-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ocz8uVSG3L31a40tOQBl8GAFUPIFBB60Ce2SG3UdNljaLTGn6W6cc+Wch7XeRwHl 9k3IP8Pc7yc7tjomHjDTJQ== 0000950134-02-012343.txt : 20021010 0000950134-02-012343.hdr.sgml : 20021010 20021010140145 ACCESSION NUMBER: 0000950134-02-012343 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020831 FILED AS OF DATE: 20021010 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDUCATIONAL DEVELOPMENT CORP CENTRAL INDEX KEY: 0000031667 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISCELLANEOUS NONDURABLE GOODS [5190] IRS NUMBER: 730750007 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04957 FILM NUMBER: 02786186 BUSINESS ADDRESS: STREET 1: 10302 E 55TH PL #B CITY: TULSA STATE: OK ZIP: 74146 BUSINESS PHONE: 9186224522 MAIL ADDRESS: STREET 1: PO BOX 470663 CITY: TULSA STATE: OK ZIP: 741460663 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL TEACHING TAPES INC DATE OF NAME CHANGE: 19701030 FORMER COMPANY: FORMER CONFORMED NAME: TUTOR TAPES INTERNATIONAL CORP DATE OF NAME CHANGE: 19701030 10-Q 1 d00322e10vq.txt FORM 10-Q FOR QUARTER ENDED AUGUST 31, 2002 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 2002. [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . ----------- ------------ Commission file number: 0-4957 EDUCATIONAL DEVELOPMENT CORPORATION (Exact name of registrant as specified in its charter) Delaware 73-0750007 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10302 East 55th Place, Tulsa Oklahoma 74146-6515 (Address of principal executive offices) Registrant's telephone number: (918) 622-4522 Indicate by check mark whether the registrant (1) has filed all reports 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 --- --- As of August 31, 2002 there were 3,827,283 shares of Educational Development Corporation Common Stock, $0.20 par value outstanding. EDUCATIONAL DEVELOPMENT CORPORATION PART I. FINANCIAL INFORMATION ITEM 1 BALANCE SHEETS
August 31, 2002 (unaudited) February 28, 2002 --------------- ----------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 471,300 $ 906,900 Accounts receivable - (less allowances for doubtful accounts and sales returns: 8/31/02 - $188,000 2/28/02 - $184,100) 2,723,400 2,040,400 Inventories - Net 8,682,000 8,292,000 Prepaid expenses and other assets 144,700 218,300 Income taxes receivable 30,100 -- Deferred income taxes 119,800 120,700 ------------ ------------ Total current assets 12,171,300 11,578,300 INVENTORIES 487,400 683,900 PROPERTY AND EQUIPMENT at cost (less accumulated depreciation: 08/31/02 - $1,498,100; 2/28/02 - $1,446,000) 1,974,700 1,907,600 ------------ ------------ $ 14,633,400 $ 14,169,800 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 3,096,300 $ 3,380,100 Accrued salaries and commissions 446,700 352,800 Income taxes -- 63,800 Other current liabilities 258,600 244,800 ------------ ------------ Total current liabilities 3,801,600 4,041,500 DEFERRED INCOME TAXES 12,300 13,000 COMMITMENTS SHAREHOLDERS' EQUITY: Common Stock, $.20 par value (Authorized 8,000,000 shares; Issued 5,429,240 shares; Outstanding 3,827,283 and 3,822,117 shares) 1,085,800 1,085,800 Capital in excess of par value 4,443,400 4,417,500 Retained earnings 10,419,300 9,647,700 ------------ ------------ 15,948,500 15,151,000 Less treasury shares, at cost (5,129,000) (5,035,700) ------------ ------------ 10,819,500 10,115,300 ------------ ------------ $ 14,633,400 $ 14,169,800 ============ ============
See notes to financial statements. 2 EDUCATIONAL DEVELOPMENT CORPORATION STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended August 31, Six Months Ended August 31, 2002 2001 2002 2001 ------------ ------------ ------------ ------------ GROSS SALES $ 8,728,300 $ 7,953,000 $ 17,866,800 $ 15,236,800 Less discounts & allowances (3,126,200) (2,844,600) (6,132,400) (5,327,800) ------------ ------------ ------------ ------------ Net sales 5,602,100 5,108,400 11,734,400 9,909,000 COST OF SALES 2,297,900 2,108,100 4,743,000 4,080,900 ------------ ------------ ------------ ------------ Gross margin 3,304,200 3,000,300 6,991,400 5,828,100 ------------ ------------ ------------ ------------ OPERATING EXPENSES: Operating & selling 914,200 877,100 1,911,400 1,709,700 Sales commissions 1,274,700 1,104,600 2,712,000 2,137,600 General & administrative 400,700 361,700 775,900 715,900 Interest 300 4,300 900 20,300 ------------ ------------ ------------ ------------ 2,589,900 2,347,700 5,400,200 4,583,500 ------------ ------------ ------------ ------------ OTHER INCOME 15,400 12,100 21,800 18,700 ------------ ------------ ------------ ------------ EARNINGS BEFORE INCOME TAXES 729,700 664,700 1,613,000 1,263,300 INCOME TAXES 275,700 240,900 611,300 470,000 ------------ ------------ ------------ ------------ NET EARNINGS $ 454,000 $ 423,800 $ 1,001,700 $ 793,300 ============ ============ ============ ============ BASIC AND DILUTED EARNINGS PER SHARE: Basic $ 0.12 $ 0.11 $ 0.26 $ 0.20 ============ ============ ============ ============ Diluted $ 0.11 $ 0.11 $ 0.24 $ 0.20 ============ ============ ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING: Basic 3,834,772 3,867,091 3,836,324 3,890,899 ============ ============ ============ ============ Diluted 4,144,683 4,028,636 4,150,941 4,017,429 ============ ============ ============ ============ DIVIDENDS DECLARED PER COMMON SHARE $ -- $ -- $ 0.06 $ 0.04 ============ ============ ============ ============
See notes to financial statements. 3 EDUCATIONAL DEVELOPMENT CORPORATION STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
Common Stock (par value $.20 per share) -------------------------- Number of Capital in Shares Excess of Retained Issued Amount Par Value Earnings --------- ------------ ------------ ------------ BALANCE, MAR. 1, 2002 5,429,240 $ 1,085,800 $ 4,417,500 $ 9,647,700 Purchases of treasury stock -- -- -- -- Sales of treasury stock -- -- 1,900 -- Exercise of options at $5.50/share -- -- 23,700 -- Exercise of options at $4.00/share -- -- 300 -- Dividends paid ($0.06/share) -- -- -- (230,100) Net earnings -- -- -- 1,001,700 --------- ------------ ------------ ------------ BALANCE, AUG. 31, 2002 5,429,240 $ 1,085,800 $ 4,443,400 $ 10,419,300 ========= ============ ============ ============ Treasury Stock ------------------------------ Number of Shareholders' Shares Amount Equity ------------ ------------ ------------- BALANCE, MAR. 1, 2002 1,607,123 $ (5,035,700) $ 10,115,300 Purchases of treasury stock 28,100 (197,700) (197,700) Sales of treasury stock (22,866) 71,800 73,700 Exercise of options at $5.50/share (10,000) 31,300 55,000 Exercise of options at $4.00/share (400) 1,300 1,600 Dividends paid ($0.06/share) -- -- (230,100) Net earnings -- -- 1,001,700 ------------ ------------ ------------ BALANCE, AUG. 31, 2002 1,601,957 $ (5,129,000) $ 10,819,500 ============ ============ ============
See notes to financial statements. 4 EDUCATIONAL DEVELOPMENT CORPORATION STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended August 31 ---------------------------- 2002 2001 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES $ (11,900) $ 1,626,300 CASH FLOWS FROM INVESTING ACTIVITIES - Purchases of property and equipment (126,200) (46,000) ----------- ----------- Net cash used in investing activities (126,200) (46,000) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under revolving credit agreement 1,317,000 2,347,000 Payments under revolving credit agreement (1,317,000) (3,431,000) Cash received from exercise of stock option 56,600 -- Cash received from sale of treasury stock 73,700 34,500 Cash paid to acquire treasury stock (197,700) (235,400) Dividends paid (230,100) (154,100) ----------- ----------- Net cash used in financing activities (297,500) (1,439,000) ----------- ----------- Net Increase (Decrease) in Cash and Cash Equivalents (435,600) 141,300 Cash and Cash Equivalents, Beginning of Period 906,900 268,300 ----------- ----------- Cash and Cash Equivalents, End of Period $ 471,300 $ 409,600 =========== =========== Supplemental Disclosure of Cash Flow Information: Cash paid for interest $ 700 $ 25,900 =========== =========== Cash paid for income taxes $ 705,000 $ 355,300 =========== ===========
See notes to financial statements. 5 EDUCATIONAL DEVELOPMENT CORPORATION NOTES TO FINANCIAL STATEMENTS Note 1 - The information shown with respect to the three months and six months ended August 31, 2002 and 2001, which is unaudited, includes all adjustments which in the opinion of Management are considered to be necessary for a fair presentation of earnings for such periods. The adjustments reflected in the financial statements represent normal recurring accruals. The results of operations for the three months and six months ended August 31, 2002 and 2001, respectively, are not necessarily indicative of the results to be expected at year end due to seasonality of the product sales. These financial statements and notes are prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and should be read in conjunction with the Financial Statements and accompanying notes contained in the Company's Annual Report to Shareholders for the Fiscal Year ended February 28, 2002. Note 2 - Effective June 30, 2002 the Company signed a Third Amendment to the Credit and Security Agreement with State Bank which provides a $3,500,000 line of credit. This line of credit is evidenced by a promissory note in the amount of $3,500,000 payable June 30, 2003. This note bears interest at the Wall Street Journal prime floating rate minus 0.25% payable monthly. The note is collateralized by substantially all the assets of the Company. At August 31, 2002, the Company had no borrowings outstanding. Note 3 - Inventories consist of the following:
August 31, 2002 February 28, 2002 --------------- ----------------- Current: Book Inventory $ 8,728,400 $ 8,338,400 Reserve for Obsolescence (46,400) (46,400) ----------- ----------- Inventories net - current $ 8,682,000 $ 8,292,000 =========== =========== Non-current: Book Inventory $ 639,000 $ 817,500 Reserve for Obsolescence (151,600) (133,600) ----------- ----------- Inventories - non-current $ 487,400 $ 683,900 =========== ===========
The Company occasionally purchases book inventory in quantities in excess of what will be sold within the normal operating cycle due to minimum order requirements of the Company's primary supplier. These amounts are included in non-current inventory. Note 4 - Basic earnings per share ("EPS") is computed by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted EPS is based on the combined weighted average number of common shares outstanding and dilutive potential common shares issuable which include, where appropriate, the assumed exercise of options. In computing diluted EPS the Company has utilized the treasury stock method. 6 EDUCATIONAL DEVELOPMENT CORPORATION The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share ("EPS") is shown below.
Three Months Ended August 31, Six Months Ended August 31, 2002 2001 2002 2001 ---------- ---------- ---------- ---------- Net Earnings $ 454,000 $ 423,800 $1,001,700 $ 793,300 ========== ========== ========== ========== Basic EPS: Weighted Average Shares Outstanding 3,834,772 3,867,091 3,836,324 3,890,899 ========== ========== ========== ========== Basic EPS $ 0.12 $ 0.11 $ 0.26 $ 0.20 ========== ========== ========== ========== Diluted EPS: Weighted Average Shares Outstanding 3,834,772 3,867,091 3,836,324 3,890,899 Assumed Exercise of Options 309,911 161,545 314,617 126,530 ---------- ---------- ---------- ---------- Shares Applicable to Diluted Earnings 4,144,683 4,028,636 4,150,941 4,017,429 ========== ========== ========== ========== Diluted EPS $ 0.11 $ 0.11 $ 0.24 $ 0.20 ========== ========== ========== ==========
Since March 1, 1998, when the Company began its stock repurchase program, 1,707,874 shares of the Company's common stock at a total cost of $5,482,100 have been acquired. The Board of Directors previously authorized purchasing up to 2,000,000 shares as market conditions warrant. At their September 18, 2002 meeting, the Board of Directors authorized purchasing up to an additional 500,000 shares as market conditions warrant. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements contained in this Management Discussion and Analysis are not based on historical facts, but are forward-looking statements that are based upon numerous assumptions about future conditions that may ultimately prove to be inaccurate. Actual events and results may materially differ from anticipated results described in such statements. The Company's ability to achieve such results is subject to certain risks and uncertainties. Such risks and uncertainties include but are not limited to, product prices, continued availability of capital and financing, and other factors affecting the Company's business that may be beyond its control. FINANCIAL CONDITION The financial condition of the Company remains strong. Working capital at August 31, 2002 was $8,369,700 compared with $7,536,800 at the end of fiscal year 2002. Accounts receivable increased 30.9% during the first six months of fiscal year 2003. The Company's "fall special" began during the second quarter and contributed to the increase in accounts receivable. This "fall special" offered extended payment terms of 60 days or a December 15 due date, depending upon the size of the order. Inventory levels rose slightly, increasing 2.3% over inventory at fiscal year end 2002. The level of inventory will fluctuate depending upon sales and the timing of shipments from the Company's principal supplier. The Company continuously monitors inventory to assure it has adequate supplies on hand to meet sales requirements. Accounts payable decreased 8.4% during the first six months of fiscal year 2003. A major component of accounts payable is the amount due to the Company's principal supplier. Increases and decreases in inventory levels as well as the timing of the purchases and the payment terms offered by various suppliers affect the levels of accounts payable. Cash generated by increased sales in the Home Business Division enabled the Company to conclude the quarter ended August 31, 2002 with no short term bank debt. The Company paid a dividend of $0.06 per share on August 12, 2002. Pre-tax margins were 13.0% and 13.7% for the three months and six months ended August 31, 2002, respectively, compared with 13.0% and 12.8% for the same comparable periods last year. 7 EDUCATIONAL DEVELOPMENT CORPORATION RESULTS OF OPERATIONS Revenues - Net sales from the Home Business Division were $7,328,700 for the six months ended August 31, 2002 compared with $5,756,600 for the six months ended August 31, 2001, an increase of 27.3%. Net sales for the three month period ending August 31, 2002 were $3,372,300, an increase of 14.2% over net sales of $2,953,100 for the same three month period last year. The Company attributes these increases to the addition of new sales consultants and the retention of existing sales consultants. The Company continues to offer new incentive programs, travel contests and regional seminars to help stimulate sales and recruiting. The Company also continues to offer its leadership skills program for the supervisors. Management believes that the Home Business Division will continue to grow. Net sales in the Publishing Division were $4,405,700 for the six months ended August 31, 2002 compared with net sales of $4,152,400 for the six months ended August 31, 2001, an increase of 6.1%. Net sales for the three months ended August 31, 2002 were $2,229,800, an increase of 3.5% over net sales of $2,155,300 for the same three month period last year. The juvenile paperback market is highly competitive. Industry sales of juvenile paperbacks approaches $888 million annually. The Publishing Division's annual sales are approximately 0.8% of industry sales. Competitive factors include product quality, price and deliverability. Sales to national chains continues to be of major importance to the Publishing Division. To insure that the Company continues to successfully participate in their growth, we continue our cooperative advertising program and other special promotional programs. These activities have improved our relationship with the national chains and we anticipate further positive development in this important area. Management believes the Company can improve its market share. Cost of Sales - The Company's cost of sales for the six months ended August 31, 2002 was $4,743,000, an increase of 16.2% over cost of sales of $4,080,900 for the six months ended August 31, 2001. Cost of sales expressed as a percentage of gross sales was 26.5% for the six months ended August 31, 2002 and 26.8% for the same six month period a year ago. Cost of sales for the three months ended August 31, 2002 was $2,297,900 compared with $2,108,100 for the three months ended August 31, 2001, an increase of 9.0%. Cost of sales expressed as a percentage of gross sales were 26.3% and 26.5% for the three month periods ending August 31, 2002 and 2001 respectively. Cost of sales as a percentage of gross sales will fluctuate primarily depending upon the product mix sold. Operating Expenses - Operating and selling expenses increased 11.8% to $1,911,400 for the six months ended August 31, 2002 when compared with $1,709,700 for the six months ended August 31, 2001. Expressed as a percentage of gross sales, operating and selling expenses were 10.7% for the six months ended August 31, 2002 and 11.2% for the same six month period last year. Operating and selling expenses for the three months ended August 31, 2002 and 2001 were $914,200 and $877,100, respectively, an increase of 4.2%. These costs expressed as a percentage of gross sales were 10.5% for the three months ended August 31, 2002 and 11.0% for the three months ended August 31, 2001. Increases in promotional costs and credit card fees in the Home Business Division, plus increases in shipping costs and promotional costs in the Publishing Division, all of which are the direct result of increased sales in these two divisions, contributed to the increase in operating expenses. Sales commissions for the six months ended August 31, 2002 were $2,712,000, an increase of 26.9% over sales commission of $2,137,600 for the six months ended August 31, 2001. These expenses expressed as a percentage of gross sales were 15.2% for the six months ended August 31, 2002 and 14.0% for the six months ended August 31, 2001. Sales commissions for the three months ended August 31, 2002 and 2001 were $1,274,700 and $1,104,600, respectively, an increase of 15.4%. Sales commissions expressed as a percentage of gross sales were 14.6% for the three months ended August 31, 2002 and 13.9% for the three months ended August 31, 2001. Sales commissions as a percentage of gross sales is determined by the product mix sold and the division which makes the sale. The Home Business Division and the Publishing Division have separate and distinct commission programs and rates. Sales commissions in the Home Business Division increased 16.1% and 27.8% for the three months and six months ended August 31, 2002, the result of increased sales in that division. Although sales in the Publishing Division increased in both the three month period and six month period ended August 31, 2002, sales commissions in the Publishing Division decreased 7.8% and 3.0% for the three months and six months ended August 31, 2002. This was the result of increased sales in the Company's "house accounts", the Company's largest customers, which have no commission expense associated with them. General and administrative for the six months ended August 31, 2002 were $775,900, an increase of 8.4% over $715,900 for the same six month period last year. These expenses expressed as a percentage of gross sales were 4.3% for the six months ended August 31, 2002 and 4.7% for the six months ended August 31, 2001. General and administrative expenses for the three months ended August 31, 2002 were $400,700 versus $361,700 for the same three months last year, an increase of 10.8%. These costs expressed as a percentage of gross sales were 4.6% and 4.5% for the three months ended August 31, 2002 and 2001, respectively. Contributing to the increases in general and administrative expenses were increases in payroll costs and public relation costs. Interest expense was less than $1,000 for the six months and three months ended August 31, 2002 compared to $20,300 and $4,300, respectively, for the six months and three months ended August 31, 2001. Minimal borrowings and lower interest costs contributed to the lower interest expense. 8 EDUCATIONAL DEVELOPMENT CORPORATION Cash flows from operating activities was negative for the six months ended August 31, 2002. Contributing to this was a increase in accounts receivable, the result of the "fall special" which offered customers extended payment terms. Also affecting cash flow was an increase in inventories and a decrease in payables. BUSINESS SEGMENTS The Company has two reportable segments: Publishing and Usborne Books at Home ("UBAH"). These reportable segments are business units that offer different methods of distribution to different types of customers. They are managed separately based on the fundamental differences in their operations. The Publishing Division markets its products to retail accounts, which include book, school supply, toy and gift stores and museums, through commissioned sales representatives, trade and specialty wholesalers and an internal telesales group. The UBAH Division markets its product line through a network of independent sales consultants through a combination of direct sales, home shows and book fairs. The accounting policies of the segments are the same as those of the Company. The Company evaluates segment performance based on operating profits of the segments which is defined as segment net sales reduced by direct cost of sales and direct expenses. Corporate expenses, including interest and depreciation, and income taxes are not allocated to the segments. The Company's assets are not allocated on a segment basis. Information by industry segment for the three months and six months ended August 31, 2002 and 2001 is set forth below:
Publishing UBAH Other Total ----------- ----------- ----------- ----------- SIX MONTHS ENDED AUGUST 31, 2002 Net sales from external customers $ 4,405,700 $ 7,328,700 $ -- $11,734,400 Earnings before income taxes $ 1,542,700 $ 1,608,100 $(1,537,800) $ 1,613,000 THREE MONTHS ENDED AUGUST 31, 2002 Net sales from external customers $ 2,229,800 $ 3,372,300 $ -- $ 5,602,100 Earnings before income taxes $ 752,300 $ 758,800 $ (781,400) $ 729,700 SIX MONTHS ENDED AUGUST 31, 2001 Net sales from external customers $ 4,152,400 $ 5,756,600 $ -- $ 9,909,000 Earnings before income taxes $ 1,496,400 $ 1,254,000 $(1,487,100) $ 1,263,300 THREE MONTHS ENDED AUGUST 31, 2001 Net sales from external customers $ 2,155,300 $ 2,953,100 $ -- $ 5,108,400 Earnings before income taxes $ 744,500 $ 648,800 $ (728,600) $ 664,700
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company does not have any material market risk. 9 EDUCATIONAL DEVELOPMENT CORPORATION Item 4. CONTROLS AND PROCEDURES With the participation of management, the Company's chief executive officer and chief financial officer evaluated the Company's disclosure controls and procedures on October 7, 2002. Based on this evaluation, the chief executive officer and the chief financial officer concluded that the disclosure controls and procedures are effective in connection with the Company's filing of its quarterly report on Form 10-Q for the quarterly period ended August 31, 2002. Subsequent to October 7, 2002 through the date of this filing of Form 10-Q for the quarterly period ended August 31, 2002, there have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls, including any significant deficiencies or material weaknesses of internal controls that would require corrective action. PART II OTHER INFORMATION None 10 EDUCATIONAL DEVELOPMENT CORPORATION SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EDUCATIONAL DEVELOPMENT CORPORATION (Registrant) Date: October 10, 2002 By /s/ Randall W. White ---------------- -------------------------- Randall W. White President Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. In connection with the Quarterly Report of Educational Development Corporation (the "Company") on Form 10-Q for the period ending August 31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Randall W. White, President and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: October 10, 2002 By /s/ Randall W. White ---------------- ------------------------------------- Randall W. White President and Chief Executive Officer In connection with the Quarterly Report of Educational Development Corporation (the "Company") on Form 10-Q for the period ending August 31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, W. Curtis Fossett, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: October 10, 2002 By /s/ W. Curtis Fossett ---------------- -------------------------- W. Curtis Fossett Chief Financial Officer 11 EDUCATIONAL DEVELOPMENT CORPORATION CERTIFICATION I, Randall W. White, President and CEO of Educational Development Corporation certify that: 1. I have reviewed this quarterly report on Form 10-Q of Educational Development Corporation. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: October 10, 2002 By /s/ Randall W. White ---------------- ------------------------------------- Randall W. White President and Chief Executive Officer I, W. Curtis Fossett, CFO of Educational Development Corporation certify that: 1. I have reviewed this quarterly report on Form 10-Q of Educational Development Corporation. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 12 EDUCATIONAL DEVELOPMENT CORPORATION 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: October 10, 2002 By /s/ W. Curtis Fossett ---------------- ------------------------------ W. Curtis Fossett Chief Financial Officer 13 -----END PRIVACY-ENHANCED MESSAGE-----