-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IeTDC0TF11PA7AJcOAxbRynxWEK+EUm3QcLZ/LUyoPnZBaraCXl4VWbwo6lNP+zW HOWvSb6j4HtocaRj5o3qSw== 0000950134-03-000426.txt : 20030114 0000950134-03-000426.hdr.sgml : 20030114 20030110080044 ACCESSION NUMBER: 0000950134-03-000426 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021130 FILED AS OF DATE: 20030110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDUCATIONAL DEVELOPMENT CORP CENTRAL INDEX KEY: 0000031667 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISCELLANEOUS NONDURABLE GOODS [5190] IRS NUMBER: 730750007 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04957 FILM NUMBER: 03509711 BUSINESS ADDRESS: STREET 1: 10302 E 55TH PL #B CITY: TULSA STATE: OK ZIP: 74146 BUSINESS PHONE: 9186224522 MAIL ADDRESS: STREET 1: PO BOX 470663 CITY: TULSA STATE: OK ZIP: 741460663 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL TEACHING TAPES INC DATE OF NAME CHANGE: 19701030 FORMER COMPANY: FORMER CONFORMED NAME: TUTOR TAPES INTERNATIONAL CORP DATE OF NAME CHANGE: 19701030 10-Q 1 d02441e10vq.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 2002. [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . ----------- ------------ Commission file number: 0-4957 EDUCATIONAL DEVELOPMENT CORPORATION (Exact name of registrant as specified in its charter) Delaware 73-0750007 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10302 East 55th Place, Tulsa Oklahoma 74146-6515 (Address of principal executive offices) Registrant's telephone number: (918) 622-4522 Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --------- ------ As of November 30, 2002 there were 3,834,481 shares of Educational Development Corporation Common Stock, $0.20 par value outstanding. EDUCATIONAL DEVELOPMENT CORPORATION PART I. FINANCIAL INFORMATION ITEM 1 BALANCE SHEETS
November 30, 2002 February 28, 2002 ----------------- ----------------- (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,107,100 $ 906,900 Accounts receivable - (less allowances for doubtful accounts and returns: 11/30/02 - $189,700 2/28/02 - $184,100) 2,720,600 2,040,400 Inventories - Net 9,089,300 8,292,000 Prepaid expenses and other assets 133,700 218,300 Deferred income taxes 130,800 120,700 ----------------- ----------------- Total current assets 14,181,500 11,578,300 INVENTORIES 309,400 683,900 PROPERTY AND EQUIPMENT at cost (less accumulated depreciation: 11/30/02 - $1,529,400; 2/28/02 - $1,446,000) 1,954,100 1,907,600 ----------------- ----------------- $ 16,445,000 $ 14,169,800 ================= ================= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 3,646,600 $ 3,380,100 Accrued salaries and commissions 633,600 352,800 Income taxes 213,800 63,800 Other current liabilities 373,500 244,800 ----------------- ----------------- Total current liabilities 4,867,500 4,041,500 DEFERRED INCOME TAXES 11,100 13,000 COMMITMENTS SHAREHOLDERS' EQUITY: Common Stock, $.20 par value (Authorized 8,000,000 shares; Issued 5,429,240 shares; Outstanding 3,834,481 and 3,822,117 shares) 1,085,800 1,085,800 Capital in excess of par value 4,547,900 4,417,500 Retained earnings 11,184,200 9,647,700 ----------------- ----------------- 16,817,900 15,151,000 Less treasury shares, at cost (5,251,500) (5,035,700) ----------------- ----------------- 11,566,400 10,115,300 ----------------- ----------------- $ 16,445,000 $ 14,169,800 ================= =================
See notes to financial statements 2 EDUCATIONAL DEVELOPMENT CORPORATION STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended November 30, Nine Months Ended November 30, 2002 2001 2002 2001 ------------ ------------ ------------ ------------ GROSS SALES $ 10,555,600 $ 8,261,700 $ 28,422,400 $ 23,498,500 Less discounts & allowances (2,728,200) (2,253,800) (8,860,600) (7,581,600) ------------ ------------ ------------ ------------ Net sales 7,827,400 6,007,900 19,561,800 15,916,900 COST OF SALES 2,802,200 2,235,200 7,545,200 6,316,100 ------------ ------------ ------------ ------------ Gross margin 5,025,200 3,772,700 12,016,600 9,600,800 ------------ ------------ ------------ ------------ OPERATING EXPENSES: Operating & selling 1,139,100 992,900 3,050,500 2,702,600 Sales commissions 2,253,900 1,632,500 4,965,900 3,770,100 General & administrative 407,400 366,800 1,183,300 1,082,700 Interest -- -- 900 20,300 ------------ ------------ ------------ ------------ 3,800,400 2,992,200 9,200,600 7,575,700 ------------ ------------ ------------ ------------ OTHER INCOME 8,100 19,600 29,900 38,300 ------------ ------------ ------------ ------------ EARNINGS BEFORE INCOME TAXES 1,232,900 800,100 2,845,900 2,063,400 INCOME TAXES 468,000 315,100 1,079,300 785,100 ------------ ------------ ------------ ------------ NET EARNINGS $ 764,900 $ 485,000 $ 1,766,600 $ 1,278,300 ============ ============ ============ ============ BASIC AND DILUTED EARNINGS PER SHARE: Basic $ 0.20 $ 0.13 $ 0.46 $ 0.33 ============ ============ ============ ============ Diluted $ 0.19 $ 0.12 $ 0.43 $ 0.32 ============ ============ ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING: Basic 3,836,345 3,851,496 3,836,331 3,877,764 ============ ============ ============ ============ Diluted 4,136,271 4,095,284 4,146,051 4,043,381 ============ ============ ============ ============ DIVIDENDS DECLARED PER COMMON SHARE $ -- $ -- $ 0.06 $ 0.04 ============ ============ ============ ============
See notes to financial statements. 3 EDUCATIONAL DEVELOPMENT CORPORATION STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
Common Stock (par value $.20 per share) Treasury Stock -------------------------- -------------------------- Number of Capital in Number Shares Excess of Retained of Shareholders' Issued Amount Par Value Earnings Shares Amount Equity ------------ ------------ ------------ ------------ ------------ ------------ ------------- BALANCE, MAR. 1, 2002 5,429,240 $ 1,085,800 $ 4,417,500 $ 9,647,700 1,607,123 $ (5,035,700) $ 10,115,300 Purchases of treasury stock -- -- -- -- 82,200 (549,700) (549,700) Sales of treasury stock -- -- 106,400 -- (84,164) 301,300 407,700 Exercise of options at $5.50/share -- -- 23,700 -- (10,000) 31,300 55,000 Exercise of options at $4.00/share -- -- 300 -- (400) 1,300 1,600 Dividends paid ($0.06 / share) -- -- -- (230,100) -- -- (230,100) Net earnings -- -- -- 1,766,600 -- -- 1,766,600 ------------ ------------ ------------ ------------ ------------ ------------ ------------ BALANCE, NOV. 30, 2002 5,429,240 $ 1,085,800 $ 4,547,900 $ 11,184,200 1,594,759 $ (5,251,500) $ 11,566,400 ============ ============ ============ ============ ============ ============ ============
See notes to financial statements. 4 EDUCATIONAL DEVELOPMENT CORPORATION STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended November 30 2002 2001 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES $ 1,652,700 $ 3,648,700 CASH FLOWS FROM INVESTING ACTIVITIES - Purchases of property and equipment (137,000) (77,400) ------------ ------------ Net cash used in investing activities (137,000) (77,400) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under revolving credit agreement 1,317,000 2,347,000 Payments under revolving credit agreement (1,317,000) (3,431,000) Cash received from exercise of stock option 56,600 9,900 Cash received from sale of treasury stock 407,700 79,200 Cash paid to acquire treasury stock (549,700) (371,400) Dividends paid (230,100) (154,100) ------------ ------------ Net cash used in financing activities (315,500) (1,520,400) ------------ ------------ Net Increase in Cash and Cash Equivalents 1,200,200 2,050,900 Cash and Cash Equivalents, Beginning of Period 906,900 268,300 ------------ ------------ Cash and Cash Equivalents, End of Period $ 2,107,100 $ 2,319,200 ============ ============ Supplemental Disclosure of Cash Flow Information: Cash paid for interest $ 900 $ 26,400 ============ ============ Cash paid for income taxes $ 941,200 $ 602,300 ============ ============
See notes to financial statements. 5 EDUCATIONAL DEVELOPMENT CORPORATION NOTES TO FINANCIAL STATEMENTS Note 1 - The information shown with respect to the three months and nine months ended November 30, 2002 and 2001, which is unaudited, includes all adjustments which in the opinion of Management are considered to be necessary for a fair presentation of earnings for such periods. The adjustments reflected in the financial statements represent normal recurring accruals. The results of operations for the three months and nine months ended November 30, 2002 and 2001, respectively, are not necessarily indicative of the results to be expected at year end due to seasonality of the product sales. These financial statements and notes are prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and should be read in conjunction with the Financial Statements and accompanying notes contained in the Company's Annual Report to Shareholders for the Fiscal Year ended February 28, 2002. Note 2 - Effective June 30, 2002 the Company signed a Third Amendment to the Credit and Security Agreement with State Bank which provides a $3,500,000 line of credit. This line of credit is evidenced by a promissory note in the amount of $3,500,000 payable June 30, 2003. This note bears interest at the Wall Street Journal prime floating rate minus 0.25% payable monthly. The note is collateralized by substantially all the assets of the Company. At November 30, 2002, the Company had no borrowings outstanding. Note 3 - Inventories consist of the following:
November 30, 2002 February 28, 2002 ----------------- ----------------- Current: Book Inventory $ 9,135,700 $ 8,338,400 Reserve for Obsolescence (46,400) (46,400) ----------- ----------- Inventories net - current $ 9,089,300 $ 8,292,000 =========== =========== Non-current: Book Inventory $ 470,000 $ 817,500 Reserve for Obsolescence (160,600) (133,600) ----------- ----------- Inventories - non-current $ 309,400 $ 683,900 =========== ===========
The Company occasionally purchases book inventory in quantities in excess of what will be sold within the normal operating cycle due to minimum order requirements of the Company's primary supplier. These amounts are included in non-current inventory. Note 4- Basic earnings per share ("EPS") is computed by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted EPS is based on the combined weighted average number of common shares outstanding and dilutive potential common shares issuable which include, where appropriate, the assumed exercise of options. In computing diluted EPS the Company has utilized the treasury stock method. 6 EDUCATIONAL DEVELOPMENT CORPORATION The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share ("EPS") is shown below.
Three Months Ended November 30, Nine Months Ended November 30, 2002 2001 2002 2001 ---------- ---------- ---------- ---------- Net Earnings $ 764,900 $ 485,000 $1,766,600 $1,278,300 ========== ========== ========== ========== Basic EPS: Weighted Average Shares Outstanding 3,836,345 3,851,496 3,836,331 3,877,764 ========== ========== ========== ========== Basic EPS $ 0.20 $ 0.13 $ 0.46 $ 0.33 ========== ========== ========== ========== Diluted EPS: Weighted Average Shares Outstanding 3,836,345 3,851,496 3,836,331 3,877,764 Assumed Exercise of Options 299,926 243,788 309,720 165,617 ---------- ---------- ---------- ---------- Shares Applicable to Diluted Earnings 4,136,271 4,095,284 4,146,051 4,043,381 ========== ========== ========== ========== Diluted EPS $ 0.19 $ 0.12 $ 0.43 $ 0.32 ========== ========== ========== ==========
Since March 1, 1998, when the Company began its stock repurchase program, 1,761,974 shares of the Company's common stock at a total cost of $5,834,000 have been acquired. The Board of Directors previously authorized purchasing up to 2,000,000 shares as market conditions warrant. At their September 18, 2002 meeting, the Board of Directors authorized purchasing up to an additional 500,000 shares as market conditions warrant. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements contained in this Management Discussion and Analysis are not based on historical facts, but are forward-looking statements that are based upon numerous assumptions about future conditions that may ultimately prove to be inaccurate. Actual events and results may materially differ from anticipated results described in such statements. The Company's ability to achieve such results is subject to certain risks and uncertainties. Such risks and uncertainties include but are not limited to, product prices, continued availability of capital and financing, and other factors affecting the Company's business that may be beyond its control. FINANCIAL CONDITION The financial condition of the Company remains strong. Working capital at November 30, 2002 was $9,314,000 compared with $7,536,800 at the end of fiscal year 2002. Accounts receivable increased 30.8% during the first nine months of fiscal year 2003. The Company's "fall special", which offered extended payment terms to December 15, 2002, began during the second quarter and contributed to the increase in accounts receivable. Inventory levels rose slightly, increasing 4.9% over inventory at fiscal year end 2002. The level of inventory will fluctuate depending upon sales and the timing of shipments from the Company's principal supplier. The Company continuously monitors inventory to assure it has adequate supplies on hand to meet sales requirements. Accounts payable increased 7.9% during the first nine months of fiscal year 2003. A major component of accounts payable is the amount due to the Company's principal supplier. Increases and decreases in inventory levels as well as the timing of purchases of inventory and the payment terms offered by various suppliers affect the levels of accounts payable. Cash generated by increased in sales in the Home Business Division enabled the Company to conclude the quarter ended November 30, 2002 with no short term bank debt. The Company paid a divided of $0.06 per share on August 9, 2002. Pre-tax margins were 15.8% and 14.6% for the three months and nine months ended November 30, 2002, respectively, compared with 13.3% and 13.0% for the same comparable periods last year. 7 EDUCATIONAL DEVELOPMENT CORPORATION RESULTS OF OPERATIONS Revenues - Net sales from the Home Business Division were $13,525,100 for the nine months ended November 30, 2002 compared with $10,231,400 for the nine months ended November 30, 2001, an increase of 32.2%. Net sales for the three month period ending November 30, 2002 were $6,196,400, an increase of 38.5% over net sales of $4,474,800 for the same three month period last year. The Company attributes these increases to the addition of new sales consultants and the retention of existing sales consultants. The Company continues to offer new incentive programs, travel contests and regional seminars to help stimulate sales and recruiting. The Company also continues to offer its leadership skills program for supervisors. Management believes that the Home Business Division will continue to grow. Net sales for the Publishing Division were $6,036,700 for the nine months ended November 30, 2002 compared with net sales of $5,685,500 for the nine months ended November 30, 2001, an increase of 6.2%. Net sales for the three months ended November 30, 2002 were $1,631,000, an increase of 6.4% over net sales of $1,533,100 for the same three month period last year. The juvenile paperback market is highly competitive. Industry sales of juvenile paperbacks approaches $888 million annually. The Publishing Division's annual sales are approximately 0.8% of industry sales. Competitive factors include product quality, price and deliverability. Sales to national chains continue to be of major importance to the Publishing Division. To insure that the Company successfully participates in their growth, we continue our cooperative advertising and other special promotional programs. These activities have improved our relationship with the national chains and we anticipate further positive development in this important area. Management believes the Company can improve its market share in the juvenile paperback market. Cost of Sales - The Company's cost of sales for the nine months ended November 30, 2002 was $7,545,200, an increase of 19.5% over cost of sales of $6,316,100 for the nine months ended November 30, 2001. Cost of sales expressed as a percentage of gross sales was 26.5% for the nine months ended November 30, 2002 and 26.9% for the same nine month period a year ago. Cost of sales for the three months ended November 30, 2002 was $2,802,200 compared with $2,235,200 for the same three months ended November 30, 2001, an increase of 25.4%. Cost of sales expressed as a percentage of gross sales was 26.5% and 27.1% for the three months ended November 30, 2002 and 2001 respectively. Cost of sales as a percentage of gross sales will fluctuate depending upon the product mix sold. Operating Expenses - Operating and selling expenses increased 12.9% to $3,050,500 for the nine months ended November 30, 2002 when compared with $2,702,600 for the nine months ended November 30, 2001. Expressed as a percentage of gross sales, operating and selling expenses were 10.7% for the nine months ended November 30, 2002 and 11.5% for the same nine month period last year. Operating and selling expenses for the three months ended November 30, 2002 and 2001 were $1,139,100 and $992,900, respectively, an increase of 14.7%. These costs expressed as a percentage of gross sales were 10.8% for the three months ended November 30, 2002 and 12.0% for the three months ended November 30, 2001. Increases in promotional costs and credit card fees in the Home Business Division, plus increases in shipping costs and promotional costs in the Publishing Division, all of which are the direct results of increased sales in these two divisions, contributed to the increase in operating expenses. Sales commissions for the nine months ended November 30, 2002 were $4,965,900, an increase of 31.7% over sales commissions of $3,770,100 for the nine months ended November 30, 2001. These expenses expressed as a percentage of gross sales were 17.5% for the nine months ended November 30, 2002 and 16.0% for the nine months ended November 30, 2001. Sales commissions for the three months ended November 30, 2002 and 2001 were $2,253,900 and $1,632,500, respectively, an increase of 38.1%. Sales commissions expressed as a percentage of gross sales were 21.4% for the three months ended November 30, 2002 and 19.8% for the three months ended November 30, 2001. Sales commissions as a percentage of gross sales is determined by the product mix sold and the division which makes the sale. The Home Business Division and the Publishing Division have separate and distinct commission programs and rates. Sales commissions in the Home Business Division increased 32.5% and 38.5% for the three months and nine months ended November 30, 2002, the result of increased sales in that division. Although sales in the Publishing Division increased in both the three month period and nine month period ended November 30, 2002, sales commissions in the Publishing Division decreased 1.1% for the nine months ended November 30, 2002 and increased 4.1% for the three months ended November 30, 2002. The amount of sales in the Company's "house accounts", which are the Publishing Division's largest customers, affects the relationship of its commission expense to sales, as these sales do not have any commission expense associated with them. 8 EDUCATIONAL DEVELOPMENT CORPORATION General and administrative expenses for the nine months ended November 30, 2002 were $1,183,300, an increase of 9.3% over $1,082,700 for the same nine month period last year. These expenses expressed as a percentage of gross sales were 4.2% for the nine months ended November 30, 2002 and 4.6% for the nine months ended November 30, 2001. General and administrative expenses for the three months ended November 30, 2002 were $407,400 versus $366,800 for the same three months last year, an increase of 11.1%. These costs expressed as a percentage of gross sales were 3.9% and 4.4% for the three months ended November 30, 2002 and 2001, respectively. Contributing to the increases in general and administrative expenses were increases in payroll costs and public relation costs. Interest expense was $900 for the nine months ended November 30, 2002 compared with $20,300 for the same nine months a year ago. There was no interest expense for the three months ended November 30, 2002 and November 30, 2001. Minimal borrowings and lower interest rates contributed to the lower interest expense in the current fiscal year. Cash flows from operating activities was positive for the nine months ended November 30, 2002. Contributing to this were increases in net earnings, payables and accrued expenses, offset by increases in receivables, the result of the Company's "fall special" which offered customers extended payment terms, and an increase in inventory. BUSINESS SEGMENTS The Company has two reportable segments: Publishing and Usborne Books at Home ("UBAH"). These reportable segments are business units that offer different methods of distribution to different types of customers. They are managed separately based on the fundamental differences in their operations. The Publishing Division markets its products to retail accounts, which include book, school supply, toy and gift stores and museums, through commissioned sales representatives, trade and specialty wholesalers and an internal telesales group. The UBAH Division markets its product line through a network of independent sales consultants through a combination of direct sales, home shows and book fairs. The accounting policies of the segments are the same as those of the Company. The Company evaluates segment performance based on operating profits of the segments which is defined as segment net sales reduced by direct cost of sales and direct expenses. Corporate expenses, including interest and depreciation, and income taxes are not allocated to the segments. The Company's assets are not allocated on a segment basis. Information by industry segment for the three months and nine months ended November 30, 2002 and 2001 is set forth below:
Publishing UBAH Other Total ----------- ----------- ----------- ----------- NINE MONTHS ENDED NOVEMBER 30, 2002 Net sales from external customers $ 6,036,700 $13,525,100 $ -- $19,561,800 Earnings before income taxes $ 2,112,400 $ 3,129,000 $(2,395,500) $ 2,845,900 THREE MONTHS ENDED NOVEMBER 30, 2002 Net sales from external customers $ 1,631,000 $ 6,196,400 $ -- $ 7,827,400 Earnings before income taxes $ 569,700 $ 1,520,900 $ (857,700) $ 1,232,900 NINE MONTHS ENDED NOVEMBER 30, 2001 Net sales from external customers $ 5,685,500 $10,231,400 $ -- $15,916,900 Earnings before income taxes $ 2,022,700 $ 2,312,000 $(2,271,300) $ 2,063,400 THREE MONTHS ENDED NOVEMBER 30, 2001 Net sales from external customers $ 1,533,100 $ 4,474,800 $ -- $ 6,007,900 Earnings before income taxes $ 526,300 $ 1,058,000 $ (784,200) $ 800,100
9 EDUCATIONAL DEVELOPMENT CORPORATION Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company does not have any material market risk. Item 4. CONTROLS AND PROCEDURES (a) Evaluation of Controls and Procedures - Within 90 days prior to the filing of this report, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), an evaluation of the effectiveness of the Company's disclosure controls and procedures was performed. Based on this evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures are effective to insure that material information is recorded, processed, summarized and reported by Management on a timely basis in order to comply with the Company's disclosure obligations under the Securities Exchange Act of 1934 and the SEC rules thereunder. (b) Changes in Internal Controls - There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation. PART II OTHER INFORMATION 10 EDUCATIONAL DEVELOPMENT CORPORATION SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EDUCATIONAL DEVELOPMENT CORPORATION (Registrant) By /s/ Randall W. White -------------------------------- Randall W. White President Date: January 10, 2003 ----------------------- 11 EDUCATIONAL DEVELOPMENT CORPORATION Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. In connection with the Quarterly Report of Educational Development Corporation (the "Company") on Form 10-Q for the period ending November 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Randall W. White, President and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: January 10, 2003 By /s/ Randall W. White --------------------- -------------------------------- Randall W. White President and Chief Executive Officer In connection with the Quarterly Report of Educational Development Corporation (the "Company") on Form 10-Q for the period ending November 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, W. Curtis Fossett, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: January 10, 2003 By /s/ W. Curtis Fossett --------------------- --------------------------------- W. Curtis Fossett Chief Financial Officer 12 EDUCATIONAL DEVELOPMENT CORPORATION CERTIFICATION I, Randall W. White, President and CEO of Educational Development Corporation certify that: 1. I have reviewed this quarterly report on Form 10-Q of Educational Development Corporation. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: January 10, 2003 By /s/ Randall W. White ---------------------- -------------------------------- Randall W. White President and Chief Executive Officer 13 EDUCATIONAL DEVELOPMENT CORPORATION I, W. Curtis Fossett, CFO of Educational Development Corporation certify that: 1. I have reviewed this quarterly report on Form 10-Q of Educational Development Corporation. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: January 10, 2003 By /s/ W. Curtis Fossett --------------------- --------------------------------- W. Curtis Fossett Chief Financial Officer 14 -----END PRIVACY-ENHANCED MESSAGE-----