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