VALUE LINE, INC. | ||
(Exact name of registrant as specified in its charter) |
New York | 13-3139843 | ||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
485 Lexington Avenue, New York, New York | 10017-5891 | ||||
(Address of principal executive offices) | (Zip Code) |
Common Stock, $0.10 par value | The NASDAQ Global Market | ||||
(Title of class) | (Name of each exchange on which registered) |
Securities registered pursuant to Section 12 (g) of the Act: None
PART I | |||||
Item 1 | Business | 5 | |||
Item 1A | Risk Factors | 15 | |||
Item 1B | Unresolved Staff Comments | 18 | |||
Item 2 | Properties | 18 | |||
Item 3 | Legal Proceedings | 19 | |||
Item 4 | Mine Safety Disclosures | 19 | |||
PART II | |||||
Item 5 | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 19 | |||
Item 6 | Selected Financial Data | 21 | |||
Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 | |||
Item 7A | Quantitative and Qualitative Disclosures About Market Risk | 39 | |||
Item 8 | Financial Statements and Supplementary Data | 41 | |||
Item 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 43 | |||
Item 9A | Controls and Procedures | 43 | |||
Item 9B | Other Information | 44 | |||
PART III | |||||
Item 10 | Directors, Executive Officers, and Corporate Governance | 45 | |||
Item 11 | Executive Compensation | 46 | |||
Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 47 | |||
Item 13 | Certain Relationships and Related Transactions and Director Independence | 47 | |||
Item 14 | Principal Accounting Fees and Services | 48 | |||
PART IV | |||||
Item 15 | Exhibits and Financial Statement Schedules | 49 |
2 |
● | maintaining revenue from subscriptions for the Company’s digital and print published products; |
● | changes in market and economic conditions, including global financial issues; |
● | protection of intellectual property rights; |
● | dependence on non-voting revenues and non-voting profits interests in EULAV Asset Management, a Delaware statutory trust (“EAM” or “EAM Trust”), which serves as the investment advisor to the Value Line Funds and engages in related distribution, marketing and administrative services; |
● | fluctuations in EAM’s assets under management due to broadly based changes in the values of equity and debt securities, redemptions by investors and other factors, and the effect these changes may have on the valuation of EAM’s intangible assets; |
● | dependence on key personnel; |
● | competition in the fields of publishing, copyright data and investment management; |
● | the impact of government regulation on the Company’s and EAM’s businesses; |
● | availability of free or low cost investment data through discount brokers or generally over the internet; |
● | terrorist attacks, cyber security attacks and natural disasters; |
● | other risks and uncertainties, including but not limited to the risks described in Item 1A, “Risk Factors” herein; and other risks and uncertainties arising from time to time. |
3 |
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5 |
● | Comprehensive reference periodical publications |
● | Targeted, niche periodical newsletters |
● | Investment analysis software |
● | Current and historical financial databases |
6 |
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11 |
Total net assets of the Value Line Funds at April 30, 2014, were: | ||||
($ in thousands) | ||||
Value Line Premier Growth Fund, Inc. | $ | 387,825 | ||
Value Line Small Cap Opportunities Fund, Inc. | 349,821 | |||
Value Line Strategic Asset Management Fund | 336,902 | |||
Value Line Income and Growth Fund, Inc. | 335,771 | |||
Value Line Asset Allocation Fund, Inc. | 240,860 | |||
Value Line Larger Companies Fund, Inc. | 209,491 | |||
Value Line Centurion Fund, Inc. | 151,415 | |||
Value Line Fund, Inc. | 124,124 | |||
Value Line Core Bond Fund | 84,094 | |||
Value Line Tax Exempt Fund, Inc. | 77,692 | |||
Total EAM managed net assets | $ | 2,297,995 | ||
Daily Income Fund managed by Reich & Tang Asset Management LLC (“Reich & Tang”) | 52,095 | |||
Total net assets | $ | 2,350,090 |
12 |
1. | Value Line Publishing LLC (“VLP”) is the publishing unit for the investment related periodical publications and copyright data. |
2. | The Vanderbilt Advertising Agency, Inc. places advertising on behalf of the Company’s publications. |
3. | Compupower Corporation (“CPWR”) provides subscription fulfillment services and subscriber relations services for VLP’s publications. |
4. | Value Line Distribution Center, Inc. (“VLDC”) primarily handles all of the mailings of the publications to VLP’s subscribers. Additionally, VLDC provides office space for CPWR’s subscriber relations and data processing departments. |
13 |
Name | Age | Principal Occupation or Employment | ||
Howard A. Brecher | 60 | Chairman and Chief Executive Officer since October 2011; Acting Chairman and Acting Chief Executive Officer from November 2009 to October 2011; Chief Legal Officer; Vice President and Secretary until January 2010; Vice President and Secretary of each of the Value Line Funds from June 2008 to December 2010; Secretary of EAM LLC from February 2009 until December 2010; Director and General Counsel of AB&Co. Mr. Brecher has been an officer of the Company for more than 20 years. | ||
Stephen R. Anastasio | 55 | Vice President since December 2010; Director since February 2010; Treasurer since 2005. Mr. Anastasio has been an officer of the Company for more than 10 years. |
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18 |
Quarter Ended | High | Low | Dividend Declared Per Share |
April 30, 2014 | $15.36 | $14.58 | $0.15 |
January 31, 2014 | $12.60 | $12.24 | $0.15 |
October 31, 2013 | $9.33 | $9.08 | $0.15 |
July 31, 2013 | $9.10 | $9.00 | $0.15 |
April 30, 2013 | $9.40 | $9.13 | $0.15 |
January 31, 2013 | $9.68 | $9.43 | $0.15 |
October 31, 2012 | $9.95 | $9.88 | $0.15 |
July 31, 2012 | $11.91 | $11.86 | $0.15 |
19 |
ISSUER PURCHASES OF EQUITY SECURITIES | ||||||||
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||
February 1, 2014 through February 28, 2014 | 3,426 | $12.13 | 3,426 | $2,268,000 | ||||
March 1, 2014 through March 31, 2014 | - | - | - | 2,268,000 | ||||
April 1, 2014 through April 30, 2014 | - | - | - | 2,268,000 | ||||
Total | 3,426 | $12.13 | 3,426 | $2,268,000 |
1) | On September 19, 2012, the Company’s Board of Directors approved a share repurchase program, authorizing the repurchase of shares of the Company’s common stock up to an aggregate purchase price of $3,000,000. The repurchases will be made from time to time on the open market at prevailing market prices, in negotiated transactions off the market, in block purchases or otherwise. The new repurchase program may be suspended or discontinued at any time at the Company’s discretion and has no set expiration date. During fiscal 2014, the Company repurchased an aggregate of 58,499 shares of the Company’s common stock for $550,621 at an average price of $9.41 per share under the repurchase program. During fiscal 2013, the Company repurchased an aggregate of 19,953 shares of the Company’s common stock for $182,254 at an average price of $9.13 per share under the repurchase program. |
2) | On January 20, 2011, the Company’s Board of Directors approved the repurchase of shares of the Company’s common stock, at such times and prices as management determined to be advisable up to an aggregate purchase amount of $3,200,000. The repurchase program expired on January 15, 2012 and was not renewed by the Company’s Board of Directors. During fiscal 2012, the Company repurchased an aggregate of 78,500 shares of the Company’s common stock for $946,000, at an average price of $12.05 per share under the repurchase program. During fiscal 2011, the Company repurchased an aggregate of 6,719 shares of the Company’s common stock for $90,000, at an average price of $13.39 per share. |
20 |
Fiscal Years Ended April 30, | ||||||||||||||||||||
($ in thousands, except number of shares and earnings/ (loss) per share amounts) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||
Revenues: | (1 | ) | (2 | ) | ||||||||||||||||
Investment periodicals and related publications | $ | 33,598 | $ | 31,940 | $ | 33,018 | $ | 34,406 | $ | 35,965 | ||||||||||
Copyright data fees | 2,733 | 3,900 | 3,591 | 3,568 | 3,243 | |||||||||||||||
Total investment periodicals and related publications | 36,331 | 35,840 | 36,609 | 37,974 | 39,208 | |||||||||||||||
Investment management fees and services | - | - | - | 10,693 | 18,932 | |||||||||||||||
Total revenues | $ | 36,331 | $ | 35,840 | $ | 36,609 | $ | 48,667 | $ | 58,140 | ||||||||||
Income/(loss) from operations | $ | 2,501 | $ | 4,120 | $ | 5,338 | $ | 8,533 | $ | (32,190 | ) | |||||||||
Gain from deconsolidation of subsidiaries | - | - | - | $ | 50,510 | - | ||||||||||||||
Revenues and profits interests from EAM Trust | $ | 7,499 | $ | 6,260 | $ | 5,890 | $ | 2,355 | - | |||||||||||
Income from securities transactions, net | $ | 178 | $ | 126 | $ | 70 | $ | 65 | $ | 837 | ||||||||||
Net income/(loss) | $ | 6,768 | $ | 6,619 | $ | 6,925 | $ | 37,782 | $ | (23,188 | ) | |||||||||
Earnings/(loss) per share, basic and fully diluted | $ | 0.69 | $ | 0.67 | $ | 0.70 | $ | 3.79 | $ | (2.32 | ) | |||||||||
Total assets | $ | 86,875 | $ | 84,341 | $ | 84,369 | $ | 87,803 | $ | 59,985 | ||||||||||
Long term liabilities | $ | 26,521 | $ | 23,962 | $ | 24,871 | $ | 23,133 | $ | 4,863 | ||||||||||
Weighted average number of common shares outstanding | 9,839,155 | 9,888,774 | 9,921,925 | 9,980,000 | 9,981,600 | |||||||||||||||
Cumulative cash dividends declared per share during the fiscal year | $ | 0.60 | $ | 0.60 | $ | 0.70 | $ | 2.60 | $ | 3.60 |
(1) | See Item 1, Business - “Asset Management and Mutual Fund Distribution Businesses” and Item 7, “Management’s Discussion and Analysis”. |
(2) | Fiscal 2010 operating income included expenses of $48,106,000 related to settlement provision (see Form 10-K for fiscal year 2010 filed July 16, 2010). |
21 |
● | Executive Summary of the Business |
● | Results of Operations |
● | Liquidity and Capital Resources |
● | Recent Accounting Pronouncements |
● | Critical Accounting Estimates and Policies |
22 |
23 |
Fiscal Years Ended April 30, | ||||||||||||||||||||
2014 | 2013 | 2012 | Change | |||||||||||||||||
($ in thousands, except earnings per share) | ’14 vs. ’13 | ’13 vs. ’12 | ||||||||||||||||||
Income from operations | $ | 2,501 | $ | 4,120 | $ | 5,338 | -39.3 | % | -22.8 | % | ||||||||||
Revenues and profits interests from EAM Trust | $ | 7,499 | $ | 6,260 | $ | 5,890 | 19.8 | % | 6.3 | % | ||||||||||
Income from operations plus non-voting revenues and non-voting profits interests from EAM Trust | $ | 10,000 | $ | 10,380 | $ | 11,228 | -3.7 | % | -7.6 | % | ||||||||||
Operating expenses | $ | 33,830 | $ | 31,720 | $ | 31,271 | 6.7 | % | 1.4 | % | ||||||||||
Income from securities transactions, net | $ | 178 | $ | 126 | $ | 70 | 41.3 | % | 80.0 | % | ||||||||||
Income before income taxes | $ | 10,178 | $ | 10,506 | $ | 11,298 | -3.1 | % | -7.0 | % | ||||||||||
Net income | $ | 6,768 | $ | 6,619 | $ | 6,925 | 2.3 | % | -4.4 | % | ||||||||||
Earnings per share | $ | 0.69 | $ | 0.67 | $ | 0.70 | 3.0 | % | -4.3 | % |
24 |
Fiscal Years Ended April 30, | ||||||||||||||||||||
2014 | 2013 | 2012 | Change | |||||||||||||||||
($ in thousands) | ’14 vs. ’13 | ’13 vs. ’12 | ||||||||||||||||||
Investment periodicals and related publications: | ||||||||||||||||||||
$ | 18,346 | $ | 19,027 | $ | 20,366 | -3.6 | % | -6.6 | % | |||||||||||
Digital | 15,252 | 12,913 | 12,652 | 18.1 | % | 2.1 | % | |||||||||||||
Total investment periodicals and related publications | 33,598 | 31,940 | 33,018 | 5.2 | % | -3.3 | % | |||||||||||||
Copyright data fees | 2,733 | 3,900 | 3,591 | -29.9 | % | 8.6 | % | |||||||||||||
Total publishing revenues | $ | 36,331 | $ | 35,840 | $ | 36,609 | 1.4 | % | -2.1 | % |
2014 | 2013 | 2012 | ||||||||||||||||||||||
Digital | Digital | Digital | ||||||||||||||||||||||
New Sales Orders | 19.0 | % | 24.3 | % | 19.1 | % | 24.4 | % | 16.8 | % | 18.6 | % | ||||||||||||
Conversion and Renewal Sales Orders | 81.0 | % | 75.7 | % | 80.9 | % | 75.6 | % | 83.2 | % | 81.4 | % | ||||||||||||
Total Gross Sales Orders | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
25 |
As of April 30, | ||||||||||||||||||||
Change | ||||||||||||||||||||
($ in thousands) | 2014 | 2013 | 2012 | ’14 vs. ’13 | ’13 vs. ’12 | |||||||||||||||
Unearned subscription revenue (current and long term liabilities) | $ | 25,124 | $ | 24,709 | $ | 25,995 | 1.7 | % | -3.4 | % |
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Asset Flows | Fiscal Years Ended April 30, | |||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
vs. | vs. | |||||||||||||||||||
2014 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||
Value Line equity fund assets (excludes variable annuity)— beginning | $ | 1,456,552,464 | $ | 1,343,996,918 | $ | 1,398,372,388 | 8.4 | % | -3.9 | % | ||||||||||
Sales/inflows & Dividends Reinvested | 268,425,995 | 252,728,239 | 210,761,258 | 6.2 | % | 19.9 | % | |||||||||||||
Redemptions/outflows | (234,450,194 | ) | (256,633,016 | ) | (277,655,817 | ) | -8.6 | % | -7.6 | % | ||||||||||
Dividend and Capital Gain Distributions | (76,752,906 | ) | (48,112,709 | ) | (19,681,858 | ) | 59.5 | % | 144.5 | % | ||||||||||
Market value change | 234,115,616 | 164,573,032 | 32,200,947 | 42.3 | % | 411.1 | % | |||||||||||||
Value Line equity fund assets (non-variable annuity)— ending | $ | 1,647,890,976 | $ | 1,456,552,464 | $ | 1,343,996,918 | 13.1 | % | 8.4 | % | ||||||||||
Variable annuity fund assets — beginning | $ | 476,317,362 | $ | 484,476,017 | $ | 520,738,282 | -1.7 | % | -7.0 | % | ||||||||||
Sales/inflows & Dividends Reinvested | 36,154,523 | 14,173,864 | 11,869,956 | 155.1 | % | 19.4 | % | |||||||||||||
Redemptions/outflows | (64,466,768 | ) | (66,726,410 | ) | (72,557,743 | ) | -3.4 | % | -8.0 | % | ||||||||||
Dividend and Capital Gain Distributions | (27,786,179 | ) | (4,119,704 | ) | 503,582 | 574.5 | % | -918.1 | % | |||||||||||
Market value change | 68,098,777 | 48,513,595 | 23,921,941 | 40.4 | % | 102.8 | % | |||||||||||||
Variable annuity fund assets — ending | $ | 488,317,714 | $ | 476,317,361 | $ | 484,476,017 | 2.5 | % | -1.7 | % | ||||||||||
Fixed income fund assets — beginning (1) (2) | $ | 191,488,529 | $ | 217,053,704 | $ | 236,526,222 | -11.8 | % | -8.2 | % | ||||||||||
Sales/inflows & Dividends Reinvested | 5,866,401 | 11,765,917 | 41,239,732 | -50.1 | % | -71.5 | % | |||||||||||||
Redemptions/outflows | (28,722,304 | ) | (37,643,781 | ) | (64,139,184 | ) | -23.7 | % | -41.3 | % | ||||||||||
Dividend and Capital Gain Distributions | 54,008 | (4,524,535 | ) | (1,752,051 | ) | -101.2 | % | 158.2 | % | |||||||||||
Market value change | (6,900,341 | ) | 4,837,224 | 5,178,985 | -242.7 | % | -6.6 | % | ||||||||||||
Fixed income fund assets — ending | $ | 161,786,294 | $ | 191,488,529 | $ | 217,053,704 | -15.5 | % | -11.8 | % | ||||||||||
Money market fund assets — ending (3) | - | - | 67,682,443 | N/A | -100.0 | % | ||||||||||||||
Assets under management — ending | $ | 2,297,994,984 | $ | 2,124,358,355 | $ | 2,113,209,083 | 8.2 | % | 0.5 | % |
(1) | On March 21, 2013, the shareholders of the Value Line U.S. Government Securities Fund approved the tax free reorganization of the Value Line U.S. Government Securities Fund into the Value Line Core Bond Fund. Shares of the U.S Government Securities Fund were exchanged into the Value Line Core Bond Fund effective March 22, 2013. This transaction is excluded from sales/redemptions. |
(2) | On May 17, 2012, the shareholders of the Value Line New York Tax Exempt Trust approved the tax free reorganization of the Value Line New York Tax Exempt Trust into the Value Line Tax Exempt Fund. Shares of the Value Line New York Tax Exempt Trust were exchanged into the Value Line Tax Exempt Fund effective May 18, 2012. This transaction is excluded from sales/redemptions. |
(3) | On October 19, 2012 the Value Line U.S. Government Money Market Fund merged into the Daily Income Fund U.S. Government Portfolio managed by Reich & Tang. Assets of $52,094,588 and $61,917,208 of the Daily Income Fund U.S. Government Portfolio are not included in the total assets under management in fiscal 2014 and 2013, respectively. |
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Fund Categories | Aggregate Assets | Percentage of Assets in Category | Shareholder Accounts | Percentage of Shareholder Accounts in Category | ||||||||||||
Guardian (SAM and Centurion Funds) | $ | 488,317,714 | 20.8 | % | 22,082 | 24.3 | % | |||||||||
Dealer platforms | 1,049,037,226 | 44.6 | % | 36,337 | 39.9 | % | ||||||||||
VL Funds direct accounts & other dealers | 812,734,632 | 34.6 | % | 32,540 | 35.8 | % | ||||||||||
Total* | $ | 2,350,089,572 | 100.0 | % | 90,959 | 100.0 | % |
30 |
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Fiscal Years Ended April 30, | Change | |||||||||||||||||||
($ in thousands) | 2014 | 2013 | 2012 | ’14 vs. ’13 | ’13 vs. ’12 | |||||||||||||||
Non-voting revenues interest | $ | 6,767 | $ | 5,781 | $ | 5,684 | 17.1 | % | 1.7 | % | ||||||||||
Non-voting profits interest | 732 | 479 | 206 | 52.8 | % | 132.5 | % | |||||||||||||
$ | 7,499 | $ | 6,260 | $ | 5,890 | 19.8 | % | 6.3 | % |
Fiscal Years Ended April 30, | ||||||||||||||||||||
Change | ||||||||||||||||||||
($ in thousands) | 2014 | 2013 | 2012 | ’14 vs. ’13 | ’13 vs. ’12 | |||||||||||||||
Advertising and promotion | $ | 4,223 | $ | 4,075 | $ | 4,203 | 3.6 | % | -3.0 | % | ||||||||||
Salaries and employee benefits | 16,335 | 15,034 | 15,001 | 8.7 | % | 0.2 | % | |||||||||||||
Production and distribution | 6,402 | 5,694 | 4,894 | 12.4 | % | 16.3 | % | |||||||||||||
Office and administration | 6,870 | 6,917 | 7,173 | -0.7 | % | -3.6 | % | |||||||||||||
Total expenses | $ | 33,830 | $ | 31,720 | $ | 31,271 | 6.7 | % | 1.4 | % |
32 |
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Fiscal Years Ended April 30, | ||||||||||||||||||||
Change | ||||||||||||||||||||
($ in thousands) | 2014 | 2013 | 2012 | ’14 vs. ’13 | ’13 vs. ’12 | |||||||||||||||
Dividend income | $ | 147 | $ | 124 | $ | 68 | 18.5 | % | 82.4 | % | ||||||||||
Interest income | 5 | 4 | 16 | 25.0 | % | -75.0 | % | |||||||||||||
Realized gains/(losses) on equity and fixed income securities available-for-sale in fiscal 2012 and capital gain distribution from ETFs in fiscal 2014 | 36 | - | (11 | ) | n/a | -100.0 | % | |||||||||||||
Interest expense | (5 | ) | - | - | n/a | n/a | ||||||||||||||
Other | (5 | ) | (2 | ) | (3 | ) | -150.0 | % | 33.3 | % | ||||||||||
Total income from securities transactions, net | $ | 178 | $ | 126 | $ | 70 | 41.3 | % | 80.0 | % |
35 |
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37 |
● | Revenue recognition |
● | Income taxes |
● | Fair Fund reserve |
38 |
Payments due by period | ||||||||||||||||||||
Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Long Term Debt Obligations | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Capital Lease Obligations | - | - | - | - | - | |||||||||||||||
Operating Lease Obligations | 4,160 | 1,468 | 2,692 | - | - | |||||||||||||||
Purchase Obligations | - | - | - | - | - | |||||||||||||||
Total | $ | 4,160 | $ | 1,468 | $ | 2,692 | $ | - | $ | - |
39 |
Equity Securities | Estimated Fair Value after | Hypothetical Percentage Increase (Decrease) in | ||||||||||||
($ in thousands) | Fair Value | Hypothetical Price Change | Hypothetical Change in Prices | Shareholders’ Equity | ||||||||||
As of April 30, 2014 | Equity Securities and ETFs held for dividend yield | $ | 5,292 | 30% increase | $ | 6,880 | 3.10 | % | ||||||
30% decrease | $ | 3,704 | -3.10 | % | ||||||||||
As of April 30, 2014 | Inverse ETF Holdings | $ | 3,934 | 30% increase | $ | 2,754 | -2.30 | % | ||||||
30% decrease | $ | 5,114 | 2.30 | % | ||||||||||
As of April 30, 2014 | Total | 30% increase | $ | 9,634 | 0.80 | % | ||||||||
$ | 9,226 | 30% decrease | $ | 8,818 | -0.80 | % |
Equity Securities | Estimated Fair Value after | Hypothetical Percentage Increase (Decrease) in | ||||||||||||
($ in thousands) | Fair Value | Hypothetical Price Change | Hypothetical Change in Prices | Shareholders’ Equity | ||||||||||
As of April 30, 2013 | Equity Securities and ETFs held for dividend yield | $ | 4,732 | 30% increase | $ | 6,152 | 2.80 | % | ||||||
30% decrease | $ | 3,312 | -2.80 | % | ||||||||||
As of April 30, 2013 | Inverse ETF Holdings | $ | 1,950 | 30% increase | $ | 1,365 | -1.15 | % | ||||||
30% decrease | $ | 2,535 | 1.15 | % | ||||||||||
As of April 30, 2013 | Total | $ | 6,682 | 30% increase | $ | 7,517 | 1.64 | % | ||||||
30% decrease | $ | 5,847 | -1.64 | % |
40 |
Page Number | ||
Report of independent auditors | 54 | |
Consolidated balance sheets at April 30, 2014 and 2013 | 55 | |
Consolidated statements of income for the fiscal years ended April 30, 2014, 2013 and 2012 | 56 | |
Consolidated Statements of Comprehensive Income for the fiscal years ended April 30, 2014, 2013 and 2012 | 57 | |
Consolidated statements of cash flows for the fiscal years ended April 30, 2014, 2013 and 2012 | 58 | |
Consolidated statement of changes in shareholders’ equity for the fiscal years ended April 30, 2014, 2013 and 2012 | 59 | |
Notes to the consolidated financial statements | 60 |
41 |
Net Revenues | Income/ (Loss) from Operations | Revenues and Profits Interests in EAM Trust | Income From Securities Trans., net | Net Income/ (Loss) | Earnings/ (Loss) Per Share | |||||||||||||||||||
2014, by Quarter | ||||||||||||||||||||||||
First | $ | 8,952 | $ | 469 | $ | 1,769 | $ | 38 | $ | 1,445 | $ | 0.15 | ||||||||||||
Second | 9,013 | 646 | 1,854 | 34 | 1,616 | 0.16 | ||||||||||||||||||
Third | 9,274 | 1,008 | 1,974 | 70 | 2,026 | 0.21 | ||||||||||||||||||
Fourth | 9,092 | 378 | 1,902 | 36 | 1,681 | 0.17 | ||||||||||||||||||
Total | $ | 36,331 | $ | 2,501 | $ | 7,499 | $ | 178 | $ | 6,768 | $ | 0.69 | ||||||||||||
2013, by Quarter | ||||||||||||||||||||||||
First | $ | 8,938 | $ | 1,352 | $ | 1,473 | $ | 26 | $ | 1,776 | $ | 0.18 | ||||||||||||
Second | 8,809 | 920 | 1,529 | 30 | 1,572 | 0.16 | ||||||||||||||||||
Third | 8,946 | 1,088 | 1,625 | 37 | 1,747 | 0.18 | ||||||||||||||||||
Fourth | 9,147 | 760 | 1,633 | 33 | 1,524 | 0.15 | ||||||||||||||||||
Total | $ | 35,840 | $ | 4,120 | $ | 6,260 | $ | 126 | $ | 6,619 | $ | 0.67 | ||||||||||||
2012, by Quarter | ||||||||||||||||||||||||
First | $ | 9,370 | $ | 1,638 | $ | 1,572 | $ | 11 | $ | 2,076 | $ | 0.21 | ||||||||||||
Second | 9,140 | 1,518 | 1,343 | 20 | 1,915 | 0.19 | ||||||||||||||||||
Third | 8,996 | 1,823 | 1,456 | 3 | 1,844 | 0.19 | ||||||||||||||||||
Fourth | 9,103 | 359 | 1,519 | 36 | 1,090 | 0.11 | ||||||||||||||||||
Total | $ | 36,609 | $ | 5,338 | $ | 5,890 | $ | 70 | $ | 6,925 | $ | 0.70 | ||||||||||||
42 |
(a) | Evaluation of Disclosure Controls and Procedures. |
(b) | Management’s Annual Report on Internal Control over Financial Reporting. |
43 |
44 |
(a) Names of Directors, Age as of June 30, 2014 and Principal Occupation | Director Since | ||
Howard A. Brecher* (60). Chairman and Chief Executive Officer of the Company since October 2011; Acting Chairman and Acting Chief Executive Officer of the Company from November 2009 until October 2011; Chief Legal Officer; Vice President and Secretary of the Company from prior to 2005 until January 2010; Vice President and Secretary of the Value Line Funds from June 2008 until December 2010; Secretary of EAM LLC from February 2009 until December 2010; Director and General Counsel of AB&Co., Inc. since prior to 2005. Mr. Brecher has been an officer of the Company for more than 20 years. In addition to his current roles with the Company, he has also served as Secretary of the Company and as a senior officer of significant affiliates of the Company. Mr. Brecher is a graduate of Harvard College, Harvard Business School and Harvard Law School. He also holds a Master’s Degree in tax law from New York University. | 1992 | ||
Stephen P. Davis (62). Deputy Commissioner, New York City Police Department (“NYPD”), since January, 2014. Managing Member, Davis Investigative Group, LLC from 2001 to 2013. Mr. Davis serves as a senior appointed official in the NYPD from which he retired in 1992 as a uniformed senior officer. He successfully managed his own business servicing the financial services industry and other clients for more than 11 years. | 2010 | ||
Alfred R. Fiore (58). Retired Chief of Police, Westport CT. Mr. Fiore served as the senior official of a municipal department with both executive and budget responsibilities. He was Chief of Police, Westport CT from 2004 to 2011 and was a member of that Police Department for more than 33 years. | 2010 | ||
William E. Reed (69). President, W.E. Reed. Mr. Reed has successfully managed his own private business for over 42 years, providing a spectrum of services to real estate owners and managers regionally. | 2010 | ||
Glenn J. Muenzer (57). Special Agent (Retired), Federal Bureau of Investigation (the “FBI”) from 1991 to 2012. Mr. Muenzer is an accomplished law enforcement professional with extensive law enforcement and financial investigative experience. Prior to joining the FBI, Mr. Muenzer was Vice President and Manager of Internal Audit at Thomson McKinnon Securities, Inc.; Assistant Vice President of Internal Audit at EF Hutton; Senior Auditor with Deloitte & Touche. Mr. Muenzer is a Certified Public Accountant. | 2012 | ||
Stephen R. Anastasio* (55). Vice President of the Company since December 2010; Treasurer since September 2005 and Director since February 2010. Mr. Anastasio has been employed by Value Line, Inc. for more than 24 years. In addition to his current roles with the Company, he has served as Chief Financial Officer, Treasurer, Chief Accounting Officer and Corporate Controller of the Company. Mr. Anastasio is a graduate of Fairleigh Dickinson University and is a Certified Public Accountant. | 2010 | ||
Mary Bernstein* (64). Director of Accounting of the Company since 2010; Accounting Manager of the Company from 2000 to 2010. Mrs. Bernstein holds an MBA Degree in accounting from Baruch College of CUNY and is a Certified Public Accountant. Mrs. Bernstein has been employed by Value Line, Inc. for more than 18 years. | 2010 |
45 |
(b) | The information pertaining to executive officers of the Company is set forth in Part I, Item I, subsection J under the caption “Executive Officers of the Registrant” of this Form 10-K. |
46 |
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned | ||
Arnold Bernhard & Co., Inc.* | 8,633,733 | 87.9% | ||
485 Lexington Avenue | ||||
New York, NY 10017 |
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned | |||
Howard A. Brecher | 800 | * | |||
Stephen R. Anastasio | 200 | * | |||
Glenn J. Muenzer | 200 | * | |||
William E. Reed | 500 | * | |||
Stephen P. Davis | 200 | * | |||
Alfred R. Fiore | 300 | * | |||
Mary Bernstein | 200 | * | |||
All directors and executive officers as a group (7 persons) | 2,400 | * |
47 |
Fiscal Years Ended April 30, | ||||||||
2014 | 2013 | |||||||
Audit fees | $ | 141,900 | $ | 134,000 | ||||
Audit-related fees | 14,705 | - | ||||||
Tax related fees | 84,840 | 76,430 | ||||||
Total | $ | 241,445 | $ | 210,430 |
48 |
(a) | (1) | Financial Statements- See Part II Item 8. |
All other Schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. |
(b) | Exhibits |
3.1 | Certificate of Incorporation of the Company, as amended through April 7, 1983, is incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 of Value Line, Inc. filed with the SEC on April 7, 1983. |
3.2 | Certificate of Amendment of Certificate of Incorporation dated October 24, 1989 is incorporated by reference to Exhibit 3.2 to the Amended Annual Report on Form 10-K/A for the year ended April 30, 2008 filed with the SEC on June 5, 2009. |
3.3 | By-laws of the Company, as amended through January 18, 1996, are incorporated by reference to Exhibit 3.1 to the Amended Quarterly Report on Form 10-Q/A for the quarter ended January 31, 1996 filed with the SEC on March 19, 1996. |
10.1 | Form of tax allocation arrangement between the Company and AB&Co. is incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-1 of Value Line, Inc. filed with the SEC on April 7, 1983. |
10.2 | Form of Servicing and Reimbursement Agreement between the Company and AB&Co., dated as of November 1, 1982, is incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-1 of Value Line, Inc. filed with the SEC on April 7, 1983. |
10.3(a) | Lease, dated as of June 4, 1993, for the Company’s premises at 220 East 42nd Street, New York, NY, is incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K for the year ended April 30, 1994 filed with the SEC on June 17, 1994. |
10.3(b) | Amendment to Lease, dated September 14, 2000, is incorporated by reference to Exhibit 10.14 to the Amended Annual Report on Form 10-K/A for the year ended April 30, 2001 filed with the SEC on August 17, 2001. |
49 |
10.3(c) | Amendment to Lease, dated April 23, 2007, is incorporated by reference to Exhibit 10.14 to the Annual Report on Form 10-K for the year ended April 30, 2007 filed with the SEC on July 20, 2007. |
10.3(d) | Lease Modification, dated as of February 7, 2013, is incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended January 31, 2013 filed with the SEC on March 13, 2013. |
10.4 | Form of indemnification agreement, dated July 13, 2010, by and between the Company and each of Howard A. Brecher, Stephen Davis, Alfred Fiore, William E. Reed, Mitchell E. Appel, Stephen R. Anastasio and Thomas T. Sarkany is incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K for the year ended April 30, 2010 filed with the SEC on July 16, 2010. |
10.5 | EULAV Asset Management Declaration of Trust dated as of December 23, 2010 is incorporated by reference to Exhibit 10.16 to the Quarterly Report on Form 10-Q for the quarter ended January 31, 2011 filed with the SEC on March 24, 2011. |
10.6 | Agreement of Sublease, dated as of February 7, 2013, for the Company’s premises at 485 Lexington Ave., New York, NY, is incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended January 31, 2013 filed with the SEC on March 13, 2013. |
14.1 | Code of Business Conduct and Ethics is incorporated by reference to Exhibit 14.1 to the Quarterly Report on Form 10-Q for the quarter ended January 31, 2011 filed with the SEC on March 24, 2011. |
21 | List of subsidiaries of Value Line, Inc.* |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
31.2 | Certification of Principal Financial Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
32.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit shall not be deemed “filed” as a part of this Annual Report on Form 10-K.* |
32.2 | Certification of the Principal Financial Officer and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit shall not be deemed “filed” as a part of this Annual Report on Form 10-K.* |
99.1 | EULAV Asset Management Audited Consolidated Financial Statements as of April 30, 2014. Separate financial statements of subsidiaries not consolidated and fifty percent or less owned persons.* |
* Filed herewith. |
50 |
101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE | XBRL Instance Document XBRL Taxonomy Extension Schema Document XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Definition Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document |
51 |
By: | /s/ Howard A. Brecher | ||
Howard A. Brecher | |||
Chairman & Chief Executive Officer | |||
(Principal Executive Officer) |
By: | /s/ Howard A. Brecher | ||
Howard A. Brecher | |||
Chairman & Chief Executive Officer and Director | |||
(Principal Executive Officer) |
By: | /s/ Stephen R. Anastasio | ||
Stephen R. Anastasio | |||
Vice President & Treasurer and Director | |||
(Principal Financial Officer and Principal Accounting Officer) |
52 |
/s/ Glenn J. Muenzer | |
Glenn Muenzer | |
Director | |
/s/ William E. Reed | |
William Reed | |
Director | |
/s/ Stephen P. Davis | |
Stephen Davis | |
Director | |
/s/ Alfred R. Fiore | |
Alfred Fiore | |
Director | |
/s/ Mary Bernstein | |
Mary Bernstein | |
Director |
53 |
HOROWITZ & ULLMANN, P.C.
Certified Public Accountants
A member of the | 275 Madison Avenue |
AICPA Center for Audit Quality | New York, NY 10016 |
New York State Society of CPAs | Telephone: (212) 532-3736 |
PCAOB registered | Facsimile: (212) 545-8997 |
E-mail: cpas@horowitz-ullmann.com |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Value Line, Inc.
We have audited the accompanying consolidated balance sheets of Value Line, Inc. (the “Company”) as of April 30, 2014 and 2013, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended April 30, 2014. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Value Line, Inc. as of April 30, 2014, and 2013, and the consolidated results of its operations and its cash flows for each of the years in the three-year period ended April 30, 2014 in conformity with accounting principles generally accepted in the United States of America.
New York, New York
July 21, 2014
54 |
April 30, | April 30, | |||||||
2014 | 2013 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents (including short term investments of $5,482 and $6,312, respectively) | $ | 5,788 | $ | 6,840 | ||||
Securities available-for-sale | 9,226 | 6,682 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $39 and $17, respectively | 1,206 | 1,278 | ||||||
Prepaid and refundable income taxes | 175 | - | ||||||
Prepaid expenses and other current assets | 1,507 | 1,646 | ||||||
Deferred income taxes | 364 | 227 | ||||||
Total current assets | 18,266 | 16,673 | ||||||
Long term assets: | ||||||||
Investment in EAM Trust | 57,850 | 57,511 | ||||||
Property and equipment, net | 3,863 | 3,930 | ||||||
Capitalized software and other intangible assets, net | 6,896 | 6,227 | ||||||
Total long term assets | 68,609 | 67,668 | ||||||
Total assets | $ | 86,875 | $ | 84,341 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 2,429 | $ | 2,460 | ||||
Accrued salaries | 1,349 | 1,200 | ||||||
Dividends payable | 1,472 | 1,481 | ||||||
Accrued taxes on income | 316 | 180 | ||||||
Unearned revenue | 21,490 | 22,073 | ||||||
Total current liabilities | 27,056 | 27,394 | ||||||
Long term liabilities: | ||||||||
Unearned revenue | 3,634 | 2,636 | ||||||
Deferred charges | 367 | - | ||||||
Deferred income taxes | 22,520 | 21,326 | ||||||
Total long term liabilities | 26,521 | 23,962 | ||||||
Total liabilities | 53,577 | 51,356 | ||||||
Shareholders’ Equity: | ||||||||
Common stock, $0.10 par value; authorized 30,000,000 shares; issued 10,000,000 shares | 1,000 | 1,000 | ||||||
Additional paid-in capital | 991 | 991 | ||||||
Retained earnings | 33,183 | 32,315 | ||||||
Treasury stock, at cost (182,071 shares and 123,572 shares, respectively) | (2,122 | ) | (1,572 | ) | ||||
Accumulated other comprehensive income, net of tax | 246 | 251 | ||||||
Total shareholders’ equity | 33,298 | 32,985 | ||||||
Total liabilities and shareholders’ equity | $ | 86,875 | $ | 84,341 | ||||
See independent auditor’s report and accompanying notes to the consolidated financial statements. |
55 |
For the Fiscal Years Ended | ||||||||||||
April 30, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Revenues: | ||||||||||||
Investment periodicals and related publications | $ | 33,598 | $ | 31,940 | $ | 33,018 | ||||||
Copyright data fees | 2,733 | 3,900 | 3,591 | |||||||||
Total revenues | 36,331 | 35,840 | 36,609 | |||||||||
Expenses: | ||||||||||||
Advertising and promotion | 4,223 | 4,075 | 4,203 | |||||||||
Salaries and employee benefits | 16,335 | 15,034 | 15,001 | |||||||||
Production and distribution | 6,402 | 5,694 | 4,894 | |||||||||
Office and administration | 6,870 | 6,917 | 7,173 | |||||||||
Total expenses | 33,830 | 31,720 | 31,271 | |||||||||
Income from operations | 2,501 | 4,120 | 5,338 | |||||||||
Revenues and profits interests in EAM Trust | 7,499 | 6,260 | 5,890 | |||||||||
Income from securities transactions, net | 178 | 126 | 70 | |||||||||
Income before income taxes | 10,178 | 10,506 | 11,298 | |||||||||
Income tax provision | 3,410 | 3,887 | 4,373 | |||||||||
Net income | $ | 6,768 | $ | 6,619 | $ | 6,925 | ||||||
Earnings per share, basic & fully diluted | $ | 0.69 | $ | 0.67 | $ | 0.70 | ||||||
Weighted average number of common shares | 9,839,155 | 9,888,774 | 9,921,925 | |||||||||
See independent auditor’s report and accompanying notes to the consolidated financial statements. |
56 |
For the Fiscal Years Ended | ||||||||||||
April 30, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Net income | $ | 6,768 | $ | 6,619 | $ | 6,925 | ||||||
Other comprehensive income/(loss), net of tax: | ||||||||||||
Change in unrealized gains on securities, net of taxes | (5 | ) | 166 | 22 | ||||||||
Other comprehensive income/(loss) | (5 | ) | 166 | 22 | ||||||||
Comprehensive income/(loss) | $ | 6,763 | $ | 6,785 | $ | 6,947 | ||||||
See independent auditor’s report and accompanying notes to the consolidated financial statements. |
57 |
For the Fiscal Years Ended | ||||||||||||
April 30, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 6,768 | $ | 6,619 | $ | 6,925 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 2,085 | 1,552 | 724 | |||||||||
Non-voting revenues interest in EAM Trust | (6,767 | ) | (5,781 | ) | (5,684 | ) | ||||||
Non-voting profits interest in EAM Trust | (732 | ) | (479 | ) | (206 | ) | ||||||
Realized and unrealized losses on securities available-for-sale | - | - | 11 | |||||||||
Deferred rent | 567 | - | - | |||||||||
Deferred income taxes | 464 | 1,078 | 4,288 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Unearned revenue | 415 | (1,286 | ) | (1,006 | ) | |||||||
Reserve for settlement | 7 | (32 | ) | (1,189 | ) | |||||||
Operating lease exit obligation | (36 | ) | (439 | ) | (439 | ) | ||||||
Accounts payable & accrued expenses | (202 | ) | (17 | ) | (1,154 | ) | ||||||
Accrued salaries | 149 | 92 | 195 | |||||||||
Accrued taxes on income | 733 | 33 | (60 | ) | ||||||||
Prepaid and refundable income taxes | (175 | ) | 779 | (720 | ) | |||||||
Prepaid expenses and other current assets | 139 | (575 | ) | (43 | ) | |||||||
Accounts receivable | 72 | (376 | ) | 697 | ||||||||
Receivable from affiliates | - | - | 37 | |||||||||
Total adjustments | (3,281 | ) | (5,451 | ) | (4,549 | ) | ||||||
Net cash provided by operating activities | 3,487 | 1,168 | 2,376 | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchases/sales of securities classified as available-for-sale: | ||||||||||||
Maturities and sales of fixed income securities | - | - | 11,196 | |||||||||
Proceeds from sales of equity securities | - | - | 89 | |||||||||
Purchases of equity securities | (2,553 | ) | (2,545 | ) | (2,468 | ) | ||||||
Distributions received from EAM Trust | 7,160 | 5,080 | 5,876 | |||||||||
Acquisition of property and equipment | (206 | ) | (331 | ) | (48 | ) | ||||||
Expenditures for capitalized software | (2,481 | ) | (2,457 | ) | (3,383 | ) | ||||||
Net cash provided by (used for) investing activities | 1,920 | (253 | ) | 11,262 | ||||||||
Cash flows from financing activities: | ||||||||||||
Purchase of treasury stock at cost | (550 | ) | (182 | ) | (946 | ) | ||||||
Dividends paid | (5,909 | ) | (5,935 | ) | (7,452 | ) | ||||||
Net cash used for financing activities | (6,459 | ) | (6,117 | ) | (8,398 | ) | ||||||
Net change in cash and cash equivalents | (1,052 | ) | (5,202 | ) | 5,240 | |||||||
Cash and cash equivalents at beginning of year | 6,840 | 12,042 | 6,802 | |||||||||
Cash and cash equivalents at end of year | $ | 5,788 | $ | 6,840 | $ | 12,042 | ||||||
See independent auditor’s report and accompanying notes to the consolidated financial statements. |
58 |
Common stock | Additional paid-in | Treasury Stock | Retained | Accumulated Other Comprehensive | ||||||||||||||||||||||||||||
Shares | Amount | capital | Shares | Amount | earnings | income (loss) | Total | |||||||||||||||||||||||||
Balance as of April 30, 2011 | 10,000,000 | $ | 1,000 | $ | 991 | (25,119 | ) | $ | (444 | ) | $ | 31,644 | $ | 63 | $ | 33,254 | ||||||||||||||||
Net income | 6,925 | 6,925 | ||||||||||||||||||||||||||||||
Change in unrealized gains on securities, net of taxes | 22 | 22 | ||||||||||||||||||||||||||||||
Purchase of treasury stock | (78,500 | ) | (946 | ) | (946 | ) | ||||||||||||||||||||||||||
Dividends declared | (6,941 | ) | (6,941 | ) | ||||||||||||||||||||||||||||
Balance as of April 30, 2012 | 10,000,000 | $ | 1,000 | $ | 991 | (103,619 | ) | $ | (1,390 | ) | $ | 31,628 | $ | 85 | $ | 32,314 |
Common stock | Additional paid-in | Treasury Stock | Retained | Accumulated Other Comprehensive | ||||||||||||||||||||||||||||
Shares | Amount | capital | Shares | Amount | earnings | income (loss) | Total | |||||||||||||||||||||||||
Balance as of April 30, 2012 | 10,000,000 | $ | 1,000 | $ | 991 | (103,619 | ) | $ | (1,390 | ) | $ | 31,628 | $ | 85 | $ | 32,314 | ||||||||||||||||
Net income | 6,619 | 6,619 | ||||||||||||||||||||||||||||||
Change in unrealized gains on securities, net of taxes | 166 | 166 | ||||||||||||||||||||||||||||||
Purchase of treasury stock | (19,953 | ) | (182 | ) | (182 | ) | ||||||||||||||||||||||||||
Dividends declared | (5,932 | ) | (5,932 | ) | ||||||||||||||||||||||||||||
Balance as of April 30, 2013 | 10,000,000 | $ | 1,000 | $ | 991 | (123,572 | ) | $ | (1,572 | ) | $ | 32,315 | $ | 251 | $ | 32,985 | ||||||||||||||||
Common stock | Additional paid-in | Treasury Stock | Retained | Accumulated Other Comprehensive | ||||||||||||||||||||||||||||
Shares | Amount | capital | Shares | Amount | earnings | income (loss) | Total | |||||||||||||||||||||||||
Balance as of April 30, 2013 | 10,000,000 | $ | 1,000 | $ | 991 | (123,572 | ) | $ | (1,572 | ) | $ | 32,315 | $ | 251 | $ | 32,985 | ||||||||||||||||
Net income | 6,768 | 6,768 | ||||||||||||||||||||||||||||||
Change in unrealized gains on securities, net of taxes | (5 | ) | (5 | ) | ||||||||||||||||||||||||||||
Purchase of treasury stock | (58,499 | ) | (550 | ) | (550 | ) | ||||||||||||||||||||||||||
Dividends declared | (5,900 | ) | (5,900 | ) | ||||||||||||||||||||||||||||
Balance as of April 30, 2014 | 10,000,000 | $ | 1,000 | $ | 991 | (182,071 | ) | $ | (2,122 | ) | $ | 33,183 | $ | 246 | $ | 33,298 | ||||||||||||||||
Dividends declared per share were $0.15 for each of the three months ending July 31, 2013, October 31, 2013, January 31, 2014 and April 30, 2014. | ||||||||||||||||||||||||||||||||
See independent auditor’s report and accompanying notes to the consolidated financial statements. |
59 |
Notes to Consolidated Financial Statements
60 |
Notes to Consolidated Financial Statements
61 |
As of April 30, 2014 | ||||||||||||||||
($ in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Cash equivalents | $ | 5,482 | $ | - | $ | - | $ | 5,482 | ||||||||
Securities available-for-sale | 9,226 | - | - | 9,226 | ||||||||||||
$ | 14,708 | $ | - | $ | - | $ | 14,708 | |||||||||
As of April 30, 2013 | ||||||||||||||||
($ in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Cash equivalents | $ | 6,312 | $ | - | $ | - | $ | 6,312 | ||||||||
Securities available-for-sale | 6,682 | - | - | 6,682 | ||||||||||||
$ | 12,994 | $ | - | $ | - | $ | 12,994 |
62 |
Fiscal Years Ended April 30, | ||||||||||||
($ in thousands) | 2014 | 2013 | 2012 | |||||||||
State and local income tax payments | $ | (114 | ) | $ | (120 | ) | $ | (159 | ) | |||
Federal income tax payments to the Parent | $ | (2,254 | ) | $ | (1,877 | ) | $ | (845 | ) |
63 |
Fiscal Years Ended April 30, | ||||||||||||
($ in thousands) | 2014 | 2013 | 2012 | |||||||||
Non-voting revenues interest in EAM | $ | 6,767 | $ | 5,781 | $ | 5,684 | ||||||
Non-voting profits interest in EAM | 732 | 479 | 206 | |||||||||
$ | 7,499 | $ | 6,260 | $ | 5,890 |
64 |
Gross | Gross | |||||||||||||||
Unrealized | Unrealized | |||||||||||||||
($ in thousands) | Cost | Gains | Losses | Fair Value | ||||||||||||
Common stocks | $ | 101 | $ | 47 | $ | (12 | ) | $ | 136 | |||||||
ETFs - equities | 3,878 | 1,280 | (2 | ) | 5,156 | |||||||||||
Inverse ETFs - equities | 4,868 | - | (934 | ) | 3,934 | |||||||||||
$ | 8,847 | $ | 1,327 | $ | (948 | ) | $ | 9,226 | ||||||||
The carrying value and fair value of securities available-for-sale at April 30, 2013 were as follows: | ||||||||||||||||
Gross | Gross | |||||||||||||||
Unrealized | Unrealized | |||||||||||||||
($ in thousands) | Cost | Gains | Losses | Fair Value | ||||||||||||
Common stocks | $ | 103 | $ | 27 | $ | (16 | ) | $ | 114 | |||||||
ETFs - equities | 3,878 | 740 | - | 4,618 | ||||||||||||
Inverse ETFs - equities | 2,314 | - | (364 | ) | 1,950 | |||||||||||
$ | 6,295 | $ | 767 | $ | (380 | ) | $ | 6,682 |
Fiscal Years Ended April 30, | ||||||||||||
($ in thousands) | 2014 | 2013 | 2012 | |||||||||
Dividend income | $ | 147 | $ | 124 | $ | 68 | ||||||
Interest income | 5 | 4 | 16 | |||||||||
Realized gains (losses) on sales of securities available-for-sale reclassified from Accumulated Other Comprehensive Income | - | - | (11 | ) | ||||||||
Interest expense | (5 | ) | - | - | ||||||||
Other (1) | 31 | (2 | ) | (3 | ) | |||||||
Total income from securities transactions, net | $ | 178 | $ | 126 | $ | 70 |
65 |
Fiscal Years Ended April 30, | ||||||||||||
($ in thousands) | 2014 | 2013 | 2012 | |||||||||
Investment management fees earned from the Value Line Funds, net of waivers shown below | $ | 14,452 | $ | 12,773 | $ | 12,465 | ||||||
12b-1 fees and other fees, net of waivers shown below | $ | 5,061 | $ | 3,905 | $ | 3,466 | ||||||
Other income | $ | 16 | $ | 14 | $ | 12 | ||||||
Investment management fee waivers and reimbursements (1) | $ | 89 | $ | 379 | $ | 806 | ||||||
12b-1 fee waivers (1) | $ | 1,683 | $ | 2,156 | $ | 2,257 | ||||||
Value Line’s non-voting revenues interest | $ | 6,767 | $ | 5,781 | $ | 5,684 | ||||||
EAM’s net income (2) | $ | 1,464 | $ | 945 | $ | 461 |
Fiscal Years Ended April 30, | ||||||||
($ in thousands) | 2014 | 2013 | ||||||
EAM’s total assets | $ | 59,965 | $ | 59,349 | ||||
EAM’s total liabilities (1) | (3,158 | ) | (2,814 | ) | ||||
EAM’s total equity | $ | 56,807 | $ | 56,535 |
66 |
Notes to Consolidated Financial Statements
Value Line | ||||||||||||||||
Investment in | Maximum | |||||||||||||||
EAM Trust | Liabilities | Exposure to | ||||||||||||||
($ in thousands) | VIE Assets | (1) | Loss | |||||||||||||
As of April 30, 2014 | $ | 59,965 | $ | 57,850 | $ | - | $ | 57,850 | ||||||||
As of April 30, 2013 | $ | 59,349 | $ | 57,511 | $ | - | $ | 57,511 |
As of April 30, | ||||||||
($ in thousands) | 2014 | 2013 | ||||||
Land | $ | 726 | $ | 726 | ||||
Building and leasehold improvements | 5,024 | 7,391 | ||||||
Furniture and equipment | 5,312 | 11,180 | ||||||
11,062 | 19,297 | |||||||
Accumulated depreciation and amortization | (7,199 | ) | (15,367 | ) | ||||
Total property and equipment, net | $ | 3,863 | $ | 3,930 |
Fiscal Years Ended April 30, | ||||||||||||
($ in thousands) | 2014 | 2013 | 2012 | |||||||||
Current tax expense (benefit): | ||||||||||||
Federal | $ | 2,707 | $ | 2,679 | $ | 139 | ||||||
State and local | 239 | 130 | (54 | ) | ||||||||
2,946 | 2,809 | 85 | ||||||||||
Deferred tax expense (benefit): | ||||||||||||
Federal | 572 | 728 | 3,785 | |||||||||
State and local | (108 | ) | 350 | 503 | ||||||||
464 | 1,078 | 4,288 | ||||||||||
Income tax provision: | $ | 3,410 | $ | 3,887 | $ | 4,373 |
67 |
Notes to Consolidated Financial Statements
Fiscal Years Ended April 30, | ||||||||
($ in thousands) | 2014 | 2013 | ||||||
Federal tax benefit (liability): | ||||||||
Unrealized gains on securities available-for-sale | $ | (134 | ) | $ | (136 | ) | ||
Operating lease exit obligation | 70 | 13 | ||||||
Deferred professional fees | 36 | 49 | ||||||
Deferred charges | 327 | 265 | ||||||
Total federal tax benefit | 299 | 191 | ||||||
State and local tax benefits: | ||||||||
Other - deferred charges | 65 | 36 | ||||||
Total state and local tax benefits | 65 | 36 | ||||||
Deferred tax asset, short term | $ | 364 | $ | 227 | ||||
Fiscal Years Ended April 30, | ||||||||
($ in thousands) | 2014 | 2013 | ||||||
Federal tax liability (benefit): | ||||||||
Deferred gain on deconsolidation of EAM | $ | 17,679 | $ | 17,679 | ||||
Deferred non-cash post-employment compensation | (619 | ) | (619 | ) | ||||
Depreciation and amortization | 2,416 | 1,642 | ||||||
Other | 646 | 262 | ||||||
Total federal tax liability | 20,122 | 18,964 | ||||||
State and local tax liabilities (benefits): | ||||||||
Deferred gain on deconsolidation of EAM | 2,181 | 2,243 | ||||||
Deferred non-cash post-employment compensation | (76 | ) | (79 | ) | ||||
Depreciation and amortization | 298 | 208 | ||||||
Deferred professional fees | (5 | ) | (10 | ) | ||||
Total state and local tax liabilities | 2,398 | 2,362 | ||||||
Deferred tax liability, long term | $ | 22,520 | $ | 21,326 |
68 |
Notes to Consolidated Financial Statements
Fiscal Years Ended April 30, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
U.S. statutory federal rate | 35.00 | % | 35.00 | % | 35.00 | % | ||||||
Increase (decrease) in tax rate from: | ||||||||||||
State and local income taxes, net of federal income tax benefit | 0.84 | % | 2.96 | % | 2.58 | % | ||||||
Effect of dividends received deductions | -0.33 | % | -0.27 | % | - | |||||||
Alternative minimum tax - net operating loss limitation | - | - | 1.23 | % | ||||||||
Domestic production tax credit | -0.58 | % | -0.52 | % | - | |||||||
Other, net | -1.43 | % | -0.17 | % | -0.10 | % | ||||||
Effective income tax rate | 33.50 | % | 37.00 | % | 38.71 | % |
Fiscal Years Ended April 30, | Sublease | ||||
($ in thousands) | |||||
2015 | $ | 1,468 | |||
2016 | 1,468 | ||||
2017 | 1,224 | ||||
2018 | - | ||||
2019 and thereafter | - | ||||
$ | 4,160 |
69 |
Notes to Consolidated Financial Statements
($ in thousands) | Amount Before Tax | Tax (Expense)/ Benefit | Amount Net of Tax | |||||||||
Change in unrealized gains on securities | $ | 28 | $ | (10 | ) | $ | 18 | |||||
Less: Gains realized in net income | (36 | ) | 13 | (23 | ) | |||||||
$ | (8 | ) | $ | 3 | $ | (5 | ) |
($ in thousands) | Amount Before Tax | Tax Expense | Amount Net of Tax | |||||||||
Change in unrealized gains on securities | $ | 256 | $ | (90 | ) | $ | 166 | |||||
$ | 256 | $ | (90 | ) | $ | 166 |
70 |
Notes to Consolidated Financial Statements
($ in thousands) | Amount Before Tax | Tax Expense | Amount Net of Tax | |||||||||
Change in unrealized gains on securities | $ | 24 | $ | (9 | ) | $ | 15 | |||||
Add: Losses realized in net income | 11 | (4 | ) | 7 | ||||||||
$ | 35 | $ | (13 | ) | $ | 22 |
Total Average | Average Cost | Aggregate Purchase Price | |||||||||||||
($ in thousands except for cost per share) | Shares | Cost Assigned | per Share | Remaining Under the Program | |||||||||||
Balance as of April 30, 2011 (1) | 25,119 | $ | 444 | $ | 17.67 | $ | 3,110 | ||||||||
Purchases effected in open market | 78,500 | 946 | $ | 12.05 | $ | 2,165 | |||||||||
Balance as of April 30, 2012 (2) | 103,619 | $ | 1,390 | $ | 13.41 | $ | - | ||||||||
Purchases effected in open market (3) | 19,953 | 182 | $ | 9.13 | $ | 2,818 | |||||||||
Balance as of April 30, 2013 | 123,572 | $ | 1,572 | $ | 12.72 | $ | 2,818 | ||||||||
Purchases effected in open market (3) | 58,499 | 550 | $ | 9.41 | $ | 2,268 | |||||||||
Balance as of April 30, 2014 | 182,071 | $ | 2,122 | $ | 11.65 | $ | 2,268 |
71 |
Notes to Consolidated Financial Statements
72 |