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

October 17, 2011 | About:
10qk

10qk

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Educational Development Corp. (EDUC) filed Quarterly Report for the period ended 2011-08-31.

Educational Development Corp. has a market cap of $20.22 million; its shares were traded at around $5.2 with a P/E ratio of 15.76 and P/S ratio of 0.74. The dividend yield of Educational Development Corp. stocks is 9.23%.

Highlight of Business Operations:

The UBAM Division s gross sales decreased $73,800 during the six month period ending August 31, 2011 when compared with the same year-to-date period a year ago. This decrease consists primarily of decreases in direct sales of 19%, 12% in school and library sales, 14% in home parties and 9% in internet sales. The decline in direct sales is attributed to a 29% decline in the total number of orders, offset by a 15% increase in average order size. The decline in home party sales is attributed to a 17% decline in the total number of orders, offset by a 4% increase in average order size.

The UBAM Division s discounts and allowances were $1,678,700 and $1,091,900 for the year-to-date periods ended August 31, 2011 and 2010, respectively. The UBAM Division is a multi-level selling organization that markets its products through independent sales representatives (“consultants”). Sales are made to individual purchasers and school and public libraries. Most sales in the UBAM Division are at retail. As a part of the UBAM Division s marketing programs, discounts between 40% and 50% of retail are offered on selected items at various times throughout the year. The discounts and allowances in the UBAM Division will vary from year to year depending upon the marketing programs in place during any given year. The UBAM Division s discounts and allowances were 21.6% and 13.9% of UBAM s gross sales for the year-to-date periods ended August 31, 2011 and 2010, respectively.

The UBAM Division s discounts and allowances were $1,071,000 and $621,700 for the quarterly periods ended August 31, 2011 and 2010, respectively. The UBAM Division is a multi-level selling organization that markets its products through independent sales representatives (“consultants”). Sales are made to individual purchasers and school and public libraries. Most sales in the UBAM Division are at retail. As a part of the UBAM Division s marketing programs, discounts between 40% and 50% of retail are offered on selected items at various times throughout the year. The discounts and allowances in the UBAM Division will vary from year to year depending upon the marketing programs in place during any given year. The UBAM Division s discounts and allowances were 30.5% and 18.2% of UBAM s gross sales for the quarterly periods ended August 31, 2011 and 2010, respectively. This increase in discounts and allowances is primarily due to new incentives added at the beginning of the fourth quarter of fiscal year 2011.

The Publishing Division s 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 Division s discounts and allowances were $5,719,000 and $5,269,300 for the year-to-date periods ended August 31, 2011 and 2010, 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 discounts between 48% and 55% of the retail price, based upon the quantity of books ordered and the dollar amount of the order. The Publishing Division s discounts and allowances were 52.3% of Publishing s gross sales for the year-to-date period ended August 31, 2011 and 52.4% for the year-to-date period ended August 31, 2010.

The Publishing Division s 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 Division s discounts and allowances were $3,061,400 and $2,995,100 for the quarterly periods ended August 31, 2011 and 2010, 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 discounts between 48% and 55% of the retail price, based upon the quantity of books ordered and the dollar amount of the order. The Publishing Division s discounts and allowances were 52.0% of Publishing s gross sales for the quarterly period ended August 31, 2011 and 52.6% for the quarterly period ended August 31, 2010.

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