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 | 10017-2630 | ||||
(Address of principal executive offices) | (Zip Code) |
(212) 907-1500 | ||
(Registrant’s telephone number, including area code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x | Smaller reporting company o |
(Do not check if a smaller reporting company) |
Class | Outstanding at August 31, 2013 |
Common stock, $0.10 par value | 9,850,705 Shares |
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Page No.
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PART I. FINANCIAL INFORMATION
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Item 1.
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Consolidated Condensed Financial Statements
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Consolidated Condensed Balance Sheets as of July 31, 2013 and April 30, 2013
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3
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Consolidated Condensed Statements of Income for the three months ended July 31, 2013 and 2012
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4
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Consolidated Condensed Statements of Comprehensive Income for the three months ended July 31, 2013 and 2012
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5
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Consolidated Condensed Statements of Cash Flows for the three months ended July 31, 2013 and 2012
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6
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Consolidated Condensed Statement of Changes in Shareholders’ Equity for the three months ended July 31, 2013
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7
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|||
Consolidated Condensed Statement of Changes in Shareholders’ Equity for the three months ended July 31, 2012
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8
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Notes to Consolidated Condensed Financial Statements
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9
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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19
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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29
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Item 4.
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Controls and Procedures
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30
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PART II. OTHER INFORMATION
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Item 1.
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Legal Proceedings
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30
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Item 1A.
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Risk Factors
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30
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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31
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Item 5.
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Other Information
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31
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Item 6.
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Exhibits
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31
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Signatures
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32
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Part I - Financial Information
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Item 1. Financial Statements
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July 31,
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April 30,
|
|||||||
2013
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2013
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|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents (including short term
investments of $3,758 and $6,312, respectively) |
$ | 4,021 | $ | 6,840 | ||||
Securities available-for-sale
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7,903 | 6,682 | ||||||
Accounts receivable, net of allowance for doubtful
accounts of $30 and $17, respectively |
1,175 | 1,278 | ||||||
Receivables from affiliates
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2 | - | ||||||
Prepaid expenses and other current assets
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1,666 | 1,646 | ||||||
Deferred income taxes
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238 | 227 | ||||||
Total current assets
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15,005 | 16,673 | ||||||
Long term assets:
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||||||||
Investment in EAM Trust
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57,660 | 57,511 | ||||||
Property and equipment, net
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3,999 | 3,930 | ||||||
Capitalized software and other intangible assets, net
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6,411 | 6,227 | ||||||
Total long term assets
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68,070 | 67,668 | ||||||
Total assets
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$ | 83,075 | $ | 84,341 | ||||
Liabilities and Shareholders’ Equity
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||||||||
Current Liabilities:
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||||||||
Accounts payable and accrued liabilities
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$ | 1,946 | $ | 2,460 | ||||
Accrued salaries
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1,154 | 1,200 | ||||||
Dividends payable
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1,478 | 1,481 | ||||||
Accrued taxes on income
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270 | 180 | ||||||
Unearned revenue
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21,176 | 22,073 | ||||||
Total current liabilities
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26,024 | 27,394 | ||||||
Long term liabilities:
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||||||||
Unearned revenue
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2,251 | 2,636 | ||||||
Deferred income taxes
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22,077 | 21,326 | ||||||
Total long term liabilities
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24,328 | 23,962 | ||||||
Total liabilities
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50,352 | 51,356 | ||||||
Shareholders’ Equity:
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||||||||
Common stock, $0.10 par value; authorized 30,000,000
shares; issued 10,000,000 shares |
1,000 | 1,000 | ||||||
Additional paid-in capital
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991 | 991 | ||||||
Retained earnings
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32,282 | 32,315 | ||||||
Treasury stock, at cost (149,295 and 123,572 shares, respectively)
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(1,798 | ) | (1,572 | ) | ||||
Accumulated other comprehensive income, net of tax
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248 | 251 | ||||||
Total shareholders’ equity
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32,723 | 32,985 | ||||||
Total liabilities and shareholders’ equity
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$ | 83,075 | $ | 84,341 |
3 |
For the Three Months Ended
July 31, |
||||||||
2013
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2012
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|||||||
Revenues:
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||||||||
Investment periodicals and related publications
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$ | 8,196 | $ | 8,028 | ||||
Copyright data fees
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756 | 910 | ||||||
Total revenues
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8,952 | 8,938 | ||||||
Expenses:
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||||||||
Advertising and promotion
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1,043 | 812 | ||||||
Salaries and employee benefits
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3,900 | 3,779 | ||||||
Production and distribution
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1,542 | 1,362 | ||||||
Office and administration
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1,998 | 1,633 | ||||||
Total expenses
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8,483 | 7,586 | ||||||
Income from operations
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469 | 1,352 | ||||||
Revenues and profits interests in EAM Trust
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1,769 | 1,473 | ||||||
Income from securities transactions, net
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38 | 26 | ||||||
Income before income taxes
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2,276 | 2,851 | ||||||
Income tax provision
|
831 | 1,075 | ||||||
Net income
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$ | 1,445 | $ | 1,776 | ||||
Earnings per share, basic & fully diluted
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$ | 0.15 | $ | 0.18 | ||||
Weighted average number of common shares
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9,863,388 | 9,896,381 |
4 |
For the Three Months Ended
|
||||||||
July 31,
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||||||||
2013
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2012
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|||||||
Net income
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$ | 1,445 | $ | 1,776 | ||||
Other comprehensive income (loss), net of tax:
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||||||||
Change in unrealized gains on securities, net of taxes
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(3 | ) | 27 | |||||
Other comprehensive income (loss)
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(3 | ) | 27 | |||||
Comprehensive income
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$ | 1,442 | $ | 1,803 |
5 |
For the Three Months Ended
|
||||||||
July 31, | ||||||||
2013
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2012
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|||||||
Cash flows from operating activities:
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||||||||
Net income
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$ | 1,445 | $ | 1,776 | ||||
Adjustments to reconcile net income to net cash used in operating activities:
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||||||||
Depreciation and amortization
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466 | 363 | ||||||
Non-voting revenues interest in EAM Trust
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(1,598 | ) | (1,394 | ) | ||||
Non-voting profits interest in EAM Trust
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(171 | ) | (79 | ) | ||||
Deferred income taxes
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587 | 554 | ||||||
Changes in operating assets and liabilities:
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||||||||
Unearned revenue
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(1,282 | ) | (1,403 | ) | ||||
Reserve for settlement
|
(38 | ) | (9 | ) | ||||
Operating lease exit obligation
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(36 | ) | (109 | ) | ||||
Accounts payable & accrued expenses
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(440 | ) | (408 | ) | ||||
Accrued salaries
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(46 | ) | (84 | ) | ||||
Accrued taxes on income
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242 | (96 | ) | |||||
Prepaid and refundable income taxes
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- | 616 | ||||||
Prepaid expenses and other current assets
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(20 | ) | 112 | |||||
Accounts receivable
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103 | (351 | ) | |||||
Receivable from affiliates
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(2 | ) | (40 | ) | ||||
Total adjustments
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(2,235 | ) | (2,328 | ) | ||||
Net cash used in operating activities
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(790 | ) | (552 | ) | ||||
Cash flows from investing activities:
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||||||||
Purchases of securities classified as available-for-sale
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(1,223 | ) | (303 | ) | ||||
Distributions received from EAM Trust
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1,620 | 498 | ||||||
Acquisition of property and equipment
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(133 | ) | (15 | ) | ||||
Expenditures for capitalized software
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(586 | ) | (405 | ) | ||||
Net cash used in investing activities
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(322 | ) | (225 | ) | ||||
Cash flows from financing activities:
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||||||||
Purchase of treasury stock at cost
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(226 | ) | - | |||||
Dividends paid
|
(1,481 | ) | (1,484 | ) | ||||
Net cash used in financing activities
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(1,707 | ) | (1,484 | ) | ||||
Net change in cash and cash equivalents
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(2,819 | ) | (2,261 | ) | ||||
Cash and cash equivalents at beginning of year
|
6,840 | 12,042 | ||||||
Cash and cash equivalents at end of period
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$ | 4,021 | $ | 9,781 |
6 |
Common stock
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Additional
paid-in-
capital
|
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Treasury stock
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Retained
earnings
|
Accumulated other
comprehensive
income/(loss)
|
|||||||||||||||||||||||||||
Shares
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Amount
|
Shares
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Amount
|
Total
|
||||||||||||||||||||||||||||
Balance at April 30, 2013
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10,000,000 | $ | 1,000 | $ | 991 | (123,572 | ) | $ | (1,572 | ) | $ | 32,315 | $ | 251 | $ | 32,985 | ||||||||||||||||
Net income
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1,445 | 1,445 | ||||||||||||||||||||||||||||||
Change in unrealized gains on securities, net of taxes
|
(3 | ) | (3 | ) | ||||||||||||||||||||||||||||
Purchase of treasury stock
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(25,723 | ) | (226 | ) | (226 | ) | ||||||||||||||||||||||||||
Dividends declared
|
(1,478 | ) | (1,478 | ) | ||||||||||||||||||||||||||||
Balance at July 31, 2013
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10,000,000 | $ | 1,000 | $ | 991 | (149,295 | ) | $ | (1,798 | ) | $ | 32,282 | $ | 248 | $ | 32,723 |
7 |
Common stock
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Additional
paid-in-
capital
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Treasury stock
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Retained
earnings
|
Accumulated other
comprehensive
income/(loss)
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
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Total
|
||||||||||||||||||||||||||||
Balance at April 30, 2012
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10,000,000 | $ | 1,000 | $ | 991 | (103,619 | ) | $ | (1,390 | ) | $ | 31,628 | $ | 85 | $ | 32,314 | ||||||||||||||||
Net income
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1,776 | 1,776 | ||||||||||||||||||||||||||||||
Change in unrealized gains on securities, net of taxes
|
27 | 27 | ||||||||||||||||||||||||||||||
Dividends declared
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(1,485 | ) | (1,485 | ) | ||||||||||||||||||||||||||||
Balance at July 31, 2012
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10,000,000 | $ | 1,000 | $ | 991 | (103,619 | ) | $ | (1,390 | ) | $ | 31,919 | $ | 112 | $ | 32,632 | ||||||||||||||||
Dividends declared per share were $0.15 for the three months ending July 31, 2012.
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8 |
9 |
10 |
As of July 31, 2013 | ||||||||||||||||
($ in thousands)
|
Level 1
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Level 2
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Level 3
|
Total
|
||||||||||||
Cash equivalents
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$ | 3,758 | $ | - | $ | - | $ | 3,758 | ||||||||
Securities available-for-sale
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7,903 | - | - | 7,903 | ||||||||||||
$ | 11,661 | $ | - | $ | - | $ | 11,661 | |||||||||
As of April 30, 2013 | ||||||||||||||||
($ in thousands)
|
Level 1
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Level 2
|
Level 3
|
Total
|
||||||||||||
Cash equivalents
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$ | 6,312 | $ | - | $ | - | $ | 6,312 | ||||||||
Securities available-for-sale
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6,682 | - | - | 6,682 | ||||||||||||
$ | 12,994 | $ | - | $ | - | $ | 12,994 |
11 |
($ in thousands)
|
Cost
|
Gross Unrealized
Gains |
Gross
Unrealized Losses |
Fair Value
|
||||||||||||
Common stocks
|
$ | 103 | $ | 34 | $ | (17 | ) | $ | 120 | |||||||
ETFs - equities
|
3,878 | 889 | (6 | ) | 4,761 | |||||||||||
Inverse ETFs - equities
|
3,537 | - | (515 | ) | 3,022 | |||||||||||
$ | 7,518 | $ | 923 | $ | (538 | ) | $ | 7,903 | ||||||||
The carrying value and fair value of securities available-for-sale at April 30, 2013 were as follows:
|
||||||||||||||||
($ in thousands)
|
Cost
|
Gross Unrealized
Gains |
Gross
Unrealized 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 |
Three Months Ended July 31,
|
||||||||
($ in thousands)
|
2013
|
2012
|
||||||
Dividend income
|
$ | 37 | $ | 26 | ||||
Other
|
1 | - | ||||||
Total income from securities transactions, net
|
$ | 38 | $ | 26 |
12 |
Three Months Ended July 31,
|
||||||||
($ in thousands) (unaudited)
|
2013
|
2012
|
||||||
Investment management fees earned from the Value Line Funds, net of waivers shown below
|
$ | 3,485 | $ | 3,080 | ||||
12b-1 fees and other fees, net of waivers shown below
|
$ | 1,119 | $ | 891 | ||||
Other income
|
$ | 2 | $ | - | ||||
Investment management fee waivers (1)
|
$ | 24 | $ | 181 | ||||
12b-1 fee waivers (1)
|
$ | 523 | $ | 543 | ||||
Value Line’s non-voting revenues interest
|
$ | 1,598 | $ | 1,394 | ||||
EAM’s net income (2)
|
$ | 343 | $ | 158 |
July 31,
|
April 30,
|
|||||||
($ in thousands)
|
2013
|
2013
|
||||||
(unaudited)
|
||||||||
EAM’s total assets
|
$ | 59,261 | $ | 59,349 | ||||
EAM’s total liabilities (1)
|
(2,660 | ) | (2,814 | ) | ||||
EAM’s total equity
|
$ | 56,601 | $ | 56,535 |
13 |
Value Line
|
||||||||||||||||
($ in thousands)
|
VIE Assets
|
Investment in
EAM Trust (1) |
Liabilities
|
Maximum
Exposure to Loss |
||||||||||||
As of July 31, 2013 (unaudited)
|
$ | 59,261 | $ | 57,660 | $ | - | $ | 57,660 | ||||||||
As of April 30, 2013
|
$ | 59,349 | $ | 57,511 | $ | - | $ | 57,511 |
14 |
($ in thousands)
|
Amount Before
Tax |
Tax Benefit
|
Amount Net of
Tax |
|||||||||
Change in unrealized gains on securities
|
$ | (4 | ) | $ | 1 | $ | (3 | ) | ||||
$ | (4 | ) | $ | 1 | $ | (3 | ) |
($ in thousands)
|
Amount Before
Tax |
Tax Expense
|
Amount Net of
Tax |
|||||||||
Change in unrealized gains on securities
|
$ | 42 | $ | (15 | ) | $ | 27 | |||||
$ | 42 | $ | (15 | ) | $ | 27 |
Three Months Ended July 31,
|
||||||||
($ in thousands)
|
2013
|
2012
|
||||||
Non-voting revenues interest in EAM
|
$ | 1,598 | $ | 1,394 | ||||
Non-voting profits interest in EAM
|
171 | 79 | ||||||
$ | 1,769 | $ | 1,473 |
15 |
Three Months Ended July 31,
|
||||||||
($ in thousands)
|
2013
|
2012
|
||||||
Current tax expense:
|
||||||||
Federal
|
$ | 216 | $ | 448 | ||||
State and local
|
28 | 73 | ||||||
244 | 521 | |||||||
Deferred tax expense:
|
||||||||
Federal
|
506 | 467 | ||||||
State and local
|
81 | 87 | ||||||
587 | 554 | |||||||
Income tax provision:
|
$ | 831 | $ | 1,075 |
July 31,
|
April 30,
|
|||||||
($ in thousands)
|
2013
|
2013
|
||||||
Federal tax benefit (liability):
|
||||||||
Unrealized gains on securities available-for-sale
|
$ | (137 | ) | $ | (136 | ) | ||
Operating lease exit obligation
|
- | 13 | ||||||
Deferred professional fees
|
49 | 49 | ||||||
Deferred charges
|
292 | 265 | ||||||
Total federal tax benefit
|
204 | 191 | ||||||
State and local tax benefits:
|
||||||||
Other
|
34 | 36 | ||||||
Total state and local tax benefits
|
34 | 36 | ||||||
Deferred tax asset, short term
|
$ | 238 | $ | 227 | ||||
July 31,
|
April 30,
|
|||||||
($ in thousands)
|
2013 | 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
|
2,166 | 1,642 | ||||||
Other
|
410 | 262 | ||||||
Total federal tax liability
|
19,636 | 18,964 | ||||||
State and local tax liabilities (benefits):
|
||||||||
Deferred gain on deconsolidation of EAM
|
2,253 | 2,243 | ||||||
Deferred non-cash post-employment compensation
|
(79 | ) | (79 | ) | ||||
Depreciation and amortization
|
276 | 208 | ||||||
Deferred professional fees
|
(9 | ) | (10 | ) | ||||
Total state and local tax liabilities
|
2,441 | 2,362 | ||||||
Deferred tax liability, long term
|
$ | 22,077 | $ | 21,326 |
16 |
Value Line, Inc.
|
Notes to Consolidated Condensed Financial Statements
|
July 31, 2013
|
(Unaudited)
|
Three Months Ended July 31,
|
||||||||
2013
|
2012
|
|||||||
U.S. statutory federal rate
|
35.00 | % | 35.00 | % | ||||
Increase (decrease) in tax rate from:
|
||||||||
State and local income taxes, net of federal income tax benefit
|
2.24 | % | 2.93 | % | ||||
Effect of dividends received deductions
|
-0.37 | % | -0.22 | % | ||||
Other, net
|
-0.36 | % | 0.00 | % | ||||
Effective income tax rate
|
36.51 | % | 37.71 | % |
July 31,
|
April 30,
|
|||||||
($ in thousands)
|
2013
|
2013
|
||||||
Land
|
$ | 726 | $ | 726 | ||||
Building and leasehold improvements
|
7,498 | 7,391 | ||||||
Furniture and equipment
|
11,206 | 11,180 | ||||||
19,430 | 19,297 | |||||||
Accumulated depreciation and amortization
|
(15,431 | ) | (15,367 | ) | ||||
Total property and equipment, net
|
$ | 3,999 | $ | 3,930 |
17 |
Value Line, Inc.
|
Notes to Consolidated Condensed Financial Statements
|
July 31, 2013
|
(Unaudited)
|
(in thousands except for shares and cost
per share)
|
Shares
|
Total Average
Cost Assigned |
Average Cost per Share
|
Aggregate Purchase Price
Remaining Under the Program |
||||||||||||
Balance as of April 30, 2013 (1)(2)(3)
|
123,572 | $ | 1,572 | $ | 12.72 | $ | 2,818 | |||||||||
Purchases effected in open market during the quarter ended:
|
||||||||||||||||
July 31, 2013
|
25,723 | 226 | $ | 8.82 | $ | 2,592 | ||||||||||
Balance as of July 31, 2013
|
149,295 | $ | 1,798 | $ | 12.04 |
Twelve Months ended July 31,
|
Previous Lease
|
New Sublease
|
Total
|
|||||||||
($ in thousands)
|
||||||||||||
2013
|
$ | 3,074 | $ | - | $ | 3,074 | ||||||
2014
|
463 | 463 | ||||||||||
$ | 3,537 | $ | - | $ | 3,537 |
Twelve Months ended July 31,
|
Previous Lease
|
New Sublease
|
Total
|
|||||||||
($ in thousands)
|
||||||||||||
2014
|
$ | 463 | $ | 857 | $ | 1,320 | ||||||
2015
|
- | 1,468 | 1,468 | |||||||||
2016
|
- | 1,468 | 1,468 | |||||||||
2017
|
- | 857 | 857 | |||||||||
$ | 463 | $ | 4,650 | $ | 5,113 |
18 |
●
|
dependence on key personnel;
|
●
|
maintaining revenue from subscriptions for the Company’s digital and print published products;
|
●
|
protection of intellectual property rights;
|
●
|
changes in market and economic conditions, including global financial issues;
|
●
|
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;
|
●
|
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” of the Company’s Annual Report on Form 10-K for the year ended April 30, 2013 and in Part II, Item 1A of this Quarterly Report on Form 10-Q for the period ended July 31, 2013; and other risks and uncertainties arising from time to time.
|
19 |
20 |
Three Months Ended July 31,
|
||||||||||||
($ in thousands, except earnings per share)
|
2013
|
2012
|
Change
|
|||||||||
Income from operations
|
$ | 469 | $ | 1,352 | -65.3 | % | ||||||
Revenues and profits interests from EAM Trust
|
$ | 1,769 | $ | 1,473 | 20.1 | % | ||||||
Income from operations plus non-voting revenues and non-voting profits interests from EAM Trust
|
$ | 2,238 | $ | 2,825 | -20.8 | % | ||||||
Operating expenses
|
$ | 8,483 | $ | 7,586 | 11.8 | % | ||||||
Income from securities transactions, net
|
$ | 38 | $ | 26 | 46.2 | % | ||||||
Income before income taxes
|
$ | 2,276 | $ | 2,851 | -20.2 | % | ||||||
Net income
|
$ | 1,445 | $ | 1,776 | -18.6 | % | ||||||
Earnings per share
|
$ | 0.15 | $ | 0.18 | -16.7 | % |
Three Months Ended July 31,
|
||||||||||||
($ in thousands)
|
2013
|
2012
|
Change
|
|||||||||
Investment periodicals and related publications:
|
||||||||||||
Print
|
$ | 4,673 | $ | 4,900 | -4.6 | % | ||||||
Digital
|
3,523 | 3,128 | 12.6 | % | ||||||||
Total investment periodicals and related publications
|
8,196 | 8,028 | 2.1 | % | ||||||||
Copyright data fees
|
756 | 910 | -16.9 | % | ||||||||
Total publishing revenues
|
$ | 8,952 | $ | 8,938 | 0.2 | % |
21 |
Three Months Ended July 31,
|
||||||||||||||||
2013
|
2012
|
|||||||||||||||
Print
|
Digital
|
Print
|
Digital
|
|||||||||||||
New Sales Orders
|
23.9 | % | 27.6 | % | 16.3 | % | 20.4 | % | ||||||||
Conversion and Renewal Sales Orders
|
76.1 | % | 72.4 | % | 83.7 | % | 79.6 | % | ||||||||
Total Sales Orders
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
As of July 31,
|
||||||||||||
($ in thousands)
|
2013
|
2012
|
Change
|
|||||||||
Unearned subscription revenue (current and long term liabilities)
|
$ | 23,427 | $ | 24,592 | -4.7 | % |
22 |
23 |
As of July 31,
|
||||||||||||
($ in millions)
|
2013
|
2012
|
Change
|
|||||||||
Variable annuity assets (GIAC)
|
$ | 481 | $ | 455 | 5.7 | % | ||||||
All other open end equity fund assets
|
1,522 | 1,294 | 17.6 | % | ||||||||
Total equity funds
|
2,003 | 1,749 | 14.5 | % | ||||||||
Fixed income funds
|
172 | 205 | -16.1 | % | ||||||||
U.S. Government Money Market Fund (“USGMMF”)
|
- | 67 | -100.0 | % | ||||||||
Total EAM managed net assets
|
2,175 | 2,021 | 7.6 | % | ||||||||
Daily Income Fund managed by Reich & Tang Asset Management LLC (“Reich & Tang”)
|
58 | - | n/a | |||||||||
Total net assets
|
$ | 2,233 | $ | 2,021 | 10.5 | % |
24 |
Three Months Ended July 31,
|
||||||||||||
($ in thousands)
|
2013
|
2012
|
Change
|
|||||||||
Non-voting revenues interest
|
$ | 1,598 | $ | 1,394 | 14.6 | % | ||||||
Non-voting profits interest
|
171 | 79 | 116.5 | % | ||||||||
$ | 1,769 | $ | 1,473 | 20.1 | % |
Three Months Ended July 31,
|
||||||||||||
($ in thousands)
|
2013
|
2012
|
Change
|
|||||||||
Advertising and promotion
|
$ | 1,043 | $ | 812 | 28.4 | % | ||||||
Salaries and employee benefits
|
3,900 | 3,779 | 3.2 | % | ||||||||
Production and distribution
|
1,542 | 1,362 | 13.2 | % | ||||||||
Office and administration
|
1,998 | 1,633 | 22.4 | % | ||||||||
Total expenses
|
$ | 8,483 | $ | 7,586 | 11.8 | % |
25 |
26 |
27 |
28 |
($ in thousands)
|
Fair Value
|
Hypothetical
Price Change |
Estimated Fair
HypotheticalValue after |
Hypothetical
Percentage Increase
(Decrease) in
Shareholders’ Equity |
||||||||||
As of July 31, 2013
|
Equity Securities and ETFs held for dividend yield
|
$ | 4,881 |
30% increase
|
$ | 6,345 | 2.91 | % | ||||||
30% decrease
|
$ | 3,416 | -2.91 | % | ||||||||||
As of July 31, 2013
|
Inverse ETF Holdings
|
$ | 3,022 |
30% increase
|
$ | 2,115 | -1.80 | % | ||||||
30% decrease
|
$ | 3,929 | 1.80 | % | ||||||||||
As of July 31, 2013
|
Total
|
$ | 7,903 |
30% increase
|
$ | 8,460 | 1.11 | % | ||||||
30% decrease
|
$ | 7,345 | -1.11 | % |
29 |
($ in thousands)
|
Fair Value
|
Hypothetical
Price Change |
Estimated Fair
HypotheticalValue after |
Hypothetical
Percentage Increase
(Decrease) in
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 | % |
(a)
|
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding disclosure.
|
|
The Company’s management has evaluated, with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, the effectiveness of the Company’s disclosure controls and procedures, (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.
|
||
(b)
|
The registrant’s Principal Executive Officer and Principal Financial Officer have determined that there have been no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
30 |
ISSUER PURCHASES OF EQUITY SECURITIES
|
||||||||||||||||
(in thousands except for
shares and cost per share) |
(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 |
||||||||||||
May 1 - 31, 2013
|
4,913 | $ | 9.25 | 4,913 | $ | 2,773,000 | ||||||||||
June 1 - 30, 2013
|
12,520 | $ | 8.68 | 12,520 | $ | 2,664,000 | ||||||||||
July 1 - 31, 2013
|
8,290 | $ | 8.77 | 8,290 | $ | 2,592,000 | ||||||||||
Total
|
25,723 | $ | 8.82 | 25,723 | $ | 2,592,000 |
31.1
|
Certificate of Principal Executive Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certificate of Principal Financial Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Joint Principal Executive Officer/Principal Financial Officer Certificate Required Under Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance Document |
101.SCH
|
XBRL Taxonomy Extension Schema Document |
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document |
31 |
Value Line, Inc. | |||||
(Registrant)
|
|||||
By: | /s/Howard A. Brecher | ||||
Howard A. Brecher | |||||
Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
By: | /s/Stephen R. Anastasio | ||||
Stephen R. Anastasio | |||||
Vice President & Treasurer | |||||
(Principal Financial Officer) | |||||
Date: September 13, 2013
|
32 |
|
1.
|
I have reviewed this report on Form 10-Q of Value Line, Inc. for the quarter ended July 31, 2013;
|
|
2.
|
Based on my knowledge, this 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 report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this 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 report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: September 13, 2013 | By: | /s/Howard A. Brecher | |
Howard A. Brecher | |||
Chairman and Chief Executive Officer (Principal Executive Officer) |
33 |
~
1.
|
I have reviewed this report on Form 10-Q of Value Line, Inc. for the quarter ended July 31, 2013;
|
2.
|
Based on my knowledge, this 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 report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this 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 report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: September 13, 2013 | By: | /s/Stephen R. Anastasio | ||
Stephen R. Anastasio | ||||
Vice President & Treasurer | ||||
(Principal Financial Officer) |
34 |
By: | /s/Howard A. Brecher | ||
Howard A. Brecher | |||
Chairman and Chief Executive Officer (Principal Executive Officer) |
By: | /s/Stephen R. Anastasio | ||
Stephen R. Anastasio | |||
Vice President & Treasurer | |||
(Principal Financial Officer) | |||
Date: September 13, 2013
|
35 |
Property and Equipment
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Note 9 - Property and Equipment:
Property and equipment are carried at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets, or in the case of leasehold improvements, over the remaining terms of the leases. For income tax purposes, depreciation of furniture and equipment is computed using accelerated methods and buildings and leasehold improvements are depreciated over prescribed extended tax lives. Property and equipment, net, on the Consolidated Condensed Balance Sheets was comprised of the following:
|
Lease Commitments - Future minimum payments under operating lease (Details) (USD $)
In Thousands, unless otherwise specified |
Jul. 31, 2013
|
Jul. 31, 2012
|
---|---|---|
Operating Leased Assets [Line Items] | ||
2013 | $ 3,074 | |
2014 | 1,320 | 463 |
2015 | 1,468 | |
2016 | 1,468 | |
2017 | 857 | |
Operating leases, total | 5,113 | 3,537 |
Previous Lease
|
||
Operating Leased Assets [Line Items] | ||
2013 | 3,074 | |
2014 | 463 | 463 |
2015 | ||
2016 | ||
2017 | ||
Operating leases, total | 463 | 3,537 |
New Sublease
|
||
Operating Leased Assets [Line Items] | ||
2013 | ||
2014 | 857 | |
2015 | 1,468 | |
2016 | 1,468 | |
2017 | 857 | |
Operating leases, total | $ 4,650 |
Consolidated Condensed Statements of Income (unaudited) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | |
---|---|---|
Jul. 31, 2013
|
Jul. 31, 2012
|
|
Revenues: | ||
Investment periodicals and related publications | $ 8,196 | $ 8,028 |
Copyright data fees | 756 | 910 |
Total revenues | 8,952 | 8,938 |
Expenses: | ||
Advertising and promotion | 1,043 | 812 |
Salaries and employee benefits | 3,900 | 3,779 |
Production and distribution | 1,542 | 1,362 |
Office and administration | 1,998 | 1,633 |
Total expenses | 8,483 | 7,586 |
Income from operations | 469 | 1,352 |
Revenues and profits interests in EAM Trust | 1,769 | 1,473 |
Income from securities transactions, net | 38 | 26 |
Income before income taxes | 2,276 | 2,851 |
Income tax provision | 831 | 1,075 |
Net income | $ 1,445 | $ 1,776 |
Earnings per share, basic & fully diluted (in dollars per share) | $ 0.15 | $ 0.18 |
Weighted average number of common shares (in shares) | 9,863,388 | 9,896,381 |
Investments
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Note 2 - Investments:
Securities Available-for-Sale:
Investments held by the Company and its subsidiaries are classified as securities available-for-sale in accordance with FASB’s ASC 320, Investments - Debt and Equity Securities. All of the Company’s securities classified as available-for-sale were readily marketable and had a maturity of twelve months or less and are classified as current assets on the Consolidated Condensed Balance Sheets.
Equity Securities: Equity securities classified as available-for-sale, consist of investments in common stocks, ETFs that attempt to replicate the performance of certain equity indexes, ETFs that attempt to replicate the inverse of the price performance of certain equity indexes and ETFs that hold preferred shares primarily of financial institutions. As of July 31, 2013 and April 30, 2013, the Company held equity securities consisting primarily of ETFs and select common stock holdings of blue chip companies with a concentration on large capitalization companies with high relative dividend yields, all classified as securities available-for-sale on the Consolidated Condensed Balance Sheets. Additionally, as of July 31, 2013 and April 30, 2013, the Company held non-leveraged ETFs, classified as securities available-for-sale, whose performance inversely corresponds to the market value changes of investments in other ETF securities held in the equity portfolio for dividend yield.
As of July 31, 2013 and April 30, 2013, the aggregate cost of the equity securities classified as available-for-sale, which consist of investments in the iShares Dow Jones Select Dividend Index (DVY), SPDR S&P Dividend (SDY), First Trust Value Line Dividend Index (FVD), PowerShares Financial Preferred (PGF), certain common shares of equity securities and inverse equity index ETFs, was $7,518,000 and $6,295,000, respectively, and the fair value was $7,903,000 and $6,682,000, respectively.
There were no sales or proceeds from sales of equity securities during the three months ended July 31, 2013 and July 31, 2012. The decreases in gross unrealized gains on equity securities classified as available-for-sale of $4,000, net of deferred taxes of $1,000, were included in Shareholders’ Equity at July 31, 2013. The increases in gross unrealized gains on equity securities classified as available-for-sale of $42,000, net of deferred taxes of $15,000, were included in Shareholders’ Equity at July 31, 2012.
The changes in the value of equity securities investments are recorded in Other Comprehensive Income in the Consolidated Condensed Financial Statements. Realized gains and losses are recorded as of the trade date in the Consolidated Condensed Statements of Income when securities are sold, mature or are redeemed. As of July 31, 2013 and April 30, 2013, accumulated other comprehensive income was $385,000 and $387,000, which is net of deferred taxes of $137,000 and $136,000, respectively.
The carrying value and fair value of securities available-for-sale at July 31, 2013 were as follows:
Government Debt Securities (Fixed Income Securities):
Fixed income securities consist of government debt securities issued by the United States federal government. There were no fixed income securities as of July 31, 2013 or April 30, 2013.
Income from securities transactions was comprised of the following:
Investment in Unconsolidated Entities: Equity Method Investment:
As of July, 31, 2013 and April 30, 2013, the Company’s investment in EAM Trust, on the Consolidated Balance Sheets was $57,660,000 and $57,511,000, respectively.
The value of VLI’s investment in EAM at July 31, 2013 and April 30, 2013 reflects the fair value of contributed capital of $55,805,000 at inception, plus $5,820,000 of cash and liquid securities in excess of working capital requirements contributed to EAM’s capital account by VLI, plus VLI’s share of non-voting revenues and non-voting profits from EAM less distributions, made quarterly to VLI by EAM, during the period subsequent to its initial investment through the dates of the Consolidated Condensed Balance Sheets. It is anticipated that EAM will have sufficient liquidity and earn enough profit to conduct its current and future operations so the management of EAM will not need additional funding. Although the distributor had historically received, from the Value Line Funds under the compensation plans it had in place with the Funds, amounts in excess of its actual expenditures, in more recent years the distributor has been spending amounts on promotion of the Value Line Funds in excess of the compensation received from the Funds. Over time, EAM anticipates that its total future expenditures on such promotion will equal or exceed its total future revenues under the Funds’ distribution plans. However, if that should not occur, EAM has no obligation to reimburse the Value Line Funds.
The Company monitors its investment in EAM Trust for impairment to determine whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. Impairment indicators include, but are not limited to the following: (a) a significant deterioration in the earnings performance, asset quality, or business prospects of the investee, (b) a significant adverse change in the regulatory, economic, or technological environment of the investee, (c) a significant adverse change in the general market condition of the industry in which the investee operates, or (d) factors that raise significant concerns about the investee’s ability to continue as a going concern such as negative cash flows, working capital deficiencies, or noncompliance with statutory capital and regulatory requirements. EAM did not record any impairment losses for its assets during the fiscal years 2014 or 2013.
The components of EAM’s investment management operations, provided to the Company by EAM, were as follows:
(1) During fiscal 2013, investment management fee waivers primarily related to the U.S. Government Money Market Fund (“USGMMF”) which was merged into a third party fund, the Daily Income Fund, managed by Reich & Tang, effective October 19, 2012. During fiscal 2014 and 2013, the 12b-1 fee waivers related to eight and nine of the Value Line Mutual Funds, respectively. (2) Represents EAM’s net income, after giving effect to Value Line’s non-voting revenues interest, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.
(1) At July 31, 2013 and April 30, 2013, EAM’s total liabilities included a payable to VLI for its accrued non-voting revenues and non-voting profits interests of $1,752,000 and $1,621,000, respectively. |
Variable Interest Entity (Tables)
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2013
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Variable Interest Entity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of total assets, the maximum exposure to loss, value of the assets and liabilities in EAM |
(1) Reported within Long Term Assets on the Consolidated Condensed Balance Sheets. |
Accounting for the Costs of Computer Software Developed for Internal Use
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3 Months Ended |
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Jul. 31, 2013
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Internal Use Software [Abstract] | |
Accounting for the Costs of Computer Software Developed for Internal Use | Note 10 - Accounting for the Costs of Computer Software Developed for Internal Use:
The Company has adopted the provisions of the Statement of Position 98-1 (SOP 98-1), “Accounting for the Costs of Computer Software Developed for Internal Use”. SOP 98-1 requires companies to capitalize as long-lived assets many of the costs associated with developing or obtaining software for internal use and amortize those costs over the software’s estimated useful life in a systematic and rational manner.
The Company capitalized $586,000 and $405,000 related to the development of software for internal use for the three months ended July 31, 2013 and July 31, 2012, respectively, of which $574,000 and $354,000 related to development costs for the digital production software project and $12,000 and $51,000 related to a new fulfillment system, respectively. Such costs are capitalized and amortized over the expected useful life of the asset which is approximately from 3 to 5 years. Total amortization expenses for the three months ended July 31, 2013 and July 31, 2012 were $402,000 and $295,000, respectively. |
Federal, State and Local Income Taxes (Detail Textuals)
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3 Months Ended | |
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Jul. 31, 2013
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Jul. 31, 2012
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Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 36.51% | 37.71% |
Investments - Equity Method Investment (Detail Textuals 1) (USD $)
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3 Months Ended | |||||
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Jul. 31, 2013
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Apr. 30, 2013
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Schedule of Equity Method Investments [Line Items] | ||||||
Investment in EAM Trust | $ 57,660,000 | $ 57,511,000 | ||||
EAM Trust
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Schedule of Equity Method Investments [Line Items] | ||||||
Investment in EAM Trust | 57,660,000 | [1] | 57,511,000 | [1] | ||
Fair value of contributed capital at inception | 55,805,000 | 55,805,000 | ||||
Cash and liquid securities in excess of working capital requirements contributed to capital account | 5,820,000 | 5,820,000 | ||||
Non-voting profits interest ("Profits Interest") | 50.00% | |||||
Payable to VLI for its accrued non-voting revenues and non-voting profits interests | $ 1,752,000 | $ 1,621,000 | ||||
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Federal, State and Local Income Taxes (Tables)
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Jul. 31, 2013
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of provision for income taxes |
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Schedule of components of deferred tax asset and deferred tax liability |
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Schedule of effective income tax rate reconciliation |
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Related Party Transactions (Tables)
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2013
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of non voting revenues interest and non voting profits interests |
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Investments - Composition of income from securities transactions (Details 1) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
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Jul. 31, 2013
|
Jul. 31, 2012
|
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Investment Income, Net [Abstract] | ||
Dividend income | $ 37 | $ 26 |
Other | 1 | |
Total income from securities transactions, net | $ 38 | $ 26 |
Variable Interest Entity (Detail textuals) (EAM Trust)
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3 Months Ended |
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Jul. 31, 2013
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EAM Trust
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Variable Interest Entity [Line Items] | |
Non-voting profits interest in EAM | 50.00% |
Property and Equipment - Components of property and equipment, net (Details) (USD $)
In Thousands, unless otherwise specified |
Jul. 31, 2013
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Apr. 30, 2013
|
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Property, Plant and Equipment [Abstract] | ||
Land | $ 726 | $ 726 |
Building and leasehold improvements | 7,498 | 7,391 |
Furniture and equipment | 11,206 | 11,180 |
Property, plant and equipment, gross | 19,430 | 19,297 |
Accumulated depreciation and amortization | (15,431) | (15,367) |
Total property and equipment, net | $ 3,999 | $ 3,930 |
Organization and Summary of Significant Accounting Policies (Details) (USD $)
In Thousands, unless otherwise specified |
Jul. 31, 2013
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Apr. 30, 2013
|
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 3,758 | $ 6,312 |
Securities available-for-sale | 7,903 | 6,682 |
Investments, fair value disclosure | 11,661 | 12,994 |
Level 1
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 3,758 | 6,312 |
Securities available-for-sale | 7,903 | 6,682 |
Investments, fair value disclosure | 11,661 | 12,994 |
Level 2
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | ||
Securities available-for-sale | ||
Investments, fair value disclosure | ||
Level 3
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | ||
Securities available-for-sale | ||
Investments, fair value disclosure |
Related Party Transactions - Income from its non-voting revenues interest and its non-voting profits interests in EAM (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
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Jul. 31, 2013
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Jul. 31, 2012
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Related Party Transactions [Abstract] | ||
Non-voting revenues interest in EAM | $ 1,598 | $ 1,394 |
Non-voting profits interest in EAM | 171 | 79 |
Revenues and profits interests in EAM Trust | $ 1,769 | $ 1,473 |
Comprehensive Income (Tables)
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Jul. 31, 2013
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Comprehensive Income (Loss) Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of comprehensive income included in the consolidated statements of changes in shareholders' equity | The components of comprehensive income included in the Consolidated Condensed Statements of Income and Changes in Shareholders’ Equity for the three months ended July 31, 2013 are as follows:
The components of comprehensive income included in the Consolidated Condensed Statements of Income and Changes in Shareholders’ Equity for the three months ended July 31, 2012 are as follows:
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Consolidated Condensed Statement of Changes in Shareholders' Equity (unaudited) (Parentheticals) (USD $)
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3 Months Ended | |
---|---|---|
Jul. 31, 2013
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Jul. 31, 2012
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Statement Of Stockholders Equity [Abstract] | ||
Dividends declared per share (in dollars per share) | $ 0.15 | $ 0.15 |
Variable Interest Entity
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Jul. 31, 2013
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Variable Interest Entity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity | Note 3 - Variable Interest Entity
The Company retained a non-voting revenues interest and a 50% non-voting profits interest in EAM, which was formed, as a result of the Restructuring Transaction on December 23, 2010, to carry on the asset management and mutual fund distribution businesses formerly conducted by the Company. EAM is considered to be a VIE. The Company makes its determination for consolidation of EAM as a VIE based on a qualitative assessment of the purpose and design of EAM, the terms and characteristics of the variable interests in EAM, and the risks EAM is designed to originate and pass through to holders of variable interests. Other than EAM, the Company does not have an interest in any other VIEs.
The Company has determined that it does not have a controlling financial interest in EAM because it does not have the power to direct the activities of EAM that most significantly impact its economic performance. Value Line does not hold any voting stock of EAM and it does not have any involvement in the day-to-day activities or operations of EAM. Although the EAM Trust Agreement provides Value Line with certain consent rights and contains certain restrictive covenants related to the activities of EAM, these are considered to be protective rights and therefore Value Line does not maintain control over EAM.
In addition, although EAM is expected to be profitable, there is a risk that it could operate at a loss. While all of the profit interest shareholders in EAM are subject to variability based on EAM’s operations risk, Value Line’s non-voting revenues interest in EAM is a preferred interest in the revenues of EAM, rather than a profits interest in EAM, and Value Line accordingly believes it is subject to proportionately less risk than other holders of the profits interests.
The Company has not provided any explicit or implicit financial or other support to EAM other than what was contractually agreed to in the EAM Trust Agreement. Value Line has no obligation to fund EAM in the future and, as a result, has no exposure to loss beyond its initial investment and any undistributed revenues and profits interests retained in EAM. The following table presents the total assets of EAM, the maximum exposure to loss due to involvement with EAM, as well as the value of the assets and liabilities the Company has recorded on its Consolidated Condensed Balance Sheets for its interest in EAM.
(1) Reported within Long Term Assets on the Consolidated Condensed Balance Sheets. |
Organization and Summary of Significant Accounting Policies
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Jul. 31, 2013
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Organization, Consolidation and Presentation Of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Summary of Significant Accounting Policies | Note 1 - Organization and Summary of Significant Accounting Policies:
Value Line, Inc. (“Value Line” or “VLI”, and collectively with its subsidiaries, the “Company”) is incorporated in the State of New York. The name “Value Line” as used to describe the Company, its products, and its subsidiaries, is a registered trademark of the Company. The Company’s primary business is producing investment periodicals and related publications and making available copyright data including certain Value Line trademarks and Value Line Proprietary Ranking System information to third parties under written agreements for use in third party managed and marketed investment products.
The Consolidated Condensed Balance Sheets as of July 31, 2013 and April 30, 2013, which have been derived from the unaudited interim Consolidated Condensed Financial Statements and the audited Consolidated Financial Statements, respectively, were prepared following the interim reporting requirements of the Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying Unaudited Interim 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 audited financial statements and footnotes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2013 filed with the SEC on July 26, 2013 (the “Form 10-K”). Results of operations covered by this report may not be indicative of the results of operations for the entire year.
Use of Estimates:
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates.
Principles of Consolidation:
The Company follows the guidance in the Financial Accounting Standards Board’s (“FASB”) Topic 810 “Consolidation” to determine if it should consolidate its investment in a variable interest entity (“VIE”). A VIE is a legal entity in which either (i) equity investors do not have sufficient equity investment at risk to enable the entity to finance its activities independently or (ii) the equity holders at risk lack the obligation to absorb losses, the right to receive residual returns or the right to make decisions about the entity’s activities that most significantly affect the entity’s economic performance. A holder of a variable interest in a VIE is required to consolidate the entity if it is determined that it has a controlling financial interest in the VIE and is therefore the primary beneficiary. The determination of a controlling financial interest in a VIE is based on a qualitative assessment to identify the variable interest holder, if any, that has (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) either the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The accounting guidance requires the Company to perform an ongoing assessment of whether the Company is the primary beneficiary of a VIE and the Company has determined it is not the primary beneficiary of a VIE (see Note 3).
In accordance with FASB’s Topic 810, the assets, liabilities, and results of operations of subsidiaries in which the Company has a controlling interest have been consolidated. All significant intercompany accounts and transactions have been eliminated in consolidation. On December 23, 2010, the Company completed the deconsolidation of the investment management related affiliates (the “Restructuring Transaction”) in accordance with FASB’s Topic 810. As part of the Restructuring Transaction, the Company received a significant non-voting revenues interest (excluding distribution revenues) and a non-voting profits interest in the new entity, EULAV Asset Management, a Delaware statutory trust (“EAM” or “EAM Trust”). The Company relied on the guidance in FASB’s ASC Topics 323 and 810 in its determination not to consolidate its investment in EAM and to account for such investment under the equity method of accounting. The Company reports the amount it receives for its non-voting revenues and non-voting profits interests as a separate line item below operating income in the Consolidated Condensed Statements of Income.
Revenue Recognition:
Depending upon the product, subscription fulfillment for Value Line periodicals and related publications is available in print or digitally, via internet access. The length of a subscription varies by product and offer received by the subscriber. Generally, subscriptions are offered as annual subscriptions. Subscription revenues, net of discounts, are recognized ratably on a straight line basis when the product is served to the client over the life of the subscription. Accordingly, the amount of subscription fees to be earned by fulfilling subscriptions after the date of the balance sheets are shown as unearned revenue within current and long term liabilities.
Copyright data revenues are derived from providing certain Value Line trademarks and the Value Line Proprietary Ranking System information to third parties under written agreements for use in selecting securities for third party marketed products, including unit investment trusts, annuities and exchange traded funds (“ETFs”). The Company earns asset-based copyright data fees as specified in the individual agreements. Revenue is recognized monthly over the term of the agreement and, because it is asset-based, will fluctuate as the market value of the underlying portfolio increases or decreases in value.
Investment in Unconsolidated Entities: The Company accounts for its investment in its unconsolidated entity, EAM, using the equity method of accounting in accordance with FASB’s ASC 323. The equity method is an appropriate means of recognizing increases or decreases measured by GAAP in the economic resources underlying the investments. Under the equity method, an investor recognizes its share of the earnings or losses of an investee in the periods for which they are reported by the investee in its financial statements rather than in the period in which an investee declares a dividend or distribution. An investor adjusts the carrying amount of an investment for its share of the earnings or losses recognized by the investee.
The Company’s “interests” in EAM, the investment adviser to and the sole member of the distributor of the Value Line Funds, consist of a “non-voting revenues interest” and a “non-voting profits interest” in EAM as defined in the EAM Trust Agreement. The non-voting revenues interest entitles the Company to receive a range of 41% to 55%, based on the amount of EAM’s adjusted gross revenues, excluding ES’s distribution revenues (“Revenues Interest”). The non-voting profits interest entitles the Company to receive 50% of EAM’s profits, subject to certain limited adjustments as defined in the EAM Trust Agreement (“Profits Interest”). The Revenues Interest and at least 90% of the Profits Interest are to be distributed each quarter to all interest holders of EAM, including Value Line. Subsequent to the Restructuring Date, the Company’s Revenues Interest in EAM excludes participation in the service and distribution fees of EAM’s subsidiary ES. The Company reflects its non-voting revenues and non-voting profits interests in EAM as non-operating income under the equity method of accounting subsequent to the Restructuring Transaction. Although the Company does not have control over the operating and financial policies of EAM, pursuant to the EAM Trust Agreement, the Company has a contractual right to receive its share of EAM’s revenues and profits.
Valuation of Securities:
The Company’s securities classified as cash equivalents and available-for-sale consist of shares of money market funds that invest primarily in short-term U.S. Government securities, investments in ETFs, shares of equity securities in various publicly traded companies and bank certificates of deposits and are valued in accordance with the requirements of the Fair Value Measurements Topic of the FASB’s ASC 820. The securities classified as available-for-sale reflected in the Consolidated Condensed Balance Sheets are valued at market and unrealized gains and losses, net of applicable taxes, are reported as a separate component of shareholders’ equity. Realized gains and losses on sales of the securities classified as available-for-sale are recorded in earnings as of the trade date and are determined on the identified cost method.
The Company classifies its securities available-for-sale as current assets to properly reflect its liquidity and to recognize the fact that it has liquid assets available-for-sale should the need arise.
Market valuations of securities listed on a securities exchange and ETF shares are based on the closing sales prices on the last business day of each month. The market value of fixed maturity U.S. Government debt securities is determined utilizing publicly quoted market prices. Cash equivalents consist of investments in money market funds that invest primarily in U.S. Government securities valued in accordance with rule 2a-7 under the 1940 Act.
The Fair Value Measurements Topic of FASB’s ASC defines fair value as the price that the Company would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market for the investment. The Fair Value Measurements Topic established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the information that market participants would use in pricing the asset or liability, including assumptions about risk. Examples of risks include those inherent in a particular valuation technique used to measure fair value such as the risk inherent in the inputs to the valuation technique. Inputs are classified as observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the factors market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The three-tier hierarchy of inputs is summarized in the three broad levels listed below. Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments)
The following summarizes the levels of fair value measurements of the Company’s investments:
The Company had no other financial instruments such as futures, forwards and swap contracts. For the periods ended July 31, 2013 and April 30, 2013, there were no Level 2 nor Level 3 investments. The Company does not have any liabilities subject to fair value measurement.
Advertising expenses:
The Company expenses advertising costs as incurred.
Income Taxes:
The Company computes its income tax provision in accordance with the Income Tax Topic of the FASB’s ASC. Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been reflected in the Consolidated Condensed Financial Statements. Deferred tax liabilities and assets are determined based on the differences between the book values and the tax bases of particular assets and liabilities, using tax rates currently in effect for the years in which the differences are expected to reverse.
The Income Tax Topic of the FASB’s ASC establishes for all entities, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. As of July 31, 2013, management has reviewed the tax positions for the years still subject to tax audit under the statute of limitations, evaluated the implications, and determined that there is no material impact to the Company’s financial statements.
Earnings per share:
Earnings per share are based on the weighted average number of shares of common stock and common stock equivalents outstanding during each period. Any shares that are reacquired during the period are weighted for the portion of the period that they are outstanding. The Company does not have any potentially dilutive common shares from outstanding stock options, warrants, restricted stock, or restricted stock units.
Cash and Cash Equivalents:
For purposes of the Consolidated Condensed Statements of Cash Flows, the Company considers all cash held at banks and short term liquid investments with an original maturity of less than three months to be cash and cash equivalents. As of July 31, 2013 and April 30, 2013, cash equivalents included $3,758,000 and $6,312,000, respectively, for amounts invested in savings accounts at large commercial banks, held as bank certificates of deposits, and investments in money market mutual funds that invest in short term U.S. government securities. |
Employees' Profit Sharing and Savings Plan (Detail Textuals) (USD $)
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3 Months Ended | |
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Jul. 31, 2013
|
Jul. 31, 2012
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Compensation Related Costs [Abstract] | ||
Estimated profit sharing plan contribution included in salaries and employee benefits | $ 83,000 | $ 115,000 |
Property and Equipment (Tables)
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Jul. 31, 2013
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property and equipment |
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Organization and Summary of Significant Accounting Policies (Detail Textuals) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | ||||
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Jul. 31, 2013
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Apr. 30, 2013
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Jul. 31, 2013
EAM Trust
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Jul. 31, 2013
EAM Trust
Minimum
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Jul. 31, 2013
EAM Trust
Maximum
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Schedule of Equity Method Investments [Line Items] | |||||
Investment management fee revenues from its mutual fund and separate accounts business | 41.00% | 55.00% | |||
Non-voting profits interest ("Profits Interest") | 50.00% | ||||
Percentage of non voting profits interests due each quarter from EAM | 90.00% | ||||
Short term investments (in dollars) | $ 3,758 | $ 6,312 |
Investments (Detail Textuals) (USD $)
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3 Months Ended | ||
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Jul. 31, 2013
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Jul. 31, 2012
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Apr. 30, 2013
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Schedule of Available-for-sale Securities [Line Items] | |||
Aggregate cost of equity securities available for sale | $ 7,518,000 | $ 6,295,000 | |
Fair value of equity securities | 7,903,000 | 6,682,000 | |
Increase (decreases) in gross unrealized gains on equity securities classified as available-for-sale | (4,000) | 42,000 | |
Accumulated other comprehensive income, net of tax | 248,000 | 251,000 | |
Equity Securities
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Schedule of Available-for-sale Securities [Line Items] | |||
Aggregate cost of equity securities available for sale | 7,518,000 | 6,295,000 | |
Fair value of equity securities | 7,903,000 | 6,682,000 | |
Increase (decreases) in gross unrealized gains on equity securities classified as available-for-sale | (4,000) | 42,000 | |
Deferred taxes on unrealized gains on securities | 1,000 | 15,000 | |
Accumulated other comprehensive income, net of tax | 385,000 | 387,000 | |
Deferred taxes on accumulated other comprehensive income | $ 137,000 | $ 136,000 |