UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
VALUE LINE, INC.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(
(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 |
| | | The |
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.
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).
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 ☐
Smaller reporting 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
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 January 31, 2023 |
| Common stock, $0.10 par value per share |
VALUE LINE, INC.
TABLE OF CONTENTS
| Page No. |
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| PART I. FINANCIAL INFORMATION |
||
| Item 1. |
Consolidated Condensed Financial Statements |
|
| Consolidated Condensed Balance Sheets as of January 31, 2023 and April 30, 2022 |
3 |
|
| Consolidated Condensed Statements of Income for the three and nine months ended January 31, 2023 and January 31, 2022 |
4 |
|
| Consolidated Condensed Statements of Comprehensive Income for the three and nine months ended January 31, 2023 and January 31, 2022 |
5 |
|
| Consolidated Condensed Statements of Cash Flows for the nine months ended January 31, 2023 and January 31, 2022 |
6 |
|
| Consolidated Condensed Statement of Changes in Shareholders’ Equity for the three months ended July 31, 2022, October 31, 2022 and January 31, 2023 |
7 |
|
| Consolidated Condensed Statement of Changes in Shareholders’ Equity for the three months ended July 31, 2021, October 31, 2021 and January 31, 2022 |
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 |
34 |
|
|
||
| Item 4. |
Controls and Procedures |
36 |
| PART II. OTHER INFORMATION |
||
| Item 1. |
Legal Proceedings |
36 |
| Item 1A. |
Risk Factors |
36 |
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
37 |
| Item 4. |
Mine Safety Disclosures |
37 |
| Item 5. |
Other Information |
37 |
| Item 6. |
Exhibits |
38 |
| Signatures |
39 |
| Part I - Financial Information |
| Item 1. Financial Statements |
| Value Line, Inc. |
| Consolidated Condensed Balance Sheets |
| (in thousands, except share amounts) |
| January 31, | April 30, | |||||||
| 2023 | 2022 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents (including short term investments of $ and $, respectively) | $ | $ | ||||||
| Equity securities | ||||||||
| Available-for-sale fixed income securities | ||||||||
| Accounts receivable, net of allowance for doubtful accounts of $ and $, respectively | ||||||||
| Prepaid and refundable income taxes | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Long term assets: | ||||||||
| Investment in EAM Trust | ||||||||
| Restricted money market investments | ||||||||
| Property and equipment, net | ||||||||
| Capitalized software and other intangible assets, net | ||||||||
| Total long term assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accrued salaries | ||||||||
| Dividends payable | ||||||||
| Accrued taxes on income | ||||||||
| Operating lease obligation-short term | ||||||||
| Unearned revenue | ||||||||
| Total current liabilities | ||||||||
| Long term liabilities: | ||||||||
| Unearned revenue | ||||||||
| Operating lease obligation-long term | ||||||||
| Deferred income taxes | ||||||||
| Total long term liabilities | ||||||||
| Total liabilities | ||||||||
| Shareholders' Equity: | ||||||||
| Common stock, $ par value; authorized shares; issued shares | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Treasury stock, at cost ( shares and shares, respectively) | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income, net of tax | ( | ) | ||||||
| Total shareholders' equity | ||||||||
| Total liabilities and shareholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated condensed financial statements.
| 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, |
|||||||||||||||
| 2023 |
2022 |
2023 |
2022 |
|||||||||||||
| Revenues: |
||||||||||||||||
| Investment periodicals and related publications |
$ | $ | $ | $ | ||||||||||||
| Copyright fees |
||||||||||||||||
| Total publishing revenues |
||||||||||||||||
| Expenses: |
||||||||||||||||
| Advertising and promotion |
||||||||||||||||
| Salaries and employee benefits |
||||||||||||||||
| Production and distribution |
||||||||||||||||
| Office and administration |
||||||||||||||||
| Total expenses |
||||||||||||||||
| Income from operations |
||||||||||||||||
| Gain on forgiveness of PPP loan (see note 16) |
||||||||||||||||
| Revenues and profits interests in EAM Trust |
||||||||||||||||
| Investment gains / (losses) |
( |
) | ||||||||||||||
| Income before income taxes |
||||||||||||||||
| Income tax provision |
||||||||||||||||
| Net income |
$ | $ | $ | $ | ||||||||||||
| Earnings per share, basic & fully diluted |
$ | $ | $ | $ | ||||||||||||
| Weighted average number of common shares |
||||||||||||||||
The accompanying notes are an integral part of these consolidated condensed financial statements.
| 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, |
|||||||||||||||
| 2023 |
2022 |
2023 |
2022 |
|||||||||||||
| Net income |
$ | $ | $ | $ | ||||||||||||
| Other comprehensive income/(loss), net of tax: |
||||||||||||||||
| Change in unrealized gains/(losses) on fixed income securities, net of taxes |
( |
) | ||||||||||||||
| Other comprehensive income/(loss) |
( |
) | ||||||||||||||
| Comprehensive income |
$ | $ | $ | $ | ||||||||||||
The accompanying notes are an integral part of these consolidated condensed financial statements.
| 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, |
||||||||
| 2023 |
2022 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
||||||||
| Investment (gains) |
( |
) | ( |
) | ||||
| Non-voting revenues interest in EAM Trust |
( |
) | ( |
) | ||||
| Non-voting profits interest in EAM Trust |
( |
) | ( |
) | ||||
| Distributions received from EAM Trust |
||||||||
| Gain on forgiveness of PPP loan (see note 16) |
( |
) | ||||||
| Deferred income taxes |
( |
) | ||||||
| Deferred rent obligation |
( |
) | ( |
) | ||||
| Changes in operating assets and liabilities: |
||||||||
| Unearned revenue |
( |
) | ( |
) | ||||
| Accounts payable & accrued expenses |
( |
) | ( |
) | ||||
| Accrued salaries |
( |
) | ( |
) | ||||
| Accrued taxes on income |
||||||||
| Prepaid and refundable income taxes |
||||||||
| Prepaid expenses and other current assets |
||||||||
| Accounts receivable |
( |
) | ||||||
| Total adjustments |
( |
) | ( |
) | ||||
| Net cash provided by operating activities |
||||||||
| Cash flows from investing activities: |
||||||||
| Purchases of equity securities |
( |
) | ( |
) | ||||
| Purchases of fixed income securities classified as available for sale |
( |
) | ( |
) | ||||
| Proceeds from sales of equity securities |
||||||||
| Proceeds from sales of fixed income securities classified as available for sale |
||||||||
| Acquisition of property and equipment |
( |
) | ||||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Cash flows from financing activities: |
||||||||
| Purchase of treasury stock at cost |
( |
) | ( |
) | ||||
| Payable to clearing broker |
||||||||
| Dividends paid |
( |
) | ( |
) | ||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| Net change in cash and cash equivalents |
( |
) | ||||||
| Cash, cash equivalents and restricted cash at beginning of period |
||||||||
| Cash, cash equivalents and restricted cash at end of period |
$ | $ | ||||||
The accompanying notes are an integral part of these consolidated condensed financial statements.
| 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, October 31, 2022, 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 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||
| Change in unrealized gains on Fixed Income securities, net of taxes | ||||||||||||||||||||||||||||||||
| Purchase of treasury stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Dividends declared | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at July 31, 2022 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||
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 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||
| Change in unrealized gains on Fixed Income securities, net of taxes | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Purchase of treasury stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Dividends declared | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at October 31, 2022 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||
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 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||
| Change in unrealized gains on Fixed Income securities, net of taxes | ||||||||||||||||||||||||||||||||
| Purchase of treasury stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Dividends declared | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at January 31, 2023 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||
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.
| 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, 2021, October 31, 2021, January 31, 2022 |
| (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, 2021 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||
| Change in unrealized gains on Fixed Income securities, net of taxes | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Purchase of treasury stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Dividends declared | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at July 31, 2021 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||
Dividends declared per common share were $0.22 for the three months ending July 31, 2021.
| Common stock | Additional paid-in- | Treasury stock | Retained | Accumulated other comprehensive | ||||||||||||||||||||||||||||
| Shares | Amount | capital | Shares | Amount | earnings | income | Total | |||||||||||||||||||||||||
| Balance at July 31, 2021 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||
| Change in unrealized gains on Fixed Income securities, net of taxes | ||||||||||||||||||||||||||||||||
| Purchase of treasury stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Dividends declared | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at October 31, 2021 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||
Dividends declared per common share were $0.44 for the six months ending October 31, 2021.
| Common stock | Additional paid-in- | Treasury stock | Retained | Accumulated other comprehensive | ||||||||||||||||||||||||||||
| Shares | Amount | capital | Shares | Amount | earnings | income | Total | |||||||||||||||||||||||||
| Balance at October 31, 2021 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||
| Change in unrealized gains on Fixed Income securities, net of taxes | ||||||||||||||||||||||||||||||||
| Purchase of treasury stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Dividends declared | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at January 31, 2022 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||
Dividends declared per common share were $0.66 for the nine months ending January 31, 2022.
The accompanying notes are an integral part of these consolidated condensed financial statements.
| 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, 2023 and April 30, 2022, 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, 2022 filed with the SEC on July 26, 2022 (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 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 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 of the product 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.
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
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 and investments in equities including ETFs and 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 sold 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 the 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.
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, 2023 | ||||||||||||||||
| ($ in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Cash equivalents | $ | $ | $ | $ | ||||||||||||
| Equity securities | ||||||||||||||||
| Available-for-sale fixed income securities | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| As of April 30, 2022 | ||||||||||||||||
| ($ in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Cash equivalents | $ | $ | $ | $ | ||||||||||||
| Equity securities | ||||||||||||||||
| Available-for-sale fixed income securities | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
The Company had no other financial instruments such as futures, forwards and swap contracts. For the periods ended January 31, 2023 and April 30, 2022, there were no Level 2 nor 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, 2023, 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.
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, 2023 and April 30, 2022, cash equivalents included $
| 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 and ETFs that hold preferred shares primarily of financial institutions.
As of January 31, 2023 and April 30, 2022, 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 and common stock equity securities was a combined total $
Proceeds from sales of equity securities during the nine months ended January 31, 2023 and January 31, 2022, were $
The carrying value and fair value of equity securities at January 31, 2023 were as follows:
| ($ in thousands) | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
| ETFs - equities | $ | $ | $ | ( | ) | $ | ||||||||||
The carrying value and fair value of equity securities at April 30, 2022 were as follows:
| ($ in thousands) | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
| ETFs - equities | $ | $ | $ | ( | ) | $ | ||||||||||
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, 2023 and January 31, 2022, were $
The aggregate cost and fair value at January 31, 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 | $ | $ | $ | ( | ) | $ | ||||||||||
| Due 1 year through 5 years | - | ( | ) | |||||||||||||
| Total investment in government debt securities | $ | $ | $ | ( | ) | $ | ||||||||||
The decrease in gross unrealized losses of $
The aggregate cost and fair value at April 30, 2022 of fixed income securities classified as available-for-sale were as follows:
| Amortized | Gross Unrealized | |||||||||||
| ($ in thousands) | Historical Cost | Holding Losses | Fair Value | |||||||||
| Maturity | ||||||||||||
| Due within 1 year | $ | $ | ( | ) | $ | |||||||
| Total investment in government debt securities | $ | $ | ( | ) | $ | |||||||
The increase in gross unrealized losses of $
The average yield on the Government debt securities classified as available-for-sale at January 31, 2023 and April 30, 2022 was
Investment Gains/(Losses):
Investment gains/(losses) were comprised of the following:
| Three Months Ended January 31, | Nine Months Ended January 31, | |||||||||||||||
| ($ in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Dividend income | $ | $ | $ | $ | ||||||||||||
| Interest income | ( | ) | ( | ) | ||||||||||||
| Investment gains/(losses) recognized on sales of equity securities during the period | ( | ) | ||||||||||||||
| Unrealized gains/(losses) recognized on equity securities held at the end of the period | ( | ) | ||||||||||||||
| Other | ( | ) | ( | ) | ||||||||||||
| Total investment gains/(losses) | $ | $ | ( | ) | $ | $ | ||||||||||
Taxable realized gains/(losses) on equity securities sold during fiscal years 2023 and 2022, which are generally the difference between the proceeds from sales and our original cost, were losses of $
Investment in Unconsolidated Entities:
Equity Method Investment:
As of January 31, 2023 and April 30, 2022, the Company's investment in EAM Trust on the Consolidated Condensed Balance Sheets was $
The value of VLI’s investment in EAM at January 31, 2023 and April 30, 2022 reflects the fair value of contributed capital of $
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 record any impairment losses for its assets during the fiscal years 2023 or 2022.
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) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Investment management fees earned from the Value Line Funds, net of waivers shown below | $ | $ | $ | $ | ||||||||||||
| 12b-1 fees and other fees, net of waivers shown below | $ | $ | $ | $ | ||||||||||||
| Other income | $ | $ | ( | ) | $ | $ | ||||||||||
| Investment management fee waivers and reimbursements | $ | $ | $ | $ | ||||||||||||
| 12b-1 fee waivers | $ | $ | $ | $ | ||||||||||||
| Value Line’s non-voting revenues interest | $ | $ | $ | $ | ||||||||||||
| EAM's net income (1) | $ | $ | $ | $ | ||||||||||||
(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
| January 31, | April 30, | |||||||
| ($ in thousands) | 2023 | 2022 | ||||||
| (unaudited) | ||||||||
| EAM's total assets | $ | $ | ||||||
| EAM's total liabilities (1) | ( | ) | ( | ) | ||||
| EAM's total equity | $ | $ | ||||||
(1) At January 31, 2023 and April 30, 2022, EAM's total liabilities included a payable to VLI for its accrued non-voting revenues interest and non-voting profits interest of $
| Note 3 - Variable Interest Entity |
The Company holds a non-voting revenues interest and a
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, 2023 (unaudited) | $ | $ | $ | $ | ||||||||||||
| As of April 30, 2022 | $ | $ | $ | $ | ||||||||||||
(1) Reported within Long-Term Assets on the Consolidated Condensed Balance Sheets.
| 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) | 2023 | 2022 | ||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents, and restricted cash shown in the Consolidated Condensed Statement of Cash Flows | $ | $ | ||||||
Income Tax Payments:
The Company made income tax payments as follows:
| Nine Months Ended January 31, | ||||||||
| ($ in thousands) | 2023 | 2022 | ||||||
| State and local income tax payments | $ | $ | ||||||
| Federal income tax payments | $ | $ | ||||||
| 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, 2023 and January 31, 2022, the estimated profit sharing plan contributions, which are included as expenses in salaries and employee benefits in the Consolidated Condensed Statements of Income, were $
| 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, 2023 and January 31, 2022 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, 2023 are as follows:
| ($ in thousands) | Amount Before Tax | Tax (Expense) / Benefit | Amount Net of Tax | |||||||||
| Change in unrealized gains on available-for-sale fixed income securities | $ | $ | ( | ) | $ | |||||||
| $ | $ | ( | ) | $ | ||||||||
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, 2022 are as follows:
| ($ in thousands) | Amount Before Tax | Tax (Expense) / Benefit | Amount Net of Tax | |||||||||
| Change in unrealized losses on available-for-sale fixed income securities | $ | ( | ) | $ | $ | ( | ) | |||||
| $ | ( | ) | $ | $ | ( | ) | ||||||
| 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, 2023, were $
The Company’s non-voting revenues and non-voting profits interests in EAM entitle it to receive quarterly distributions in a range of
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
| Three Months Ended January 31, | Nine Months Ended January 31, | |||||||||||||||
| ($ in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Non-voting revenues interest in EAM | $ | $ | $ | $ | ||||||||||||
| Non-voting profits interest in EAM | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
At January 31, 2023, the Company's investment in EAM includes a receivable of $
Transactions with Parent:
During the nine months ended January 31, 2023 and January 31, 2022, the Company was reimbursed $
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 $
As of January 31, 2023, the Parent owned
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) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Current tax expense: | ||||||||||||||||
| Federal | $ | $ | $ | $ | ||||||||||||
| State and local | ||||||||||||||||
| Current tax expense | ||||||||||||||||
| Deferred tax expense (benefit): | ||||||||||||||||
| Federal | ( | ) | ( | ) | ||||||||||||
| State and local | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Deferred tax expense (benefit): | ( | ) | ( | ) | ||||||||||||
| Income tax provision | $ | $ | $ | $ | ||||||||||||
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
The overall effective income tax rates, as a percentage of pre-tax ordinary income for the nine months ended January 31, 2023 and January 31, 2022 were
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) | 2023 | 2022 | ||||||
| Federal tax liability (benefit): | ||||||||
| Deferred gain on deconsolidation of EAM | $ | $ | ||||||
| Deferred non-cash post-employment compensation | ( | ) | ( | ) | ||||
| Depreciation and amortization | ||||||||
| Unrealized gain on securities held for sale | ||||||||
| Right of Use Asset | ( | ) | ( | ) | ||||
| Deferred charges | ( | ) | ( | ) | ||||
| Other | ( | ) | ( | ) | ||||
| Total federal tax liability | ||||||||
| State and local tax liabilities (benefits): | ||||||||
| Deferred gain on deconsolidation of EAM | ||||||||
| Deferred non-cash post-employment compensation | ( | ) | ( | ) | ||||
| Depreciation and amortization | ||||||||
| Unrealized gain on securities held for sale | ||||||||
| Other | ||||||||
| Total state and local tax liabilities | ||||||||
| Deferred tax liability, long-term | $ | $ | ||||||
At the end of each interim reporting period, the Company estimates the effective income tax rate to apply for the full fiscal year. The Company uses the effective income tax rate determined to provide for income taxes on a year-to-date basis and reflects the tax effect of any tax law changes and certain other discrete events in the period in which they occur.
The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory income tax rate to pretax income as a result of the following:
| Nine Months Ended January 31, | ||||||||
| 2023 | 2022 | |||||||
| U.S. statutory federal tax rate | % | % | ||||||
| Increase (decrease) in tax rate from: | ||||||||
| State and local income taxes, net of federal income tax benefit | % | % | ||||||
| Non-taxable SBA loan forgiveness | ( | )% | ||||||
| Effect of dividends received deductions | ( | )% | ( | )% | ||||
| Other, net | % | % | ||||||
| Effective income tax rate | % | % | ||||||
The Company believes that, as of January 31, 2023, there were no material uncertain tax positions that would require disclosure under GAAP.
The Company is included in the consolidated federal income tax return of the Parent. The Company has a tax sharing agreement which requires it to make tax payments to the Parent equal to the Company's liability/(benefit) as if it filed a separate return. Beginning with the fiscal year ended April 30, 2017, the Company files combined income tax returns with the Parent on a unitary basis in certain states.
The Company’s federal income tax returns (included in the Parent’s consolidated returns) and state and city tax returns for fiscal years ended 2020 through 2022, are subject to examination by the tax authorities, generally for three years after they are filed with the tax authorities.
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:
| January 31, | April 30, | |||||||
| ($ in thousands) | 2023 | 2022 | ||||||
| Building and leasehold improvements | $ | $ | ||||||
| Operating lease - right-of-use asset | ||||||||
| Furniture and equipment | ||||||||
| Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
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 purchasing software for internal use and amortize those costs over the software's estimated useful life in a systematic and rational manner. Such costs, when incurred, are capitalized and amortized over the expected useful life of the asset, normally
During the nine months ended January 31, 2023 and January 31, 2022, the Company did not incur and did not capitalize expenditures related to third party programmers' costs or to the development of software for internal use.
Note 11 - Treasury Stock and Repurchase Program:
During October 2022, the Company's Board of Directors approved a renewal of a share repurchase program authorizing the repurchase of shares of the Company’s common stock up to an aggregate purchase price of $
Treasury stock, at cost, consists of the following:
| (in thousands except for shares and cost per share) | Shares | Cost Assigned | Average Cost per Share | Aggregate Purchase Price Remaining Under the Program | ||||||||||||
| Balance as of October 31, 2022 | $ | $ | $ | |||||||||||||
| Purchases effected in open market during the months ended: | ||||||||||||||||
| November 30, 2022 | ||||||||||||||||
| December 31, 2022 | ||||||||||||||||
| January 31, 2023 | ||||||||||||||||
| Balance as of January 31, 2023 | $ | $ | $ | |||||||||||||
Note 12 - Lease Commitments:
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. This ASU requires that, for leases longer than one year, a lessee recognizes in the statements of financial position a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. It also requires that for finance leases, a lessee recognizes interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a combined expense. The firm adopted this ASU in May 2019 under a modified retrospective approach.
The Company adopted ASU 2016-02 using a modified retrospective transition approach as of the Effective Date as permitted by the amendments in ASU 2018-11, which provides an alternative modified retrospective transition method. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. May 1, 2019). The Company has elected to employ the transitionary relief offered by the FASB and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized.
The Company leases office space in New York, NY and a warehouse and appurtenant office space in Lyndhurst, NJ. The Company has evaluated these leases and determined that they are operating leases under the definitions of the guidance of ASU 2016-02.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the right-of-use asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received.
On May 1, 2019, the Company recorded a right-of-use asset in the amount of $
The Company recognizes lease expense, calculated as the remaining cost of the lease allocated over the remaining lease term on a straight-line basis. Lease expense is presented as part of continuing operations in the consolidated condensed statements of income. The Company recognized $
For the nine months ended January 31, 2023, the Company paid $
The Company’s leases generally do not provide an implicit interest rate, and therefore the Company estimated an incremental borrowing rate, or IBR, as of the commencement date, to determine the present value of its operating lease liabilities. The IBR is defined under ASC 842 as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. The following table reconciles the undiscounted future minimum lease payments to the total operating lease liabilities recognized on the Consolidated Condensed Balance Sheet as of January 31, 2023:
| Fiscal years ended April 30, | ($ in thousands) | |||
| 2023* | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||