Educational Development Corp. (EDUC, Financial) filed Quarterly Report for the period ended 2011-05-31.
Educational Development Corp. has a market cap of $21.4 million; its shares were traded at around $5.5 with a P/E ratio of 18.4 and P/S ratio of 0.8. The dividend yield of Educational Development Corp. stocks is 8.7%.
For the three months ended May 31, 2011, we experienced a positive cash flow from operating activities of $427,000. Cash flow from operating activities resulted from net income after taxes of $300,200, an increase in certain current liabilities of $111,800, an increase in net taxes receivable/payable of $98,700, a decrease in inventory of $87,900, and a small decrease in prepaid expenses of $13,600.
For the three months ended May 31, 2011, cash used in financing activities was $571,300 from dividend payments of $468,700 and the purchase of $154,200 of treasury stock, offset by the sale of $51,600 of treasury stock.
Effective June 30, 2011 we signed a Thirteenth Amendment to the Credit and Security Agreement with Arvest Bank which provides a $2,500,000 line of credit through June 30, 2012. Interest is payable monthly at the greater of (a) prime-floating rate minus 0.75% or (b) 4.00%. At May 31, 2011, the rate in effect was 5.00%. Borrowings are collateralized by substantially all the assets of the Company. At May 31, 2011 the Company had no debt outstanding under this agreement. Available credit under the revolving credit agreement was $2,500,000 at May 31, 2011.
Management continually estimates and calculates the amount of non-current inventory. Non-current inventory arises due to occasionally purchasing book inventory in quantities in excess of what will be sold within the normal operating cycle due to minimum order requirements of our primary supplier. Non-current inventory was estimated by management using the current year turnover ratio by title. All inventory in excess of 2 ½ years of anticipated sales was classified as noncurrent inventory. Noncurrent inventory balances, before valuation allowance, were $807,000 at May 31, 2011 and $903,000 at February 28, 2011.
Inventories are presented net of a valuation allowance. Management has estimated and included a valuation allowance for both current and noncurrent inventory. This allowance is based on management s identification of slow moving inventory on hand. Management has estimated a valuation allowance for both current and noncurrent inventory of $337,200 and $330,700 as of May 31, 2011 and February 28, 2011, respectively.
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Educational Development Corp. has a market cap of $21.4 million; its shares were traded at around $5.5 with a P/E ratio of 18.4 and P/S ratio of 0.8. The dividend yield of Educational Development Corp. stocks is 8.7%.
Highlight of Business Operations:
Cost of sales increased 5.1% for the three months ended May 31, 2011 when compared with the three months ended May 31, 2010. Cost of sales as a percentage of gross sales was 26.2% and 26.4%, respectively, for each of the three month periods ended May 31, 2011 and May 31, 2010. 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 $272,000 in the quarter ended May 31, 2011 and $293,500 in the quarter ended May 31, 2010.For the three months ended May 31, 2011, we experienced a positive cash flow from operating activities of $427,000. Cash flow from operating activities resulted from net income after taxes of $300,200, an increase in certain current liabilities of $111,800, an increase in net taxes receivable/payable of $98,700, a decrease in inventory of $87,900, and a small decrease in prepaid expenses of $13,600.
For the three months ended May 31, 2011, cash used in financing activities was $571,300 from dividend payments of $468,700 and the purchase of $154,200 of treasury stock, offset by the sale of $51,600 of treasury stock.
Effective June 30, 2011 we signed a Thirteenth Amendment to the Credit and Security Agreement with Arvest Bank which provides a $2,500,000 line of credit through June 30, 2012. Interest is payable monthly at the greater of (a) prime-floating rate minus 0.75% or (b) 4.00%. At May 31, 2011, the rate in effect was 5.00%. Borrowings are collateralized by substantially all the assets of the Company. At May 31, 2011 the Company had no debt outstanding under this agreement. Available credit under the revolving credit agreement was $2,500,000 at May 31, 2011.
Management continually estimates and calculates the amount of non-current inventory. Non-current inventory arises due to occasionally purchasing book inventory in quantities in excess of what will be sold within the normal operating cycle due to minimum order requirements of our primary supplier. Non-current inventory was estimated by management using the current year turnover ratio by title. All inventory in excess of 2 ½ years of anticipated sales was classified as noncurrent inventory. Noncurrent inventory balances, before valuation allowance, were $807,000 at May 31, 2011 and $903,000 at February 28, 2011.
Inventories are presented net of a valuation allowance. Management has estimated and included a valuation allowance for both current and noncurrent inventory. This allowance is based on management s identification of slow moving inventory on hand. Management has estimated a valuation allowance for both current and noncurrent inventory of $337,200 and $330,700 as of May 31, 2011 and February 28, 2011, respectively.
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