<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q/A
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended January 31, 1996 Commission file number 0-11306
-------
VALUE LINE, INC.
----------------
(Exact name of registrant as specified in its charter)
New York 13-3139843
- ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 East 42nd Street, New York, New York 10017-5891
- ------------------------------------------------------------------------------
(address of principal executive offices) (zip code)
Registrant's telephone number including area code (212) 907-1500
--------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at March 12, 1996
----- -----------------------------
Common stock, $.10 par value 9,976,975 Shares
----------------
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
Value Line, Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Jan. 31, Apr. 30,
1996 1995
----------------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents (including short term
investments of $41,262 and $43,608, respectively) $41,926 $45,026
Trading securities 59,082 48,187
Short term securities available for sale 39,538 39,099
Accounts receivable, net of allowance for doubtful
accounts of $419 and $350, respectively 2,200 3,348
Receivable from affiliates 2,040 1,641
Prepaid expenses and other current assets 2,343 1,416
----------------------
Total current assets 147,129 138,717
Long term securities available for sale 153,050 118,013
Property and equipment, net 12,214 7,922
Goodwill, net 337 346
----------------------
Total assets $312,730 $264,998
========= =========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $7,931 $6,358
Securities sold under agreements to repurchase 36,994 36,994
Accrued salaries 990 1,466
Dividends and interest payable 2,077 534
Accrued taxes payable 5,638 3,054
----------------------
Total current liabilities 53,630 48,406
Unearned revenue 40,729 36,789
Deferred income taxes 8,993 4,806
Deferred charges 1,600 1,808
Shareholders' Equity:
Common stock, $.10 par value; authorized 30,000,000
shares; issued 10,000,000 shares 1,000 1,000
Additional paid-in capital 944 940
Retained earnings 189,881 163,101
Treasury stock, at cost (23,025 shares on 1/31/96,
24,650 shares on 4/30/95) (443) (474)
Unrealized gain on securities, net of taxes 16,396 8,622
----------------------
Total shareholders' equity 207,778 173,189
----------------------
Total liabilities and shareholders' equity $312,730 $264,998
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
Part I - Financial Information
Item 1. Financial Statements
Value Line, Inc.
Consolidated Statements of Income and Retained Earnings
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
Jan. 31, Jan. 31,
1996 1995 1996 1995
---------------------- ------------------
<S> <C> <C>
Revenues:
Investment periodicals and
related publications $14,869 $13,833 $42,944 $42,023
Investment management fees & svcs 6,820 5,592 19,530 17,422
Settlement of disputed securities trades --- --- 2,054 617
---------------------- ------------------
Total revenues 21,689 19,425 64,528 60,062
---------------------- ------------------
Expenses:
Advertising and promotion 4,154 3,458 10,837 12,673
Salaries and employee benefits 5,434 4,774 15,304 14,124
Printing, paper and distribution 2,075 1,677 5,767 4,564
Office and administration 2,514 2,293 7,424 6,855
Mutual fund support expense --- --- --- 1,550
---------------------- ------------------
Total expenses 14,177 12,202 39,332 39,766
---------------------- ------------------
Income from operations 7,512 7,223 25,196 20,296
Income from securities transactions, net 16,096 4,366 28,698 8,467
---------------------- ------------------
Income before taxes 23,608 11,589 53,894 28,763
Provision for taxes 9,317 4,578 21,128 11,363
---------------------- ------------------
Net income $14,291 $7,01 $32,766 $17,400
Retained earnings, at beginning of
year 177,584 152,317 163,101 145,918
Dividends declared (1,994) --- (5,986) (3,990)
---------------------- ------------------
Retained earnings, at end of period $189,881 $159,328 $189,881 $159,328
====================== ==================
Earnings per share $1.43 $0.70 $3.28 $1.74
====================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3 OF 11
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
Value Line, Inc.
Consolidated Statements oCash Flows
(in thousands)
<TABLE>
<CAPTION>
For the Nine months
ended
Jan. 31, Jan. 31,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $32,766 $17,400
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 981 1,023
Accretion of discount (439) (343)
(Gains) on sale of trading securities
and securities held for sale (7,505) (1,285)
Unrealized (gains)/losses on trading securities (7,508) 929
Changes in assets and liabilities:
Increase in unearned revenue 3,940 236
Increase/(decrease) in deferred charges (208) 1,018
Increase/(decrease) in accounts payable
and accrued expenses 1,147 (1,321)
Decrease in accrued salaries (476) (154)
Increase/(decrease) in interest payable (452) 218
Increase/(decrease) in accrued taxes payable 2,584 (1,444)
(Increase)/decrease in prepaid expenses and
other current assets (927) 825
Decrease in accounts receivable 1,330 2,358
(Increase) in receivable from affiliates (399) (160)
----------- -----------
Total adjustments (7,932) 1,900
----------- -----------
Net cash provided by operations 24,834 19,300
----------- -----------
Cash flows from investing activities:
Proceeds from sales of securities 18,085 2,000
Purchase of securities (37,581) (7,260)
Proceeds from sale of trading securities 37,856 59,849
Purchase of trading securities (37,074) (52,712)
Acquisition of property, and equipment, net (5,264) (956)
----------- -----------
Net cash provided by/(used in) investing activities (23,978) 921
----------- -----------
Cash flows from financing activities:
Proceeds from sale of treasury stock 35 ---
Dividends paid (3,991) (5,985)
Loan repayment --- (1,416)
----------- -----------
Net cash (used in) financing activities (3,956) (7,401)
----------- -----------
Net increase/(decrease) in cash and cash equivalents (3,100) 12,820
Cash and cash equivalents at beginning of period 45,026 14,330
----------- -----------
Cash and cash equivalents at end of period $41,926 $27,150
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4 OF 11
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VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Significant Accounting Policies - Note 1:
- -----------------------------------------
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of normal
recurring accruals except as noted below) considered necessary for a fair
presentation. This report should be read in conjunction with the financial
statements and footnotes contained in the Company's annual report on Form 10-K,
dated July 19, 1995 for the fiscal year ended April 30, 1995. Results of
operations covered by this report may not be indicative of the results of
operations for the entire year.
Cash and Cash Equivalents:
The Company considers all cash held at banks and invested in the Value Line
money market funds with an original maturity of less than three months to be
cash and cash equivalents. As of January 31, 1996 and April 30, 1995, cash
equivalents included $37,605,000 and $41,503,000, respectively, invested in the
Value Line money market funds.
Securities Sold Under Agreements to Repurchase:
The Company has entered into agreements to sell and repurchase U.S. Government
Agency debt securities. The securities are recorded at market value and are
included in "Short-term securities available for sale" on the Consolidated
Balance Sheets.
Valuation of Securities:
The Company's long-term securities portfolio, which consists of shares of the
Value Line Mutual Funds, and short-term securities portfolio, that the Company
classifies as available for sale are valued at market value in accordance with
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities. Unrealized gains and losses on these
securities are reported, net of applicable taxes, as a separate component of
Shareholders' Equity. Realized gains and losses on sales of the securities are
recorded in earnings on trade date and are determined on the identified cost
method.
Trading securities, which consist of securities held by Value Line Securities,
Inc., the Company's broker-dealer subsidiary, are valued at market with
unrealized gains and losses included in earnings.
Reclassification:
Certain prior year amounts disclosed in the Consolidated Financial Statements
and Notes thereto have been reclassified to conform to current year
presentation.
Marketable Securities - Note 2:
- -------------------------------
Trading Securities:
Securities held by Value Line Securities, Inc. had an aggregate cost of
$44,501,000 and $40,767,000 and a market value of $59,082,000 and $48,187,000 at
January 31, 1996 and April 30, 1995, respectively.
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VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Short-Term Securities Available for Sale:
Short-term securities available for sale consists of the Company's holdings
in the following securities:
Federal National Mortgage Association (FNMA), floating rate notes due
August 5, 1997; par value $30,325,000.
Federal Farm Credit Bank (FFCB), floating rate notes due February 12,
1997; par value $10,000,000.
The market value of the Company's holdings in these securities, which
approximates cost, at January 31, 1996 and April 30, 1995 was $29,735,000 and
$29,438,000 for the FNMA and $9,803,000 and $9,661,000 for the FFCB,
respectively. These notes were purchased at a discount from their respective
face values. The accretion of this discount has been included as an addition to
the cost of the securities and reflected as interest income in the Consolidated
Statements of Income and Retained Earnings.
Long-Term Securities Available for Sale:
The aggregate cost of the long-term securities was $127,826,000 and
$104,749,000 and the market value was $153,050,000 and $118,013,000 at January
31, 1996 and April 30, 1995, respectively. At January 31, 1996, gross unrealized
gains on these securities of $25,224,000, net of deferred taxes of $8,828,000,
were included in shareholders' equity. Realized gains and the proceeds received
from sales of these securities during the nine months ended January 31, 1996
were $3,581,000 and $18,085,000, respectively.
Supplemental Disclosure of Cash Flow Information - Note 3:
- ----------------------------------------------------------
Cash payments for income taxes were $18,545,000 and $12,804,000 during the
nine months ended January 31, 1996 and 1995, respectively. Interest payments of
$2,107,000 and $1,042,000 were remitted during the nine months of fiscal 1996
and fiscal 1995, respectively.
Securities Sold under Agreements to Repurchase - Note 4:
- --------------------------------------------------------
The outstanding obligation of $36,994,000 at January 31, 1996 under the
agreements to repurchase the Federal National Mortgage Association Floating Rate
Notes due August 5, 1997 (FNMA), and Federal Farm Credit Bank Floating Rate
Notes due February 12, 1997 (FFCB), stated in Note 2, mature on February 5, 1996
with respect to the FNMA ($27,899,000) and February 12, 1996 for the obligation
to repurchase the FFCB securities ($9,095,000). These obligations accrue
interest at the stated interest rates of 5.6%, respectively. The Company intends
to refinance these obligations on a short term basis.
Mutual Fund Support Expenses - Note 5:
- --------------------------------------
On June 28, 1994, the Company purchased as part of its investment management
operations for which it receives fee income, U.S. Government Agency notes with a
market value as of that date of $38,615,000 from the Value Line Cash Fund for
which it is the investment adviser, in order to maintain a $1.00 per share net
asset value. In addition, as part of the same transaction the Company reimbursed
the Value Line Cash Fund $1,550,000 for losses the Fund incurred on the sale
which the Company may recoup in the future.
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<PAGE>
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Property and Equipment:
- -----------------------
During January 1996, the Company purchased for cash an approximately 85,000
square foot warehouse facility for $4,100,000 under a newly formed subsidiary,
Value Line Distribution Center, Inc. The new facility will house the
distribution operations for the various Company publications and the
fulfillment operations of the Compupower Corporation. The remaining building
capacity will provide warehouse storage, a disaster recovery site and will
provide for future business expansion.
7 OF 11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations:
Liquidity and Capital Resources:
Value Line, Inc. (the Company) has liquid resources which are used in its
business totaling $246,549,000 at January 31, 1996. In addition to $93,499,000
in working capital, the Company has long-term securities available for sale with
a market value of $153,050,000, that, although classified as non-current assets
are also readily marketable as the need arises. The Company has entered into
agreements to sell and repurchase U.S. Government Agency debt securities
included in working capital with a market value of $39,538,000 at January 31,
1996. The repurchase obligations of $36,994,000 have been entered into on a
short-term basis. The securities, currently available for sale, mature during
calendar year 1997 and are readily marketable should management decide to
liquidate the Company's holdings and related obligations. The Company's working
capital, including cash, has increased $3,188,000, and its securities available
for sale, classified as long term, have increased $35,037,000 for the nine
months ended January 31, 1996. During January 1996, the Company purchased under
a newly formed subsidiary an approximately 85,000 square foot building located
in the State of New Jersey for $4,100,000 in cash. The building will provide a
central location for the Company's distribution and fulfillment operations,
warehouse storage, a disaster recovery site and additional space for future
business expansion. Management believes that the Company's cash and other
liquid asset resources used in its business together with future cash flows
from operations will be sufficient to finance current and forecasted
operations.
Management anticipates no significant borrowing requirements during fiscal
1996 other than the short term refinancing of the repurchase obligations.
Results of Operations:
Net income for the nine months ended January 31, 1996 of $32,766,000 or $3.28
per share was $15,366,000 or 88% higher than the prior year's net income of
$17,400,000 or $1.74 per share. Net income of $14,291,000 or $1.43 per share for
the third quarter of fiscal 1996 increased 104% from net income of $7,011,000
for the third quarter of fiscal 1995. Net income for the third quarter of fiscal
1996 set a new record high for earnings of any quarter in the Company's history.
Net income for the nine months ended January 31, 1996 also set a new record
for the earnings for any full year in the Company's history.
Revenues of $64,528,000 for the nine months of fiscal 1996 increased 7% from
revenues of $60,062,000 for the same period of fiscal 1995. Subscription
revenues of $42,944,000 were 2% higher than revenues of $42,023,000 for fiscal
1995. Full term subscription levels to all products increased 28% from the prior
year's level. The Value Line Investment Survey - Expanded Edition, introduced in
the latter part of fiscal 1995, contributed in excess of $1,500,000 of revenues
during the first nine months of fiscal 1996 while revenues from The Investment
Survey increased over $900,000 during this period. These increases were
partially offset by decreases in revenues from the print version of the Value
Line Mutual Fund Survey. Revenues derived from investment management fees and
services for the nine months ended January 31, 1996 of $19,530,000 were
$2,108,000 or 12% higher than the level at January 31, 1995. The revenue
increase was primarily a result of a 12% increase in the average annual net
assets under management in Value Line mutual funds. Assets under management at
January 31, 1996 increased 22% from the levels at January 31, 1995. Total
revenues for the nine months ended January 31, 1996 and January 31, 1995
included proceeds of $2,054,000 and $617,000, respectively, from the settlement
of a disputed securities transaction.
8 OF 11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations: (continued:)
Expenses for the nine months ended January 31, 1996 of $39,332,000 were 1% below
the prior year's level of $39,765,000. The prior year's expenses included a one
time charge of $1,550,000 in support of the Cash Fund, the majority of
which already has been recouped. Advertising expenses of $10,837,000 were
$1,836,000 or 14% below the prior year's level. The significant reduction in
expenses was attributable to a decline in advertising for the print version of
the Value Line Mutual Fund Survey while the development of a new electronic
version was under commencement. Advertising expenses for The Value Line
Investment Survey increased 22% while marketing expenses of $922,000 were
incurred in fiscal 1996 for new products including The Value Line Fund Analyzer,
The Value Line Investment Survey Expanded Edition, The No-Load Mutual Fund
Advisor, The No-Load Analyzer, and the Value Line Investment Survey Condensed.
Salary and employee benefit expenses of $15,304,000 for the nine months ended
January 31, 1996 were 8% higher than the prior year's level of $14,124,000 as
a result of filling vacant staff positions in the Data Processing and Mutual
Fund divisions, additional staffing in the customer service department and the
effect of a 4% general salary increase as of August 1, 1994. Office and
administration expenses of $7,424,000 increased $570,000 or 8% from the prior
year's level. The increases were a result of professional fees related to
potential business expansion alternatives, a lawsuit in which the Company is a
plaintiff and from the estimated restructure costs related to the purchase of
the new facility. These increases were partially offset by a decrease in
software amortization related to a decision during fiscal 1995 to replace the
Company's fulfillment software. Fiscal 1995 also includes the absorption of
expenses related to the establishment of two mutual funds.
Income from securities transactions for the nine months ended January 31, 1996
of $28,698,000 increased $20,231,000 from the prior year's level of $8,467,000.
The increase in capital gains produced by the Company's trading portfolios of
$10,508,000 and the increase in capital gains distributions from the Company's
mutual funds of $4,710,000 were the major contributors to the additional income.
The additional capital gains during fiscal 1996 versus fiscal 1995 of $3,908,000
from the sale of equity and fixed income fund shares in connection with the
Company's annual portfolio realignment also contributed to the increase in
income from securities transactions.
9 OF 11
<PAGE>
Item 14. Exhibits (a) 3.
1. -- By-laws of Value Line, Inc., as amended.
10 of 11
<PAGE>
Value Line, Inc.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Form 10Q report for the period ended
January 31, 1996 to be signed on its behalf by the undersigned thereunto
duly authorized.
Value Line, Inc.
(Registrant)
Date: March 16, 1996 By: -----------------------------
Jean Bernhard Buttner
Chairman and President
Date: March 16, 1996 By: -----------------------------
Stephen R. Anastasio
Corporate Controller
11 OF 11
<PAGE>
BY-LAWS *
OF
VALUE LINE, INC.
(Incorporated under the laws of New York)
-----------------------
ARTICLE 1
OFFICES
SECTION 1. OFFICES. The principal office shall be located in the City of
New York, County of New York, State of New York. The Corporation may have
offices and places of business at such other places as may be determined by the
Board of Directors.
ARTICLE II
SHAREHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of the shareholders shall be
held at such place as the Board of Directors may select.
SECTION 2. ANNUAL MEETINGS. An Annual Meeting of Shareholders shall be
held on such date and at such time as may be designated by resolution of the
Board of Directors from time to time for the purpose of electing directors by a
plurality vote and for transacting such other business as may properly be
brought before the meeting.
* As amended January 18, 1996
1
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SECTION 3. ANNUAL ELECTION OF DIRECTORS. The annual election of directors
shall be conducted by two inspectors of election, neither of whom shall be a
candidate for the office of director. The inspectors shall be chosen at each
annual meeting of shareholders to serve for the ensuing year and if such
inspectors shall not be present at any election, the meeting may appoint others
in their place. The inspectors shall be sworn faithfully to perform their
duties and shall make a written certificate of the results of the election.
SECTION 4. SPECIAL MEETINGS. Special meetings of the shareholders for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the President and shall be called by the President or Secretary at the request
in writing of a majority of the Board of Directors, or at the request in writing
of shareholders owning 25% in amount of the shares of the entire capital stock
of the Corporation issued and outstanding, and entitled to vote. Such request
shall state the purpose or purposes of the proposed meeting. The business
transacted at all special meetings shall be confined to the object stated in the
call.
SECTION 5. NOTICES. Written notice of annual and special meetings of
shareholders, stating the time, place and object thereof, shall be mailed,
postage prepaid, at least ten days before such meeting, to each shareholder
entitled to vote thereat at such address as appears on the books of the
Corporation, except such as may in writing waive such notice.
2
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SECTION 6. QUORUM. The holders of a majority of the shares issued and
outstanding and entitled to vote thereat, present in person, or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
shareholders for the transaction of business, except as otherwise provided by
law. If, however, such majority shall not be present or represented at any
meeting of the shareholders, the shareholders entitled to vote thereat, present
in person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of voting stock shall be present. At such adjourned meetings
at which the requisite amount of voting shares shall be represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
SECTION 7. NOTICE OF SHAREHOLDER PROPOSALS.
(a) At an annual meeting of shareholders, only such business shall be
conducted, and only such proposals shall be acted upon, as shall have been
brought before the annual meeting (i) by, or at the direction of, the Board of
Directors or (ii) by any shareholder who complies with the notice procedures set
forth in this Section of the By-Laws. For a proposal to be properly brought
before an annual meeting by a shareholder, the shareholder must have given
timely notice thereof in writing to the Chairman of the Board of Directors with
a copy to the Secretary. To be timely, a shareholder's notice must be received
at the principal executive offices of the Corporation, addressed to the Chairman
of the Board
3
<PAGE>
of Directors with a copy to the Secretary, not less than thirty (30) days nor
more than sixty (60) days prior to the scheduled annual meeting, regardless of
any postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that if less than forty (40) days' notice or prior public
disclosure of the date of the scheduled annual meeting is given or made, notice
by the shareholder to be timely must be so received not later than the close of
business on the tenth (10th) day following the earlier of the day on which such
notice of the date of the scheduled annual meeting was mailed or the day on
which such public disclosure was made. Such shareholder's notice shall set
forth as to each matter the shareholder proposes to bring before the annual
meeting (i) a brief description of the proposal desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on the Corporation's books,
of the shareholder proposing such business, (iii) the class and number of shares
which are beneficially owned by the shareholder on the date of such shareholder
notice and (iv) any material interest of the shareholder in such proposal.
(b) If the Chairman of the annual meeting determines that a shareholder
proposal was not made in accordance with the terms of this Section, she or he
shall so declare at the annual meeting and any such proposal shall not be acted
upon at the annual meeting.
4
<PAGE>
ARTICLE III
DIRECTORS
SECTION 1. NUMBER, QUALIFICATION AND TERM. The property and business of
the Corporation shall be managed by its Board of Directors, consisting of not
less than three (3) nor more than fifteen (15) persons. Directors need not be
shareholders. They shall be elected at the annual meeting of the shareholders,
and each director shall be elected to serve until his successor shall be elected
and shall qualify.
SECTION 2. CHAIRMAN OF THE BOARD OF DIRECTORS. The Board of Directors
may elect a Chairman who shall act as chairman of all meetings of the Board.
SECTION 3. VACANCIES. If the office of any director or directors becomes
vacant by reason of death, resignation, retirement, disqualification, removal
from office, or otherwise, the remaining directors, though less than a quorum,
shall choose a successor or successors who shall hold office until the next
annual election and until a successor or successors have been duly elected,
unless sooner displaced.
SECTION 4. ADDITIONAL POWERS. In addition to the powers and authorities
by these By-Laws expressly conferred upon it, the Board of Directors may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the shareholders.
5
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SECTION 5. MEETINGS OF THE BOARD OF DIRECTORS. A regular meeting of the
Board of Directors shall be held without notice immediately after the Annual
Meeting of Shareholders at the same place at which such meeting is held, or at
such other place, within or without the State of New York, as the directors
shall designate; thereafter, regular meetings of the Board of Directors shall be
held on five days' notice, at such time and such place as the Board of Directors
shall designate.
Special meetings may be held at any time upon the call of the President,
and shall be called by the President or Secretary or other officer performing
his duties, on the request of two directors, which request need not be in
writing. Notice of special meetings shall be given by the Secretary or other
officer performing his duties, orally or by telegraph or by mail. Such notice
shall be given or sent or mailed not less than five days before the meeting.
Meetings may be held at any time without notice if all the directors are present
or if those not present waive notice of the meeting in writing, either before or
after the meeting.
SECTION 6. QUORUM. A majority of the directors shall constitute a quorum
at any meeting, except when otherwise provided by law, but a less number may
adjourn any meeting from time to time and the meeting may be held as adjourned
without further notice.
SECTION 7. COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors
by resolution adopted by a majority of the entire Board may designate from among
its members an executive committee
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and other committees, each consisting of three or more directors, and each of
which, to the extent provided in the resolution, shall have all the authority of
the Board of Directors, except that no such committee shall have authority as to
the following matters:
(a) The submission to shareholders of any action that needs
shareholders' authorization under the Business Corporation
Law.
(b) The filling of vacancies in the Board of Directors or in any
committee.
(c) The fixing of compensation of the directors for serving on
the Board of Directors or on any committee.
(d) The amendment or repeal of the By-Laws, or the adoption of
new By-Laws.
(e) The amendment or repeal of any resolution of the Board of
Directors which by its terms shall not be so amendable or
repealable.
The Board may designate one or more directors as alternate members of any
such committee, who may replace any absent member or members at any meeting of
such committee. Each such committee shall serve at the pleasure of the Board of
Directors.
Regular meetings of any such committee shall be held at such time and place
as shall from time to time be fixed by such committee and no notice thereof
shall be necessary. Special meetings may be called at any time by any officer
of the Corporation or any member of such committee. Notice of each
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special meeting of each such committee shall be given (or waived) in the same
manner as notice of a special meeting of the Board of Directors. A majority of
the members of such committee shall constitute a quorum for the transaction of
business and the act of a majority of the members present at the time of the
vote, if a quorum is present at such time, shall be the act of the committee.
Each such committee shall serve at the pleasure of the Board of Directors.
SECTION 8. ACTION BY BOARD OF DIRECTORS OR COMMITTEE WITHOUT A MEETING.
Any action required or permitted to be taken by the Board of Directors or by any
committee thereof may be taken without a meeting if all members of the Board or
the committee consent in writing to the adoption of a resolution authorizing the
action. The resolution and the written consents thereto by the members of the
Board or committee shall be filed with the minutes of the proceedings of the
Board or committee.
SECTION 9. PARTICIPATION BY TELEPHONE. Any one or more members of the
Board of Directors or any committee thereof may participate in a meeting of such
Board of Directors or committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at a meeting.
SECTION 10. NOMINATION OF DIRECTORS. Only persons who are nominated in
accordance with the procedures set forth in the By-Laws shall be eligible to
serve as directors. Nominations of
8
<PAGE>
persons for election to the Board of Directors may be made at a meeting of
shareholders (a) by or at the direction of the Board of Directors or (b) by any
shareholder who is a shareholder of record at the time of giving of notice
provided for in this section who shall be entitled to vote for the election of
directors at the meeting and who complies with the notice procedures set forth
in this Section. Such nominations, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely notice in writing to
the Chairman of the Board of Directors with a copy to the Secretary. To be
timely, a stockholder's notice shall be received at the principal executive
offices of the Corporation, addressed to the Chairman of the Board of Directors
with a copy to the Secretary, not less than thirty (30) days nor more than sixty
(60) days prior to the meeting, regardless of any postponements, deferrals or
adjournments of that meeting to a later date; provided, however, that if less
than forty (40) days' notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder to be timely
must be so received not later than the close of business on the tenth (10th) day
following the earlier of the day on which such notice of the date of the meeting
was mailed or the day on which such public disclosure was made. Such
shareholder's notice shall set forth (a) as to each person whom the shareholder
proposes to nominate for election or reelection as a director all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in
9
<PAGE>
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); and (b) as to
the shareholder giving the notice (i) the name and address, as they appear on
the Corporation's books, of such shareholder proposing such nomination and any
other shareholders known by such shareholder to be supporting such nomination,
and (ii) the class and number of shares which are beneficially owned by such
shareholder. At the request of the Board of Directors, any person nominated by
the Board of Directors for election as a director shall furnish to the Secretary
that information required to be set forth in a shareholder's notice of
nomination which pertains to the nominee. No person shall be eligible to serve
as a director unless nominated in accordance with the procedures set forth in
this By-Law. The Chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by the By-Laws, and, if she or he should so determine, she
or he shall so declare to the meeting and the defective nomination shall be
disregarded. Notwithstanding the foregoing provisions of this Section, a
shareholder shall also comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder with
respect to the matters set forth in this Section.
10
<PAGE>
ARTICLE IV
OFFICERS AND AGENTS
SECTION 1. ELECTION AND APPOINTMENT. The Board of Directors, as soon as
may be after each annual meeting of shareholders and election, shall choose a
President of the Corporation, and from time to time shall choose one or more
Vice Presidents, a Secretary and a Treasurer, and from time to time may appoint
such other officers, agents and employees as it may deem proper.
Any two or more offices may be held by the same person except the offices
of President and Secretary.
The President shall be chosen from among the directors.
SECTION 2. TERM OF OFFICE. The President shall hold office unless he
shall become disqualified or sooner removed by a vote of a majority of all the
members of the Board, for the term of one year or until his successor shall be
chosen and qualify. All other officers shall hold office at the pleasure of the
Board of Directors.
SECTION 3. POWERS AND DUTIES OF THE PRESIDENT. The President shall be the
chief executive officer of the Corporation, and shall have the general
management and superintendence of the affairs of the Corporation; he shall
preside at all meetings of the shareholders; and in all cases where, and to the
extent that, the duties of the other officers of the Corporation are not
specially prescribed by the By-Laws, rules or regulations of the Board of
Directors, the President may prescribe such duties. He shall have
11
<PAGE>
and may exercise any and all powers and perform any and all duties pertaining to
the office of President, or conferred or imposed upon the President by the By-
Laws, or by the Board of Directors.
Subject to such limitations as the Board of Directors may from time to time
prescribe, the President shall have power to appoint and dismiss all such agents
and employees of the Corporation (including any appointed by the Board) and he
may deem proper, and to prescribe their duties, and subject to like limitations
may from time to time, delegate to other officers of the Corporation any of the
powers and duties conferred upon him by the By-Laws or by the Board of
Directors.
SECTION 4. ABSENCE OF DISABILITY OF THE PRESIDENT. In the absence or
disability of the President, the Chairman of the Board of Directors shall
perform the duties and exercise the powers of the President and shall perform
such other duties, as may be prescribed by the Board of Directors.
SECTION 5. POWERS AND DUTIES OF THE VICE PRESIDENTS. The Vice Presidents
shall perform such duties as may be prescribed by the Board of Directors and
subject thereto by the President, and shall perform such other duties as are
customarily performed by the vice president of a corporation.
SECTION 6. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall attend
all sessions of the Board of Directors and all meetings of the shareholders, and
act as Clerk thereof, and record all votes and the minutes of all proceedings in
a minute book or books to be kept for that purpose, and shall perform like
duties
12
<PAGE>
for any committee of the Board when required. He shall cause to be given notice
of all meetings of shareholders and directors and shall perform such other
duties as pertain to his office. He shall keep in safe custody the seal of the
Corporation and, when authorized by the Board of Directors, affix it when
required to any instrument.
SECTION 7. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall have
the custody of all the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. He shall disburse the funds of the Corporation as
may be ordered by the Board, taking proper vouchers for such disbursements, and
shall render to the President and directors at the regular meetings of the
Board, or whenever they may require it, an account of all his transactions as
Treasurer and of the financial condition of the Corporation.
SECTION 8. POWERS AND DUTIES OF OTHER OFFICERS. All other officers shall
have such duties and exercise such powers as generally pertain to their
respective offices as well as such duties and powers as from time to time may be
prescribed by the President or the Board of Directors.
13
<PAGE>
ARTICLE V
SHARES AND SHARE CERTIFICATES
SECTION 1. TRANSFERS. The shares of the Corporation shall be transferable
only on the books of the Corporation.
SECTION 2. CERTIFICATES REPRESENTING SHARES. The shares of the
Corporation shall be represented by certificates signed by the Chairman or a
Vice-Chairman of the Board of Directors or the President or a Vice-President and
the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer of the Corporation, and may be sealed with the seal of the Corporation
or a facsimile thereof. The signatures of the officers upon a certificate may
be facsimiles if the certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation itself or its employee. In
case any officer who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer before such certificate
is issued, it may be issued by the Corporation with the same effect as if he
were such officer at the date of issue. Shares shall be transferable in the
manner provided by law and in the By-Laws.
14
<PAGE>
ARTICLE VI
FINANCE
SECTION 1. RESERVES. Before making any distribution of profits there may
be set aside out of the net profits of the Corporation such sum or sums as the
directors from time to time in their absolute discretion deem expedient as a
reserve fund to meet contingencies, or for equalizing dividends, or for
maintaining any property of the Corporation, or for any other purpose, and any
profits of any year not distributed as dividends shall be deemed to have been
thus set apart until otherwise disposed of by the Board of Directors.
SECTION 2. CHECKS. The moneys of the Corporation shall be deposited in
the name of the Corporation in such bank or banks or trust company or trust
companies as the Board of Directors shall designate, and shall be drawn out only
by check signed by such persons as may be designated from time to time by
resolution of the Board of Directors.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall begin on
May 1st and end April 30th of each year, unless otherwise provided by the Board
of Directors.
ARTICLE VII
CORPORATE SEAL
SECTION 1. SEAL. The seal of the Corporation shall be circular in form
and contain the name of the Corporation, the year of its organization and the
words, "Corporate Seal, New York."
15
<PAGE>
ARTICLE VIII
NOTICE
SECTION 1. NOTICE. Whenever under the provisions of these By-Laws notice
is required to be given to any director, officer or shareholder, it shall not be
construed to mean personal notice, but such notice may be given in writing by
depositing the same in a post office or letter box, in a post-paid, sealed
wrapper, addressed to such shareholder, officer or directors, at such address as
appears on the books of the Corporation, or in default of other address to such
shareholder at the General Post Office in the City of New York, and such notice
shall be deemed to have been given at the time when the same was thus mailed.
SECTION 2. WAIVER OF NOTICE. Any shareholder, officer or director may
waive any notice required to be given under these By-Laws.
ARTICLE IX
AMENDMENT OF BY-LAWS
SECTION 1. AMENDMENTS. These By-Laws may be amended by vote of a majority
of the shareholders entitled to vote at any annual meeting, or at any special
meeting of shareholders called for that purpose or by a vote of a majority of
directors entitled to vote at any annual meeting, or at any special meeting of
directors called for that purpose.
Date: January 18, 1996
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET AND CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 41,926
<SECURITIES> 98,620
<RECEIVABLES> 4,659
<ALLOWANCES> (419)
<INVENTORY> 0
<CURRENT-ASSETS> 147,129
<PP&E> 18,546
<DEPRECIATION> (6,332)
<TOTAL-ASSETS> 312,730
<CURRENT-LIABILITIES> 53,630
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 206,778
<TOTAL-LIABILITY-AND-EQUITY> 312,730
<SALES> 42,944
<TOTAL-REVENUES> 64,528
<CGS> 0
<TOTAL-COSTS> 39,332
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 53,894
<INCOME-TAX> 21,128
<INCOME-CONTINUING> 32,766
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 32,766
<EPS-PRIMARY> 3.28
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