<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 October 31, 2001 Commission file number 0-11306
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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
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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 October 31, 2001
----- -------------------------------
Common stock, $.10 par value 9,979,325 Shares
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<Page>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VALUE LINE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<Table>
<Caption>
Oct. 31, April 30,
2001 2001
-------- ---------
Assets
Current Assets:
Cash and cash equivalents (including short term
investments of $149,938 and $86,094, respectively) $150,322 $ 86,424
Trading securities 578 15,360
Accounts receivable, net of allowance for doubtful
accounts of $117 and $131, respectively 1,539 2,216
Receivable from affiliates 2,651 2,821
Prepaid expenses and other current assets 656 1,274
Deferred income taxes 742 742
-------- --------
Total current assets 156,488 108,837
Long term securities available for sale 78,523 148,784
Property and equipment, net 8,848 9,423
Capitalized software and other intangible assets, net 3,325 3,948
-------- --------
Total assets $247,184 $270,992
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $ 4,886 $ 5,716
Accrued salaries 1,757 2,291
Dividends payable 2,495 2,494
Accrued taxes payable 2,964 423
-------- --------
Total current liabilities 12,102 10,924
Unearned revenue 36,455 39,526
Deferred income taxes 10,775 20,194
Deferred charges 3 142
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 967 963
Retained earnings 168,540 163,416
Treasury stock, at cost (20,675 shares on 10/31/01,
and 21,075 on 4/30/01) (398) (406)
Accumulated other comprehensive income, net of tax 17,740 35,233
-------- --------
Total shareholders' equity 187,849 200,206
-------- --------
Total liabilities and shareholders' equity $247,184 $270,992
======== ========
</Table>
The accompanying notes and independent auditor's review report 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)
(UNAUDITED)
<Table>
<Caption>
Three months ended Six months ended
October 31, October 31,
2001 2000 2001 2000
---- ---- ---- ----
Revenues:
Investment periodicals and
related publications $13,178 $13,812 $26,508 $27,871
Investment management fees & svcs 8,599 11,861 18,109 22,357
------- ------- ------- -------
Total revenues 21,777 25,673 44,617 50,228
------- ------- ------- -------
Expenses:
Advertising and promotion 4,496 5,557 10,087 10,709
Salaries and employee benefits 5,886 6,072 11,770 12,091
Production and distribution 2,185 1,881 4,264 3,689
Office and administration 1,920 2,161 3,919 4,371
------- ------- ------- -------
Total expenses 14,487 15,671 30,040 30,860
------- ------- ------- -------
Income from operations 7,290 10,002 14,577 19,368
Income from securities transactions, net 2,169 1,023 2,435 2,214
------- ------- ------- -------
Income before income taxes 9,459 11,025 17,012 21,582
Provision for income taxes 3,944 4,528 6,898 8,860
------- ------- ------- -------
Net income $ 5,515 $ 6,497 $10,114 $12,722
======= ======= ======= =======
Earnings per share, basic & fully diluted $ 0.55 $ 0.65 $ 1.01 $ 1.27
======= ======= ======= =======
</Table>
The accompanying notes and independent auditor's review report 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)
(UNAUDITED)
<Table>
<Caption>
For the six months
ended
Oct. 31, Oct. 31,
2001 2000
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 10,114 $ 12,722
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 1,527 1,515
Gains on sales of trading securities and securities held for sale (1,365) (1,134)
Unrealized losses on trading securities 386 1,179
Loss on disposal of equipment 6 --
Changes in assets and liabilities:
Decrease in unearned revenue (3,071) (4,396)
Decrease in deferred charges (139) (138)
Decrease in accounts payable and accrued expenses (830) (318)
Decrease in accrued salaries (534) (395)
Increase/(decrease) in accrued taxes payable 2,541 (1,041)
Decrease/(increase) in prepaid expenses and other current assets 618 (118)
Decrease in accounts receivable 677 608
Decrease/(increase) in receivable from affiliates 170 (538)
----------- -----------
Total adjustments (14) (4,776)
----------- -----------
NET CASH PROVIDED BY OPERATIONS 10,100 7,946
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of long term securities 49,903 24,572
Purchases of long term securities (82) (4,321)
Proceeds from sales of trading securities 31,725 22,476
Purchases of trading securities (22,436) (21,991)
Acquisition of property, and equipment (103) (524)
Expenditures for capitalized software (232) (641)
----------- -----------
NET CASH PROVIDED BY INVESTING ACTIVITIES 58,775 19,571
CASH FLOWS FROM FINANCING ACTIVITIES:
PROCEEDS FROM SALES OF TREASURY STOCK 12 --
Dividends paid (4,989) (4,990)
----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (4,977) (4,990)
----------- -----------
Net increase in cash and cash equivalents 63,898 22,527
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 86,424 47,933
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 150,322 $ 70,460
=========== ===========
</Table>
The accompanying notes and independent auditor's review report 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 SIX MONTHS ENDED OCTOBER 31, 2001
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<Table>
<Caption>
Common stock
Accumulated
Other
Comprehensive
income
(Unrealized
Number Par value Additional gains on
of @ $.10 paid-in Treasury Comprehensive Retained long term
shares Per share capital Stock income earnings securities) Total
------ --------- ------- ----- ------ -------- ----------- -----
Balance at May 1, 2001 9,978,925 $1,000 $963 ($406) $163,416 $35,233 $200,206
Comprehensive income
Net income $10,114 10,114 10,114
Other comprehensive income,
net of tax:
Change in unrealized
gains on securities (17,493) (17,493) (17,493)
-------
Comprehensive income ($7,379)
=======
Exercise of stock options 400 4 8 12
Dividends declared (4,990) (4,990)
--------- ------ ---- ----- -------- ------- --------
Balance at October 31, 2001 9,979,325 $1,000 $967 ($398) $168,540 $17,740 $187,849
========= ====== ==== ===== ======== ======= ========
</Table>
The accompanying notes and independent auditor's review report 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 SIX MONTHS ENDED OCTOBER 31, 2000
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<Table>
<Caption>
Common stock
Accumulated
Other
Comprehensive
income
(Unrealized
Number Par value Additional gains on
of @ $.10 paid-in Treasury Comprehensive Retained long term
shares Per share capital Stock income earnings securities) Total
------ --------- ------- ----- ------ -------- ----------- -----
Balance at May 1, 2000 9,978,625 $1,000 $959 ($411) $149,304 $60,014 $210,866
Comprehensive income
Net income $12,722 12,722 12,722
Other comprehensive income,
net of tax:
Change in unrealized
gains on securities (1,464) (1,464) (1,464)
-------
Comprehensive income $11,258
=======
Dividends declared (4,990) (4,990)
--------- ------ ---- ----- -------- ------- --------
Balance at October 31, 2000 9,978,625 $1,000 $959 ($411) $157,036 $58,550 $217,134
========= ====== ==== ===== ======== ======= ========
</Table>
The accompanying notes and independent auditor's review report are an integral
part of these financial statements.
6
<Page>
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED 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 30,
2001 for the fiscal year ended April 30, 2001. 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 October 31, 2001 and April 30, 2001, cash
equivalents included $149,768,000 and $86,011,000, 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.
Advertising expenses:
The Company expenses advertising costs as incurred.
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
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VALUE LINE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARKETABLE SECURITIES - NOTE 2:
- -------------------------------
Trading Securities:
Securities held by the Company and by Value Line Securities, Inc. had an
aggregate cost of $585,000 and a market value of $578,000 at October 31, 2001,
and an aggregate cost of $14,981,000 and a market value of $15,360,000 at
April 30, 2001.
Long-Term Securities Available for Sale:
The aggregate cost of the long-term securities was $51,230,000 and a market
value of $78,523,000 at October 31, 2001. The aggregate cost of the long-term
securities was $94,579,000 and a market value of $148,784,000 at April 30, 2001.
At October 31, 2001, the decrease in gross unrealized appreciation on these
securities of $26,912,000, net of deferred taxes of $9,419,000, was included
in shareholders' equity. During the second quarter of fiscal 2002, the
Company sold various securities from its long term securities portfolio. The
proceeds from these sales were $49,903,000 and the related gain on these
sales were $6,472,000.
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - NOTE 3:
- ----------------------------------------------------------
Cash payments for income taxes were $4,352,000 and $9,910,000 during the six
months ended October 31, 2001 and 2000, respectively.
EMPLOYEES' PROFIT SHARING AND SAVINGS PLAN - NOTE 4:
- ----------------------------------------------------
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. The estimated profit sharing plan contribution, which is
included as an expense in salaries and employee benefits in the Consolidated
Statements of Income for the six months ended October 31, 2001 and 2000, was
$750,000 and $690,000, respectively.
8
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VALUE LINE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 October 31, 2001 and 2000, the Company held long term securities classified
as available-for-sale. For the six months ended October 31, 2001 and 2000 the
decrease in gross unrealized gains on these securities were $26,912,000 and
$2,252,000, and the decrease related to deferred taxes was $9,419,000 and
$788,000, respectively.
RELATED PARTY TRANSACTIONS - NOTE 6:
- ------------------------------------
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. Effective July 1, 2000, the Company received service and
distribution fees under rule 12b-1 of the Investment Company Act of 1940 from
all but two of the fifteen mutual funds for which Value Line is the adviser.
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 six months ended October 31, 2001 and October 31, 2000
investment management fees, 12b-1 service and distribution fees and brokerage
commission income, net of clearing fees, amounted to $17,035,000 and
$20,609,000, respectively. These amounts include service and distribution fees
of $3,259,000 and $2,900,000, respectively. The related receivables from the
funds for management advisory fees and 12b-1 service fees included in Receivable
from affiliates were $2,509,000 and $2,697,000 at October 31, 2001 and April 30,
2001, respectively.
For the six months ended October 31, 2001 and 2000, the Company was reimbursed
$272,000 and $263,000, respectively, for payments it made on behalf of and
services it provided to Arnold Bernhard and Company, Inc. ("Parent"). At October
31, 2001 and April 30, 2001, Receivable from Affiliates included a receivable
from the Parent of $45,000 and $46,000 respectively. For the six months ended
October 31, 2001 and 2000, the Company made federal income tax payments to the
Parent amounting to $2,750,000 and $7,950,000, respectively.
9
<Page>
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FEDERAL, STATE AND LOCAL INCOME TAXES - NOTE 7:
- -----------------------------------------------
The Company computes its tax in accordance with the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes".
The provision for income taxes includes the following:
<Table>
<Caption>
Six months ended October 31,
2001 2000
--------------------
(in thousands)
Current:
Federal $5,925 $7,455
State and local 1,108 1,774
--------------------
7,033 9,229
Deferred:
Federal (135) (357)
State and local -- (12)
--------------------
(135) (369)
--------------------
$6,898 $8,860
====================
</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
asset/(liability) are primarily a result of unrealized gains on the Company's
trading and long term securities portfolios.
BUSINESS SEGMENTS - NOTE 8:
- ---------------------------
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 FINANCIAL STATEMENTS (CONTINUED)
Disclosure of Reportable Segment Profit and Segment Assets (in thousands)
<Table>
<Caption>
Six months ended October 31, 2001
Publishing Investment Total
Management
Services
Revenues from external customers $26,508 $18,109 $44,617
Intersegment revenues 111 -- 111
Income from securities transactions 74 2,361 2,435
Depreciation and amortization 1,490 20 1,510
Segment profit 7,928 6,666 14,594
Segment assets 18,599 227,420 246,019
Expenditures for
segment assets 322 13 335
<Caption>
Six months ended October 31, 2000
Publishing Investment Total
Management
Services
Revenues from external customers $27,871 $22,357 $50,228
Intersegment revenues 54 -- 54
Income from securities transactions 138 2,076 2,214
Depreciation and amortization 1,457 29 1,486
Segment profit 8,039 11,358 19,397
Segment assets 20,589 276,161 296,750
Expenditures for
segment assets 1,064 90 1,154
</Table>
11
<Page>
VALUE LINE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Reconciliation of Reportable Segment Revenues,
Operating Profit and Assets (in thousands)
<Table>
<Caption>
Six months ended October 31,
2001 2000
Revenues
Total revenues for reportable segments $44,728 $50,282
Elimination of intersegment revenues (111) (54)
--------------------
Total consolidated revenues $44,617 $50,228
====================
Segment profit
Total profit for reportable segments $17,029 $21,611
Less: Depreciation related to corporate assets (17) (29)
--------------------
Income before income taxes $17,012 $21,582
====================
Assets
Total assets for reportable segments $246,019 $296,750
Corporate assets 1,165 640
--------------------
Consolidated total assets $247,184 $297,390
====================
</Table>
12
<Page>
[HOROWITZ & ULLMANN, P.C. LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Value Line, Inc.
New York, NY
We have reviewed the accompanying consolidated balance sheet of Value
Line, Inc. and its subsidiaries as of October 31, 2001 and the related
consolidated statements of income, changes in stockholder's equity, and cash
flows for the six month periods ended October 31, 2001 and 2000. All
information included in these financial statements is the representation of
the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in score than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of April 30, 2001 and the
related consolidated statements of income, changes in stockholder's equity,
and cash flows for the year then ended (not presented herein), and in our
report dated July 12, 2001, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying consolidated balance sheet as of April 30, 2001 is fairly
stated in all material respects.
/s/ Horowitz & Ullmann, P.C.
December 14, 2001
13
<Page>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS:
LIQUIDITY AND CAPITAL RESOURCES:
The Company had liquid resources, which were used in its business, of
$222,909,000 at October 31, 2001. In addition to $144,386,000 of working
capital, the Company had long-term securities available for sale with a market
value of $78,523,000, that, although classified as non-current assets, are also
readily marketable should the need arise.
The Company's cash flow from operations of $10,100,000 for the six months ended
October 31, 2001 was 27% higher than fiscal 2001's cash flow of $7,946,000. The
increase in cash flow from operations was primarily due to a delayed payment of
federal income tax as provided by the Internal Revenue Service's disaster relief
that resulted from the September 11, 2001 terrorist attacks in New York City. A
23% increase in new full term subscription orders also contributed to the cash
flow from operations. Net cash inflows from investing activities during the
first six months of fiscal 2002 were $39,204,000 higher than net cash flows for
the first six months of fiscal 2001 due largely to the Company's decision to
realign its long-term securities holdings and substantially reduce its equity
trading portfolio holdings.
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 2002.
RESULTS OF OPERATIONS:
Net income for the six months ended October 31, 2001 was $10,114,000, or $1.01
per share compared with net income of $12,722,000 or $1.27 per share during the
same period of last fiscal year. Net income for the second quarter was
$5,515,000 or $.55 per share as compared to $6,497,000 or $.65 per share for the
three months ended October 31, 2000. Revenues of $44,617,000 for the six months
ended October 31, 2001 were 11% below those during the same period last year due
largely to the 19% decline in investment management fees and services revenue,
mainly from the Value Line family of mutual funds, as a result of the decline in
the equity markets. Operating income of $14,577,000 for the six months ended
October 31, 2001, compares to operating income of $19,368,000 for the same
period of last fiscal year.
Subscription revenues of $26,508,000 were 5% below revenues for the same period
of the prior fiscal year. The decrease in subscription revenues compared to the
prior year is a result of a 5% decline in revenues from THE VALUE LINE
INVESTMENT SURVEY and related products, which include THE VALUE LINE
INVESTMENT SURVEY FOR WINDOWS, RESEARCH CENTER, CONDENSED, EXPANDED EDITION,
AND VALUE LINE SELECT. As of October 31, 2001, combined circulation to the
VALUE LINE INVESTMENT SURVEY, VALUE LINE INVESTMENT SURVEY FOR WINDOWS,
RESEARCH CENTER, AND CONDENSED is 2% higher than the prior year's
circulation. The change in subscription revenues is primarily attributable to
the continued difficult financial market conditions that investors face, with
the NASDAQ index falling almost 50% during the past 12 months. This decline
in the financial markets has, in turn, restrained demand for the Company's
investment publications. Recently, the Company experienced a substantial
increase in subscription activity with total new subscription orders rising
over 23% from the level during the first six months of the prior fiscal year.
Investment management fees and services revenues of $18,109,000 for the six
months ended October 31, 2001, were 19% below the prior fiscal year's revenues.
The lower investment management fees and services are due to a decrease in the
average annual net assets under management in the Company's mutual funds that
resulted primarily from the decline in the financial markets during the past
12 months.
14
<Page>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS:
Operating expenses for the six months ended October 31, 2001 of $30,040,000 were
slightly less than last year's expenses of $30,860,000. Total advertising
expenses increased 5% over the prior year's expenses as a result of additional
advertising for the Value Line family of mutual funds for which Value Line is
the advisor. In addition, the United States Postal Service raised postage rates
approximately 10% and 2% effective January 1, 2001 and July 1, 2001,
respectively, which has increased both direct mail marketing and product
distribution expenses during the fiscal 2002. Salaries and employee benefit
expenses of $11,770,000 were 3% below expenses of $12,091,000 recorded in the
prior fiscal year. Production and distribution costs for the six months ended
October 31, 2001 of $4,264,000 were 16% above expenses of $3,689,000 for the six
months ended October 31, 2000. The increase in production expenses was a result
of a reclassification of maintenance costs and amortization of new product
development expenditures for Version 2 of the Company's Website from
administrative expenses. Additionally, expenses associated with outsourcing a
portion of the Company's stock and mutual fund data collection services and
amortization of previously deferred costs for the development of computer
software for internal use contributed to the higher production expenses. Office
and administrative expenses of $3,919,000 were 10% below last year's expenses of
$4,371,000. The net decrease in administrative expenses primarily resulted from
the aforementioned reclassification of certain maintenance expenses and
amortization of software development expenditures for Value Line's Internet site
to production expenses.
The Company's securities portfolios produced a gain of $2,435,000 for the six
months ended October 31, 2001 compared to a gain of $2,214,000 during last
fiscal year. The second quarter of fiscal 2002 includes gains of $6,472,000
attributable to sales of securities from the Company's long-term securities
portfolio. The Company's trading portfolio produced losses of $5,493,000
during the six months ended October 31, 2001, versus a gain of $15,000 during
the same period of last fiscal year. The value of the Company's securities
portfolio has been negatively impacted by the declining financial market that
started at the beginning of fiscal year 2001. The decline has accelerated
dramatically during the current fiscal year. Income from securities
transactions also included dividend income of $1,464,000 for the six months
ended October 31, 2001, which compares to $2,245,000 for the same period of
last fiscal year.
With a net profit margin of 23%, an operating profit margin of 33%, and
liquid resources in excess of $222 million, the Company remains poised to
continue to succeed in the near future.
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 October 31,
2001 to be signed on its behalf by the undersigned thereunto duly authorized.
Value Line, Inc.
(Registrant)
Date: December 17, 2001 By: s/Jean Bernhard Buttner
-------------------------
Jean Bernhard Buttner
Chairman & Chief Executive Officer
Date: December 17, 2001 By: s/Stephen R. Anastasio
-------------------------
Stephen R. Anastasio
Chief Accounting Officer
Date: December 17, 2001 By:
-------------------------
David T. Henigson
Vice President and Treasurer
16