profits interests:
The Company holds 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, 2012, the Company recorded income of $1,473,000, consisting of $1,394,000, from its non-voting revenues interest in EAM and $79,000, from its non-voting profits interest in EAM without incurring any directly related expenses. During the three months ended July 31, 2011, the Company recorded income of $1,572,000, consisting of $1,491,000, from its non-voting revenues interest in EAM and $81,000 from its non-voting profits interests in EAM. During the period from December 23, 2010 until May 28, 2011, EAM occupied a portion of the premises that the Company leases from a third party. The Company received $44,000 for the month of May, 2011 for rent and certain accounting and other administrative support services provided to EAM on a transitional basis during such period.
Transactions with Parent:
During the three months ended July 31, 2012 and 2011, the Company was reimbursed $0 and $101,000, respectively, for payments it made on behalf of and for services the Company provided to the Parent. The Receivables from affiliates on the Consolidated Condensed Balance Sheets, included receivables from the Parent of $40,000 and $0 at July 31, 2012 and April 30, 2012, 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, 2012 or 2011. Prepaid and refundable income taxes on the Consolidated Condensed Balance Sheets included $101,000 and $530,000 of prepaid federal income tax due from the Parent at July 31, 2012 and April 30, 2012, respectively.
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. The Parent may make additional purchases of common stock of the Company from time to time in the future. As of July 31, 2012, the Parent owned approximately 87.2% of the outstanding shares of common stock of the Company.
Transactions with Parent: | | | | | |
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During the six months ended October 31, 2012 and 2011, the Company was reimbursed $88,000 and $167,000, respectively, for payments it made on behalf of and for services the Company provided to the Parent. There were no Receivables from affiliates or receivables from the Parent on the Consolidated Condensed Balance Sheets at October 31, 2012 and April 30, 2012. |
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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 $230,000 and $245,000 of federal tax payments to the Parent during the six months ended October 31, 2012 or 2011, respectively. Prepaid and refundable income taxes on the Consolidated Condensed Balance Sheets included $0 and $530,000 of prepaid federal income tax due from the Parent at October 31, 2012 and April 30, 2012, respectively. |
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
July
October 31, 2012
(Unaudited)
(Unaudited
From time to time, the Parent has purchased additional shares of common stock of the Company in the market when and as the Parent has determined it to be appropriate. The Parent may make additional purchases of common stock of the Company from time to time in the future. As of October 31, 2012, the Parent owned approximately 87.3% of the outstanding shares of common stock of the Company. |
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Note 8 - Federal, State and Local Income Taxes: | | | |
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In accordance with the requirements of the Income Tax Topic of the FASB's ASC, the Company's provision for income taxes includes the following: |
| | Three Months Ended October 31, | | | Six Months Ended October 31, | |
($ in thousands) | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
Current tax expense (benefit): | | | | | | | | | | | | |
Federal | | $ | 879 | | | $ | (93 | ) | | $ | 1,327 | | | $ | (43 | ) |
State and local | | | 29 | | | | (123 | ) | | | 102 | | | | (215 | ) |
| | | 908 | | | | (216 | ) | | | 1,429 | | | | (258 | ) |
Deferred tax expense (benefit): | | | | �� | | | | | | | | | | | | |
Federal | | | (31 | ) | | | 1,330 | | | | 436 | | | | 2,336 | |
State and local | | | 30 | | | | (148 | ) | | | 117 | | | | 33 | |
| | | (1 | ) | | | 1,182 | | | | 553 | | | | 2,369 | |
Income tax provision: | | $ | 907 | | | $ | 966 | | | $ | 1,982 | | | $ | 2,111 | |
Deferred income taxes are provided for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. The tax effect of temporary differences giving rise to the Company's deferred tax asset and deferred tax liability are as follows: |
In accordance with the requirements of the Income Tax Topic of the FASB’s ASC, the Company’s provision for income taxes includes the following:
| | October 31, | | | April 30, | |
($ in thousands) | | 2012 | | | 2012 | |
Federal tax benefit (liability): | | | | | | |
Net operating loss | | $ | - | | | $ | 126 | |
Unrealized gains on securities available-for-sale | | | (61 | ) | | | (46 | ) |
Operating lease exit obligation | | | 90 | | | | 153 | |
Deferred professional fees | | | - | | | | 80 | |
Deferred charges | | | 223 | | | | 76 | |
Total federal tax benefit | | | 252 | | | | 389 | |
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State and local tax benefits: | | | | | | | | |
Net operating loss | | | - | | | | 15 | |
Other | | | 33 | | | | 38 | |
Total state and local tax benefits | | | 33 | | | | 53 | |
Deferred tax asset, short term | | $ | 285 | | | $ | 442 | |
| | | | | | | | |
| | | | | | |
| | October 31, | | | April 30, | |
($ in thousands) | | 2012 | | | 2012 | |
Federal tax liability (benefit): | | | | | | | | |
Deferred gain on deconsolidation of EAM | | $ | 17,679 | | | $ | 17,679 | |
Deferred non-cash post-employment compensation | | | (619 | ) | | | (619 | ) |
Depreciation and amortization | | | 1,312 | | | | 1,032 | |
Other | | | 216 | | | | 120 | |
Total federal tax liability | | | 18,588 | | | | 18,212 | |
| | | | | | | | |
State and local tax liabilities (benefits): | | | | | | | | |
Deferred gain on deconsolidation of EAM | | | 2,188 | | | | 2,182 | |
Deferred non-cash post-employment compensation | | | (76 | ) | | | (76 | ) |
Depreciation and amortization | | | 162 | | | | 127 | |
Deferred professional fees | | | (16 | ) | | | (21 | ) |
Total state and local tax liabilities | | | 2,258 | | | | 2,212 | |
Deferred tax liability, long term | | $ | 20,846 | | | $ | 20,424 | |
| | Three Months Ended July 31, | |
($ in thousands) | | 2012 | | | 2011 | |
Current tax expense (benefit): | | | | | | |
Federal | | $ | 448 | | | $ | 50 | |
State and local | | | 73 | | | | (121 | ) |
| | | 521 | | | | (71 | ) |
Deferred tax expense: | | | | | | | | |
Federal | | | 467 | | | | 1,006 | |
State and local | | | 87 | | | | 210 | |
| | | 554 | | | | 1,216 | |
Income tax provision: | | $ | 1,075 | | | $ | 1,145 | |
Deferred income taxes are provided for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. The tax effect of temporary differences giving rise to the Company’s deferred tax asset and deferred tax liability are as follows:
| | July 31, | | | April 30, | |
($ in thousands) | | 2012 | | | 2012 | |
Federal tax benefit (liability): | | | | | | |
Net operating loss | | $ | - | | | $ | 126 | |
Unrealized gains on securities available-for-sale | | | (61 | ) | | | (46 | ) |
Operating lease exit obligation | | | 128 | | | | 153 | |
Deferred professional fees | | | - | | | | 80 | |
Deferred charges | | | 135 | | | | 76 | |
Total federal tax benefit | | | 202 | | | | 389 | |
| | | | | | | | |
State and local tax benefits: | | | | | | | | |
Net operating loss | | | - | | | | 15 | |
Other | | | 19 | | | | 38 | |
Total state and local tax benefits | | | 19 | | | | 53 | |
Deferred tax asset, short term | | $ | 221 | | | $ | 442 | |
| | | | | | | | |
| | July 31, | | | April 30, | |
($ in thousands) | | 2012 | | | 2012 | |
Federal tax liability (benefit): | | | | | | | | |
Deferred gain on deconsolidation of EAM | | $ | 17,679 | | | $ | 17,679 | |
Deferred non-cash post-employment compensation | | | (619 | ) | | | (619 | ) |
Depreciation and amortization | | | 1,418 | | | | 1,032 | |
Other | | | 117 | | | | 120 | |
Total federal tax liability | | | 18,595 | | | | 18,212 | |
| | | | | | | | |
State and local tax liabilities (benefits): | | | | | | | | |
Deferred gain on deconsolidation of EAM | | | 2,087 | | | | 2,182 | |
Deferred non-cash post-employment compensation | | | (73 | ) | | | (76 | ) |
Depreciation and amortization | | | 168 | | | | 127 | |
Deferred professional fees | | | (5 | ) | | | (21 | ) |
Total state and local tax liabilities | | | 2,177 | | | | 2,212 | |
Deferred tax liability, long term | | $ | 20,772 | | | $ | 20,424 | |
The Company’s net operating loss carryforward of approximately $360,000 was fully utilized during the three months ended July 31, 2012. The tax effect of temporary differences giving rise to the Company’s long term deferred tax liability is primarily a result of the federal, state, and local taxes related to the $50,510,000 gain from deconsolidation of the Company’s asset management and 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.
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 reflects the tax effect of any tax law changes and certain other discrete events in the period in which they occur.
The Company's net operating loss carryforward from fiscal 2012 of approximately $360,000 was fully utilized during the six months ended October 31, 2012. The tax effect of temporary differences giving rise to the Company's long term deferred tax liability is primarily a result of the federal, state, and local taxes related to the $50,510,000 gain from deconsolidation of the Company's asset management and 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. |
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
July
October 31, 2012
(Unaudited)
(Unaudited
The annual effective tax rate may change during fiscal 2013 due to a number of factors including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-tax income, the Company’sAt 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 reflects the tax effect of any tax law changes and certain other discrete events in the period in which they occur. |
| | | | | | | |
The annual effective tax rate may change during fiscal 2013 due to a number of factors including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-tax income, the Company's geographic profit mix between tax jurisdictions, new tax laws, new interpretations of existing tax laws and rulings by and settlements with tax authorities. |
| | | | | | | |
The overall effective income tax rates, as a percentage of pre-tax income, for the six months ended October 31, 2012 and 2011, were 37.18% and 34.60%, respectively. The fluctuation in the effective income tax rate during the six months ended October 31, 2012, is attributable to the recognition of an alternative minimum tax benefits during the prior fiscal year and a higher percentage of income subject to state and local taxes during the current fiscal year. |
| | | | | | | |
The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory income tax rate to pretax income as a result of the following: |
| | Six Months Ended October 31, |
| | 2012 | | | 2011 | |
U.S. statutory federal rate | | | 35.00 | % | | | 35.00 | % |
Increase (decrease) in tax rate from: | | | | | | | | |
State and local income taxes, net of federal income tax benefit | | | 2.68 | % | | | 2.28 | % |
Effect of dividends received deductions | | | -0.25 | % | | | -0.10 | % |
Domestic production tax credit | | | -0.59 | % | | | -0.98 | % |
Alternative minimum tax (benefit) - net operating loss limitation | | | 0.00 | % | | | -1.60 | % |
Other, net | | | 0.34 | | | | 0.00 | % |
Effective income tax rate | | | 37.18 | % | | | 34.60 | % |
The Company believes that, as of October 31, 2012, there were no material uncertain tax positions that would require disclosure under GAAP. |
| | | | | | | |
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's liability/(benefit) as if it filed a separate return. |
| | | | | | | |
The Company's federal income tax returns (included in the Parent's consolidated returns) and state and city tax returns for fiscal years 2009, 2010, and 2011 were subject to examination by the tax authorities, generally for three years after they were filed with the tax authorities. In February 2012, the Internal Revenue Service concluded its examination of the Company's federal income tax returns through the fiscal year 2010, which resulted in no changes that had any adverse effect on the Company's financial statements. |
| | | | | | | |
Note 9 - Property and Equipment: | | | | | |
| | | | | | | |
Property and equipment are carried at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets, or in the case of leasehold improvements, over the remaining terms of the leases. For income tax purposes, depreciation of furniture and equipment is computed using accelerated methods and buildings and leasehold improvements are depreciated over prescribed extended tax lives. Property and equipment, net was comprised of the following: |
| | | | | | | |
The overall effective income tax rates, as a percentage of pre-tax income, for the three months ended July 31, 2012 and 2011, were 37.71% and 35.55%, respectively. The fluctuation in the effective income tax rate during the first quarter ended July 31, 2012, is attributable to a higher percentage of income subject to state and local taxes.
| | October 31, | | | April 30, | |
($ in thousands) | | 2012 | | | 2012 | |
Land | | $ | 726 | | | $ | 726 | |
Building and leasehold improvements | | | 7,283 | | | | 7,283 | |
Furniture and equipment | | | 10,994 | | | | 10,955 | |
| | | 19,003 | | | | 18,964 | |
Accumulated depreciation and amortization | | | (15,249 | ) | | | (15,110 | ) |
Total property and equipment, net | | $ | 3,754 | | | $ | 3,854 | |
The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory income tax rate to pretax income as a result of the following:
| | Three Months Ended July 31, |
| | 2012 | | | 2011 | |
U.S. statutory federal rate | | | 35.00 | % | | | 35.00 | % |
Increase (decrease) in tax rate from: | | | | | | | | |
State and local income taxes, net of federal income tax benefit | | | 2.93 | % | | | 1.58 | % |
Effect of dividends received deductions | | | -0.22 | % | | | -0.09 | % |
Other, net | | | - | | | | -0.94 | % |
Effective income tax rate | | | 37.71 | % | | | 35.55 | % |
The Company believes that, as of July 31, 2012, there were no material uncertain tax positions that would require disclosure under GAAP.
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’s liability/(benefit) as if it filed a separate return.
The Company’s federal income tax returns (included in the Parent’s consolidated returns) and state and city tax returns for fiscal years 2009, 2010, and 2011 are subject to examination by the tax authorities, generally for three years after they were filed with the tax authorities. The Internal Revenue Service (“IRS”) and New York State tax authorities have recently concluded an examination for the years ended through April 30, 2008, which resulted in no changes that had any adverse effect on the Company’s financial statements. More recently, the IRS has concluded its examination of the Company’s federal income tax returns through the fiscal year 2010, which resulted in no changes that had any adverse effect on the Company’s financial statements.
Note 9 - Property and Equipment:
Property and equipment are carried at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets, or in the case of leasehold improvements, over the remaining terms of the leases. For income tax purposes, depreciation of furniture and equipment is computed using accelerated methods and buildings and leasehold improvements are depreciated over prescribed extended tax lives. Property and equipment, net was comprised of the following:
| | July 31, | | | April 30, | |
($ in thousands) | | 2012 | | | 2012 | |
Land | | $ | 726 | | | $ | 726 | |
Building and leasehold improvements | | | 7,283 | | | | 7,283 | |
Furniture and equipment | | | 10,970 | | | | 10,955 | |
| | | 18,979 | | | | 18,964 | |
Accumulated depreciation and amortization | | | (15,178 | ) | | | (15,110 | ) |
Total property and equipment, net | | $ | 3,801 | | | $ | 3,854 | |
Note 10 - Accounting for the Costs of Computer Software Developed for Internal Use:
The Company has adopted the provisions of the Statement of Position 98-1 (SOP 98-1), “Accounting for the Costs of Computer Software Developed for Internal Use”. SOP 98-1 requires companies to capitalize as long-lived assets many of the costs associated with developing or obtaining software for internal use and amortize those costs over the software’s estimated useful life in a systematic and rational manner.
The Company capitalized $405,000 and $1,557,000 related to the development of software for internal use for the three months ended July 31, 2012 and 2011, respectively, of which $354,000 and $1,283,000 related to development costs for the digital production software project and $51,000 and $274,000 related to a new fulfillment system, respectively. Such costs are capitalized and amortized over the expected useful life of the asset which is approximately from 3 to 5 years. Total amortization expenses for the three months ended July 31, 2012 and July 31, 2011 were $295,000 and $66,000, respectively.
The new fulfillment system was placed in service on December 1, 2011. The Company’s refreshed website, Single Sign On (“SSO”) and new e-commerce and website shopping cart were also placed in service during December 2011. A new institutional sales website ValueLinePro.com was launched by the Company during March 2012.
Note 10 - Accounting for the Costs of Computer Software Developed for Internal Use: | |
| | | | | | | |
The Company has adopted the provisions of the Statement of Position 98-1 (SOP 98-1), "Accounting for the Costs of Computer Software Developed for Internal Use". SOP 98-1 requires companies to capitalize as long-lived assets many of the costs associated with developing or obtaining software for internal use and amortize those costs over the software's estimated useful life in a systematic and rational manner. |
| | | | | | | |
The Company capitalized $839,000 and $2,165,000 related to the development of software for internal use for the six months ended October 31, 2012 and 2011, respectively, of which $758,000 and $1,271,000 related to development costs for the digital production software project and $81,000 and $894,000 related to a new fulfillment system, respectively. Such costs are capitalized and amortized over the expected useful life of the asset which is approximately from 3 to 5 years. Total amortization expenses for the six months ended October 31, 2012 and October 31, 2011 were $617,000 and $128,000, respectively. |
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
October 31, 2012
(Unaudited
The new fulfillment system was placed in service on December 1, 2011. The Company's refreshed website, Single Sign On ("SSO") and new e-commerce and website shopping cart were also placed in service during December 2011. A new institutional sales website ValueLinePro.com was launched by the Company during March 2012. |
| | | | | | | |
Note 11 - 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 amount of $3,200,000. The repurchase program expired on January 15, 2012 and was not renewed by the Company's Board of Directors. |
|
On September 19, 2012, 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 amount of $3,000,000. |
|
Treasury stock, at cost, consists of the following:
(in thousands except for shares and cost per share) | | Shares | | | Total Average Cost Assigned | | | Average Cost per Share | | | Aggregate Purchase Price Remaining Under the Program | |
Balance as of April 30, 2012 (1)(2) | | | 103,619 | | | $ | 1,390 | | | $ | 13.41 | | | $ | - | |
Purchases effected in open market during the quarter ended October 31, 2012: | | | | | |
September 30, 2012 | | | 3,440 | | | $ | 30 | | | $ | 8.84 | | | $ | 2,970 | |
Balance as of October 31, 2012 | | | 107,059 | | | $ | 1,420 | | | $ | 13.26 | | | | | |
(1) Includes the balance of 18,400 shares with a total average cost of $354,000 that were acquired prior to the repurchase program authorized in January 2011. |
|
(2) Includes the balance of 85,219 shares with a total average cost of $1,036,000 that were acquired during the former repurchase program, which was authorized in January 2011 and expired in January 2012. |
| | | | | | | |
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Cautionary Statement Regarding Forward-Looking Information
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, as amended. 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 digital and print published products; |
| | protection of intellectual property rights; |
| | changes in market and economic conditions, including global financial issues; |
| | dependence on non-voting revenues and non-voting profits interests in EULAV Asset Management, a Delaware statutory trust (“EAM” or “EAM Trust”), which serves as an investment advisor to the Value Line Funds and engages in related distribution, marketing and administrative services; |
| | fluctuations in EAM’s assets under management due to broadly based changes in the values of equity and debt securities, redemptions by investors and other factors, and the effect these changes may have on the valuation of EAM’s intangible assets; |
| | competition in the fields of publishing, copyright data and investment management; |
| | the impact of government regulation on the Company’s and EAM’s business; |
| | availability of free or low cost investment data through discount brokers or generally over the internet; |
| | the risk that, while the Company believes that the restructuring transaction that closed on December 23, 2010, achieved compliance with the requirements of the order issued by the Securities and Exchange Commission (the “SEC”) on November 4, 2009, the Company might be required to take additional steps which could adversely affect the Company’s results of operations or the Company’s financial condition; |
| | terrorist attacks, cyber security attacks and natural disasters; |
| | identifying and executing a suitable lease for replacement office space for the Company’s principal offices prior to expiration in May 2013 of the current, non-renewable lease at the Company’s current location; |
| | other risks and uncertainties, including but not limited to the risks described in Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended April 30, 2012 and in Part II, Item 1A of this Quarterly Report on Form 10-Q for the period ended July 31, 2012; and |
| | other risks and uncertainties arising from time to time. |
These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors which may involve external factors over which we may have no control, or changes in our plans, strategies, objectives, expectations or intentions, which may happen at any time at our discretion, could also have material adverse effects on future results. Except as otherwise required to be disclosed in periodic reports required to be filed by public companies with the SEC pursuant to the SEC’sSEC's rules, we have no duty to update these statements, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, current plans, anticipated actions, and future financial conditions and results may differ from those expressed in any forward-looking information contained herein.
In this report, “Value Line,” “we,” “us,” “our” refers to Value Line, Inc. and the “Company” refers to Value Line and its subsidiaries unless the context otherwise requires.
Executive Summary of the Business
The Company’sCompany's primary business is producing investment periodicals and related publications and making available copyright data, including certain Proprietary Ranking System and other proprietary information, to third parties under written agreements for use in third-party managed and marketed investment products. Value Line markets under well-known brands including Value Line, the Value Line Logo, The Value Line Investment Survey®, 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, and is a registered trademark of the Company. ThePrior to December 23, 2010, the date of the completion of the Restructuring Transaction (see “Restructuring of Asset Management and Mutual Fund Distribution Businesses” below), the Company also holds a non-voting revenues and non-voting profits interest in an unconsolidated entity, EAM that providesprovided investment management services to the Value Line® Mutual Funds (“("Value Line Funds”Funds"), institutions and individual accounts and providesprovided distribution, marketing, and administrative services to the Value Line Funds.
The Company’s target audiences within the investment periodicals and related publications field are individual investors, colleges, libraries, and investment management professionals. Individuals come to Value Line for complete research in one package. Institutional subscribers consist of corporations, financial professionals, colleges, and municipal libraries. 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. The Company has a dedicated department that solicits institutional subscriptions. Fees for institutional subscriptions vary by the university or college enrollment, number of users, and the number of products purchased.
Payments received for new and renewal subscriptions and the value of receivables for amounts billed to retail and institutional customers are 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 subscription fees to be earned by fulfilling subscriptions after the date of a particular balance sheet are shown on that balance sheet as unearned revenue within current and long term liabilities.
Restructuring of Asset Management and Mutual Fund Distribution Businesses
The business of EAMEULAV Asset Management Trust, a Delaware business trust (“EAM”) is managed by its trustees each owning 20% of the voting profits interest of EAM and by its officers subject to the direction of the trustees. The Company holds aCompany’s non-voting revenues and non-voting profits interests in EAM that entitlesentitle it to receive a range of 41% to 55% of EAM’s revenues (excluding distribution revenues) from EAM’s mutual fund and separate account business 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.
Pursuant to the EAM Agreement, the Company granted EAM the right to use the Value Line name for all existing Value Line Funds and agreed to supply the Value Line Proprietary Ranking System information to EAM without charge or expense.
Business Environment
During the Company’s first quartersix months ended JulyOctober 31, 2012, the NASDAQ and the Dow Jones Industrial Average were up 4% and 2%., respectively. The severe downturn experienced in the September 2008 to March 2009 period and the volatility in the financial markets since then have resulted in many individual investors withdrawing money from equity investments, including equity mutual funds. This risk-averse temperament of investors continues to restrain both the Company’s revenues from its research periodicals and publications and the Company’s cash flows from its non-voting revenues and non-voting profits interests in EAM.
Results of Operations for the Three and Six Months Ended JulyOctober 31, 2012 and 2011
The following table illustrates the Company’s key components of revenues and expenses.
| | Three Months Ended July 31, | |
($ in thousands, except earnings per share) | | 2012 | | | 2011 | | | Change | |
Income from operations | | $ | 1,352 | | | $ | 1,638 | | | | -17.5 | % |
Revenues and profits interests from EAM Trust | | $ | 1,473 | | | $ | 1,572 | | | | -6.3 | % |
Income from operations plus non-voting revenues and non-voting profits interests from EAM Trust | | $ | 2,825 | | | $ | 3,210 | | | | -12.0 | % |
Operating expenses | | $ | 7,586 | | | $ | 7,732 | | | | -1.9 | % |
Income from securities transactions, net | | $ | 26 | | | $ | 11 | | | | 136.4 | % |
Income before income taxes | | $ | 2,851 | | | $ | 3,221 | | | | -11.5 | % |
Net income | | $ | 1,776 | | | $ | 2,076 | | | | -14.5 | % |
Earnings per share | | $ | 0.18 | | | $ | 0.21 | | | | -14.3 | % |
| | Three Months Ended October 31, | | | Six Months Ended October 31, | |
($ in thousands, except earnings per share) | | 2012 | | | 2011 | | | Change | | | 2012 | | | 2011 | | | Change | |
Income from operations | | $ | 920 | | | $ | 1,518 | | | | -39.4 | % | | $ | 2,272 | | | $ | 3,156 | | | | -28.0 | % |
Revenues and profits interests from EAM Trust | | $ | 1,529 | | | $ | 1,343 | | | | 13.8 | % | | $ | 3,002 | | | $ | 2,915 | | | | 3.0 | % |
Income from operations plus non-voting revenues and non-voting profits interests from EAM Trust | | $ | 2,449 | | | $ | 2,861 | | | | -14.4 | % | | $ | 5,274 | | | $ | 6,071 | | | | -13.1 | % |
Operating expenses | | $ | 7,889 | | | $ | 7,622 | | | | 3.5 | % | | $ | 15,475 | | | $ | 15,354 | | | | 0.8 | % |
Income from securities transactions, net | | $ | 30 | | | $ | 20 | | | | 50.0 | % | | $ | 56 | | | $ | 31 | | | | 80.6 | % |
Income before income taxes | | $ | 2,479 | | | $ | 2,881 | | | | -14.0 | % | | $ | 5,330 | | | $ | 6,102 | | | | -12.7 | % |
Net income | | $ | 1,572 | | | $ | 1,915 | | | | -17.9 | % | | $ | 3,348 | | | $ | 3,991 | | | | -16.1 | % |
Earnings per share | | $ | 0.16 | | | $ | 0.19 | | | | -15.8 | % | | $ | 0.34 | | | $ | 0.40 | | | | -15.0 | % |
During the three months ended July 31, 2012, the Company’s net income of $1,776,000, or $0.18 per share, was $300,000 or 14.5% below net income of $2,076,000, or $0.21 per share, for the three months ended July 31, 2011. Income from operations of $1,352,000 for the three months ended July 31, 2012, was $286,000 or 17.5% below income from operations of $1,638,000 for the three months ended July 31, 2011. Income before income taxes, which is inclusive of the non-voting revenues and non-voting profits interests from EAM for the three months ended July 31, 2012, was $2,851,000, which is $370,000 or 11.5% below income before income taxes of $3,221,000 for the three months ended July 31, 2011.
Total operating revenues
| | Three Months Ended July 31, | |
($ in thousands) | | 2012 | | | 2011 | | | Change | |
Investment periodicals and related publications: | | | | | | | | | |
Print | | $ | 4,900 | | | $ | 5,206 | | | | -5.9 | % |
Digital | | | 3,128 | | | | 3,192 | | | | -2.0 | % |
Total investment periodicals and related publications | | | 8,028 | | | | 8,398 | | | | -4.4 | % |
Copyright data fees | | | 910 | | | | 972 | | | | -6.4 | % |
Total publishing revenues | | $ | 8,938 | | | $ | 9,370 | | | | -4.6 | % |
| | Three Months Ended October 31, | | | Six Months Ended October 31, | |
($ in thousands) | | 2012 | | | 2011 | | | Change | | | 2012 | | | 2011 | | | Change | |
Investment periodicals and related publications: | | | | | | | | | | | | | | | | | | |
Print | | $ | 4,735 | | | $ | 5,094 | | | | -7.0 | % | | $ | 9,635 | | | $ | 10,300 | | | | -6.5 | % |
Digital | | | 3,092 | | | | 3,233 | | | | -4.4 | % | | | 6,220 | | | | 6,425 | | | | -3.2 | % |
Total investment periodicals and related publications | | | 7,827 | | | | 8,327 | | | | -6.0 | % | | | 15,855 | | | | 16,725 | | | | -5.2 | % |
Copyright data fees | | | 982 | | | | 813 | | | | 20.8 | % | | | 1,892 | | | | 1,785 | | | | 6.0 | % |
Total publishing revenues | | $ | 8,809 | | | $ | 9,140 | | | | -3.6 | % | | $ | 17,747 | | | $ | 18,510 | | | | -4.1 | % |
Investment periodicals and related publications revenues
Investment periodicals and related publications revenues and circulation were down approximately 4% for the three months ended July 31, 2012, as compared to the three months ended July 31, 2011. The Company continued 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. Factors that have contributed to the decline in the investment periodicals and related publications revenues and circulation 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. For twelve month period ended July 31, 2012, core (third time and thereafter renewed) subscriber renewal rates for the flagship product, The Value Line Investment Survey, are 71%, down from 81% last fiscal year. The Company is not adding enough new subscribers to offset the subscribers that choose not to renew this product. The Company has been successful in growing revenues from digitally-delivered investment periodicals within institutional sales. Gross institutional sales orders of $2,318,000 for the three months ended July 31, 2012, were $317,000 or 15.8% above comparable sales orders of $2,001,000, for the three months ended July 31, 2011. This increase continues a positive growth trend for Institutional Sales, but is not sufficient to wholly offset the lost revenues from retail subscribers.
Within investment periodicals and related publications, subscription sales orders are derived from print and digital products. The following chart illustrates the fiscal year-to-fiscal year changes in the gross sales orders associated with print and digital subscriptions.
| | Sources of Subscription Gross Sales Orders | |
| | | |
| | Three Months Ended July 31, | |
| | 2012 | | | 2011 | |
| | Print | | | Digital | | | Print | | | Digital | |
New Sales Orders | | | 16.3% | | | | 20.4% | | | | 13.9% | | | | 22.3% | |
Conversion and Renewal Sales Orders | | | 83.7% | | | | 79.6% | | | | 86.1% | | | | 77.7% | |
Total Gross Sales Orders | | | 100.0% | | | | 100.0% | | | | 100.0% | | | | 100.0% | |
| | As of July 31, | | | | | |
($ in thousands) | | 2012 | | | 2011 | | | Change | |
Deferred subscription income (current and long term liabilities) | | $ | 24,592 | | | $ | 25,399 | | | | -3.2 | % |
Print publicationSources of Subscription Gross Sales Orders
| Three Months Ended October 31, |
| 2012 | | 2011 |
| Print | Electronic | | Print | Electronic |
New Sales Orders | 21.5% | 25.3% | | 11.2% | 26.3% |
Renewal Sales Orders | 78.5% | 74.7% | | 88.8% | 73.7% |
Total Gross Sales Orders | 100.0% | 100.0% | | 100.0% | 100.0% |
| Six Months Ended October 31, |
| 2012 | | 2011 |
| Print | Electronic | | Print | Electronic |
New Sales Orders | 17.8% | 21.7% | | 11.4% | 27.2% |
Renewal Sales Orders | 82.2% | 78.3% | | 88.6% | 72.8% |
Total Gross Sales Orders | 100.0% | 100.0% | | 100.0% | 100.0% |
| As of October 31, | | |
($ in thousands) | | 2012 | | | 2011 | | | Change | |
Deferred subscription income (current and long term liabilities) | | $ | 23,111 | | | $ | 24,195 | | | | -4.5 | % |
Investment periodicals and related publications revenues
Investment periodicals and related publications revenues decreased $306,000,$500,000, or 5.9%,6.0% for the three months ended JulyOctober 31, 2012 from the prior fiscal yearand $870,000, or 5.2%, for the reasons described earlier. For the threesix months ended JulyOctober 31, 2012, earned revenues from institutional print publications increased $93,000 or 36.1% as compared to the prior fiscal year. ForWhile the Company continued 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 at October 31, 2012 was 4.6% lower than total product line circulation at October 31, 2011. Price increases recently instituted have been offset by reduced sales volume of renewals and new orders. Continuing 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. The Company is not adding enough new subscribers to offset the subscribers that choose not to renew their subscriptions. The Company has been successful in growing revenues from digitally-delivered investment periodicals within institutional sales. Gross institutional sales orders of $4,951,000 for the six months ended October 31, 2012, were $518,000 or 11.7% above comparable sales orders of $4,433,000, for the six months ended October 31, 2011. This increase continues a positive growth trend for Institutional Sales, but is not sufficient to wholly offset the lost revenues from retail subscribers.
Print publication revenues decreased $359,000 or 7.0% for the three months ended JulyOctober 31, 2012 and $665,000, or 6.5%, for the six months ended October 31, 2012 from fiscal 2012 for the reasons described earlier. Earned revenues from institutional print publications increased $135,000 or 50.7% for the three months ended October 31, 2012 and $228,000 or 43.5%, for the six months ended October 31, 2012 as compared to the prior fiscal year. Print publications revenues from retail subscribers decreased $399,000$494,000 or 8.1%,10.2% for the three months ended October 31, 2012 and $893,000 or 9.1% for the six months ended October 31, 2012, as compared to the prior fiscal year. Print circulation has fallen 8.7%8.3% as of JulyOctober 31, 2012 as compared to print circulation at JulyOctober 31, 2011.2011, albeit the Company is realizing a higher average price level on new orders.
DDigitaligital publications revenues decreased $64,000,$141,000 or 2.0%4.4%, for the three months ended JulyOctober 31, 2012 and $205,000, or 3.2%, for the six months ended October 31, 2012 from the prior fiscal year. For the three months ended July 31, 2012, earnedEarned revenues from institutional digital publications decreased $17,000$50,000 of 2.3%, for the three months ended October 31, 2012 and $67,000 or 0.8%1.6%, for the six months ended October 31, 2012, as compared to the prior fiscal year. For the three months ended July 31, 2012, digitalDigital publications revenues from retail subscribers decreased $47,000$91,000 or 4.3%8.4%, for the three months ended October 31, 2012 and $138,000 or 6.3%, for the six months ended October 31, 2012, as compared to the prior fiscal year.
The Company has relied more on its institutional sales marketing efforts, and the increase in institutional combined print and digital revenues is a direct result of a focused effort to sell to colleges, libraries and corporate accounts. The decrease in digital retail publications revenues is primarily attributable to the decrease in circulation within the Company’s software products.products, and to some extent the transition of certain users from the retail category to institutional, at higher prices.
The majority of the Company’s subscribers have traditionally been individual investors who generally receive printed publications via U.S. Mail on a weekly basis. Consistent with the experience of other print publishers in many fields, the Company has found that its roster of customers has been declining as individuals migrate to free or low-costvarious digital investment resources or reduceservices. A modest number of customers who do not qualify for retail prices have chosen to cancel their investment activities.subscriptions, while the rest have converted to institutional services, at higher prices.
Individual investors interested in digitally-delivered investment information have access to free equity research from many sources. For example, most retail broker-dealers with computerized trading services offer their customers free or low cost research services that compete with the Company’s services. Revenues from the Company’s current retail online services have also declined because many competing products offer more dynamicextensive interactive features.
The Company believes that the volatility of the equity market and the sluggish economic recovery have to some extent eroded retail investor interest in equities. The Company also believes that the negative trend in overall subscription revenue is likely to continue until new products have been developed and marketed.
The Company has established the goal of developing competitive digital products and marketing them effectively through traditional as well as various digitalinternet and mobile channels. Towards that end, the Company has been modernizing legacy information technology systems. The Company is not able to predict when these efforts will result in the launch of new products or whether they will be successful in reversing the trend of declining retail publishing revenues.
During fiscal 2012, there were a number of technology advances which are building blocks to the eventualplanned launch of our new product offeringofferings expected to begin in mid-2013.fiscal 2014. In December 2011, the new fulfillment system was placed in service that gives the Company the ability to perform real time order processing and grant immediate access to products on the web, all from one system, as well as offering multi-tiered entitlements which will come into play in the latter part of fiscal 2013.2014. In December 2011, a new eCommerce platform and a Single Sign On module were launched which directly leverage the new fulfillment systemssystem's capabilities for new web order entry and customer access to their products via a single username and password. Both of these services are a substantial progression from the previous solutions which were made up of multiple systems that previously had no ability to communicate with each other, requiring increased staff hours through manual double-keying. In January 2012, a website reskin was launched which served to modernize the look and feel of valueline.com.
In addition, the Company launched a new institutional sales website ValueLinePro.com. during March 2012. ValueLinePro.com provides a dedicated internet destination for investment advisers, portfolio managers, corporate professionals and library patrons who seek to learn how Value Line’s proprietary research tools can help them research stocks, mutual funds, options, convertible securities and ETFs.exchange traded funds (“ETFs”). The site thoroughly describes each of the Company’s customized products available to institutions and investment professionals, coordinating with the Company’s sales and marketing efforts to institutions.institutions, and has began to serve as a key generator of sales leads.
A major track of work is the creation of a centralized storageand active database for all of Value Line’s finalized, post-calculated data. In order to serve up our data for a variety of uses (new products, different Institutional Sales channels, etc.) it became apparent that all data fields must be fully defined, and a new storagestorage/retrieval mechanism developed which was built upon that knowledge.current “relational” protocols.
The Technology Group accomplished these tasks through intense field analysis sessionsadoption of a formal Software Development Lifecycle (SDLC) and project management system gives the Company a standard process for how development goals are pursued. Each project is planned with the Research department. The work has been broken into multiple phases comprisedcreation of Value Line’s equity products (Phase I) and Convertibles, Options and Mutual Funds (Phase II), all of which will ultimately span until fiscal 2013 year end.documentation for a formal architecture. In this way, the suitable resources are assigned with the overall business objectives in mind.
Copyright data fees
The Value Line Proprietary Ranking System information (the “Ranking System”), a component of the Company’s flagship product, The Value Line Investment Survey, is also utilized in the Company’s copyright data business. The Ranking System is also required to be made available to EAM for specific uses without charge or expense.charge. The Ranking System is designed to be predictive over a six to twelve month period. For the three months ended JulyOctober 31, 2012, the combined Ranking System “Rank 1 & 2” stocks increased by 5.0%, allowing for weekly changes in Ranks, outperforming an increase of 1.9% in the S&P 500 Index during the same period. For the six month period ended October 31, 2012, the combined Ranking System “Rank 1 & 2” stocks declined by 5.5%0.2%, allowing for weekly changes in Ranks, comparing unfavorably to a decrease of 1.3% inunderperforming the S&P 500 IndexIndex’s increase of 1.0%, during the samecomparable period. For the six and twelve month periodsperiod ended JulyOctober 31, 2012, the combined Ranking System “Rank 1 & 2” stocks declined 0.2% and 1.1%increased 11.4%, respectively, underperforming the S&P 500 Index’s increasesincrease of 5.1% and 7.2%12.7%, respectively, during the comparable periods.period.
During the three and six months ended JulyOctober 31, 2012, copyright data fees of $910,000 were 6.4% below copyright data fees of $972,000 forincreased $169,000 or 20.8% and $107,000, or 6.0%, respectively, as compared to the prior fiscal year. As of JulyOctober 31, 2012, total third party sponsored assets were attributable to four contracts for copyright data representing $3.3$3.4 billion in various products, as compared to four contracts and $3.4$3.0 billion in assets at JulyOctober 31, 2011, representing a 2.5% decrease13.0% increase in 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. This market has become significantly more competitive as a result of product diversification and increased use of indices by portfolio managers. Management is focusing on the Company’s vast data archives, and on accelerating the copyright data selling cycle, while maintaining good communications with current third party sponsors.
Investment management fees and services-services – (unconsolidated)
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 and will receive ongoing payments in respect of its non-voting revenues and non-voting profits interests, as discussed below. Total assets in the Value Line Funds managed and/or distributed by EAM at JulyOctober 31, 2012, were $2.0$2.05 billion, 6.0% belowwhich is $16 million or 0.8% above total assets of $2.15$2.03 billion in the Value Line Funds managed by EAM at JulyOctober 31, 2011.
Value Line Mutual Funds
Total Net Assets
| | As of October 31, | | | | |
($ in millions) | | 2012 | | | 2011 | | | Change | |
Equity funds | | $ | 1,780 | | | $ | 1,748 | | | | 1.8 | % |
Fixed income funds | | | 204 | | | | 210 | | | | -2.9 | % |
U.S. Government Money Market Fund (“USGMMF”) | | | - | | | | 74 | | | | -100.0 | % |
Total EAM managed net assets | | | 1,984 | | | | 2,032 | | | | -2.4 | % |
Daily Income Fund managed by Reich & Tang Asset Management LLC (“Reich & Tang”) | | | 64 | | | | - | | | | n/a | |
Total net assets | | $ | 2,048 | | | $ | 2,032 | | | | 0.8 | % |
| | As of July 31, | | | | |
($ in millions) | | 2012 | | | 2011 | | | Change | |
Equity funds | | $ | 1,749 | | | $ | 1,864 | | | | -6.2 | % |
Fixed income funds | | | 205 | | | | 210 | | | | -2.4 | % |
U.S. Government Money Market Fund | | | 67 | | | | 77 | | | | -13.0 | % |
Total net assets | | $ | 2,021 | | | $ | 2,151 | | | | -6.0 | % |
OfWhile equity assets under management did rise, the twelve funds, sharesrise amalgamates a positive performance, with significant (comparable to last year) loss of accounts and the associated net asset outflows (redemptions less new sales). 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”).
| | As of July 31, | | | | | As of October 31, | | | | |
($ in millions) | | 2012 | | | 2011 | | | Change | | | 2012 | | | 2011 | | | Change | |
Variable annuity assets (GIAC) | | $ | 455 | | | $ | 492 | | | | -7.5 | % | | $ | 455 | | | $ | 463 | | | | -1.7 | % |
All other open end equity fund assets | | | 1,294 | | | | 1,372 | | | | -5.7 | % | | | 1,325 | | | | 1,285 | | | | 3.1 | % |
Total equity fund net assets | | $ | 1,749 | | | $ | 1,864 | | | | -6.2 | % | | $ | 1,780 | | | $ | 1,748 | | | | 1.8 | % |
EAM Trust - Results of operations before distribution to interest holders
The overall results of EAM’s investment management operations during the threesix months ended JulyOctober 31, 2012, before interest holder distributions, include total investment management fees earned from the Value Line Funds of $3,080,000$6,229,000 and 12b-1 fees of $891,000.$1,876,000. For the three months ended July 31, 2012,same period, total investment management fee waivers were $179,000$346,000 and 12b-1 fee waivers were $541,000.$1,088,000. During the threesix months ended JulyOctober 31, 2012, EAM’sEAM's net income was $158,000$388,000 after giving effect to Value Line’s non-voting revenues interest of $1,394,000,$2,808,000, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.
Total results of EAM’s investment management operations during the threesix months ended JulyOctober 31, 2011, before interest holder distributions, include total investment management fees earned from the Value Line Funds of $3,301,000,$6,258,000, 12b-1 fees of $928,000$1,750,000 and other income of $4,000.$9,000. For the same period, total investment management fee waivers were $230,000$457,000 and 12b-1 fee waivers were $618,000.$1,166,000. During the threesix months ended JulyOctober 31, 2011, EAM’sEAM's net income was $162,000,$188,000, after giving effect to Value Line’s non-voting revenues interest of $1,491,000,$2,821,000, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.
As of JulyOctober 31, 2012, nine of the twelve Value Line Funds have all or a portion of the 12b-1 fees being waived, two of the twelve funds have partial investment management fee waivers in place and, effective June 16, 2011, Value Line U.S. Government Money Market Fund (“USGMMF”)USGMMF discontinued the 12b-1 program. Although, under the terms of the EAM Declaration of Trust, the Company no longer receives or shares in the revenues from 12b-1 distribution fees, the Company could benefit from the fee waivers to the extent that the resulting reduction of expense ratios and enhancement of the performance of the Value Line Funds attracts new assets.
As of JulyOctober 31, 2012, threefour of the six Value Line equity mutual funds, excluding SAM and Centurion, had an overall four or five star rating by Morningstar, Inc. The largest distribution channel for the Value Line Funds remains the fund supermarket platforms such as Guardian, Charles Schwab & Co., Inc., Fidelity, Pershing and E-Trade.
In August 2012, the Value Line Asset Allocation Fund was added to Schwab’sSchwab's prestigious OneSource Select List.
The Value Line fixed income Fundfund assets (excluding USGMMF), represent approximately 10.1%10.0% of total Fund assets under management (“AUM”) at JulyOctober 31, 2012, an increasea slight decrease from 9.8%10.3% last fiscal year. The USGMMF assets represent 3.3%3.1% of the total Fund AUM at JulyOctober 31, 2012, a decrease from 3.6% of the total Fund AUM at JulyOctober 31, 2011. At JulyOctober 31, 2012, fixed income AUM had decreased by 2.4%2.9%, and USGMMF AUM had decreased by 13.0% due to the low interest rate environment.13.5%. Management fees from the USGMMF were zero with EAM having waived all fees for the Fund since the end of November 2009, and, because of the historically low interest rate environment and new regulations restricting investments, substantially subsidizing the USGMMF expenses.
At the Value Line Mutual Funds shareholder meeting held on December 15, 2011, the Convertible Fund shareholders approved the merger of the Value Line Convertible Fund into the Value Line Income and Growth Fund, effective December 16, 2011. The Value Line Convertible Fund had approximately $20 million in assets under management as of December 16, 2011. EAM is committed to leavingOn May 18, 2012, the money market businessVL New York Tax Exempt Trust ($15 million) combined into the VL Tax Exempt Fund ($90 million). The combination offers many benefits for fund shareholders as described in August 2012. the fund’s proxy materials.
The currentUSGMMF in accordance with a plan approved by the Fund Board calls for the Money Market Fund to mergemerged into a third party fund.fund, the Daily Income Fund, managed by Reich & Tang, effective October 19, 2012. Final documentation was approved at the fund board meeting held onduring June 20 and 21, 2012. EAM would continue towill distribute the Daily Income Fund on behalf of Reich & Tang and maintain the shareholder accounts on behalf of the Value Line USGMM Funds shareholders who invest in the Daily Income Fund, but EAM willis no longer be subsidizing the expenses of the existingmoney market fund resulting from the low interest rate economic environment. In addition, the merger of the USGMMF will eliminate the cost of administration and fund accounting. On May 18,
At the September 2012 meeting, the VL New York Tax ExemptFunds' Board approved a change in the strategy of the Value Line Aggressive Income Trust ($15 million) combined intoand a name change to the VL Tax ExemptValue Line Core Bond Fund ($90 million). This pushedeffective December 10, 2012. In doing so, the VL Tax Exempt Fund over $100 million,Value Line Funds would have a core bond fund offering that still meets the fundamental investment objectives of Aggressive Income Trust, which is an important milestonemaximization of current income with a secondary objective of capital appreciation, yet have broader appeal and a larger pool of investors to raiseattract assets. Such assets since many institutions do not invest in funds under $100 million. The combination offers many benefits for fundmay include existing shareholders of other Value Line Funds as described in the proxy materials.older shareholders redeem equities.
EAM Trust - The Company’s non-voting revenues and non-voting profits interests
The Company recorded income from its non-voting revenues interest and its non-voting profits interests in EAM as follows:
| | Three Months Ended October 31, | | | Six Months Ended October 31, | |
($ in thousands) | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
Non-voting revenues interest | | $ | 1,414 | | | $ | 1,330 | | | $ | 2,808 | | | $ | 2,821 | |
Non-voting profits interest | | | 115 | | | | 13 | | | | 194 | | | | 94 | |
| | $ | 1,529 | | | $ | 1,343 | | | $ | 3,002 | | | $ | 2,915 | |
The Company holds 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’sEAM'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, 2012, the Company recorded income of $1,473,000, consisting of $1,394,000, from its non-voting revenues interest in EAM and $79,000, from its non-voting profits interest in EAM without incurring any directly related expenses. During the three months ended July 31, 2011, the Company recorded income of $1,572,000, consisting of $1,491,000, from its non-voting revenues interest in EAM and $81,000 from its non-voting profits interests in EAM.
Expenses
| | Three Months Ended July 31, | |
($ in thousands) | | 2012 | | | 2011 | | | Change | |
Advertising and promotion | | $ | 812 | | | $ | 1,121 | | | | -27.6 | % |
Salaries and employee benefits | | | 3,779 | | | | 3,640 | | | | 3.8 | % |
Production and distribution | | | 1,362 | | | | 1,229 | | | | 10.8 | % |
Office and administration | | | 1,633 | | | | 1,742 | | | | -6.3 | % |
Total expenses | | $ | 7,586 | | | $ | 7,732 | | | | -1.9 | % |
Value Line operating expenses
| | Three Months Ended October 31, | | | Six Months Ended October 31, | |
($ in thousands) | | 2012 | | | 2011 | | | Change | | | 2012 | | | 2011 | | | Change | |
Advertising and promotion | | $ | 1,087 | | | $ | 988 | | | | 10.0 | % | | $ | 1,899 | | | $ | 2,109 | | | | -10.0 | % |
Salaries and employee benefits | | | 3,634 | | | | 3,710 | | | | -2.1 | % | | | 7,413 | | | | 7,350 | | | | 0.8 | % |
Production and distribution | | | 1,452 | | | | 1,158 | | | | 25.4 | % | | | 2,814 | | | | 2,387 | | | | 17.9 | % |
Office and administration | | | 1,716 | | | | 1,766 | | | | -2.8 | % | | | 3,349 | | | | 3,508 | | | | -4.5 | % |
| | $ | 7,889 | | | $ | 7,622 | | | | 3.5 | % | | $ | 15,475 | | | $ | 15,354 | | | | 0.8 | % |
Expenses within the Company are categorized into advertising and promotion, salaries and employee benefits, production and distribution, and office and administration, restructuring and provision for settlement.administration. Operating expenses of $7,586,000 for the three and six months ended JulyOctober 31, 2012, decreased $146,000,increased $267,000 or 1.9%3.5% and $121,000, or 0.8%, respectively, as compared to the three and six months ended JulyOctober 31, 2011.
Advertising and promotion
Advertising and promotion expenses during the three months ended JulyOctober 31, 2012, decreased $309,000,increased $99,000 or 27.6%10.0%, as compared to the threeprior year period, mainly related to a $37,000 increase in telemarketing costs, and a $67,000 increase in expenses related to design and promotion of the digital products in fiscal 2013.
Advertising and promotion expenses during the six months ended JulyOctober 31, 2011.2012, decreased $210,000, or 10.0%, as compared to fiscal 2012. Media printand internet advertising and promotional costs for the threesix months ended JulyOctober 31, 2012 decreased by $335,000$298,000 due to the marketing expense offor the digital product and software promotion for institutions and investment professionals during the first quarter of fiscal 2012. The remaining decrease for the threesix months ended JulyOctober 31, 2012, was mainly related to a $57,000$47,000 decrease primarily in copyright data sales commissions costs and a $49,000$43,000 reduction in renewal solicitation costs, which were offset by a $91,000$68,000 increase in direct marketing costs, and a $34,000$71,000 increase in telemarketing costs.costs, and a $70,000 increase in expenses related to design and promotion of the digital product in fiscal 2013.
Salaries and employee benefits
Salaries and employee benefits decreased $76,000 or 2.1% and increased by $139,000$63,000 or 3.8%0.8%, respectively, during the three and six months ended JulyOctober 31, 2012, as compared to fiscal 2012. Increased expenses in salariesSalaries and employee benefits related to additional headcountare at a relatively stable state, with variations resulting from the timing of personnel replacements and variations in information technology, marketing, quantitative research and institutional sales were offset by the additional capitalization of $112,000 for digital project development costs as compared to the prior year. During the three months ended July 31, 2012 and 2011, the Company accrued profit sharing expenses of $115,000 and $150,000, respectively.commissionable orders.
Production and distribution
Production and distribution expenses during the three and six months ended JulyOctober 31, 2012, increased $133,000$294,000 or 10.8% above25.4% and $427,000 or 17.9%, respectively, as compared to fiscal 2012. During the three and six months ended JulyOctober 31, 2012, an increase of $240,000 resulting$268,000 and $508,000, respectively, resulted from additional amortization of internally developed software costs for the automation of our new fulfillment system, single sign on and website development implemented during the third quarter of fiscal 2012 waswhich were partially offset by a decrease in paper, printing and distribution expenses and service mailers costs.lower costs related to outsourcing certain data collection services.
Office and administration
Office and administration expenses during the three months ended JulyOctober 31, 2012, decreased $109,000$50,000 or 6.3% below2.8%, as compared to fiscal 2012. The decrease was due to a $171,000$103,000 decline in professional fees, which was partially offset by an increase in building operating expenses in fiscal 2013.
Office and administration expenses during the six months ended October 31, 2012, decreased $159,000 or 4.5%, as compared to fiscal 2012. The decrease was due to a $225,000 decline in professional fees, which was partially offset by a $50,000 increase in building maintenance expenses in fiscal 2013. In fiscal 2012 office and administrative expense were reduced due to reimbursement of $44,000 received from EAM for the month of May 2011 for rent and certain accounting and other administrative support services provided to EAM during their final month of occupancy at the Company’s office facility.
Income from Securities Transactions, net
During the threesix months ended JulyOctober 31, 2012, the Company’s income from securities transactions, net, of $26,000,$56,000, which includes onlyprimarily dividend income, was $15,000$25,000 or 136.4%80.6% above income from securities transactions, net, of $11,000$31,000 during the threesix months ended JulyOctober 31, 2011. There were no sales, or gains or losses from sales of equity securities during the three months ended July 31, 2012. Realized losses on sales of fixed income securities, were $5,000 during the threesix months ended JulyOctober 31, 2011. During the threesix months ended JulyOctober 31, 2011, income from securities transactions, net, included combined dividend and interest income of $20,000.$41,000.
Effective income tax rate
The overall effective income tax rate, as a percentage of pre-tax ordinary income for the threesix months ended JulyOctober 31, 2012 and 2011 was 37.71%37.18% and 35.55%34.60%, respectively. The annual effective tax rate changed during fiscal 2013 due to a number of factors including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-tax income, the Company’sCompany's geographic profit mix between tax jurisdictions, new tax laws, new interpretations of existing tax laws and rulings by and settlements with tax authorities. The fluctuation in the effective income tax rate is attributable to the inclusion of a tax benefit for alternative minimum tax during the prior fiscal year and a higher percentage of income subject to state and local taxes.taxes during the current fiscal year.
Liquidity and Capital Resources
The Company had negative working capital, defined as current assets less current liabilities, of $8,824,000$9,447,000 as of JulyOctober 31, 2012 and negative working capital of $7,892,000$9,581,000 as of JulyOctober 31, 2011. These amounts include short term unearned revenue of $20,536,000$19,697,000 and $21,103,000$20,003,000 reflected in total current liabilities at JulyOctober 31, 2012 and JulyOctober 31, 2011, respectively. Cash and short term securities were $14,007,000$13,346,000 as of JulyOctober 31, 2012 and $16,782,000$13,895,000 as of JulyOctober 31, 2011.
The Company’s cash and cash equivalents include $8,702,000$7,044,000 and $6,615,000$9,284,000 at JulyOctober 31, 2012 and JulyOctober 31, 2011, respectively, invested primarily in Money Market Funds at brokers’ accounts, which operate under Rule 2a-7 of the of the 1940 Act and invest primarily in short term U.S. government securities.
Cash from operating activities
The Company had cash outflows from operating activities of $552,000$721,000 during the threesix months ended JulyOctober 31, 2012, $26,000 above$593,000 below cash outflows from operations of $526,000$1,314,000 during the threesix months ended JulyOctober 31, 2011. The negative cash flows during the first quarterssix months of fiscal 2013 and 2012 were primarily the result of payments made for the settlement reserve of $19,000 and $984,000 and funding the Company’s Profit Sharing and Savings Plan in the amounts of $294,000 and $507,000, respectively.
Cash from investing activities
The Company’s cash outflows from investing activities of $225,000$99,000 during the threesix months ended JulyOctober 31, 2012, compared to cash inflows from investing activities of $3,063,000$9,308,000 for the threesix months ended JulyOctober 31, 2011. Cash inflows for the threesix months ended JulyOctober 31, 2011, were higher primarily due to the receipt of $2,998,000Company’s decision not to re-invest $8,995,000 of proceeds from sales of fixed income securities during the prior fiscal year, in short-term, low yielding fixed income securities. The decrease in cash inflows from investing activities in fiscal 2013 was partially offset by the decline in expenditures for capitalized software of $1,152,000$1,326,000 related to capitalized software costs for upgrading its product capabilities and timing of the receipt of non-voting revenues interest and non-voting profits interest distributions from EAM Trust. The Company expects that investing activities will continue to provide cash from continued receipts from its non-voting revenues and non-voting profits interests distributions in EAM.
Cash from financing activities
The Company’s cash outflows from financing activities of $1,484,000$2,999,000 during the threesix months ended JulyOctober 31, 2012, were less than cash outflows from financing activities of $2,153,000$4,934,000 for the threesix months ended JulyOctober 31, 2011. During fiscal 2013, cash outflows for financing activities consisted of dividend payments of $0.15 per share.share and $30,000 for the repurchase of the Company’s common stock under the September 19, 2012 board approved common stock repurchase program. During fiscal 2012, cash outflows for financing activities consisted of $158,000dividend payments of $0.20 per share and $946,000 for the repurchase of the Company’s common stock under the January 20, 2011 board approved repurchase program and dividend payments of $0.20 per share.that expired on January 15, 2012. The Company expects financing activities towill continue to include use of cash for dividend payments for the foreseeable future.
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 needs for the next twelve months. Managementmonths and does not anticipate making any borrowings during the next twelve months. As of JulyOctober 31, 2012, retained earnings and liquid assets were approximately $33 million$32,007,000 and $14 million,$13,346,000, respectively.
Seasonality
Our operations are minimally seasonal in nature. Our publishing revenues are comprised of subscriptions which are generally annual subscriptions. Our cash flows from operating activities are somewhat seasonal in nature, primarily due to the timing of customer payments made for subscription renewals, which generally occur more frequently in our fiscal third quarter.
Off-balance sheet arrangements
We are not a party to any off-balance sheet arrangements, other than operating leases entered into in the ordinary course of business.
Recent Accounting Pronouncements
In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”), which represents an update to ASC 220, Comprehensive Income. ASU 2011-05 provides new disclosure guidance for comprehensive income, requiring presentation of each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income and a total amount for comprehensive income. An entity will have the option to present these items in one continuous statement or two separate but consecutive statements. An entity will no longer be permitted to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. ASU 2011-05 is effective for fiscal years and interim periods within those years beginning after December 15, 2011. Portions of ASU 2011-05 were amended in December 2011. The Company adopted the provisions of ASU 2011-5 effective May 1, 2012, and it did not have a material impact on our Consolidated Condensed Financial Statements.
In December 2011, the FASB issued ASU No. 2011-11, Disclosures about Offsetting Assets and Liabilities (“("ASU 2011-11”2011-11"), to improve reporting and transparency of offsetting (netting) assets and liabilities and the related affects on the financial statements. ASU 2011-11 is effective for fiscal years and interim periods within those years beginning after January 1, 2013. The Company believes that the implementation of ASU 2011-11 will not have a material effect on its Consolidated Condensed Financial Statements.
In July 2012, the FASB issued ASU 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“("ASU 2012-02”2012-02"), to simplify how entities test indefinite-lived intangible assets for impairment which improves consistency in impairment testing requirements among long-lived asset categories. ASU 2012-02 permits an assessment of qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, these amended standards eliminate the requirement to perform quantitative impairment testing as outlined in the previously issued standards. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, early adoption is permitted. The Company believes that the implementation of ASU 2012-02 will not have a material effect on its Consolidated Condensed Financial Statements.
Critical Accounting Estimates and Policies
The Company prepares its Consolidated Condensed Financial Statements in accordance with accepted accounting principles as in effect in the United States (U.S. “GAAP”). The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent, and the Company evaluates its estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies reflect the significant judgments and estimates used in the preparation of its Consolidated Condensed Financial Statements.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Market Risk Disclosures
The Company’s Consolidated Condensed Balance Sheets include a substantial amount of assets whose fair values are subject to market risks. The Company’s 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 investment activities.
Interest Rate Risk
At JulyOctober 31, 2012, the Company did not have investments in securities with fixed maturities and therefore did not have any interest rate risk.
Equity Price Risk
The carrying values of investments subject to equity price risks are based on quoted market prices 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.
The Company’s equity investment strategy has been to acquire equity securities across a diverse industry group. The portfolio consists primarily of ETFs and select common stock holdings of blue chip companies with a concentration on large capitalization companies with high relative dividend yields. In order to maintain liquidity in these securities, the Company’s policy has been to invest in and hold in its portfolio, no more than 5% of the approximate average daily trading volume in any one issue. Additionally, the Company may purchase and hold non-leveraged ETFs whose performance inversely corresponds to the market value changes of investments in other ETF securities held in the equity portfolio for dividend yield.
As of JulyOctober 31, 2012 and April 30, 2012, the aggregate cost of the equity securities classified as available-for-sale, which consist of investments in the iShares Dow Jones Select Dividend Index (DVY), SPDR S&P Dividend (SDY), First Trust Value Line Dividend Index (FVD), PowerShares Financial Preferred (PGF), certain common shares of equity securities and inverse equity index ETFs, such as ProShares Short Dow 30 (DOG) and ProShares Short S&P 500 (SH), was $4,053,000$4,950,000 and $3,749,000 and the market value was $4,226,000$5,123,000 and $3,881,000, respectively.
| | | | | | | | | | | Hypothetical | |
| | | | | | | | | | | Percentage | |
($ in thousands) | | | | | | | | Estimated Fair | | | Increase | |
| | | | | | | | Value after | | | (Decrease) in | |
| | | | | | Hypothetical | | Hypothetical | | | Shareholders’ | |
Equity Securities | | | | Fair Value | | Price Change | | Change in Prices | | | Equity | |
As of July 31, 2012 | | Equity Securities | | $ | 2,908 | | 30% increase | | $ | 3,781 | | | | 1.74 | % |
| | and ETFs held | | | | | | | | | | | | | |
| | for dividend yield | | | | | 30% decrease | | $ | 2,036 | | | | -1.74 | % |
As of July 31, 2012 | | Inverse ETF | | $ | 1,318 | | 30% increase | | $ | 922 | | | | -0.79 | % |
| | Holdings | | | | | 30% decrease | | $ | 1,713 | | | | 0.79 | % |
As of July 31, 2012 | | Total | | $ | 4,226 | | 30% increase | | $ | 4,703 | | | | 0.95 | % |
| | | | | | | 30% decrease | | $ | 3,749 | | | | -0.95 | % |
| | | | | | | | | | | | |
($ in thousands) | | | | | | | | Estimated Fair | | | | |
| | | | | | | | Value after | | | Increase | |
| | | | | | Hypothetical | | Hypothetical | | | | |
Equity Securities | | | | Fair Value | | Price Change | | Change in Prices | | | | |
As of October 31, 2012 | | Equity Securities | | $ | 3,351 | | 30% increase | | $ | 4,355 | | | | 2.00 | % |
| | and ETFs held | | | | | | | | | | | | | |
| | for dividend yield | | | | | 30% decrease | | $ | 2,345 | | | | -2.00 | % |
As of October 31, 2012 | | Inverse ETF | | $ | 1,772 | | 30% increase | | $ | 1,241 | | | | -1.06 | % |
| | Holdings | | | | | 30% decrease | | $ | 2,304 | | | | 1.06 | % |
As of October 31, 2012 | | Total | | $ | 5,123 | | 30% increase | | $ | 5,596 | | | | 0.94 | % |
| | | | | | | 30% decrease | | $ | 4,649 | | | | -0.94 | % |
| | | | | | | | | | | | | Hypothetical | |
($ in thousands) | | | | | | | | | Estimated Fair | | | Percentage | |
| | | | | | | | | Value after | | | Increase | |
| | | | | | | Hypothetical | | Hypothetical | | | | |
Equity Securities | | | | Fair Value | | Price Change | | Change in Prices | | | | |
As of April 30, 2012 | | Equity Securities | | $ | 2,565 | | 30% increase | | $ | 3,334 | | | | 1.54 | % |
| | and ETFs held | | | | | | | | | | | | | |
| | for dividend yield | | | | | 30% decrease | | $ | 1,796 | | | | -1.54 | % |
As of April 30, 2012 | | Inverse ETF | | $ | 1,316 | | 30% increase | | $ | 921 | | | | -0.79 | % |
| | Holdings | | | | | 30% decrease | | $ | 1,710 | | | | 0.79 | % |
As of April 30, 2012 | | Total | | $ | 3,881 | | 30% increase | | $ | 4,255 | | | | 0.75 | % |
| | | | | | | 30% decrease | | $ | 3,506 | | | | -0.75 | % |
| | | | | | | | | | | | | Hypothetical | |
| | | | | | | | | | | | | Percentage | |
($ in thousands) | | | | | | | | | Estimated Fair | | | Increase | |
| | | | | | | | | Value after | | | (Decrease) in | |
| | | | | | | Hypothetical | | Hypothetical | | | Shareholders’ | |
Equity Securities | | | | Fair Value | | Price Change | | Change in Prices | | | Equity | |
As of April 30, 2012 | | Equity Securities | | $ | 2,565 | | 30% increase | | $ | 3,334 | | | | 1.54 | % |
| | and ETFs held | | | | | | | | | | | | | |
| | for dividend yield | | | | | 30% decrease | | $ | 1,796 | | | | -1.54 | % |
As of April 30, 2012 | | Inverse ETF | | $ | 1,316 | | 30% increase | | $ | 921 | | | | -0.79 | % |
| | Holdings | | | | | 30% decrease | | $ | 1,710 | | | | 0.79 | % |
As of April 30, 2012 | | Total | | $ | 3,881 | | 30% increase | | $ | 4,255 | | | | 0.75 | % |
| | | | | | | 30% decrease | | $ | 3,506 | | | | -0.75 | % |
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 ChiefPrincipal 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 ChiefPrincipal 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 ChiefPrincipal 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. |
Part II – OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
There have been no material changes to the risk factors disclosed in Item 1A – Risk Factors in the Company’s Annual Report on Form 10-K for the year ended April 30, 2012 filed with the SEC on July 27, 2012.
On October 29 and 30, 2012, the metropolitan New York City and New Jersey region suffered severe damage from Hurricane Sandy. The Company does not currently believe that Hurricane Sandy will have a material impact on our Consolidated Condensed Financial Statements.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.( c ) Purchases of Equity Securities by the Company
The following table provides information with respect to all repurchases of common stock made by or on behalf of the Company during the fiscal quarter ended October 31, 2012. All purchases listed below were made in the open market at prevailing market prices.
| | ISSUER PURCHASES OF EQUITY SECURITIES | |
| | (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 | |
September 1- 30, 2012 | | | 3,440 | | | $ | 8.84 | | | | 3,440 | | | $ | 2,970,000 | |
Total | | | 3,440 | | | $ | 8.84 | | | | 3,440 | | | $ | 2,970,000 | |
All shares represent shares repurchased pursuant to authorization of the Board of Directors. On September 19, 2012, 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 $3,000,000.
Item 5. Other Information
None.
Item 6. Exhibits
31.1 | Certificate of ChiefPrincipal Executive Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certificate of Principal Financial Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Joint ChiefPrincipal Executive Officer/ Principal Financial Officer Certificate Required Under Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS | | XBRL Instance Document |
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101.SCH | | XBRL Taxonomy Extension Schema Document |
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101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB | | XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document |