Value Line - 10-Q quarterly report FY

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

or

For the transition period from __________________________________ to ________________________________

(Exact name of registrant as specified in its charter)

(Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

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

 

 

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

Part I - Financial Information  

Item 1. Financial Statements  

 

 

 

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

Part I - Financial Information      

Item 1. Financial Statements  

 

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

Part I - Financial Information       

Item 1. Financial Statements       

Value Line, Inc.

Consolidated Condensed Statement of Changes in Shareholders' Equity

For the Six Months Ended October 31, 2007

(in thousands, except share amounts)

(unaudited)

 

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

 

Part I - Financial Information    

Item 1. Financial Statements

Value Line, Inc.

Consolidated Condensed Statement of Changes in Shareholders' Equity

For the Six Months Ended October 31, 2006

(in thousands, except share amounts)

(unaudited)

 

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

 

The interim consolidated condensed financial statements of Value Line, Inc., together with its subsidiaries (collectively referred to as the “Company”), are unaudited. In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of normal recurring accruals except as noted below) considered necessary for a fair presentation. This report should be read in conjunction with the financial statements and footnotes contained in the Company's annual report on Form 10-K, dated July 20, 2007 for the fiscal year ended April 30, 2007. Results of operations covered by this report may not be indicative of the results of operations for the entire year.

 

Value Line, Inc. ("VLI") is incorporated in the State of New York. The Company's primary businesses are producing investment related periodical publications, licensing certain Value Line trademarks and Value Line proprietary ranking system information to third parties under written agreements for use in third party managed and marketed investment products, providing investment management services to the Value Line Funds, institutions and individual accounts and providing distribution, marketing, and administration services to the Value Line Funds. The name "Value Line" as used to describe the Company, its products, and its subsidiaries, is a registered trademark of the Company.

 

Principles of consolidation:

 

The consolidated condensed financial statements include the accounts of the Company and all of its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

 

Depending upon the product, subscription fulfillment is available in print, via internet access, and CD-ROM. The length of a subscription varies by product and offer received by the subscriber. Generally, subscriptions are available as trial subscriptions, annual subscriptions and/or multi-year subscriptions. Subscription revenues are recognized on a straight line basis over the life of the subscription. Accordingly, the amount of subscription fees to be earned by fulfilling subscriptions after the date of the balance sheet is shown as unearned revenue within current and long-term liabilities.

 

Licensing revenues are derived from licensing certain Value Line trademarks and Value Line proprietary ranking system information to third parties under written agreements for use in selecting securities for third party marketed products, including unit investment trusts, closed-end fund products and exchange traded funds. Value Line earns an asset based licensing fee as specified in the individual licensing agreements. Revenue is recognized monthly over the term of the agreement and will fluctuate as the market value of the underlying portfolio increases or decreases in value.

 

Investment management fees consist of management fees from the Value Line Mutual Funds ("Value Line Funds"), and from asset management clients. Investment management fees for the mutual funds are earned on a monthly basis as services are performed and the fee is calculated based on average daily net assets of the mutual funds in accordance with each fund's advisory agreement. Investment management fees for the asset management accounts are earned on a monthly basis as services are performed and the fee is calculated on assets in accordance with each of the management agreements (see note 6).

Service and distribution fees are received from the Value Line Funds in accordance with service and distribution plans under rule 12b-1 of the Investment Company Act of 1940. The plans are compensation plans, which means that the distributor’s fees under the plans are payable without regard to actual expenses incurred by the distributor. Expenses incurred by Value Line Securities, Inc. ("VLS") include payments to securities dealers, banks, financial institutions and other organizations (including an allocation of VLI expenses), that provide distribution, marketing, and administrative services with respect to the distribution of the mutual funds’ shares. Service and distribution fees are received on a monthly basis and calculated on the average daily net assets of the respective mutual fund in accordance with each fund prospectus.

 

The Company's securities classified as available for sale consist of shares of the Value Line Funds and government debt securities accounted for in accordance with Statement of Financial Accounting Standards No.115, "Accounting for Certain Investments in Debt and Equity Securities". The securities available for sale and trading securities reflected in the consolidated condensed financial statements at fair value are valued at market with unrealized gains and losses on these securities reported, net of applicable taxes, as a separate component of Shareholders' Equity. Realized gains and losses on sales of the securities available for sale are recorded in earnings on trade date and are determined on the identified cost method.

The Company classifies its securities available for sale as current assets. It does so to properly reflect its liquidity and to recognize the fact that it has assets available for sale to fully satisfy its current liabilities should the need arise.

Market valuation of securities listed on a securities exchange is based on the closing sales prices on the last business day of each month. Valuation of open-ended mutual fund shares is based upon the publicly quoted net asset value of the shares. The market value of the Company's fixed maturity government debt obligations are determined utilizing publicly quoted market prices.

Advertising expenses:

 

 

 

Reclassification:

 

Certain items in the prior year financial statements have been reclassified to conform to the current year presentation.

 

Income Taxes:

 

The Company computes its income tax provision in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been reflected in the consolidated condensed Financial Statements. Deferred tax liabilities and assets are determined based on the differences between the book values and the tax bases of particular assets and liabilities, using tax rates currently in effect for the years in which the differences are expected to reverse.

 

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 condensed Statements of Cash Flows, the Company considers all cash held at banks and short term liquid investments with an original maturity of less than three months to be cash and cash equivalents. As of October 31, 2007 and April 30, 2007, cash equivalents included $14,167,000 and $19,868,000, respectively, invested in the Value Line Cash Fund.

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.

Securities held by the Company are classified as Trading Securities and Available-for-Sale Securities. All securities held by VLS, as a broker/dealer, are classified as trading securities. Securities held by the Company and its other subsidiaries, which are all held with the expectation that they may be sold in less than one year, are also classified as trading securities. All other investments not classified as trading securities are classified as available-for-sale securities.

 

 

Trading securities held by the Company at October 31, 2007 had an aggregate cost of $20,042,000 and a market value of $19,734,000. Trading securities held by the Company at April 30, 2007 had an aggregate cost of $16,115,000 and a market value of $15,849,000. There were no sales and no realized trading gains or losses during the first six months of fiscal year 2008 or 2007. The net changes in unrealized losses of $41,000 for the period ended October 31, 2007 and the net changes in unrealized gains of $98,000 for the period ended October 31, 2006, respectively, were included in the Consolidated Condensed Statement of Income.

The aggregate cost of the equity securities classified as available for sale, which consist of investments in the Value Line Funds, was $23,926,000 and the market value was $55,067,000 at October 31, 2007. The aggregate cost of the equity securities classified as available for sale, which consist of investments in the Value Line Funds, was $23,917,000 and the market value was $49,719,000 at April 30, 2007. The total gains for equity securities with net gains included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheet are $31,142,000 and $25,859,000, net of deferred taxes of $10,962,000 and $9,102,000, as of October 31, 2007 and April 30, 2007, respectively. At October 31, 2007, there were no losses for equity securities included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheet. At April 30, 2007, the total losses for equity securities with net losses included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheet were $58,000, net of deferred tax benefit of $20,000.

 

During the six months ended October 31, 2007 and 2006, there were no sales and no realized gains or losses on equity securities, for which unrealized gains and losses were included in Accumulated Other Comprehensive Income as of October 31, 2007 or October 31, 2006. The increase in gross unrealized gains on equity securities classified as available for sale of $5,340,000 and the decrease in gross unrealized gains of $1,210,000, net of deferred taxes of $1,880,000 and $426,000 at October 31, 2007 and 2006, respectively were included in Shareholders' Equity.

 

 

 

Government debt securities consist of federal, state, and local government securities within the United States. The Company’s investments in debt securities are classified as available for sale and valued at market value. The aggregate cost and fair value at October 31, 2007 for government debt securities classified as available for sale were as follows:

 

The aggregate cost and fair value at April 30, 2007 for government debt securities classified as available for sale were as follows:

The unrealized losses of $284,000 and $258,000 in government debt securities net of deferred income tax benefits of $100,000 and $91,000, respectively, were included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheets as of October 31, 2007 and April 30, 2007, respectively.

 

The average yield on the Government debt securities classified as available for sale at October 31, 2007 and April 30, 2007 was 3.30% and 3.54%, respectively.

 

 

For the six months ended October 31, 2007 and 2006, income from securities transactions also included $461,000 and $306,000 of dividend income and $1,152,000 and $899,000 of interest income. There was no interest expense during the first six months of fiscal 2008 or 2007.

 

Cash payments for income taxes were $8,054,000 and $8,737,000 for the six months ended October 31, 2007 and 2006, respectively.

 

 

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 on the salaries of eligible employees and the amount of consolidated net operating income as defined in the Plan. The estimated profit sharing plan contribution, which is included as an expense in salaries and employee benefits in the Consolidated Condensed Statement of Income, was $480,000 and $663,000 for the six months ended October 31, 2007 and 2006, respectively.

 

 

The Company has adopted Financial Accounting Standards 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.

 

At October 31, 2007 and April 30, 2007, the Company held both equity securities and U.S. Government debt securities that are classified as Available for Sale on the Consolidated Condensed Balance Sheets. The change in valuation of these securities, net of deferred income taxes, has been recorded in Accumulated Other Comprehensive Income in the Company's Consolidated Condensed Balance Sheets.

The components of comprehensive income that are included in the Statement of Changes in Shareholders' Equity are as follows:

 

The Company acts as investment adviser and manager for fourteen open-ended investment companies, the Value Line Funds. The Company earns investment management fees based upon the average daily net asset values of the respective Value Line Funds. Service and distribution fees are received from the Value Line Funds in accordance with service and distribution plans under rule 12b-1 of the Investment Company Act of 1940. The plans are compensation plans, which means that the distributor’s fees under the plans are payable without regard to actual expenses incurred by the distributor, which means the distributor may earn a profit under the plan. Expenses incurred by VLS include payments to securities dealers, banks, financial institutions and other organizations which provide distribution, marketing, and administrative services (including payments by VLS to VLI for allocated compensation and administration expenses) with respect to the distribution of the mutual funds’ shares. Service and distribution fees are received on a monthly basis and calculated on the average daily net assets of the respective mutual fund in accordance with each fund's prospectus.

 

For the six months ended October 31, 2007 and 2006, investment management fees and 12b-1 service and distribution fees amounted to $16,032,000 and $15,088,000, respectively, which included fee waivers for certain of the Value Line Funds. These amounts included service and distribution fees of $3,537,000 and $3,873,000 earned by VLS in fiscal years 2008 and 2007, respectively. The related receivables from the funds for investment management fees and service and distribution fees included in Receivables from affiliates were $2,857,000 and $2,534,000 at October 31, 2007 and April 30, 2007, respectively.

 

For the six months ended October 31, 2007 and 2006, total management fee waivers were $117,000 and $128,000 respectively, and service and distribution fee waivers were $2,042,000 and $1,314,000, respectively. The Company and its subsidiary, VLS, have no right to recoup the previously waived amounts of management fees and 12b-1 fees.

 

As of October 31, 2007, the Company had $55,064,000 invested in the Value Line equity funds and $14,167,000 in the Value Line Cash Fund. Combined, this represents approximately 1.7% of total fund assets at October 31, 2007. Purchases and redemptions routinely occur in the Value Line Cash Fund as part of business operations.

 

For the six months ended October 31, 2007 and 2006, the Company was reimbursed $739,000 and $533,000, respectively, for payments it made on behalf of and services it provided to the Parent. At October 31, 2007, and April 30, 2007, Receivables from affiliates included a Receivable from the Parent of $41,000 and $243,000, respectively.

From time to time, the Parent has purchased additional shares of the Company in the market when and as the Parent has determined it to be appropriate. As stated several times in the past, the public is reminded that the Parent may make additional purchases from time to time in the future. For the quarter ended October 31, 2007, the Parent did not not purchase any additional shares in the market.

 

The Company computes its income tax provision in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes".

 

Deferred income 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)/assets are primarily a result of unrealized gains on the Company's available for sale securities portfolios.

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:

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.

 

The Company operates two reportable business segments: Investment Periodicals, Publishing & Licensing and Investment Management. The Investment Periodicals, Publishing & Licensing segment produces investment related periodical publications (retail and institutional) in both print and electronic form, and receives licensing fees for Value Line proprietary ranking system information and Value Line trademarks. The Investment Management segment provides advisory services to the Value Line Funds, as well as institutional and individual accounts. 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 and income from securities transactions related to corporate assets, between the two reportable segments.

 

 

By letter dated June 15, 2005, the staff of the Securities and Exchange Commission informed the Company that it was conducting an informal inquiry. Thereafter, the staff has requested documents and information related to, among other things, trades for the Company’s and its affiliates’ proprietary accounts, execution of trades through VLS for the Value Line Funds and the fees collected by VLS from the Value Line Funds pursuant to a Service and Distribution Plan. The Company and its subsidiaries are cooperating with the inquiry. Management cannot determine the effect, if any, that the inquiry will have on the results of operations and financial condition.

 

 

 

This report contains statements (including certain projections and business trends) accompanied by such phrases as “believe”, “estimate”, “expect”, “anticipate”, “will”, “intend” and other similar or negative expressions, that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to the following:

Any forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

The investment periodicals and related publications revenues were down 5% for the six months ended October 31, 2007 as compared to the six months ended October 31, 2006. As a percentage of total operating revenues, investment periodicals and related publications revenues have fallen from 54.4% during the first six months of fiscal 2007 to 52.1% during the first six months of fiscal 2008. While the Company continues to bring in new subscribers through various marketing channels, primarily direct mail and the Internet, total product line circulation continues to decline. Factors that have contributed to the decline in the investment periodicals and related publications revenues include the increasing amount of competition in the form of free and paid investment research on the Internet and research provided by brokerage firms at no cost to their clients.

 

* Retail business is down, Institutional Sales are up.

 

Licensing fee revenues have declined $133,000 for the six months ended October 31, 2007 as compared to the six months ended October 31, 2006 primarily due to the volatility in the equity markets and the conversion of three closed-end funds traded on the American Stock Exchange, to open-end Exchange Traded Funds. These three conversions, initiated in part as a result of the actions of companies that invest in closed-end funds for the purpose of encouraging trust action to eliminate discount NAV pricing, resulted in the withdrawal of assets that in turn, lowered the Company’s asset based licensing fees for the six months of fiscal 2008. As of October 31, 2007, total third party sponsored assets attributable to the licensing business represent $6.1 billion in various products. The Company believes the growth of the business is dependent upon the desire of third party marketers to use the Value Line trademarks and proprietary research for their products, signing new licensing agreements, and the marketplace’s acceptance of new products. Value Line believes it was an early entrant into this new market five years ago and today the market has somewhat matured and the Company and its third party sponsors face more competition in the marketplace.

The investment management fees and distribution services revenues were up $1,000,000 for the six months ended October 31, 2007 as compared to the six months ended October 31, 2006. While management fees for the first six months

 

 

of fiscal year 2008 were up $1,280,000 as compared to the first six months of fiscal year 2007 there was a net decrease of $336,000 in distribution services revenues due to 12b-1 fee waivers for certain of the Value Line Funds. For the six months ended October 31, 2007 and 2006, 12b-1 fee waivers were $2,042,000 and $1,314,000, respectively. For the six months ended October 31, 2007 and 2006, total management fee waivers were $117,000 and $128,000, respectively. The Company and its subsidiary, VLS, have no right to recoup the previously waived amounts of management fees and 12b-1 fees.

 

The table below illustrates the total fund assets for the six months ended October 31, 2007 as compared to the six months last fiscal year. The second table shows the two channels through which the equity funds are available. Shares of Value Line Strategic Asset Management Trust (“SAM”) and Value Line Centurion Fund are available to the public only through the purchase of certain variable annuity and variable life insurance contracts issued by The Guardian Insurance & Annuity Company, Inc. (“GIAC”).

The Company believes that the 23.6% growth in equity funds for the six months of fiscal 2008, excluding SAM and Centurion Funds sold through GIAC, has been in large part due to the superior performance for certain Value Line Funds at various intervals in terms of short, mid and long-term returns. As of September 30, 2007, 80% of the equity funds, excluding SAM and Centurion, had four or five star ratings by Morningstar, Inc. The largest distribution channel for the Value Line Funds remains the fund supermarket platforms such as, but not limited to, Charles Schwab & Co., Inc., TD Ameritrade, Inc., and National City Bank.

Advertising and promotion expenses for the six months ended October 31, 2007 increased $23,000 as compared to the six months ended October 31, 2006. The primary increase is within the fees paid to third party intermediaries, such as, but not limited to, Charles Schwab & Co., Inc. to market the Value Line Funds. This expense will fluctuate based on assets invested in the Value Line Funds by clients of the intermediaries, the change in market value of such assets, and the addition of any new intermediary selling agreements. The Company anticipates third party intermediary expenses will continue to increase as assets grow and more shareholders come into the Value Line Funds through intermediaries rather than direct accounts. Costs associated with direct mail decreased 4% below last fiscal year, while the overall number of pieces mailed increased year to year. The Company also increased its expenditures in print media promoting the Value Line Funds in select markets. For the six months ended October 31, 2007 media advertising expenses were up $301,000 as there was no media advertising during the six months ended October 31, 2006.

 

 

Over the past several years, the Company has increased productivity by the combination of roles and responsibilities along with selective outsourcing. Some duplication of effort has been eliminated and certain tasks, such as data entry, have been outsourced to third party vendors that the Company believes can provide better controls and results at a favorable cost.

 

Production and distribution expenses for the six months ended October 31, 2007 were $331,000 below expenses for the six months ended October 31, 2006. Amortized software costs decreased $196,000 below last fiscal year due to a decrease of capitalized projects and costs. In addition, the decline in expenses was due to lower demand for paper, printing and mailing costs that resulted primarily from a decrease in circulation of the print products. The decline in expenses was primarily due to lower demand for paper, printing and mailing costs that resulted primarily from a decrease in circulation of the print products. Partially offsetting the savings during the six months of fiscal 2008 was an increase in the cost of paper and an increase in postage rates.

 

Office and administration expenses for the six months ended October 31, 2007 were $665,000 above expenses for the six months ended October 31, 2006. During the first six months of fiscal year 2008 professional fees significantly decreased as compared to the first six months of fiscal year 2007. Professional fees can fluctuate year to year based on the level of activity requiring the use of outside professional consultants. Within Occupancy, during the last fiscal quarter of fiscal 2007, the Company amended its lease in midtown New York extending the lease expiration date to May 2013 on negotiated terms in place of the Company’s renewal option at market rate, which resulted in significantly higher rent as a result of market conditions.

 

For the six months ended October 31, 2007 the Company’s income from securities transactions, net, is $348,000 higher than income for the six months ended October 31, 2006. Income from securities transactions, net, includes dividend and interest income of $1,614,000 at October 31, 2007 that is $409,000 or 34% higher than income of $1,205,000 for the six months ended October 31, 2006 due to an increase in interest rates. Capital gains, for the six months ended October 31, 2007 were $7,000 as compared to capital losses of $66,000 during the six months ended October 31, 2006.

 

The Company had working capital of $85,872,000 as of October 31, 2007 and $67,102,000 as of October 31, 2006. Cash and short-term securities totaled $121,179,000 as of October 31, 2007 and $102,663,000 as of October 31, 2006.

The Company’s cash flow from operations of $4,894,000 for the six months ended October 31, 2007 was 15% above cash flow from operations of $4,256,000 for the six months ended October 31, 2006. The primary change was the purchase of additional fixed income debt securities within the company’s trading portfolio, which was partially offset by the slowing decline in unearned revenues and the timing of payments of accounts payable and accrued expenses.

The Company’s net cash outflow from financing activities of $5,989,000 for the six months ended October 31, 2007 increased 20% as compared to the six months of the prior fiscal year due to the payment of a higher quarterly dividend per common share of $0.30 in fiscal 2008 as compared to $0.25 in fiscal 2007.

 

The Company’s Critical Accounting Estimates and Policies have not changed from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Form 10-K for the fiscal year ended April 30, 2007.

 

 

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company’s Consolidated Balance Sheet includes a substantial amount of assets whose fair values are subject to market risks. The Company’s significant market risks are primarily associated with interest rates and equity prices. The following sections address the significant market risks associated with the Company’s business activities.

The Company’s strategy has been to acquire highly liquid debt securities with extremely low credit risk. Despite this strategy management recognizes and accepts the possibility that losses may occur. To limit the price fluctuation in these securities from interest rate changes, the Company’s management invests primarily in short-term obligations maturing in 1 to 5 years.

The fair values of the Company’s fixed maturity investments will fluctuate in response to changes in market interest rates. Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values of those instruments. Additionally, fair values of interest rate sensitive instruments may be affected by prepayment options, relative values of alternative investments, and other general market conditions.

The following table summarizes the estimated effects of hypothetical increases and decreases in interest rates on assets that are subject to interest rate risk. It is assumed that the changes occur immediately and uniformly to each category of instrument containing interest rate risks. The hypothetical changes in market interest rates do not reflect what could be deemed best or worst case scenarios. Variations in market interest rates could produce significant changes in the timing of repayments due to prepayment options available. For these reasons, actual results might differ from those reflected in the table. Dollars are in thousands.

 

The carrying values of investments subject to equity price risks are based on quoted market prices or management’s estimates of fair value as of the balance sheet dates. Market prices are subject to fluctuation and, consequently, the amount realized in the subsequent sale of an investment may significantly differ from the reported market value. Fluctuation in the market price of a security may result from perceived changes in the underlying economic characteristics of the issuer, the relative price of alternative investments and general market conditions. Furthermore, amounts realized in the sale of a particular security may be affected by the relative quantity of the security being sold.

Value Line invests a significant level of its assets in equity securities, primarily the Value Line Funds. Each mutual fund invests in a variety of equity positions.

 

 

 

 

Item 4. CONTROLS AND PROCEDURES

 

 

Part II - Other Information

 

Item 1. Legal Proceedings

Refer to Note 9 (Contingencies) of the consolidated condensed financial statements for discussion of legal proceedings.

 

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A - Risk Factors in the Company’s Annual Report on Form 10-K for the year ended April 30, 2007.

 

Item 6. Exhibits

31.1 Certificate of Chief Executive Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certificate of Principal Accounting Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Joint Chief Executive Officer/Principal Accounting Officer Certificate Required Under Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

VALUE LINE, INC.

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