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

January 14, 2010 | About:
10qk

10qk

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Educational Development Corp. (EDUC) filed Quarterly Report for the period ended 2009-11-30.

Educational Development Corp. has a market cap of $22.5 million; its shares were traded at around $5.8199 with a P/E ratio of 12.6 and P/S ratio of 0.8. The dividend yield of Educational Development Corp. stocks is 1.8%. Educational Development Corp. had an annual average earning growth of 10.5% over the past 10 years.

Highlight of Business Operations:

Operating Results for the Three Months Ended November 30, 2009 We earned income before income taxes of $1,483,200 for the three months ended November 30, 2009 compared with $1,044,800 for the three months ended November 30, 2008.

Cost of sales increased 3.2% for the three months ended November 30, 2009 when compared with the three months ended November 30, 2008. Cost of sales as a percentage of gross sales was 26.4% for the three months ended November 30, 2009 and for the three months ended November 30, 2008 was 27.8%. 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 $306,000 in the quarter ended November 30, 2009 and $289,200 in the quarter ended November 30, 2008.

Cost of sales decreased 3.4% for the nine months ended November 30, 2009 when compared with the nine months ended November 30, 2008, consistent with the decrease in net sales for the period. Cost of sales as a percentage of gross sales was 26.2% for the nine months ended November 30, 2009 and for the nine months ended November 30, 2008 was 27.8%. 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. These costs totaled $867,200 in the nine months ended November 30, 2009 and $847,000 in the nine months ended November 30, 2008. When comparing our gross margins with the gross margins of other companies, note that we do not include the costs of our distribution network in our cost of sales.

For the nine months ended November 30, 2009, we experienced a positive cash flow from operating activities of $258,100. Cash flow from operating activities resulted from net income after taxes of $1,565,900 and increases in current liabilities of $470,600, offset by increases in inventory of $950,800 and accounts receivable of $944,300.

For the nine months ended November 30, 2009, cash used in financing activities was $1,395,000 from dividend payments of $1,536,600, revolving credit payments of $2,200,000 and the purchase of $4,400 of treasury stock, offset by revolving credit borrowings of $2,200,000 and the sale of $146,000 in treasury stock.

Effective June 30, 2009, we signed an Eleventh Amendment to the Credit and Security Agreement with Arvest Bank which provided a reduced $2,500,000 line of credit through June 30, 2010. Interest is payable monthly at the greater of 5.00% or the Wall Street Journal prime-floating rate minus 0.75% (3.25% at November 30, 2009) and borrowings are collateralized by substantially all of our assets. At November 30, 2009 we had no debt outstanding under this agreement. Available credit under the revolving credit agreement was $2,500,000 at November 30, 2009.

Read the The complete Report

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