10-Q 1 valu20240131_10q.htm FORM 10-Q valu20240131_10q.htm
0000717720 VALUE LINE INC false --04-30 Q3 2024 4,739 7,240 33 36 0.10 0.10 30,000,000 30,000,000 10,000,000 10,000,000 573,017 565,460 39,928 55,805,000 5,820,000 0 0 0 1 false false false false Reported within Long-Term Assets on the Consolidated Condensed Balance Sheets. At July 31, 2023 and April 30, 2023, EAM's total liabilities included a payable to VLI for its accrued non-voting revenues interest and non-voting profits interest of $2,833,000 and $2,601,000, respectively. 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. Excludes the three months ended July 31, 2023 00007177202023-05-012024-01-31 xbrli:shares 00007177202024-02-29 thunderdome:item iso4217:USD 00007177202024-01-31 00007177202023-04-30 iso4217:USDxbrli:shares 0000717720us-gaap:SubscriptionAndCirculationMember2023-11-012024-01-31 0000717720us-gaap:SubscriptionAndCirculationMember2022-11-012023-01-31 0000717720us-gaap:SubscriptionAndCirculationMember2023-05-012024-01-31 0000717720us-gaap:SubscriptionAndCirculationMember2022-05-012023-01-31 0000717720us-gaap:LicenseMember2023-11-012024-01-31 0000717720us-gaap:LicenseMember2022-11-012023-01-31 0000717720us-gaap:LicenseMember2023-05-012024-01-31 0000717720us-gaap:LicenseMember2022-05-012023-01-31 00007177202023-11-012024-01-31 00007177202022-11-012023-01-31 00007177202022-05-012023-01-31 00007177202022-04-30 00007177202023-01-31 0000717720us-gaap:CommonStockMember2023-04-30 0000717720us-gaap:AdditionalPaidInCapitalMember2023-04-30 0000717720us-gaap:TreasuryStockCommonMember2023-04-30 0000717720us-gaap:RetainedEarningsMember2023-04-30 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-30 0000717720us-gaap:RetainedEarningsMember2023-05-012023-07-31 00007177202023-05-012023-07-31 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-05-012023-07-31 0000717720us-gaap:TreasuryStockCommonMember2023-05-012023-07-31 0000717720us-gaap:CommonStockMember2023-07-31 0000717720us-gaap:AdditionalPaidInCapitalMember2023-07-31 0000717720us-gaap:TreasuryStockCommonMember2023-07-31 0000717720us-gaap:RetainedEarningsMember2023-07-31 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-31 00007177202023-07-31 0000717720us-gaap:RetainedEarningsMember2023-08-012023-10-31 00007177202023-08-012023-10-31 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-08-012023-10-31 0000717720us-gaap:TreasuryStockCommonMember2023-08-012023-10-31 0000717720us-gaap:CommonStockMember2023-10-31 0000717720us-gaap:AdditionalPaidInCapitalMember2023-10-31 0000717720us-gaap:TreasuryStockCommonMember2023-10-31 0000717720us-gaap:RetainedEarningsMember2023-10-31 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-10-31 00007177202023-10-31 0000717720us-gaap:RetainedEarningsMember2023-11-012024-01-31 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-11-012024-01-31 0000717720us-gaap:CommonStockMember2024-01-31 0000717720us-gaap:AdditionalPaidInCapitalMember2024-01-31 0000717720us-gaap:TreasuryStockCommonMember2024-01-31 0000717720us-gaap:RetainedEarningsMember2024-01-31 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-31 0000717720us-gaap:CommonStockMember2022-04-30 0000717720us-gaap:AdditionalPaidInCapitalMember2022-04-30 0000717720us-gaap:TreasuryStockCommonMember2022-04-30 0000717720us-gaap:RetainedEarningsMember2022-04-30 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-30 0000717720us-gaap:RetainedEarningsMember2022-05-012022-07-31 00007177202022-05-012022-07-31 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-05-012022-07-31 0000717720us-gaap:TreasuryStockCommonMember2022-05-012022-07-31 0000717720us-gaap:CommonStockMember2022-07-31 0000717720us-gaap:AdditionalPaidInCapitalMember2022-07-31 0000717720us-gaap:TreasuryStockCommonMember2022-07-31 0000717720us-gaap:RetainedEarningsMember2022-07-31 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-31 00007177202022-07-31 0000717720us-gaap:RetainedEarningsMember2022-08-012022-10-31 00007177202022-08-012022-10-31 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-08-012022-10-31 0000717720us-gaap:TreasuryStockCommonMember2022-08-012022-10-31 0000717720us-gaap:CommonStockMember2022-10-31 0000717720us-gaap:AdditionalPaidInCapitalMember2022-10-31 0000717720us-gaap:TreasuryStockCommonMember2022-10-31 0000717720us-gaap:RetainedEarningsMember2022-10-31 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-10-31 00007177202022-10-31 0000717720us-gaap:RetainedEarningsMember2022-11-012023-01-31 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-11-012023-01-31 0000717720us-gaap:TreasuryStockCommonMember2022-11-012023-01-31 0000717720us-gaap:CommonStockMember2023-01-31 0000717720us-gaap:AdditionalPaidInCapitalMember2023-01-31 0000717720us-gaap:TreasuryStockCommonMember2023-01-31 0000717720us-gaap:RetainedEarningsMember2023-01-31 0000717720us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-31 xbrli:pure 0000717720srt:MinimumMembervalu:EulavAssetManagementLLCMember2023-05-012024-01-31 0000717720srt:MaximumMembervalu:EulavAssetManagementLLCMember2023-05-012024-01-31 0000717720valu:EulavAssetManagementLLCMember2023-05-012024-01-31 0000717720us-gaap:FairValueInputsLevel1Member2024-01-31 0000717720us-gaap:FairValueInputsLevel2Member2024-01-31 0000717720us-gaap:FairValueInputsLevel3Member2024-01-31 0000717720us-gaap:FairValueInputsLevel1Member2023-04-30 0000717720us-gaap:FairValueInputsLevel2Member2023-04-30 0000717720us-gaap:FairValueInputsLevel3Member2023-04-30 0000717720us-gaap:ExchangeTradedFundsMember2024-01-31 0000717720us-gaap:ExchangeTradedFundsMember2023-04-30 0000717720us-gaap:FixedIncomeSecuritiesMember2023-05-012024-01-31 0000717720us-gaap:FixedIncomeSecuritiesMember2022-05-012023-01-31 0000717720us-gaap:FixedIncomeSecuritiesMember2024-01-31 0000717720us-gaap:FixedIncomeSecuritiesMemberus-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2024-01-31 0000717720us-gaap:FixedIncomeSecuritiesMember2023-04-30 0000717720us-gaap:FixedIncomeSecuritiesMemberus-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-04-30 0000717720us-gaap:FixedIncomeSecuritiesMember2022-05-012023-04-30 0000717720valu:EulavAssetManagementLLCMember2024-01-31 0000717720valu:EulavAssetManagementLLCMember2023-04-30 0000717720valu:EulavAssetManagementLLCMember2022-05-012023-04-30 0000717720us-gaap:InvestmentAdviceMembervalu:EulavAssetManagementLLCMember2023-11-012024-01-31 0000717720us-gaap:InvestmentAdviceMembervalu:EulavAssetManagementLLCMember2022-11-012023-01-31 0000717720us-gaap:InvestmentAdviceMembervalu:EulavAssetManagementLLCMember2023-05-012024-01-31 0000717720us-gaap:InvestmentAdviceMembervalu:EulavAssetManagementLLCMember2022-05-012023-01-31 0000717720us-gaap:DistributionAndShareholderServiceMembervalu:EulavAssetManagementLLCMember2023-11-012024-01-31 0000717720us-gaap:DistributionAndShareholderServiceMembervalu:EulavAssetManagementLLCMember2022-11-012023-01-31 0000717720us-gaap:DistributionAndShareholderServiceMembervalu:EulavAssetManagementLLCMember2023-05-012024-01-31 0000717720us-gaap:DistributionAndShareholderServiceMembervalu:EulavAssetManagementLLCMember2022-05-012023-01-31 0000717720valu:EulavAssetManagementLLCMember2023-11-012024-01-31 0000717720valu:EulavAssetManagementLLCMember2022-11-012023-01-31 0000717720valu:EulavAssetManagementLLCMember2022-05-012023-01-31 0000717720valu:EulavAssetManagementLLCMember2024-01-31 0000717720valu:EulavAssetManagementLLCMember2023-04-30 0000717720us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMembervalu:EulavAssetManagementLLCMember2024-01-31 0000717720us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMembervalu:EulavAssetManagementLLCMember2023-04-30 0000717720valu:EulavAssetManagementLLCMember2023-01-31 0000717720valu:ReimbursementForPaymentsAndServicesMembervalu:ABAndCoMember2023-05-012024-01-31 0000717720valu:ReimbursementForPaymentsAndServicesMembervalu:ABAndCoMember2022-05-012023-01-31 0000717720valu:ABAndCoMember2024-01-31 0000717720valu:ABAndCoMember2023-04-30 0000717720valu:ABAndCoMember2023-05-012024-01-31 0000717720valu:ABAndCoMember2022-05-012023-01-31 00007177202018-05-012019-04-30 0000717720us-gaap:DomesticCountryMember2024-01-31 0000717720us-gaap:DomesticCountryMember2023-04-30 0000717720us-gaap:StateAndLocalJurisdictionMember2024-01-31 0000717720us-gaap:StateAndLocalJurisdictionMember2023-04-30 0000717720valu:PropertyAndEquipmentMember2024-01-31 0000717720valu:PropertyAndEquipmentMember2023-04-30 utr:Y 0000717720srt:MinimumMember2024-01-31 0000717720srt:MaximumMember2024-01-31 00007177202022-10-21 00007177202023-12-31 00007177202023-11-012023-11-30 00007177202023-11-30 00007177202023-12-012023-12-31 00007177202024-01-012024-01-31 0000717720valu:PropertyAndEquipmentMember2019-05-01 00007177202019-05-01 0000717720valu:CashSecuringALetterOfCreditIssuedAsSecurityDepositMember2024-01-31 0000717720valu:CashSecuringALetterOfCreditIssuedAsSecurityDepositMember2023-01-31 0000717720us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembervalu:OneSingleCustomerMember2023-05-012024-01-31
 
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended January 31, 2024

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____________________________________ to __________________________________

 

Commission File Number: 0-11306

image01.jpg

VALUE LINE, INC.

(Exact name of registrant as specified in its charter)

 

New York13-3139843
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
  
551 Fifth Avenue, New York, New York10176-0001
(Address of principal executive offices)(Zip Code)

(212) 907-1500

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading symbol

Name of each Exchange on which registered

Common stock, $0.10 par value per share

VALU

The Nasdaq Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐                   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer

Smaller reporting company Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class Outstanding at February 29, 2024
Common stock, $0.10 par value per share 9,424,983 shares

 

1

 

 

imageb.jpg

VALUE LINE, INC.

 

TABLE OF CONTENTS

 

       

Page No.

PART I. FINANCIAL INFORMATION

     

Item 1.

 

Consolidated Condensed Financial Statements

   
     
   

Consolidated Condensed Balance Sheets as of January 31, 2024 and April 30, 2023

 

3

     
   

Consolidated Condensed Statements of Income for the three and nine months ended January 31, 2024 and January 31, 2023

 

4

     
   

Consolidated Condensed Statements of Comprehensive Income for the three and nine months ended January 31, 2024 and January 31, 2023

 

5

     
   

Consolidated Condensed Statements of Cash Flows for the nine months ended January 31, 2024 and January 31, 2023

 

6

     
   

Consolidated Condensed Statement of Changes in Shareholders’ Equity for the three months ended July 31, 2023, six months ended October 31, 2023 and nine months ended January 31, 2024

 

7

         
   

Consolidated Condensed Statement of Changes in Shareholders’ Equity for the three months ended July 31, 2022, six months ended October 31, 2022 and nine months ended January 31, 2023

 

8

         
   

Notes to Consolidated Condensed Financial Statements

 

9

     

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

     

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

33

 

 

 

Item 4.

 

Controls and Procedures

 

35

     

PART II. OTHER INFORMATION

     

Item 1.

 

Legal Proceedings

 

35

     

Item 1A.

 

Risk Factors

 

35

     

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

36

         

Item 4.

 

Mine Safety Disclosures

 

36

         

Item 5.

 

Other Information

 

36

         

Item 6.

 

Exhibits

 

37

         
   

Signatures

 

38

 

 

2

Part I - Financial Information
Item 1. Financial Statements
 

 

Value Line, Inc.

Consolidated Condensed Balance Sheets

(in thousands, except share amounts)

 

  

January 31,

  

April 30,

 
  

2024

  

2023

 
  

(unaudited)

     

Assets

        

Current Assets:

        

Cash and cash equivalents (including short term investments of $4,739 and $7,240, respectively)

 $5,780  $7,590 

Equity securities

  15,370   14,546 

Available-for-sale Fixed Income securities

  46,149   39,928 

Accounts receivable, net of allowance for credit losses of $33 and $36, respectively

  1,302   2,124 

Prepaid and refundable income taxes

  6   425 

Prepaid expenses and other current assets

  1,090   1,463 

Total current assets

  69,697   66,076 
         

Long term assets:

        

Investment in EAM Trust

  59,640   58,775 

Restricted money market investments

  305   305 

Property and equipment, net

  4,797   5,788 

Capitalized software and other intangible assets, net

  102   132 

Total long term assets

  64,844   65,000 
         

Total assets

 $134,541  $131,076 
         

Liabilities and Shareholders' Equity

        

Current Liabilities:

        

Accounts payable and accrued liabilities

 $1,094  $1,263 

Accrued salaries

  920   961 

Dividends payable

  2,639   2,642 

Accrued taxes on income

  192   307 

Operating lease obligation-short term

  1,241   1,344 

Unearned revenue

  15,953   16,771 

Total current liabilities

  22,039   23,288 
         

Long term liabilities:

        

Unearned revenue

  6,544   6,202 

Operating lease obligation-long term

  3,890   4,784 

Deferred income taxes

  12,822   13,129 

Total long term liabilities

  23,256   24,115 

Total liabilities

  45,295   47,403 
         

Shareholders' Equity:

        

Common stock, $0.10 par value; authorized 30,000,000 shares; issued 10,000,000 shares

  1,000   1,000 

Additional paid-in capital

  991   991 

Retained earnings

  102,292   95,979 

Treasury stock, at cost (573,017 shares and 565,460 shares, respectively)

  (15,009)  (14,671)

Accumulated other comprehensive income, net of tax

  (28)  374 

Total shareholders' equity

  89,246   83,673 
         

Total liabilities and shareholders' equity

 $134,541  $131,076 

 

The accompanying notes are an integral part of these consolidated condensed financial statements.

 

3

Part I - Financial Information
Item 1. Financial Statements

 

 

Value Line, Inc.

Consolidated Condensed Statements of Income

(in thousands, except share & per share amounts)

(unaudited)

 

   

For the Three Months Ended

   

For the Nine Months Ended

 
   

January 31,

   

January 31,

 
   

2024

   

2023

   

2024

   

2023

 
                                 

Revenues:

                               

Investment periodicals and related publications

  $ 6,319     $ 6,592     $ 19,174     $ 19,795  

Copyright fees

    2,812       3,375       9,310       10,182  

Total publishing revenues

    9,131       9,967       28,484       29,977  
                                 

Expenses:

                               

Advertising and promotion

    782       703       2,139       2,247  

Salaries and employee benefits

    3,719       3,758       11,156       11,574  

Production and distribution

    1,219       1,371       4,094       3,829  

Office and administration

    1,179       1,151       3,442       3,614  

Total expenses

    6,899       6,983       20,831       21,264  

Income from operations

    2,232       2,984       7,653       8,713  
                                 

Revenues and profits interests in EAM Trust

    3,489       2,685       9,341       8,516  

Investment gains/(losses)

    2,009       1,250       1,685       1,276  

Income before income taxes

    7,730       6,919       18,679       18,505  

Income tax provision

    1,845       1,671       4,447       4,469  

Net income

  $ 5,885     $ 5,248     $ 14,232     $ 14,036  
                                 

Earnings per share, basic & fully diluted

  $ 0.62     $ 0.55     $ 1.51     $ 1.48  
                                 
                                 

Weighted average number of common shares

    9,426,983       9,456,877       9,429,575       9,465,955  

 

The accompanying notes are an integral part of these consolidated condensed financial statements.

 

4

Part I - Financial Information
Item 1. Financial Statements
 

 

Value Line, Inc.

Consolidated Condensed Statements of Comprehensive Income

(in thousands)

(unaudited)

 

   

For the Three Months Ended

   

For the Nine Months Ended

 
   

January 31,

   

January 31,

 
   

2024

   

2023

   

2024

   

2023

 
                                 
                                 

Net income

  $ 5,885     $ 5,248     $ 14,232     $ 14,036  
                                 

Other comprehensive income/(loss), net of tax:

                         

Change in unrealized gains/(losses) on

                               

Fixed Income securities, net of tax

    258       123       (402 )     125  

Other comprehensive income/(loss)

    258       123       (402 )     125  

Comprehensive income

  $ 6,143     $ 5,371     $ 13,830     $ 14,161  

 

The accompanying notes are an integral part of these consolidated condensed financial statements.

 

5

Part I - Financial Information
Item 1. Financial Statements

 

 

Value Line, Inc.

Consolidated Condensed Statements of Cash Flows

(in thousands)

(unaudited)

 

   

For the Nine Months Ended

 
   

January 31,

 
   

2024

   

2023

 

Cash flows from operating activities:

               

Net income

  $ 14,232     $ 14,036  
                 

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation and amortization

    1,054       1,006  

Investment (gains)/losses

    133       (438 )

Non-voting revenues interest in EAM Trust

    (8,420 )     (7,917 )

Non-voting profits interest in EAM Trust

    (921 )     (599 )

Distributions received from EAM Trust

    8,476       9,660  

Deferred income taxes

    (190 )     57  

Deferred rent

    (997 )     (920 )

Changes in operating assets and liabilities:

               

Unearned revenue

    (476 )     (1,010 )

Accounts payable & accrued expenses

    (169 )     (195 )

Accrued salaries

    (41 )     (20 )

Accrued taxes on income

    (126 )     80  

Prepaid and refundable income taxes

    419       278  

Prepaid expenses and other current assets

    373       62  

Accounts receivable

    822       (102 )

Total adjustments

    (63 )     (58 )

Net cash provided by operating activities

    14,169       13,978  
                 

Cash flows from investing activities:

               

Purchases of equity securities

    (2,073 )     (1,322 )

Purchases of fixed income securities classified as available-for-sale

    (38,855 )     (30,205 )

Proceeds from sales of equity securities

    1,129       1,421  

Proceeds from sales of fixed income securities classified as available-for-sale

    32,113       9,907  

Acquisition of property and equipment

    (14 )     (23 )

Expenditures for capitalized software

    (19 )     -  

Net cash used in investing activities

    (7,719 )     (20,222 )
                 

Cash flows from financing activities:

               

Purchase of treasury stock at cost

    (338 )     (4,487 )

Dividends paid

    (7,922 )     (7,111 )

Net cash used in financing activities

    (8,260 )     (11,598 )

Net change in cash and cash equivalents

    (1,810 )     (17,842 )

Cash, cash equivalents and restricted cash at beginning of period

    7,895       30,008  

Cash, cash equivalents and restricted cash at end of period

  $ 6,085     $ 12,166  

 

The accompanying notes are an integral part of these consolidated condensed financial statements.

 

6

Part I - Financial Information
Item 1. Financial Statements
 

 

Value Line, Inc.

Consolidated Condensed Statement of Changes in Shareholders' Equity

For the Three Months Ended July 31, 2023, Six Months Ended October 31, 2023, 

and Nine Months Ended January 31, 2024

(in thousands, except share amounts)

(unaudited)

 

   

Common stock

   

Additional

paid-in-

   

Treasury stock

   

Retained

   

Accumulated other comprehensive

         
   

Shares

   

Amount

   

capital

   

Shares

   

Amount

   

earnings

   

income

   

Total

 

Balance at April 30, 2023

    10,000,000     $ 1,000     $ 991       (565,460 )   $ (14,671 )   $ 95,979     $ 374     $ 83,673  
                                                                 

Net income

                                            4,859               4,859  

Change in unrealized gains on Fixed Income securities, net of taxes

                                                    (212 )     (212 )

Purchase of treasury stock

                            (4,011 )     (188 )                     (188 )

Dividends declared

                                            (2,641 )             (2,641 )

Balance at July 31, 2023

    10,000,000     $ 1,000     $ 991       (569,471 )   $ (14,859 )   $ 98,197     $ 162     $ 85,491  

 

Dividends declared per common share were $0.28 for the three months ending July 31, 2023.

 

   

Common stock

   

Additional

paid-in-

   

Treasury stock

   

Retained

   

Accumulated other

comprehensive

         
   

Shares

   

Amount

   

capital

   

Shares

   

Amount

   

earnings

   

income

   

Total

 

Balance at July 31, 2023

    10,000,000     $ 1,000     $ 991       (569,471 )   $ (14,859 )   $ 98,197     $ 162     $ 85,491  
                                                                 

Net income

                                            3,488               3,488  

Change in unrealized gains on Fixed Income securities, net of taxes

                                                    (448 )     (448 )

Purchase of treasury stock

                            (3,546 )     (150 )                     (150 )

Dividends declared

                                            (2,639 )             (2,639 )

Balance at October 31, 2023

    10,000,000     $ 1,000     $ 991       (573,017 )   $ (15,009 )   $ 99,046     $ (286 )   $ 85,742  

 

Dividends declared per common share were $0.56 for the six months ending October 31, 2023.

 

   

Common stock

   

Additional

paid-in-

   

Treasury stock

   

Retained

   

Accumulated other

comprehensive

         
   

Shares

   

Amount

   

capital

   

Shares

   

Amount

   

earnings

   

income

   

Total

 

Balance at October 31, 2023

    10,000,000     $ 1,000     $ 991       (573,017 )   $ (15,009 )   $ 99,046     $ (286 )   $ 85,742  
                                                                 

Net income

                                            5,885               5,885  

Change in unrealized gains on Fixed Income securities, net of taxes

                                                    258       258  

Dividends declared

                                            (2,639 )             (2,639 )

Balance at January 31, 2024

    10,000,000     $ 1,000     $ 991       (573,017 )   $ (15,009 )   $ 102,292     $ (28 )   $ 89,246  

 

Dividends declared per common share were $0.84 for the nine months ending January 31, 2024.

 

The accompanying notes are an integral part of these consolidated condensed financial statements.

 

7

Part I - Financial Information
Item 1. Financial Statements

 

Value Line, Inc.

Consolidated Condensed Statement of Changes in Shareholders' Equity

For the Three Months Ended July 31, 2022, Six Months Ended October 31, 2022

and Nine Months Ended January 31, 2023

(in thousands, except share amounts)

(unaudited)

 

   

Common stock

   

Additional

paid-in-

   

Treasury stock

   

Retained

   

Accumulated other

comprehensive

         
   

Shares

   

Amount

   

capital

   

Shares

   

Amount

   

earnings

   

income

   

Total

 

Balance at April 30, 2022

    10,000,000     $ 1,000     $ 991       (490,157 )   $ (9,967 )   $ 87,645     $ (24 )   $ 79,645  
                                                                 

Net income

                                            4,458               4,458  

Change in unrealized gains on Fixed Income securities, net of taxes

                                                    5       5  

Purchase of treasury stock

                            (35,029 )     (2,382 )                     (2,382 )

Dividends declared

                                            (2,369 )             (2,369 )

Balance at July 31, 2022

    10,000,000     $ 1,000     $ 991       (525,186 )   $ (12,349 )   $ 89,734     $ (19 )   $ 79,357  

 

Dividends declared per common share were $0.25 for the three months ending July 31, 2022.

 

   

Common stock

   

Additional

paid-in-

   

Treasury stock

   

Retained

   

Accumulated other

comprehensive

         
   

Shares

   

Amount

   

capital

   

Shares

   

Amount

   

earnings

   

income

   

Total

 

Balance at July 31, 2022

    10,000,000     $ 1,000     $ 991       (525,186 )   $ (12,349 )   $ 89,734     $ (19 )   $ 79,357  
                                                                 

Net income

                                            4,330               4,330  

Change in unrealized gains on Fixed Income securities, net of taxes

                                                    (3 )     (3 )

Purchase of treasury stock

                            (17,314 )     (1,100 )                     (1,100 )

Dividends declared

                                            (2,364 )             (2,364 )

Balance at October 31, 2022

    10,000,000     $ 1,000     $ 991       (542,500 )   $ (13,449 )   $ 91,700     $ (22 )   $ 80,220  

 

Dividends declared per common share were $0.50 for the six months ending October 31, 2022.

 

   

Common stock

   

Additional

paid-in-

   

Treasury stock

   

Retained

   

Accumulated other

comprehensive

         
   

Shares

   

Amount

   

capital

   

Shares

   

Amount

   

earnings

   

income

   

Total

 

Balance at October 31, 2022

    10,000,000     $ 1,000     $ 991       (542,500 )   $ (13,449 )   $ 91,700     $ (22 )   $ 80,220  
                                                                 

Net income

                                            5,248               5,248  

Change in unrealized gains on Fixed Income securities, net of taxes

                                                    123       123  

Purchase of treasury stock

                            (18,638 )     (1,005 )                     (1,005 )

Dividends declared

                                            (2,360 )             (2,360 )

Balance at January 31, 2023

    10,000,000     $ 1,000     $ 991       (561,138 )   $ (14,454 )   $ 94,588     $ 101     $ 82,226  
 

Dividends declared per common share were $0.75 for the nine months ending January 31, 2023.

 

The accompanying notes are an integral part of these consolidated condensed financial statements.

 

8

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

January 31, 2024

(Unaudited)

 

 

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 core business is producing investment periodicals and their underlying research and making available certain Value Line copyrights, Value Line trademarks and Value Line Proprietary Ranks and other proprietary information, to third parties under written agreements for use in third-party managed and marketed investment products and for other purposes.  The Company maintains a significant investment in Eulav Asset Management LLC ("EAM")  from which it receives a non-voting revenues interest  and a non-voting profits interest.  Pursuant to the EAM Declaration of Trust dated as of December 23, 2010 (the "EAM Trust Agreement"), VLI granted EAM the right to use the Value Line name for all existing Value Line Funds and agreed to supply, without charge or expense, the Value Line Proprietary Ranking System information to EAM for use in managing the Value Line Funds.  EAM was established to provide investment management services to the Value Line Mutual Funds ("Value Line Funds" or the "Funds").   

 

The Consolidated Condensed Balance Sheets as of January 31, 2024 and April 30, 2023, 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, 2023 filed with the SEC on July 28, 2023 (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. The Company holds a significant non-voting revenues interest (excluding distribution revenues) and a significant non-voting profits interest in 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 earns 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 fees are derived from providing certain Value Line trademarks and the Value Line Proprietary Ranks 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 fees upon delivery to the customer as specified in the individual agreements.  Revenue is recognized monthly and received either quarterly or in advance 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.  

 

9

 

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% of EAM’s adjusted gross revenues, excluding EULAV Securities' 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. The Company's Revenues Interest in EAM excludes participation in the service and distribution fees of EAM's subsidiary EULAV Securities. The Company reflects its non-voting revenues and non-voting profits interests in EAM as non-operating income under the equity method of accounting. 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, equity securities and available-for-sale fixed income securities consist of shares of money market funds that invest primarily in short-term U.S. Government securities, investments in equities including ETFs and fixed income securities invested primarily in short-term U.S. Treasury bills, and to a smaller extent bank certificates of deposit that are valued in accordance with the requirements of the Fair Value Measurements Topic of the FASB's ASC 820. The securities classified as equity securities reflected in the Consolidated Condensed Balance Sheets are valued at market and unrealized gains and losses are recorded in the Consolidated Condensed Statements of Income per FASB Accounting Standards Update No. 2016-01 ("ASU 2016-01"). The securities classified as available-for-sale  fixed income securities 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. Investment gains and losses on sales of the equity securities are the difference between proceeds from sales and the fair value of the equity securities at the beginning of the period or the purchase date, if later. Investment gains and losses on sales of the available-for-sale fixed income securities are the difference between proceeds from sales and the cost of the securities. Investment gains and losses on sales of all securities are recorded in earnings as of the trade date and are determined on the identified cost method.  

 

The Company classifies its equity securities and available-for-sale fixed income securities 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 the Company's 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. 

 

10

 

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:

 

  As of January 31, 2024 

($ in thousands)

 

Level 1

  

Level 2

  

Level 3

  

Total

 

Cash equivalents

 $4,739  $-  $-  $4,739 

Equity securities

  15,370   -   -   15,370 

Available-for-sale fixed income securities

  45,899   250   -   46,149 
  $66,008  $250  $-  $66,258 

 

  As of April 30, 2023 

($ in thousands)

 

Level 1

  

Level 2

  

Level 3

  

Total

 

Cash equivalents

 $7,240  $-  $-  $7,240 

Equity securities

  14,546   -   -   14,546 

Available-for-sale fixed income securities

  39,178   750   -   39,928 
  $60,964  $750  $-  $61,714 

 

The Company had no other financial instruments such as futures, forwards and swap contracts. For the periods ended January 31, 2024 and April 30, 2023, there were no Level 3 investments. The Company does not have any liabilities that are 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 Company adopted the provisions of ASU 2015-17, Income taxes (Topic 740) and classifies all deferred taxes as long-term liabilities on the Consolidated Condensed Balance Sheets.

 

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 January 31, 2024, 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 January 31, 2024 and April 30, 2023, cash equivalents included $4,739,000 and $7,240,000, respectively, for amounts invested in money market mutual funds that invest in short term U.S. government securities or savings accounts located in the United States.

 

11

 

 

Note 2 - Investments:

 

Investments held by the Company and its subsidiaries are classified as  equity securities and available-for-sale fixed income securities in accordance with FASB's ASC 321, Investments - Equity Securities and with FASB's ASC 320, Investments - Debt Securities.  All of the Company's securities were readily marketable or had a maturity of twelve months or less and are classified as current assets  on the Consolidated Condensed Balance Sheets.

 

Equity Securities:

 

Equity securities on the Consolidated Condensed Balance Sheets, consist of ETFs held for dividend yield that attempt to replicate the performance of certain equity indexes.  

 

As of January 31, 2024 and April 30, 2023, the aggregate cost of the equity securities, which consist of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), ProShares Trust S&P 500 Dividend Aristocrats ETF (NOBL), IShares DJ Select Dividend ETF (DVY) and other Exchange Traded Funds was a combined total $11,109,000 and $10,169,000, respectively, and the fair value was $15,370,000 and $14,546,000, respectively.  

 

Proceeds from sales of equity securities during the nine months ended January 31, 2024 and January 31, 2023, were $1,129,000 and $1,421,000, respectively.     

 

The carrying value and fair value of equity securities at January 31, 2024 were as follows:

 

($ in thousands)

 

Cost

  

Gross Unrealized

Gains

  

Gross Unrealized

Losses

  

Fair Value

 

ETFs - equities

 $11,109  $4,265  $(4) $15,370 

 

The carrying value and fair value of equity securities at April 30, 2023 were as follows:

 

($ in thousands)

 

Cost

  

Gross Unrealized

Gains

  

Gross Unrealized

Losses

  

Fair Value

 

ETFs - equities

 $10,169  $4,392  $(15) $14,546 

 

12

 

Government Debt Securities (Fixed Income Securities):

 

Fixed income securities consist of certificates of deposits and securities issued by federal, state and local governments within the United States.  

 

Proceeds from maturities and sales of government debt securities classified as available-for-sale during the nine months ended January 31, 2024 and January 31, 2023, were $32,113,000 and $9,907,000, respectively. As of January 31, 2024, Accumulated Other Comprehensive Income included unrealized losses of $34,000 net of deferred tax benefits of $6,000.  As of April 30, 2023, Accumulated Other Comprehensive Income included unrealized gains of $473,000, net of deferred taxes of $99,000.

 

The aggregate cost and fair value at January 31, 2024 of fixed income securities classified as available-for-sale were as follows:

 

  

Amortized

  

Gross Unrealized

  

Gross Unrealized

     

($ in thousands)

 

Historical Cost

  

Holding Gains

  

Holding Losses

  

Fair Value

 

Maturity

                

Due within 1 year

 $41,126  $39  $(4) $41,161 

Due 1 year through 5 years

  5,058   -   (70)  4,988 

Total investment in government debt securities

 $46,184  $39  $(74) $46,149 

 

The increase in gross unrealized losses of $508,000 on fixed income securities classified as available-for-sale net of deferred income tax benefits of $106,000, was included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheet as of January 31, 2024.  

 

The aggregate cost and fair value at April 30, 2023 of fixed income securities classified as available-for-sale were as follows:

 

  

Amortized

  

Gross Unrealized

  

Gross Unrealized

     

($ in thousands)

 

Historical Cost

  

Holding Gains

  

Holding Losses

  

Fair Value

 

Maturity

                

Due within 1 year

 $34,384  $486  $(5) $34,865 

Due within 1 year through 5 years

  5,071      (8)  5,063 

Total investment in government debt securities

 $39,455  $486  $(13) $39,928 

 

The increase in gross unrealized gains of $503,000 on fixed income securities classified as available-for-sale net of deferred income tax liability of $105,000, was included in Accumulated Other Comprehensive Income on the Consolidated Balance Sheet as of April 30, 2023.  

 

The average yield on the Government debt securities classified as available-for-sale at January 31, 2024 and April 30, 2023 was 4.56% and 2.55%, respectively.

 

Investment Gains/(Losses):

Investment gains/(losses) were comprised of the following:

 

  

Three Months Ended January 31,

  

Nine Months Ended January 31,

 

($ in thousands)

 

2024

  

2023

  

2024

  

2023

 

Dividend income

 $153  $190  $431  $444 

Interest income

  511   194   1,387   395 

Investment gains/(losses) recognized on sales of equity securities during the period

  2   7   (1)  12 

Unrealized gains/(losses) recognized on equity securities held at the end of the period

  1,343   859   (132)  425 

Total investment gains/(losses)

 $2,009  $1,250  $1,685  $1,276 

 

Taxable realized gains/(losses) on equity securities sold during fiscal years 2024 and 2023, which are generally the difference between the proceeds from sales and our original cost, were losses of $16,000 in fiscal 2024 and losses of $2,000 in fiscal 2023.  

 

13

 

Investment in Unconsolidated Entities:

Equity Method Investment:

 

As of January 31, 2024 and April 30, 2023, the Company's investment in EAM Trust on the Consolidated Condensed Balance Sheets was $59,640,000 and $58,775,000, respectively.

 

The value of VLI’s investment in EAM at January 31, 2024 and April 30, 2023 reflects the fair value of contributed capital of $55,805,000 at inception which included $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. 

 

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 2024 or 2023.

 

The components of EAM’s investment management operations, provided to the Company by EAM, were as follows:

 

  Three Months Ended January 31,  

Nine Months Ended January 31,

 

($ in thousands) (unaudited)

 

2024

  

2023

  

2024

  

2023

 

Investment management fees earned from the Value Line Funds, net of waivers shown below

 $6,320  $4,809  $17,388  $14,951 

12b-1 fees and other fees, net of waivers shown below

 $1,632  $1,457  $4,811  $4,507 

Other income

 $192  $146  $295  $150 

Investment management fee waivers and reimbursements

 $77  $73  $239  $104 

12b-1 fee waivers

 $24  $26  $72  $80 

Value Line’s non-voting revenues interest

 $3,083  $2,512  $8,420  $7,917 

EAM's net income (1)

 $812  $346  $1,842  $1,198 

 

(1) 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. 

 

  

January 31,

  

April 30,

 

($ in thousands)

 

2024

  

2023

 
  

(unaudited)

     

EAM's total assets

 $62,610  $61,389 

EAM's total liabilities (1)

  (5,532)  (4,357)

EAM's total equity

 $57,078  $57,032 

 

(1) At January 31, 2024 and April 30, 2023, EAM's total liabilities included a payable to VLI for its accrued non-voting revenues interest and non-voting profits interest of $3,448,000 and $2,601,000, respectively.

 

14

 

 

Note 3 - Variable Interest Entity

 

The Company holds a non-voting revenues interest and a 50% non-voting profits interest in EAM, the adviser to the Value Line asset management and mutual fund distribution businesses. EAM is considered to be a VIE in relation to the Company.  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.

 

      Value Line 

($ in thousands)

 

VIE Assets

  

Investment in EAM

Trust (1)

  

Liabilities

  

Maximum Exposure

to Loss

 

As of January 31, 2024 (unaudited)

 $62,610  $59,640  $-  $59,640 

As of April 30, 2023

 $61,389  $58,775  $-  $58,775 

 

(1)  Reported within Long-Term Assets on the Consolidated Condensed Balance Sheets.

 

15

 

 

Note 4 - Supplementary Cash Flows Information:

 

Reconciliation of Cash, Cash Equivalents, and Restricted Cash:

 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Condensed Statement of Cash Flows that sum to the total of the same such amounts shown in the Consolidated Condensed Statement of Cash Flows.

 

   

Nine Months Ended January 31,

 

($ in thousands)

 

2024

   

2023

 

Cash and cash equivalents

  $ 5,780     $ 11,861  

Restricted cash

    305       305  

Total cash, cash equivalents, and restricted cash shown in the Consolidated Condensed Statement of Cash Flows

  $ 6,085     $ 12,166  

 

Income Tax Payments:

 

The Company made income tax payments as follows:

 

   

Nine Months Ended January 31,

 

($ in thousands)

 

2024

   

2023

 

State and local income tax payments

  $ 656     $ 732  

Federal income tax payments

  $ 4,000     $ 3,327  

 

 

Note 5 - Employees' Profit Sharing and Savings Plan:

 

Substantially all employees of the Company and its subsidiaries are members of the Value Line, Inc. Profit Sharing and Savings Plan (the "Plan").  In general, this is a qualified, contributory plan which provides for a discretionary annual Company contribution. For the nine months ended January 31, 2024 and January 31, 2023, the estimated profit sharing plan contributions, which are included as expenses in salaries and employee benefits in the Consolidated Condensed Statements of Income, were $287,000 and $318,000 in fiscal 2024 and fiscal 2023, respectively. 

 

 

Note 6 - Comprehensive Income:

 

The FASB's ASC Comprehensive Income topic requires the reporting of comprehensive income in addition to net income from operations.  Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that otherwise would not be recognized in the calculation of net income.

 

As of January 31, 2024 and January 31, 2023 the Company held fixed income securities consisting of certificates of deposits and securities issued by federal, state, and local governments within the United States that are classified as securities available-for-sale on the Consolidated Condensed Balance Sheets. The change in valuation of fixed income securities, net of deferred income taxes, has been recorded in Accumulated Other Comprehensive Income in the Company's Consolidated Condensed Balance Sheets. 

 

The components of comprehensive income included in the Consolidated  Condensed Statements of Income and Changes in Shareholders' Equity for the nine months ended January 31, 2024 are as follows:

 

($ in thousands)

 

Amount Before

Tax

   

Tax (Expense) /

Benefit

   

Amount Net of

Tax

 

Change in unrealized gains/(losses) on available-for-sale fixed income securities

  $ (508 )   $ 106     $ (402 )
    $ (508 )   $ 106     $ (402 )

 

The components of comprehensive income included in the Consolidated Condensed Statements of Income and Changes in Shareholders' Equity for the nine months ended January 31, 2023 are as follows:

 

($ in thousands)

 

Amount Before

Tax

   

Tax (Expense) /

Benefit

   

Amount Net of

Tax

 

Change in unrealized gains/(losses) on available-for-sale fixed income securities

  $ 158     $ (33 )   $ 125  
    $ 158     $ (33 )   $ 125  

 

16

 

 

Note 7 - Related Party Transactions:

 

Investment Management (overview):

 

The Company has substantial non-voting revenues and non-voting profits interests in EAM, the asset manager to the Value Line Mutual Funds.  Accordingly, the Company does not report this operation as a separate business segment, although it maintains a significant interest in the cash flows generated by this business and receives non-voting revenues and non-voting profits interests, as discussed below. 

 

Total assets in the Value Line Funds managed and/or distributed by EAM at January 31, 2024, were $4.06 billion, 33.6% above total assets of $3.04 billion in the Value Line Funds managed and/or distributed by EAM at January 31, 2023. 

 

The Company’s non-voting revenues and non-voting profits interests in EAM entitle it to receive quarterly distributions in a range of 41% to 55% of EAM’s revenues (excluding distribution revenues) from EAM’s mutual fund and separate account business and 50% of the residual profits of EAM (subject to temporary increase in certain limited circumstances).  The Voting Profits Interest Holders receive the other 50% of residual profits of EAM.  Distribution is not less than 90% of EAM’s profits payable each fiscal quarter under the provisions of the EAM Trust Agreement.   

 

EAM Trust - VLI's non-voting revenues and non-voting profits interests:

 

The Company holds non-voting revenues and non-voting profits interests in EAM which entitle the Company to receive from EAM an amount ranging from 41% to 55% of EAM's investment management fee revenues from its mutual fund and separate accounts business.  EAM currently has no separately managed account fees.  The Company recorded income from its non-voting revenues interest and its non-voting profits interests in EAM as follows:   

 

  

Three Months Ended January 31,

  

Nine Months Ended January 31,

 

($ in thousands)

 

2024

  

2023

  

2024

  

2023

 

Non-voting revenues interest in EAM

 $3,083  $2,512  $8,420  $7,917 

Non-voting profits interest in EAM

  406   173   921   599 
  $3,489  $2,685  $9,341  $8,516 

 

At January 31, 2024, the Company's investment in EAM includes a receivable of $3,448,000 representing the quarterly distribution of the non-voting revenues share and non-voting profits share. That amount was subsequently paid to the Company.

 

Transactions with Parent:

 

During the nine months ended January 31, 2024 and January 31, 2023, the Company was reimbursed $230,000 and $232,000, respectively, for payments it made on behalf of and for services the Company provided to the Parent Company, Arnold Bernhard and Co., Inc. ("Parent").  There were no receivables from the Parent on the Consolidated Condensed Balance Sheets at January 31, 2024 and April 30, 2023.  

 

The Company is a party to a tax-sharing arrangement with the Parent which allocates the tax liabilities of the two Companies between them. The Company made federal tax payments of $4,000,000 and $3,327,000 to the Parent during the nine months ended January 31, 2024 and January 31, 2023, respectively.

 

As of January 31, 2024, the Parent owned 91.59% of the outstanding shares of common stock of the Company.

 

 

Note 8 - Federal, State and Local Income Taxes:

 

In accordance with the requirements of the Income Tax Topic of the FASB's ASC, the Company's provision for income taxes includes the following:

 

  

Three Months Ended January 31,

  

Nine Months Ended January 31,

 

($ in thousands)

 

2024

  

2023

  

2024

  

2023

 

Current tax expense:

                

Federal

 $1,195  $1,191  $3,657  $3,581 

State and local

  469   364   979   831 

Current tax expense

  1,664   1,555   4,636   4,412 

Deferred tax expense (benefit):

                

Federal

  288   184   (18)  85 

State and local

  (107)  (68)  (171)  (28)

Deferred tax expense (benefit):

  181   116   (189)  57 

Income tax provision

 $1,845  $1,671  $4,447  $4,469 

 

17

 

On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act (the "Tax Act"), was enacted. The Tax Act lowered the U.S. federal income tax rate ("Federal Tax Rate") from 35% to 21% effective January 1, 2018.  Accordingly, the Company computes Federal income tax expense using the Federal Tax Rate of 21% in fiscal year 2019 and each year thereafter.  

 

The overall effective income tax rates, as a percentage of pre-tax ordinary income for the nine months ended January 31, 2024 and January 31, 2023 were 23.80% and 24.15%, respectively. The lower effective tax rate during nine months ended January 31, 2024 as compared to January 31, 2023, is primarily a result of a decrease in the state and local income tax rate to 3.04% from 3.39% due to changes in state and local income tax allocations. The Company's annualized overall effective tax rate fluctuates due to a number of factors, in addition to changes in tax law, including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-income tax, the Company's geographic profit mix between tax jurisdictions, taxation method adopted by each locality, new interpretations of existing tax laws and rulings and settlements with tax authorities.   

 

Deferred income taxes, a liability, are provided for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities.  The tax effect of temporary differences giving rise to the Company's long-term deferred tax liability are as follows:

 

  

January 31,

  

April 30,

 

($ in thousands)

 

2024

  

2023

 

Federal tax liability (benefit):

        

Deferred gain on deconsolidation of EAM

 $10,669  $10,669 

Deferred non-cash post-employment compensation

  (372)  (372)

Depreciation and amortization

  70   59 

Unrealized gain/(loss) on fixed income securities held for sale

  (7)  99 

Unrealized gain on equity securities

  895   919 

Right of Use Asset

  (154)  (174)

Deferred charges

  (133)  (136)

Other

  (461)  (432)

Total federal tax liability

  10,507   10,632 
         

State and local tax liabilities (benefits):