VALU Value Line Inc

Value Line, Inc., (NASDAQ: VALU) reported results for the third fiscal quarter ended January 31, 2012.

During the nine months ended January 31, 2012, the Company’s net income of $5,835,000, or $0.59 per share, compared to net income of $34,841,000, or $3.49 per share, for the nine months ended January 31, 2011. Net income of $1,844,000 for the third quarter of fiscal 2012 compared to net income of $31,437,000 for the third quarter of fiscal 2011. The net income of the Company during the three and nine months ended January 31, 2011 included $50,510,000 of pre-tax accounting (non-cash) gain from deconsolidation of the former Value Line subsidiaries, EULAV Asset Management LLC (“EAM LLC”) and EULAV Securities, Inc. (“ESI”), that performed the operations of the investment management business prior to deconsolidation of these subsidiaries. The Company received substantial non-voting revenues and non-voting profits interests upon the formation of EULAV Asset Management Trust (“EAM”) on December 23, 2010, to provide the investment management services to the Value Line Family of Mutual Funds (“Restructuring Transaction”).

Following the Restructuring Transaction, the Company no longer engages, through subsidiaries, in the investment management or mutual fund distribution businesses. During the three and nine months ended January 31, 2012, the Company recorded income from its non-voting revenues and non-voting profits interests in EAM of $1,456,000 and $4,371,000, respectively, and $724,000 from December 23, 2010 through January 31, 2011, without incurring any directly related expenses.

Income from operations of $4,979,000 for the nine months ended January 31, 2012 was $586,000 or 11% below income from operations of $5,565,000 for the nine months ended January 31, 2011. Income from operations of $1,823,000 for the third quarter of fiscal 2012 compared to income from operations of $229,000 for the third quarter of fiscal 2011. The net income and income from operations included restructuring expenses of $1,302,000 and $3,764,000 for the three and nine months ended January 31, 2011, respectively, and non-cash postemployment compensation expense of $1,770,000.

Income from operations for the nine months ended January 31, 2012, does not include income from the Company’s non-voting revenues and profits interests in EAM of $4,371,000, while income from operations for the nine months ended January 31, 2011 includes $10,693,000 of advisory management fees and service distribution fees from the former Value Line subsidiaries, EAM LLC and ESI, that performed the operations of the investment management business prior to deconsolidation of these subsidiaries on December 23, 2010. Income before income taxes, which is inclusive of the income from the Company’s non-voting revenues and profits interests in EAM through January 31, 2012, was $9,384,000 as compared to $56,847,000 for the nine months ended January 31, 2011, which included the aforementioned gain on Restructuring Transaction of $50,510,000, non-cash postemployment compensation expense of $1,770,000, and $3,764,000 of expenses related to the Restructuring Transaction.

Shareholders’ equity of $32,699,000 at January 31, 2012, compared to shareholders’ equity of $32,286,000 at January 31, 2011. Retained earnings were $32,022,000 and cash and short term liquid assets were $15,614,000 at January 31, 2012.

The Company launched a new institutional sales website ValueLinePro.com. during March 2012. ValueLinePro.com provides a dedicated internet destination for investment advisers, portfolio managers, corporate professionals and professional librarians who seek to learn how Value Line’s proprietary research tools can help them research stocks, mutual funds, options, convertible securities and ETFs.

Value Line, Inc. is a leading New York based provider of investment research. The Value Line Investment Survey is one of the most widely used sources of independent equities investment research. Value Line also publishes a range of proprietary investment research in both print and digital formats including our original research in the areas of Mutual Funds, Options, Convertible securities and ETFs. Value Line’s acclaimed research also enables the Company to provide specialized products such as Value Line Select, Value Line Special Situations, Value Line Dividend Select, and copyright data, distributed under copyright agreements for fees, including certain proprietary ranking system information and other proprietary information used in third party products. Investment Management services are provided through its substantial non-controlling and non-voting interests in EULAV Asset Management, the investment adviser to The Value Line Family of Mutual Funds. Value Line’s products are available to individual investors at www.valueline.com or through 1-800-VALUELINE, while our institutional-level services for professional investors, advisers, corporate, academic, municipal and legal libraries are offered at www.ValueLinePro.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This report contains statements that are predictive in nature, depend upon or refer to future events or conditions (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 for Value Line, Inc. (“Value Line” or “the Company”) may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to the following:

• dependence on key personnel;
• maintaining revenue from subscriptions for the Company’s digital and print published products;
• protection of intellectual property rights;
• changes in market and economic conditions, including global financial issues;
• dependence on non-voting revenues and non-voting profits interests in EULAV Asset Management Trust, a Delaware business trust (“EAM”), which provides investment management and distribution, marketing and administrative services to the Value Line branded mutual funds;
• fluctuations in EAM’s assets under management due to broadly based changes in the values of equity and debt securities, redemptions by investors and other factors, and the effect these changes may have on the valuation of EAM’s intangible assets;
• competition in the fields of publishing, copyright data and investment management;
• the impact of government regulation on the Company’s and EAM’s business and the uncertainties of litigation and regulatory proceedings;
• availability of free or low cost investment data through discount brokers or generally over the internet;
• the risk that, while the Company believes that the restructuring transaction that closed on December 23, 2010, achieved compliance with the requirements of the order issued by the Securities and Exchange Commission (“SEC”) on November 4, 2009, the Company might be required to take additional steps which could adversely affect the Company’s results of operations or the Company’s financial condition;
• terrorist attacks, cyber security attacks and natural disasters;
• other risks and uncertainties, including but not limited to the risks described in Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended April 30, 2011 and in Part II, Item 1A of this Quarterly Report on Form 10-Q for the period ended January 31, 2012; and

• other risks and uncertainties arising from time to time.

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.

                   

Value Line, Inc.

Consolidated Condensed Summary of Financial Results

(in thousands, except per share amounts)

(unaudited)

    For the three months

ended January 31,

    For the nine months

ended January 31,

    2012       2011

(1)

          2012       2011

(1)

  Revenues $8,996       $12,035 $27,506       $39,142 Income from operations $1,823 $229 $4,979 $5,565

Revenues and profits interests in

  EAM Trust

$1,456

$724

$4,371

$724

Income from securities

  transactions, net

$3

$(40)

$34

$48

Income before income taxes $3,282 $51,423 $9,384 $56,847 Net income $1,844 $31,437 $5,835 $34,841

Earnings per share, basic and

  fully diluted

$0.19

$3.15

$0.59

$3.49

(1)  

Restated to include the final valuation of $1.77 million of non-cash postemployment compensation

expense compared to the previous estimate of $1.475 million, and the tax effect of $115 thousand.