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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, 2000 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 July 6, 2000 was $58,304,528.
There were 9,978,625 shares of the Company's Common Stock outstanding at
July 6, 2000.
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."). As of July 6, 2000, AB & Co. owns
approximately 85% of the Company's issued and outstanding common stock.
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 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,
2000, 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(R), The Mutual Fund Survey for
Windows(R), 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:
2
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:
o 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.
o An expanded Business Section provides detail about companies, focusing on
business lines and strategies.
o An enlarged Assets and Liabilities Section provides long-term statistics
and a more complete balance sheet on each company.
o 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.
3
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 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 second year
renewals and $225 for subsequent 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 $345.
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 $85.
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.
4
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, 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(R) is a powerful menu-driven
software program with fast filtering, ranking, reporting and graphing
capabilities on over 6,200 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 3.0 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(R) 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. In addition to containing
digital replicas of the entire Value Line Investment Survey, the program
includes up-to the-minute data updates through its seemless integration with the
Value Line 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 $570($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 6,200 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
5
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 2000, 98, NT 4.X, 95 and 3.X.
Value Line Mutual Fund Survey for Windows(R) 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 Line DataFile contains historic annual and quarterly financial
records for more than 5,000 companies in numerous industries, including air
transport, industrial services, beverage, machinery, bank, insurance and
finance, savings and loan associations, toys, and securities bro-kers. 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
WWW.VALUELINE.COM, in fiscal 2000. Included, is a multimedia section that
features daily market reports and updates on stocks, options and convertibles as
well as Webcasting of daily analyst commentary and fast-breaking developments on
companies in the news. In addition, Value Line has added a host of new tools to
chart and filter stocks, mutual fund tools with which to build a portfolio, and
financial calculators. The Company's complete retail product line can be ordered
through the Web Site. We continue to offer program enhancements, weekly data
updates and survey page updates for both the Value Line Investment Survey for
Windows(R) and the Value Line Mutual Fund Survey for Windows(R) via the
internet.
6
B. Investment Management.
As of April 30, 2000, 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, 2000, were:
(in thousands)
The Value Line Fund, Inc. $ 492,957
Value Line Income and Growth Fund, Inc. 232,946
The Value Line Special Situations Fund, Inc. 467,854
Value Line Leveraged Growth Investors, Inc. 778,528
The Value Line Cash Fund, Inc. 341,731
Value Line U.S. Government Securities Fund, Inc. 139,817
Value Line Centurion Fund, Inc. 946,653
The Value Line Tax Exempt Fund, Inc. 162,657
Value Line Convertible Fund, Inc. 106,323
Value Line Aggressive Income Trust 128,555
Value Line New York Tax Exempt Trust 28,314
Value Line Strategic Asset Management Trust 1,626,375
Value Line Emerging Opportunities Fund, Inc. 46,777
Value Line Asset Allocation Fund, Inc. 304,505
Value Line U.S. Multinational Company Fund, Inc. 43,909
----------
$5,847,901
==========
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 clients which call for payments to the
Company calculated on the basis of the market value of the securities portfolio
under management.
7
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. During fiscal 2000 VLS also received 12b-1 fees from three of the
Value Line Funds. Effective July 1, 2000, the shareholders' of ten of the Value
Line Funds approved a service and distribution plan pursuant to rule 12b-1
providing for a charge to shareholders of .25% assets annually. These payments
may be used by the Company as an offset to certain marketing and distribution
costs.
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 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.
8
THE VALUE LINE STRATEGY TRUST SERIES I:
During the past year we licensed certain trademarks and proprietary
information for a new series of "unit investment trust", THE VALUE LINE
STRATEGY TRUST SERIES I. The fundamental strategy for this Trust and future
Trusts in this series is to invest in the 100 Rank #1 stocks and maintain a
static portfolio position in these 100 stocks for a fourteen-month period. At
the end of the fourteen months the portfolio will be liquidated and the
investors will be invited to reinvest their distribution in the next available
VALUE LINE STRATEGY TRUST SERIES . Ranson, the underwriter of the UITs, intends
to introduce a new UIT Series every two months. These unit investment trusts are
sold by an extensive network of brokerage firms and provide publicity for the
ranking system within the brokerage industry. As of this date, nine trusts have
been established with a total asset value of approximately $65,000,000.
VALUE LINE TARGET 25 PORTFOLIO: The fundamental strategy for this Trust
and future Trusts in this series is to invest in a selected 25 stocks of the 100
Rank #1 stocks and maintain a static portfolio position in these 25 stocks for a
fourteen-month period. At the end of the fourteen months the portfolio will be
liquidated and the investors will be invited to reinvest their distribution in
the next available VALUE LINE TARGET 25 PORTFOLIO. Nike Securities, the
underwriter of this UIT, intends to introduce a new UIT series every month.
These unit investment trusts are sold by an extensive network of brokerage firms
and provide an exposure for the ranking system within the brokerage
industry. As of July 6, 2000 four Series Trusts have been established with
aggregate assets over $85,000,000.
E. Investments.
The Company invests in the Value Line Funds and in other marketable
securities.
F. Employees.
At April 30, 2000, the Company and its subsidiaries employed 317 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,
2000 1999
(in thousands)
Investment Periodicals
& Related Publications $ 21,393 $ 19,529
Investment Management 276,195 223,063
Corporate Assets 610 1,215
-------- --------
$298,198 $243,807
9
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 July 6, 2000), 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 65 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.
Samuel Eisenstadt 78 Senior Vice President and Research Chairman.
David T. Henigson 42 Vice President and Treasurer; Director of
Compliance and Internal Audit; Vice
President, of each of the Value Line Funds
and Secretary and Treasurer; Vice President
of AB&Co.
Howard A. Brecher 46 Vice President and Secretary; 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
10
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, 2000.
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, 2000 was 1,310. 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:
Dividend
High Low Declared
Quarter Ended Bid Asked Bid Asked Per Share
July 31, 1998 ............. $49 1/2 $ 42 $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
July 31, 1999 ............. 40 13/16 42 36 3/4 37 1/8 .25
October 31, 1999 .......... 38 1/4 39 1/4 33 34 7/8 .25
January 31, 2000 .......... 37 1/2 39 1/4 34 1/4 34 5/8 .25
April 30, 2000 ............ 39 40 1/4 32 5/8 34 3/4 .25
11
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,
2000 1999 1998 1997 1996
(in thousands, except per share amounts)
Revenues:
Investment
periodicals
and related
publications ......... $ 58,857 $ 62,220 $ 61,210 $ 62,442 $ 58,509
Investment
management
fees and services .... $ 37,385 $ 33,080 $ 32,405 $ 29,136 $ 26,564
Gain on sale of
operating facility ... $ -- $ 518 $ -- $ -- $ --
Settlement of
disputed securities
transactions ......... $ -- $ -- $ -- $ -- $ 2,054
Total revenues ....... $ 96,242 $ 95,818 $ 93,615 $ 91,774 $ 87,127
Income from
operations ........... $ 36,428 $ 39,436 $ 39,360 $ 36,277 $ 32,486
Net income ............ $ 33,698 $ 27,172 $ 35,177 $ 45,512 $ 41,714
Earnings per
share, basic and
fully diluted ......... $ 3.38 $ 2.72 $ 3.53 $ 4.56 $ 4.18
Total assets ........... $298,198 $243,807 $207,525 $160,310 $333,826
Cash dividends
declared per share ..... $ 1.00 $ 1.00 $ 1.00 $ 15.95 $ .80
12
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FISCAL 2000
OPERATING RESULTS
Net income for the twelve months ended April 30, 2000 of $33,698,000, or $3.38
per share ranked fourth highest in Value Line's history and was 24% higher than
the prior year's net income of $27,172,000, or $2.72 per share. Revenues of
$96,242,000 for fiscal year 2000, the highest in Value Line's history, were
$424,000 higher than the prior year's revenues of $95,818,000. Operating income
of $36,428,000 for the twelve months ended April 30, 2000, was the third highest
in the history of the Company and 8% lower than operating income of $39,436,000
for the same period of last fiscal year. The decrease from last fiscal year's
operating income is due largely to $3,458,000 of additional advertising expenses
related to selling arrangements for the Value Line mutual funds and expenses
related to the engagement of an outside advertising agency for the Company's
publication business. Additionally, both revenues and operating income for last
fiscal year include a gain of $518,000 from the sale of the vacant North Bergen,
New Jersey operating facility.
Total assets of $298,198,000 at April 30, 2000 increased 22% from the balance at
April 30, 1999.
Subscription revenues of $58,857,000 were 5% below revenues from the prior
fiscal year. The decrease in subscription revenues compared to the prior year is
due primarily to a 5% net decrease in revenues from THE VALUE LINE INVESTMENT
SURVEY and related products, which includes THE VALUE LINE INVESTMENT SURVEY FOR
WINDOWS, CONDENSED, EXPANDED EDITION AND V.L. SELECT. The decrease in
publication revenues is largely a result of the reduced level of advertising
that occurred while the Company has been in the process of revising its
advertising strategy. Additionally, the availability of free or low cost data on
the Internet has also had a negative impact on revenue growth. The decline in
revenues from THE VALUE LINE INVESTMENT SURVEY was offset in part by increased
revenues from THE VALUE LINE INVESTMENT SURVEY FOR WINDOWS, THE VALUE LINE
INVESTMENT SURVEY - CONDENSED EDITION and VALUE LINE SELECT products. Investment
management fees and services revenues of $37,385,000 for fiscal 2000, a new
record high for the Company for any fiscal year, were $4,305,000, or 13%, above
the prior year's revenues. The higher revenues from investment management fees
and services, compared to the prior year, resulted primarily from the increase
in the year-over-year average net assets under management in the Company's
mutual funds. Reduced revenues from individually managed asset accounts
partially offset the increased revenues from the Company's mutual funds. Assets
under management in the Company's mutual funds at April 30, 2000 increased 20%
from the level at April 30, 1999.
Operating expenses for the twelve months ended April 30, 2000 of $59,814,000
were 6% above last year's expenses of $56,382,000. Total company-wide
advertising and promotional expenses of $21,629,000 were 25% above the prior
year's expenses. When compared to the prior year, savings from the planned
reduction of television advertising through April 30, 2000 were offset
13
by the increase in expenses relating to a selling arrangement for two of the
Company's equity mutual funds and increased promotional fees to discount brokers
based on higher invested assets in the Value Line mutual funds. Additionally,
the Company engaged an outside advertising agency to promote its products that
failed to produce the expected results. Salaries and employee benefit expenses
of $22,986,000 were less than 1% above expenses of $22,950,000 recorded in the
prior fiscal year. The stable level of salaries and benefits resulted primarily
from savings in employee benefits and related expenses and staff reductions in
the Asset Management, Purchasing and Y2K divisions and the outsourcing of the
Customer Service division at the Compupower Corporation. Production and
distribution costs of $6,809,000 were 9% below expenses of $7,454,000 for the
twelve months ended April 30, 1999. The lower expenses resulted from a decrease
in maintenance and production expenses related to the Company's web-site and a
decline in paper, printing and distribution expenses that were directly related
to lower production runs for print publications. Office and administration
expenses of $8,390,000 were 3% below last year's expenses of $8,648,000. The
decline in administrative expenses from last year is the result of reduced
professional fees, telecommunication charges and depreciation expenses.
Administrative expenses for fiscal 2000 have been reduced by $275,000 that
resulted from the favorable resolution of two litigations in which the Company
was the plaintiff. Additional administrative costs in fiscal year 2000 include
expenses related to the amortization of capitalized employee salaries and fringe
benefit expenses for Value Line software programmers associated with the
adoption in the latter half of fiscal year 1999 of SOP 98-1 "Accounting for the
Costs of Computer Software Developed for Internal Use". The new SOP 98-1
requires the Company to defer the internal costs of developing and enhancing
various computer software programs such as those associated with the Internet
site, version 3 of the Value Line Investment Survey for Windows and other
products.
The Company's securities portfolios produced income of $18,504,000 for the
twelve months ended April 30, 2000, an increase of $13,311,000 over last year's
income of $5,193,000. This was primarily due to an increase of $8,106,000 in
capital gain distributions from the Value Line mutual funds, an additional
$3,725,000 in capital gains from the Company's trading portfolio and an increase
of $959,000 in dividend income. The strong performance of the Value Line equity
mutual funds and trading portfolios in an overall favorable market enviroment
during fiscal 2000 was mainly responsible for the increase in income from
securities transactions.
Liquidity and Capital Resources
Value Line, Inc. ("the Company") had liquid resources, which are used in its
business, of $271,494,000 at April 30, 2000. In addition to $61,026,000 of
working capital, the Company had long-term securities available for sale with a
market value of $210,468,000, that, although classified as non-current assets,
are also readily marketable should the need arise.
The Company's cash flow from operations of $19,637,000 for the fiscal year ended
April 30, 2000 was lower than fiscal 1999's cash flow of $26,130,000. This was
primarily due to the higher volume of prepayments for subscriptions during
fiscal 1999, and the timing of payments during fiscal 2000 of certain
promotional costs. Net cash outflows for investing activities during fiscal 2000
were $711,000 lower than fiscal 1999's outflows primarily due
14
to a decrease in trading activity in the Company's trading and long-term
securities partially offset by increased expenditures for capitalized software.
Year 2000 (Y2K):
During the Y2K rollover, the Company's systems and those of its third party
critical vendors performed without any problems. Value Line continues all
operations without any Y-2K related issues, both internally and externally
including the use of the Company's products by our clients. The effective
transition was the result of Value Line's extensive year 2000 planning.
The Company's expenditures for the Y2K project were $509,000, $732,000, and
$251,000 during fiscal years 2000, 1999 and 1998, respectively.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.
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 2001.
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.
15
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 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.
16
Liquidity and Capital Resources
Value Line, Inc. (the Company) had liquid resources which are used in
its business of $219,361,000 at April 30, 1999. In addition to $50,770,000of
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 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.
17
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.
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.
18
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.
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 24
Consolidated balance sheets--April 30, 2000 and 1999 25
Consolidated statements of income and retained earnings
--years ended April 30, 2000,1999, 1998 26
Consolidated statements of cash flows
--years ended April 30, 2000, 1999 and 1998 27
Consolidated statement of changes in stockholders' equity
--years ended April 30, 2000, 1999 and 1998 28
Notes to the consolidated financial statements 29
Supplementary schedules 43
Quarterly Results (Unaudited):
(in thousands, except per share amounts)
Income Earnings
Total From Net Per
Revenues Operations Income Share
2000, by Quarter -
First ...................... $23,831 $10,292 $ 6,914 $0.69
Second ..................... 23,415 9,825 6,386 0.64
Third ...................... 24,065 7,086 14,093 1.41
Fourth ..................... 24,931 9,225 6,305 0.64
------- ------- ------- -----
Total .................... $96,242 $36,428 $33,698 $3.38
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
19
Income Earnings
Total From Net Per
1998, by Quarter - Revenues Operations Income Share
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
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.
20
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.
21
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, 2000, 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 13, 2000
22
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, 2000, 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 13,2000
23
[LETTERHEAD OF HOROWITZ & ULLMANN, P.C.]
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 and retained earnings, changes in
stockholders' equity, and cash flows present fairly, in all material
respects, the financial position of Value Line, Inc. and its subsidiaries at
April 30, 2000 and 1999, and the results of their operations, changes in
stockholders' equity, and their cash flows for each of the three years in the
period ended April 30, 2000, 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 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.C.
July 13, 2000
24
VALUE LINE, INC.
Consolidated Balance Sheets
(in thousands, except share amounts)
Apr. 30, Apr. 30,
Assets 2000 1999
Current Assets: --------- ---------
Cash and cash equivalents (including short term
investments of $47,456 and $41,250, respectively) $ 47,933 $ 41,826
Trading securities $ 19,044 $ 14,023
Accounts receivable, net of allowance for doubtful
accounts of $133 and $295, respectively $ 2,495 $ 1,846
Receivable from affiliates $ 3,061 $ 2,587
Prepaid expenses and other current assets $ 1,115 $ 913
Deferred income taxes $ 139 $ 418
--------- ---------
Total current assets $ 73,787 $ 61,613
Long term securities available for sale $ 210,468 $ 168,591
Property and equipment, net $ 10,402 $ 11,662
Capitalized software and other intangible assets, net $ 3,541 $ 1,941
--------- ---------
Total assets $ 298,198 $ 243,807
========= =========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $ 7,162 $ 5,842
Accrued salaries $ 2,063 $ 1,765
Dividends payable $ 2,495 $ 2,495
Accrued taxes payable $ 1,041 $ 741
--------- ---------
Total current liabilities $ 12,761 $ 10,843
Unearned revenue $ 41,116 $ 43,100
Deferred charges $ 419 $ 697
Deferred income taxes $ 33,036 $ 22,264
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 $ 149,304 $ 125,585
Treasury stock, at cost (21,375 shares on April 30, 2000,
and 21,375 on April 30, 1999) ($ 411) ($ 411)
Accumulated other comprehensive income, net of taxes $ 60,014 $ 39,770
--------- ---------
Total shareholders' equity $ 210,866 $ 166,903
--------- ---------
Total liabilities and shareholders' equity $ 298,198 $ 243,807
========= =========
The accompanying notes are an integral part of these financial statements
25
VALUE LINE, INC.
Consolidated Statements of Income and Retained Earnings
(in thousands, except per share amounts)
Years ended April 30,
2000 1999 1998
-------- -------- --------
Revenues:
Investment periodicals and related publications $ 58,857 $ 62,220 $ 61,210
Investment management fees & services 37,385 33,080 32,405
Gain on sale of operating facility -- 518 --
-------- -------- --------
Total revenues 96,242 95,818 93,615
-------- -------- --------
Expenses:
Advertising and promotion 21,629 17,330 15,090
Salaries and employee benefits 22,986 22,950 22,153
Production and distribution 6,809 7,454 8,498
Office and administration 8,390 8,648 8,514
-------- -------- --------
Total expenses 59,814 56,382 54,255
-------- -------- --------
Income from operations 36,428 39,436 39,360
Income from securities transactions, net 18,504 5,193 18,272
-------- -------- --------
Income before income taxes 54,932 44,629 57,632
Provision for income taxes 21,234 17,457 22,455
-------- -------- --------
Net income 33,698 27,172 35,177
Retained earnings, at beginning of year 125,585 108,392 83,194
Dividends declared (9,979) (9,979) (9,979)
-------- -------- --------
Retained earnings, at end of year $149,304 $125,585 $108,392
======== ======== ========
Earnings per share, basic and fully diluted $ 3.38 $ 2.72 $ 3.53
======== ======== ========
The accompanying notes are an integral part of these financial statements.
26
VALUE LINE, INC.
Consolidated Statements of Cash Flows
(in thousands)
Years ended April 30,
2000 1999 1998
-------- -------- --------
Cash flows from operating activities:
Net income $ 33,698 $ 27,172 $ 35,177
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 2,523 2,139 1,855
Deferred income taxes 703 1,119 (196)
Gains on sales of trading securities
and securities held for sale (13,497) (1,311) (15,985)
Unrealized (gains)/losses on trading securities (1,112) (1,013) 568
Gain on sale of operating facility -- (518) --
Other 2 25 (13)
Changes in assets and liabilities:
Increase/(decrease) in unearned revenue (1,984) 557 352
Decrease in deferred charges (278) (278) (278)
Increase/(decrease) in accounts payable
and accrued expenses 1,320 (1,328) (765)
Increase/(decrease) in accrued salaries 298 1 (444)
(Decrease)/increase in accrued taxes payable (252) 394 (461)
(Increase)/decrease in prepaid expenses and
other current assets (202) (22) 103
(Increase)/decrease in accounts receivable (1,108) (559) 1,229
(Increase) in receivable from affiliates (474) (248) (490)
-------- -------- --------
Total adjustments (14,061) (1,042) (14,525)
-------- -------- --------
Net cash provided by operations 19,637 26,130 20,652
-------- -------- --------
Cash flows from investing activities:
Proceeds from sales of long term securities 18,467 8,980 21,824
Purchases of long term securities (18,452) (6,636) (27,376)
Proceeds from sales of trading securities 35,939 13,251 39,461
Purchases of trading securities (36,640) (18,097) (29,655)
Acquisition of property, and equipment, net (398) (855) (857)
Expenditures for capitalized software (2,470) (1,496) (231)
Proceeds from sales of operating facility and equipment 3 591 --
-------- -------- --------
Net cash provided by/(used in) investing activities (3,551) (4,262) 3,166
-------- -------- --------
Cash flows from financing activities:
Proceeds from sale of treasury stock 15
Dividends paid (9,979) (9,979) (9,979)
-------- -------- --------
Net cash (used in) financing activities (9,979) (9,979) (9,964)
-------- -------- --------
Net increase in cash and cash equivalents 6,107 11,889 13,854
Cash and cash equivalents at beginning of period 41,826 29,937 16,083
-------- -------- --------
Cash and cash equivalents at end of period $ 47,933 $ 41,826 $ 29,937
======== ======== ========
The accompanying notes are an integral part of these financial statements
27
VALUE LINE, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED APRIL 30, 2000, 1999 AND 1998
(in thousands, except share amounts)
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, 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
========= ====== ==== ===== ======== ======= ========
Comprehensive income
Net income 33,698 33,698 33,698
Other comprehensive income,
net of tax:
Change in unrealized
gains on securities 20,244 20,244 20,244
-------
Comprehensive income $53,942
=======
Dividends declared (9,979) (9,979)
--------- ------ ---- ----- -------- ------- --------
BALANCE AT APRIL 30, 2000 9,978,625 $1,000 $959 ($411) $149,304 $60,014 $210,866
========= ====== ==== ===== ======== ======= ========
The accompanying notes are an integral part of these financial statements.
28
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 83% 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.
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.
29
VALUE LINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
Advertising expenses: The Company expenses advertising costs as incurred.
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, 2000 and 1999, cash equivalents included
$46,726,000 and $40,925,000, 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 $20,713,000, $15,712,000, and $23,114,000
in fiscal 2000, 1999, and 1998, respectively. Interest payments of $17,000,
$86,000, and $47,000, were made in fiscal 2000, 1999, and 1998, respectively.
30
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, 2000, 1999 and 1998,
investment management fees and brokerage commission income, net of clearing
fees, amounted to $33,658,000, $28,351,000, and $25,348,000, respectively. The
related receivables from the funds for management advisory fees included in
Receivable from affiliates were $2,972,000 and $2,487,000 at April 30, 2000 and
1999, respectively.
For the years ended April 30, 2000, 1999, and 1998, the Company was reimbursed
$519,000, $496,000, and $461,000, respectively, for payments it made on behalf
of and services it provided to the Parent. At April 30, 2000 and 1999,
Receivable from affiliates included a receivable from the Parent of $44,000 and
$26,000, respectively. For the years ended April 30, 2000, 1999, and 1998, the
Company made federal income tax payments to the Parent amounting to $17,460,000,
$12,870,000, and $18,800,000, respectively. At April 30, 2000 and 1999, accrued
taxes payable include a federal tax liability owed to the Parent in the amount
of $401,000 and $152,000, respectively. These data are in accordance with the
tax sharing arrangement described in Note 6.
31
VALUE LINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4-INVESTMENTS:
Trading Securities:
Securities held by Value Line Securities, Inc. had an aggregate cost of
$15,821,000 and $11,914,000 and a market value of $19,044,000 and $14,023,000 at
April 30, 2000 and April 30, 1999, respectively.
Net realized trading gains amounted to $3,188,000 during the year ended April
30, 2000. Net realized trading losses related to equity securities aggregated
$587,000 during fiscal 1999. Net realized trading gains amounted to $6,869,000
for the year ended April 30, 1998. The net unrealized gains on trading
securities for the period ended April 30, 2000 and 1999 were $1,112,000 and
$1,013,000, respectively, and net unrealized trading losses were $568,000 during
fiscal years 1998.
Long-Term Securities Available for Sale:
The aggregate cost of the long-term securities, which are invested in the
Value Line mutual funds, was $118,135,000 and $107,406,000 and the market value
was $210,468,000 and $168,591,000 at April 30, 2000 and 1999, respectively. The
change in gross unrealized gains on these securities of $31,144,000,
$19,651,000, and $23,630,000, net of the change in deferred taxes of
$10,900,000, $6,878,000, and $8,270,000, were included in shareholders' equity
at April 30, 2000, 1999 and 1998, respectively. Realized capital gains from
sales of these securities were $10,748,000, $2,157,000, and $11,980,000, during
fiscal years 2000, 1999 and 1998, respectively. The proceeds received from the
sales of these securities during the fiscal years ended April 30, 2000, 1999,
and 1998 were $18,467,000, $8,980,000, and $21,824,000, respectively.
For the years ended April 30, 2000, 1999, and 1998, Income from securities
transactions also included $3,871,000, $2,912,000, and $2,818,000, of dividend
income; $36,000, $77,000, and $78,000, of interest income; and $17,000, $86,000,
and $47,000, of related interest expense, respectively. Investment income for
fiscal year 2000, 1999 and 1998 included losses related to derivative financial
futures contracts in the amount of $439,000, $259,000 and $1,179,000,
respectively.
32
VALUE LINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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,
2000 1999
----------------------
(in thousands)
Land $ 726 $ 726
Building and leasehold improvements 7,821 7,821
Furniture and equipment 11,024 10,635
----------------------
19,571 19,182
Accumulated depreciation and amortization (9,169) (7,520)
----------------------
$10,402 $11,662
======================
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 in fiscal 1999.
33
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,
2000 1999 1998
---------------------------------------------
(in thousands)
Current:
Federal $17,529 $13,405 $18,202
State and local 2,831 2,934 4,449
---------------------------------------------
20,360 16,339 22,651
Deferred:
Federal 776 868 (18)
State and local 98 250 (178)
---------------------------------------------
874 1,118 (196)
---------------------------------------------
$21,234 $17,457 $22,455
=============================================
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:
34
VALUE LINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended April 30,
2000 1999 1998
----------------------------------------------
(in thousands)
Unrealized gains on securities held for sale ($32,315) ($21,415) ($14,537)
Unrealized gains on trading securities (1,127) (738) (291)
Relocation reserve 64 64 284
Depreciation and amortization (568) (663) (626)
Deferred charges 703 1,047 1,095
Other, net (207) (141) 224
----------------------------------------------
($33,449) ($21,846) ($13,851)
==============================================
Included in Deferred income taxes in total current assets are deferred state
and local income taxes of $139,000 and $237,000 at April 30, 2000 and 1999,
respectively. At April 30, 1999, deferred income taxes in current assets also
included $182,000 of deferred federal taxes.
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,
2000 1999 1998
---------------------------------------------
(in thousands)
Tax expense at the U.S. statutory rate $19,226 $15,620 $20,171
Increase (decrease) in tax expense from:
State and local income taxes, net of
federal income tax benefit 1,904 2,070 2,776
Effect of tax exempt income and dividend
deductions (110) (62) (64)
Other, net 214 (171) (428)
---------------------------------------------
21,234 $17,457 $22,455
=============================================
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.
35
VALUE LINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, 2000, 1999, and 1998 was $1,189,000, $1,609,000, and $1,455,000,
respectively.
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, 2000,
is as follows:
Number of Option
Shares Prices
--------- ------
Outstanding at April 30, 1997 3,475 $29.75
Granted -
Exercised (500) $29.75
Cancelled -
---------
Outstanding at April 30, 1998 2,975 $29.75
Granted -
Exercised - $29.75
Cancelled -
---------
Outstanding at April 30, 1999 2,975 $29.75
Granted -
Exercised -
Cancelled -
---------
Outstanding at April 30, 2000 2,975 $29.75
=========
36
VALUE LINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Options outstanding at April 30, 2000 expire at various dates through March
2003. At April 30, 2000, 2,975 of the outstanding options were exercisable. Of
the common stock held in treasury at April 30, 2000, 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, 2000, consists of
the following:
Shares Amount
----------------- -----------------
(in thousands)
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
Exercise of incentive stock options - -
----------------- -----------------
Balance April 30, 2000 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.
37
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)
2001 1,790
2002 1,782
2003 1,766
2004 1,958
2005 1,997
Thereafter 5,389
---------
$14,682
=========
Rental expense for the years ended April 30, 2000, 1999, and 1998 under
operating leases covering office space was $1,490,000, $1,505,000, and
$1,288,000, 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.
Disclosure of Reportable Segment Profit and Segment Assets (in thousands)
APRIL 30, 2000
Publishing Investment Total
Management
Services
Revenues from external customers $58,857 $37,385 $96,242
Intersegment revenues 74 0 74
Income from securities transactions 275 18,229 18,504
Depreciation and amortization 2,440 37 2,477
Segment profit 17,714 18,760 36,474
Segment assets 21,393 276,195 297,588
Expenditures for segment assets 2,868 0 2,868
38
VALUE LINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 0 518
Intersegment revenues 76 0 76
Income from securities transactions 258 4,935 5,193
Depreciation and amortization 1,969 53 2,022
Segment profit 22,467 17,086 39,553
Segment assets 19,529 223,063 242,592
Expenditures for segment assets 2,341 10 2,351
Reconciliation of Reportable Segment Revenues,
Operating Profit and Assets
(in thousands)
2000 1999
REVENUES
Total revenues for reportable segments $96,316 $95,894
Elimination of intersegment revenues (74) (76)
-----------------------
Total consolidated revenues $96,242 $95,818
=======================
SEGMENT PROFIT
Total profit for reportable segments $54,978 $44,746
Less: Depreciation related to corporate assets (46) (117)
-----------------------
Income before income taxes $54,932 $44,629
=======================
ASSETS
Total assets for reportable segments $297,588 $242,592
Corporate assets 610 1,215
-----------------------
Consolidated total assets $298,198 $243,807
=======================
39
VALUE LINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, 2000, Value Line Securities, Inc. net capital, as defined, of
$13,473,000 exceeded required net capital by $13,196,000 and the ratio of
aggregate indebtedness to net capital was .31 to 1.
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, 2000, the Company did not have an investment in financial futures
contracts. The average fair value of the committments during fiscal 2000 was
$1,374,000. 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 2000, 1999 or 1998, nor accounts receivable for 2000 or 1999.
40
VALUE LINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 $439,000, $259,000, and $2,925,000 for the
years ended April 30, 2000, 1999 and 1998, respectively. Income from securities
transactions in the Statement of Income are reflected net of derivative trading
activity.
NOTE 15-YEAR 2000:
During fiscal 1998, the Company established a central committee to coordinate,
evaluate and implement changes to ensure that its computer systems and software
applications were converted to become year 2000 compliant with no disruption to
business services. The conversion and implementation process was successfully
completed without significant cost or effect to the Company's operations.
The Company's fiscal year 2000, 1999 and 1998 expenditures for the Y2K project
were $509,000, $732,000 and $251,000, respectively. These expenditures included
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.
NOTE 16-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.
At April 30, 2000, 1999, and 1998, 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 $31,144,000, $19,651,000, and
$23,630,000 and the change in the related deferred taxes was $10,900,000,
$6,878,000, and $8,270,000 during the three years ended April 30, 2000, 1999 and
1998, respectively.
41
VALUE LINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17-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, 2000 and 1999 the Company capitalized $896,000 and $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
AS OF APRIL 30, 2000
COMMON STOCK NAME NUMBER OF SHARES COST MKT VALUE
- ------------------------------- ------------------ ------------ -----------
3COM CORP 800 34,994 31,550
3DO CO 1,600 13,961 9,800
AASTROM BIOSCIENCES INC 2,600 14,430 7,475
ABERCROMBIE AND FITCH CO 3 503 47
ACT MFG INC 100 2,818 3,638
ADAPTEC INC 300 12,556 8,100
ADAPTIVE BROADBAND CORP 4,600 125,649 149,500
ADC TELECOMMUNICATIONS INC 1,650 39,288 100,238
ADELPHIA COMM 3 465 600
ADELPHIA COMMUNICATIONS CORP 2 810 950
ADMINISTAFF INC 500 15,025 20,125
ADOBE SYS INC 300 16,717 36,281
ADTRAN INC 700 27,200 47,294
ADVANCED ENERGY INDS INC 850 47,033 58,650
ADVANCED FIBRE COMMUNICATIONS 1,700 88,419 77,669
ADVANCED LTG TECHNOLOGIES INC 800 13,521 12,200
ADVANCED MICRO DEVICES INC 652 29,952 57,463
ADVENT SOFTWARE INC 400 9,113 21,000
ADVO INC 1,400 37,783 42,000
AEGON 1,400 101,286 101,325
AES CORP 950 54,339 85,441
AFFILIATED MANAGERS GROUP INC 200 8,491 8,025
AFTERMARKET TECHNOLOGY CORP 400 5,300 4,650
ALBERTSONS INC 1 261 813
ALCATEL ALSTHOM 2,450 103,663 111,322
ALCOA INC 1,150 82,723 74,606
ALLEN TELECOM INC 200 2,923 3,550
ALLIANCE PHARMACEUTICAL CORP 400 6,695 3,175
ALLIANCE SEMICONDUCTOR CORP 300 3,465 6,113
ALYSIS TECHNOLOGIES INC 1,700 12,835 7,969
AMAZON COM INC 100 5,363 5,519
AMERICA ONLINE INC DEL 600 36,374 35,888
AMERICAN EAGLE OUTFITTERS INC 200 7,513 3,400
AMERICAN EXPRESS CO 900 131,224 135,056
AMERICAN FREIGHTWAYS CORP 700 12,199 13,038
AMERICAN INTL GROUP INC 2,450 176,702 268,734
AMERICAN PWR CONVERSION CORP 1,650 31,317 58,266
AMERITRADE HLDG CORP 3 465 225
AMGEN INC 3,200 114,834 179,200
AMPHENOL CORP NEW 600 25,721 38,250
ANADIGICS INC 600 37,140 45,150
ANALOG DEVICES INC 200 12,823 15,363
ANHEUSER BUSCH COS INC 900 53,946 63,506
ANNTAYLOR STORES CORP 2 410 525
43
VALUE LINE, INC.
SCHEDULE 1-MARKETABLE SECURITIES
AS OF APRIL 30, 2000
COMMON STOCK NAME NUMBER OF SHARES COST MKT VALUE
- ------------------------------- ------------------ ------------ -----------
ANTEC CORP 200 9,598 10,750
APAC TELESERVICES INC 2,500 21,200 23,750
APOLLO GROUP INC 100 2,162 2,900
APPLE COMPUTER 750 77,659 93,047
APPLIED FILMS CORP 700 21,298 17,500
APPLIED MATERIALS INC 750 24,445 76,359
APPLIED PWR INC 201 5,590 5,969
APRIA HEALTHCARE GROUP INC 200 2,960 2,788
ARGOSY GAMING CORP 300 3,915 4,800
ARKANSAS BEST CORP 450 5,076 5,822
ARTHROCARE CORP 1,700 93,373 173,188
ARTISAN COMPONENTS INC 600 6,405 5,925
ASPECT COMMUNICATIONS INC 250 8,703 8,875
ASPEN TECHNOLOGY INC 200 6,735 7,075
ASSOCIATES FIRST CAP CORP 1 280 331
ASTEC INDS INC 300 6,693 7,538
AT HOME CORP 202 8,998 4,350
AT+T CORP 177 10,213 8,860
ATMEL CORP 300 13,519 14,681
AUDIOVOX CORP 100 7,005 3,431
AURORA BIOSCIENCE CORP 800 26,315 29,000
AUTOZONE INC 550 16,517 12,616
AVIGEN INC 200 7,710 6,550
AVX CORP NEW 1,050 67,393 102,309
AXYS PHARMACEUTICAL INC 2,200 11,663 13,200
AZTAR CORP 1,500 15,381 17,906
BANK AMER CORP 200 9,110 9,800
BARRA INC 250 8,903 10,531
BCE INC 400 47,870 45,900
BEA SYS INC 2,000 81,502 96,500
BELL ATLANTIC CORP 1,000 53,899 59,250
BELLSOUTH CORP 3,250 145,820 158,234
BERINGER WINE ESTATES HLDGS 700 23,623 25,288
BEST BUY CO INC 702 48,351 56,750
BIOGEN INC 650 19,070 38,228
BIOJECT MED TECHNOLOGIES INC 800 7,790 5,800
BIOSITE DIAGNOSTICS INC 600 16,030 13,875
BOEING CO 400 15,914 15,875
BORDERS GROUP INC 800 12,340 12,700
BORG WARNER AUTOMOTIVE INC 200 8,362 8,363
BP AMOCO PLC 1,300 60,104 66,300
BRINKER INTL INC 400 14,020 12,750
BRISTOL MYERS SQUIBB CO 700 44,465 36,706
BRITISH TELECOMMUNICATIONS 500 77,161 91,500
C CUBE MICROSYSTEMS INC 300 17,315 19,275
C H ROBINSON WORLDWIDE 100 4,775 5,000
44
VALUE LINE, INC.
SCHEDULE 1-MARKETABLE SECURITIES
AS OF APRIL 30, 2000
COMMON STOCK NAME NUMBER OF SHARES COST MKT VALUE
- ------------------------------- ------------------ ------------ -----------
C+D TECHNOLOGIES 300 15,546 19,331
CABLE DESIGN TECHNOLOGIES CORP 950 30,191 32,538
CABLETRON SYSTEMS INC 1,400 30,808 32,025
CABOT CORP 1,100 32,368 29,700
CACI INC 100 2,124 2,344
CALIFORNIA AMPLIFIER INC 103 2,208 4,013
CALIFORNIA MICRO DEVICES CORP 400 7,133 8,400
CANDELA CORP 600 5,787 8,063
CARDIODYNAMICS INTL CORP 1,900 15,495 10,569
CATELLUS DEV CORP 400 5,074 5,200
CBRL GROUP INC 3 428 1,200
CCC INFORMATION SVCS GROUP INC 200 2,310 2,775
CDW COMPUTER CTRS INC 500 23,850 52,000
CELGENE CORP 300 10,290 14,119
CELL PATHWAYS INC NEW 400 15,476 10,375
CENDANT CORP 2,050 37,643 31,647
CENTENNIAL COMMUNICATIONS CORP 600 11,130 11,850
CEPHALON INC 900 26,170 50,625
CERNER CORP 100 2,336 2,206
CHASE MANHATTAN CORP NEW 3,400 273,531 245,013
CHEESECAKE FACTORY 900 28,339 36,844
CHEVRON CORP 200 15,935 17,025
CHIRON CORP 700 29,969 31,675
CHOICEPOINT INC 400 14,939 15,200
CIENA CORP 600 51,160 74,175
CIRCUIT CITY STORES INC 100 6,068 5,881
CISCO SYS INC 4,050 78,188 280,779
CMG INFORMATION SVCS INC 600 44,175 42,750
CNET NETWORKS INC 200 5,900 6,913
COASTCAST CORP 700 8,547 12,381
COCA COLA CO 2,000 101,681 94,125
COHERENT INC 1,600 86,411 92,500
COLE KENNETH PRODTNS INC 2,500 63,840 102,188
COLGATE PALMOLIVE CO 750 40,697 42,844
COLLAGENEX PHARMACEUTICALS INC 300 5,565 3,038
COMCAST CORP 700 26,644 27,300
COMDISCO INC 500 15,494 15,531
COMMERCE BANCORP INC N J 1 24 22
COMMSCOPE INC 900 37,058 42,750
COMMUNICATION INTELLIGENCE COR 800 4,615 2,425
COMPUTER ASSOC INTL INC 550 28,861 30,697
COMPUTER SCIENCES CORP 550 41,587 44,859
COMPUWARE CORP 302 7,929 3,781
CONCORD CAMERA CORP 1,600 25,684 29,200
CONCORD EFS INC 100 2,719 2,238
CONCURRENT COMPUTER CORP 300 5,415 3,000
45
VALUE LINE, INC.
SCHEDULE 1-MARKETABLE SECURITIES
AS OF APRIL 30, 2000
COMMON STOCK NAME NUMBER OF SHARES COST MKT VALUE
- ------------------------------- ------------------ ------------ -----------
COOPER COS INC 300 9,184 10,088
COOPER INDS INC 4 520 250
COPART INC 1,600 8,695 27,600
COREL CORP 100 2,487 663
CORNING INC 1,000 158,856 197,500
CORSAIR COMMUNICATIONS INC 1,000 18,369 18,125
COSTCO WHSL CORP NEW 1,450 69,391 78,391
COTT CORP QUE 1,400 8,563 7,306
CROWN CASTLE INTL CORP 300 11,313 11,513
CRYO CELL INTL INC 1,400 12,720 8,313
CSG SYS INTL INC 150 7,800 6,919
CSX CORP 203 5,650 4,431
CTS CORP 602 30,273 37,875
CURAGEN CORP 800 25,725 21,300
CV THERAPEUTICS INC 500 20,906 19,938
CVS CORP 4 620 600
CYBERONICS INC 1,000 25,613 20,375
CYBEX COMPUTER PRODS CORP 600 19,540 16,425
CYGNUS INC 1,000 12,625 12,500
CYTOGEN CORP 1,600 14,586 10,500
CYTOTHERAPEUTICS 400 3,745 1,775
CYTYC CORP 2,900 74,636 129,775
D.R.HORTON INC 200 2,335 2,588
DANKA BUS SYS 5 713 94
DATAKEY INC 500 4,025 3,500
DATARAM CORP 300 5,303 6,206
DATASCOPE CORP 300 10,215 9,938
DATATEC SYS INC 400 2,895 3,575
DAVOX CORP 800 11,240 20,400
DELL COMPUTER CORP 400 20,475 20,050
DEUTSCHE TELEKOM AG 600 46,830 40,500
DIAL CORP NEW 300 3,540 4,181
DIGITAL MICROWAVE CORP 100 3,268 3,694
DIRECT FOCUS INC 700 18,210 22,925
DISNEY WALT CO 500 19,613 21,656
DOLLAR GEN CORP 1 -- 11
DREYERS GRAND ICE CREAM INC 1,250 21,728 30,000
DU PONT E I DE NEMOURS + CO 102 6,596 4,819
DUKE ENERGY CO 1,200 65,048 69,000
DURA PHARMACEUTICALS INC 300 4,478 3,900
DYCOM INDS INC 1,600 71,157 83,200
E M C CORP MASS 1,600 160,339 222,300
EASTMAN KODAK CO 2,150 133,571 120,266
ECHOSTAR COMMUNICATIONS CORP N 900 24,488 57,319
ECLIPSYS CORP 500 5,750 4,000
ELAN PLC 600 26,705 25,725
46
VALUE LINE, INC.
SCHEDULE 1-MARKETABLE SECURITIES
AS OF APRIL 30, 2000
COMMON STOCK NAME NUMBER OF SHARES COST MKT VALUE
- ------------------------------- ------------------ ------------ -----------
ELCOM INTL INC 100 2,155 719
ELCOR CHEM CORP 1,000 24,944 31,813
ELECTRO SCIENTIFIC INDS INC 100 5,705 6,306
ELECTRONIC ARTS 100 7,619 6,050
ENERGY BIOSYSTEMS CORP 600 9,474 4,088
ENZO BIOCHEM INC 150 7,320 6,075
EPITOPE INC 200 2,773 1,750
ERICSSON L M TEL CO 400 34,050 35,375
ESHED ROBOTEC 1982 LTD 1,300 15,015 7,881
ESS TECHNOLOGY INC 504 8,370 7,325
ETHAN ALLEN INTERIORS INC 100 2,649 2,669
EVOLVING SYS INC 300 2,153 2,550
EXCALIBUR TECHNOLOGIES CORP 100 2,811 3,550
EXPEDITORES INTL WASH INC 100 3,674 4,275
EXTENDED SYS INC 400 19,170 15,900
EXXON MOBIL CORP 1,700 120,777 132,069
F5 NETWORKS INC 1 705 81
FAIR ISSAC + CO INC 500 21,081 21,156
FEDERAL NATL MTG ASSN 2,850 182,552 171,891
FIRST HEALTH GROUP CORP 300 9,053 9,131
FLEXTRONICS INTERNATIONAL 750 43,169 52,688
FLORIDA PROGRESS CORP 300 12,690 14,700
FLOWERS INDS INC 400 4,920 6,100
FOREST OIL CORP 4 720 1,150
FORWARD AIR CORP 1,100 16,856 37,813
FURNITURE BRANDS INTL INC 202 4,472 4,000
GATEWAY INC 1,600 89,593 88,400
GEMSTAR INTL GROUP LTD 850 12,879 39,313
GENERAL DATACOMM INDS INC 400 2,795 2,875
GENERAL DYNAMICS CORP 1 318 888
GENERAL ELEC CO 1,650 140,209 259,463
GENERAL MTRS CORP 1,502 122,554 142,038
GENERAL SEMICONDUCTOR INC 200 3,498 4,000
GENZYME CORP 100 4,756 4,881
GEORGIA GULF CORP 1,900 47,070 45,719
GEOWORKS 700 17,743 11,419
GILAT SATELLITE NETWORKS LTD 301 26,770 26,838
GLOBECOMM SYS INC 1,000 22,531 18,875
GO2NET 100 5,580 5,950
GTE CORP 800 52,403 54,200
GUESS INC 1,300 30,584 35,750
GUIDANT CORP 950 53,410 54,506
HAIN FOOD GROUP INC 800 22,471 21,450
HANDLEMAN CO DEL 400 4,495 4,800
HANNAFORD BROS CO 300 20,846 21,713
HARLEY DAVIDSON INC 700 28,061 27,869
47
VALUE LINE, INC.
SCHEDULE 1-MARKETABLE SECURITIES
AS OF APRIL 30, 2000
COMMON STOCK NAME NUMBER OF SHARES COST MKT VALUE
- ------------------------------- ------------------ ------------ -----------
HARMAN INTL INDS INC NEW 200 11,591 13,075
HARMONIC INC 1,800 128,268 132,863
HELIX TECHNOLOGY CORP 1,950 102,979 99,572
HERCULES INC 4 870 175
HEWLETT PACKARD CO 2 960 575
HOME DEPOT INC 4,354 183,671 244,697
HOMEBASE INC 600 1,899 1,238
HONDA MOTOR LTD 100 8,272 8,850
HONEYWELL INTL INC 50 2,390 2,800
HOOPER HOLMES INC 2,800 28,963 48,650
HYSEQ INC 400 13,020 11,275
I LINK CORP 300 2,303 2,250
I2 TECHNOLOGIES INC 300 29,663 38,775
IDEC PHARMACEUTICALS CORP 1,100 69,678 70,400
IDEXX LABS INC 1,200 30,510 31,500
ILEX ONCOLOGY INC 600 16,005 14,400
IMAGINON INC 300 774 441
IMMUNE RESPONSE CORP DEL 600 4,493 5,025
IMMUNEX CORP NEW 1,750 38,978 68,906
IMMUNOGEN INC 1,600 15,411 16,200
IMPERIAL BANCORP 402 8,405 8,163
INFONAUTICS CORP 1,500 13,481 9,671
INFORMATION RES INC 200 1,883 1,263
INGENUUS CORPORATION 2,900 7,758 7,794
INHALE THERAPEUTIC SYS 1,100 70,449 68,063
INSIGHT ENTERPRISES INC 800 23,819 33,450
INSO CORP 1,400 26,683 6,475
INTEGRA LIFESCIENCES CORP 400 7,026 4,525
INTEGRATED DEVICE TECHNOLOGY 950 36,366 45,659
INTEL CORP 2,050 108,922 259,966
INTELECT COMMUNICATIONS INC 400 2,895 1,225
INTELLICORP 900 8,820 2,025
INTERDIGITAL COMM CORP 100 3,624 2,069
INTERGRAPH CORP 700 5,066 4,769
INTERIM SVCS INC 100 1,761 1,713
INTERLEUKIN GENETICS INC 1,400 18,770 9,100
INTERMEDIA COMMUNICATIONS INC 2 1,210 75
INTERNATIONAL HOME FOODS INC 600 11,113 8,738
INTERVOICE INC 202 5,780 3,313
INTEST CORP 600 12,780 13,425
INTIMATE BRANDS INC 3 390 390
INTUIT 900 31,046 32,344
INVESTMENT TECHNOLOGY GROUP 300 9,415 11,250
ISLE CAPRI CASINOS INC 1,300 11,115 18,038
IVAX CORP 1,000 20,329 27,375
JABIL CIRCUIT INC 200 6,468 8,188
48
VALUE LINE, INC.
SCHEDULE 1-MARKETABLE SECURITIES
AS OF APRIL 30, 2000
COMMON STOCK NAME NUMBER OF SHARES COST MKT VALUE
- ------------------------------- ------------------ ------------ -----------
JDA SOFTWARE GROUP INC 900 17,483 16,763
JDS UNIPHASE CORP 1,301 126,556 134,975
JETFORM CORP 400 3,320 2,425
JOHNSON + JOHNSON 1,300 107,133 107,250
JONES PHARMA INC 2,000 54,613 57,625
K MART CORP 500 4,869 4,063
K V PHARMACEUTICAL CO 400 12,920 10,500
KEMET CORP 400 11,945 29,800
KENNAMETAL INC 700 18,885 20,125
KEY ENERGY SVCS INC 1,400 14,364 13,650
KEYCORP NEW 300 5,959 5,550
KLA TENCOR CORP 900 58,025 67,388
KOHLS CORP 600 30,915 28,800
KONINKLIJKE PHILIPS ELECTRS NV 403 14,798 18,056
KOPIN CORP 400 21,695 30,975
KULICKE + SOFFA INDS INC 500 32,269 39,156
KYOCERA CORP 300 49,923 49,819
LA Z BOY INC 206 4,673 3,850
LAMSON + SESSIONS CO 100 805 788
LANDSTAR SYS INC 100 6,311 5,725
LAUDER ESTEE COS INC 2 510 1,225
LCC INTL INC 1,000 20,638 24,438
LEAPNET INC 2,000 14,288 8,250
LEARNING TREE INTL INC 200 6,035 9,588
LEGATO SYSTEMS INC 2 610 44
LEXMARK INTL GROUP INC 300 33,746 35,400
LIGHTBRIDGE INC 200 5,760 4,200
LINEAR TECHNOLOGY CORP 200 6,356 11,425
LOUISIANA PAC CORP 200 2,612 2,675
LOWES COS INC 50 2,903 2,475
LSI LOGIC CORP 250 13,606 15,625
LUCENT TECHNOLOGIES INC 1,253 76,665 77,809
LYCOS INC 300 11,344 13,950
MACDERMID INC 200 6,723 4,688
MACROMEDIA INC 650 42,422 56,550
MACROVISION CORP 200 9,510 9,775
MARSH + MCLENNAN COS INC 150 14,183 14,784
MATRIX PHARMACEUTICALS 500 4,025 4,594
MATTEL INC 4 720 925
MAXIM PHARMACEUTICALS INC 200 14,135 7,750
MBNA CORP 2,650 48,030 70,391
MCKESSON HBO INC 4 1,145 138
MCLEODUSA INC 4,900 113,831 122,500
MEDAREX INC 100 4,319 5,300
MEDICIS PHARMACEUTICAL CORP 500 20,088 21,875
MEDIMMUNE INC 450 34,425 71,972
49
VALUE LINE, INC.
SCHEDULE 1-MARKETABLE SECURITIES
AS OF APRIL 30, 2000
COMMON STOCK NAME NUMBER OF SHARES COST MKT VALUE
- ------------------------------- ------------------ ------------ -----------
MEDTRONIC INC 2,550 102,423 132,441
MEMBERWORKS INC 600 20,005 19,378
MEMC ELECTR MATLS INC 300 5,440 5,213
MENS WEARHOUSE INC 1,550 36,103 33,228
MENTOR GRAPHICS CORP 2,203 30,084 29,166
MERCK + CO INC 3,400 233,566 236,300
MERCURY COMPUTER SYS INC 100 1,403 3,844
MERCURY GEN CORP NEW 4 470 63
MERIX CORP 100 1,955 2,188
MERRILL LYNCH + CO INC 200 17,652 20,388
META GROUP INC 300 9,665 6,750
METTLER TOLEDO INTL INC 950 35,066 32,775
MICHAEL FOODS INC NEW 700 15,248 15,006
MICHAELS STORES INC 1,400 41,064 55,213
MICRON TECHNOLOGY INC 100 13,180 13,925
MICROS SYS INC 1,250 72,794 50,313
MICROSOFT 2 760 75
MICROSOFT CORP 3,300 201,798 230,175
MICROSTRATEGY INC 500 15,756 12,938
MICROTEST INC 700 9,266 7,744
MICROVISION INC WASH 300 10,209 9,919
MICROWARE SYS CORP 1,000 6,434 4,125
MINIMED INC 350 22,889 43,028
MINNESOTA MNG + MFG CO 900 82,350 77,850
MODIS PROFESSIONAL SVCS INC 303 2,824 2,306
MOLECULAR DEVICES CORP 600 30,155 25,791
MOLEX INC 200 11,225 10,988
MONDAVI ROBERT CORP 300 11,040 9,956
MORGAN J P + CO INC 800 94,009 102,700
MORGAN STANLEY DEAN WITTER+CO 2,700 200,428 207,225
MOTOROLA INC 202 26,776 24,700
MRV COMMUNICATIONS INC 400 21,495 27,575
MSC INDL DIRECT INC 600 10,424 8,400
MYRIAD GENETICS INC 100 5,100 6,438
NASDAQ 100 INDEX 3 2,165 1,163
NATIONAL DATA CORP 200 6,900 5,550
NATIONAL DISC BROKERS GROUP 500 15,338 14,594
NATIONAL SEMICONDUCTOR CORP 150 7,639 9,113
NATIONAL STEEL CORP 300 1,853 1,875
NAVIDEC INC 100 1,693 844
NAVIGANT CONSULTING CO 300 11,756 2,981
NBTY INC 1,100 8,433 19,525
NETRIX CORP 3 1,590 2,100
NETRIX CORP 200 2,510 2,500
NETWORK APPLIANCE INC 650 35,163 48,059
NETWORKS ASSOCS INC 600 14,063 15,263
50
VALUE LINE, INC.
SCHEDULE 1-MARKETABLE SECURITIES
AS OF APRIL 30, 2000
COMMON STOCK NAME NUMBER OF SHARES COST MKT VALUE
- ------------------------------- ------------------ ------------ -----------
NEUROCRINE BIOSCIENCES INC 500 15,925 10,625
NEW ERA OF NETWORKS INC 1,200 28,110 37,650
NEWHALL LD + FARMING CO CALIF 500 13,525 13,500
NEWPORT CORP 600 46,499 72,788
NEXTEL COMMUNICATIONS INC 800 99,163 87,550
NOKIA CORP 3,150 89,559 179,156
NORTEL NETWORKS CORP 2,400 162,487 271,800
NORTH FORK BANCORPORATION INC 200 3,435 3,238
NORTHERN TRUST CORP 1,950 66,830 125,044
NOVELLUS SYS INC 250 14,584 16,672
NOVEN PHARMACEUTICALS INC 600 3,792 7,050
OAK TECHNOLOGY 2,603 36,983 36,684
OMNICOM GROUP 250 23,794 22,766
ONTRACK DATA INTL INC 1,300 11,496 11,294
OPEN MKT INC 700 9,648 7,219
ORACLE CORP 3,702 111,367 295,919
ORBOTECH LTD 200 15,591 17,050
OSICOM TECHNOLOGIES INC 200 8,891 10,400
OVERSEAS SHIPHOLDING GROUP INC 300 7,178 7,856
P COM INC 400 7,520 4,325
PACIFIC SUNWEAR OF CALIF 600 17,768 20,438
PARADIGM ADVANCED TECHNOLOGIES 200 530 413
PARLEX CORP 100 3,105 2,338
PATINA OIL + GAS CORP 300 2,696 4,163
PATTERSON DENTAL CO 200 7,003 9,625
PAXAR CORP 1,800 18,503 18,338
PAYCHEX INC 450 20,222 23,681
PC CONNECTION INC 300 8,903 14,363
PE CORP 1,650 86,674 99,000
PEGASUS COMMUNICATIONS CORP 200 20,379 21,825
PEGASYSTEMS INC 1,900 14,583 16,863
PENTAIR INC 200 7,548 7,650
PENTON MEDIA INC 500 12,925 13,156
PEPSICO INC 700 24,535 25,681
PERICOM SEMICONDUCTOR CORP 800 28,840 35,150
PETCO ANIMAL SUPPLIES INC 3,000 41,166 34,688
PETROLEUM GEO SVCS AS 200 2,725 3,250
PFIZER INC 4,400 134,877 185,350
PHOTON DYNAMICS INC 400 24,570 29,600
PHOTOWORKS INC 3,700 25,023 13,413
PICTURETEL CORP 3,500 13,963 14,875
PIER 1 IMPORTS INC 700 7,779 7,963
PINNACLE SYS INC 800 14,651 19,200
PIONEER STD ELECTRS INC 300 4,290 4,594
PLANAR SYS INC 400 4,570 4,475
PLEXUS CORP 900 53,920 68,963
51
VALUE LINE, INC.
SCHEDULE 1-MARKETABLE SECURITIES
AS OF APRIL 30, 2000
COMMON STOCK NAME NUMBER OF SHARES COST MKT VALUE
- ------------------------------- ------------------ ------------ -----------
PMC SIERRA INC 301 53,661 57,650
POGO PRODUCING CO 2,100 55,449 53,813
POLARIS INDS INC 100 2,980 3,063
POLAROID CORP 900 19,883 18,169
POLYMEDICA CORP 700 17,923 37,581
POPE + TALBOT INC 1,600 20,880 33,900
PRESSTEK INC 700 16,748 14,700
PRI AUTOMATION INC 500 32,681 39,938
PRINCETON VIDEO IMAGE INC 700 7,210 5,250
PROGENICS PHAARMACEUTICALS INC 300 20,690 13,800
PROGRESS SOFTWARE CORP 200 4,810 4,000
PROSOFT DEV INC 1,600 24,330 26,800
PROVINCE HEALTHCARE CO 800 23,478 23,100
PSW TECHNOLOGIES INC 400 14,820 9,100
PUMA TECHNOLOGY INC 701 19,896 22,288
QLOGIC CORP 300 22,106 30,094
QUALCOMM INC 2,401 176,223 260,925
QUINTEL COMMUNICATIONS INC 2,100 13,905 7,088
RADIANCE MED SYS INC 1,600 17,955 14,000
RADIANT SYS INC 200 2,073 3,725
RAMBUS INC DEL 150 23,606 34,500
RAMTRON INTL CORP 700 8,560 7,569
REAL NETWORKS INC 1 505 950
REMEDY CORP 600 26,318 31,875
REMEDYTEMP 500 10,400 9,906
RESMED INC 1,200 23,180 40,800
RESPIRONICS INC 1,700 24,760 27,625
REXALL SUNDOWN INC 700 11,791 13,475
ROADWAY EXPRESS INC DEL 1,600 29,680 37,600
ROHN INDS INC 2,500 12,162 9,531
ROWAN COS INC 100 1,762 2,794
ROYAL DUTCH PETE CO 2,250 131,305 129,094
S + P 500 INDEX 2 6,073 4,125
SAFEGUARD SCIENTIFICS INC 800 28,559 33,400
SALTON INC 1,000 41,875 42,938
SANDISK CORP 200 17,725 18,325
SANMINA CORP 950 33,847 57,059
SANTA CRUZ OPERATION INC 100 2,493 606
SAWTEK INC 101 5,085 5,106
SBC COMMUNICATIONS INC 400 16,308 17,525
SCHOLASTIC CORP 200 11,310 9,338
SCHOOL SPECIALTY INC 300 5,996 5,588
SCHWAB CHARLES CORP 850 37,177 37,825
SCI SYS INC 50 2,546 2,663
SCICLONE PHARMACEUTICALS INC 302 7,150 3,281
SCIENTIFIC ATLANTA INC 1,900 92,109 123,619
52
VALUE LINE, INC.
SCHEDULE 1-MARKETABLE SECURITIES
AS OF APRIL 30, 2000
COMMON STOCK NAME NUMBER OF SHARES COST MKT VALUE
- ------------------------------- ------------------ ------------ -----------
SCM MICROSYSTEMS INC 300 24,659 23,738
SEACHANGE INTL INC 200 7,450 6,000
SEMEX CORP 500 5,681 5,000
SEMTECH CORP 300 18,213 20,456
SENSAR CORP 400 13,620 8,625
SENSORMATIC ELECTRS CORP 1,400 17,482 23,363
SHELL TRANS + TRADING PLC 1,300 61,753 62,725
SICOR INC 3,450 35,757 39,028
SIEBEL SYS INC 800 63,263 98,300
SIGMA DESIGNS 2,500 14,400 10,625
SIRIUS SATELLITE RADIO INC 600 26,486 23,813
SKYWEST INC 100 4,018 4,213
SLM HLDG CORP 350 14,359 10,959
SOFTWARE SPECTRUM INC 300 7,290 5,456
SOLECTRON CORP 1,100 44,093 51,494
SONIC FDRY INC 200 11,935 8,950
SONOSITE INC 400 12,589 13,175
SONY CORP 400 78,612 90,250
SOURCE INFORMATION MGMT CO 300 4,721 4,425
SPECTRA PHYSICS LASERS INC 100 4,268 5,100
SPECTRANETICS CORP 800 3,540 4,100
SPEEDFAM IPEC INC 1,700 29,966 26,881
SPIEGEL INC 1,600 10,674 13,200
SPLASH TECHNOLOGY HLDGS INC 1,000 13,731 12,875
STANDARD PAC CORP NEW 200 2,458 2,013
STARBUCKS CORP 250 9,547 7,559
STARTEC GLOBAL COMMUNICATIONS 900 22,783 13,163
STARTEK INC 200 7,273 10,275
STATION CASINOS INC 2,750 60,303 78,375
STEEL TECHNOLOGIES INC 500 5,963 4,031
STILLWATER MNG CO 1,000 35,406 28,000
STORAGE COMPUTER CORP 1,000 12,538 6,938
STRYKER CORP 150 5,695 10,781
SUIZA FOODS CORP 1,100 43,836 42,831
SUN MICROSYSTEMS INC 2,700 96,866 248,231
SUPERGEN INC 100 2,829 3,313
SUPERIOR INDS INTL INC 200 6,223 6,438
SURMODICS INC 600 10,305 15,300
SYBASE INC 2,450 35,708 49,459
SYMANTEC CORP 450 22,260 28,097
SYMBOL TECHNOLOGIES INC 500 21,399 27,875
SYNTROLEUM CORP 800 15,440 15,700
SYSCO CORP 600 21,443 22,575
TARGET CORP 100 7,093 6,656
TECHNE CORP 1,900 111,729 135,138
TELEFONICA S A 759 49,032 50,288
53
VALUE LINE, INC.
SCHEDULE 1-MARKETABLE SECURITIES
AS OF APRIL 30, 2000
COMMON STOCK NAME NUMBER OF SHARES COST MKT VALUE
- ------------------------------- ------------------ ------------ -----------
TELEFONOS DE MEXICO S A 2,000 103,263 117,625
TELETECH HLDGS INC 700 28,525 22,838
TELLABS INC 202 11,185 11,013
TELXON CORP 1,000 14,269 14,750
TENNECO AUTOMOTIVE INC 6 405 375
TERADYNE INC 750 71,503 82,500
TEREX CORP NEW 6 893 1,050
TEXAS INSTRS INC 850 112,939 138,444
THE GOOD GUYS INC 5,100 31,011 14,663
TIMBERLAND CO 1,200 49,761 83,250
TIMBERLINE SOFTWARE CORP 0 4 3
TITAN CORP 1,700 65,404 72,994
TOMMY HILFIGER CORP 205 6,812 1,888
TOPPS INC 1,100 11,148 9,625
TOSCO CORP 300 8,696 9,619
TOTAL FINA SA 1,900 136,889 143,688
TOWER AUTOMOTIVE INC 200 2,758 3,125
TOYOTA MTR CO 2,350 117,722 234,853
TRANSMEDIA ASIA PAC INC 1,500 6,356 5,344
TREDEGAR INDS INC 500 12,150 12,906
TREEV INC 1,100 7,618 6,738
TRENDWEST RESORTS INC 100 2,518 2,325
TRIANGLE PHARMACEUTICALS INC 200 1,760 1,294
TRIMBLE NAVIGATION LTD 100 1,069 2,763
TRIMERIS INC 300 14,378 10,331
TRIPATH IMAGING INC 1,200 9,060 7,200
TRITON ENERGY LTD 1,700 52,906 61,944
TRIUMPH GROUP INC NEW 400 11,295 10,750
TV GUIDE INC 900 22,426 26,831
TWEETER HOME ENTMT GROUP INC 700 22,260 25,813
TYCO INTL LTD NEW 1,550 70,699 71,203
U S WEST INC NEW 200 14,760 14,238
UNICOM CORP 100 3,893 3,975
UNISOURCE ENERGY CORP 400 6,445 6,500
UNISYS CORP 302 8,900 7,256
UNITED PARCEL SVC INC 3 690 544
UNITED RENTALS INC 300 6,446 4,069
UNITED STATIONERS INC 350 8,963 11,681
UNITED TECHNOLOGIES CORP 2 785 363
UNIVERSAL ELECTRS INC 1,500 19,913 30,750
US FREIGHTWAYS CORP 200 7,256 9,325
US LEC CORP 600 15,168 15,675
V ONE CORP 3,100 16,030 13,369
VALENCE TECHNOLOGY INC 400 6,995 6,175
VENTANA MED SYS INC 600 22,724 16,913
VERITAS SOFTWARE CORP 1 855 700
54
VALUE LINE, INC.
SCHEDULE 1-MARKETABLE SECURITIES
AS OF APRIL 30, 2000
COMMON STOCK NAME NUMBER OF SHARES COST MKT VALUE
- ------------------------------- ------------------ ------------ -----------
VERITY INC 900 27,776 29,194
VERSANT CORP 1,500 16,388 9,750
VIASAT INC 100 3,205 4,681
VIISAGE TECHNOLOGY INC 1,800 19,524 11,700
VINTAGE PETE INC 500 9,744 9,938
VIRTUALFUND COM INC 1,400 7,770 4,506
VISUAL NETWORKS INC 500 19,950 19,500
VISX INC DEL 100 7,817 1,581
VITESSE SEMICONDUCTOR CORP 150 7,978 10,209
VOICESTREAM WIRELESS CORP 1 68 99
VYSIS INC 1,200 16,116 8,925
WAL MART STORES INC 4,602 156,852 255,725
WALGREEN CO 50 1,443 1,406
WARNER LAMBERT CO 800 69,909 91,050
WEBB DEL CORP 103 2,976 1,588
WEBB INTERACTIVE SVCS INC 1,200 13,235 19,200
WELLS FARGO + CO NEW 400 16,570 16,425
WESTELL TECHNOLOGIES 2,500 56,144 71,094
WESTERN DIGITAL CORP 2,700 17,829 18,731
WEYERHAEUSER CO 200 11,160 10,688
WHITEHALL JEWELLERS INC 800 15,540 13,750
WHOLE FOODS MKT INC 100 3,706 4,256
WILD OATS MKTS INC 300 5,640 3,975
WILSONS LEATHER EXPERTS INC 800 11,928 9,700
WINSTAR COMMUNICATIONS INC 300 10,463 11,963
WIRELESS TELECOM GROUP INC 100 843 325
WORLDCOM INC 200 9,621 9,088
WORLDPAGES COM INC 1,000 7,788 6,563
WPP GROUP PLC 1,400 41,834 108,325
XICOR INC 600 7,193 10,725
XILINX INC 100 2,020 7,325
XYBERNAUT CORP 400 5,895 3,900
ZEBRA TECHNOLOGIES CORP 300 15,278 17,100
ZEROPLUS COM INC 1,300 12,234 6,094
ZIONS BANCORP 200 8,335 8,300
ZOMAX OPTICAL MEDIA INC 100 5,111 4,731
ZORAN CORP 200 7,435 9,988
GRAND TOTAL 15,820,489 19,044,909
55
VALUE LINE, INC.
Schedule XIII-Other Investments:4/30/2000
HISTORICAL
MUTUAL FUND INVESTMENTS COST MARKET VALUE
The Value Line Fund. Inc. $ 4,170,136 $ 8,287,114
The Value Line Special Situations Fund, Inc. 9,381,860 17,100,971
The Value Line Income and Growth Fund, Inc. 2,994,624 4,092,166
The Value Line Leveraged Growth Investors, Inc. 21,956,996 47,898,502
The Value Line U.S. Government Securities Fund, Inc. 1,066 1,061
The Value Line Tax Exempt Fund, Inc. National Bond 1,293,008 1,264,102
The Value Line New York Tax Exempt Trust 1,190,267 1,187,969
The Value Line Convertible Fund, Inc. 3,714,903 3,662,322
The Value Line Aggressive Income Trust 3,074,357 2,820,643
The Value Line Emerging Opportunity Fund, Inc. 12,648,840 24,540,121
The Value Line Asset Allocation Fund, Inc. 45,274,195 71,673,982
The Value Line U.S. Multinational Company Fund 12,435,197 27,938,571
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$ 118,135,449 $ 210,467,524
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