Edgar Filing: VALUE LINE INC

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, 2006

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 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, 2006

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,
	2006			2006
	(unaudited)

Assets
Current Assets:
Cash and cash equivalents (including short term investments of $10,158 and $14,885, respectively)	$	11,074		$	15,331
Trading securities		22,317			22,314
Securities available for sale		68,424			65,915
Accounts receivable, net of allowance for doubtful accounts of $75 and $72, respectively		3,960			3,037
Receivable from affiliates		2,641			2,917
Prepaid expenses and other current assets		1,491			1,617
Deferred income taxes		88			88

Total current assets		109,995			111,219

Long term assets
Property and equipment, net		5,264			5,406
Capitalized software and other intangible assets, net		2,293			2,589

Total long term assets		7,557			7,995

Total assets	$	117,552		$	119,214

Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities	$	3,691		$	6,186
Accrued salaries		1,331			1,495
Dividends payable		2,495			2,495
Accrued taxes payable		3,300			560
Unearned revenue		29,421			28,224
Deferred income taxes		7,273			8,436

Total current liabilities		47,511			47,396

Long term liabilities
Unearned revenue		6,089			9,502
Deferred charges		381			381

Total long term liabilities		6,470			9,883

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		48,032			44,256
Treasury stock, at cost (18,400 shares on 7/31/06 and 4/30/06)		(354	)		(354	)
Accumulated other comprehensive income, net of tax		13,902			16,042

Total shareholders' equity		63,571			61,935

Total liabilities and shareholders' equity	$	117,552		$	119,214

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

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,
	2006		2005

Revenues:
Investment periodicals and related publications	$	11,541	$	12,174
Licensing fees		1,811		886
Investment management fees & services		8,039		7,814

Total revenues		21,391		20,874

Expenses:
Advertising and promotion		3,224		2,606
Salaries and employee benefits		4,542		5,163
Production and distribution		1,811		1,775
Office and administration		1,945		2,167

Total expenses		11,522		11,711


Income from operations		9,869		9,163
Income from securities transactions, net		593		285

Income before income taxes		10,462		9,448
Provision for income taxes		4,191		3,800

Net income	$	6,271	$	5,648


Earnings per share, basic & fully diluted	$	0.63	$	0.57


Weighted average number of common shares		9,981,600		9,981,600

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

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,
	2006			2005
Cash flows from operating activities:
Net income	$	6,271		$	5,648

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		555			568
Unrealized gains on trading securities		(3	)		-

Changes in assets and liabilities:
(Decrease) in unearned revenue		(2,216	)		(2,655	)
(Decrease) in deferred charges		(21	)		(21	)
Increase/(decrease) in accounts payable and accrued expenses		(2,474	)		(294	)
Increase/(decrease) in accrued salaries		(164	)		100
Increase in accrued taxes payable		2,740			2,960
(Increase)/decrease in prepaid expenses and other current assets		126			242
Decrease/(increase) in accounts receivable		(923	)		340
Decrease/(increase) in receivable from affiliates		276			(299	)

Total adjustments		(2,104	)		941

Net cash provided by operating activities		4,167			6,589

Cash flows from investing activities:
Purchases of equity securities		-			(3	)
Proceeds from sales of fixed income securities		125			9,650
Purchases of fixed income securities		(5,937	)		-
Expenditures for capitalized software		(117	)		(68	)

Net cash provided by/(used in) investing activities		(5,929	)		9,579

Cash flows from financing activities:
Dividends paid		(2,495	)		(2,495	)

Net cash used in financing activities		(2,495	)		(2,495	)

Net (decrease)/increase in cash and cash equivalents		(4,257	)		13,673
Cash and cash equivalents at beginning of year		15,331			5,971

Cash and cash equivalents at end of period	$	11,074		$	19,644

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

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 financial statements.

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, 2005

(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, 2005		9,981,600	$	1,000	$	991		($354	)			$	30,798		$	11,708	$	44,143

Comprehensive income
Net income										$	5,648		5,648					5,648
Other comprehensive income, net of tax:
Change in unrealized
gains on securities, net of taxes											2,743					2,743		2,743

Comprehensive income										$	8,391

Dividends declared													(2,495	)				(2,495	)

Balance at July 31, 2005		9,981,600	$	1,000	$	991		($354	)			$	33,951		$	14,451	$	50,039

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

VALUE LINE, INC.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Significant Accounting Policies - Note 1:

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 27, 2006 and Form 10-K Amended, dated August 18, 2006 for the fiscal year ended April 30, 2006. Results of operations covered by this report may not be indicative of the results of operations for the entire year.

Value Line, Inc. (the "Company") is incorporated in New York State. Through its subsidiary, Value Line Publishing, Inc. ("VLP"), it publishes investment periodicals and related publications. Value Line, Inc. performs investment management services. Arnold Bernhard & Co., Inc. (the "Parent") owns approximately 86% of the issued and outstanding common stock 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:

Subscription revenues are recognized ratably over the terms of the subscriptions. Accordingly, the amount of subscription fees to be earned by servicing subscriptions after the date of the balance sheet is shown as unearned revenue.

Investment management fees (except 12b-1 fees) are recorded as the related services are performed (see note 6). Service and distribution fees under Rule 12b-1 are earned every month based on the average net assets of the respective mutual fund.

Valuation of Securities:

The Company's securities classified as available for sale consist of shares of the Value Line Mutual Funds ("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 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.

Trading securities held by the Company and subsidiaries are valued at market with unrealized gains and losses included in earnings.

Market valuation of securities listed on a securities exchange and over-the-counter securities traded on the NASDAQ Global Market is based on the closing sales prices on the last business day of each month. In the absence of closing sales prices for such securities, and for other securities traded in the over-the-counter market, the security is valued at the midpoint between the latest available and representative asked and bid prices.

Valuation of open-ended mutual fund shares is based upon the daily net asset values of the shares as calculated by such funds.

The market value of the Company's fixed maturity government debt obligations are determined utilizing quoted prices at the end of each day provided by an outside pricing service.

Advertising Expenses:

The Company expenses advertising costs as incurred.

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.

VALUE LINE, INC.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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, 2006 and April 30, 2006, cash equivalents included $10,097,000 and $14,746,000 respectively, invested in the Value Line money market funds.

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.

Marketable Securities - Note 2:

Trading Securities:

Trading securities held by the Company at July 31, 2006 had an aggregate cost of $22,402,000 and a market value of $22,317,000.Trading securities held by the Company at April 30, 2006 had an aggregate cost of $22,402,000 and a market value of $22,314,000. There were no trading securities held at July 31, 2005. There were no sales and no realized trading gains or losses during the first quarter of fiscal 2007 and 2006. The net changes in unrealized gains of $3,000 for the period ended July 31, 2006 was 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 $21,639,000 and the market value was $43,348,000 at July 31, 2006.The aggregate cost of the equity securities classified as available for sale was $21,635,000 and the market value was $46,644,000 at April 30, 2006. The total gains for equity securities with net gains included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheet were $21,709,000 and $25,009,000, net of deferred taxes of $7,642,000 and $8,803,000, as of July 31 and April 30, 2006, respectively. There were no sales and no realized gains or losses on equity securities during the first three months of fiscal 2007 and 2006. The decrease in gross unrealized gains on these securities of $3,302,000 and the increase of $4,323,000, net of deferred taxes of $1,162,000 and $1,513,000, were included in Shareholders' Equity at July 31, 2006 and 2005, respectively.

Government Debt Securities:

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, 2006 for U.S. government debt securities classified as available for sale were as follows:

			(In Thousands)
	Historical		Fair		Gross Unrealized
Maturity	Cost		Value		Holding Losses
Due in less than 2 years	$	12,023	$	11,860		($163	)
Due in 2-5 years		13,309		13,216		(93	)
Total investment in debt securities	$	25,332	$	25,076		($256	)

VALUE LINE, INC.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

The aggregate cost and fair value at April 30, 2006 for U.S. Government debt securities classified as available for sale were as follows:


			(In Thousands)
	Historical		Fair		Gross Unrealized
Maturity	Cost		Value		Holding Losses
Due in less than 2 years	$	10,778	$	10,641		($137	)
Due in 2-5 years		8,745		8,630		(115	)
Total investment in debt securities	$	19,523	$	19,271		($252	)

The unrealized losses of $256,000 and $252,000 in U.S. government debt securities net of deferred income tax benefits of $90,000 and $89,000, respectively, were included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheets as of July 31, 2006 and April 30, 2006.

The average yield on the U.S. Government debt securities classified as available for sale at July 31, 2006 and April 30, 2006 was 3.87% and 3.76%, respectively.

Proceeds from sales of government debt securities classified as available for sale were $125,000 and $9,650,000 during the three months ended July 31, 2006 and 2005, respectively. There were no related gains or losses on sales of government debt securities during the first three months of fiscal years 2007 or 2006.

For the three months ended July 31, 2006, and 2005, income from securities transactions also included $167,000 and $76,000 of dividend income and $423,000 and $262,000 of interest income, respectively. Income from securities transactions during the first quarter of fiscal 2006 also included $11,000 of related interest expense. There was no interest expense in fiscal 2007.

Supplemental Disclosure of Cash Flow Information - Note 3:

Cash payments for income taxes were $1,450,000 and $686,000 during the three months ended July 31, 2006 and 2005, respectively.

Employees' Profit Sharing and Savings Plan - Note 4:

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 upon 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 $320,000 and $360,000 for the three months ended July 31, 2006 and 2005, respectively.

Comprehensive Income - Note 5:

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, 2006 and April 30, 2006 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.

VALUE LINE, INC.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

				(In Thousands)
Three months ended 7-31-06	Before Tax Amount			Tax (Expense) or Benefit			Net of Tax Amount
Unrealized Gains on Securities:
Unrealized Holding Gains/(Losses) arising during the period		($3,302	)	$	1,162			($2,140	)
Other Comprehensive income		($3,302	)	$	1,162			($2,140	)

Three months ended 7-31-05
Unrealized Gains on Securities:
Unrealized Holding Gains/(Losses) arising during the period	$	4,220			($1,477	)	$	2,743
Other Comprehensive income	$	4,220			($1,477	)	$	2,743

Related Party Transactions - Note 6:

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. The fourteen Value Line Funds have adopted service and distribution plans under rule 12b-1 of the Investment Company Act of 1940. During certain periods prior to December 2004, Value Line Securities, Inc., ("VLS") earned brokerage commission income on securities transactions executed by VLS on behalf of the funds that cleared on a fully disclosed basis through non-affiliated brokers, who received a portion of the gross commission. VLS in November 2004 suspended executing trades through VLS for any of the Value Line Funds.

For the three months ended July 31, 2006 and 2005 investment management fees and 12b-1 service and distribution fees amounted to $7,757,000 and $7,623,000, respectively, which included fee waivers for certain of the Value Line Funds. These amounts included service and distribution fees of $2,107,000 and $2,477,000 earned by Value Line Securities, Inc. ("VLS"). The related receivables from the funds for management advisory fees and service and distribution fees included in Receivables from affiliates were $2,528,000, and $2,751,000 at July 31, 2006 and April 30, 2006, respectively.

For the three months ended July 31, 2006 and 2005, the Company was reimbursed $308,000 and $177,000, respectively, for payments it made on behalf of and services it provided to the Parent. At July 31, and April 30, 2006, Receivables from affiliates included a Receivable from the Parent of $92,000 and $154,000, respectively.

From time to time, the Parent has purchased additional shares of Value Line, Inc. 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.

VALUE LINE, INC.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Federal, State and Local Income Taxes - Note 7:

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,
	2006			2005
	(in thousands)
Current:
Federal	$	3,346		$	3,087
State and local		904			790
	$	4,250		$	3,877
Deferred:
Federal		($45	)		($78	)
State and local		(14	)		1
		($59	)		($77	)

Total:	$	4,191		$	3,800

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.

Business Segments - Note 8:

The Company operates two reportable business segments: Publishing & Licensing and Investment Management. The Publishing & Licensing segment produces investment related periodicals in both print and electronic form, and licensing fees for proprietary information. 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.

VALUE LINE, INC.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Disclosure of Reportable Segment Profit and Segment Assets (in thousands)

	Three months ended July 31, 2006
	Publishing &		Investment		Total
	Licensing		Management

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 profit		5,439		4,434		9,873
Segment assets		14,469		72,195		86,664
Expenditures for segment assets		117		-		117


	Three months ended July 31, 2005
		Publishing &		Investment		Total
		Licensing		Management

Revenues from external customers	$	13,060	$	7,814	$	20,874
Intersegment revenues		27		-		27
Income from securities transactions		4		23		27
Depreciation and amortization		540		24		564
Segment profit		6,453		2,714		9,167
Segment assets		13,129		63,516		76,645
Expenditures for segment assets		68		-		68

Reconciliation of Reportable Segment Revenues, Operating Profit and Assets


	(in thousands)
	Three months ended July 31,
	2006			2005
Revenues
Total revenues for reportable segments	$	21,416		$	20,901
Elimination of intersegment revenues		(25	)		(27	)
Total consolidated revenues	$	21,391		$	20,874

Segment profit

Total profit for reportable segments		10,152			9,194
Add: Income from securities transactions
related to corporate assets		314			258
Less: Depreciation related to corporate assets		(4	)		(4	)
Income before income taxes	$	10,462		$	9,448

Assets
Total assets for reportable segments		86,664			76,645
Corporate assets		30,888			29,683
Consolidated total assets	$	117,552		$	106,328

VALUE LINE, INC.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Contingencies - Note 9:

On September 17, 2003 the Company commenced an action in New York Supreme Court, seeking damages in an unspecified amount, against a small mutual fund company pertaining to a contemplated transaction. The Company was countersued for alleged damages in excess of $5,000,000. The action was settled in November 2004 without a material adverse effect on the Company. A related entity of the defendant in the New York action brought suit against the Company and certain Directors in Federal Court in Texas in March, 2004 based on the same transaction. On the Company's motion, that action has been transferred from Texas to New York. On March 2, 2006 the Federal Judge in New York granted the Company's motion dismissing three causes of action. The court allowed one cause of action to continue at this time.

Although the ultimate outcome of the litigation is subject to the inherent uncertainties of any legal proceeding, based upon Counsel's analysis of the factual and legal issues and the Company's meritorious defenses, it is management's belief that the expected outcome of this matter will not have a material adverse effect on the Company's consolidated results of operations and financial condition.

By letter dated June 15, 2005, the staff of the Securities and Exchange Commission informed the Company that it was conducting a preliminary inquiry. Thereafter, the staff has requested documents and information relating to, among other things, trades for the Company's and affiliates' proprietary accounts, the 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 operation and financial condition.

Item 2. MANAGEMENT DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Liquidity and Capital Resources

The Company had working capital as of July 31, 2006 of $62,484,000. Cash and short-term securities as of July 31, 2006 totaled $79,498,000.

The Company’s cash flow from operations of $4,167,000 for the three months ended July 31, 2006 was 37% lower than fiscal 2006’s cash flow of $6,589,000. The decrease in cash flow from operations was primarily due to the timing of payments for advertising and promotion. Net cash outflows of $5,929,000 from investing activities during the first three months of fiscal 2007 primarily resulted from purchases of fixed income securities. This compared to net cash inflows of $9,579,000 from investing activities last fiscal year.

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 anticipates no borrowing for fiscal year 2007.

Results of Operations

Net income for the first quarter ended July 31, 2006 of $6,271,000 or $0.63 per share was $623,000 or 11% above net income of $5,648,000 or $0.57 per share in fiscal year 2006. Operating income of $9,869,000 for the three months ended July 31, 2006 was 8% above operating income of $9,163,000 last fiscal year. The Company’s income from securities transactions of $593,000 for the first three months of fiscal 2007 was 108% above last year’s. Shareholders’ equity of $63,571,000 at July 31, 2006 was 27% higher than shareholders’ equity of $50,039,000 at July 31, 2005.

Subscription revenues of $11,541,000 for the first three months of fiscal year 2007 were 5% below subscription revenues of $12,174,000 for the prior fiscal year. Electronic publications revenues of $2,755,000 for the three months ended July 31, 2006 were level with electronic revenues for the same period last fiscal year. Within electronic publications revenues are revenues generated by institutional subscribers and retail subscribers. Institutional revenues increased $128,000 or 15%, while revenues from retail subscribers were down $139,000 or 7%. Print subscription revenues of $8,786,000 were down $623,000 or 7% compared to $9,409,000 for the last fiscal year. Licensing fees for the first three months of fiscal 2007 of $1,811,000 were up $925,000 or 104% compared to $886,000 last fiscal year.

Investment management fees and services revenues of $8,039,000 for the three months ended July 31, 2006 were up $225,000, or 3%, above the prior fiscal year’s revenues of $7,814,000. Investment advisory fees were up 10% primarily due to an increase in the net assets of the Value Line Mutual Funds, which was partially offset by fee waivers for certain of the Value Line Mutual Funds at July 31, 2006. Total mutual funds net assets as of July 31, 2006 were over $3.5 billion.

Operating expenses for the three months ended July 31, 2006 of $11,522,000 were 2% below expenses of $11,711,000 for the previous fiscal year. Total advertising and promotional expenses of $3,224,000 for the first three months of fiscal 2007 were 24% above the prior year’s expenses of $2,606,000. The increase in advertising expenses resulted primarily from the increase in the frequency of marketing campaigns in fiscal 2007 for the Company’s investment periodicals. Salaries and employee benefit expenses of $4,542,000 for the three months ended July 31, 2006 were 12% below expenses of $5,163,000 for the prior fiscal year. Production and distribution expenses for the period ended July 31, 2006 of $1,811,000 were 2% above expenses of $1,775,000 in fiscal 2006. The increase in expenses for the first three months of fiscal 2007 was primarily due to the outsourcing of certain data collection services and an increase in U.S postal rates, which were partially offset by lower paper and printing costs that resulted from a decrease in circulation of the print products. Office and administrative expenses for the first three months of fiscal 2007 of $1,945,000 were 10% below the prior fiscal year’s expenses of $2,167,000. The decline in administrative expenses was primarily due to a decrease in professional fees.

For the three months ended July 31, 2006, the Company’s income from securities transactions of $593,000 was 108% above securities transactions income of $285,000 last fiscal year. Income from securities transactions, for the first three months of fiscal 2007 included dividend and interest income of $590,000, which compares to dividend and interest income of $338,000 for the comparable period of the prior fiscal year. Unrealized gains on trading securities during fiscal 2007 were $3,000.

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

This report may contain 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:

·	demand for and market acceptance of new and existing products;

·	renewals of subscriptions for the Company’s products;

·	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;

·	competitive product and pricing pressures;

·	the impact of government regulation on the Company’s business and the uncertainties of litigation and regulatory initiatives and inquiries; 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, 2006, 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.

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 and liabilities 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 management prefers to invest in highly liquid debt securities with extremely low credit risk. The Company’s strategy is to acquire securities that are attractively priced in relation to the perceived credit risk. Management recognizes and accepts 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.

	Estimated Fair Value after
	Hypothetical Change in Interest Rates

	(bp = basis points)

			6 mos.		6 mos.		1 yr.		1 yr.

	Fair		50 bp		50 bp		100 bp		100 bp
Fixed Income Securities	Value		increase		decrease		increase		decrease

As of July 31, 2006
Investments in securities with fixed maturities	$	47,393	$	47,325	$	47,648	$	47,173	$	47,635

As of April 30, 2006
Investments in securities with fixed maturities	$	41,585	$	41,549	$	41,801	$	41,514	$	41,821

Management regularly monitors the maturity structure of the Company’s investments in fixed maturity debt obligations 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 amount of its assets in equity securities, primarily equity mutual funds managed by Value Line. Each of these mutual funds invests in a variety of equity positions of various companies thereby diversifying Value Line’s risk. Value Line has also utilized derivative financial instruments in the past to minimize market price risk, although no such derivative financial instruments were utilized during fiscal 2007 and 2006.

The table below summarizes Value Line’s equity price risks as of July 31 and April 30, 2006 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, 2006	$	43,348		30% increase	$	56,352		13.29	%
				30% decrease	$	30,343		(13.29	)%

As of April 30, 2006	$	46,644		30% increase	$	60,637		14.69	%
				30% decrease	$	32,651		(14.69	)%

Item 4. Disclosure Controls and Procedures

(a)

The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Exchange Act Rule 13a - 15(e)), based on their evaluation of these controls and procedures as of the end of the period covered by this report, are appropriately designed to ensure that material information relating to the registrant is made known to such officers and are operating effectively.

(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 has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

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 our Annual Report on Form 10-K for the year ended April 30, 2006.

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, 2006 to be signed on its behalf by the undersigned thereunto duly authorized.


	Value Line, Inc.
	(Registrant)

Date: September 13, 2006	By:	/s/ Jean Bernhard Buttner
		Jean Bernhard Buttner
		Chairman & Chief Executive Officer


Date: September 13, 2006	By:	/s/ Mitchell E. Appel
		Mitchell E. Appel
		Chief Financial Officer