-----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, EWyZIs9MSGjUDAL+rMvNtrUJ+vX5vLxyGBWyz+j5KUS2RNrnzMnVElGM4Djcvw4G zXJFyxiiFUI8+NoNOpRfTw== 0001047469-99-029109.txt : 19990730 0001047469-99-029109.hdr.sgml : 19990730 ACCESSION NUMBER: 0001047469-99-029109 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990430 FILED AS OF DATE: 19990729 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VALUE LINE INC CENTRAL INDEX KEY: 0000717720 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 133139843 STATE OF INCORPORATION: NY FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-11306 FILM NUMBER: 99673410 BUSINESS ADDRESS: STREET 1: 220 E 42ND ST CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2129071500 10-K 1 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended April 30, 1999 Commission File Number 0-11306 VALUE LINE, INC. (Exact name of registrant as specified in its charter) New York 13-3139843 (State or other jurisdiction of (IRS Employer Identification incorporation or organization) Number) 220 East 42nd Street, New York, N.Y. 10017-5891 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 907-1500 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.10 par value 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 and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the registrant's voting stock held by non-affiliates on June 25, 1999 was $74,693,991. There were 9,978,625 shares of the Company's Common Stock outstanding at June 25, 1999. DOCUMENTS INCORPORATED BY REFERENCE None Part I Item 1. BUSINESS. Value Line, Inc. (the "Company"), a New York corporation, was organized in 1982 and is the successor to substantially all of the operations of Arnold Bernhard & Company, Inc. ("AB&Co."). The Company's primary businesses are producing investment related periodical publications through its wholly-owned subsidiary, Value Line Publishing, Inc. ("VLP"), and providing investment advisory services to mutual funds, institutions and individual clients. VLP publishes The Value Line Investment Survey, one of the nation's major periodical investment services, as well as The Value Line Investment Survey - Expanded Edition, The Value Line Investment Survey - Condensed Edition, Value Line Select, The Value Line Mutual Fund Survey, The Value Line No-Load Fund Advisor, The Value Line OTC Special Situations Service, The Value Line Options Survey and The Value Line Convertibles Survey. The Company's periodical publications are marketed through media and direct mail to retail and institutional investors. The Company is investment adviser for the Value Line Family of Mutual Funds, which on April 30, 1999, included 15 open-end investment companies with various investment objectives. In addition, the Company manages investments for private and institutional clients and, through VLP, provides historical financial databases in standard computer formats (DataFile: Estimates & Projections, Convertibles, Mutual Funds and other services). VLP also markets investment analysis software, The Value Line Investment Survey FOR WINDOWS-Registered Trademark-, The Mutual Fund Survey FOR WINDOWS-Registered Trademark-, Value Line Daily Options, Electronic Convertibles, Value Line Small Cap Plus and other electronic products. Value Line also offers products directly on its internet site, valueline.com. The Company is registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940. In addition to VLP, the Company's other wholly-owned subsidiaries include a registered broker-dealer, Value Line Securities, Inc., and an advertising agency, Vanderbilt Advertising Agency, Inc. These subsidiaries primarily provide services used by the Company in its investment management and publishing businesses. Compupower Corporation, another subsidiary, serves the subscription fulfillment needs of the Company's publishing operations. Value Line Distribution Center, Inc. ("VLDC") handles all of the mailings of the publications to the Company's subscribers. Additionally, VLDC provides office space for Compupower Corporation's computer operation's center. The name "Value Line," as used to describe the Company, its products, and its subsidiaries, is a registered trademark of the Company. As used herein, except as the context otherwise requires, the term "Company" includes the Company and its consolidated subsidiaries. A. Investment Information and Publications. VLP publishes investment related publications and produces electronic products described below: 1 l. Publications: The Value Line Investment Survey is a weekly investment related periodical that in addition to various timely articles on current economic, financial and investment matters ranks common stocks for future relative performance based on computer-generated statistics of financial results and stock market performance. Two of the more important evaluations for each stock covered are "Timeliness-TM-" and "Safety-TM-." "Timeliness-TM-" relates to the probable relative price performance of a stock over the next six to twelve months, as compared to the rest of the approximately 1,700 covered stocks. Rankings are updated each week and range from Rank 1 for the expected best performing stocks to Rank 5 for the expected poorest performers. "Safety" rankings are a measure of risk and are based primarily on the issuer's relative financial strength and the stock's price stability. "Safety" ranges from Rank 1 for the least risky stocks to Rank 5 for the riskiest. VLP employs approximately 110 analysts and statisticians who prepare articles of interest for each periodical and who evaluate stock performance and provide future earnings estimates and quarterly written evaluations with weekly updates when relevant. The annual subscription price of The Value Line Investment Survey is $570. The Expanded Edition of The Value Line Investment Survey, introduced in 1995, provides detailed descriptions of 1,800 additional small- and medium-capitalization stocks, many listed on NASDAQ, beyond the 1,700 stocks of larger-capitalization companies traditionally covered in The Value Line Investment Survey. Like The Value Line Investment Survey, the Expanded Edition has its own "Summary & Index" providing updated ranks and other data, as well as "screens" of key financial performance measures. The "Ratings and Reports" section, providing updated reports on about 140 stocks each week, has been organized to correspond closely to the industries reviewed in the Standard Edition of The Value Line Investment Survey. A combined Index, published quarterly, allows the subscriber to easily locate a specific stock among the 3,500 stocks covered. The Expanded Edition includes a number of unique as well as standard features: - - The Performance Ranking System incorporates many of the elements of the Value Line Timeliness-TM- Ranking System, modified to accommodate the 1,800 stocks in the Expanded Edition. The Performance-TM- Rank is based on earnings growth and price momentum and is designed to predict relative price performance over the next six to 12 months. - - An expanded Business Section provides detail about companies, focusing on business lines and strategies. - - An enlarged Assets and Liabilities Section provides long-term statistics and a more complete balance sheet on each company. - - New Total-Return Statistics provide an "at a glance" look at a particular stock's performance --appreciation plus dividends--over the past three months, six months, and one, three and five years. The principal difference between the Expanded Edition and The Value Line Investment Survey's Standard Edition is that the Expanded Edition does not include Value Line's financial 2 forecasts or analysts' comments. This modification has allowed VLP to offer this service at a relatively low price. The annual cost of the Expanded Edition to current subscribers of The Value Line Investment Survey is $125 for the first year, $175 for renewals and $695 for new subscribers combining both Editions. Stand-alone subscriptions are offered at $249. The Value Line Mutual Fund Survey, introduced in 1993, provides full-page profiles of 1,500 mutual funds and condensed coverage of an additional 500 funds. Every two weeks subscribers receive an updated issue, containing about 150 fund reports, plus a "Performance & Index" providing current rankings and performance figures for the full universe of more than 2,000 funds, as well as articles on investment trends and issues concerning mutual fund investors. The Value Line Mutual Fund Survey also includes semi-annual profiles and analyses on 100 of the nation's major fund families. Funds are ranked for both risk and overall risk-adjusted performance using strictly quantitative means. A large binder is provided to house the fund reports. The annual subscription price of The Value Line Mutual Fund Survey is $295. The Value Line No-Load Fund Advisor is a periodical monthly newsletter for investors who wish to manage their own portfolios of no- and low-load, open-end mutual funds. Each issue features strategies for maximizing total return, with special attention given to tax considerations. Also featured are in-depth interviews with noted portfolio managers, model portfolios for a range of investor profiles, and information about retirement planning, industry news, and listings (with descriptions) of new funds worthy of further consideration. A full statistical review, including latest performance, rankings and sector weightings, is updated each month on 600 leading no-load and low-load funds. The annual subscription price of The Value Line No-Load Fund Advisor is $107. The Value Line Special Situations Service, published periodically 24 times a year, concentrates on fast-growing, smaller companies whose stocks are perceived by VLP analysts as having exceptional appreciation potential. The annual subscription price of The Value Line Special Situations Service is $495. This product is also available via the Value Line Internet site at an annual subscription of $429. The Value Line Options Survey, a periodical weekly service published 48 times a year, evaluates and ranks for future performance the most active options listed on United States exchanges (approximately 10,000). The annual subscription price of The Value Line Options Survey is $399. An electronic version of this publication, The Value Line Daily Options Survey (available over the Internet), was introduced during the latter part of fiscal 1995. The price of online access to this service is $299. The Value Line Convertibles Survey, a periodical service published 48 times a year, evaluates and ranks for future market performance approximately 600 convertible securities (bonds and preferred stocks) and approximately 120 warrants. The annual subscription price of The Value Line Convertibles Survey is $525 and the service is available over the Internet at an annual subscription price of $425. Value Line Select was first published in January 1998. As a stock recommendation service with an exclusive circulation, it focuses each month on one company that VLP analysts, 3 economists and statisticians recommend as an investment. Recommendations are backed by in-depth research and subject to ongoing monitoring. An annual subscription to Value Line Select is $795. The Value Line Investment Survey - Condensed Edition is a monthly service, which contains full-page reports on more than 600 stocks. Its reports provide information on many actively traded, larger capitalization issues as well as some smaller growth stocks. Since it was introduced in fiscal 1996, it has proven to be very popular among investors who want the same type of analysis provided in the full Investment Survey, but who don't want or need coverage of the large number of companies contained in that publication. Readers also receive supplemental reports as well as a monthly Index, which includes updated statistics. An annual subscription is $145. 2. Electronic Products: Value Line Investment Survey FOR WINDOWS-Registered Trademark- is a powerful menu-driven software program with fast filtering, ranking, reporting and graphing capabilities on over 6,000 stocks, including the 1,700 stocks covered in VLP's benchmark publication, The Value Line Investment Survey. The product was introduced to the market during June 1996. Version 2.0 of the product was released in December of 1997 with major enhancements to the user interface and the ability for users to update their data from our internet site (www.valueline.com). New features are added continuously. Since the latter part of 1998, customers can view and print the proprietary page format directly through the Web site. Value Line Investment Survey FOR WINDOWS-Registered Trademark- provides over 200 search fields on each stock, more than 50 charting and graphing variables for comparative research, and 10 years of historical financial data for scrutinizing performance, risk and yield. The software includes a portfolio module that lets users create and track their own stock portfolios. An exclusive E-page feature on the CD-ROM version allows the user to view and print actual full-page stock reports from the respected Value Line Investment Survey and Expanded publications. In addition, weekly updates and technical support are available through Value Line's Web site (www.valueline.com). To access the 1,700 stocks covered exclusively in The Value Line Investment Survey publication, subscribers are offered a two-month trial subscription with monthly CD-ROM updates and weekly internet updates for $55, a full-year subscription for $595 ($195 for subscribers to The Value Line Investment Survey print edition.) This product is available on CD-ROM. A Special Plus Stock Edition, a powerful yet economical professional tool on CD-ROM, is distributed on a monthly basis with weekly internet updates for $95 for a two-month trial subscription, or $995 for a full year ($495 for subscribers to The Value Line Investment Survey print edition.) This Special Edition contains full financial and business descriptions on over 6,000 stocks. Value Line Small Cap Plus is now available exclusively over the Value Line Internet site. The service is updated monthly and was first released in early 1999. The publication covers, evaluates and rates 600 mostly small-cap stocks that VLP analysts consider promising for future growth potential but may not have an extensive financial history. Similar to the Value Line 4 Investment Survey - Expanded Edition, each issue contains ratings and reports on about 200 stocks and includes a Performance Ranking System modified to accommodate the idiosyncrasies of the small-cap market. An annual subscription to Value Line Small Cap Plus costs $145. Windows is a registered trademark of Microsoft Corp. Value Line, Inc. and Microsoft Corp. are not affiliated companies. Both versions are compatible with Windows 98, Windows 95 or 3.X. Value Line Mutual Fund Survey FOR WINDOWS-Registered Trademark- is the electronic version of the Value Line Mutual Fund Survey. The program features powerful sorting, filtering and portfolio analysis. Version 2 was introduced in 1998, with added features such as style attribution analysis, portfolio stress tester, portfolio rebalancing, correlation of Fund returns, manager bios and photos and hypothetical assets to differentiate us from the competition. VALUE/SCREEN III is a data and software service for screening common stocks. It is compatible with DOS and Apple systems and is primarily sold to retail investors. It provides extensive financial data on about 1,600 companies covered by The Value Line Investment Survey. Users can screen on as many as 49 variables for companies' financial performance and for investment objectives. This product is not Year 2000 compliant and is scheduled to be discontinued by December 1999. We are offering special incentives for subscriber to consent to our newer windows based product line. Value Line DataFile contains historic annual and quarterly financial records for more than 6,000 companies in numerous industries, including air transport, industrial services, beverage, machinery, bank, insurance and finance, savings and loan associations, toys, and securities brokers. DataFile is sold to the institutional market. Value Line Data File II, which includes less historical data is also available. This version complies with Microsoft Access format for small businesses. During fiscal 1997, Value Line introduced the Value Line Mutual Fund Data File. VLP also offers an Estimates and Projections File, with year-ahead and three- to five-year estimates of financial performance and projections of stock-price ranges, as well as a Convertible Securities File and custom services. The Total Return Service is a customized data service. It was developed to help publicly traded companies meet the SEC's mandated executive-compensation disclosure requirements. The service consists of a line graph comparing the total return of a public company's stock over the last five years to a published equity market index and a published or constructed industry index. Technological initiatives to automate and upgrade information systems are currently underway. This project will increase the number of stocks in the various Value Line publications to include all U.S. company stocks covered on the major exchanges. 3. Value Line Internet: Value Line made significant improvements to its Internet Web site in fiscal 1999. The addition of E-Commerce proved to be a welcome enhancement to the Value Line Web site, our complete retail product line can now be ordered over the internet. Additionally, we continue to develop and implement features for our existing universe of subscribers. For our electronic line 5 we continue to offer program enhancements, weekly data updates and survey page updates for both the Value Line Investment Survey for Windows-Registered Trademark- and the Value Line Mutual Fund Survey for Windows-Registered Trademark-. We are currently developing version 2 of our internet site, www.valueline.com. B. Investment Management. As of April 30, 1999, the Company was the investment adviser for 15 mutual funds registered under the Investment Company Act of 1940. Value Line Securities, Inc., a wholly owned subsidiary of the Company, underwrites and distributes shares of the Value Line Funds. State Street Bank and Trust Company, an unaffiliated entity, acts as custodian of the Funds' assets. Shareholder services for the Value Line Funds are provided by National Financial Data Services, an unaffiliated entity associated with State Street Bank and Trust Company. Total net assets of the Value Line Funds at April 30, 1999, were:
(in thousands) The Value Line Fund, Inc. $ 441,422 Value Line Income and Growth Fund, Inc. 206,974 The Value Line Special Situations Fund, Inc. 207,826 Value Line Leveraged Growth Investors, Inc. 650,306 The Value Line Cash Fund, Inc. 357,471 Value Line U.S. Government Securities Fund, Inc. 175,698 Value Line Centurion Fund, Inc. 861,783 The Value Line Tax Exempt Fund, Inc. 193,152 Value Line Convertible Fund, Inc. 69,279 Value Line Aggressive Income Trust 172,732 Value Line New York Tax Exempt Trust 32,986 Value Line Strategic Asset Management Trust 1,471,656 Value Line Small-Cap Growth Fund, Inc. 22,356 Value Line Asset Allocation Fund, Inc. 184,852 Value Line U.S. Multinational Company Fund, Inc. 34,098 ---------- $5,082,591 ---------- ----------
The investment advisory contracts between each of the Value Line Funds and the Company provide that the Company will render investment research, advice, and supervision to the funds. These contracts must be approved annually in accordance with statutory procedures. The Company furnishes each fund with its investment program, subject to such fund's fundamental investment policies and to control and review by such fund's Board of Directors or Trustees. Each contract also provides that the Company will furnish, at its expense, various administrative services, office space, equipment and administrative personnel necessary for managing the affairs of the funds. Advisory fee rates vary among the funds and may be subject to certain limitations. Each mutual fund may use "Value Line" in its name only so long as the Company acts as its investment adviser. Value Line Asset Management ("VLAM"), a division of the Company, manages pension funds and institutional and individual portfolios by utilizing the techniques developed for The Value Line Investment Survey. VLAM has varied investment advisory agreements with its 6 clients which call for payments to the Company calculated on the basis of the market value of the securities portfolio under management. C. Wholly-Owned Operating Subsidiaries. 1. Vanderbilt Advertising Agency, Inc.: Vanderbilt Advertising Agency, Inc. ("Vanderbilt") places advertising for the Company's publications, investment advisory services, and mutual funds. Commission income generated by Vanderbilt serves to reduce the Company's advertising expenses. 2. Compupower Corporation: Compupower provides computerized subscription fulfillment services for the Company as well as subscriber relations services for Company publications. Additionally, Compupower also provides microfiche and imaging services to Value Line, its affiliates and third-party customers. 3. Value Line Securities, Inc.: Value Line Securities, Inc. ("VLS") is registered as a broker-dealer under the Securities Exchange Act of 1934 and is a member of the National Association of Securities Dealers, Inc. VLS acts as the underwriter and distributor of the Value Line Funds. Shares of the Value Line Funds are sold to the public without a sales charge (i.e., on a "no-load" basis). Since 1986, VLS has effected brokerage transactions in exchange-listed securities for certain of the Value Line Funds, clearing such transactions on a fully disclosed basis through unaffiliated broker-dealers who receive a portion of the gross commissions. VLS also receives 12b-1 fees from certain of the Value Line Funds. 4. Value Line Distribution Center, Inc. Value Line Distribution Center, Inc. ("VLDC") handles all of the mailings of the publications to the Company's subscribers. Additionally, VLDC provides office space for the Compupower Corporation's subscriber relations and data processing departments. D. Other Businesses. The Company publishes the Value Line Arithmetic Composite and the Value Line Geometric Composite, daily indices of the stock market performance of the approximately 1,700 common stocks contained in The Value Line Investment Survey. The calculation of both indices is done by a firm unaffiliated with the Company. Futures contracts based upon fluctuations in the Value Line Arithmetic Composite are traded on the Kansas City Board of Trade, and options on the Index are traded on the Philadelphia Stock Exchange. The Company receives fees in connection with these activities. E. Investments. The Company invests in the Value Line Funds and in other marketable securities. 7 F. Employees. At April 30, 1999, the Company and its subsidiaries employed 345 people. The Company, its affiliates, officers, directors and employees may from time to time own securities which are also held in the portfolios of the Value Line Funds or recommended in the Company's publications. The Company has imposed rules upon itself and such people requiring monthly reports of securities transactions for their respective accounts and restricting trading in various types of securities in order to avoid possible conflicts of interest. G. Assets. The Company's assets identifiable to each of its principal business segments were as follows:
April 30, 1999 1998 (in thousands) Investment Periodicals & Related Publications $ 19,529 $ 18,573 Investment Management 223,063 186,904 Corporate Assets 1,215 2,048 -------- -------- $243,807 $207,525 -------- -------- -------- --------
H. Competition. The investment management and the investment information and publications industries are very competitive. There are many competing firms and a wide variety of product offerings. Some of the firms in these industries are substantially larger and have greater financial resources than the Company. The Company believes that it is one of the world's largest independent securities research organizations and that it publishes the world's largest investment periodicals' service in terms of number of subscriptions, annual revenues and number of equity research analysts. I. Executive Officers. The following table lists the names, ages (at June 25, 1999), and principal occupations and employment during the past five years of the Company's Executive Officers. All officers are elected to terms of office for one year. Each of the following has held an executive position with the companies indicated for at least five years.
Name Age Principal Occupation or Employment - --------------------- ----- ------------------------------------------- Jean Bernhard Buttner 64 Chairman of the Board, President and Chief Executive Officer of the Company and AB&Co. Chairman of the Board and President of each of the Value Line Funds. 8 Samuel Eisenstadt 77 Senior Vice President and Research Chairman. David T. Henigson 41 Vice President since 1992 and Treasurer since 1994; Director of Compliance and Internal Auditor; Vice President of each of the Value Line Funds since 1992 and Secretary and Treasurer since 1994; Vice President of AB&Co. Howard A. Brecher 45 Vice President since 1996 and Secretary since 1992; Vice President, Secretary, Treasurer and General Counsel of AB&Co.
Item 2. PROPERTIES. On June 4, 1993, the Company entered into a lease agreement for approximately 77,000 square feet that provided for the relocation of its office space to 220 East 42nd Street, New York, New York. During January 1996, a subsidiary of the Company purchased for cash an approximately 85,000 square foot warehouse facility for $4,100,000. The new facility has consolidated into a single location the distribution operations for the various Company publications and the fulfillment operations of Compupower Corporation. The remaining building capacity provides warehouse space, a disaster recovery site and will provide for future business expansion. The Company owned a distribution facility in North Bergen, New Jersey. The land and premises were sold in May of 1998. The Company believes the capacity of these facilities is sufficient to meet the Company's current and expected future requirements. Item 3. LEGAL PROCEEDINGS. There are no material pending legal proceedings. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of the stockholders during the fourth quarter of the fiscal year ended April 30, 1999. Part II Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Registrant's Common Stock is traded on the over-the-counter market. The approximate number of record holders of the Registrant's Common Stock at April 30, 1999 was 1,350. Over-the-counter price quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. The range of the bid and asked quotations and the dividends paid on these shares during the past two fiscal years were as follows: 9
Dividend High Low Declared Quarter Ended Bid Asked Bid Asked Per Share July 31, 1997 ...... $46 1/2 $46 1/2 $32 1/2 $32 1/2 $.25 October 31, 1997 ... 41 3/8 41 3/8 34 7/8 35 .25 January 31, 1998 ... 45 46 34 34 .25 April 30, 1998 ..... 45 1/2 46 37 3/4 38 1/2 .25 July 31, 1998 ...... 49 1/2 49 7/8 36 7/8 37 7/8 .25 October 31, 1998 ... 42 5/8 46 3/8 33 9/16 34 5/16 .25 January 31, 1999 ... 41 1/4 42 1/8 37 7/8 38 .25 April 30, 1999 ..... $38 1/4 $39 1/4 $34 9/16 $35 7/8 $.25
Item 6. SELECTED FINANCIAL DATA. Earnings per share for each of the fiscal years shown below are based on the weighted average number of shares outstanding.
Years ended April 30, 1999 1998 1997 1996 1995 (in thousands, except per share amounts) Revenues: Investment periodicals and related publications ....... $ 62,220 $ 61,210 $ 62,442 $ 58,509 $ 55,912 Investment management fees and services .. $ 33,080 $ 32,405 $ 29,136 $ 26,564 $ 23,182 Gain on sale of operating facility.. $ 518 $ - $ - $ - $ - Settlement of disputed securities transactions ....... $ - $ - $ 196 $ 2,054 $ 617 Total revenues ........ $ 95,818 $ 93,615 $ 91,774 $ 87,127 $ 79,711 Income from operations .......... $ 39,436 $ 39,360 $ 36,277 $ 32,486 $ 29,660 Net income ............ $ 27,172 $ 35,177 $ 45,512 $ 41,714 $ 23,168 Earnings per share, basic and fully diluted ....... $ 2.72 $ 3.53 $ 4.56 $ 4.18 $ 2.32 Total assets .......... $243,807 $207,525 $160,310 $333,826 $264,998 Cash dividends declared per share .. $ 1.00 $ 1.00 $ 15.95 $ .80 $ .60
10 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. FISCAL 1999 OPERATING RESULTS Net earnings for fiscal year 1999 were $27,172,000, $2.72 per share, compared to net earnings for fiscal year 1998 of $35,177,000, or $3.53 per share. Revenues of $95,818,000 for fiscal 1999, a new record high for the Company, exceeded the prior year's revenues of $93,615,000 by 2%. Operating income of $39,436,000 for the twelve months ended April 30, 1999 also set a new record high for Value Line. The fourth quarter and fiscal year 1999 operating results include the capitalization of $1,092,000, net of amortization of $95,000 associated with the cost of developing internal use software. Inclusive and exclusive of the capitalization of these costs, both net earnings of $7,048,000 or $.70 per share and operating income of $11,058,000 were the highest during any fourth quarter period in the history of the Company. Revenues of $95,818,000 for fiscal year 1999 were $2,203,000 above fiscal year's 1998 revenues. Subscription revenues of $62,220,000, the second highest in the history of the Company, were $1,010,000 or 2% above revenues in the prior fiscal year. The increase in subscription revenues from the prior year's level is due primarily to a 2% increase in revenues from THE VALUE LINE INVESTMENT SURVEY and related products, including an increase of almost $1,700,000 in fiscal 1999's revenues from new products. Investment management fees and services revenues of $33,080,000 for the fiscal year ended April 30, 1999, were $664,000, or 2%, above the prior year's revenues. The higher revenues from investment management fees and services, compared to the prior year, resulted primarily from an increase in the year-to-date average net assets under management in the Company's mutual funds. This was partially offset by reduced revenues from individually managed asset accounts. During fiscal 1999, the Company also recorded as revenues a gain of $518,000 from the sale of the Company's North Bergen, New Jersey, vacant operating facility. Operating expenses for the year ended April 30, 1999, were $56,382,000, $2,127,000, or 4%, above last year's total expenses of $54,255,000. Total advertising and promotional expenses of $17,330,000 were $2,240,000, or 15%, above the prior year's expenses. Promotional expenses for the Value Line Family of Mutual Funds were $1,126,000 above the prior fiscal year's expenses primarily due to an increase in expenses relating to a selling arrangement for two of the Company's equity mutual funds of which the Company is the adviser. In addition, the current year's advertising expenses for THE VALUE INVESTMENT SURVEY and related products and for new publications, including Value Line Select, were $977,000 and $487,000, respectively, higher than the prior year's expenses. Salaries and employee benefit expenses of $22,950,000 were 4% above expenses of $22,153,000 recorded in the prior year. The increase from the prior year is primarily the result of revisions to the salary structure in the Research Department, employment of additional staff in the Asset Management and Y2000 divisions, and general increases in salaries and incentive compensation granted in March and August 1998. These increases were partially offset by the capitalization of $1,092,000 of employee salaries and fringe benefits associated with the adoption of SOP 98-1 "Accounting for the costs of computer software developed for internal use". Production and distribution costs of $7,454,000 were 12% below 11 expenses of $8,498,000 for the fiscal year ended April 30, 1998. Increases in production and distribution expenses associated with new publications and increased expenses for software and Internet development and maintenance were offset by lower expenses for paper usage, service mailers, and subscriber guides resulting from lower production runs for print publications. In addition, April 1998 production expenses included approximately $500,000 of expenses related to the Compupower Corporation's migration of production and distribution data from a mainframe system to a client server database. Office and administration expenses of $8,648,000 were 2% above last year's expenses of $8,514,000. The increase in administrative expenses from the prior year's level is primarily due to increased fees for professional services, higher property rent pursuant to a scheduled rent increase included in the Company's New York City lease, and additional depreciation expenses resulting primarily from a change to the asset lives assigned to personal computers. These increases were partially offset by lower consulting fees at the Company's fulfillment operation and reduced insurance expenses. In addition, the receipt of proceeds of $126,000 from the settlement of an intellectual property infringement lawsuit in which the Company was the plaintiff reduced fiscal 1998's office and administrative expenses. The Company's securities portfolios produced income of $5,193,000 during fiscal year 1999, a decrease of $13,079,000 from last year's income of $18,272,000. This was due primarily to a $9,119,000 reduction in the size of the capital gain distributions from the Company's family of mutual funds. The lower capital gains distributions from the Value Line mutual funds resulted from management's effective tax planning decisions to minimize capital gain distributions from the Company's mutual funds. The tax planning strategy maintained fund shareholder values while reducing the tax liability for all Value Line mutual fund shareholders, including the Company. Although the Company's earnings were lower due to the reduced taxable capital gain distributions, shareholder's equity increased by the appreciation in the value of the long-term securities portfolio that resulted from the higher net asset value of the mutual fund shares. This was a direct result of minimizing the realization of taxable capital gains within the Value Line mutual funds. In addition, the lower capital gains from the Company's trading portfolio that resulted from a decrease in the average assets invested in this portfolio also contributed to the decline in the income from securities transactions. Liquidity and Capital Resources Value Line, Inc. (the Company) had liquid resources which are used in its business of $221,265,000 at April 30, 1999. In addition to $52,674,000 of working capital, the Company had long-term securities available for sale with a market value of $168,591,000, that, although classified as non-current assets, are also readily marketable should the need arise. The Company's cash flow from operations of $24,634,000 for fiscal 1999 was $4,213,000 higher than fiscal 1998's cash flow primarily due to increased income from operations, the timing of payments for income taxes and higher volume of prepayments for subscriptions to the Company's products resulting from an increase in total new, full term orders. This increase to cash flow was partially offset by the increase in accounts receivable that resulted from the efficiencies in order processing in the new subscription fulfillment system. Net cash outflows for investing activities during fiscal 1999 were $6,163,000 higher than fiscal 1998's outflows due primarily to the Company's decision during fiscal 1999 to invest additional cash in its short term trading portfolio to support its trading strategies. The receipt of $591,000 of proceeds during fiscal 1999, primarily from the sale of the Company's North Bergen, New Jersey vacant 12 operating facility also contributed to the increase from fiscal 1998's cash flow from investing activities. Year 2000 (Y2K): Our Year 2000 planning was launched in 1997 with an initial assessment of the Company's systems, its risk of exposure, the steps necessary to achieve Y2K compliance, and the resources necessary to implement those steps. The first phase of the plan involved a complete assessment of the Company's systems and a survey of vendors. Systems were categorized into three groups - Mission Critical, Critical, and Non-Critical. Mission Critical systems are systems that would result in a disruption of service or services. Critical systems are defined as those that could cause minor disruption of services. Non-Critical systems are defined as those that would have no significant impact on operations or services. The second phase of the project was the actual replacement and/or modification of systems and applications. This phase also included the implementation of the modified applications back into the production environment. The second phase has been completed since January 1999. State of Readiness - Y2K: We are now well into the third phase of the project: testing and further implementation based on test results. Due to the timely and successful initial assessment of the Company's year 2000 readiness, we are able to continue to enhance our current products, create new products and release updated versions of our electronic products while still maintaining our Y2K test environments throughout the year. Anticipated Costs - Y2K: The Company's fiscal year 1998 expenditures for the Y2K project were $251,000. The Company's fiscal year 1999 expenditures for the Y2K project were $732,000. The Company's fiscal year 2000 budget is projected to be $414,000. These expenditures include new software and hardware, allocation of staff time, temporary assistance for clerical tasks, legal counsel, testing tools and external, third-party monitoring of the Company's Y2K implementation plan. Risks - Y2K: We cannot predict with certainty what will happen as the millennium approaches. We cannot be sure that we will find every problem in the Company's systems, that the vendors the Company relies upon will find every problem in their systems, or that the Securities Industry will not experience system failures that will negatively and materially impact Value Line. The Company will continue to work toward compliance and urge its vendors to do the same, but niether the Company, nor its vendors, can predict the future with certainty. 13 Contingency Planning - Y2K: Value Line is in the process of finalizing contingency plans to account for the possible failure of every Mission Critical system. Whether this involves performing tasks manually, or locating alternative vendors for Mission Critical software and hardware systems, Value Line is committed to having viable contingency plans developed for every Mission Critical system. We continue to reassess and adjust our risk management process and contingency plans. We believe we have sufficient planning to properly communicate and coordinate any disruption that the turn of the century could cause to our production environment. We are carefully monitoring our third party vendors and should have a better understanding of their Y2K readiness by June of 1999. We will continue to monitor and evaluate all vendors' Y2K status beyond the year 2000. Recent AICPA Pronouncements: The Accounting Standards Committee of the AICPA recently issued Statement of Position ("SOP") 98-1 which requires entities to adopt uniform rules in their financial statements in accounting for the cost of computer software developed or obtained for internal use. The SOP requires companies to capitalize as long-lived assets, for fiscal years beginning after December 15, 1998, many of the costs associated with developing or obtaining software for internal use to amortize those costs over the software's estimated useful life in a systematic and rational manner. The Company capitalized $1,092,000 of expenses during fiscal year 1999 that qualifies for amortization under the new statement. Accordingly, earnings have increased to the extent of the capitalized costs (net of amortization of $95.000) during fiscal year 1999. Thereafter, assuming capitalized costs remain constant, the initial increase in earnings will diminish as the capitalized costs are amortized. Once the amount capitalized in the first year of application is fully amortized, the increase in earnings due to this accounting change will cease provided the amount capitalized each year remains constant. Management believes that the Company's cash and other liquid asset resources used in its business together with the future cash flows from operations will be sufficient to finance current and forecasted operations. Management anticipates no borrowing for fiscal year 2000. FISCAL 1998 OPERATING RESULTS Revenues and operating income for the twelve months ended April 30, 1998 were the highest in the history of the Company and exceeded the prior year's levels by 2% and 9%, respectively. Furthermore, the 42% operating profit margin for the 1998 fiscal year was also a Company record. Revenues for the three months ended April 30, 1998 were the second highest in Value Line's history. Net income for the twelve months ended April 30, 1998 of $35,177,000 or $3.53 per share compares to net income of $45,512,000 or $4.56 per share for the twelve months of fiscal 1997. Net income for the three months ended April 30, 1998 of $5,977,000 or $.60 per share was approximately equal to the prior year's net income of $6,034,000 or $.60 per share. Net income for both the three months and fiscal year of 1998 were ranked third highest for the Company. The special dividend of $149,700,000 paid during January 1997 significantly reduced the Company's 14 securities portfolios. This reduction in the securities portfolios was the primary reason for the lower level of net income in fiscal 1998. Revenues of $93,615,000 for the twelve months of fiscal 1998 were $1,841,000 or 2% above the comparable results for fiscal 1997. Subscription revenues for the twelve months of fiscal 1998 of $61,210,000 were 2% below revenues for the comparable period of fiscal 1997, primarily a result of the reduction in fulfillment revenues from former third party clients of the Compupower Corporation and reduced levels of revenues from the Value Line Mutual Fund Survey, print publication. Revenues from The Value Line Investment Survey, including a 9% price increase that went into effect February 1, 1996 and revenues from related publications were approximately equal to fiscal 1997's level. Revenues derived from investment management fees and services for the twelve months ended April 30, 1998 of $32,405,000 were $3,269,000 or 11% above the level for the comparable period of fiscal 1997. The increase in revenues resulted primarily from an 11% increase in the average annual net assets under management in the Company's mutual funds. The increase in the value of the portfolios under management resulted primarily from the appreciation in the financial markets. Assets under management in the Company's mutual funds at April 30, 1998 increased 23% from the levels at April 30, 1997. Expenses for the twelve months ended April 30, 1998 were $54,255,000, 2% below last year's comparable level of $55,497,000. Advertising expenses of $15,090,000 were 4% below the prior year's level. Advertising for The Value Line Investment Survey family of products decreased 10% from the prior year's level because of a strategic reduction in advertising campaigns during periods of uncertain financial market stability. Promotional expenses for the Value Line Mutual Funds increased $1,525,000 from fiscal 1997's level. The increase in expenses relates primarily to a selling arrangement that became effective July 1, 1996 for two of the equity funds for which the Company is the advisor. Salary and employee benefit expenses of $22,153,000 for twelve months of fiscal 1998 were 1% above the prior year's level. Fiscal 1998's expenses include an increase in employment recruitment costs and the employment of additional staff for technology initiatives to automate and upgrade information systems that will increase the number of Company's covered in the various Value Line equity publications and year 2,000 planning and execution. Additionally, the reduction in Compupower's staff, as a result of the termination of services to third parties, contributed to the stable level of expenses. Printing, paper and distribution expenses of $8,498,000 at April 30, 1998 were slightly higher than expenses of $8,495,000 for the comparable period of fiscal 1997. Expenses for the fourth quarter of fiscal 1998 include approximately $500,000 of costs related to Compupower Corporation's migration of production and distribution data from a mainframe system to a client server database. The remaining expenses decreased from the prior year's level primarily due to the lower costs associated with production and distribution of the electronic products as compared with the print publications, an approximate 10% reduction in the cost of paper, shorter production runs and the utilization of new technology that maximizes 2nd class discounts offered by the U.S. Postal Service. Office and administration expenses of $8,514,000 decreased $747,000 or 8% from the prior year's level. This reduction was in part due to non-recurring professional fees related to a lawsuit from which the Company received a $558,000 award. Additionally, expenses for fiscal 1997 include a charge of $328,000 for the writedown of goodwill at the Company's fulfillment subsidiary resulting from a decision 15 to restructure these operations. Administrative expenses for fiscal 1997 also include a negotiated settlement with the former landlord of the Company's headquarters' facility in which the Company received proceeds of $906,000. The Company's securities portfolios produced income from securities transactions for the twelve months ended April 30, 1998 of $18,272,000 compared with $36,898,000 during the same period of last fiscal year. The primary cause for the decrease was the reduced levels of capital gains and dividend income from the Company's mutual fund holdings that resulted from the smaller size of those securities portfolios. The reduction in the portfolios resulted from the $15.00 per share special dividend distributed to all shareholders in January 1997 following the Company's achievement of record earnings during six of the last eight fiscal years. Also, the twelve months of fiscal 1997 include $31,789,000 of capital gains of which $17,643,000 resulted from sales of the Company's long term mutual fund holdings in connection with the special dividend. Liquidity and Capital Resources Value Line, Inc. (the Company) has liquid resources which are used in its business of $183,057,000 at April 30, 1998. In addition to $33,780,000 in working capital, the Company has long-term securities available for sale with a market value of $149,277,000, that, although classified as non-current assets, are also readily marketable should the need arise. The Company's cash flow from operations of $20,421,000 increased $8,585,000 from last year's level primarily as a result of the larger tax payments remitted during the prior fiscal year that resulted from the additional income from securities transactions. Also, the increase in unearned revenues from new business and decline in accounts receivable from collections contributed to the increase in cash flow. Cash flows from investing activities during fiscal 1997 were $164,712,000 higher than fiscal 1998's results due to the receipt of proceeds from sales of mutual fund holdings in preparation of the special dividend paid in January 1997. The Company recognizes the need to ensure that its computer systems and software applications are converted to a year 2000 date with no disruption to business operations. In light of this, the Company has established a central committee to coordinate, evaluate and implement changes necessary for compliance. Additionally, the Company is communicating with suppliers, financial institutions and others with which it does business to ensure that they are also compliant with the year 2000 date. Significant areas of operations which will be impacted have already been identified and conversion efforts are underway. The total cost of compliance and its effect on the Company's future results of operations are being determined as part of the detailed conversion planning. The cost, including routine hardware enhancements and modifications to software applications, is not expected to exceed $1,000,000. The Accounting Standards Committee of the AICPA recently issued the Statement of Position ("SOP") 98-1 which requires entities to adopt uniform rules in their financial statements in accounting for the cost of computer software developed or obtained for 16 internal use. The SOP requires companies to capitalize as long-lived assets many of the costs associated with developing or obtaining software for internal use and to amortize those costs over the software's estimated full life in a systematic and rational manner. Management estimates that the Company currently expenses approximately $2,000,000 of expenses that would qualify for amortization under the new statement. Management believes that the Company's cash and other liquid asset resources used in its business together with the future cash flows from operations will be sufficient to finance current and forecasted operations. Management anticipates no significant borrowing requirements during fiscal 1999. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The following consolidated financial statements of the registrant and its subsidiaries are included as a part of this Form 10K: Page Numbers Reports of independent accountants 22 Consolidated balance sheets--April 30, 1999 and 1998 23 Consolidated statements of income and retained earnings --years ended April 30, 1999, 1998 and 1997 24 Consolidated statements of cash flows --years ended April 30 1999, 1998 and 1997 25 Consolidated statement of changes in stockholders' equity --years ended April 30 1999, 1998 and 1997 26 Notes to the consolidated financial statements 27 Supplementary schedules 43 Quarterly Results (Unaudited): (in thousands, except per share amounts)
Income Earnings Total From Net Per Revenues Operations Income Share 1999, by Quarter - First .......... $24,656 $11,035 $ 6,509 $ .65 Second ......... 23,391 9,538 5,421 .55 Third .......... 23,538 7,805 8,194 .82 Fourth ......... 24,233 11,058 7,048 .70 ------ ------ ------- ----- Total ........ $95,818 $39,436 $27,172 $2.72 1998, by Quarter - First .......... $23,170 $10,975 $ 7,811 $ .78 Second ......... 23,721 10,467 7,063 .71 Third .......... 23,524 9,884 14,326 1.44 Fourth ......... 23,200 8,034 5,977 .60 ------ -------- ------- ----- Total ........ $93,615 $39,360 $35,177 $3.53 17 1997, by Quarter - First .......... $22,457 $ 9,421 $ 6,526 $ .65 Second ......... 22,347 9,024 7,839 .79 Third .......... 23,767 8,415 25,113 2.52 Fourth ......... 23,203 9,417 6,034 .60 ------ ------- ------- ----- Total ........ $91,774 $36,277 $45,512 $4.56
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. There have been no disagreements with the independent accountants on accounting and financial disclosure matters. Part III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Information required by this item will be filed as an amendment to this Form 10-K. Item 11. EXECUTIVE COMPENSATION. Information required by this item will be filed as an amendment to this Form 10-K. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information required by this item will be filed as an amendment to this Form 10-K. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information required by this item will be filed as an amendment to this Form 10-K. 18 Part IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) 1. Financial Statements See Item 8. 2. Schedules Schedule I - Marketable Securities. Schedule XIII - Other Investments. (Reg. S-X, Article 5) All other Schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. 3. Exhibits 3.1 Articles of Incorporation of the Company, as amended through April 17, 1983 are Incorporated by reference to the Registration Statement - Form S-1 of Value Line, Inc. Part II, Item 16.(a) 3.1 filed with the Securities and Exchange Commission on April 7, 1983. 3.2 Certificate of Amendment of Certificate of Incorporation dated October 24, 1989. 10.8 Form of tax allocation arrangement between the Company and AB&Co. incorporated by reference to the Registration Statement - Form S-1 of Value Line, Inc. Part II, Item 16.(a) 10.8 filed with the Securities and Exchange Commission on April 7, 1983. 10.9 Form of Servicing and Reimbursement Agreement between the Company and AB&Co., dated as of November 1, 1982 incorporated by reference to the Registration Statement - Form S-1 of Value Line, Inc. Part II, Item 16.(a) 10.9 filed with the Securities and Exchange Commission on April 7, 1983. 10.10 Value Line, Inc. Profit Sharing and Savings Plan as amended and restated effective May 1, 1989, including amendments through April 30, 1995, incorporated by reference to the Annual Report on Form 10-K for the year ended April 30, 1996. 10.13 Lease for the Company's premises at 220 East 42nd Street, New York, N.Y. incorporated by reference to the Annual Report on Form 10-K for the year ended April 30, 1994. 21 Subsidiaries of the Registrant. (b) Reports on Form 8-K. None (c) Exhibits. 21 Subsidiaries of the Registrant. 27 Financial Data Schedules. 19 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K for the fiscal year ended April 30, 1999, to be signed on its behalf by the undersigned, thereunto duly authorized. VALUE LINE, INC. (Registrant) By: /s/Jean Bernhard Buttner ------------------------------------------- Jean Bernhard Buttner Chairman & Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By: /s/Jean Bernhard Buttner ------------------------------------------- Jean Bernhard Buttner Chairman & Chief Executive Officer By: /s/Stephen R. Anastasio ------------------------------------------- Stephen R. Anastasio Principal Financial and Accounting Officer Dated: July 15, 1999 20 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K for the fiscal year ended April 30, 1999, to be signed on its behalf by the undersigned as Directors of the Registrant. /s/Jean Bernhard Buttner /s/Howard A. Brecher - -------------------------- ---------------------------- Jean Bernhard Buttner Howard A. Brecher /s/Harold Bernard, Jr. /s/Samuel Eisenstadt - -------------------------- ---------------------------- Harold Bernard, Jr. Samuel Eisenstadt /s/W. Scott Thomas /s/David T. Henigson - -------------------------- ---------------------------- W. Scott Thomas David T. Henigson /s/Linda S. Wilson - -------------------------- Linda S. Wilson Dated: July 15, 1999 21 HOROWITZ & ULLMANN, P.O. CERTIFIED PUBLIC ACCOUNTANTS 275 MADISON AVENUE NEW YORK, NY 10016 TELEPHONE (212) 532-3736 --- FAX (212) 545-8997 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Value Line, Inc. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, changes in stockholders' equity, and cash flows present fairly, in all material respects, the financial position of Value Line, Inc. and subsidiaries at April 30, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended April 30, 1999, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits of the consolidated financial statements referred to above also included an audit of the Financial Statement Schedules listed in Item 14(a) of Form 10-K. In our opinion, these Financial Statement Schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated statements. /s/ Horowitz & Ullmann, P.O. July 12, 1999 22 VALUE LINE, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
Apr. 30, Apr. 30, Assets 1999 1998 Current Assets: ---------- ---------- Cash and cash equivalents (including short term investments of $41,250 and $29,072, respectively) $41,826 $29,937 Trading securities 14,023 8,861 Accounts receivable, net of allowance for doubtful accounts of $295 and $507, respectively 1,846 1,287 Receivable from affiliates 2,587 2,339 Prepaid expenses and other current assets 2,817 1,689 Deferred income taxes 418 1,443 ---------- ---------- Total current assets 63,517 45,556 Long term securities available for sale 168,591 149,277 Property and equipment, net 11,662 12,651 Goodwill 37 41 ---------- ---------- Total assets $243,807 $207,525 ---------- ---------- ---------- ---------- Liabilities and Shareholders' Equity Current Liabilities: Accounts payable and accrued liabilities $5,842 $7,170 Accrued salaries 1,765 1,764 Dividends and interest payable 2,495 2,495 Accrued taxes payable 741 347 ---------- ---------- Total current liabilities 10,843 11,776 Unearned revenue 43,100 42,543 Deferred charges 697 975 Deferred income taxes 22,264 15,294 Shareholders' Equity: Common stock, $.10 par value; authorized 30,000,000 shares; issued 10,000,000 shares 1,000 1,000 Additional paid-in capital 959 959 Retained earnings 125,585 108,392 Treasury stock, at cost (21,375 shares on April 30, 1999, and 21,375 on April 30, 1998) (411) (411) Unrealized gains on securities available for sale, net of taxes 39,770 26,997 ---------- ---------- Total shareholders' equity 166,903 136,937 ---------- ---------- Total liabilities and shareholders' equity $243,807 $207,525 ---------- ---------- ---------- ----------
The accompanying notes are an integral part of these financial statements. 23 VALUE LINE, INC. CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Years ended April 30, 1999 1998 1997 -------- --------- --------- Revenues: Investment periodicals and related publications $62,220 $61,210 $62,442 Investment management fees & services 33,080 32,405 29,136 Gain on sale of operating facility 518 -- -- Settlement of disputed securities transactions -- -- 196 -------- --------- --------- Total revenues 95,818 93,615 91,774 -------- --------- --------- Expenses: Advertising and promotion 17,330 15,090 15,739 Salaries and employee benefits 22,950 22,153 22,002 Production and distribution 7,454 8,498 8,495 Office and administration 8,648 8,514 9,261 -------- --------- --------- Total expenses 56,382 54,255 55,497 -------- --------- --------- Income from operations 39,436 39,360 36,277 Income from securities transactions, net 5,193 18,272 36,898 -------- --------- --------- Income before income taxes 44,629 57,632 73,175 Provision for income taxes 17,457 22,455 27,663 -------- --------- --------- Net income $27,172 $35,177 $45,512 Retained earnings, at beginning of year 108,392 83,194 196,834 Dividends declared (9,979) (9,979) (159,152) -------- --------- --------- Retained earnings, at end of year $125,585 $108,392 $83,194 -------- --------- --------- -------- --------- --------- Earnings per share, basic and fully diluted $2.72 $3.53 $4.56 -------- --------- --------- -------- --------- ---------
The accompanying notes are an integral part of these financial statements. 24 VALUE LINE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
Years ended April 30, 1999 1998 1997 Cash flows from operating activities: ----------- ----------- ----------- Net income $27,172 $35,177 $45,512 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,750 1,592 1,477 Deferred income taxes 1,119 (196) (5,820) Gains on sales of trading securities and securities held for sale (1,311) (15,985) (46,439) Unrealized (gains)/losses on trading securities (1,013) 568 14,732 Gain on sale of operating facility (518) -- -- Write-down of goodwill -- -- 328 Accretion of discount -- -- (224) Other 25 (13) 21 Changes in assets and liabilities: Increase/(decrease) in unearned revenue 557 352 (802) Decrease in deferred charges (278) (278) (277) Increase/(decrease) in accounts payable and accrued expenses (1,328) (765) 1,605 Increase/(decrease) in accrued salaries 1 (444) 400 Decrease in interest payable -- -- (63) Decrease in accrued taxes payable 394 (461) (258) (Increase)/decrease in prepaid expenses and other current assets (1,129) 135 1,048 Decrease in accounts receivable (559) 1,229 480 (Increase)/decrease in receivable from affiliates (248) (490) 116 ----------- ----------- ----------- Total adjustments (2,538) (14,756) (33,676) ----------- ----------- ----------- Net cash provided by operations 24,634 20,421 11,836 ----------- ----------- ----------- Cash flows from investing activities: Proceeds from sales of long term securities 8,980 21,824 149,505 Purchases of long term securities (6,636) (27,376) (26,543) Proceeds from sales of trading securities 13,251 39,461 114,116 Purchases of trading securities (18,097) (29,655) (66,239) Acquisition of property, and equipment, net (855) (857) (2,730) Proceeds from sales of operating facility and equipment 591 -- -- ----------- ----------- ----------- Net cash provided by/(used in) investing activities (2,766) 3,397 168,109 ----------- ----------- ----------- Cash flows from financing activities: Proceeds from sale of treasury stock 15 32 Dividends paid (9,979) (9,979) (158,652) Loan repayment -- -- (36,994) ----------- ----------- ----------- Net cash (used in) financing activities (9,979) (9,964) (195,614) ----------- ----------- ----------- Net increase/(decrease) in cash and cash equivalents 11,889 13,854 (15,669) Cash and cash equivalents at beginning of period 29,937 16,083 31,752 ----------- ----------- ----------- Cash and cash equivalents at end of period $41,826 $29,937 $16,083 ----------- ----------- ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these financial statements. 25 VALUE LINE, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE THREE YEARS ENDED APRIL 30, 1999, 1998 AND 1997 (IN THOUSANDS, EXCEPT SHARE AMOUNTS) (UNAUDITED)
Accumulated Number Par value Additional other of common of common paid-in Treasury Comprehensive Retained comprehensive shares shares capital Stock income earnings income Total ---------- --------- ----------- -------- ------------- --------- ------------- -------- BALANCE AT MAY 1, 1996 9,976,975 $1,000 $944 ($443) $196,834 $22,931 $221,266 Comprehensive income Net income $45,512 45,512 45,512 Other comprehensive income, net of tax: Change in unrealized gains on securities (11,294) (11,294) (11,294) --------- Comprehensive income $34,218 --------- --------- Exercise of stock options 1,150 10 22 32 Dividends declared (159,152) (159,152) --------- ------ ----- ------ -------- ------- ------- BALANCE AT APRIL 30, 1997 9,978,125 $1,000 $954 ($421) $83,194 $11,637 $96,364 --------- ------ ----- ------ -------- ------- ------- --------- ------ ----- ------ -------- ------- ------- Comprehensive income Net income $35,177 35,177 35,177 Other comprehensive income, net of tax: Change in unrealized gains on securities 15,360 15,360 15,360 --------- Comprehensive income $50,537 --------- --------- Exercise of stock options 500 5 10 15 Dividends declared (9,979) (9,979) --------- ------ ----- ------ -------- ------- ------- BALANCE AT APRIL 30, 1998 9,978,625 $1,000 $959 ($411) $108,392 $26,997 $136,937 --------- ------ ----- ------ -------- ------- ------- --------- ------ ----- ------ -------- ------- ------- Comprehensive income Net income $27,172 27,172 27,172 Other comprehensive income, net of tax: Change in unrealized gains on securities 12,773 12,773 12,773 --------- Comprehensive income $39,945 --------- --------- Dividends declared (9,979) (9,979) --------- ------ ----- ------ -------- ------- ------- BALANCE AT APRIL 30, 1999 9,978,625 $1,000 $959 ($411) $125,585 $39,770 $166,903 --------- ------ ----- ------ -------- ------- ------- --------- ------ ----- ------ -------- ------- -------
The accompanying notes are an integral part of these financial statements. 26 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1-ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Value Line, Inc. (the "Company") is incorporated in New York State and carries on the investment periodicals and related publications and investment management activities formerly performed by Arnold Bernhard & Co., Inc. (the "Parent") which owns approximately 81% of the issued and outstanding common stock of the Company. Principles of consolidation: The consolidated financial statements include the accounts of the Company and all of its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Revenue recognition: Subscription revenues are recognized ratably over the terms of the subscriptions. Accordingly, the amount of subscription fees to be earned by servicing subscriptions after the date of the balance sheet is shown as unearned revenue. The unearned revenue shown on the balance sheet is a noncurrent deferred credit. This classification recognizes that the fulfillment of this commitment will require the use of significantly fewer current assets than the amount of the unearned revenues and, accordingly, combining it with current liabilities would significantly understate the liquidity position of the Company. Investment management fees are recorded as revenue as the related services are performed. Valuation of Securities: The Company accounts for the valuation of its securities holdings in accordance with the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities". It values its long-term securities portfolio, which consists of shares of the Value Line Mutual Funds, and short-term securities portfolio, which the Company classifies as available for sale, at market value. Unrealized gains and losses on these securities are reported, net of applicable taxes, as a separate component of Shareholders' Equity. Realized gains and losses on sales of the securities are recorded in earnings on trade date and are determined on the identified cost method. 27 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Trading securities, which consist of securities held by Value Line Securities, Inc., the Company's broker-dealer subsidiary are valued at market with unrealized gains and losses included in earnings. Goodwill: Goodwill represents the excess of the purchase price over the fair value of net assets acquired and is being amortized over a period of 14 years. During fiscal 1997, the Company accelerated the amortization of the goodwill associated with the Compupower Corporation. This resulted from management's decision to cease third party activity and reorganize the fulfillment operation. 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 year. Cash and Cash Equivalents: For purposes of the Consolidated 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 April 30, 1999 and 1998, cash equivalents included $40,925,000 and $28,283,000, respectively, invested in the Value Line money market funds. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE 2-SUPPLEMENTARY CASH FLOW INFORMATION: Cash payments for income taxes were $15,712,000, $23,114,000, and $33,677,000, in 1999, 1998, and 1997, respectively. Interest payments of $86,000, $47,000, and $1,188,000, were made in 1999, 1998, and 1997, respectively. 28 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3-RELATED PARTY TRANSACTIONS: The Company acts as investment adviser and manager for fifteen open-ended investment companies, the Value Line Family of Funds (see Note 4). The Company earns investment management fees based upon the average daily net asset values of the respective funds. The Company also earns brokerage commission income, net of clearing fees, on securities transactions executed by Value Line Securities, Inc. on behalf of the funds that are cleared on a fully disclosed basis through non-affiliated brokers. For the years ended April 30, 1999, 1998 and 1997, investment management fees and brokerage commission income, net of clearing fees, amounted to $28,351,000, $25,348,000, and $22,443,000, respectively. The related receivables from the funds for management advisory fees included in Receivable from affiliates were $2,487,000 and $2,177,000 at April 30, 1999 and 1998, respectively. For the years ended April 30, 1999, 1998, and 1997, the Company was reimbursed $496,000, $461,000, and $493,000, respectively, for payments it made on behalf of and services it provided to the Parent. At April 30, 1999 and 1998, Receivable from affiliates included a receivable from the Parent of $26,000 and $28,000, respectively. For the years ended April 30, 1999, 1998, and 1997, the Company made federal income tax payments to the Parent amounting to $12,870,000, $18,800,000, and $29,200,000, respectively. At April 30, 1999, accrued taxes payable include a federal tax liability owed to the Parent in the amount of $152,000. At April 30, 1998, accrued taxes payable are presented net of a $694,000 receivable from the Parent for federal income taxes. These data are in accordance with the tax sharing arrangement described in Note 6. NOTE 4-INVESTMENTS: Trading Securities: Securities held by Value Line Securities, Inc. had an aggregate cost of $11,914,000 and $7,914,000 and a market value of $14,023,000 and $8,861,000 at April 30, 1999 and April 30, 1998, respectively. 29 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Net realized trading losses related to equity securities aggregated $587,000 during fiscal 1999, net realized trading gains amounted to $6,869,000 and $21,405,000 for the years ended April 30, 1998 and 1997. The net unrealized gains on trading securities for the period ended April 30, 1999 were $1,013,000 and net unrealized trading losses were $568,000 and $14,732,000 during fiscal years 1998 and 1997. Short-Term Securities Available for Sale: Short-term securities available for sale, which were sold during fiscal 1997 as further explained below, consisted of the Company's holdings in the following securities: Federal National Mortgage Association (FNMA), floating rate notes due August 5, 1997; par value $30,325,000. Federal Farm Credit Bank (FFCB), floating rate notes due February 12, 1997; par value $10,000,000. During the first quarter of fiscal 1997, the Company sold the FFCB securities and received proceeds of $9,870,000 which were equivalent to the recorded market value of these securities. During the second quarter of fiscal 1997, the Company sold the FNMA securities and received proceeds of $30,187,000, including accrued interest and realized a net capital gain of $154,000. Long-Term Securities Available for Sale: The aggregate cost of the long-term securities, which are invested in the Value Line mutual funds, was $107,406,000 and $107,743,000 and the market value was $168,591,000 and $149,277,000 at April 30, 1999 and April 30, 1998, respectively. The change in gross unrealized gains on these securities of $19,651,000, $23,630,000 and $17,375,000, net of the change in deferred taxes of $6,878,000, $8,270,000 and $6,081,000, were included in shareholders' equity at April 30, 1999, 1998 and 1997, respectively. Realized capital gains from sales of these securities were $2,157,000, $11,980,000, and $30,658,000 during fiscal years 1999, 1998 and 1997, respectively. The proceeds received from the sales of these securities during the fiscal years ended April 30, 1999, 1998, and 1997 were $8,980,000, $21,824,000, and $91,662,000, respectively. 30 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended April 30, 1999, 1998, and 1997, Income from securities transactions also included $2,912,000, $2,818,000, and $4,868,000, of dividend income; $77,000, $78,000, and $1,474,000, of interest income; and $86,000, $47,000, and $1,124,000, of related interest expense, respectively. NOTE 5-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 consist of the following: April 30, 1999 1998 -------------------------- (in thousands) Land $726 $785 Building and leasehold improvements 7,821 8,039 Furniture and equipment 10,635 10,711 -------------------------- 19,182 19,535 Accumulated depreciation and amortization (7,520) (6,884) -------------------------- $11,662 $12,651 -------------------------- --------------------------
Pursuant to the Company's realignment of its production and distribution departments, the Company sold its vacant North Bergen, New Jersey operating facility during May 1998 and received gross proceeds of $577,000. The gain on the sale of the operating facility in the amount of $518,000 is included in revenues in the Consolidated Statements of Income. 31 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6-FEDERAL, STATE AND LOCAL INCOME TAXES: The Company computes its tax in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". The provision for income taxes includes the following:
Years ended April 30, 1999 1998 1997 --------------------------------------------- (in thousands) Current: Federal $13,405 $18,202 $28,565 State and local 2,934 4,449 4,918 --------------------------------------------- 16,339 22,651 33,483 Deferred: Federal 868 (18) (5,753) State and local 250 (178) (67) --------------------------------------------- 1,118 (196) (5,820) --------------------------------------------- $17,457 $22,455 $27,663 --------------------------------------------- ---------------------------------------------
32 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Deferred taxes 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 deferred tax (liability)/asset are as follows:
Years ended April 30, 1999 1998 1997 ----------------------------------------------- (in thousands) Unrealized gains on securities held for sale ($21,415) ($14,537) ($6,266) Unrealized gains on trading securities (738) (291) (532) Relocation reserve 64 284 177 Depreciation (663) (626) (637) Deferred charges 1,046 1,095 1,249 Other, net (141) 224 233 ----------------------------------------------- ($21,846) ($13,851) ($5,777) ----------------------------------------------- -----------------------------------------------
Included in Deferred income taxes in total current assets are deferred federal tax assets of $182,000 and $957,000 and deferred state and local tax assets of $296,000 and $486,000 at April 30, 1999 and 1998, respectively. 33 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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:
Years ended April 30, 1999 1998 1997 ------------------------------------------ (in thousands) Tax expense at the U.S. statutory rate $15,620 $20,171 $25,699 Increase (decrease) in tax expense from: State and local income taxes, net of federal income tax benefit 2,070 2,776 3,147 Effect of tax exempt income and dividend deductions (62) (64) (409) Other, net (171) (428) (774) ------------------------------------------ $17,457 $22,455 $27,663 ------------------------------------------ ------------------------------------------
The Company is included in the consolidated federal income tax return of the Parent. The Company has a tax sharing arrangement which requires it to make tax payments to the Parent equal to the Company's liability as if it filed a separate return. NOTE 7-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 which is determined by a formula based upon the salaries of eligible employees and the amount of consolidated net operating income as defined in the Plan. Plan expense, included in salaries and employee benefits in the Consolidated Statements of Income and Retained Earnings, for the years ended April 30, 1999, 1998, and 1997 was $1,609,000, $1,455,000, and $1,550,000, respectively. 34 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 8-INCENTIVE STOCK OPTIONS: On April 17, 1993, the Incentive Stock Option Plan expired. On the date of expiration, 22,550 options available for grant were cancelled. Information on the 1983 Incentive Stock Option Plan for the three years ended April 30, 1999, is as follows:
Number of Option Shares Prices ------------ Outstanding at April 30, 1996 4,625 $17.50 to $29.75 Granted - Exercised (1,150) $17.50 to $29.75 Cancelled - ------------ Outstanding at April 30, 1997 3,475 $17.50 to $29.75 Granted - Exercised (500) $29.75 Cancelled - ------------ Outstanding at April 30, 1998 2,975 $29.75 Granted - Exercised - Cancelled - ------------ Outstanding at April 30, 1999 2,975 $29.75 ------------ ------------
35 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Options outstanding at April 30, 1999 expire at various dates through March 2003. At April 30, 1999, 2,975 of the outstanding options were exercisable. Of the common stock held in treasury at April 30, 1999, 2,975 shares were held for exercise of stock options. NOTE 9-TREASURY STOCK: Treasury stock, at cost, for the three years ended April 30, 1999, consists of the following:
Shares Amount ------------- ---------- (in thousands) Balance April 30, 1996 23,025 443 Exercise of incentive stock options (1,150) (22) ------------- ---------- Balance April 30, 1997 21,875 421 Exercise of incentive stock options (500) (10) ------------- ---------- Balance April 30, 1998 21,375 $411 Exercise of incentive stock options - - ------------- ---------- Balance April 30, 1999 21,375 $411 ------------- ---------- ------------- ----------
NOTE 10-LEASE COMMITMENTS: On June 4, 1993, the Company entered into a 15 year lease agreement to provide primary office space. The lease includes free rental periods as well as scheduled base rent escalations over the term of the lease. The total amount of the base rent payments is being charged to expense on the straight-line method over the term of the lease. The Company has recorded a Deferred charge on its Consolidated Balance Sheets to reflect the excess of annual rental expense over cash payments since inception of the lease. 36 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Future minimum payments, exclusive of forecasted increases in real estate taxes and wage escalations, under operating leases for office space, with remaining terms of one year or more, are as follows:
Year ended April 30: (in thousands) 2000 1,789 2001 1,790 2002 1,782 2003 1,766 2004 1,958 Thereafter 7,385 ------------ $16,470 ------------ ------------
Rental expense for the years ended April 30, 1998, 1997, and 1996 under operating leases covering office space was $1,505,000, $1,288,000, and $1,456,000, respectively. NOTE 11-BUSINESS SEGMENTS: The Company operates two reportable business segments: Publishing and Investment Management Services. The publishing segment produces investment related periodicals in both print and electronic form. The investment management segment provides advisory services to mutual funds, institutional and individual clients as well as brokerage services for the Value Line family of mutual funds. The segments are differentiated by the products and services they offer. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company allocates all revenues and expenses, except for depreciation related to corporate assets, between the two reportable segments. 37 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Disclosure of Reportable Segment Profit and Segment Assets
APRIL 30, 1999 Publishing Investment Total Management Services Revenues from external customers $62,220 $33,080 $95,300 Gain on sale of operating facility 518 -- 518 Intersegment revenues 76 -- 76 Income from securities transactions 258 4,935 5,193 Depreciation and amortization 1,580 53 1,633 Segment profit 22,467 17,086 39,553 Segment assets 19,529 223,063 242,592 Expenditures for segment assets 845 10 855 APRIL 30, 1998 Publishing Investment Total Management Services Revenues from external customers $61,210 $32,405 $93,615 Intersegment revenues 88 -- 88 Income from securities transactions 255 18,017 18,272 Depreciation and amortization 1,454 51 1,505 Segment profit 20,640 18,807 39,447 Segment assets 18,573 186,904 205,477 Expenditures for segment assets 857 -- 857
38 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Reconciliation of Reportable Segment Revenues, Operating Profit and Assets
1999 1998 REVENUES Total revenues for reportable segments $95,894 $93,703 Elimination of intersegment revenues ($76) ($88) --------------------------- Total consolidated revenues $95,818 $93,615 --------------------------- --------------------------- SEGMENT PROFIT Total profit for reportable segments $44,746 $57,719 Less: Depreciation related to corporate assets (117) (87) --------------------------- Income before income taxes $44,629 $57,632 --------------------------- --------------------------- ASSETS Total assets for reportable segments $242,592 $205,477 Corporate assets 1,215 2,048 --------------------------- Consolidated total assets $243,807 $207,525 --------------------------- ---------------------------
NOTE 12-NET CAPITAL: The Company's wholly owned subsidiary, Value Line Securities, Inc. is subject to the net capital provisions of Rule 15c3-1 under the Securities Exchange Act of 1934, which requires the maintenance of minimum net capital of $100,000 or one-fifteenth of aggregate indebtedness, if larger. Additionally, dividends may only be declared if aggregate indebtedness is less than twelve times net capital. At April 30, 1999, Value Line Securities, Inc. net capital, as defined, of $11,020,000 exceeded required net capital by $10,874,000 and the ratio of aggregate indebtedness to net capital was .20 to 1. 39 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 13-DISCLOSURE OF CREDIT RISK OF FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK: In the normal course of business, the Company enters into contractual committments, principally financial futures contracts for securities indices. Financial futures contracts provide for the delayed delivery of financial instruments for which the seller agrees to make delivery at a specified future date, at a specified price or yield. The contract or notional amount of these contracts reflects the extent of involvement the Company has in these contracts. At April 30, 1999, the underlying notional value of such committments was $2,976,000. The average fair value of the committments during fiscal 1999 was $2,845,000. Risk arises from the potential inability of counterparts to meet the terms of their contracts and from movements in securities values. The Company limits its credit risk associated with such instruments by entering exclusively into exchange traded futures contracts. The Company executes, as agent, securities transactions on behalf of the Value Line mutual funds. If either the mutual fund or a counterparty fail to perform, the Company may be required to discharge the obligations of the nonperforming party. In such circumstances, the Company may sustain a loss if the market value of the security is different from the contract value of the transaction. No single customer accounted for a significant portion of the Company's sales in 1999, 1998 or 1997, nor accounts receivable for 1999 or 1998. NOTE 14-ESTIMATED FAIR VALUE OF FINANCIAL AND DERIVATIVE INSTRUMENTS: Statement of Accounting Standards No. 119, "Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments," requires disclosure of information regarding derivative instruments, which include financial index futures contracts. Derivative instruments held for trading purposes are reflected at fair value at April 30, 1999 and 1998. Net realized trading losses related to derivative financial instruments amounted to $269,000, $2,925,000 and $5,778,000 for the years ended April 30, 1999, 1998 and 1997, respectively. Income from securities transactions in the Statement of Income are reflected net of derivative trading activity. 40 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 15-SPECIAL DIVIDEND DISTRIBUTION: On December 16, 1996, the Board of Directors of the Company declared a special $15.00 per share dividend which was paid January 2, 1997, to all shareholders of record on December 26, 1996. The Company paid this dividend out of accumulated earnings and profits. The dividend was paid pursuant to a transaction in which the Parent settled a lawsuit and purchased all the AB&Co. shares held by the Arnold Van Hoven Bernhard family and the trustees of a trust of which he is the income beneficiary. Accordingly, Jean B. Buttner, Chief Executive Officer of the Company, now owns 100% of the voting shares of the Parent. NOTE 16-YEAR 2000: The Company recognizes the need to ensure its computer systems and software applications are converted to a year 2000 date with no disruption to business operations. In light of this, the Company has established a central committee to coordinate, evaluate and implement changes necessary for compliance. Additionally, the Company is communicating with suppliers, financial institutions, and others with which it does business to ensure they are also compliant with the year 2000 date. Significant areas of operations which will be impacted have already been identified and conversion efforts are underway. The total cost of compliance and its effect on the Company's future results of operations are being determined as part of the detailed conversion planning. The total cost, including routine hardware enhancements and modifications to software applications is not expected to exceed $1,500,000. NOTE 17-COMPREHENSIVE INCOME: During the fiscal year 1999, the Company adopted FASB statement no. 130, Reporting Comprehensive Income. Statement no. 130 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 historically has not been recognized in the calculation of net income. 41 VALUE LINE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS At April 30, 1999, 1998, and 1997, the Company held long term securities classified as available-for-sale. The change in valuation of these securities, net of deferred taxes has been recorded in the Company's Consolidated Balance Sheets. The increase in gross unrealized gains was $19,651,000, $23,630,000 and $17,375,000 and the change in the related deferred taxes was $6,878,000, $8,270,000 and $6,081,000 during the three years ended April 30, 1999, 1998 and 1997, respectively. NOTE 18-ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED FOR INTERNAL USE: During fiscal year 1999, the Company 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 is effective for tax years ending after December 31, 1998. The SOP 98-1 requires companies to capitalize as long-lived assets many of the costs associated with developing or obtaining software for internal use and amortize those costs over the software's estimated useful life in a systematic and rational manner. At April 30, 1999 the Company capitalized $997,000 of costs, net of amortization, related to the development of software for internal use. Such costs are capitalized and amortized over the expected useful life of the asset which approximates 3 years. 42 VALUE LINE, INC. SCHEDULE 1 - MARKETABLE SECURITIES A/O APRIL 30, 1999
- ---------------------------------------------------------------------------- NUMBER OF SHARES COMMON STOCK NAME COST MKT VALUE - ---------------------------------------------------------------------------- 500 4 KIDS ENTERTAINMEN $17,338 $15,781 500 99 CENTS ONLY STORE $22,806 $23,562 200 ABACUS DIRECT CORP $16,410 $14,800 600 ABBOTT LABS COM NPV $29,606 $29,062 800 ABM INDS INC COM $22,240 $24,300 6,000 ACCLAIM ENTMT INC C $50,541 $39,000 900 ACNIELSON CORP COM $24,682 $25,088 400 ACTION PERFORMANCE $11,820 $13,550 1,300 ACXIOM CORP COM $24,359 $32,825 1,000 ADC TELECOMMUNICATI $39,450 $47,812 300 ADVANCE PARADIAM IN $18,300 $15,750 1,100 AEGON ORD $92,157 $104,638 1,100 AES CORP COM $45,958 $55,000 1,700 AGOURON PHARMACEUTI $98,781 $100,406 400 ALASKA AIR GROUP IN $19,095 $17,625 300 ALLERGAN INC COM $21,092 $26,962 200 ALLIANT TECHSYSTEMS $17,318 $16,375 200 ALLIED WASTE INDUST $4,175 $3,538 400 ALPHARMA INC CL A $16,375 $11,800 250 ALTERA CORP $17,909 $18,062 900 ALTERRA HEALTHCARE $19,170 $20,025 1,000 AMCAST INDL CORP CO $17,675 $16,750 1,250 AMERICA ONLINE INC $121,603 $178,438 400 AMERICAN EAGLE OUTF $22,187 $29,900 1,900 AMERICAN FREIGHTWAY $32,654 $32,656 1,450 AMERICAN INTL GROUP $118,343 $170,284 500 AMERICAN MGMT SYS I $17,400 $17,188 1,800 AMERICAN ONCOLOGY R $25,088 $16,088 850 AMERICAN PWR CONVER $22,710 $28,050 2,300 AMERICAN STORES CO $77,369 $72,594 500 AMERICAN WOODMARK C $14,025 $19,250 800 AMERISOURCE HEALTH $31,495 $22,150 400 AMERITECH CORP NEW $24,981 $27,375 1,950 AMGEN INC COM $80,059 $119,803 1,500 ANHEUSER BUSCH COS $116,047 $109,688 1,600 ANNTAYLOR STORES CO $58,560 $76,000 1,200 APPLE COMPUTER COM $42,578 $55,200 400 APPLIED PWR INC COM $12,848 $12,625 1,000 APTARGROUP INC COM $28,088 $28,000 550 ARVIN INDS INC COM $20,573 $20,144 700 ASTEC INDS INC COM $17,871 $27,125 3,700 AT + T CORP COM $206,519 $186,850 600 ATLANTIC COAST AIRL $15,900 $18,525 1,100 AUTOZONE INC COM $33,033 $33,000 600 BARNES + NOBLE INC $17,542 $20,850 1,200 BED BATH + BEYOND I $23,545 $42,825 2,750 BELL ATLANTIC CORP $132,726 $158,469 3,750 BELLSOUTH CORP COM $170,516 $167,812 500 BENCHMARK ELECTRS I $10,856 $16,812 1,000 BERGEN BRUNSWIG COR $21,869 $19,000 43 - ---------------------------------------------------------------------------- NUMBER OF SHARES COMMON STOCK NAME COST MKT VALUE - ---------------------------------------------------------------------------- 1,000 BEST BUY CO INC COM $40,171 $47,750 1,300 BETHLEHEM STL CORP $14,258 $11,862 1,500 BIOGEN INC COM $107,694 $142,594 1,100 BIOMET INC COM $27,288 $45,100 700 BLYTH INDS INC COM $18,410 $15,925 100 BMC SOFTWARE INC CO $3,281 $4,306 2,400 BRISTOL MYERS SQUIB $159,148 $152,550 900 BRITISH PETE PLC AM $83,221 $101,869 900 BRITISH TELECOMMUNI $132,711 $150,975 400 CABLEVISION SYS COR $26,112 $30,950 1,000 CAMBREX CORP COM $27,250 $25,625 500 CARLISLE COS INC CO $20,181 $24,500 100 CATALINA MARKETING $4,722 $8,544 750 CDW COMPUTER CTRS I $51,369 $67,125 800 CENTRAL NEWSPAPERS $26,720 $27,150 1,200 CENTURY BANCORP INC $24,960 $21,450 2,600 CHATTEM INC COM $75,106 $101,562 400 CHEVRON CORP COM $32,562 $39,900 600 CINTAS CORP COM $36,272 $41,250 1,850 CISCO SYS INC COM $120,804 $211,016 950 CITIGROUP INC COM $42,096 $71,488 700 CITY NATL CORP COM $23,048 $27,038 650 CKE RESTAURANTS INC $22,880 $10,644 500 CNET INC COM $38,548 $64,250 850 COCA COLA ENTERPRIS $24,304 $29,325 601 COMMERCE BANCORP IN $27,119 $26,498 350 COMPUTER ASSOC INTL $15,626 $14,941 1,300 COMPUWARE CORP COM $44,825 $31,688 1,000 CONMED CORP $28,050 $28,875 1,300 CONSOLIDATED PRODS $22,896 $23,481 1,100 COORS ADOLPH CO CLA $58,333 $58,850 2,200 COPART INC COM $23,911 $39,875 22,400 COREL CORP COM $75,460 $68,600 1,200 COSTCO COS INC COM $72,207 $97,125 2 CRESCENDO PHARMACEU $23 $30 700 CTS CORP COM $21,210 $37,362 1,800 CYPRESS SEMICONDUCT $18,652 $18,450 1,200 DAVE + BUSTERS INC $22,560 $24,600 2,500 DELL COMPUTER CORP $34,714 $102,969 700 DII GROUP INC COM $19,022 $21,700 900 DIONEX CORP COM $24,491 $36,900 550 DOLLAR GEN CORP $12,175 $19,284 1,050 DOLLAR TREE STORES $33,688 $38,325 200 DOMINION RES INC VA $8,377 $8,225 900 DUKE ENERGY CO COM $55,862 $50,400 1,200 DYCOM INDS INC COM $31,270 $54,825 800 E M C CORP MASS COM $79,130 $87,150 1,100 E TRADE GROUP INC C $70,312 $127,050 600 EAGLE USA AIRFREIGH $17,850 $21,900 200 EASTMAN KODAK CO CO $13,633 $14,925 100 ECHOSTAR COMMUNICAT $9,725 $10,031 44 - ---------------------------------------------------------------------------- NUMBER OF SHARES COMMON STOCK NAME COST MKT VALUE - ---------------------------------------------------------------------------- 500 ELCOR CHEM CORP COM $17,931 $19,312 1,000 ETHAN ALLEN INTERIO $32,604 $50,688 1,000 EXCALIBUR TECHNOLOG $17,238 $15,500 200 EXCITE INC COM $14,812 $29,200 1,400 EXXON CORP COM $99,986 $116,288 500 FASTENAL CO $23,347 $23,875 1,800 FEDERAL HOME LN MTG $91,092 $112,950 2,550 FEDERAL NATL MTG AS $177,092 $180,891 1,450 FIFTH THIRD BANCORP $79,075 $103,947 1,200 FINANCIAL FED CORP $23,685 $25,050 150 FISERV INC $6,464 $8,784 700 FURNITURE BRANDS IN $18,104 $17,544 200 FURON CO COM $3,878 $3,575 200 GAP INC COM $11,556 $13,312 1,300 GARTNER GROUP INC N $48,355 $24,781 900 GEMSTAR INTL GROUP $54,214 $94,838 100 GENERAL DYNAMICS CO $5,509 $7,025 1,950 GENERAL ELEC CO COM $169,562 $205,725 1,400 GENERAL MLS INC COM $107,911 $102,375 1,750 GENTEX CORP COM $28,614 $52,609 1,400 GENZYME CORP COM $57,095 $52,850 81 GENZYME CORP COM MO $473 $256 400 GERBER SCIENTIFIC I $10,470 $7,525 100 GLAXO WELLCOME PLC $6,359 $5,825 400 GTE CORP COM $26,937 $26,775 1,200 GUIDANT CORP COM $30,768 $64,425 2,400 HANDLEMAN CO DEL CO $28,358 $33,750 1,000 HANGER ORTHOPEDIC G $21,550 $14,625 1,000 HARTE HANKS INC COM $19,988 $25,250 700 HAVERTY FURNITURE C $17,448 $16,538 1,300 HCC INS HLDGS INC $26,640 $27,462 1,500 HELEN TROY LTD COM $28,215 $21,000 800 HENRY JACK + ASSOC $29,590 $26,400 1,800 HOME DEPOT INC COM $85,694 $107,887 500 HON INDS INC COM $13,758 $13,500 2,400 HOOPER HOLMES INC C $23,273 $38,250 600 HOUSEHOLD INTL INC $22,256 $30,188 300 IMMUNEX CORP NEW CO $24,625 $28,650 1,700 IN FOCUS SYS INC CO $17,298 $17,638 1,400 INDEPENDENT BK CORP $23,345 $18,812 600 INFOSEEK CORP COM $37,193 $30,638 3,500 INTEL CORP COM $176,069 $214,156 1,100 INTERNATIONAL BUSIN $199,921 $230,106 350 INTUIT COM $32,945 $30,144 1,000 INVACARE CORP COM $23,925 $23,125 319 INVESTMENT TECHNOLO $13,710 $11,045 800 INVESTORS FINL SERV $25,820 $29,100 600 ITT EDL SVCS INC CO $23,655 $14,738 1,200 JABIL CIRCUIT INC C $50,361 $55,875 700 JACOBS ENGR GROUP I $23,091 $27,606 1,950 JOHNSON + JOHNSON C $161,318 $190,125 45 - ---------------------------------------------------------------------------- NUMBER OF SHARES COMMON STOCK NAME COST MKT VALUE - ---------------------------------------------------------------------------- 400 JONES PHARMA INC CO $10,908 $12,850 500 KAUFMAN + BROAD HOM $12,100 $12,156 900 KELLWOOD CO COM $30,595 $23,175 4,500 KOREA ELEC PWR CORP $59,122 $74,250 750 KRONOS INC COM $14,338 $25,500 1,700 LADD FURNITURE INC $30,322 $32,512 400 LATTICE SEMICONDUCT $19,850 $16,350 500 LEGATO SYSTEMS INC $19,025 $20,219 550 LEVEL ONE COMMUNICA $14,410 $28,256 1,650 LILLY ELI + CO COM $146,190 $121,481 1,750 LUCENT TECHNOLOGIES $81,381 $105,219 900 MACDERMID INC COM $28,215 $37,744 1,600 MACROMEDIA INC COM $49,375 $66,300 850 MANITOWOC INC COM $20,605 $32,406 2,700 MBNA CORP COM $48,936 $76,106 700 MEDICAL MANAGER COR $15,094 $19,950 600 MEDICIS PHARMACEUTI $26,420 $14,588 750 MEDIMMUNE INC $42,694 $41,344 600 MEDTRONIC INC COM $26,918 $43,162 150 MENS WEARHOUSE INC $3,516 $4,106 2,650 MERCK + CO INC COM $185,097 $186,162 1,300 MERCURY INTERACTIVE $13,114 $36,644 500 METZLER GROUP INC C $17,025 $13,938 700 MICREL INC COM $20,991 $41,212 100 MICRO WHSE INC COM $1,516 $1,694 700 MICROCHIP TECHNOLOG $23,712 $24,500 1,100 MICRON TECHNOLOGY I $68,362 $40,838 2,550 MICROSOFT CORP COM $140,448 $207,347 2,100 MINIMED INC COM $99,407 $131,250 1,100 MOBIL CORP COM $101,996 $115,225 1,000 MORRISON HEALTH CAR $17,675 $18,750 100 NABORS INDUSTRIES I $4,003 $2,056 700 NATIONAL DATA CORP $27,310 $32,288 700 NATIONAL DISC BROKE $20,335 $39,944 1,400 NOKIA CORP SPONSORE $93,834 $103,862 500 NORDSTROM INC COM $19,338 $17,594 1,850 NORTH FORK BANCORPO $35,751 $41,625 1,150 NORTHERN TRUST CORP $80,859 $107,094 1,450 OFFICE DEPOT INC CO $20,431 $31,900 4,100 ORACLE CORP COM $90,480 $110,956 200 ORANGE + ROCKLAND U $11,244 $11,638 1,166 ORIENTAL FINL GROUP $25,395 $33,595 1,100 ORTHODONTIC CTRS AM $17,861 $13,612 1,200 OSTEOTECH INC COM $24,440 $43,350 1,600 OUTBACK STEAKHOUSE $39,542 $57,300 700 OXFORD INDS INC COM $25,760 $18,506 1,000 PAREXEL INTL CORP C $25,988 $24,062 250 PATTERSON DENTAL CO $8,867 $9,016 700 PAYCHEX INC COM $22,589 $35,744 400 PE CORP COM PE BIOS $44,862 $43,250 1,600 PECO ENERGY CO COM $60,848 $75,900 46 - ---------------------------------------------------------------------------- NUMBER OF SHARES COMMON STOCK NAME COST MKT VALUE - ---------------------------------------------------------------------------- 1,200 PEOPLES HERITAGE FI $25,005 $23,250 1,100 PERFORMANCE FOOD GR $28,290 $29,150 1,150 PFIZER INC COM $99,216 $132,322 1,200 PHARMACEUTICAL PROD $37,519 $34,950 1,100 PHILADELPHIA CONS H $25,630 $27,156 2,100 PHILADELPHIA SUBN C $45,322 $47,381 3,150 PHILIP MORRIS COS I $149,063 $110,447 500 PINNACLE SYS INC CO $19,494 $27,188 150 PLEXUS CORP COM $4,992 $5,006 500 PMC SIERRA INC COM $14,625 $47,938 700 PRE PAID LEGAL SVCS $20,766 $19,950 100 PRI AUTOMATION INC $2,975 $2,481 1,800 PROCTER + GAMBLE CO $162,766 $168,862 500 PROGRESS SOFTWARE C $16,025 $11,375 1,000 PROTECTIVE LIFE COR $25,369 $39,188 400 PUBLIC SVC ENTERPRI $14,937 $16,000 100 QUAKER OATS CO COM $4,834 $6,456 300 QUALCOMM INC COM $34,690 $60,000 900 QUEENS CNTY BANCORP $26,880 $31,612 1,050 REGIS CORP MINNESOT $20,598 $26,906 900 RENAL CARE GROUP IN $26,888 $18,788 2,900 RESMED INC COM $88,478 $76,669 1,100 RICHFOOD HLDGS INC $18,961 $13,750 1,600 RIGHT MGMT CONSULTA $24,643 $27,200 400 ROSS STORES INC COM $16,600 $18,375 1,300 SAFETY KLEEN CORP C $17,371 $20,638 400 SAFEWAY INC COM NEW $24,012 $21,575 200 SANMINA CORP COM $11,219 $13,275 300 SAPIENT CORP COM $19,538 $18,825 1,900 SBC COMMUNICATIONS $101,613 $106,400 2,600 SCHERING PLOUGH COR $96,604 $125,612 900 SCHWAB CHARLES CORP $74,564 $98,775 1,000 SCOTTS CO CL A $26,362 $41,125 600 SEMTECH CORP COM $18,405 $19,575 50 SEQUA CORP CL A $2,767 $2,834 1,250 SLM HLDG CORP COM $52,755 $53,359 800 SMITHFIELD FOODS IN $21,836 $18,900 1,100 SOLECTRON CORP COM $47,191 $53,350 400 SOUTHERN CO COM $11,662 $10,825 1,500 SOUTHWEST AIRLS CO $22,183 $48,844 400 SOUTHWEST SECS GROU $19,795 $21,175 1,000 SPARTECH CORP COM N $17,425 $23,750 2,500 STANDARD PAC CORP N $28,762 $34,531 2,700 STAPLES INC COM $47,891 $81,000 1,000 STARBUCKS CORP COM $16,474 $36,938 850 STATE STREET CORPOR $43,163 $74,375 1,000 STERIS CORP COM $26,150 $17,750 500 STEWART ENTERPRISES $10,962 $9,938 500 STRAYER ED INC COM $17,275 $17,312 400 STRYKER CORP COM $15,618 $24,475 300 SUMMIT TECHNOLOGY I $4,940 $5,231 47 - ---------------------------------------------------------------------------- NUMBER OF SHARES COMMON STOCK NAME COST MKT VALUE - ---------------------------------------------------------------------------- 3,100 SUN MICROSYSTEMS IN $106,125 $185,419 400 SUNOCO INC COM $16,787 $14,300 450 SUNRISE ASSISTED LI $18,675 $18,000 500 SUPERIOR CONSULTANT $23,525 $13,500 1,500 SWIFT TRANSN INC $21,333 $27,562 1,000 SYBRON INTL CORP WI $21,675 $27,688 200 SYMBOL TECHNOLOGIES $10,656 $9,550 1,800 TANDY BRANDS ACCESS $30,340 $25,988 52 TELEFONICA S A SPON $7,755 $7,250 800 TELLABS INC COM $58,264 $87,650 400 TERADYNE INC COM RT $22,612 $18,875 1,100 TEREX CORP NEW COM $29,068 $34,788 400 TEXAS UTILS CO COM $18,500 $15,900 600 TIFFANY + CO NEW CO $23,918 $50,400 300 TIMBERLAND CO CL A $17,846 $20,775 1,866 TIMBERLINE SOFTWARE $22,362 $27,407 700 TIME WARNER INC COM $42,721 $49,000 3,600 TOYOTA MTR CO ADR 2 $181,950 $206,100 500 U S FOODSERVICE COM $19,775 $21,031 800 U S WEST INC NEW CO $51,174 $41,850 50 UNIPHASE CORP COM $5,764 $6,069 1,400 US FREIGHTWAYS CORP $45,950 $52,500 700 USWEB CORP COM $17,622 $15,706 1,900 VEECO INSTRS INC DE $72,357 $73,150 550 VISX INC DEL $34,771 $70,812 1,150 VITESSE SEMICONDUCT $29,504 $53,259 500 WACKENHUT CORP COM $11,884 $11,219 4,300 WAL MART STORES INC $139,064 $197,800 350 WARNER LAMBERT CO C $23,767 $23,778 1,200 WASHINGTON MUT INC $47,726 $49,350 300 WATERS CORP COM $26,452 $31,538 400 WATSON PHARMACEUTIC $11,431 $16,200 1,200 WERNER ENTERPRISES $20,550 $23,100 700 WESLEY JESSEN VISIO $19,810 $21,438 900 WILD OATS MKTS INC $23,895 $24,919 900 WILLIAMS SONOMA INC $25,197 $26,100 550 WPP GROUP PLC SPONS $27,954 $48,262 800 XILINX INC COM $32,325 $36,500 950 YAHOO INC COM $143,474 $165,953 800 ZALE CORP NEW COM $17,890 $30,250 900 ZIONS BANCORP COM $49,471 $60,019 TOTALS $11,913,771 $14,023,018
48 EX-21 2 EXHIBIT 21 Exhibit 21 SUBSIDIARIES OF THE REGISTRANT
Percentage of Voting Securities State of Owned By Incorporation Registrant ------------- ---------- Compupower Corporation Delaware 100% Value Line Securities, Inc. New York 100% The Vanderbilt Advertising Agency, Inc. New York 100% Value Line Publishing, Inc. New York 100% Value Line Distribution Center, Inc. New Jersey 100%
VALUE LINE, INC. SCHEDULE XIII - OTHER INVESTMENTS: 4/30/99
Historical Mutual Fund Investments Cost Market Value ---- ------------ The Value Line Fund, Inc. $ 3,403,913 $ 7,009,752 The Value Line Special Situations Fund, Inc. 8,384,787 10,844,763 The Value Line Income Fund, Inc. 2,381,816 3,430,800 Value Line Leveraged Growth Investors, Inc. 18,026,204 39,206,707 Value Line U.S. Government Securities Fund, Inc. 6,844,624 6,872,862 Value Line Tax Exempt Fund, Inc., High Yield Portfolio 1,224,454 1,304,637 Value Line Convertible Fund, Inc. 974,675 974,316 Value Line Aggressive Income Trust 827,343 859,672 Value Line New York Tax Exempt Trust 1,122,688 1,216,276 Value Line Small Cap Growth Fund 12,118,855 14,419,780 Value Line Asset Allocation Fund, Inc. 40,143,839 60,330,236 Value Line US Multinational Company Fund 11,952,837 22,121,268 ------------------------------ TOTAL $107,406,035 $168,591,069 ------------------------------ ------------------------------
EX-27 3 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF INCOME AND RETAINED EARNINGS CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS APR-30-1999 MAY-01-1998 APR-30-1999 41,826 14,023 4,728 (295) 0 63,517 19,182 (7,520) 243,807 10,843 0 0 0 1,000 165,903 243,807 62,220 95,818 0 56,382 0 0 0 44,629 17,457 27,172 0 0 0 27,172 2.72 2.72
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