VALUE LINE INC - Quarter Report: 2021 January (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

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

 

For the quarterly period ended January 31, 2021

or

 

☐ 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 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.)
551 Fifth Avenue, New York, New York	10176-0001
(Address of principal executive offices)	(Zip Code)

                                                                                          

(212) 907-1500

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading symbol	Name of each Exchange on which registered
Common stock, $0.10 par value per share	VALU	The Nasdaq Capital Market

 

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐                   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐     Accelerated filer ☐       Non-accelerated filer ☒

Smaller reporting company ☐     Emerging growth company ☐    

      

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

 

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 March 10, 2021
Common stock, $0.10 par value per share	9,574,187 shares

                                    

 

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

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

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

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

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

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

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

January 31, 2021

(Unaudited)

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

Cautionary Statement Regarding Forward-Looking Information

This report contains statements that are predictive in nature, depend upon or refer to future events or conditions (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, as amended. Actual results for Value Line, Inc. (“Value Line” or “the Company”) may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to the following:

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors which may involve external factors over which we may have no control or changes in our plans, strategies, objectives, expectations or intentions, which may happen at any time at our discretion, could also have material adverse effects on future results. Except as otherwise required to be disclosed in periodic reports required to be filed by public companies with the SEC pursuant to the SEC's rules, we have no duty to update these statements, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, current plans, anticipated actions, and future financial conditions and results may differ from those expressed in any forward-looking information contained herein.

In this report, “Value Line,” “we,” “us,” “our” refers to Value Line, Inc. and “the Company” refers to Value Line and its subsidiaries unless the context otherwise requires.

Executive Summary of the Business

The Company's core business is producing investment periodicals and their underlying research and making available certain Value Line copyrights, Value Line trademarks and Value Line Proprietary Ranks and other proprietary information, to third parties under written agreements for use in third-party managed and marketed investment products and for other purposes. Value Line markets under well-known brands including Value Line®, the Value Line logo®, The Value Line Investment Survey®, Smart Research, Smarter Investing™ and The Most Trusted Name in Investment Research®. The name "Value Line" as used to describe the Company, its products, and its subsidiaries, is a registered trademark of the Company. Effective December 23, 2010, EULAV Asset Management Trust (“EAM”) was established to provide investment management services to the Value Line Funds, institutional and individual accounts and provide distribution, marketing, and administrative services to the Value Line® Mutual Funds ("Value Line Funds"). The Company maintains a significant investment in EAM from which it receives payments in respect of its non-voting revenues and non-voting profits interests.

The Company’s target audiences within the investment research field are individual investors, colleges, government entities including public libraries, and investment management professionals. Individuals come to Value Line for complete research in a single package. Institutional licensees consist of corporations, financial professionals, colleges, government agencies, and municipal libraries. Libraries and universities offer the Company’s detailed research to their patrons and students. Investment management professionals and other institutional customers use the research and historical information in their day-to-day businesses. The Company has a dedicated department that solicits institutional subscriptions.

Payments received for new and renewal subscriptions and the value of receivables for amounts billed to retail and institutional customers are recorded as unearned revenue until the order is fulfilled. As the orders are fulfilled, the Company recognizes revenue in equal installments over the life of the particular subscription. Accordingly, the subscription fees to be earned by fulfilling subscriptions after the date of a particular balance sheet are shown on that balance sheet as unearned revenue within current and long-term liabilities.

The investment periodicals and related publications (retail and institutional) as well as the Value Line copyrights, Value Line Proprietary Ranking System results, and other proprietary information, consolidate into one segment called Publishing.

Asset Management and Mutual Fund Distribution Businesses

The business of EAM is managed by its trustees each owning 20% of the voting profits interest in EAM and by its officers subject to the direction of the trustees. The Company’s non-voting revenues and non-voting profits interests in EAM entitle it to receive a range of 41% to 55% of EAM’s revenues (excluding distribution revenues) from EAM’s mutual fund and separate account business and 50% of the residual profits of EAM (subject to temporary increase in certain limited circumstances). The Voting Profits Interest Holders will receive the other 50% of residual profits of EAM. Distribution is not less than 90% of EAM’s profits payable each fiscal quarter under the provisions of the EAM Trust Agreement.

Business Environment

The nation's economy, which endured a series of historic ups and downs over the past year, as the world battled the worst global pandemic since 1918, has begun to recover significantly. For the most part, this nascent comeback is being led by the housing, retailing, and manufacturing sectors, but restrained by the frustrating slow and uneven pace of job creation.

This optimistic case assumes that the progress being made in quelling COVID-19 will continue. In addition to further progress on the pandemic front, the nation anticipates additional support from Congress and the continuing monetary support from the Federal Reserve, which is being promised.

Currently, the Dow Jones Industrial Average, the S&P 500 Index, and the NASDAQ Composite each recently hit an all-time high. Moreover, this more than decade-long bull market seems as though it will endure, aided by historically low interest rates, past and prospective fiscal support, and evident strong earnings improvement.

Recently, though, investor fears of rising inflation have started to creep back in after a long absence. Such concerns are being engendered by the faster pace of economic improvement, a recent uptick in producer, or wholesale, prices, and expectations of significant additional fiscal spending. This led to a sharp recovery in yields on 10-year Treasury notes and 30-year Treasury bonds. For now, we believe these inflation worries are overblown, and that the economic recovery will prove to be of insufficient magnitude to seriously unsettle the inflation outlook.

Results of Operations for the Three and Nine Months Ended January 31, 2021 and January 31, 2020

The following table illustrates the Company’s key components of revenues and expenses.

During the nine months ended January 31, 2021, the Company’s net income of $16,202,000, or $1.69 per share, was 26.1% above net income of $12,853,000, or $1.33 per share, for the nine months ended January 31, 2020. During the nine months ended January 31, 2021, the Company’s income from operations of $6,697,000 was 14.0% below income from operations of $7,783,000 during the nine months ended January 31, 2020. The largest factors in the increase in net income during the nine months ended January 31, 2021, compared to the prior fiscal year, were an increase in copyright fees, an increase from revenues and profits interests in EAM Trust, and an increase in realized capital gains on sales of securities available for sale.

During the nine months ended January 31, 2021, there were 9,604,869 average common shares outstanding as compared to 9,652,805 average common shares outstanding during the nine months ended January 31, 2020.

During the three months ended January 31, 2021, the Company’s net income of $6,029,000, or $0.63 per share, was 21.7% above net income of $4,952,000, or $0.51 per share, for the three months ended January 31, 2020. During the three months ended January 31, 2021, the Company’s income from operations of $2,283,000 was 27.0% below income from operations of $3,129,000 during the three months ended January 31, 2020.

Total operating revenues

Within investment periodicals and related publications, subscription sales orders are derived from print and digital products. The following chart illustrates the changes in the sales orders associated with print and digital subscriptions.

Sources of subscription sales         

During the nine months ended January 31, 2021 new sales of print and digital publications increased as a percent of the total gross print and digital sales versus the prior fiscal year due to an increase in new Telemarketing gross sales of print and digital publications. During the nine months ended January 31, 2021 renewal sales of print and digital publications decreased as a percent of the total gross digital sales versus the prior fiscal year due to a decrease in new gross sales of Institutional print publications as customer migration to digital services continues gradually.

Unearned subscription revenue as of January 31, 2021 is 1.0% below January 31, 2020 and is 5.2% below April 30, 2020. A certain amount of variation is to be expected due to the volume of new orders and timing of renewal orders, direct mail campaigns and large Institutional Sales orders.

Investment periodicals and related publications revenues

Investment periodicals and related publications revenues of $20,823,000 decreased 1.3% during the nine months ended January 31, 2021, as compared to the prior fiscal year.  Total product line circulation at January 31, 2021 was 2.5% above total product line circulation at January 31, 2020, reversing a long term trend.  The Company actively attracted new subscribers to our services through increased marketing efforts, promoting add-on and multi-year purchases in addition to continuing direct mail, e-mail, and telephone efforts by our sales personnel.  During the nine months ended January 31, 2021, our Institutional Sales department generated total sales orders of $10,192,000 or 7.9% above the prior fiscal year and the retail telemarketing sales team generated total sales orders of $6,001,000 or 1.5% above the prior fiscal year.

Total print circulation at January 31, 2021 was 1.7% above the total print circulation at January 31, 2020. Print publication revenues of $9,054,000 during the nine months ended January 31, 2021 decreased 5.3% as compared to the prior fiscal year. Total digital circulation at January 31, 2021 was 3.6% above total digital circulation at January 31, 2020 and digital publications revenues of $11,769,000 during the nine months ended January 31, 2021 were 2.1% above the prior fiscal year.

During the three months ended January 31, 2021, investment periodicals and related publications revenues of $6,830,000 decreased 3.9% as compared to the investment periodicals and related publications revenues of $7,108,000 during the three months ended January 31, 2020 which included an extra week of servings for the weekly print products. Decrease would be 1.2% excluding the extra week of print products servings during the third quarter of the prior fiscal year. During the three months ended January 31, 2021, print publication revenues of $2,896,000 decreased 11.5%, (5.9% excluding the extra week of print products servings during the three months ended January 31, 2020) as compared to third quarter of the prior fiscal year.

Value Line serves primarily individual and professional investors in stocks, who pay mostly on annual subscription plans, for basic services or as much as $100,000 or more annually for comprehensive premium quality research, not obtainable elsewhere. The ongoing goal of adding new subscribers has led us to experiment with varying terms for our independent, proprietary research including periods of intensive promotion of “starter” services and publications. Further, new services and new features for existing services are regularly under consideration and development. Prominently introduced in the past year were new elements in the Value Line Research Center, such as The New Value Line ETFs Service. A new monthly publication Value Line Information You Should Know Wealth Newsletter was introduced as well, and features of the Value Line Research Center and The Value Line Fund Advisor Plus services were enhanced. The new Value Line M & A Service, seeking stocks of quality companies that may be merged or acquired, launched in the second quarter of fiscal 2021 and Value Line Climate Change Investing Service in the fourth.         

Copyright fees

During the nine months ended January 31, 2021, copyright fees of $9,845,000 were 4.6% above those during the corresponding periods in the prior fiscal year. The Company has negotiated with the sponsor of the largest exchange traded fund (“ETF”) in the program the phased restructuring of the Company’s asset based fees and overall fees of the ETF in light of the competitive market. The Company’s copyright fees may be reduced in the range of ten percent, although the level of assets under management in the ETF is critical to this projection, and it reached new highs in recent weeks subsequent to the third quarter ended January 31, 2021.

Investment management fees and services – (unconsolidated)

The Company has substantial non-voting revenues and non-voting profits interests in EAM, the asset manager to the Value Line Mutual Funds. Since the Company’s interest is non-controlling and non-voting, the Company does not report this operation as a separate business segment, although it maintains a significant interest in the cash flows generated by this business and will receive ongoing payments in respect of its non-voting revenues and non-voting profits interests.

Value Line Funds continue to succeed in assets growth, realizing net investor inflows for the past two years. Net assets in hybrid funds were up $1.15 billion at January 31, 2021. Total assets in the Value Line Funds managed and/or distributed by EAM at January 31, 2021, were $4.90 billion, which is $1.15 billion, or 30.7%, above total assets of $3.75 billion in the Value Line Funds managed and/or distributed by EAM at January 31, 2020. The increase reflects successful investment selection capturing market appreciation and positive net flows for the Value Line Funds, partially offset by net redemptions in eight of the ten funds over the twelve month period ended January 31, 2021.

Shares of Value Line Strategic Asset Management Trust (“SAM”) and Value Line Centurion Fund (“Centurion”) are only distributed within certain variable annuity and variable life insurance contracts.

Value Line Mutual Funds

The Value Line Fund shareholders are provided a money market fund investment managed by Federated Government Obligations Fund. In July 2020, the Value Line VIP Equity Advantage Fund with insignificant assets was closed and liquidated.

As of January 31, 2021, four of six Value Line equity and hybrid mutual funds, excluding SAM and Centurion, held an overall four or five star rating by Morningstar, Inc.

Several of the Value Line Funds have received national recognition. The Value Line Asset Allocation Fund and Capital Appreciation Fund continue stellar performance as the top performing balanced funds of any allocation funds in Morningstar’s allocation categories.

EAM Trust - Results of operations before distribution to interest holders

The overall results of EAM’s investment management operations during the nine months ended January 31, 2021, before interest holder distributions, included total investment management fees earned from the Value Line Funds of $21,318,000, 12b-1 fees and other fees of $7,194,000 and other income of $234,000. For the same period, total investment management fee waivers were $207,000 and 12b-1 fee waivers for nine Value Line Funds were $490,000. During the nine months ended January 31, 2021, EAM's net income was $2,958,000 after giving effect to Value Line’s non-voting revenues interest of $11,113,000, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.

The overall results of EAM’s investment management operations during the nine months ended January 31, 2020, before interest holder distributions, included total investment management fees earned from the Value Line Funds of $16,531,000, 12b-1 fees and other fees of $6,275,000 and other income of $147,000. For the same period, total investment management fee waivers were $233,000 and 12b-1 fee waivers for three Value Line Funds were $517,000. During the nine months ended January 31, 2020, EAM's net income was $1,990,000 after giving effect to Value Line’s non-voting revenues interest of $8,389,000, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.

As of January 31, 2021, three of the Value Line Funds have all or a portion of the 12b-1 fees being waived, and one fund has partial investment management fee waivers in place. Although, under the terms of the EAM Declaration of Trust, the Company no longer receives or shares in the revenues from 12b-1 distribution fees, the Company could benefit from the fee waivers to the extent that the resulting reduction of expense ratios and enhancement of the performance of the Value Line Funds attracts new assets.

The Value Line equity and hybrid funds’ assets represent 89.5%, variable annuity funds issued by GIAC represent 8.4%, and fixed income fund assets represent 2.1%, respectively, of total fund assets under management (“AUM”) as of January 31, 2021. At January 31, 2021, equity, hybrid and GIAC variable annuities AUM increased by 31.7% and fixed income AUM decreased by 3.7% as compared to fiscal 2020.

EAM - The Company’s non-voting revenues and non-voting profits interests

The Company holds non-voting revenues and non-voting profits interests in EAM which entitle the Company to receive from EAM an amount ranging from 41% to 55% of EAM's investment management fee revenues from its mutual fund and separate accounts business, and 50% of EAM’s net profits, not less than 90% of which is distributed in cash every fiscal quarter. The applicable recent non-voting revenues interest percentage for the third quarter of fiscal 2021 was 52.48%.

The Company recorded income from its non-voting revenues interest and its non-voting profits interest in EAM as follows:

Operating expenses

Expenses within the Company are categorized into advertising and promotion, salaries and employee benefits, production and distribution, office and administration.

Advertising and promotion

During the three and nine months ended January 31, 2021, advertising and promotion expenses of $837,000 and $2,709,000, respectively, increased 11.9% and 13.2% as compared to the prior fiscal year. During the nine months ended January 31, 2021, increases were primarily due to a $133,000 increase in media marketing expenses and institutional sales promotion and a $141,000 increase in direct mail expenses primarily for The Value Line Investment Survey and other services.

Salaries and employee benefits

During the three and nine months ended January 31, 2021, salaries and employee benefits of $4,716,000 and $13,778,000, respectively, increased 4.3% and 3.6% above the prior fiscal year. The increase during the nine months ended January 31, 2021, was primarily due to increases in Profit Sharing employee retirement benefits during fiscal 2021 and employee recruitment fees partially offset by a 6.0% decrease in salaries and employee benefits in the Information Technology department (“IT”), reflecting completion of certain initiatives to upgrade operating systems.

Production and distribution

During the nine months ended January 31, 2021, production and distribution expenses of $3,854,000 increased 6.8% above the prior fiscal year. During the three months ended January 31, 2021, production and distribution expenses of $1,189,000 were comparable to the third quarter of the prior fiscal year. The increase of $246,000 during the nine months ended January 31, 2021, was attributable to costs related to production support of the Company’s website, maintenance of the Company’s publishing and application software and operating systems as compared to fiscal 2020.

Office and administration

During the nine months ended January 31, 2021, office and administrative expenses of $3,630,000 increased 6.2% above the prior fiscal year. During the three months ended January 31, 2021, office and administrative expenses of $1,105,000 decreased 8.3% below the third quarter of the prior fiscal year. The increase during the nine months ended January 31, 2021 was primarily a result of an increase in professional fees and bank service costs based on higher credit card gross receipts of $9.3 million in fiscal 2021 which were 18% higher than credit card gross receipts of $7.9 million in the prior fiscal year.

Concentration

During the nine months ended January 31, 2021, 32.1% of total publishing revenues of $30,668,000 were derived from a single customer.

Income from Securities Transactions, net

During the nine months ended January 31, 2021 and January 31, 2020, the Company’s income from securities transactions, net, primarily derived from dividend and interest income, was $1,705,000 and $451,000, respectively. Proceeds from maturities and sales of government debt securities classified as available-for-sale during the nine months ended January 31, 2021 and January 31, 2020, were $11,431,000 and $5,223,000, respectively. Proceeds from sales of equity securities classified as available-for-sale during the nine months ended January 31, 2021 were $7,684,000. Gains on the sales of equity securities classified as available-for-sale were reclassified from other comprehensive income in the Consolidated Condensed Balance Sheet in the amount of $1,162,000 during the nine months ended January 31, 2021. There were no sales or proceeds from sales of equity securities during the nine months ended January 31, 2020.

Effective income tax rate

The overall effective income tax rates, as a percentage of pre-tax ordinary income for the nine months ended January 31, 2021 and January 31, 2020 were 22.82% and 27.05%, respectively. The decrease in the effective tax rate during the quarter ended January 31, 2021 is primarily a result of a decrease in the state and local income taxes as a result of changes in state and local tax allocation factors in primarily deferred taxes in fiscal 2021. The Company's annualized overall effective tax rate fluctuates due to a number of factors, in addition to changes in tax law, including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-tax income, the Company's geographic profit mix between tax jurisdictions, taxation method adopted by each locality, new interpretations of existing tax laws and rulings and settlements with tax authorities.

Leases

The FASB issued ASU 2016-02,"Leases (Topic 842)", in February 2016. ASU 2016-02 requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. ASU 2016-02 also requires certain qualitative and quantitative disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases.      

The Company adopted ASU 2016-02 using a modified retrospective transition approach as of the Effective Date as permitted by the amendments in ASU 2018-11, which provides an alternative modified retrospective transition method. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. May 1, 2019). The Company has elected to employ the transitionary relief offered by the FASB and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized.      

The Company leases office space in New York, NY and a warehouse and appurtenant office space in Lyndhurst, NJ. The Company has evaluated these leases and determined that they are operating leases under the definitions of the guidance of ASU 2016-02.         

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the right-of-use asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received.                                                      

Liquidity and Capital Resources

The Company had working capital, defined as current assets less current liabilities, of $20,813,000 as of January 31, 2021 and $13,700,000 as of April 30, 2020. These amounts include short-term unearned revenue of $18,111,000 and $18,854,000 reflected in total current liabilities at January 31, 2021 and April 30, 2020, respectively. Cash and short-term securities were $39,699,000 and $34,158,000 as of January 31, 2021 and April 30, 2020, respectively.

The Company’s cash and cash equivalents include $15,286,000 and $2,115,000 at January 31, 2021 and April 30, 2020, respectively, invested primarily in commercial banks and in Money Market Funds at brokers, which operate under Rule 2a-7 of the 1940 Act and invest primarily in short-term U.S. government securities.

Cash from operating activities

The Company had cash inflows from operating activities of $10,355,000 during the nine months ended January 31, 2021 compared to cash inflows from operating activities of $6,856,000 during the nine months ended January 31, 2020. The increase in cash inflows from fiscal 2020 to fiscal 2021 is primarily attributable to the increase in revenues and profits interests distributions received from EAM Trust as compared to the prior fiscal year and the increase in net income during the nine months ended January 31, 2021.

Cash from investing activities

The Company’s cash inflows from investing activities of $7,954,000 during the nine months ended January 31, 2021 compared to cash outflows from investing activities of $3,426,000 for the nine months ended January 31, 2020. Cash inflows for the nine months ended January 31, 2021 were higher than in fiscal 2020 primarily due to increased proceeds from sales of equity and fixed income securities in fiscal 2021.

Cash from financing activities

During the nine months ended January 31, 2021, the Company’s cash outflows from financing activities were $7,081,000 and compared to cash outflows from financing activities of $6,368,000 for the nine months ended January 31, 2020. During the nine months ended January 31, 2021 cash outflows for financing activities included $1,045,000 for the repurchase of 21,411 shares of the Company’s common stock under the April 17, 2020 board approved common stock repurchase program. Quarterly dividend payments of $0.21 per share during fiscal 2021 aggregated $6,056,000 and compared to quarterly dividend payments of $0.20 per share during fiscal 2020 which aggregated $5,796,000.

At January 31, 2021 there were 9,579,640 common shares outstanding as compared to 9,639,545 common shares outstanding at January 31, 2020. The Company expects financing activities to continue to include use of cash for dividend payments for the foreseeable future.

Management believes that the Company’s cash and other liquid asset resources used in its business together with the future cash flows from operations and from the Company’s non-voting revenues and non-voting profits interests in EAM will be sufficient to finance current and forecasted liquidity needs for the next twelve months. Management does not anticipate making any borrowings during the next twelve months. As of January 31, 2021, and April 30, 2020, retained earnings were $66,604,000 and $56,450,000, respectively, and liquid assets were $39,699,000 and $34,158,000, respectively.

Seasonality

Our publishing revenues are comprised of subscriptions which are generally annual or multi-year subscriptions. Our cash flows from operating activities are minimally seasonal in nature, primarily due to the timing of customer payments made for orders and subscription renewals.

Off-balance sheet arrangements

We are not a party to any off-balance sheet arrangements, other than operating leases entered into in the ordinary course of business.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. This ASU requires that, for leases longer than one year, a lessee recognize in the statements of financial position a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. It also requires that for finance leases, a lessee recognize interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a combined expense. The Company adopted this ASU in May 2019 under a modified retrospective approach (see Note 12).                                                       

On June 21, 2018, the United States Supreme Court reversed the 1992 ruling in Quill, which protected firms delivering items by common carrier into a state where it had no physical presence from having to collect sales tax in such state. Since then, states' legislative efforts to increase business tax collections have continually expanded. The Company has integrated the effects of the various state laws into its operations and continues to do so.

Critical Accounting Estimates and Policies

The Company prepares its Consolidated Condensed financial statements in accordance with Generally Accepted Accounting Principles as in effect in the United States (U.S. “GAAP”). The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent, and the Company evaluates its estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies reflect the significant judgments and estimates used in the preparation of its Consolidated Condensed Financial Statements.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market Risk Disclosures

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

Interest Rate Risk

The Company’s strategy has been to acquire debt securities with 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 within one year.

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.

Fixed income securities consist of certificates of deposits and securities issued by federal, state and local governments within the United States. As of January 31, 2021 and April 30, 2020 the aggregate cost of fixed income securities classified as available-for-sale were $5,967,000 and $14,902,000, respectively, and fair value was $6,001,000 and $15,079,000, respectively.

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.

Fixed Income Securities