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Educational Development Corp. Reports Operating Results (10-Q)

October 15, 2010 | About:
10qk

10qk

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Educational Development Corp. (EDUC) filed Quarterly Report for the period ended 2010-08-31.

Educational Development Corp. has a market cap of $23.9 million; its shares were traded at around $6.15 with a P/E ratio of 14.4 and P/S ratio of 0.8. The dividend yield of Educational Development Corp. stocks is 7.8%. Educational Development Corp. had an annual average earning growth of 4% over the past 10 years.

Highlight of Business Operations:

The Publishing Divisions discounts and allowances are a much larger percentage of gross sales than discounts and allowances in the UBAM Division due to the different customer markets that each division targets. The Publishing Divisions discounts and allowances were $2,995,100 and $2,837,200 for the quarterly periods ended August 31, 2010 and 2009, respectively. The Publishing Division sells to retail book chains, regional and local bookstores, toy and gift stores, school supply stores and museums. To be competitive with other wholesale book distributors, the Publishing Division sells at

Cost of sales decreased 3.6% for the three months ended August 31, 2010 when compared with the three months ended August 31, 2009. Cost of sales as a percentage of gross sales was 25.9% for both the three months ended August 31, 2010 and the three months ended August 31, 2009. Cost of sales is the inventory cost of the product sold, which includes the cost of the product itself and inbound freight charges. Purchasing and receiving costs, inspection costs, warehousing costs, and other costs of our distribution network are included in operating and selling expenses, not in cost of sales. These costs totaled $277,300 in the quarter ended August 31, 2010 and $274,700 in the quarter ended August 31, 2009.

Cost of sales decreased 1.4% for the six months ended August 31, 2010 when compared with the six months ended August 31, 2009. Cost of sales as a percentage of gross sales was 26.2% for the six months ended August 31, 2010 and for the six months ended August 31, 2009 was 26.1%. Cost of sales is the inventory cost of the product sold, which includes the cost of the product itself and inbound freight charges. Purchasing and receiving costs, inspection costs, warehousing costs, and other costs of our distribution network are included in operating and selling expenses, not in cost of sales. These costs totaled $570,800 in the six months ended August 31, 2010 and $561,200 in the six months ended August 31, 2009.

For the six months ended August 31, 2010, we experienced a positive cash flow from operating activities of $1,499,400. Cash flow from operating activities resulted from net income after taxes of $378,400, a decrease in inventory of $1,108,200, an increase in current liabilities of $87,200 and a decrease in net taxes receivable/payable of $67,900, offset by a small increase in prepaid expenses of $33,500.

For the six months ended August 31, 2010, cash used in financing activities was $989,900 from dividend payments of $931,700 and the purchase of $186,700 of treasury stock, offset by the sale of $124,100 of treasury stock.

Effective June 30, 2010 we signed a Twelfth Amendment to the Credit and Security Agreement with Arvest Bank which provided a reduced $2,500,000 line of credit through June 30, 2011. Interest is payable monthly at the greater of (a) prime-floating rate minus 0.75% or (b) 5.00%. At August 31, 2010, the rate in effect was 5.00%. Borrowings are collateralized by substantially all the assets of the Company. At August 31, 2010 the Company had no debt outstanding under this agreement. Available credit under the revolving credit agreement was $2,500,000 at August 31, 2010.

Read the The complete Report

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10qk
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