<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended April 30, 1998 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 (IRS Employer Identification
incorporation or organization) Number)
220 East 42nd Street, New York, N.Y. 10017-5891
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 907-1500
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the registrant's voting stock held by
non-affiliates on June 25, 1998 was $82,198,444.
There were 9,978,625 shares of the Company's Common Stock outstanding at June
25, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
None
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Part I
Item 1. BUSINESS.
Value Line, Inc. (the "Company"), a New York corporation, was organized in
1982 and is the successor to substantially all of the operations of Arnold
Bernhard & Company, Inc. ("AB&Co.").
The Company's primary businesses are producing investment related
periodical publications through its wholly-owned subsidiary, Value Line
Publishing, Inc. ("VLP"), and providing invest-ment advisory services to mutual
funds, institutions and individual clients. VLP publishes The Value Line
Investment Survey, one of the nation's major periodical investment services, as
well as The Value Line Investment Survey - Expanded Edition, The Value Line
Investment Survey - Condensed Edition, Value Line Small Cap Plus, Value Line
Select, The Value Line Mutual Fund Survey, The Value Line No-Load Fund Advisor,
The Value Line OTC Special Situations Service, The Value Line Options Survey and
The Value Line Convertibles Survey. The Company's periodical publications are
direct marketed through media and direct mail to retail and institutional
investors. The Company is investment adviser for the Value Line Family of
Mutual Funds, which on April 30, 1998, included 15 open-end investment companies
with various investment objectives. In addition, the Company manages
investments for private and institutional clients and, through VLP, provides
financial database information through computer media and computer time-sharing
facilities (DataFile and other services). VLP also markets investment analysis
software, Value Line Investment Survey FOR WINDOWS-Registered Trademark-,
Mutual Fund Survey FOR WINDOWS-Registered Trademark-, Value Line Daily Options,
Electronic Convertibles and other electronic products. The Company is
registered with the Securities and Exchange Commission as an investment adviser
under the Investment Advisers Act of 1940.
In addition to VLP, the Company's other wholly-owned subsidiaries include a
registered broker-dealer, Value Line Securities, Inc., and an advertising
agency, Vanderbilt Advertising Agency, Inc. These subsidiaries primarily
provide services used by the Company in its publishing and investment management
businesses. Compupower Corporation, another subsidiary, serves the subscription
fulfillment needs of the Company's publishing operations. Value Line
Distribution Center, Inc. ("VLDC") handles all of the mailings of the
publications to the Company's subscribers. Additionally, VLDC provides office
space for Compupower Corporation's client relations department and computer
operation's center. The name "Value Line," as used to describe the Company, its
products, and its subsidiaries, is a registered trademark of the Company. As
used herein, except as the context otherwise requires, the term "Company"
includes the Company and its consolidated subsidiaries.
A. Investment Information and Publications.
VLP publishes investment related publications and produces electronic
products described below:
l. Publications:
The Value Line Investment Survey is a weekly investment related periodical
that in addition to various timely articles on current economic, financial and
investment matters ranks common
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stocks for future relative performance based on computer-generated statistics of
financial results and stock market performance. Two of the more important
evaluations for each stock covered are "Timeliness(TM)" and "Safety."
"Timeliness(TM)" relates to the probable relative price performance of a stock
over the next six to twelve months, as compared to the rest of the approximately
1,700 covered stocks. Rankings are updated each week and range from Rank 1 for
the expected best performing stocks to Rank 5 for the expected poorest
performers. "Safety" rankings are a measure of risk and are based primarily on
the issuer's relative financial strength and the stock's price stability.
"Safety" ranges from Rank 1 for the least risky stocks to Rank 5 for the
riskiest. VLP employs approximately 85 - 90 analysts and statisticians who
prepare articles of interest for each periodical and who evaluate stock
performance and provide future earnings estimates and quarterly written
evaluations with weekly updates when relevant. The annual subscription price of
The Value Line Investment Survey is $570.
During the year, we added a number of new features to each Value Line stock
page. Among the changes was the addition of a Technical Rank, designed to
complement the long-standing and widely used Timeliness(TM) and Safety(TM)
Ranks. We also added the date when the various ranks were last changed along
with an indication as to whether that change resulted in a raising or a lowering
of the rank.
The Expanded Edition of The Value Line Investment Survey, introduced in
1995, provides detailed descriptions of 1,800 additional small- and medium-
capitalization stocks, many listed on NASDAQ, beyond the 1,700 stocks of larger-
capitalization companies traditionally covered in The Value Line Investment
Survey.
Like The Value Line Investment Survey, the Expanded Edition has its own
"Summary & Index" providing updated ranks and other data, as well as "screens"
of key financial performance measures. The "Ratings and Reports" section,
providing updated reports on about 140 stocks each week, has been organized to
correspond closely to the industries reviewed in the Standard Edition of The
Value Line Investment Survey. A combined Index, published quarterly, allows the
subscriber to easily locate a specific stock among the 3,500 stocks covered.
The Expanded Edition includes a number of unique as well as standard
features:
- - A new Performance Ranking System incorporates many of the elements of the
Value Line Timeliness/(TM) Ranking System, modified to accommodate the
1,800 stocks in the Expanded Edition. The Performance/(TM) Rank is based
on earnings growth and price momentum and is designed to predict relative
price performance over the next six to 12 months.
- - An expanded Business Section provides detail about companies, focusing on
business lines and strategies.
- - An enlarged Assets and Liabilities Section provides long-term statistics
and a more complete balance sheet on each company.
- - New Total-Return Statistics provide an "at a glance" look at a particular
stock's performance --appreciation plus dividends --over the past three
months, six months, and one, three and five years.
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The principal difference between the Expanded Edition and The Value Line
Investment Survey is that the Expanded Edition does not include financial
forecasts or analysts' comments. This modification has allowed VLP to offer
this service at a relatively low price.
The annual cost of the Expanded Edition to current subscribers of The Value
Line Investment Survey is $125 for their first subscription, $175 for renewals
and $695 for new subscribers combining both Editions. Stand-alone subscriptions
are offered at $249.
The Value Line Mutual Fund Survey introduced in 1993 provides full-page
profiles of 1500 mutual funds and condensed coverage of an additional 500 funds.
Every two weeks subscribers receive an updated issue, containing about 150 fund
reports, plus a "Performance & Index" providing current rankings and performance
figures for the full universe of more than 2,000 funds. The Value Line Mutual
Fund Survey also includes semi-annual profiles and analyses on 100 of the
nation's major fund families. Additionally, subscribers receive a 12-page
periodical monthly newsletter containing articles of general interest to
subscribers and readers, "The Value Line Mutual Fund Advisor," with articles on
investment trends and issues concerning mutual fund investors. Funds are ranked
for both risk and overall risk-adjusted performance using strictly quantitative
means. A large binder is provided to house the periodic fund reports. A second
binder is provided to full-term subscribers for the periodical monthly
newsletter. The annual subscription price of The Value Line Mutual Fund Survey
is $295.
VLP has instituted online distribution of individual one-page reports from
The Value Line Investment Survey and The Value Line Mutual Fund Survey through
the CompuServe online network. The price per page for these documents is $5.
The Value Line No-Load Fund Advisor is a periodical monthly newsletter for
investors who wish to manage their own portfolios of no- and low-load, open-end
mutual funds. Each issue features strategies for maximizing total return, with
special attention given to tax considerations. Also featured are in-depth
interviews with noted portfolio managers, model portfolios for a range of
investor profiles, and information about retirement planning, industry news, and
listings (with descriptions) of new funds worthy of further consideration. A
full statistical review, including latest performance, rankings and sector
weightings, is updated each month on 600 leading no-load and low-load funds.
The annual subscription price of The Value Line No-Load Fund Advisor is $107.
The Value Line OTC Special Situations Service, published periodically 24
times a year, concentrates on fast-growing, smaller companies whose stocks are
perceived by VLP analysts as having exceptional appreciation potential. The
annual subscription price of The Value Line OTC Special Situations Service is
$429.
The Value Line Options Survey, a periodical weekly service published 48
times a year, evaluates and ranks for future performance the most active options
listed on United States exchanges (approximately 8,000). The annual
subscription price of The Value Line Options Survey is $445. An electronic
version of this publication, The Value Line Daily Options Survey (available over
the internet), was introduced during the latter part of fiscal 1995.
The Value Line Convertibles Survey, a periodical service published 48 times
a year, evaluates and ranks for future market performance approximately 580
convertible securities (bonds and preferred stocks) and approximately 75
warrants. The annual subscription price of The Value
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Line Convertibles Survey is $625. Also introduced in 1997, the electronic
convertibles are offered over the internet.
Value Line Small Cap Plus, a monthly newsletter first released in March
1998, covers, evaluates and rates 600 mostly small-cap stocks that VLP analysts
consider promising for future growth potential but may not have an extensive
financial history. Similar to the Value Line Investment Survey - Expanded
Edition, each issue contains ratings and reports on about 200 stocks and
includes a Performance Ranking System modified to accommodate the idiosyncrasies
of the small-cap market. An annual subscription to Value Line Small Cap Plus
costs $145.
Value Line Select was first published in January 1998. As a stock
recommendation service with an exclusive circulation, it focuses each month on
one company that VLP analysts, economists and statisticians recommend as an
investment. Recommendations are backed by in-depth research and subject to
ongoing monitoring. An annual subscription to Value Line Select is $795.
The Value Line Investment Survey - Condensed Edition is a monthly service,
which contains full-page reports on more than 600 stocks. Its reports provide
information on many actively traded, larger capitalization issues as well as
some smaller growth stocks. Since it was introduced in fiscal 1996, it has
proven to be very popular among investors who want the same type of analysis
provided in the full Investment Survey, but who don't want or need coverage of
the large number of companies contained in that publication. Readers also
receive supplemental reports as well as a monthly Index, which includes updated
statistics. An annual subsciption is $145.
2. Electronic Products:
Value Line Investment Survey FOR WINDOWS-Registered Trademark- is a
powerful menu-driven software program with fast filtering, ranking, reporting
and graphing capabilities on over 5,000 stocks, including the 1,700 stocks
covered in VLP's benchmark publication, The Value Line Investment Survey. The
product was introduced to the market during June 1996. Version 2 of the product
was released in December of 1997 with major enhancements to the user interface
and the ability for users to update their data from our internet site
(www.valueline.com).
Value Line Investment Survey FOR WINDOWS-Registered Trademark- provides
over 200 search fields on each stock, more than 50 charting and graphing
variables for comparative research, and 10 years of historical financial data
for scrutinizing performance, risk and yield. The software includes a
portfolio module that lets users create and track their own stock portfolios.
An exclusive E-page feature on the CD-ROM version allows the user to view
and print actual full-page stock reports from the respected Value Line
Investment Survey and Expanded publications. In addition, weekly updates and
technical support are available through Value Line's web site
(www.valueline.com). In addition to retrieving demos of the software and
sample E pages, viewers can request information on Value Line's products.
To access the 1,700 stocks covered exclusively in The Value Line Investment
Survey publication, subscribers are offered a two-month trial subscription with
monthly CD-ROM updates and weekly internet updates for $55, a full-year
subscription for $595 or $195 for subscribers to The Value Line Investment
Survey print edition. This product is available on CD-ROM.
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A Special 5,000 Stock Edition, a powerful yet economical professional tool
on CD-ROM, is distributed on a monthly basis with weekly internet updates for
$95 for a two-month trial subscription, or $995 for a full year or $495 for
subscribers to The Value Line Investment Survey print edition. This Special
Edition contains full financial and business descriptions on over 5,000 stocks,
Timeliness Rankings on 1,700 stocks, Performance Ranks on over 3,100 stocks,
Safety Rankings on over 4,200 stocks and 1,700 stocks with analysts' comments
and estimates found in The Value Line Investment Survey publication.
Windows is a registered trademark of Microsoft Corp. Value Line, Inc. and
Microsoft Corp. are not affiliated companies.
Both versions are compatible with Windows 98, Windows 95 or 3.X. A P.C.
system of 486 or higher is recommended, with 16MB RAM and 70MB of free hard disk
space.
Value Line Mutual Fund Survey FOR WINDOWS-Registered Trademark- and Value
Line No-Load Analyzer FOR WINDOWS-Registered Trademark- are electronic versions
of the Mutual Fund Survey launched in the latter part of fiscal 1995.
VALUE/SCREEN III is a data and software service for screening common
stocks. It is compatible with DOS and Apple systems and is primarily sold to
retail investors. It provides extensive financial data on about 1,600 companies
covered by The Value Line Investment Survey. Users can screen on as many as 49
variables for companies' financial performance and for investment objectives.
This product is not Year 2000 compliant and is scheduled to be discontinued by
December 1999.
Value Line DataFile contains historic annual and quarterly financial
records for more than 5,400 companies in numerous industries, including air
transport, industrial services, beverage, machinery, bank, insurance and
finance, savings and loan associations, toys, and securities bro-kers. DataFile
is sold to the institutional market. Value Line Data File II, which includes
less historical data is also available. During fiscal 1997, Value Line
introduced the Value Line Mutual Fund Data File. VLP also offers an Estimates
and Projections File, with year-ahead and three- to five-year estimates of
financial performance and projections of stock-price ranges, as well as a
Convertible Securities File and custom services.
The Total Return Service is a customized data service. It was developed to
help publicly traded companies meet the SEC's mandated executive-compensation
disclosure requirements. The service consists of a line graph comparing the
total return of a public company's stock over the last five years to a published
equity market index and a published or constructed industry index.
Technological initiatives to automate and upgrade information systems are
currently underway. This project will increase the number of stocks in the
various Value Line publications to include all U.S. company stocks covered on
the major exchanges.
B. Investment Management:
As of April 30, 1998, the Company was the investment adviser for 15 mutual
funds registered under the Investment Company Act of 1940. Value Line
Securities, Inc., a wholly owned subsid-iary of the Company, underwrites and
distributes shares of the Value Line Funds. State Street
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Bank and Trust Company, an unaffiliated entity, acts as custodian of the Funds'
assets. Share-holder services for the Value Line Funds are provided by National
Financial Data Services, an unaffiliated entity associated with State Street
Bank and Trust Company.
Total net assets of the Value Line Funds at April 30, 1998, were:
(in thousands)
The Value Line Fund, Inc. $ 414,663
The Value Line Income Fund, Inc. 168,135
The Value Line Special Situations Fund, Inc. 145,759
Value Line Leveraged Growth Investors, Inc. 508,204
The Value Line Cash Fund, Inc. 306,198
Value Line U.S. Government Securities Fund, Inc. 183,328
Value Line Centurion Fund, Inc. 778,240
The Value Line Tax Exempt Fund, Inc. 201,044
Value Line Convertible Fund, Inc. 96,071
Value Line Aggressive Income Trust 165,501
Value Line New York Tax Exempt Trust 33,856
Value Line Strategic Asset Management Trust 1,312,231
Value Line Small-Cap Growth Fund, Inc. 21,426
Value Line Asset Allocation Fund, Inc. 133,233
Value Line U.S. Multinational Company Fund, Inc. 30,815
---------
$4,498,704
---------
---------
The investment advisory contracts between each of the Value Line Funds and
the Company provide that the Company will render investment research, advice,
and supervision to the funds. These contracts must be approved annually in
accordance with statutory procedures. The Company furnishes each fund with its
investment program, subject to such fund's fundamental investment policies and
to control and review by such fund's Board of Directors or Trustees. Each
contract also provides that the Company will furnish, at its expense, various
administrative services, office space, equipment and administrative personnel
necessary for managing the affairs of the funds. Advisory fee rates vary among
the funds and may be subject to certain limitations. Each mutual fund may use
"Value Line" in its name only so long as the Company acts as its investment
adviser.
Value Line Asset Management ("VLAM"), a division of the Company, manages
pension funds and institutional and individual portfolios by utilizing the
techniques developed for The Value Line Investment Survey. VLAM has varied
investment advisory agreements with its clients which call for payments to the
Company calculated on the basis of the market value of the securities portfolio
under management.
C. Wholly-Owned Operating Subsidiaries:
1. Vanderbilt Advertising Agency, Inc.:
Vanderbilt Advertising Agency, Inc. ("Vanderbilt") places advertising for
the Company's publications, investment advisory services, and mutual funds.
Commission income generated by Vanderbilt serves to reduce the Company's
advertising expenses.
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2. Compupower Corporation:
Compupower provides computerized subscription fulfillment services for the
Company as well as subscriber relations services for Company publications.
Additionally, Compupower also provides microfiche and imaging services to Value
Line, its affiliates and third-party customers.
3. Value Line Securities, Inc.:
Value Line Securities, Inc. ("VLS") is registered as a broker-dealer under
the Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. VLS acts as the underwriter and distributor of the
Value Line Funds. Shares of the Value Line Funds are sold to the public without
a sales charge (i.e., on a "no-load" basis). Since 1986, VLS has effected
brokerage transactions in exchange-listed securities for certain of the Value
Line Funds, clearing such transactions on a fully disclosed basis through
unaffiliated broker-dealers who receive a portion of the gross commissions. VLS
also receives 12b-1 fees from certain of the Value Line Funds.
4. Value Line Distribution Center, Inc.
Value Line Distribution Center, Inc. ("VLDC") handles all of the mailings
of the publications to the Company's subscribers. Additionally, VLDC provides
office space for the Compupower Corporation's subscriber relations and data
processing departments.
D. Other Businesses.
The Company publishes the Value Line Arithmetic Composite and the Value
Line Geometric Composite, daily indices of the stock market performance of the
approximately 1,700 common stocks contained in The Value Line Investment Survey.
The calculation of both indices is done by a firm unaffiliated with the Company.
Futures contracts based upon fluctuations in the Value Line Arithmetic Composite
are traded on the Kansas City Board of Trade, and options on the Index are
traded on the Philadelphia Stock Exchange. The Company receives fees in
connection with these activities.
E. Investments.
The Company invests in the Value Line Funds and in other marketable
securities.
F. Employees.
At April 30, 1998, the Company and its subsidiaries employed 357 people.
The Company, its affiliates, officers, directors and employees may from
time to time own securities which are also held in the portfolios of the Value
Line Funds or recommended in the Company's publications. The Company has
imposed rules upon itself and such people requiring monthly reports of
securities transactions for their respective accounts and restricting trading in
various types of securities in order to avoid possible conflicts of interest.
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G. Assets.
The Company's assets identifiable to each of its principal business
segments were as follows:
<TABLE>
<CAPTION>
April 30,
1998 1997
(in thousands)
<S> <C> <C>
Investment Periodicals
& Related Publications $ 18,573 $ 20,644
Investment Management 186,904 137,649
Corporate Assets 2,048 2,017
______ ______
$207,525 $160,310
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------- -------
</TABLE>
H. Competition.
The investment management and the investment information and publications
industries are very competitive. There are many competing firms and a wide
variety of product offerings. Some of the firms in these industries are
substantially larger and have greater financial resources than the Company. The
Company believes that it is one of the world's largest independent securities
research organizations and that it publishes the world's largest investment
service periodicals in terms of number of subscriptions, annual revenues and
number of equity research analysts.
I. Executive Officers.
The following table lists the names, ages (at June 25, 1998), and principal
occupations and employment during the past five years of the Company's Executive
Officers. All officers are elected to terms of office for one year. Each of
the following has held an executive position with the companies indicated for at
least five years.
Name Age Principal Occupation or Employment
- --------------------- --- ----------------------------------
Jean Bernhard Buttner 63 Chairman of the Board, President and
Chief Executive Officer of the Company
and AB&Co. Chairman of the Board and
President of each of the Value Line
Funds.
Samuel Eisenstadt 76 Senior Vice President and Research
Chairman.
David T. Henigson 40 Vice President since 1992 and Treasurer
since 1994; Director of Compliance and
Internal Auditor; Vice President of each
of the Value Line Funds since 1992 and
Secretary and Treasurer since 1994; Vice
President of AB&Co.
Howard A. Brecher 44 Vice President since 1996 and Secretary
since 1992; Vice President, Secretary,
Treasurer and General Counsel of AB&Co.
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Item 2. PROPERTIES.
On June 4, 1993, the Company entered into a new lease agreement for
approximately 80,000 square feet that provided for the relocation of its office
space to 220 East 42nd Street, New York, New York. During January 1996, a
subsidiary of the Company purchased for cash an approximately 85,000 square foot
warehouse facility for $4,100,000. The new facility has consolidated into a
single facility the distribution operations for the various Company publications
and the fulfillment operations of Compupower Corporation. The remaining
building capacity provides warehouse space, a disaster recovery site and will
provide for future business expansion. The Company owned a distribution
facility in North Bergen, New Jersey. The land and premises were sold in May of
this year. The Company believes the capacity of these facilities is sufficient
to meet the Company's current and expected future requirements.
Item 3. LEGAL PROCEEDINGS.
There are no material pending legal proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the stockholders during the fourth
quarter of the fiscal year ended April 30, 1998.
Part II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Registrant's Common Stock is traded in the over-the-counter market.
The approximate number of record holders of the Registrant's Common Stock at
April 30, 1998 was 1,350. Over-the-counter price quotations reflect inter-
dealer prices, without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions. The range of the bid and asked
quotations and the dividends paid on these shares during the past two fiscal
years were as follows:
Dividend
High Low Declared
Quarter Ended Bid Asked Bid Asked Per Share
July 31, 1996. . . . . . 38 1/4 38 3/4 30 1/2 33 1/4 .20
October 31, 1996 . . . . 38 1/4 39 33 1/4 34 .25
January 31, 1997 . . . . 46 51 29 30 15.25
April 30, 1997 . . . . . 33 1/4 34 1/4 29 29 3/4 .25
July 31, 1997. . . . . . 46 1/2 46 1/2 32 1/2 32 1/2 .25
October 31, 1997 . . . . 41 3/8 41 3/8 34 7/8 35 .25
January 31, 1998 . . . . 45 46 34 34 .25
April 30, 1998 . . . . . 45 1/2 46 37 3/4 38 1/2 .25
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Item 6. SELECTED FINANCIAL DATA.
Earnings per share for each of the fiscal years shown below are based on
the weighted average number of shares outstanding.
<TABLE>
<CAPTION>
Years ended April 30,
1998 1997 1996 1995 1994
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Revenues:
Investment
periodicals
and related
publications. . . . $ 61,210 $ 62,442 $ 58,509 $ 55,912 $ 57,830
Investment
management
fees and services $ 32,405 $ 29,136 $ 26,564 $ 23,182 $ 24,220
Settlement of
disputed securities
transactions $ - $ 196 $ 2,054 $ 617 $ 408
Total revenues $ 93,615 $ 91,774 $ 87,127 $ 79,711 $ 82,458
Income from
operations . . . . . $ 39,360 $ 36,277 $ 32,486 $ 29,660 $ 32,464
Net income . . . . . . $ 35,177 $ 45,512 $ 41,714 $ 23,168 $ 28,902
Earnings per
share. . . . . . . . $ 3.53 $ 4.56 $ 4.18 $ 2.32 $ 2.90
Total assets . . . . . $207,525 $160,310 $333,826 $264,998 $200,321
Cash dividends
declared per share $ 1.00 $ 15.95 $ .80 $ .60 $ .80
</TABLE>
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FISCAL 1998
OPERATING RESULTS
Revenues and operating income for the twelve months ended April 30, 1998
were the highest in the history of the Company and exceeded the prior year's
levels by 2% and 9%, respectively. Revenues for the three months ended April
30, 1998 were the second highest in Value Line's history. Net income for the
twelve months ended April 30, 1998 of $35,177,000 or $3.53 per share compares to
net income of $45,512,000 or $4.56 per share for the twelve months of fiscal
1997. Net income for the three months ended April 30, 1998 of $5,977,000 or
$.60 per share was approximately equal to the prior year's net income of
$6,034,000 or $.60 per share. Net income for both the three months and fiscal
year of 1998 were ranked third highest for the Company. The special dividend of
$149,700,000 paid during January 1997 significantly reduced the Company's
securities portfolios. This reduction in the securities portfolios was the
primary reason for the lower level of net income in fiscal 1998.
Revenues of $93,615,000 for the twelve months of fiscal 1998 were
$1,841,000 or 2% above the comparable results for fiscal 1997. Subscription
revenues for the twelve months of fiscal 1998 of $61,210,000 were 2% below
revenues for the comparable period of fiscal 1997, primarily a result of the
reduction in fulfillment revenues from former third party clients of the
Compupower Corporation and reduced levels of revenues from the Value Line Mutual
Fund Survey, print publication. Revenues from The Value Line Investment Survey,
including a 9% price increase that went into effect February 1, 1996 and
revenues from related publications were approximately equal to fiscal 1997's
level. Revenues derived from investment management fees and services for the
twelve months ended April 30, 1998 of $32,405,000 were $3,269,000 or 11% above
the level for the comparable period of fiscal 1997. The increase in revenues
resulted primarily from an 11% increase in the average annual net assets under
management in the Company's mutual funds. The increase in the value of the
portfolios under management resulted primarily from the appreciation in the
financial markets. Assets under management in the Company's mutual funds at
April 30, 1998 increased 23% from the levels at April 30, 1997.
Expenses for the twelve months ended April 30, 1998 were $54,255,000, 2%
below last year's comparable level of $55,497,000. Advertising expenses of
$15,090,000 were 4% below the prior year's level. Advertising for The Value
Line Investment Survey family of products decreased 10% from the prior year's
level because of a strategic reduction in advertising campaigns during periods
of uncertain financial market stability. Promotional expenses for the Value
Line Mutual Funds increased $1,525,000 from fiscal 1997's level. The increase
in expenses relates primarily to a selling arrangement that became effective
July 1, 1996 for two of the equity funds for which the Company is the advisor.
Salary and employee benefit expenses of $22,153,000 for twelve months of fiscal
1998 were 1% above the prior year's level. Fiscal 1998's expenses include an
increase in employment recruitment costs and the employment of additional staff
for technology initiatives to automate and upgrade information systems that will
increase the number of Company's covered in the
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various Value Line equity publications and year 2,000 planning and execution.
Additionally, the reduction in Compupower's staff, as a result of the
termination of services to third parties, contributed to the stable level of
expenses. Printing, paper and distribution expenses of $8,498,000 at April 30,
1998 were slightly higher than expenses of $8,495,000 for the comparable period
of fiscal 1997. Expenses for the fourth quarter of fiscal 1998 include
approximately $500,000 of costs related to the Compupower Corporation's
migration of production and distribution data from a mainframe system to a
client server database. The remaining expenses decreased from the prior year's
level primarily due to the lower costs associated with production and
distribution of the electronic products as compared with the print publications,
an approximate 10% reduction in the cost of paper, shorter production runs and
the utilization of new technology that maximizes 2nd class discounts offered by
the U.S. Postal Service. Office and administration expenses of $8,514,000
decreased $747,000 or 8% from the prior year's level. This reduction was in
part due to non-recurring professional fees related to a lawsuit from which the
Company received a $558,000 award. Additionally, expenses for fiscal 1997
include a charge of $328,000 for the writedown of goodwill at the Company's
fulfillment subsidiary resulting from a decision to restructure these
operations. Administrative expenses for fiscal 1997 also include a negotiated
settlement with the former landlord of the Company's headquarters' facility in
which the Company received proceeds of $906,000.
The Company's securities portfolios produced income from securities
transactions for the twelve months ended April 30, 1998 of $18,272,000 compared
with $36,898,000 during the same period of last fiscal year. The primary cause
for the decrease was the reduced levels of capital gains and dividend income
from the Company's mutual fund holdings that resulted from the smaller size of
those securities portfolios. The reduction in the portfolios resulted from the
$15.00 per share special dividend distributed to all shareholders in January
1997 following the Company's achievement of record earnings during six of the
last eight fiscal years. Also, the twelve months of fiscal 1997 include
$31,789,000 of capital gains of which $17,643,000 resulted from sales of the
Company's long term mutual fund holdings in connection with the special
dividend.
Liquidity and Capital Resources
Value Line, Inc. (the Company) has liquid resources which are used in its
business of $183,057,000 at April 30, 1998. In addition to $33,780,000 in
working capital, the Company has long-term securities available for sale with a
market value of $149,277,000, that, although classified as non-current assets,
are also readily marketable should the need arise.
The Company's cash flow from operations of $20,421,000 increased
$8,585,000 from last year's level primarily as a result of the larger tax
payments remitted during the prior fiscal year that resulted from the additional
income from securities transactions. Also, the increase in unearned revenues
from new business and decline in accounts receivable from collections
contributed to the increase in cash flow. Cash flows from investing activities
during fiscal 1997 were $164,712,000 higher than fiscal 1998's results due to
the receipt of proceeds from sales of mutual fund holdings in preparation of the
special dividend paid in January 1997.
13
<PAGE>
The Company recognizes the need to ensure that its computer systems and
software applications are converted to a year 2000 date with no disruption to
business operations. In light of this, the Company has established a central
committee to coordinate, evaluate and implement changes necessary for
compliance. Additionally, the Company is communicating with suppliers,
financial institutions and others with which it does business to ensure that
they are also compliant with the year 2000 date. Significant areas of
operations which will be impacted have already been identified and conversion
efforts are underway. The total cost of compliance and its effect on the
Company's future results of operations are being determined as part of the
detailed conversion planning. The cost, including routine hardware enhancements
and modifications to software applications, is not expected to exceed
$1,000,000.
The Accounting Standards Committee of the AICPA recently issued the
Statement of Position ("SOP") 98-1 which requires entities to adopt uniform
rules in their financial statements in accounting for the cost of computer
software developed or obtained for internal use. The SOP requires companies to
capitalize as long-lived assets many of the cost associated with developing or
obtaining software for internal use and amortize those costs over the software's
estimated full life in a systematic and rational manner. Management estimates
that the Company currently expenses approximately $2,000,000 of expenses that
would qualify for amortization under the new statement.
Management believes that the Company's cash and other liquid asset
resources used in its business together with the future cash flows from
operations will be sufficient to finance current and forecasted operations.
Management anticipates no significant borrowing requirements during fiscal 1999.
FISCAL 1997
OPERATING RESULTS
Net income, revenues, income from operations and income from securities
transactions for fiscal 1997 all set new record high levels for the Company,
exceeding the previous record highs set in fiscal 1996. Net income for the year
ended April 30, 1997 was $45,512,000 or $4.56 per share compared to net income
of $41,714,000 or $4.18 per share for the same period during fiscal 1996. The
year ended April 30, 1997 included a one time gain of $17,580,000 on sales of
various securities holdings in preparation for the payment of a special dividend
of $15.00 per share on January 2, 1997. Income from operations for the year
ended April 30, 1997 exceeded the prior year's level by 12%.
Revenues of $91,774,000 for fiscal 1997 were $4,647,000 or 5% above the
comparable results for fiscal 1996. Subscription revenues for the year ended
April 30, 1997 of $62,442,000 increased $3,933,000 or 6% from revenues of
$58,509,000 for fiscal 1996. The increase was a result of higher revenues from
The Value Line Investment Survey, a portion of which was the result of a price
increase effective February 1996. Additional revenues from new products,
including The Value Line Investment Survey-Condensed Edition, The Value Line
Investment Survey-Expanded Edition and the Value Line Investment Survey FOR
WINDOWS-Registered Trademark-, introduced in July 1996, contributed to the
overall increase in subscription revenues. Average full term sub-scription
levels for all publications during fiscal 1997, through April 30, 1997 increased
8% com-
14
<PAGE>
pared to the average level for the year ended April 30, 1996. Revenues derived
from investment management fees and services for the year ended April 30, 1997
of $29,136,000 were $2,572,000 or 10% above the level at April 30, 1996.
Revenues increased primarily as a result of additional average annual net assets
under management in the Company's mutual funds. Included in fiscal 1997 and
1996 revenues are proceeds of $196,000 and $2,054,000, respectively received
from the settlement of disputed securities trades.
Expenses for the year ended April 30, 1997 of $55,497,000 were $856,000
or 2% above last year's comparable expenses of $54,641,000. Advertising
expenses of $15,739,000 were 3% above last year's level and include an increase
for various new products, including the Value Line Investment Survey FOR
WINDOWS-Registered Trademark-. Additionally, the Company incurred $848,000 of
promotional expenses related to a selling arrangement for two of the equity
mutual funds for which the Company is the advisor. Salary and employee benefit
expenses of $22,002,000 were 5% above last year's comparable level of
$20,892,000. Restructuring expenses for several of the Company's operations,
incentive compensation and the additional staffing in various support
departments as well as the Asset Management division accounted for most of the
increase. Print-ing, paper and distribution expenses of $8,495,000 increased 1%
for the year ended April 30, 1997 compared with expenses of $8,388,000 for
fiscal 1996. The additional costs incurred during fiscal 1997, associated with
the production and distribution of new products were offset by a decline in
printing expenses that resulted primarily from a negotiated favorable pricing
agreement with the Company's printing vendor that became effective January 1,
1996. Also, Compupower discontinued servicing third party customers and the
Company closed The Value Line Investment Survey-Canadian Edition. The
distribution costs have also been reduced through the use of new technology that
maximizes 2nd class discounts offered by the U.S. Postal Service. Office and
administration expenses of $9,261,000 decreased $778,000 or 8% from fiscal
1996's level. Proceeds of $906,000 were received from a negotiated settlement
with the Company's landlord. There was also a decrease in professional fees
that were incurred in fiscal 1996 in connection with an active lawsuit in which
the Company was the plaintiff and the receipt of $558,000 of proceeds during
fiscal 1997 from the settlement of this lawsuit. Restructuring Compupower
resulted in a charge of $328,000 for the write-off of goodwill during fiscal
1997. Additional expenses were incurred to relocate the fulfillment,
distribution and client relations operations to the Company's new operating
facility located in New Jersey.
The Company's investment portfolios produced income from securities
transactions for the year ended April 30, 1997 of $36,898,000 compared to income
of $35,898,000 for the comparable period of fiscal 1996. The increase was a
result of additional capital gains of $15,377,000 from sales of the Company's
mutual fund holdings offset by lower capital gains from securities held in the
Company's trading portfolios of $11,949,000. Additionally, capital gains
distributions from the Company's mutual funds increased $2,518,000. The lower
capital gains in the trading portfolio was a result of a significant reduction
in the securities holdings during the third quarter of fiscal 1997. In
addition, there was a correction in the financial markets during the first five
months of fiscal 1997 as compared to the rapidly rising market during the
comparable period of fiscal 1996. The Company's sale of stock futures indices,
used to reduce the financial market exposure from the Company's equity
securities holdings, resulted in an increase in capital losses of $4,253,000
during fiscal 1997. The increase in capital losses from sale of stock future
indices resulted from a decision to reduce the Company's overall equity
securities financial market exposure. The capital gains recognized from
appreciation in the Company's long term securities portfolio offset the losses
on the sales of the stock indices.
15
<PAGE>
Liquidity and Capital Resources
The Company has liquid resources which are used in its business of
$133,376,000 at April 30, 1997. In addition to $25,261,000 in working capital,
the Company has long-term securities available for sale with a market value of
$108,115,000, that, although classified as non-current assets, are also readily
marketable should the need arise. During fiscal 1997, the Company sold U.S.
Government Agency debt securities under agreements to sell and repurchase and
received $40,057,000 from these sales. A portion of the proceeds were used to
satisfy $36,994,000 of repurchase obligations.
On January 2, 1997, the Company paid a special dividend in the aggregate
amount of $149,700,000 or $15.00 per share. The dividend was paid pursuant to a
transaction in which Arnold Bernhard & Co., Inc. (AB&Co.), the owner of
approximately 80% of the outstanding common stock of the Company, settled a
lawsuit and purchased all the AB&Co. shares held by the Arnold Van Hoven
Bernhard family and the trustees of a trust of which he is the income
beneficiary. Accordingly, Jean B. Buttner, Chief Executive Officer of the
Company, now owns 100% of the voting shares of AB&Co.
During the third quarter of fiscal 1997, the Company sold various
holdings from its long term securities available for sale and its short term
trading portfolio and received $81,191,000 and $56,170,000, respectively. These
proceeds, together with $12,339,000 from the Company's holdings in the Value
Line Cash Fund were used to finance the special dividend. The special dividend
was paid from the Company's accumulated earnings and profits.
The Company's cash flow from operations of $11,836,000 decreased
$9,050,000 from last year's level, primarily as a result of increased income tax
payments from sales of securities holdings and increased operating profit.
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 1998.
16
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the registrant and its
subsidiaries are included as a part of this Form 10K:
Page Numbers
Reports of independent accountants 22
Consolidated balance sheets--April 30, 1998 and 1997 24
Consolidated statements of income and retained earnings
--years ended April 30, 1998, 1997 and 1996 25
Consolidated statements of cash flows
--years ended April 30 1998, 1997 and 1996 26
Notes to the consolidated financial statements 27
Supplementary schedules 39
<TABLE>
<CAPTION>
Quarterly Results (Unaudited):
(in thousands, except per share amounts)
Income Earnings
Total From Net Per
Revenues Operations Income Share
<S> <C> <C> <C> <C>
1998, by Quarter -
First. . . . . . . . $23,170 $10,975 $ 7,811 $ .78
Second . . . . . . . 23,721 10,467 7,063 .71
Third. . . . . . . . 23,524 9,884 14,326 1.44
Fourth . . . . . . . 23,200 8,034 5,977 .60
-------- -------- --------- -------
Total $93,615 $39,360 $ 35,177 $3.53
1997, by Quarter -
First. . . . . . . . $22,457 $ 9,421 $ 6,526 $ .65
Second . . . . . . . 22,347 9,024 7,839 .79
Third. . . . . . . . 23,767 8,415 25,113 2.52
Fourth . . . . . . . 23,203 9,417 6,034 .60
-------- -------- --------- -------
Total $91,774 $36,277 $45,512 $ 4.56
1996, by Quarter -
First. . . . . . . . $20,028 $ 7,549 $10,224 $ 1.02
Second . . . . . . . 22,811 10,134 8,250 .83
Third. . . . . . . . 21,689 7,512 14,291 1.43
Fourth . . . . . . . 22,599 7,291 8,949 .90
-------- -------- --------- -------
Total $87,127 $32,486 $41,714 $ 4.18
</TABLE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
There have been no disagreements with the independent accountants on
accounting and financial disclosure matters.
17
<PAGE>
Part III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information required by this item will be filed as an amendment to this
Form 10-K.
Item 11. EXECUTIVE COMPENSATION.
Information required by this item will be filed as an amendment to this
Form 10-K.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Information required by this item will be filed as an amendment to this
Form 10-K.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this item will be filed as an amendment to this
Form 10-K.
Part IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) 1. Financial Statements
See Item 8.
2. Schedules
Schedule I - Marketable Securities.
Schedule XIII - Other Investments. (Reg. S-X, Article 5)
All other Schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
18
<PAGE>
3. Exhibits
3.1 Articles of Incorporation of the Company, as amended through
April 17, 1983 are Incorporated by reference to the
Registration Statement - Form S-1 of Value Line, Inc.
Part II, Item 16.(a) 3.1 filed with the Securities and
Exchange Commission on April 7, 1983.
3.2 Certificate of Amendment of Certificate of Incorporation
dated October 24, 1989.
10.8 Form of tax allocation arrangement between the Company and
AB&Co. incorporated by reference to the Registration
Statement - Form S-1 of Value Line, Inc. Part II, Item
16.(a) 10.8 filed with the Securities and Exchange
Commission on April 7, 1983.
10.9 Form of Servicing and Reimbursement Agreement between the
Company and AB&Co., dated as of November 1, 1982
incorporated by reference to the Registration Statement -
Form S-1 of Value Line, Inc. Part II, Item 16.(a) 10.9 filed
with the Securities and Exchange Commission on April 7,
1983.
10.10 Value Line, Inc. Profit Sharing and Savings Plan as amended
and restated effective May 1, 1989, including amendments
through April 30, 1995, incorporated byreference to the
Annual Report on Form 10-K for the year ended April 30,
1996.
10.13 Lease for the Company's premises at 220 East 42nd Street,
New York, N.Y. incorporated by reference to the Annual
Report on Form 10-K for the year ended April 30, 1994.
21 Subsidiaries of the Registrant.
(b) Reports on Form 8-K.
None
(c) Exhibits.
21 Subsidiaries of the Registrant.
27 Financial Data Schedules.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report on Form 10-K for the
fiscal year ended April 30, 1998, to be signed on its behalf by the undersigned,
thereunto duly authorized.
VALUE LINE, INC.
(Registrant)
By: s/Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman & Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
By: s/Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman & Chief Executive Officer
By: s/Stephen R. Anastasio
Stephen R. Anastasio
Principal Financial and Accounting Officer
Dated: July 15, 1998
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report on Form 10-K for the
fiscal year ended April 30, 1998, to be signed on its behalf by the undersigned
as Directors of the Registrant.
s/Jean Bernhard Buttner s/William S. Kanaga
Jean Bernhard Buttner William S. Kanaga
s/Harold Bernard, Jr. s/Howard A. Brecher
Harold Bernard, Jr. Howard A. Brecher
s/W. Scott Thomas s/Samuel Eisenstadt
W. Scott Thomas Samuel Eisenstadt
s/Linda S. Wilson s/David T. Henigson
Linda S. Wilson David T. Henigson
Dated: July 15, 1998
<PAGE>
HOROWITZ & ULLMANN, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
275 MADISON AVENUE
NEW YORK, NY 10016
TELEPHONE
(212) 532-3736
---
FAX
REPORT OF INDEPENDENT ACCOUNTANTS (212) 545-8997
To the Board of Directors
and Shareholders of
Value Line, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and retained earnings and of cash flows
present fairly, in all material respects, the financial position of Value
Line, Inc. and subsidiaries at April 30, 1998 and 1997, and the results of
their operations and their cash flows for each of the three years in the
period ended April 30, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Our audits of the consolidated financial statements referred to above also
included an audit of the Financial Statement Schedules listed in Item 14(a) of
Form 10-K. In our opinion, these Financial Statement Schedules present
fairly, in all material respects, the information set forth therein when read
in conjunction with the related consolidated statements.
/s/ Horowitz & Ullmann, P.C.
HOROWITZ & ULLMANN, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
New York, NY
July 9, 1998
22
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the registration
statement on Form S-8 (No. 2-90593) of our report dated July 9, 1998 relating
to the consolidated financial statements of Value Line, Inc. and subsidiaries
for the years ended April 30, 1998 and 1997 which appears on page 22 of this
Form 10-K. We also consent to the incorporation by reference of our report on
the Financial Statement Schedules, which appear in this Form 10-K.
HOROWITZ & ULLMANN, P.C.
Certified Public Accountants
New York, NY
July 9, 1998
23
<PAGE>
<TABLE>
<CAPTION>
Value Line, Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)
Apr. 30, Apr. 30,
Assets 1998 1997
Current Assets: ----------- -----------
<S> <C> <C>
Cash and cash equivalents (including short term
investments of $29,072 and $15,476, respectively) $29,937 $16,083
Trading securities 8,861 15,217
Accounts receivable, net of allowance for doubtful
accounts of $507 and $593, respectively 1,287 2,603
Receivable from affiliates 2,339 1,849
Prepaid expenses and other current assets 1,689 1,824
Deferred income taxes 1,443 1,205
----------- -----------
Total current assets 45,556 38,781
Long term securities available for sale 149,277 108,115
Property and equipment, net 12,651 13,370
Goodwill 41 44
----------- -----------
Total assets $207,525 $160,310
----------- -----------
----------- -----------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $7,170 $8,009
Accrued salaries 1,764 2,208
Dividends and interest payable 2,495 2,495
Accrued taxes payable 347 808
----------- -----------
Total current liabilities 11,776 13,520
Unearned revenue 42,543 42,191
Deferred charges 975 1,253
Deferred income taxes 15,294 6,982
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 959 954
Retained earnings 108,392 83,194
Treasury stock, at cost (21,375 shares on April 30, 1998,
and 21,875 on April 30, 1997) (411) (421)
Unrealized gains on securities available for sale, net of taxes 26,997 11,637
----------- -----------
Total shareholders' equity 136,937 96,364
----------- -----------
Total liabilities and shareholders' equity $207,525 $160,310
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
Value Line, Inc.
Consolidated Statements of Income and Retained Earnings
(in thousands, except per share amounts)
Years ended April 30,
1998 1997 1996
---------- ---------- -----------
<S> <C> <C> <C>
Revenues:
Investment periodicals and related publications $61,210 $62,442 $58,509
Investment management fees & services 32,405 29,136 26,564
Settlement of disputed securities transactions -- 196 2,054
---------- ---------- -----------
Total revenues 93,615 91,774 87,127
---------- ---------- -----------
Expenses:
Advertising and promotion 15,090 15,739 15,322
Salaries and employee benefits 22,153 22,002 20,892
Printing, paper and distribution 8,498 8,495 8,388
Office and administration 8,514 9,261 10,039
---------- ---------- -----------
Total expenses 54,255 55,497 54,641
---------- ---------- -----------
Income from operations 39,360 36,277 32,486
Income from securities transactions, net 18,272 36,898 35,898
---------- ---------- -----------
Income before income taxes 57,632 73,175 68,384
Provision for income taxes 22,455 27,663 26,670
---------- ---------- -----------
Net income $35,177 $45,512 $41,714
Retained earnings, at beginning of year 83,194 196,834 163,101
Dividends declared (9,979) (159,152) (7,981)
---------- ---------- -----------
Retained earnings, at end of year $108,392 $83,194 $196,834
---------- ---------- -----------
---------- ---------- -----------
Earnings per share, basic and fully diluted $3.53 $4.56 $4.18
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
Value Line, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Years ended April 30,
1998 1997 1996
Cash flows from operating activities: ---------- ----------- -----------
<S> <C> <C> <C>
Net income $35,177 $45,512 $41,714
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,592 1,477 1,288
Write-down of goodwill -- 328 --
Accretion of discount -- (224) (582)
Gains on sale of trading securities
and securities held for sale (15,985) (46,439) (20,815)
Unrealized (gains)/losses on trading securities 568 14,732 (9,030)
Loss/(gain) on write-down of equipment (13) 21 (166)
Deferred income taxes (196) (5,820) 4,205
Changes in assets and liabilities:
Increase/(decrease) in unearned revenue 352 (802) 6,204
Decrease in deferred charges (278) (277) (278)
Increase/(decrease) in accounts payable
and accrued expenses (765) 1,605 727
Increase/(decrease) in accrued salaries (444) 400 342
Decrease in interest payable -- (63) (471)
Decrease in accrued taxes payable (461) (258) (1,027)
(Increase)/decrease in prepaid expenses and
other current assets 135 1,048 (1,456)
Decrease in accounts receivable 1,229 480 555
(Increase)/decrease in receivable from affiliates (490) 116 (324)
----------- ----------- -----------
Total adjustments (14,756) (33,676) (20,828)
----------- ----------- -----------
Net cash provided by operations 20,421 11,836 20,886
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sales of securities 21,824 149,505 27,269
Purchase of securities (27,376) (26,543) (52,211)
Proceeds from sale of trading securities 39,461 114,116 64,333
Purchase of trading securities (29,655) (66,239) (61,574)
Acquisition of property, and equipment, net (857) (2,730) (6,026)
----------- ----------- -----------
Net cash provided by/(used in) investing activities 3,397 168,109 (28,209)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from sale of treasury stock 15 32 35
Dividends paid (9,979) (158,652) (5,986)
Loan repayment -- (36,994) ---
----------- ----------- -----------
Net cash (used in) financing activities (9,964) (195,614) (5,951)
----------- ----------- -----------
Net increase/(decrease) in cash and cash equivalents 13,854 (15,669) (13,274)
Cash and cash equivalents at beginning of period 16,083 31,752 45,026
----------- ----------- -----------
Cash and cash equivalents at end of period $29,937 $16,083 $31,752
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Value Line, Inc.
Notes to Consolidated Financial Statements
Note 1-Organization and Summary of Significant Accounting Policies:
Value Line, Inc. (the "Company") is incorporated in New York State and
carries on the investment periodicals and related publications and investment
management activities formerly performed by Arnold Bernhard & Co., Inc. (the
"Parent") which owns approximately 80% of the issued and outstanding common
stock of the Company.
Principles of consolidation: The consolidated financial statements include
the accounts of the Company and all of its subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Revenue recognition: Subscription revenues are recognized ratably over the
terms of the subscriptions. Accordingly, the amount of subscription fees to be
earned by servicing subscriptions after the date of the balance sheet is shown
as unearned revenue. The unearned revenue shown on the balance sheet is a
noncurrent deferred credit. This classification recognizes that the fulfillment
of this commitment will require the use of significantly fewer current assets
than the amount of the unearned revenues and, accordingly, combining it with
current liabilities would significantly understate the liquidity position of the
Company.
Investment management fees are recorded as revenue as the related services are
performed.
Valuation of Securities:
Effective May 1, 1994, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities" ("SFAS 115"). As a result of adopting SFAS
115, the Company changed the method by which it values its long-term
securities portfolio, which consists of shares of the Value Line Mutual
Funds, and short-term securities portfolio, which the Company classifies as
available for sale, from the lower of aggregate cost or market to market
value. 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. SFAS 115 cannot be
retroactively applied to the financial statements of periods prior to May 1,
1994.
27
<PAGE>
Value Line, Inc.
Notes to Consolidated Financial Statements
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.
Goodwill: Goodwill represents the excess of the purchase price over the fair
value of net assets acquired and is being amortized over a period of 14 years.
During fiscal 1997, the Company accelerated the amortization of the goodwill
associated with the Compupower Corporation. This resulted from managements
decision to cease third party activity and reorganize the fulfillment operation.
Earnings per share: Earnings per share are based on the weighted average
number of shares of common stock and common stock equivalents outstanding during
each year.
Cash and Cash Equivalents: For purposes of the Consolidated Statements of
Cash Flows, the Company considers all cash held at banks and short term liquid
investments with an original maturity of less than three months to be cash and
cash equivalents. As of April 30, 1998 and 1997, cash equivalents included
$28,283,000 and $13,815,000, respectively, invested in the Value Line money
market funds.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Note 2-Supplementary Cash Flow Information:
Cash payments for income taxes were $23,114,000, $33,677,000, and $24,056,000,
in 1998, 1997 and 1996, respectively. Interest payments of $47,000, $1,188,000,
and $2,618,000 were made in 1998, 1997 and 1996, respectively.
28
<PAGE>
Value Line, Inc.
Notes to Consolidated Financial Statements
Note 3-Related Party Transactions:
The Company acts as investment adviser and manager for fifteen open-ended
investment companies, the Value Line Family of Funds (see Note 4). The Company
earns investment management fees based upon the average daily net
asset values of the respective funds. The Company also earns brokerage
commission income, net of clearing fees, on securities transactions executed by
Value Line Securities, Inc. on behalf of the funds that are cleared on a fully
disclosed basis through non-affiliated brokers. For the years ended April 30,
1998, 1997 and 1996, investment management fees and brokerage commission income,
net of clearing fees, amounted to $25,348,000, $22,443,000, and $19,686,000,
respectively. The related receivables from the funds for management advisory
fees included in Receivable from affiliates were $2,177,000 and $1,703,000 at
April 30, 1998 and 1997, respectively.
For the years ended April 30, 1998, 1997, and 1996, the Company was reimbursed
$461,000, $493,000, and $438,000, respectively, for payments it made on behalf
of and services it provided to the Parent. At April 30, 1998 and 1997,
Receivable from affiliates included a receivable from the Parent of $28,000 and
$44,000, respectively. For the years ended April 30, 1998, 1997, and 1996, the
Company made federal income tax payments to the Parent amounting to $18,800,000,
$29,200,000, and $19,952,000, respectively. At April 30, 1998 and 1997, accrued
taxes payable are presented net of a receivable of $694,000 and $834,000,
respectively. These data are in accordance with the tax sharing arrangement
described in Note 6.
Note 4-Investments:
Trading Securities:
Securities held by Value Line Securities, Inc. had an aggregate cost of
$7,914,000 and $13,702,000 and a market value of $8,861,000 and $15,217,000 at
April 30, 1998 and April 30, 1997, respectively.
Short-Term Securities Available for Sale:
Short-term securities available for sale, which were sold during fiscal 1997
as further explained below, consisted 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.
29
<PAGE>
Value Line, Inc.
Notes to Consolidated Financial Statements
Federal Farm Credit Bank (FFCB), floating rate notes due February 12, 1997;
par value $10,000,000.
During the first quarter of fiscal 1997, the Company sold the FFCB securities
and received proceeds of $9,870,000 which were equivalent to the recorded market
value of these securities. During the second quarter of fiscal 1997, the Company
sold the FNMA securities and received proceeds of $30,187,000, including accrued
interest and realized a net capital gain of $154,000. At April 30, 1996, the
market value of the FNMA and FFCB securities, which approximates cost, was
$29,831,000 and $9,850,000, respectively. These notes were purchased at a
discount from their respective face values. The accretion of this discount had
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, which are invested in the
Value Line mutual funds, was $107,743,000 and $90,211,000 and the market value
was $149,277,000 and $108,115,000 at April 30, 1998 and April 30, 1997,
respectively. The change in gross unrealized gains on these securities of
$23,630,000 and $17,374,918, net of the change in deferred taxes of $8,270,000
and $6,081,000, were included in shareholders' equity at April 30, 1998 and
1997, respectively. Realized gains from the sales of these securities were
$11,980,000, $18,958,000 and $3,581,000 during fiscal years 1998, 1997 and 1996,
respectively. The proceeds received from sales of these securities during the
fiscal years ended April 30, 1998, 1997 and 1996 were $21,824,000, $91,662,000
and $18,085,000, respectively.
For the years ended April 30, 1998, 1997, and 1996, Income from securities
transactions consisted of $2,818,000, $4,868,000, and $5,275,000, of dividend
income; $15,998,000, $46,418,000, and $20,814,000, of net realized capital
gains; $78,000, $1,474,000, and $2,758,000, of interest income; and $47,000,
$1,124,000, and $2,148,000, of related interest expense, respectively. Income
from securities transactions also included $568,000 and $14,732,000 of
unrealized losses and $9,196,000 of unrealized gains for the years ended April
30, 1998, 1997 and 1996, respectively.
Note 5-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.
30
<PAGE>
Value Line, Inc.
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
Property and equipment consisted of the following: April 30,
1998 1997
------------------------
(in thousands)
<S> <C> <C>
Land $785 $785
Building and leasehold improvements 8,039 7,992
Furniture and equipment 10,711 10,146
------------------------
19,535 18,923
Accumulated depreciation and amortization (6,884) (5,553)
------------------------
$12,651 $13,370
------------------------
------------------------
</TABLE>
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 houses 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.
Note 6-Federal, State and Local Income Taxes:
The Company computes its tax in accordance with the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes".
31
<PAGE>
Value Line, Inc.
Notes to Consolidated Financial Statements
The provision for income taxes includes the following:
<TABLE>
<CAPTION>
Years ended April 30,
1998 1997 1996
-----------------------------
(in thousands)
<S> <C> <C> <C>
Current:
Federal $18,202 $28,565 $18,612
State and local 4,449 4,918 3,852
-----------------------------
22,651 33,483 22,464
Deferred:
Federal (18) (5,753) 4,034
State and local (178) (67) 172
-----------------------------
(196) (5,820) 4,206
-----------------------------
$22,455 $27,663 $26,670
-----------------------------
-----------------------------
</TABLE>
Deferred taxes are provided for temporary differences between the financial
reporting basis and the tax basis of the Company's assets and liabilities. The
tax effect of temporary differences giving rise to the Company's deferred tax
(liability)/asset are as follows:
<TABLE>
<CAPTION>
Years ended April 30,
1998 1997 1996
--------------------------------
(in thousands)
<S> <C> <C> <C>
Unrealized gains on securities held for sale ($14,537) ($6,266) ($12,347)
Unrealized gains on trading securities (291) (532) (5,661)
Relocation reserve 284 177 220
Depreciation (626) (637) (572)
Deferred charges 1,095 1,249 959
Accretion of securities under
repurchase agreements - - (319)
Other, net 224 233 42
--------------------------------
($13,851) ($5,777) ($17,678)
--------------------------------
--------------------------------
</TABLE>
32
<PAGE>
Value Line, Inc.
Notes to Consolidated Financial Statements
Included in Deferred income taxes in total current assets are deferred federal
tax assets of $957,000 and $897,000 and deferred state and local tax assets of
$486,000 and $308,000 at April 30, 1998 and 1997, respectively.
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:
<TABLE>
<CAPTION>
Years ended April 30,
1998 1997 1996
------------------------------
(in thousands)
<S> <C> <C> <C>
Tax expense at the U.S. statutory rate $20,171 $25,699 $24,016
Increase (decrease) in tax expense from:
State and local income taxes, net of
federal income tax benefit 2,776 3,147 2,611
Effect of tax exempt income and dividend
deductions (64) (409) (586)
Other, net (428) (774) 629
------------------------------
$22,455 $27,663 $26,670
------------------------------
------------------------------
</TABLE>
The Company is included in the consolidated federal income tax return of the
Parent. The Company has a tax sharing arrangement which requires it to make tax
payments to the Parent equal to the Company's liability as if it filed a
separate return.
Note 7-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 upon the salaries of eligible employees and the amount of consolidated
net operating income as defined in the Plan. Plan expense, included in
salaries and employee benefits in the Consolidated Statements of Income and
Retained Earnings, for the years ended April 30, 1998, 1997, and 1996 was
$1,455,000, $1,550,000, and $1,331,000, respectively.
33
<PAGE>
Value Line, Inc.
Notes to Consolidated Financial Statements
Note 8-Incentive Stock Options:
On April 17, 1993, the Incentive Stock Option Plan expired. On the date of
expiration, 22,550 options available for grant were cancelled. Information on
the 1983 Incentive Stock Option Plan for the three years ended April 30, 1998,
is as follows:
<TABLE>
<CAPTION>
Number of Option
Shares Prices
---------
<S> <C> <C>
Outstanding at April 30, 1995 6,250 $17.50 to $29.75
Granted -
Exercised (1,625) $17.50 to $29.75
Cancelled -
---------
Outstanding at April 30, 1996 4,625 $17.50 to $29.75
Granted -
Exercised (1,150) $17.50 to $29.75
Cancelled -
---------
Outstanding at April 30, 1997 3,475 $17.50 to $29.75
Granted -
Exercised (500) $29.75
Cancelled -
---------
Outstanding at April 30, 1998 2,975 $29.75
---------
---------
</TABLE>
Options outstanding at April 30, 1998 expire at various dates through March
2003. At April 30, 1998, 2,975 of the outstanding options were exercisable. Of
the common stock held in treasury at April 30, 1998, 2,975 shares were held for
exercise of stock options.
Note 9-Treasury Stock:
Treasury stock, at cost, for the three years ended April 30, 1997, consists of
the following:
<TABLE>
<CAPTION>
Shares Amount
---------- ----------
(in thousands)
<S> <C> <C>
Balance April 30, 1995 24,650 474
Exercise of incentive stock options (1,625) (31)
---------- ----------
Balance April 30, 1996 23,025 443
Exercise of incentive stock options (1,150) (22)
---------- ----------
Balance April 30, 1997 21,875 421
Exercise of incentive stock options (500) (10)
---------- ----------
Balance April 30, 1998 21,375 $411
---------- ----------
---------- ----------
</TABLE>
34
<PAGE>
Value Line, Inc.
Notes to Consolidated Financial Statements
Note 10-Lease Commitments:
On June 4, 1993, the Company entered into a 15 year lease agreement that
provides new primary office space, replacing the previous lease that expired
during the second quarter of fiscal year 1994. The lease includes free rental
periods as well as scheduled base rent escalations over the term of the lease.
The total amount of the base rent payments is being charged to expense on the
straight-line method over the term of the lease. The Company has recorded a
Deferred charge on its Consolidated Balance Sheets to reflect the excess of
annual rental expense over cash payments since inception of the lease.
Future minimum payments, exclusive of forecasted increases in real estate
taxes and wage escalations, under operating leases for office space, with
remaining terms of one year or more, are as follows:
<TABLE>
<CAPTION>
Year ended April 30: (in thousands)
<S> <C>
1999 $1,813
2000 1,846
2001 1,827
2002 1,827
2003 1,827
Thereafter 9,693
--------
$18,833
--------
--------
</TABLE>
35
<PAGE>
Value Line, Inc.
Notes to Consolidated Financial Statements
Rental expense for the years ended April 30, 1998, 1997, and 1996 under
operating leases covering office space was $1,288,000, $1,456,000, and
$1,402,000, respectively.
Note 11-Business Segments:
The Company operates in two business segments: Investment Periodicals and
related Publications, and Investment Management. Identifiable assets consisted
of:
<TABLE>
<CAPTION>
April 30,
1998 1997
-------------------------
(in thousands)
<S> <C> <C>
Identifiable assets:
Investment periodicals and
related publications $18,573 $20,644
Investment management 186,904 137,649
Corporate assets 2,048 2,017
-------------------------
Total $207,525 $160,310
-------------------------
-------------------------
</TABLE>
Revenues and income from operations were as follows:
<TABLE>
<CAPTION>
Years ended April 30,
1998 1997 1996
-----------------------------
(in thousands)
<S> <C> <C> <C>
Revenues:
Investment periodicals and
related publications $61,298 $62,590 $58,649
Intersegment revenues (88) (148) (140)
-----------------------------
61,210 62,442 58,509
Investment management 32,405 29,136 26,564
Settlement of disputed securities trans. -- 196 2,054
-----------------------------
Consolidated revenues $93,615 $91,774 $87,127
-----------------------------
-----------------------------
Income from operations:
Investment periodicals and
related publications $20,553 $20,205 $15,492
Investment management 18,807 15,876 14,940
Settlement of disputed securities trans. -- 196 2,054
-----------------------------
Consolidated income from operations $39,360 $36,277 $32,486
-----------------------------
-----------------------------
</TABLE>
36
<PAGE>
Value Line, Inc.
Notes to Consolidated Financial Statements
Note 12-Net Capital:
The Company's wholly owned subsidiary, Value Line Securities, Inc. is subject to
the net capital provisions of Rule 15c3-1 under the Securities Exchange Act of
1934, which requires the maintenance of minimum net capital of $100,000 and
requires that aggregate indebtedness, as defined, shall not exceed fifteen times
net capital, as defined. Additionally, dividends may only be declared if
aggregate indebtedness is less than twelve times net capital.
At April 30, 1998, Value Line Securities, Inc. net capital, as defined, of
$10,196,000 exceeded required net capital by $10,096,000 and the ratio of
aggregate indebtedness to net capital was .10 to 1.
Note 13-Off-Balance-Sheet Risk:
The Company executes, as agent, securities transactions on behalf of the Value
Line mutual funds. If either the mutual fund or a counterparty fail to perform,
the Company may be required to discharge the obligations of the nonperforming
party. In such circumstances, the Company may sustain a loss if the market
value of the security is different from the contract value of the transaction.
No single customer accounted for a significant portion of the Company's sales
in 1998, 1997 or 1996, nor accounts receivable for 1998 or 1997.
37
<PAGE>
Value Line, Inc.
Notes to Consolidated Financial Statements
Note 14-Estimated Fair Value of Financial and Derivative Instruments:
Statement of Accounting Standards No. 119, "Disclosure About Derivative
Financial Instruments and Fair Value of Financial Instruments," requires
disclosure of information regarding derivative instruments, which include
financial index futures contracts.
At April 30, 1998, the Company held no derivative financial instruments. The
average fair value of derivative financial instruments for the year ended April
30, 1998 consists of a liability of $243,700.
Net realized trading gains related to equity securities aggregated $6,869,000
for the year ended April 30, 1998. The net unrealized losses on trading
securities for the period ended April 30, 1998 was $568,000. Net trading losses
related to derivative financial instruments amounted to $2,925,000 for the year
ended April 30, 1998.
Note 15-Special Dividend Distribution:
On December 16, 1996, the Board of Directors of the Company declared a special
$15.00 per share dividend which was paid January 2, 1997, to all shareholders of
record on December 26, 1996. The Company paid this dividend out of accumulated
earnings and profits.
The dividend was paid pursuant to a transaction in which the Parent settled a
lawsuit and purchased all the AB&Co. shares held by the Arnold Van Hoven
Bernhard family and the trustees of a trust of which he is the income
beneficiary. Accordingly, Jean B. Buttner, Chief Executive Officer of the
Company, now owns 100% of the voting shares of the Parent.
Note 16-Year 2000:
The Company recognizes the need to ensure its computer systems and software
applications are converted to a year 2000 date with no disruption to business
operations. In light of this, the Company has established a central committee to
coordinate, evaluate and implement changes necessary for compliance.
Additionally, the Company is communicating with suppliers, financial
institutions, and others with which it does business to ensure they are also
compliant with the year 2000 date. Significant areas of operations which will be
impacted have already been identified and conversion efforts are underway. The
total cost of compliance and its effect on the Company's future results of
operations are being determined as part of the detailed conversion planning. The
total cost, including routine hardware enhancements and modifications to
software applications is not expected to exceed $1,000,000.
38
<PAGE>
<TABLE>
<CAPTION>
Value Line, Inc.
Schedule 1 - Marketable Securities
Shares Common Stock Name Cost Market
- ---------- -------------------------------- ---------- ----------
<S> <C> <C> <C>
1,000 AAR CORP 27,800.00 26,187.50
700 ACCESS HEALTH INC 23,222.50 23,625.00
350 ACCUSTAFF INC 9,635.50 12,556.25
800 ACTION PERFORMANCE COS INC 23,640.00 27,700.00
1,300 ACXIOM CORP 24,358.75 31,525.00
1,100 AES CORP 45,958.00 60,706.25
1,200 AIRBOURNE FREIGHT CORP 33,468.00 47,550.00
500 AIRTOUCH COMMUNICATIONS INC 19,640.00 26,562.50
150 AKZO NOBEL N V 15,796.88 15,450.00
800 ALASKA AIR GROUP INC 25,390.00 44,900.00
450 ALASKA AIR GROUP INC 22,119.75 25,256.25
400 ALCIDE CORP COM 23,520.00 18,400.00
1,550 ALIANT COMMUNICATIONS INC 45,218.36 43,981.25
450 ALLIED WASTE INDUSTRIES 8,578.12 12,375.00
550 ALLSTATE CORP 40,716.50 52,937.50
450 AMERICAN INTL GROUP INC 44,788.50 59,203.12
1,100 AMERICAN PRECISION INDS INC 25,286.25 19,937.50
1,400 AMERICAN PWR CONVERSION CORP 38,365.63 45,062.50
1,000 ANALYTICAL SURVEYS INC 26,425.00 32,500.00
200 ANCHOR GAMING 11,350.00 16,850.00
750 APOLLO GROUP INC 22,411.88 25,687.50
800 APPLIED PWR INC 25,695.00 29,900.00
500 APTARGROUP INC 28,087.50 31,250.00
2,200 ARKANSAS BEST CORP 25,850.00 23,100.00
600 ARROW INTERNATIONAL INC 23,390.63 19,800.00
1,300 ARTESYN TECHNOLOGIES INC 34,402.50 28,600.00
550 ARVIN INDS INC 20,572.75 22,515.62
1,050 ASA HLDGS INC 42,268.75 39,900.00
600 ATLANTIC COAST AIRLS INC 27,855.00 33,937.50
600 ATWOOD OCEANICS INC 33,090.00 32,812.50
1,100 AUTOZONE INC 33,033.00 33,206.25
1,066 BALDOR ELEC CO 24,524.65 27,982.50
1,000 BALLARD MEDICAL PRODUCTS 24,300.00 25,125.00
650 BANKAMERICA CORP 47,557.00 55,250.00
900 BARRA INC 25,380.00 21,600.00
700 BED BATH + BEYOND INC 27,733.75 34,475.00
850 BELL ATLANTIC CORP 74,853.63 79,528.12
900 BENCHMARK ELECTRS INC 24,151.23 20,193.75
1,300 BETHLEHAM STL CORP 14,257.75 20,231.25
1,400 BILLING CONCEPTS CORP 24,447.50 39,200.00
1,450 BIOGEN INC 63,665.63 64,343.75
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
Value Line, Inc.
Schedule 1 - Marketable Securities
Shares Common Stock Name Cost Market
- ---------- -------------------------------- ---------- ----------
<S> <C> <C> <C>
2,750 BIOMET INC 73,962.50 82,500.00
1,000 BLOUNT INTL INC 25,525.00 31,062.50
100 BMC SOFTWARE INC 6,562.50 9,356.25
1,500 BRIGHTPOINT INC 26,700.00 29,250.00
500 BUCKLE INC 26,462.50 25,312.50
1,100 CALMAT CO 26,317.50 28,806.25
1,050 CANANDAIGUA WINE INC 52,840.88 54,993.75
100 CATALINA MARKETING CORP 4,721.75 5,200.00
600 CATHAY BANCORP INC 21,930.00 21,825.00
1,400 CHATTEM INC 25,270.00 38,850.00
1,000 CHEESECAKE FACTORY 21,783.33 25,250.00
1,850 CHIRON CORP 40,637.50 35,843.75
500 CINCINNATI FINL CORP 64,277.50 63,687.50
1,300 CISCO SYS INC 79,409.38 95,225.00
750 CITFED BANCORP INC 25,150.00 39,750.00
50 CITICORP 6,382.75 7,525.00
600 CKE RESTAURANTS INC 23,232.28 20,775.00
850 COCA COLA ENTERPRISES INC 24,303.63 32,087.50
630 COMMERCE BANCORP INC N J 22,792.50 36,146.25
500 COMMUNITY FIRST BANKSAHRES INC 23,900.00 25,187.50
1,250 COMPUSA INC 40,884.37 23,203.12
850 COMPUTER ASSOC INTL INC 38,129.76 49,778.12
700 COMPUTER TASK GROUP INC 26,897.50 27,212.50
1,000 CONMED CORP 28,050.00 22,875.00
700 COOPER COS INC 26,503.75 26,906.25
700 COSTCO COS INC 37,646.00 39,112.50
2 CRESCENDO PHARMACEUTICALS COR 22.53 25.00
600 CULLEN FROST BANKERS INC 28,380.00 35,100.00
1,200 CULP INC 25,185.00 22,800.00
900 DATASCOPE CORP 25,076.25 25,312.50
1,200 DAWSON GEOPHYSICAL CO 24,960.00 20,850.00
850 DELL COMPUTER CORP 40,612.50 68,637.50
500 DIONEX CORP 27,212.50 26,687.50
450 DOLLAR GEN CORP 12,542.37 17,043.75
150 DOLLAR TREE STORES INC 6,229.50 8,137.50
650 DRESS BARN,THE 18,300.75 18,931.25
1,300 EAGLE HARDWARE AND GARDEN 25,577.50 23,725.00
500 ELECTRO SCIENTIFIC INDS INC 29,225.00 19,000.00
550 ELECTRONIC ARTS 19,800.00 25,437.50
850 ERICSSON L M TEL CO 40,381.25 43,721.87
800 ETHAN ALLEN INTERIORS INC 25,390.00 40,750.00
</TABLE>
Page 2
<PAGE>
<TABLE>
<CAPTION>
Value Line, Inc.
Schedule 1 - Marketable Securities
Shares Common Stock Name Cost Market
- ---------- -------------------------------- ---------- ----------
<S> <C> <C> <C>
400 ETHAN ALLEN INTERIORS INC 13,562.00 20,375.00
800 FEDERAL HOME LN MTG CORP 27,374.00 37,050.00
1,000 FEDERAL NATL MTG ASSN 63,467.50 59,875.00
1,500 FIFTH THIRD BANCORP 79,633.13 82,500.00
1,400 FINANCIAL FED CORP 25,151.28 32,375.00
900 FINGERHUT COS INC 20,105.82 26,662.50
900 FIRST YRS INC 25,807.50 28,350.00
7,350 FOOD LION INC 75,784.20 74,418.75
1,300 FURNITURE BRANDS INTL INC 24,602.50 38,187.50
1,100 FURON CO 26,455.00 23,031.25
800 FURON CO 15,512.00 16,750.00
300 G + K SERVICES 10,515.00 12,075.00
1,250 GARTNER GROUP INC NEW 46,650.00 41,406.25
800 GBC BANCORP CALIF 38,740.00 51,000.00
800 GENERAL BINDING CORP 24,640.00 26,400.00
1,050 GENERAL ELEC CO 75,828.38 89,381.25
600 GENERAL NUTRITION COS INC 20,012.50 21,525.00
1,000 GENTEX CORP 24,175.00 33,750.00
1,000 GERBER SCIENTIFIC INC 26,175.00 25,500.00
1,400 GLEASON CORP 37,126.25 46,375.00
2,400 GLOBAL INDUSTRIES INC 39,972.00 54,450.00
600 GOODYS FAMILY CLOTHING 27,480.00 29,700.00
600 GUIDANT CORP 30,768.00 40,125.00
1,200 GYMBOREE CORP 31,911.00 22,050.00
650 HBO + CO 35,406.25 38,878.12
900 HEARTLAND EXPRESS INC 24,345.00 22,387.50
2,500 HELEN TROY LTD 48,875.00 51,250.00
1,000 HELIX TECHNOLOGY CORP 29,405.00 20,000.00
2,000 HERLEY INDUSTRIES INC 27,850.00 26,250.00
250 HEWLETT PACKARD CO 15,741.88 18,828.12
350 HOME DEPOT INC 19,248.00 24,368.75
500 HON INDS INC 13,757.50 16,000.00
200 HOUSEHOLD INTL INC 22,256.00 26,287.50
800 HUGHES SUPPLY INC 25,140.00 31,000.00
100 ICN PHARMACEUTICALS INC 3,742.88 4,925.00
450 INPUT/OUTPUT INC 11,835.38 11,193.75
1,300 INSTRON CORP 24,277.50 25,025.00
1,000 INTER TEL INC 25,525.00 23,625.00
800 INTERFACE INC 23,840.00 33,950.00
800 INTERNATIONAL MULTIFOODS CORP 25,190.00 23,250.00
1,000 INVACARE CORP 23,925.00 27,875.00
</TABLE>
Page 3
<PAGE>
<TABLE>
<CAPTION>
Value Line, Inc.
Schedule 1 - Marketable Securities
Shares Common Stock Name Cost Market
- ---------- -------------------------------- ---------- ----------
<S> <C> <C> <C>
1,900 ITEQ INC 23,963.75 24,225.00
800 JACOBS ENGR GROUP INC 26,390.00 26,700.00
800 JONES MED INDS INC 25,290.00 23,600.00
1,400 JONES MED INDS INC 50,529.50 41,300.00
1,300 JUST FOR FEET INC 27,121.25 28,600.00
1,200 KATY INDS INC 23,385.00 22,050.00
800 KAUFMAN + BROAD HOME CORP 17,440.00 23,250.00
800 KAYDON CORP 24,395.00 35,050.00
700 KELLWOOD CO 24,885.00 22,356.25
900 KEY ENERGY GROUP INC 30,726.28 16,818.75
1,400 KOLLMORGEN CORP 24,920.00 29,400.00
900 KRONOS INC 25,807.50 32,400.00
600 KUHLMAN CORP 21,630.00 29,400.00
600 KULICKE + SOFFA INDS INC 14,587.50 12,900.00
1,700 LADD FURNITURE INC 30,322.50 48,450.00
150 LANCASTER COLONY CORP 6,529.50 5,793.75
1,600 LANCE INC 38,138.63 34,400.00
900 LEARONAL INC 23,782.50 25,650.00
1,050 LEVEL ONE COMMUNICATIONS INC 27,510.00 32,681.25
1,500 LILLIAN VERNON CORP 25,762.50 25,875.00
100 LILLY ELI + CO 6,246.75 6,956.25
600 LINDSAY MFG CO 26,580.00 28,125.00
200 M S CARRIERS INC 4,987.50 6,800.00
900 MACDERMID INC 28,215.00 26,943.75
700 MANITOWOC INC 25,453.75 32,637.50
600 MANUGISTICS GROUP INC 23,662.50 36,000.00
1,200 MASCOTECH INC 25,335.00 27,975.00
900 MAVERICK TUBE CORP 30,970.00 15,693.75
1,800 MBNA CORP 48,936.00 60,975.00
600 MEDTRONIC INC 26,918.00 31,575.00
650 MERCK + CO INC 83,341.38 78,325.00
1,100 MERCURY INTERACTIVE CORP 22,192.50 44,550.00
1,000 MICHAEL FOODS INC NEW 25,800.00 29,250.00
2,100 MICHAEL FOODS INC NEW 50,400.50 61,425.00
1,000 MICROSOFT CORP 77,865.63 90,125.00
500 MILLER HERMAN INC 16,827.50 15,093.75
1,100 MOBILE TELECOMMUNICATION 19,305.00 28,050.00
700 MOOG INC 24,062.50 30,275.00
1,200 MYERS IND INC 26,453.64 29,850.00
100 NABORS INDUSTRIES INC 4,003.00 2,518.75
500 NAC RE CORP 25,712.50 25,000.00
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
Value Line, Inc.
Schedule 1 - Marketable Securities
Shares Common Stock Name Cost Market
- ---------- -------------------------------- ---------- ----------
<S> <C> <C> <C>
200 NAC RE CORP 9,631.00 10,000.00
500 NATIONAL DATA CORP 20,712.50 20,406.25
1,000 NATURES SUNSHINE PRODS INC 24,175.00 24,500.00
650 NAUTICA ENTERPRISES INC 18,544.50 16,168.75
700 NCI BLDG SYS INC 25,585.00 36,400.00
300 NETWORKS ASSOCS INC 17,907.75 20,550.00
1,400 NEWPARK RES INC 27,247.50 33,687.50
1,600 NEWPORT CORP 24,680.00 32,600.00
500 NISSAN MTR LTD 4,015.00 3,375.00
1,500 NORTH FORK BANCORPORATION INC 43,481.25 55,687.50
1,200 NORTHERN TRUST CORP 84,106.25 87,600.00
450 NORTHWEST AIRLS CORP 27,225.00 23,625.00
100 NORWEST CORP 3,690.50 3,968.75
1,200 NS GROUP INC 33,160.00 16,125.00
950 OFFICE DEPOT INC 19,919.13 31,468.75
1,500 ONEIDA LTD 34,655.00 44,906.25
1,625 ORIENTAL FINL GROUP INC 47,190.00 67,640.62
1,200 OSHKOSH B GOSH INC 47,536.00 46,200.00
800 OUTBACK STEAKHOUSE INC 26,875.00 30,500.00
1,000 OVERSEAS SHIPHOLDING GROUP INC 25,925.00 21,250.00
350 OVERSEAS SHIPHOLDING GROUP INC 8,979.25 7,437.50
700 OXFORD INDS INC 25,760.00 24,937.50
600 PACIFIC SUNWEAR OF CALIF 24,930.00 26,475.00
750 PARAMETRIC TECHNOLOGY CORP 24,375.00 23,976.56
1,400 PARK OHIO INDS INC OHIO 23,975.00 25,725.00
1,900 PARKER DRILLING CO 27,982.50 19,475.00
800 PARKER DRILLING CO 12,124.00 8,200.00
500 PATTERSON DENTAL CO 15,233.75 14,718.75
1,050 PAYCHEX INC 52,003.38 57,028.12
600 PEOPLES HERITAGE FINL GROUP 25,005.00 28,950.00
400 PEOPLESOFT INC 15,850.00 18,600.00
1,000 PERFORMANCE FOOD GROUP CO 25,612.50 20,250.00
700 PFIZER INC 41,058.50 79,668.75
1,100 PHILIP MORRIS COS INC 45,408.00 41,043.75
50 PHILIPS ELECTRS N V 3,960.88 4,500.00
1,000 PHOTRONIC INC 28,525.00 36,875.00
1,200 PIER 1 IMPORTS INC 21,660.00 31,650.00
900 PILLOWTEX CORP 24,620.04 45,168.75
900 PMC SIERRA INC 26,325.00 40,950.00
1,100 POOL ENERGY SVCS CO 27,280.00 29,012.50
800 PRE PAID LEGAL SVCS INC 23,090.00 30,250.00
</TABLE>
Page 5
<PAGE>
<TABLE>
<CAPTION>
Value Line, Inc.
Schedule 1 - Marketable Securities
Shares Common Stock Name Cost Market
- ---------- -------------------------------- ---------- ----------
<S> <C> <C> <C>
1,700 PRIME MED SVCS INC 23,885.00 18,062.50
200 PROCTER + GAMBLE CO 16,931.00 16,437.50
1,400 PROTECTIVE LIFE CORP 35,516.25 51,975.00
400 PUBLIC SVC ENTERPRISE GROUP 14,937.00 13,425.00
100 QUAKER OATS CO 4,834.25 5,200.00
300 QUINTILES TRANSNATIONAL CORP 14,062.50 14,850.00
800 REGAL BELOIT CORP 24,758.72 24,600.00
1,950 ROLLINS TRUCK LEASING CORP 23,708.75 25,837.50
250 ROSS STORES INC 8,390.63 11,578.12
600 ROWAN COS INC 20,418.00 17,662.50
1,000 SAFESKIN CORP 21,712.50 35,625.00
1,200 SAFESKIN CORP 27,124.25 42,750.00
800 SCHERING PLOUGH CORP 39,324.00 64,100.00
600 SCHLUMBERGER LTD 48,036.75 49,725.00
1,000 SCOTTS CO 26,362.50 36,500.00
50 SEQUA CORP 2,767.13 3,700.00
1,100 SHAW GROUP INC 24,530.00 25,850.00
1,000 SHOREWOOD PACKAGING CORP 24,300.00 25,937.50
500 SILICON VY BANCSHARES 29,275.00 32,625.00
1,250 SLM HLDG CORP 52,755.01 53,359.37
600 SMITH A O CORP 24,592.50 27,075.00
1,700 SMITHFIELD FOODS INC 51,606.50 51,637.50
800 SMUCKER J M CO 23,940.00 19,650.00
300 SOFAMOR/DANEK GROUP INC. 16,199.63 26,325.00
1,000 SOUTHWEST AIRLS CO 22,182.76 27,437.50
500 SPS TECHNOLOGIES INC 22,525.00 30,906.25
3,300 STANDARD PAC CORP NEW 37,446.33 56,925.00
3,100 STANDARD PAC CORP NEW 35,680.50 53,475.00
1,500 STANDARD PRODS CO 49,106.25 48,000.00
150 STAPLES INC 3,468.75 3,703.12
500 STARBUCKS CORP 19,312.50 24,062.50
850 STATE STREET CORPORATION 43,163.00 60,775.00
1,800 STERLING BANCSHARES INC 24,660.00 31,500.00
400 STRYKER CORP 15,618.26 18,000.00
410 SUIZA FOODS CORP 21,971.18 24,292.50
400 SUN INC 16,787.00 16,175.00
1,400 SUN MICROSYSTEMS INC 63,808.75 57,662.50
1,100 SUNAMERICA INC 38,464.25 54,931.25
1,200 SWIFT TRANSN INC 25,600.00 27,450.00
950 SYMANTEC CORP 23,868.75 27,550.00
1,800 TAB PRODS CO 23,940.00 26,550.00
</TABLE>
Page 6
<PAGE>
<TABLE>
<CAPTION>
Value Line, Inc.
Schedule 1 - Marketable Securities
Shares Common Stock Name Cost Market
- ---------- -------------------------------- ---------- ----------
<S> <C> <C> <C>
500 TECH DATA CORP 24,062.50 24,937.50
450 TELE COMMUNICATIONS INC NEW 14,006.25 14,512.50
150 TELLABS INC 9,743.75 10,631.25
1,000 TELXON CORP 24,737.50 32,312.50
1,000 TEREX CORP NEW 27,300.00 30,625.00
100 TEXAS INDS INC 4,909.25 6,443.75
1,200 THOR INDS INC 25,290.00 31,350.00
100 TIDEWATER INC 6,746.75 3,962.50
600 TIFFANY + CO NEW 25,380.00 27,300.00
800 TOLL BROS INC 21,698.00 22,300.00
1,650 TOYOTA MTR CO 87,910.75 86,625.00
900 TRANSTECHNOLOGY CORP 25,188.75 26,887.50
950 TRAVELERS GROUP INC 42,096.09 58,128.12
600 TRIANGLE PAC CORP DEL 27,480.00 26,100.00
150 U S OFFICE PRODS CO 2,679.50 2,653.12
1,000 UNIFIRST CORP 28,925.00 27,000.00
500 UNITED STATIONERS INC 29,550.00 31,562.50
700 UNITED STATIONERS INC 33,475.00 44,187.50
900 VARLEN CORP 25,230.00 31,275.00
400 VESTA INS GROUP INC 22,320.00 22,650.00
1,100 VIKING OFFICE PRODS INC 26,028.13 26,606.25
700 VINTAGE PETE INC 13,860.00 13,650.00
500 VITESSE SEMICONDUCTOR CORP 26,650.00 28,843.75
300 VITESSE SEMICONDUCTOR CORP 13,246.50 17,306.25
450 VOLT INFORMATION SCIENCES INC 25,888.50 14,962.50
1,000 VWR SCIENTIFIC PRODS CORP 24,050.00 32,875.00
850 VWR SCIENTIFIC PRODS CORP 28,656.75 27,943.75
1,300 WABASH NATL CORP 37,277.50 40,137.50
750 WAL MART STORES INC 29,131.87 37,921.87
800 WASHINGTON MUT INC 59,900.00 56,050.00
400 WATSON PHARMACEUTICALS INC 11,431.00 17,200.00
900 WATTS INDS INC 24,513.75 23,062.50
1,000 WERNER ENTERPRISES INC 25,500.00 24,125.00
100 WESTPOINT STEVENS INC 2,665.63 3,350.00
750 WHOLE FOODS MKT INC 38,666.25 46,406.25
1,000 WOLVERINE WORLD WIDE INC 25,362.50 28,875.00
1,500 WORLD FUEL SERVICES CORP. 24,875.00 30,281.25
1,050 WYNNS INTL INC 24,185.00 23,625.00
900 ZERO CORP 25,413.75 27,731.25
7,913,788.98 8,861,066.48
</TABLE>
Page 7
<PAGE>
<TABLE>
<CAPTION>
Value Line, Inc.
Schedule XIII - Other Investments
Historical
Mutual Fund Investments Cost Market Value
------------------------ ------------- -------------
<S> <C> <C>
The Value Line Fund, Inc. 3,266,834 5,946,656
The Value Line Special Situations Fund, Inc. 7,823,638 9,270,924
The Value Line Income Fund, Inc. 1,191,664 1,787,578
Value Line Leveraged Growth Investors, Inc. 16,160,276 29,148,150
Value Line U.S. Government Securities Fund, Inc. 6,464,750 6,491,069
Value Line Tax Exempt Fund, Inc., High Yield Portfolio 1,133,853 1,232,280
Value Line Convertible Fund, Inc. 884,899 1,021,714
Value Line Aggressive Income Trust 6,275,651 6,535,969
Value Line New York Tax Exempt Trust 1,038,043 1,141,730
Value Line Small Cap Growth Fund 12,178,079 13,985,907
Value Line Asset Allocation Fund, Inc. 39,222,830 53,924,693
Value Line US Multinational Company Fund 12,102,172 18,789,617
----------- ------------
Total 107,742,687 149,276,287
----------- ------------
----------- ------------
</TABLE>
<PAGE>
Exhibit 21
<TABLE>
<CAPTION>
Subsidiaries of the Registrant
----------------------------------
Percentage
of Voting
Securities
State of Owned By
Incorporation Registrant
------------- ----------
<S> <C> <C>
Compupower Corporation Delaware 100%
Value Line Securities, Inc. New York 100%
The Vanderbilt Advertising Agency, Inc. New York 100%
Value Line Publishing, Inc. New York 100%
Value Line Distribution Center, Inc. New Jersey 100%
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS AND STATEMENTS OF INCOME AND RETAINED EARNINGS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> APR-30-1998
<CASH> 29,937
<SECURITIES> 8,861
<RECEIVABLES> 4,133
<ALLOWANCES> (507)
<INVENTORY> 0
<CURRENT-ASSETS> 45,556
<PP&E> 19,535
<DEPRECIATION> (6,884)
<TOTAL-ASSETS> 207,525
<CURRENT-LIABILITIES> 11,776
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 135,937
<TOTAL-LIABILITY-AND-EQUITY> 207,525
<SALES> 61,210
<TOTAL-REVENUES> 93,615
<CGS> 0
<TOTAL-COSTS> 54,255
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47
<INCOME-PRETAX> 57,632
<INCOME-TAX> 22,455
<INCOME-CONTINUING> 35,177
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,177
<EPS-PRIMARY> 3.53
<EPS-DILUTED> 3.53
</TABLE>
