<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended JULY 31, 1999 Commission file number 0-11306
-------
VALUE LINE, INC.
----------------
(Exact name of registrant as specified in its charter)
New York 13-3139843
- --------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 East 42nd Street, New York, New York 10017-5891
- --------------------------------------------------------------------
(address of principal executive offices) (zip code)
Registrant's telephone number including area code (212) 907-1500
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 31, 1999
----- ----------------------------
Common stock, $.10 par value 9,978,625 Shares
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
VALUE LINE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
July 31, April 30,
1999 1999
----------- -----------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents (including short term
investments of $44,286 and $41,250, respectively) $44,812 $41,826
Trading securities 14,510 14,023
Accounts receivable, net of allowance for doubtful
accounts of $286 and $295, respectively 1,908 1,846
Receivable from affiliates 2,991 2,587
Prepaid expenses and other current assets 3,010 1,792
Deferred income taxes 418 1,443
----------- -----------
Total current assets 67,649 63,517
Long term securities available for sale 176,968 168,591
Property and equipment, net 11,447 11,662
Goodwill 36 37
----------- -----------
Total assets $256,100 $243,807
----------- -----------
----------- -----------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $6,397 $5,842
Accrued salaries 985 1,765
Dividends payable 2,495 2,495
Accrued taxes payable 4,576 741
----------- -----------
Total current liabilities 14,453 10,843
Unearned revenue 41,228 43,100
Deferred income taxes 24,436 22,264
Deferred charges 628 697
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 959 959
Retained earnings 130,004 125,585
Treasury stock, at cost (21,375 shares on 7/31/99,
and 4/30/99) (411) (411)
Unrealized gain on securities, net of taxes 43,803 39,770
----------- -----------
Total shareholders' equity 175,355 166,903
----------- -----------
Total liabilities and shareholders' equity $256,100 $243,807
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VALUE LINE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For the three months
ended
July 31, July 31,
1999 1998
----------- -----------
<S> <C> <C>
Revenues:
Investment periodicals and
related publications $14,970 $15,597
Investment management fees & svcs 8,861 8,541
Gain on disposal of operating facility -- 518
----------- -----------
Total revenues 23,831 24,656
----------- -----------
Expenses:
Advertising and promotion 3,540 3,531
Salaries and employee benefits 6,066 5,973
Printing, paper and distribution 1,746 1,871
Office and administration 2,187 2,246
----------- -----------
Total expenses 13,539 13,621
----------- -----------
Income from operations 10,292 11,035
Income from securities trans., net 1,185 142
----------- -----------
Income before income taxes 11,477 11,177
Provision for income taxes 4,563 4,668
----------- -----------
Net income $6,914 $6,509
----------- -----------
----------- -----------
Earnings per share, basic & fully diluted $0.69 $0.65
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VALUE LINE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
For the three months
ended
July 31, July 31,
1999 1998
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,914 $ 6,509
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 401 407
(Gains)/losses on sales of trading securities and securities held for sale (395) 295
Unrealized (gains)/losses on trading securities (43) 235
Gain on sale of operating facility -- (518)
Changes in assets and liabilities:
Increase/(decrease) in unearned revenue (1,872) 779
Decrease in deferred charges (69) (69)
Increase/(decrease) in accounts payable and accrued expenses 555 (1,412)
(Decrease) in accrued salaries (780) (780)
Increase in accrued taxes payable 3,835 3,612
(Increase)/decrease in prepaid expenses and other current assets (193) 231
(Increase) in accounts receivable (130) (1,031)
(Increase) in receivable from affiliates (404) (141)
-------- --------
Total adjustments 905 1,608
-------- --------
Net cash provided by operations 7,819 8,117
Cash flows from investing activities:
Purchases of long term securities (2,172) (1,295)
Proceeds from sales of trading securities 6,283 2,461
Purchases of trading securities (6,264) (1,945)
Acquisitions of property, and equipment, net (185) (284)
Proceeds from sale of operating facility -- 577
-------- --------
Net cash (used in) investing activities (2,338) (486)
Cash flows from financing activities:
Dividends paid (2,495) (2,495)
-------- --------
Net cash (used in) financing activities (2,495) (2,495)
-------- --------
Net increase in cash and cash equivalents 2,986 5,136
Cash and cash equivalents at beginning of period 41,826 29,937
-------- --------
Cash and cash equivalents at end of period $ 44,812 $ 35,073
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VALUE LINE, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED JULY 31, 1999
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Common stock
Accumulated
Number Additional Other
of paid-in Treasury Comprehensive Retained Comprehensive
shares Amount capital Stock income earnings income Total
----------- ----------- ----------- ----------- ------------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at May 1, 1999 9,978,125 $1,000 $959 ($411) $125,585 $39,770 $166,903
Comprehensive income
Net income $6,914 6,914 6,914
Other comprehensive income,
net of tax:
Change in unrealized
gains on securities 4,033 4,033 4,033
-------------
Comprehensive income $10,947
-------------
-------------
Dividends declared (2,495) (2,495)
----------- ----------- ----------- ----------- ----------- ------------- ----------
Balance at July 31, 1999 9,978,125 $1,000 $959 ($411) $130,004 $43,803 $175,355
----------- ----------- ----------- ----------- ----------- ------------- ----------
----------- ----------- ----------- ----------- ----------- ------------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VALUE LINE, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED JULY 31, 1998
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Common stock
Accumulated
Number Additional Other
of paid-in Treasury Comprehensive Retained Comprehensive
shares Amount capital Stock income earnings income Total
----------- ----------- ----------- ----------- ------------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at May 1, 1998 9,978,625 $1,000 $959 ($411) $108,392 $26,997 $136,937
Comprehensive income
Net income $6,509 6,509 6,509
Other comprehensive income,
net of tax:
Change in unrealized
gains on securities (2,733) (2,733) (2,733)
-------------
Comprehensive income $3,776
-------------
-------------
Dividends declared (2,495) (2,495)
----------- ----------- ---------- ----------- ----------- ------------- ----------
Balance at July 31, 1998 9,978,625 $1,000 $959 ($411) $112,406 $24,264 $138,218
----------- ----------- ---------- ----------- ----------- ------------- ----------
----------- ----------- ---------- ----------- ----------- ------------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SIGNIFICANT ACCOUNTING POLICIES - NOTE 1:
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements contain all adjustments (consisting of normal recurring
accruals except as noted below) considered necessary for a fair presentation.
This report should be read in conjunction with the financial statements and
footnotes contained in the Company's annual report on Form 10-K, dated
July 15, 1999 for the fiscal year ended April 30, 1999. Results of operations
covered by this report may not be indicative of the results of operations for
the entire year.
Cash and Cash Equivalents:
The Company considers all cash held at banks and invested in the Value Line
money market funds with an original maturity of less than three months to be
cash and cash equivalents. As of July 31, 1999 and April 30, 1999, cash
equivalents included $43,913,000 and $40,925,000, respectively, invested in the
Value Line money market funds.
Valuation of Securities:
The Company's long-term securities portfolio, which consists of shares of the
Value Line Mutual Funds are valued at market value in accordance with Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities". Unrealized gains and losses on these securities
are reported, net of applicable taxes, as a separate component of Shareholders'
Equity. Realized gains and losses on sales of the securities are recorded in
earnings on trade date and are determined on the identified cost method.
Trading securities, which consist of securities held by Value Line Securities,
Inc., the Company's broker-dealer subsidiary, are valued at market with realized
and unrealized gains and losses included in earnings.
Earnings per Share, basic & fully diluted:
Earnings per share are based on the weighted average number of shares of common
stock outstanding during the period.
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.
7
<PAGE>
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARKETABLE SECURITIES - NOTE 2:
Trading Securities:
Securities held by Value Line Securities, Inc. had an aggregate cost of
$12,358,000 and $11,914,000 and a market value of $14,510,000 and $14,023,000 at
July 31, 1999 and April 30, 1999, respectively.
Long-Term Securities Available for Sale:
The aggregate cost of the long-term securities was $109,579,000 and $107,406,000
and the market value was $176,968,000 and $168,591,000 at July 31, 1999 and
April 30, 1999, respectively. At July 31, 1999, the increase in gross unrealized
appreciation on these securities of $6,205,000, net of deferred taxes of
$2,172,000, was included in shareholders' equity.
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - NOTE 3:
Cash payments for income taxes were $1,187,000 and $922,000 during the three
months ended July 31, 1999 and 1998, respectively.
DISCLOSURE OF CREDIT RISK OF FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK -
NOTE 4:
In the normal course of business, the Company enters into contractual
committments, principally financial futures contracts for securities indices.
Financial futures contracts provide for the delayed delivery of financial
instruments for which the seller agrees to make delivery at a specified
future date, at a specified price or yield. The contract or notional amount
of these contracts reflects the extent of involvement the Company has in
these contracts. At July 31, 1999, the underlying notional value of such
committments was $3,491,000. The average fair value of the committments
during fiscal 2000 was $3,394,000. Risk arises from the potential inability
of counterparts to meet the terms of their contracts and from movements in
securities values. The Company limits its credit risk associated with such
instruments by entering exclusively into exchange traded futures contracts.
No single customer accounted for a significant portion of the Company's sales
nor accounts receivables in fiscal 2000 or fiscal 1999.
8
<PAGE>
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
COMPREHENSIVE INCOME - NOTE 5:
Statement no. 130 requires the reporting of comprehensive income in addition to
net income from operations. Comprehensive income is a more inclusive financial
reporting methodology that includes disclosure of certain financial information
that historically has not been recognized in the calculation of net income.
At July 31, 1999 and 1998, the Company held long term securities classified as
available-for-sale. The increase during the first three months of fiscal 1999 in
gross unrealized gains on these securities and the related deferred taxes was
$6,205,000 and $2,172,000, respectively. The decrease during the first quarter
of fiscal 1998 in gross unrealized gains on these securities and the related
deferred taxes was $4,204,000 and $1,471,000, respectively.
ESTIMATED FAIR VALUE OF FINANCIAL AND DERIVATIVE INSTRUMENTS - NOTE 6:
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.
Derivative instruments held for trading purposes are reflected at fair value
at July 31, 1999 and April 30, 1999. Net realized trading losses related to
derivative financial instruments amounted to $69,000 at July 31, 1999. Income
from securities transactions in the Statement of Income are reflected net of
derivative trading activity.
GAIN ON SALE OF OPERATING FACILITY - NOTE 7:
Pursuant to the Company's realignment of its production and distribution
departments, the Company sold its idle North Bergen, New Jersey operating
facility during May 1998 for which it received gross proceeds of $577,000. The
gain on the sale of the operating facility is included in revenues in the
Consolidated Statements of Income.
9
<PAGE>
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
RELATED PARTY TRANSACTIONS - NOTE 8:
The Company acts as investment adviser and manager for fifteen open-ended
investment companies, the Value Line Family of Funds. 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 three months ended July 31, 1999 and 1998
investment management fees and brokerage commission income, net of clearing
fees, amounted to $7,975,000, and $7,089,000, respectively. The related
receivables from the funds for management advisory fees included in Receivable
from affiliates were $2,727,000 and $2,487,000 at July 31, 1999 and April 30,
1999, respectively.
At July 31, 1999 and April 30, 1999, Receivable from affiliates included a
receivable from the Parent of $166,000 and $26,000, respectively. For the three
months ended July 31, 1999 the Company made federal income tax payments to the
Parent amounting to $200,000.
BUSINESS SEGMENTS - NOTE 9:
The Company operates two reportable business segments: Publishing and
Investment Management Services. The publishing segment produces investment
related periodicals in both print and electronic form. The investment management
segment provides advisory services to mutual funds, institutional and individual
clients as well as brokerage services for the Value Line family of mutual funds.
The segments are differentiated by the products and services they offer.
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company allocates all revenues
and expenses, except for depreciation related to corporate assets, between the
two reportable segments.
10
<PAGE>
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Disclosure of Reportable Segment Profit and Segment Assets
July 31, 1999
Publishing Investment Total
Management
Services
<S> <C> <C> <C>
Revenues from external customers $14,970 $8,861 $23,831
Intersegment revenues 16 -- 16
Income from securities transactions 68 1,117 1,185
Depreciation and amortization 359 12 371
Segment profit 5,823 4,499 10,322
Segment assets 19,676 235,036 254,712
Expenditures for
segment assets 185 -- 185
<CAPTION>
July 31, 1998
Publishing Investment Total
Management
Services
<S> <C> <C> <C>
Revenues from external customers $15,597 $8,541 $24,138
Gain on sale of operating facility 518 -- 518
Intersegment revenues 19 -- 19
Income from securities transactions 62 80 142
Depreciation and amortization 365 13 378
Segment profit 6,103 4,961 11,064
Segment assets 19,331 187,756 207,087
Expenditures for
segment assets 282 2 284
</TABLE>
11
<PAGE>
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Reconciliation of Reportable Segment Revenues,
Operating Profit and Assets
1999 1998
<S> <C> <C>
Revenues
Total revenues for reportable segments $23,847 $24,675
Elimination of intersegment revenues ($16) ($19)
-----------------------------
Total consolidated revenues $23,831 $24,656
-----------------------------
-----------------------------
Segment profit
Total profit for reportable segments $11,507 $11,206
Less: Depreciation related to corporate assets (30) (29)
-----------------------------
Income before income taxes $11,477 $11,177
-----------------------------
-----------------------------
Assets
Total assets for reportable segments $254,712 $207,087
Corporate assets 1,388 2,378
-----------------------------
Consolidated total assets $256,100 $209,465
-----------------------------
-----------------------------
</TABLE>
12
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS:
LIQUIDITY AND CAPITAL RESOURCES:
Value Line, Inc. (the Company) had liquid resources which are used in its
business of $230,164,000 at July 31, 1999. In addition to $53,196,000 of working
capital, the Company had long-term securities available for sale with a market
value of $176,968,000, that, although classified as non-current assets, are also
readily marketable should the need arise.
The Company's cash flow from operations of $905,000 for fiscal the first quarter
of fiscal 2000 was lower than fiscal 1998's cash flow of $1,608,000 primarily
due to the higher volume of prepayments for subscriptions during the first
quarter of fiscal 1999. Net cash outflows for investing activities during fiscal
2000 were $1,852,000 higher than fiscal 1999's outflows due primarily to the
Company's decision during fiscal 2000 to invest additional cash in its short
term trading portfolio to support its trading strategies. The receipt of
$577,000 of proceeds during the three months ended July 31, 1998, from the sale
of the Company's North Bergen, New Jersey vacant operating facility also
contributed to the variance in cash flows from investing activities.
Year 2000 (Y2K):
Our Year 2000 planning was launched in 1997 with an initial assessment of the
Company's systems, its risk of exposure, the steps necessary to achieve Y2K
compliance, and the resources necessary to implement those steps.
The first phase of the plan involved a complete assessment of the Company's
systems and a survey of vendors. Systems were categorized into three groups -
Mission Critical, Critical, and Non-Critical. Mission Critical systems are
systems that would result in a disruption of service or services. Critical
systems are defined as those that could cause minor disruption of services.
Non-Critical systems are defined as those that would have no significant impact
on operations or services.
The second phase of the project was the actual replacement and/or modification
of systems and applications. This phase also included the implementation of the
modified applications back into the production environment. The second phase has
been completed since January 1999.
The third phase of the project, testing and further implementation based on test
results, has also been completed. Due to the timely and successful initial
assessment of the Company's year 2000 readiness, we are able to continue to
enhance our current products, create new products and release updated versions
of our electronic products while still maintaining our Y2K test environments
throughout the year.
State of Readiness - Y2K
We are now well into the fourth phase of the project: Testing and
Implementation. This phase involves testing each system, implementing changes to
our product environment, and then re-testing each system. All mission critical
systems are Y2K compliant. Though we cannot provide absolute assurances, we
currently believe the Company has completed the tasks required to ensure Y2K
compliance and we will be testing throughout the year. The Year 2000 project
is currently on schedule.
Anticipated Costs - Y2K
The Company's fiscal year 1998 expenditures for the Y2K project were $251,000.
The Company's fiscal year 1999 expenditures for the Y2K project were $732,000.
The Company's fiscal year 2000 expenditures through July 31, 1999 for the Y2K
project were $108,000. The projected budget for the remainder of fiscal year
2000 is $306,000. These expenditures include new software and hardware,
allocation of staff time, temporary assistance for clerical tasks, legal
counsel, testing tools and external, third-party monitoring of the Company's Y2K
implementation plan.
Risks - Y2K
We cannot predict with certainty what will happen as the millennium approaches.
We cannot be sure that we will find every problem in the Company's systems, that
the vendors the Company relies upon will find every problem in their systems, or
that the Securities Industry will not experience system failures that will
negatively and materially impact Value Line. The Company will continue to work
toward compliance and urge its vendors to do the same, but neither the Company,
nor its vendors, can predict the future with certainty.
13
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS:
Contingency Planning - Y2K
Value Line is in the process of finalizing contingency plans to account for the
possible failure of every Mission Critical system. Whether this involves
performing tasks manually, or locating alternative vendors for Mission Critical
software and hardware systems, Value Line is committed to having viable
contingency plans developed for every Mission Critical system. We continue to
reassess and adjust our risk management process and contingency plans. We
believe we have sufficient planning to properly communicate and coordinate any
disruption that the turn of the century could cause to our production
environment. We are carefully monitoring our third party vendors and have
developed a plan to provide alternative suppliers for those vendors that will
not be compliant with the year 2000. We will continue to monitor and evaluate
all vendors' Y2K status beyond the year 2000.
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 borrowing for fiscal year 2000.
RESULTS OF OPERATIONS:
Net income for the three months ended July 31, 1999 was $6,914,000 or $0.69 per
share, compared to prior year net income of $6,509,000, or $0.65 per share, an
increase of 6%. Revenues of $23,831,000 for the first quarter of fiscal 2000,
the second highest during any first quarter period, were $825,000 or 3% below
the prior year's revenues of $24,656,000. Operating income was $10,292,000 for
the three months ended July 31, 1999 as compared to operating income of
$11,035,000 for the same period of last fiscal year. Operating income is ranked
the third highest during any first quarter period, surpassed by the last two
consecutive record first quarter periods. Both revenues and operating income for
last fiscal year includes a gain of $518,000 from the sale of the vacant, North
Bergen New Jersey operating facility.
Subscription revenues of $14,970,000 were 4% below revenues from the prior
fiscal year. The decrease in subscription revenues compared to the prior year is
due primarily to a 4% net decrease in revenues from THE VALUE LINE INVESTMENT
SURVEY and related products. The lower publication revenues is due largely to
the recent decline in circulation to Company's print products that resulted from
the reduced level of advertising that occurred while the Company was in the
process of revising its advertising strategy. This decline in revenues from the
print products was offset in part by the additional revenues from new products.
Investment management fees and services revenues of $8,861,000 for the three
months ended July 31, 1999, were 4%, above the prior year's revenues. The higher
revenues from investment management fees and services, compared to the prior
year, resulted primarily from a 5% increase in the year-over-year average net
assets under management in the Company's mutual funds. Reduced revenues from
individually managed asset accounts partially offset the increased revenues from
the Company's mutual funds.
Operating expenses for the three months ended July 31, 1999, were $13,539,000,
1%, below last year's total expenses of $13,621,000. Total advertising and
promotional expenses of $3,540,000 were approximately equal to the prior year's
expenses. When compared to the prior year, savings from the planned reduction in
advertising through July 31, 1999 were offset by the increase in expenses
relating to a selling arrangement for two of the Company's equity mutual funds
of which the Company is the adviser. Salaries and employee benefit expenses of
$6,066,000 were 2% above expenses of $5,973,000 recorded in the prior fiscal
year. Production and distribution costs of $1,746,000 were 7% below expenses of
$1,871,000 for the three months ended July 31, 1998. The lower expenses resulted
from a decrease in maintenance expenses related to the Company's web-site and a
decline in paper, printing and distribution expenses that were directly related
to lower production runs for print publications. Office and administration
expenses of $2,187,000 were 3% below last year's expenses of $2,246,000. The
decline in administrative expenses from last year's level was a result of
reduced professional fees and lower telephone and insurance expenses. Additional
costs included in fiscal year 2000 include expenses related to the amortization
of capitalized employee salaries and fringe
14
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS:
benefits associated with the adoption, in the latter half of fiscal year 1999,
of SOP 98-1 "Accounting for the Costs of Computer Software developed for
Internal Use".
The Company's securities portfolios produced income of $1,185,000 for the three
months ended July 31, 1999, an increase of 735% over last year's income of
$142,000. This was due primarily to a strong rally in the equity market,
primarily technology stocks during the Company's first fiscal quarter ended July
31, 1999.
15
<PAGE>
VALUE LINE, INC.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Form 10Q report for the period ended July 31,
1999 to be signed on its behalf by the undersigned thereunto duly authorized.
Value Line, Inc.
(Registrant)
Date: September 14, 1999 By: /s/Jean Bernhard Buttner
-------------------------
Jean Bernhard Buttner
Chairman & Chief Executive Officer
Date: September 14, 1999 By: /s/Stephen R. Anastasio
-------------------------
Stephen R. Anastasio
Chief Accounting Officer
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-1-1999
<PERIOD-END> JUL-31-1999
<CASH> 44,812
<SECURITIES> 14,510
<RECEIVABLES> 5,185
<ALLOWANCES> (286)
<INVENTORY> 0
<CURRENT-ASSETS> 67,649
<PP&E> 19,367
<DEPRECIATION> (7,920)
<TOTAL-ASSETS> 256,100
<CURRENT-LIABILITIES> 14,453
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 174,355
<TOTAL-LIABILITY-AND-EQUITY> 256,100
<SALES> 14,970
<TOTAL-REVENUES> 23,831
<CGS> 0
<TOTAL-COSTS> 13,539
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,477
<INCOME-TAX> 4,563
<INCOME-CONTINUING> 6,914
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,914
<EPS-BASIC> 0.69
<EPS-DILUTED> 0.69
</TABLE>
