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VALUE LINE INC - Quarter Report: 2007 July (Form 10-Q)

Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
 
(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2007

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________________________ to ______________________________

Commission File Number: 0-11306

Value Inc Logo
VALUE LINE, INC.
(Exact name of registrant as specified in its charter)

New York
 
13-3139843
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
     
220 East 42nd Street, New York, New York
 
10017-5891
(Address of principal executive offices)
 
(Zip Code)

(212) 907-1500
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.               Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o         Accelerated filer o        Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
                                             Yes o No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class
 
Outstanding at July 31, 2007
     
Common stock, $.10 par value
 
9,981,600 Shares
 

 
Part I - Financial Information
Item 1. Financial Statements

Value Line, Inc.
Consolidated Condensed Balance Sheets
(in thousands, except share amounts)

   
July 31,
 
Apr. 30,
 
   
2007
 
2007
 
   
(unaudited)
     
           
Assets
         
Current Assets:
         
Cash and cash equivalents (including short term investments of $20,782 and $20,165, respectively)
 
$
21,466
 
$
20,605
 
Trading securities
   
17,156
   
15,849
 
Securities available for sale
   
79,811
   
76,822
 
Accounts receivable, net of allowance for doubtful accounts of $93 and $88, respectively
   
3,451
   
3,929
 
Receivable from affiliates
   
2,841
   
2,794
 
Prepaid expenses and other current assets
   
1,508
   
2,098
 
Deferred income taxes
   
139
   
139
 
               
Total current assets
   
126,372
   
122,236
 
               
Long term assets
             
Property and equipment, net
   
4,807
   
4,923
 
Capitalized software and other intangible assets, net
   
1,499
   
1,804
 
               
Total long term assets
   
6,306
   
6,727
 
               
Total assets
 
$
132,678
 
$
128,963
 
               
Liabilities and Shareholders' Equity              
Current Liabilities:
             
Accounts payable and accrued liabilities
 
$
3,920
 
$
5,316
 
Accrued salaries
   
1,410
   
1,545
 
Dividends payable
   
2,995
   
2,995
 
Accrued taxes payable
   
2,455
   
0
 
Unearned revenue
   
27,661
   
28,552
 
Deferred income taxes
   
8,951
   
8,654
 
               
Total current liabilities
   
47,392
   
47,062
 
               
Long term liabilities
             
Unearned revenue
   
5,838
   
5,948
 
Deferred charges
   
381
   
381
 
               
Total long term liabilities
   
6,219
   
6,329
 
               
Shareholders' Equity:
             
Common stock, $.10 par value; authorized 30,000,000 shares; issued 10,000,000 shares
   
1,000
   
1,000
 
Additional paid-in capital
   
991
   
991
 
Retained earnings
   
60,331
   
57,383
 
Treasury stock, at cost (18,400 shares on 7/31/07 and 4/30/07)
   
(354
)
 
(354
)
Accumulated other comprehensive income, net of tax
   
17,099
   
16,552
 
               
Total shareholders' equity
   
79,067
   
75,572
 
               
Total liabilities and shareholders' equity
 
$
132,678
 
$
128,963
 

The accompanying notes are an integral part of these consolidated condensed financial statements.
 
2

 
Part I - Financial Information
Item 1. Financial Statements

Value Line, Inc.
Consolidated Condensed Statements of Income
(in thousands, except share & per share amounts)
(unaudited)

   
Three months ended
 
   
July 31,
 
   
2007
 
2006
 
           
Revenues:
         
Investment periodicals and related publications
 
$
10,963
 
$
11,541
 
Licensing fees
   
1,653
   
1,811
 
Investment management fees & services
   
8,185
   
8,039
 
               
Total revenues
   
20,801
   
21,391
 
               
Expenses:
             
Advertising and promotion
   
3,596
   
3,224
 
Salaries and employee benefits
   
4,609
   
4,542
 
Production and distribution
   
1,663
   
1,811
 
Office and administration
   
1,968
   
1,945
 
               
Total expenses
   
11,836
   
11,522
 
               
Income from operations
   
8,965
   
9,869
 
Income from securities transactions, net
   
701
   
593
 
               
Income before income taxes
   
9,666
   
10,462
 
Provision for income taxes
   
3,723
   
4,191
 
               
Net income
 
$
5,943
 
$
6,271
 
               
Earnings per share, basic & fully diluted
 
$
0.60
 
$
0.63
 
               
Weighted average number of common shares
   
9,981,600
   
9,981,600
 

The accompanying notes are an integral part of these consolidated condensed financial statements.
 
3


Part I - Financial Information
Item 1. Financial Statements

Value Line, Inc.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)

   
For the three months
 
   
ended
 
   
July 31,
 
July 31,
 
   
2007
 
2006
 
Cash flows from operating activities:
         
Net income
 
$
5,943
 
$
6,271
 
               
Adjustments to reconcile net income to net cash provided by operating activities:
             
Depreciation and amortization
   
436
   
555
 
Unrealized losses/(gains) on trading securities
   
104
   
(3
)
Deferred income taxes
   
(36
)
 
-
 
               
Changes in assets and liabilities:
             
Purchase of trading securities
   
(1,411
)
 
-
 
(Decrease) in unearned revenue
   
(1,001
)
 
(2,216
)
(Decrease) in deferred charges
   
(6
)
 
(21
)
Increase/(decrease) in accounts payable and accrued expenses
   
(1,390
)
 
(2,474
)
Increase/(decrease) in accrued salaries
   
(135
)
 
(164
)
Increase in accrued taxes payable
   
2,455
   
2,740
 
(Increase)/decrease in prepaid expenses and other current assets
   
626
   
126
 
Decrease/(increase) in accounts receivable
   
478
   
(923
)
Decrease/(increase) in receivable from affiliates
   
(47
)
 
276
 
               
Total adjustments
   
73
   
(2,104
)
               
Net cash provided by operations
   
6,016
   
4,167
 
               
Cash flows from investing activities:
             
Purchases and sales of securities classified as available for sale:
             
Purchases of equity securities
   
(4
)
 
-
 
Proceeds from sales of fixed income securities
   
683
   
125
 
Purchases of fixed income securities
   
(2,824
)
 
(5,937
)
Acquisition of property and equipment
   
(2
)
 
-
 
Expenditures for capitalized software
   
(13
)
 
(117
)
               
Net cash (used in) investing activities
   
(2,160
)
 
(5,929
)
               
Cash flows from financing activities:
             
Dividends paid
   
(2,995
)
 
(2,495
)
               
Net cash used in financing activities
   
(2,995
)
 
(2,495
)
               
Net increase/(decrease) in cash and cash equivalents
   
861
   
(4,257
)
Cash and cash equivalents at beginning of year
   
20,605
   
15,331
 
               
Cash and cash equivalents at end of period
 
$
21,466
 
$
11,074
 

The accompanying notes are an integral part of these consolidated condensed financial statements.
 
4


Part I - Financial Information
Item 1. Financial Statements

Value Line, Inc.
Consolidated Condensed Statement of Changes in Shareholders' Equity
For the Three Months Ended July 31, 2007
(in thousands, except share amounts)
(unaudited)

   
Common stock
                           
                             
Accumulated
     
   
Number
     
Additional
               
Other
     
   
of
     
paid-in
 
Treasury
 
Comprehensive
   
Retained
 
Comprehensive
     
   
shares
 
Amount
 
capital
 
Stock
 
income
   
earnings
 
income
 
Total
 
                                     
Balance at April 30, 2007
   
9,981,600
         
$
1,000
         
$
991
           
($354
)         
                
$
57,383
          
$
16,552
          
$
75,572
 
                                                     
Comprehensive income
                                                   
Net income
                         
$
5,943
     
5,943
         
5,943
 
Other comprehensive income, net of tax:
                                                   
Change in unrealized gains on securities, net of taxes
                           
547
           
547
   
547
 
                                                     
Comprehensive income
                         
$
6,490
                     
                                                     
Dividends declared
                                   
(2,995
)
       
(2,995
)
                                                     
Balance at July 31, 2007
   
9,981,600
 
$
1,000
 
$
991
   
($354
)
       
$
60,331
 
$
17,099
 
$
79,067
 

The accompanying notes are an integral part of these consolidated condensed financial statements.

5

 
Part I - Financial Information
Item 1. Financial Statements

Value Line, Inc.
Consolidated Condensed Statement of Changes in Shareholders' Equity
For the Three Months Ended July 31, 2006
(in thousands, except share amounts)
(unaudited)

   
Common stock
                           
                             
Accumulated
     
   
Number
     
Additional
               
Other
     
   
of
     
paid-in
 
Treasury
 
Comprehensive
   
Retained
 
Comprehensive
     
   
shares
 
Amount
 
capital
 
Stock
 
income
   
earnings
 
income
 
Total
 
                                     
Balance at April 30, 2006
   
9,981,600
          
$
1,000
          
$
991
            
($354
)         
                
$
44,256
          
$
16,042
          
$
61,935
 
                                                     
Comprehensive income
                                                   
Net income
                         
$
6,271
     
6,271
         
6,271
 
Other comprehensive income, net of tax:
                                                   
Change in unrealized gains on securities, net of taxes
                           
(2,140
)
         
(2,140
)
 
(2,140
)
                                                     
Comprehensive income
                         
$
4,131
                     
                                                     
Dividends declared
                                   
(2,495
)
       
(2,495
)
                                                     
Balance at July 31, 2006
   
9,981,600
 
$
1,000
 
$
991
 
 
($354
)
       
$
48,032
 
$
13,902
 
$
63,571
 

The accompanying notes are an integral part of these consolidated condensed financial statements.
 
6


Value Line, Inc.
Notes to Consolidated Condensed Financial Statements
 
Note 1-Organization and Summary of Significant Accounting Policies:

The interim consolidated condensed financial statements of Value Line, Inc., together with its subsidiaries (collectively referred to as the “Company”), are unaudited. In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of normal recurring accruals except as noted below) considered necessary for a fair presentation. This report should be read in conjunction with the financial statements and footnotes contained in the Company's annual report on Form 10-K, dated July 20, 2007 for the fiscal year ended April 30, 2007. Results of operations covered by this report may not be indicative of the results of operations for the entire year.

Value Line, Inc. is incorporated in the State of New York. The Company's primary businesses are producing investment related periodical publications, licensing certain Value Line trademarks and Value Line proprietary ranking system information to third parties under written agreements for use in third party managed and marketed investment products, providing investment management and distribution services to the Value Line Funds, institutions and individual accounts and providing distribution, marketing, and administration services to the Value Line Funds. The name "Value Line" as used to describe the Company, its products, and its subsidiaries, is a registered trademark of the Company.

Principles of consolidation:
 
The consolidated condensed financial statements include the accounts of the Company and all of its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition:
 
Depending upon the product, subscriptions fulfillment is available in print, via internet access, and CD-ROM. The length of a subscription varies by product and offer received by the subscriber. Generally, subscriptions are available as trial subscriptions, annual subscriptions and/or multi-year subscriptions. Subscription revenues are recognized on a straight line basis over the life of the subscription. Accordingly, the amount of subscription fees to be earned by fulfilling subscriptions after the date of the balance sheet is shown as unearned revenue within current and long-term liabilities.

Licensing revenues are derived from licensing certain Value Line trademarks and Value Line proprietary ranking system information to third parties under written agreements for use in selecting securities for third party marketed products, including unit investment trusts, closed-end fund products and exchange traded funds. Value Line earns an asset based licensing fee as specified in the individual licensing agreements. Revenue is recognized monthly over the term of the agreement and will fluctuate as the market value of the underlying portfolio increases or decreases in value.

Investment management fees consist of management fees from the Value Line Mutual Funds ("Value Line Funds"), and from asset management clients. Investment management fees for the mutual funds are earned on a monthly basis as services are performed and the fee is calculated based on average daily net assets of the mutual funds in accordance with each fund's advisory agreement. Investment management fees for the asset management accounts are earned on a monthly basis as services are performed and the fee is calculated on assets in accordance with each of the management agreements (see note 6).
 
Service and distribution fees are received from the Value Line Funds in accordance with service and distribution plans under rule 12b-1 of the Investment Company Act of 1940. The plans are compensation plans, which means that the distributor’s fees under the plans are payable without regard to actual expenses incurred by the distributor. Expenses include payments to securities dealers, banks, financial institutions and other organizations which provide distribution, marketing, and administrative services with respect to the distribution of the mutual funds’ shares. Service and distribution fees are received on a monthly basis and calculated on the average daily net assets of the respective mutual fund in accordance with each fund prospectus.

Valuation of Securities:
 
The Company's securities classified as available for sale consist of shares of the Value Line Funds and government debt securities accounted for in accordance with Statement of Financial Accounting Standards No.115, "Accounting for Certain Investments in Debt and Equity Securities". The securities available for sale and trading securities reflected in the consolidated condensed financial statements at fair value are valued at market with unrealized gains and losses on these securities reported, net of applicable taxes, as a separate component of Shareholders' Equity. Realized gains and losses on sales of the securities available for sale are recorded in earnings on trade date and are determined on the identified cost method.
 
The Company classifies its securities available for sale as current assets. It does so to properly reflect its liquidity and to recognize the fact that it has assets available for sale to fully satisfy its current liabilities should the need arise.
 
Market valuation of securities listed on a securities exchange is based on the closing sales prices on the last business day of each month. Valuation of open-ended mutual fund shares is based upon the publicly quoted net asset value of the shares. The market value of the Company's fixed maturity government debt obligations are determined utilizing publicly quoted market prices.

Advertising expenses:
 
The Company expenses advertising costs as incurred.
 
7


Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

Reclassification:
 
Certain items in the prior year financial statements have been reclassified to conform to the current year presentation.

Income Taxes:

The Company computes its income tax provision in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been reflected in the consolidated condensed Financial Statements. Deferred tax liabilities and assets are determined based on the differences between the book values and the tax bases of particular assets and liabilities, using tax rates currently in effect for the years in which the differences are expected to reverse.

Earnings per share:

Earnings per share are based on the weighted average number of shares of common stock and common stock equivalents outstanding during each year.

Cash and Cash Equivalents:

For purposes of the consolidated condensed Statements of Cash Flows, the Company considers all cash held at banks and short term liquid investments with an original maturity of less than three months to be cash and cash equivalents. As of July 31, 2007 and April 30, 2007, cash equivalents included $19,915,000 and $19,868,000, respectively, invested in the Value Line Cash Fund.

Use of Estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Note 2-Investments:

Securities held by the Company are classified as Trading Securities and Available-for-Sale Securities. All securities held by Value Line Securities, Inc. ("VLS"), as a broker/dealer, are classified as trading securities. Securities held by the Company and its other subsidiaries, which are all held with the expectation that they may be sold in less than one year, are also classified as trading securities. All other investments not classified as trading securities are classified as available-for-sale securities.

Trading Securities:

Trading securities held by the Company at July 31, 2007 had an aggregate cost of $17,527,000 and a market value of $17,156,000. Trading securities held by the Company at April 30, 2007 had an aggregate cost of $16,115,000 and a market value of $15,849,000. There were no sales and no realized trading gains or losses during the first quarter of fiscal year 2008 or 2007. The net changes in unrealized losses of $104,000 for the period ended July 31, 2007 and the net changes in unrealized gains of $3,000 for the period ended July 31, 2006, respectively, were included in the Consolidated Condensed Statement of Income.

Securities Available for Sale:
Equity Securities:

The aggregate cost of the equity securities classified as available for sale, which consist of investments in the Value Line Funds, was $23,922,000 and the market value was $50,664,000 at July 31, 2007. The aggregate cost of the equity securities classified as available for sale, which consist of investments in the Value Line Funds, was $23,917,000 and the market value was $49,719,000 at April 30, 2007. The total gains for equity securities with net gains included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheet are $26,791,000 and $25,859,000, net of deferred taxes of $9,431,000 and $9,102,000, as of July 31, 2007 and April 30, 2007, respectively. The total losses for equity securities with net losses included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheet were $49,000 and $58,000, net of deferred tax benefit of $17,000 and $20,000, as of July 31, 2007 and April 30, 2007, respectively. During the three months ended July 31, 2007 and 2006, there were no sales and no realized gains or losses on equity securities, for which unrealized gains and losses were included in Accumulated Other Comprehensive Income as of July 31, 2007 or July 31, 2006. The increase in gross unrealized gains on these securities of $941,000 and the decrease of $3,302,000, net of deferred taxes of $331,000 and $1,162,000, were included in Shareholders' Equity at July 31, 2007 and 2006, respectively.

8


Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

Government Debt Securities:

Government debt securities consist of federal, state, and local government securities within the United States. The Company's investments in debt securities are classified as available for sale and valued at market value. The aggregate cost and fair value at July 31, 2007 for government debt securities classified as available for sale were as follows:

       
(In Thousands)
     
   
Historical
     
Gross Unrealized
 
Maturity
 
Cost
 
Fair Value
 
Holding Losses
 
Due in less than 2 years
 
$
16,202
 
$
15,971
   
($231
)
Due in 2 years or more
   
13,301
   
13,176
   
(125
)
Total investment in debt securities
 
$
29,503
 
$
29,147
   
($356
)

The aggregate cost and fair value at April 30, 2007 for government debt securities classified as available for sale were as follows:

       
(In Thousands)
     
   
Historical
     
Gross Unrealized
 
Maturity
 
Cost
 
Fair Value
 
Holding Losses
 
Due in less than 2 years
 
$
9,504
 
$
9,324
   
($180
)
Due in 2 years or more
   
17,857
   
17,779
   
(78
)
Total investment in debt securities
 
$
27,361
 
$
27,103
   
($258
)

The unrealized losses of $356,000 and $258,000 in government debt securities net of deferred income tax benefits of $126,000 and $91,000, respectively, were included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheets as of July 31, 2007 and April 30, 2007, respectively.
 
The average yield on the Government debt securities classified as available for sale at July 31, 2007 and April 30, 2007 was 3.63% and 3.54%, respectively.
 
Proceeds from sales of government debt securities classified as available for sale during the three months ended July 31, 2007 and 2006 were $683,000 and $125,000, respectively. There were no related gains or losses on sales of government debt securities during the first quarter of fiscal 2008 or 2007.
 
For the three months ended July 31, 2007 and 2006, income from securities transactions also included $252,000 and $167,000 of dividend income and $552,000 and $423,000 of interest income. There was no interest expense during the first quarter of fiscal 2008 or 2007.

Note 3-Supplementary Cash Flow Information:

Cash payments for income taxes were $765,000 and $1,450,000 for the three months ended July 2007 and 2006, respectively.

Note 4-Employees' Profit Sharing and Savings Plan:

Substantially all employees of the Company and its subsidiaries are members of the Value Line, Inc. Profit Sharing and Savings Plan (the "Plan"). In general, this is a qualified, contributory plan which provides for a discretionary annual Company contribution which is determined by a formula based on the salaries of eligible employees and the amount of consolidated net operating income as defined in the Plan. The estimated profit sharing plan contribution, which is included as an expense in salaries and employee benefits in the Consolidated Condensed Statement of Income, was $270,000 and $320,000 for the three months ended July 31, 2007 and 2006, respectively.
 
9


Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

Note 5-Comprehensive Income:

The Company has adopted Financial Accounting Standards No. 130, "Reporting Comprehensive Income". Statement No. 130 requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.

At July 31, 2007 and April 30, 2007, the Company held both equity securities and U.S. Government debt securities that are classified as Available for Sale on the Consolidated Condensed Balance Sheets. The change in valuation of these securities, net of deferred income taxes, has been recorded in Accumulated Other Comprehensive Income in the Company's Consolidated Condensed Balance Sheets.

The components of comprehensive income that are included in the Statement of Changes in Shareholders' Equity are as follows:

       
(in thousands)
     
   
Before
 
Tax
 
Net of
 
   
Tax
 
(Expense)
 
Tax
 
   
Amount
 
or Benefit
 
Amount
 
Three months ended July 31, 2007
             
Unrealized Gains on Securities:
                   
Change in Unrealized Holding Gains Arising during the period
 
$
843
   
($296
)
$
547
 
                     
Change in Other Comprehensive Income
 
$
843
   
($296
)
$
547
 
                     
Three months ended July 31, 2006
                   
Unrealized Gains on Securities:
                   
Change in Unrealized Holding Losses Arising during the period
   
($3,302
)
$
1,162
   
($2,140
)
                     
Change in Other Comprehensive Income
   
($3,302
)
$
1,162
   
($2,140
)

Note 6-Related Party Transactions:

The Company acts as investment adviser and manager for fourteen open-ended investment companies, the Value Line Funds. The Company earns investment management fees based upon the average daily net asset values of the respective Value Line Funds. Service and distribution fees are received from the Value Line Funds in accordance with service and distribution plans under rule 12b-1 of the Investment Company Act of 1940. The plans are compensation plans, which means that the distributor’s fees under the plans are payable without regard to actual expenses incurred by the distributor, which means the distributor may earn a profit under the plan. Expenses include payments to securities dealers, banks, financial institutions and other organizations which provide distribution, marketing, and administrative services with respect to the distribution of the mutual funds’ shares. Service and distribution fees are received on a monthly basis and calculated on the average daily net assets of the respective mutual fund in accordance with each fund's prospectus.

For the three months ended July 31, 2007 and 2006, investment management fees and 12b-1 service and distribution fees amounted to $7,883,000 and $7,757,000, respectively, which included fee waivers for certain of the Value Line Funds. These amounts included service and distribution fees of $1,669,000 and $2,107,000 earned by VLS in fiscal years 2008 and 2007, respectively. The related receivables from the funds for investment management fees and service and distribution fees included in Receivables from affiliates were $2,758,000 and $2,534,000 at July 31, 2007 and April 30, 2007, respectively.

For the three months ended July 31, 2007 and 2006, total management fee waivers were $60,000 and $65,000 respectively, and service and distribution fee waivers were $1,119,000 and $516,000, respectively. The Company and its subsidiary, VLS, have no right to recoup the previously waived amounts of management fees and 12b-1 fees.

As of July 31, 2007, the Company had $50,660,000 invested in the Value Line equity funds and $19,915,000 in the Value Line Cash Fund. Combined, this represents approximately 1.9% of total fund assets at July 31, 2007. Purchases and redemptions routinely occur in the Value Line Cash Fund as part of business operations.

For the three months ended July 31, 2007 and 2006, the Company was reimbursed $461,000 and $308,000, respectively, for payments it made on behalf of and services it provided to the Parent. At July 31, 2007, and April 30, 2007, Receivables from affiliates included a Receivable from the Parent of $71,000 and $243,000, respectively.

From time to time, the Parent has purchased additional shares of the Company in the market when and as the Parent has determined it to be appropriate. As stated several times in the past, the public is reminded that the Parent may make additional purchases from time to time in the future. For the quarter ended July 31, 2007, the Parent did not not purchase any additional shares in the market.
 
10


Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

Note 7-Federal, State and Local Income Taxes:

The Company computes its income tax provision in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes".

The provision for income taxes includes the following:

   
Three months ended July 31,
 
   
2007
 
2006
 
   
(in thousands)
 
Current:
         
Federal
 
$
3,005
 
$
3,346
 
State and local
   
833
   
904
 
     
3,838
   
4,250
 
Deferred:
             
Federal
   
(114
)
 
(45
)
State and local
   
(1
)
 
(14
)
     
(115
)
 
(59
)
Provision for income taxes
 
$
3,723
 
$
4,191
 

Deferred income taxes are provided for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. The tax effect of temporary differences giving rise to the Company's deferred tax (liability)/assets are primarily a result of unrealized gains on the Company's available for sale securities portfolios.

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory income tax rate to pretax income as a result of the following:

   
Three months ended July 31,
 
   
2007
 
2006
 
   
(in thousands)
 
           
Tax expense at the U.S. statutory rate
 
$
3,383
 
$
3,662
 
Increase (decrease) in tax expense from:
             
State and local income taxes, net of federal income tax benefit
   
541
   
579
 
Effect of tax exempt income and dividend deductions
   
(166
)
 
(88
)
Other, net
   
(35
)
 
38
 
Provision for income taxes
 
$
3,723
 
$
4,191
 

The Company is included in the consolidated federal income tax return of the Parent. The Company has a tax sharing arrangement which requires it to make tax payments to the Parent equal to the Company's liability as if it filed a separate return.
 
Note 8-Business Segments:

The Company operates two reportable business segments: Investment Periodicals, Publishing & Licensing and Investment Management. The Investment Periodicals, Publishing & Licensing segment produces investment related periodical publications (retail and institutional) in both print and electronic form, and receives licensing fees for Value Line proprietary ranking system information and Value Line trademarks. The Investment Management segment provides advisory services to the Value Line Funds, as well as institutional and individual accounts. The segments are differentiated by the products and services they offer. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company allocates all revenues and expenses, except for depreciation and income from securities transactions related to corporate assets, between the two reportable segments.
 
11


Value Line, Inc.
Notes to Consolidated Condensed Financial Statements


Disclosure of Reportable Segment Profit and Segment Assets (in thousands)
       
   
Three months ended July 31, 2007
 
   
Investment
         
   
Periodicals,
 
Investment
 
Total
 
   
Publishing &
 
Management
     
   
Licensing
         
               
Revenues from external customers
 
$
12,616
 
$
8,185
 
$
20,801
 
Intersegment revenues
   
9
   
-
   
9
 
Income from securities transactions
   
95
   
239
   
334
 
Depreciation and amortization
   
414
   
18
   
432
 
Segment operating profit
   
5,247
   
3,722
   
8,969
 
Segment assets
   
18,724
   
81,371
   
100,095
 
Expenditures for segment assets
   
15
   
-
   
15
 

   
Three months ended July 31, 2006
 
   
Investment
         
   
Periodicals,
 
Investment
 
Total
 
   
Publishing &
 
Management
     
   
Licensing
         
Revenues from external customers
 
$
13,352
 
$
8,039
 
$
21,391
 
Intersegment revenues
   
25
   
-
   
25
 
Income from securities transactions
   
36
   
243
   
279
 
Depreciation and amortization
   
528
   
23
   
551
 
Segment operating profit
   
5,439
   
4,434
   
9,873
 
Segment assets
   
14,469
   
72,195
   
86,664
 
Expenditures for segment assets
   
117
   
-
   
117
 
                     
Reconciliation of Reportable Segment Revenues, Operating Profit and Assets

   
(in thousands)
 
   
2007
 
2006
 
Revenues
         
Total revenues for reportable segments
 
$
20,810
 
$
21,416
 
Elimination of intersegment revenues
   
(9
)
 
(25
)
Total consolidated revenues
 
$
20,801
 
$
21,391
 
               
Segment profit
             
Total profit for reportable segments
   
9,303
   
10,152
 
Add: Income from securities transactions related to corporate assets
   
367
   
314
 
Less: Depreciation related to corporate assets
 
 
(4
)
 
(4
)
          Income before income taxes
 
$
9,666
 
$
10,462
 
               
Assets
             
Total assets for reportable segments
   
100,095
   
86,664
 
Corporate assets
   
32,583
   
30,888
 
Consolidated total assets
 
$
132,678
 
$
117,552
 
 
 
Value Line, Inc.
Notes to Consolidated Condensed Financial Statements

Note 9-Contingencies:

By letter dated June 15, 2005, the staff of the Securities and Exchange Commission informed the Company that it was conducting an informal inquiry. Thereafter, the staff has requested documents and information related to, among other things, trades for the Company’s and its affiliates’ proprietary accounts, execution of trades through VLS for the Value Line Funds and the fees collected by VLS from the Value Line Funds pursuant to a Service and Distribution Plan. The Company and its subsidiaries are cooperating with the inquiry. Management cannot determine the effect, if any, that the inquiry will have on the results of operations and financial condition.
12


 
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
     FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This report contains statements (including certain projections and business trends) accompanied by such phrases as “believe”, “estimate”, “expect”, “anticipate”, “will”, “intend” and other similar or negative expressions, that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to the following:

·
dependence on key personnel;
·
maintaining revenue from subscriptions for the Company’s products;
·
protection of intellectual property rights;
·
changes in market and economic conditions;
·
fluctuations in the Company’s assets under management due to broadly based changes in the values of equity and debt securities, redemptions by investors and other factors;
·
dependence on Value Line Funds for investment management and related fees;
·
competition in the fields of publishing, licensing and investment management;
·
the impact of government regulation on the Company’s business and the uncertainties of litigation and regulatory proceedings;
·
terrorist attacks; and
·
other risks and uncertainties, including but not limited to the risks described in Item 1A, “Risk Factors” of the Company’s annual report on Form 10-K for year ended April 30, 2007, and other risks and uncertainties from time to time.

Any forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
 
Results of Operations

Net income for the first quarter ended July 31, 2007 of $5,943,000 or $0.60 per share was $328,000 or 5% below net income of $6,271,000 or $0.63 per share for the first quarter of the prior fiscal year. Operating income of $8,965,000 for the three months ended July 31, 2007 was $904,000 or 9% below operating income of $9,869,000 last fiscal year. The Company’s income from securities transactions of $701,000 for the three months ended July 31, 2007 was 18% above last year’s. Shareholders’ equity of $79,067,000 at July 31, 2007 was 24% higher than shareholders’ equity of $63,571,000 at July 31, 2006.
 
Operating revenues

Three Months Ended July 31,
 
2007
 
2006
 
Percentage
Change
 
(in thousands)
 
 
 
 
 
FY 08 vs. 07
 
Investment periodicals and related publications
 
$
10,963
 
$
11,541
   
-5.0
%
Licensing Fees
 
$
1,653
 
$
1,811
   
-8.7
%
Investment management fees and services
 
$
8,185
 
$
8,039
   
1.8
%
Total Operating Revenues
 
$
20,801
 
$
21,391
   
-2.8
%
 
13

 
Investment periodicals and related publications revenues

The investment periodicals and related publications revenues were down 5% for the first three months ended July 31, 2007 as compared to the first quarter of the prior fiscal year. As a percentage of total operating revenues, investment periodicals and related publications revenues have fallen from 54% during the first quarter of fiscal 2007 to 52.7% during the first quarter of fiscal 2008. While the Company continues to bring in 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 the increasing amount of competition in the form of free and paid investment research on the Internet and research provided by brokerage firms at no cost to their clients.
 
Within investment periodicals and related publications are subscription revenues to print and electronic products.

Three Months Ended July 31,
 
2007
 
2006
 
Percentage
Change
 
(in thousands)
 
 
 
 
 
FY 08 vs. 07
 
               
Print publication revenues
 
$
7,984
 
$
8,786
   
-9.1
%
Electronic publication revenues
 
$
2,979
 
$
2,755
   
8.1
%
Total Investment periodicals and related publications revenue
 
$
10,963
 
$
11,541
   
-5.0
%
                     
Unearned Revenues (Short and Long Term)
 
$
33,499
 
$
35,510
   
-5.7
%
 
Value Line’s electronic publications revenues are derived from institutional and retail subscribers. For the three months ended July 31, 2007, institutional revenues increased $332,000 or 33%, while revenues from retail subscribers were down $108,000 or 6% as compared to the first quarter of the prior fiscal year. The decrease in electronic retail publications revenues is attributable to the decrease in circulation within the Company’s software products. Circulation of The Value Line Investment Analyzer decreased 24%, which resulted in a $122,000 decline in revenues from this product, partially offset by an increase in the circulation and revenues from the online subscription to The Value Line Investment Survey.
 
Licensing revenues

Licensing fee revenues have declined $158,000 for the three months ended July 31, 2007 as compared to the first quarter of the prior fiscal year primarily due to the volatility in the equity markets and the conversion of three closed-end funds traded on the American Stock Exchange, to open-end Exchange Traded Funds. These three conversions, initiated in part as a result of the actions of companies that invest in closed-end funds for the purpose of instigating trust action to eliminate discount NAV pricing, resulted in the withdrawal of assets that in turn, lowered the Company’s asset based licensing fees for the first quarter of fiscal 2008. As of July 31, 2007, total third party sponsored assets attributable to the licensing business represent $5.6 billion in various products. The Company believes the growth of the business is dependent upon the desire of third party marketers to use the Value Line trademarks and proprietary research for their products, signing new licensing agreements, and the marketplace’s acceptance of new products. Value Line believes it was an early entrant into this new market five years ago and today the market has matured and the Company and its third party sponsors face more competition in the marketplace.
 
14

 
Investment management fees and distribution services revenues

The investment management fees and distribution services revenues were up $146,000 for the three months ended July 31, 2007 as compared to the first quarter last fiscal year. While management fees for the first quarter of fiscal year 2008 were up $564,000 as compared to the first quarter of fiscal year 2007 there was a net decrease of $438,000 in distribution services revenues due to 12b-1 fee waivers for certain of the Value Line Funds. For the three months ended July 31, 2007 and 2006, 12b-1 fee waivers were $1,119,000 and $516,000, respectively. For the three months ended July 31, 2007 and 2006, total management fee waivers were $60,000 and $65,000, respectively. The Company and its subsidiary, VLS, have no right to recoup the previously waived amounts of management fees and 12b-1 fees.

The table below illustrates the total fund assets for the three months ended July 31, 2007 as compared to the first quarter last fiscal year. The second table shows the two channels through which the equity funds are available. Shares of Value Line Strategic Asset Management Trust (“SAM”) and Value Line Centurion Fund are available to the public only through the purchase of certain variable annuity and variable life insurance contracts issued by The Guardian Insurance & Annuity Company, Inc. (“GIAC”).

Three Months Ended July 31,
 
2007
 
2006
 
Percentage
Change
 
(in thousands)
 
 
 
 
 
FY 08 vs. 07
 
               
Equity funds
 
$
3,331,770
 
$
3,008,524
   
10.7
%
Fixed income funds
 
$
279,712
 
$
305,182
   
-8.3
%
Money Market funds
 
$
197,976
 
$
172,535
   
14.7
%
Total net assets
 
$
3,809,458
 
$
3,486,241
   
9.3
%
 
             
Equity fund assets sold through GIAC
 
$
891,707
 
$
928,105
   
-3.9
%
All other equity fund assets
 
$
2,440,063
 
$
2,080,419
   
17.3
%
Total Equity fund net assets
 
$
3,331,770
 
$
3,008,524
   
10.7
%

The Company believes that the 17.3% growth in equity funds for the first quarter of fiscal 2008, excluding SAM and Centurion Funds sold through GIAC, has been in large part due to the superior performance for certain Value Line Funds at various intervals in terms of short, mid and long-term returns. As of June 30, 2007, 80% of the equity funds, excluding SAM and Centurion, had four or five star ratings by Morningstar, Inc. The largest distribution channel for the Value Line Funds remains the fund supermarket platforms such as, but not limited to, Charles Schwab & Co., Inc., TD Ameritrade, Inc., and National City Bank.

Expenses

Advertising and promotion

Three Months Ended July 31,
 
2007
 
2006
 
Percentage
 Change
 
(in thousands)
 
 
 
 
 
FY 08 vs. 07
 
               
Advertising and promotion
 
$
3,596
 
$
3,224
   
11.5
%
 
15

 
Advertising and promotion expenses for the three months ended July 31, 2007 increased $372,000 as compared to the first quarter of last fiscal year. The primary increase is within the fees paid to third party intermediaries, such as, but not limited to, Charles Schwab & Co., Inc. to market the Value Line Funds. This expense will fluctuate based on assets invested in the Value Line Funds by clients of the intermediaries, the change in market value of such assets, and the addition of any new intermediary selling agreements. The Company anticipates third party intermediary expenses will continue to increase as assets continue to grow and more shareholders come into the Value Line Funds through intermediaries rather than direct accounts. Costs associated with direct mail remained substantially the same, while the overall number of pieces mailed increased year to year. The Company also increased its expenditures in print media promoting the Value Line Funds in select markets. For the three months ended July 31, 2007 media advertising expenses were up $121,000 as there was no media advertising during the first quarter of last fiscal year.
 
Salary and employee benefits

Three Months Ended July 31,
 
2007
 
2006
 
Percentage
Change
 
(in thousands)
 
 
 
 
 
FY 08 vs. 07
 
                     
Salaries and employee benefits
 
$
4,609
 
$
4,542
   
1.5
%

Over the past several years, the Company has increased productivity by the combination of roles and responsibilities along with selective outsourcing. Some duplication of effort has been eliminated and certain tasks, such as data entry, have been outsourced to third party vendors that the Company believes can provide better controls and results at a favorable cost.
 
Production and distribution

Three Months Ended July 31,
 
2007
 
2006
 
Percentage
Change
 
(in thousands)
 
 
 
 
 
FY 08 vs. 07
 
                     
Production and distribution
 
$
1,663
 
$
1,811
   
-8.2
%
 
Production and distribution expenses for the three months ended July 31, 2007 were $148,000 below expenses for the first quarter of last fiscal year. The decline in expenses was primarily due to lower demand for paper, printing and mailing costs that resulted primarily from a decrease in circulation of the print products. Partially offsetting the savings during the first quarter of fiscal 2008 was an increase in the cost of paper and an increase in postage rates.
 
Office and administration

Three Months Ended July 31,
 
2007
 
2006
 
Percentage Change
 
(in thousands)
 
 
 
 
 
FY 08 vs. 07
 
                     
Office and administration
 
$
1,968
 
$
1,945
   
1.2
%
 
Office and administration expenses for the three months ended July 31, 2007 were $23,000 above expenses for the first quarter of last fiscal year. During the first quarter of fiscal year 2008 professional fees significantly decreased as compared to the first quarter of fiscal year 2007. Professional fees can fluctuate year to year based on the level of activity requiring the use of outside professional consultants. Within Occupancy, during the last fiscal quarter of fiscal 2007, the Company extended its lease in midtown New York extending the lease expiration date to May 2013 on negotiated terms in place of the Company’s renewal option at market rate, which resulted in significantly higher rent as a result of market conditions.
 
16

 
Income from securities transactions, net
 
For the three months ended July 31, 2007 the Company’s income from securities transactions, net, is $108,000 higher than income for the first quarter of last fiscal year. Income from securities transactions, net, includes dividend and interest income of $804,000 at July 31, 2007 that is $214,000 or 36.5% higher than income of $590,000 for the first quarter of last fiscal year due to an increase in interest rates. Capital losses, for the three months ended July 31, 2007 were $104,000 as compared to capital gains of $3,000 during the first quarter of fiscal year 2007.

Liquidity and Capital Resources

The Company had working capital of $78,980,000 as of July 31, 2007 and $62,484,000 as of July 31, 2006. Cash and short-term securities totaled $101,277,000 as of July 31, 2007 and $79,498,000 as of July 31, 2006.
 
Cash from operating activities

The Company’s cash flow from operations of $6,016,000 for the three months ended July 31, 2007 was 44% above cash flow from operations of $4,167,000 for the three months ended July 31, 2006. The primary change was the purchase of additional fixed income debt securities within VLS, the Company’s broker/dealer subsidiary, which was partially offset by the slowing decline in unearned revenues and accounts payable and accrued expenses within the Company.

Cash from investing activities

The Company’s cash outflow from investing activities of $2,160,000 for the three months ended July 31, 2007 was 64% below cash outflow from investing activities of $5,929,000 for the three months ended July 31, 2006 due to the maturity of fixed income securities and the redeployment of holdings in fixed income securities classified as available for sale to trading securities and cash during the first quarter of fiscal 2008.

Cash from financing activities

The Company’s net cash outflow from financing activities of $2,995,000 for the three months ended July 31, 2007 increased 20% as compared to the first quarter of the prior fiscal year due to the payment of a higher quarterly dividend per common share of $0.30 in fiscal 2008 as compared to $0.25 in fiscal 2007.
 
Management believes that the Company’s cash and other liquid asset resources used in its business together with the future cash flows from operations will be sufficient to finance current and forecasted operations. Management does not anticipate any borrowing in fiscal 2008. 

17

 
Critical Accounting Estimates and Policies

The Company’s Critical Accounting Estimates and Policies have not changed from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Form 10-K for the fiscal year ended April 30, 2007.
 
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market Risk Disclosures

The Company’s Consolidated Balance Sheet includes a substantial amount of assets whose fair values are subject to market risks. The Company’s significant market risks are primarily associated with interest rates and equity prices. The following sections address the significant market risks associated with the Company’s business activities.

Interest Rate Risk

The Company’s strategy has been to acquire highly liquid debt securities with extremely low credit risk. Despite this strategy management recognizes and accepts the possibility that losses may occur. To limit the price fluctuation in these securities from interest rate changes, the Company’s management invests primarily in short-term obligations maturing in 1 to 5 years.

The fair values of the Company’s fixed maturity investments will fluctuate in response to changes in market interest rates. Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values of those instruments. Additionally, fair values of interest rate sensitive instruments may be affected by prepayment options, relative values of alternative investments, and other general market conditions.

The following table summarizes the estimated effects of hypothetical increases and decreases in interest rates on assets that are subject to interest rate risk. It is assumed that the changes occur immediately and uniformly to each category of instrument containing interest rate risks. The hypothetical changes in market interest rates do not reflect what could be deemed best or worst case scenarios. Variations in market interest rates could produce significant changes in the timing of repayments due to prepayment options available. For these reasons, actual results might differ from those reflected in the table. Dollars are in thousands.
 
18

 
   
Estimated Fair Value after
 
   
Hypothetical Change in Interest Rates
 
       
   
(bp = basis points)
 
                       
       
6 mos.
 
6 mos.
 
1 yr.
 
1 yr.
 
   
Fair
 
50bp
 
50bp
 
100bp
 
100bp
 
Fixed Income Securities
 
Value
 
increase
 
decrease
 
increase
 
decrease
 
                       
As of July 31, 2007
Investments in securities with fixed maturities
 
$
46,303
 
$
45,846
 
$
46,567
 
$
45,425
 
$
46,633
 
                                 
As of April 30, 2007
Investments in securities with fixed maturities
 
$
42,952
 
$
42,357
 
$
43,074
 
$
41,900
 
$
43,054
 

Management regularly monitors the maturity structure of the Company’s investments in debt securities in order to maintain an acceptable price risk associated with changes in interest rates.

Equity Price Risk

The carrying values of investments subject to equity price risks are based on quoted market prices or management’s estimates of fair value as of the balance sheet dates. Market prices are subject to fluctuation and, consequently, the amount realized in the subsequent sale of an investment may significantly differ from the reported market value. Fluctuation in the market price of a security may result from perceived changes in the underlying economic characteristics of the issuer, the relative price of alternative investments and general market conditions. Furthermore, amounts realized in the sale of a particular security may be affected by the relative quantity of the security being sold.

Value Line invests a significant level of its assets in equity securities, primarily the Value Line Funds. Each mutual fund invests in a variety of equity positions.

The table below summarizes Value Line’s equity price risks as of July 31, 2007 and April 30, 2007 and shows the effects of a hypothetical 30% increase and a 30% decrease in market prices as of those dates. The selected hypothetical changes do not reflect what could be considered the best or worst case scenarios. Dollars are in thousands.

           
Estimated
   
           
Fair Value after
 
Hypothetical Percentage
       
Hypothetical
 
Hypothetical
 
Increase (Decrease) in
Equity Securities
 
Fair Value
 
Price Change
 
Change in Prices
 
Shareholders’ Equity
As of July 31, 2007
 
$50,664
 
30% increase
 
$65,863
 
12.49%
       
30% decrease
 
$35,464
 
(12.49)%
                 
As of April 30, 2007
 
$49,719
 
30% increase
 
$64,635
 
12.83%
       
30% decrease
 
$34,803
 
(12.83)%
 
19

 
Item 4. CONTROLS AND PROCEDURES

(a)
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure.

The Company’s management has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

(b)
The registrant’s principal executive officer and principal financial officer have determined that there have been no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that have materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
20

 
Part II - Other Information
 
Item 1. Legal Proceedings

Refer to Note 9 (Contingencies) of the consolidated condensed financial statements for discussion of legal proceedings.
 
Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A - Risk Factors in the Company’s Annual Report on Form 10-K for the year ended April 30, 2007.
 
Item 6. Exhibits

31.1 Certificate of Chief Executive Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certificate of Chief Financial Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Joint CEO/CFO Certificate Required Under Section 906 of the Sarbanes-Oxley Act of 2002.

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VALUE LINE, INC.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-Q report for the period ended July 31, 2007 to be signed on its behalf by the undersigned thereunto duly authorized.

 
Value Line, Inc.
 
 
(Registrant)
 
     
Date: September 14, 2007
By:
s/Jean Bernhard Buttner
 
   
Jean Bernhard Buttner
 
   
Chairman & Chief Executive Officer
 
       
Date: September 14, 2007
By:
s/Mitchell E. Appel
 
   
Mitchell E. Appel
 
   
Chief Financial Officer
 

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