Value Line Inc. (VALU, Financial) filed Quarterly Report for the period ended 2009-10-31.
VALUE LINE, INC.'s primary businesses are producing investment related periodical publications through its wholly-owned subsidiary Value Line Publishing, Inc. and providing investment advisory services to mutual funds, institutions, and individual clients. Value Line Inc. has a market cap of $256.6 million; its shares were traded at around $25.71 with and P/S ratio of 3.7. The dividend yield of Value Line Inc. stocks is 3.1%. Value Line Inc. had an annual average earning growth of 9.8% over the past 5 years.
Investment periodicals and related publications revenues were down $1,816,000 or 9% for the six months ended October 31, 2009 as compared to the first six months of the prior fiscal year. While the Company continues to attract new subscribers through various marketing channels, primarily direct mail and the Internet, total product line circulation continues to decline. Factors that have contributed to the decline in the investment periodicals and related publications revenues include competition in the form of free or low cost investment research on the Internet and research provided by brokerage firms at no cost to their clients. As of October 31, 2009, total company-wide circulation has dropped more than 16% compared to the previous fiscal year. Overall renewal rates for the flagship product, The Value Line Investment Survey are 71%, up slightly from 70% a year earlier. Even so, the Company is not adding enough new subscribers to offset the subscribers that choose not to renew. The Company has been fortunate that electronic investment periodicals revenues from institutional sales have increased $327,000 or 10% from the previous year. Fiscal year gross institutional sales through October 31, 2009 were $4,013,000, up $359,000 or 10% from the previous fiscal year.
For the six months ended October 31, 2009 print publication revenues decreased $1,842,000 or 13% from the last fiscal year for the reasons described earlier. Print circulation, which has always dominated our subscription base, has fallen 16% from the last fiscal year. Electronic publications revenues were up $26,000 for the six months ended October 31, 2009. All the retail electronic services continued to decline in circulation from the prior fiscal year.
The electronic publication revenues are broken down into institutional accounts and retail subscribers. For the six months ended October 31, 2009, institutional revenues increased $327,000 or 10%, while revenues from retail subscribers were down $301,000 or 10% as compared to the six months ended October 31, 2008. The Company has relied more on its institutional sales marketing efforts, and the increase in institutional revenues is a direct result of a focused effort to boost sales to colleges, libraries and money managers. The decrease in electronic retail publications revenues is primarily attributable to the decrease in circulation within the Company s software products.
Copyright data fees have decreased $1,325,000 or 45% for the six months ended October 31, 2009 as compared to the six months ended October 31, 2008. As of October 31, 2009, total third party sponsored assets were attributable to four contracts for copyright data and represent $2.4 billion in various products as compared to four contracts and $3.7 billion in assets last fiscal year, representing a 36% decline in assets year over year. The combination of the underperformance by the Ranking System and the broad and deep declines in the equity markets from late 2008 and early 2009 significantly impacted assets of the third party sponsors that are customers of our copyright data business which resulted in lower asset based fees paid to the Company. The Company believes the growth of the business is dependent upon the desire of third parties to use the Value Line proprietary research for their products. Today this market is significantly more competitive as a result of product diversification and growth of the use of indexes by portfolio managers. Copyright data fees have been a critical component of the Company s plan to replace shrinking publishing revenues but no new contracts have been added this fiscal year to date. Unless the Ranking System s predictive performance improves, we anticipate copyright data revenues will continue to underperform.
As a result of the decline in assets under management year to year, investment management fees and distribution services revenues for the six months ended October 31, 2009 were down $5,745,000 or 38% below the prior fiscal year. Management fees for the six months ended October 31, 2009 were down $4,078,000 or 36% as compared to the prior fiscal year. There was a net decrease of $1,279,000 or 38% in distribution services revenues (12b-1 fees). During the period, contractual fee waivers have existed for most of the Value Line Funds. For the six months ended October 31, 2009 and 2008, 12b-1 fee waivers were $1,361,000 and $1,658,000, respectively. For the six months ended October 31, 2009 and 2008, management fee waivers were $436,000 and $101,000, respectively. Twelve of the fourteen funds have all or a portion of the 12b-1 fees being waived and five of the fourteen funds have partial management fee waivers in place. With very limited exception, the Company and its subsidiaries have no right to recoup the previously waived management fees and 12b-1 fees.
Read the The complete ReportVALU is in the portfolios of Chuck Royce of ROYCE & ASSOCIATES.
VALUE LINE, INC.'s primary businesses are producing investment related periodical publications through its wholly-owned subsidiary Value Line Publishing, Inc. and providing investment advisory services to mutual funds, institutions, and individual clients. Value Line Inc. has a market cap of $256.6 million; its shares were traded at around $25.71 with and P/S ratio of 3.7. The dividend yield of Value Line Inc. stocks is 3.1%. Value Line Inc. had an annual average earning growth of 9.8% over the past 5 years.
Highlight of Business Operations:
For the six months ended October 31, 2009 the Company s net loss of $29,199,000 or $2.93 per share was $44,803,000 below net income of $15,604,000 or $1.56 per share for the six months ended October 31, 2008. Net income for the second quarter ended October 31, 2009 of $2,381,000 or $0.23 per share was $8,161,000 or 77% below net income of $10,542,000 or $1.05 per share for the second quarter of the prior fiscal year. The operating loss of $39,351,000 for the six months ended October 31, 2009 was $53,082,000 below the operating income of $13,731,000 last fiscal year. The operating and net losses of the Company were a result of the Company recording a provision for settlement of $47,706,000 for settlement and related costs associated with the Securities and Exchange Commission (“SEC”) investigation. Please refer to Note 11 – Subsequent Events within the Notes to the Consolidated Condensed Financial Statements. Excluding the provision for settlement, operating income for the six months ended October 31, 2009 of $8,355,000 was $5,376,000 or 39% below last fiscal year and operating income of $3,435,000 for the second quarter ended October 31, 2009 was $2,831,000 or 45% below operating income of $6,266,000 for the second quarter of the prior fiscal year. Inclusive of the $47,706,000 provision for settlement, shareholders equity of $47,636,000 at October 31, 2009 was 40% lower than shareholders equity of $79,763,000 at October 31, 2008.Investment periodicals and related publications revenues were down $1,816,000 or 9% for the six months ended October 31, 2009 as compared to the first six months of the prior fiscal year. While the Company continues to attract new subscribers through various marketing channels, primarily direct mail and the Internet, total product line circulation continues to decline. Factors that have contributed to the decline in the investment periodicals and related publications revenues include competition in the form of free or low cost investment research on the Internet and research provided by brokerage firms at no cost to their clients. As of October 31, 2009, total company-wide circulation has dropped more than 16% compared to the previous fiscal year. Overall renewal rates for the flagship product, The Value Line Investment Survey are 71%, up slightly from 70% a year earlier. Even so, the Company is not adding enough new subscribers to offset the subscribers that choose not to renew. The Company has been fortunate that electronic investment periodicals revenues from institutional sales have increased $327,000 or 10% from the previous year. Fiscal year gross institutional sales through October 31, 2009 were $4,013,000, up $359,000 or 10% from the previous fiscal year.
For the six months ended October 31, 2009 print publication revenues decreased $1,842,000 or 13% from the last fiscal year for the reasons described earlier. Print circulation, which has always dominated our subscription base, has fallen 16% from the last fiscal year. Electronic publications revenues were up $26,000 for the six months ended October 31, 2009. All the retail electronic services continued to decline in circulation from the prior fiscal year.
The electronic publication revenues are broken down into institutional accounts and retail subscribers. For the six months ended October 31, 2009, institutional revenues increased $327,000 or 10%, while revenues from retail subscribers were down $301,000 or 10% as compared to the six months ended October 31, 2008. The Company has relied more on its institutional sales marketing efforts, and the increase in institutional revenues is a direct result of a focused effort to boost sales to colleges, libraries and money managers. The decrease in electronic retail publications revenues is primarily attributable to the decrease in circulation within the Company s software products.
Copyright data fees have decreased $1,325,000 or 45% for the six months ended October 31, 2009 as compared to the six months ended October 31, 2008. As of October 31, 2009, total third party sponsored assets were attributable to four contracts for copyright data and represent $2.4 billion in various products as compared to four contracts and $3.7 billion in assets last fiscal year, representing a 36% decline in assets year over year. The combination of the underperformance by the Ranking System and the broad and deep declines in the equity markets from late 2008 and early 2009 significantly impacted assets of the third party sponsors that are customers of our copyright data business which resulted in lower asset based fees paid to the Company. The Company believes the growth of the business is dependent upon the desire of third parties to use the Value Line proprietary research for their products. Today this market is significantly more competitive as a result of product diversification and growth of the use of indexes by portfolio managers. Copyright data fees have been a critical component of the Company s plan to replace shrinking publishing revenues but no new contracts have been added this fiscal year to date. Unless the Ranking System s predictive performance improves, we anticipate copyright data revenues will continue to underperform.
As a result of the decline in assets under management year to year, investment management fees and distribution services revenues for the six months ended October 31, 2009 were down $5,745,000 or 38% below the prior fiscal year. Management fees for the six months ended October 31, 2009 were down $4,078,000 or 36% as compared to the prior fiscal year. There was a net decrease of $1,279,000 or 38% in distribution services revenues (12b-1 fees). During the period, contractual fee waivers have existed for most of the Value Line Funds. For the six months ended October 31, 2009 and 2008, 12b-1 fee waivers were $1,361,000 and $1,658,000, respectively. For the six months ended October 31, 2009 and 2008, management fee waivers were $436,000 and $101,000, respectively. Twelve of the fourteen funds have all or a portion of the 12b-1 fees being waived and five of the fourteen funds have partial management fee waivers in place. With very limited exception, the Company and its subsidiaries have no right to recoup the previously waived management fees and 12b-1 fees.
Read the The complete ReportVALU is in the portfolios of Chuck Royce of ROYCE & ASSOCIATES.
