VALUE LINE INC – 10-K – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help a reader understand Value Line, its operations and business factors. The MD&A should be read in conjunction with Item 1, "Business", Item 1A, "Risk Factors", and in conjunction with the consolidated financial statements and the accompanying notes contained in Item 8 of this report.  

The MD&A includes the following subsections:

                     ? Executive Summary of the Business                     ? Results of Operations                     ? Liquidity and Capital Resources                     ? Recent Accounting Pronouncements                     ? Critical Accounting Estimates and Policies   

Executive Summary of the Business

  The Company's primary business is producing investment periodicals and related publications and making available copyright data, including certain Proprietary Ranking System and other proprietary information, to third parties under written agreements for use in third-party managed and marketed investment products. Value Line markets under well-known brands including Value Line®, the Value Line logo®, The Value Line Investment Survey®, and The Most Trusted Name in Investment Research™. The name "Value Line" is used to describe the Company, its products, and its subsidiaries, and is a registered trademark of the Company. Prior to December 23, 2010, the date of the completion of the Restructuring Transaction (see "Restructuring of Asset Management and Mutual Fund Distribution Businesses" below), the Company provided investment management services to the Value Line® Mutual Funds ("Value Line Funds"), institutional and individual accounts and provided distribution, marketing, and administrative services to the Value Line Funds. Subsequent to the Restructuring Transaction, EAM provides the investment management services to the Value Line Funds. Value Line retains substantial non-voting revenues and non-voting profits interest in EAM.  The Company's target audiences within the investment periodicals and related publications field are individual investors, colleges, libraries, and investment management professionals. Individuals come to Value Line for complete research in one package. Institutional subscribers consist of corporations, financial professionals, colleges, and municipal libraries. Libraries and universities, offer the Company's detailed research to their patrons and students. Investment management professionals use the research and historical information in their day-to-day businesses. The Company has a dedicated department that solicits institutional subscriptions. Fees for institutional subscriptions vary by the university or college enrollment, number of users, and the number of products purchased.  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 subscriptions 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.  Prior to December 23, 2010, the Company's businesses consolidated into two reportable business segments. The investment periodicals and related publications (retail and institutional) and fees from copyright data including the Proprietary Ranking System information and other proprietary information consolidate into one segment called Publishing and the investment management services to the Value Line Funds and other managed accounts were consolidated into a second business segment called Investment Management. Subsequent to December 23, 2010, the date of the Restructuring Transaction, the Publishing segment constitutes the Company's only reportable business segment.  22        

Restructuring of Asset Management and Mutual Fund Distribution Businesses

The Company completed the restructuring of its asset management and mutual fund distribution businesses (the "Restructuring Transaction") on December 23, 2010 (the "Restructuring Date") and executed the EAM Declaration of Trust (the "EAM Declaration of Trust"). As part of the Restructuring Transaction: (1) EULAV Securities, Inc. ("ESI"), a New York corporation and wholly-owned subsidiary of the Company that acted as the distributor of the Value Line Funds was restructured into EULAV Securities LLC ("ES"), a Delaware limited liability company; (2) the Company transferred 100% of its interest in ES to EULAV Asset Management LLC ("EAM LLC"), a wholly-owned subsidiary of the Company that acted as the investment adviser to the Value Line Funds and certain separate accounts; (3) EAM LLC was converted into EAM; and (4) EAM admitted five individuals (the "Voting Profits Interest Holders"), as the initial holders of voting profits interests in EAM, with each of such individuals owning 20% of the voting profits interests of EAM, and (5) pursuant to the EAM Declaration of Trust, the Company received an interest in certain revenues of EAM and a portion of the residual profits of EAM but has no voting authority with respect to the election or removal of the trustees of EAM. The Voting Profits Interest Holders, who were selected by the independent directors of the Company, paid no consideration in exchange for their interests in EAM.  The business of EAM is managed by its trustees 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.  Pursuant to the EAM Declaration of Trust, the Company granted EAM the right to use the Value Line name for all existing Value Line Funds and agreed to supply the Value Line Proprietary Ranking System information to EAM without charge

or expense.  Business Environment 

During the twelve months ended April 30, 2013, the NASDAQ and the Dow Jones Industrial Average were up 9% and 12%, respectively. The risk-averse temperament of investors continues to restrain both the Company's revenues from its research periodicals and publications and the Company's cash flows from its non-voting revenues and non-voting profits interests in EAM.  The U.S. economy has been weaving an irregular recovery path over the past year, accelerating for a time, then just as quickly losing momentum. During the third quarter of calendar 2012, the nation's gross domestic product jumped forward by 3.1%. A drawdown in inventories and a marked retreat in defense-related spending then combined to hold growth to a scant 0.4% for the calendar year. As we moved into 2013, expectations were that the economy would rebound smartly early in the year, which it did, as GDP climbed by 2.5%.  Now, some sluggishness in several industrial and consumer categories, coupled with the ill effects of the government's mandated spending reductions, or sequestrations, seem likely to pare the current quarter's growth to just 1%-2%. Encouragingly, we think these dislocations will largely, though not completely, run their course over the next few months, so that during the second half of calendar 2013, growth could well nudge back above 2%.  Unfortunately, notwithstanding the noteworthy recovery in the housing market, indications that employment will continue to track higher, and the seeming commitment of the Federal Reserve to furthering the business expansion via exceptionally accommodative monetary policies, there is every likelihood that this three steps forward, two steps back growth progression will remain in place for the balance of this year.  On the whole, however, we sense that growth will accelerate modestly and perhaps more consistently in 2014, and that this upturn, underpinned by benign inflation and historically low interest rates, will remain in force for several years thereafter. All told, this should be a solid investment backdrop in which to gradually accumulate equities.  23        

Results of Operations for Fiscal Years 2013, 2012 and 2011

  The following table illustrates the Company's key components of revenues and expenses.                                                            Fiscal Years Ended April 30,

($ in thousands, except earnings per share)             2013           2012

2011

 Income from operations                               $    4,120$   5,338$   8,533 Revenues and profits interests from EAM Trust        $    6,260$   5,890$   2,355 Income from operations plus non-voting revenues and non-voting profits interests from EAM Trust      $   10,380$  11,228$  10,888 Operating expenses                                   $   31,720$  31,271$  40,134 Gain from deconsolidation of subsidiaries                     -              -     $  50,510 Income from securities transactions, net             $      126      $     

70     $      65 Income before income taxes                           $   10,506$  11,298$  61,463 Net income                                           $    6,619$   6,925$  37,782 Earnings per share                                   $     0.67$    0.70$    3.79

During the twelve months ended April 30, 2013, the Company's net income of $6,619,000, or $0.67 per share was $306,000 or 4.4% below net income of $6,925,000, or $0.70 per share, for the twelve months ended April 30, 2012. Income from operations was $4,120,000 for the twelve months ended April 30, 2013 and compares to income from operations of $5,338,000 for the twelve months ended April 30, 2012. Income before income taxes, which is inclusive of the non-voting revenues and non-voting profits interests from EAM, was $10,506,000 for the twelve months ended April 30, 2013, as compared to $11,298,000 for the twelve months ended April 30, 2012.  During the twelve months ended April 30, 2012, the Company's net income of $6,925,000, or $0.70 per share, was $30,857,000 or 82% below net income of $37,782,000, or $3.79 per share, for the twelve months ended April 30, 2011. The net income of the Company during the twelve months ended April 30, 2011 included $50,510,000 of pre-tax accounting (non-cash) gain and applicable deferred income taxes of $19,462,000 on the non-cash gain from deconsolidation of Value Line's former investment management subsidiaries, EAM LLC and ESI.  Income from operations of $5,338,000 for the twelve months ended April 30, 2012, did not include the non-voting revenues and non-voting profits interests from EAM of $5,890,000, while income from operations for the twelve months ended April 30, 2011 of $8,533,000 included $10,693,000 of advisory management fees and service distribution fees from the former Value Line subsidiaries, EAM LLC and ESI, that performed the operations of the investment management business prior to deconsolidation of these subsidiaries on December 23, 2010. During the twelve months ended April 30, 2011, the net income and income from operations included restructuring expenses of $3,764,000, non-cash post-employment compensation expense of $1,770,000 related to the grant of a voting profits interest in EAM to a former employee, $914,000 of expenses for operating lease exit costs related to the relocation of the EAM operations and a $1,767,000 reduction in the estimated cost of administration of a fund created as part of the Settlement with the SEC during fiscal 2010 ("Fair Fund").  Income before income taxes, which is inclusive of the non-voting revenues and non-voting profits interests from EAM through April 30, 2012, was $11,298,000 as compared to $61,463,000 for the twelve months ended April 30, 2011, which included the aforementioned gain on Restructuring Transaction of $50,510,000.  24         Total operating revenues                                                              Fiscal Years Ended April 30,                                 2013                    2012                    2011                       Change ($ in thousands)             $           %           $           %           $           %        13 vs. 12       12 vs. 11

Investment periodicals and related publications:     Print                $ 19,027$ 20,366$ 21,625                       -6.6 %          -5.8 %     Digital                12,913                  12,652                  12,781                        2.1 %          -1.0 % Total investment periodicals and related publications       31,940       89.1 %     33,018       90.2 %     34,406       70.7 %          -3.3 %          -4.0 %   Copyright data fees       3,900       10.9 %      3,591        9.8 %      3,568        7.3 %           8.6 %           0.6 % Total publishing revenues                   35,840                  36,609                  37,974                       -2.1 %          -3.6 %   Investment management                      -          -            -          -       10,693       22.0 %           n/a          -100.0 %     Total revenues       $ 35,840$ 36,609$ 48,667                       -2.1 %         -24.8 %    Total publishing revenues from investment periodicals and related publications including copyright data fees were $35,840,000 during the twelve months ended April 30, 2013, which is 2.1% below the total publishing revenues of $36,609,000 from fiscal 2012.  Total publishing revenues from investment periodicals and related publications including copyright data fees were $36,609,000 during the twelve months ended April 30, 2012, which was 3.6% below the total publishing revenues from fiscal 2011. As a result of the completion of the Restructuring Transaction on December 23, 2010, investment management activity for the twelve months ended April 30, 2013, April 30, 2012, and for the period from December 23, 2010 through April 30, 2011 during fiscal 2011, is reported as non-voting revenues and non-voting profits interests in EAM and is not included in 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 Orders

                                                    Fiscal Years Ended April 30,                                   2013                         2012                         2011                           Print        Digital         Print        Digital         Print        Digital

New Sales Orders             19.0 %         24.2 %        16.8 %         18.6 %        13.0 %         21.0 % Conversion and Renewal Sales Orders         81.0 %         75.8 %        83.2 %         81.4 %        87.0 %         79.0 % Total Sales Orders          100.0 %        100.0 %       100.0 %        100.0 %       100.0 %        100.0 %                                                                    As of April 30, ($ in thousands)                                       2013          2012          Change  Unearned subscription revenue (current and long term liabilities)                                    $  24,709$  25,995           -4.9 %    25        

Investment periodicals and related publications revenues

Investment periodicals and related publications revenues decreased 3.3% for the twelve months ended April 30, 2013, as compared to the prior fiscal year. The Company continued its efforts to attract new subscribers through various marketing channels, primarily direct mail and the internet for retail users, and by the efforts of our sales personnel in the institutional market. Total product line circulation at April 30, 2013 was 0.6% above total product line circulation at April 30, 2012, reversing a long term trend. Continuing factors that have contributed to the decline in the investment periodicals and related publications revenues include competition in the form of free or low cost investment research on the Internet and research provided by brokerage firms at no direct cost to their clients. The Company has been successful in growing revenues from digitally-delivered investment periodicals within Institutional Sales. Institutional Sales orders of $12,001,000 for the twelve months ended April 30, 2013, were $1,415,000 or 13.4% above comparable sales orders of $10,586,000, for the twelve months ended April 30, 2012. This growth continues a positive trend for Institutional Sales, but is not sufficient to wholly offset the lost revenues from retail subscribers. We have also benefited from "converting" some customers from retail to professional price services.  Print publication revenues decreased $1,339,000, or 6.6%, for the twelve months ended April 30, 2013 from fiscal 2012 for the reasons described earlier.  Earned revenues from institutional print publications increased $550,000 or 49.2%, for the twelve months ended April 30, 2013 as compared to the prior fiscal year. Print publications revenues from retail subscribers decreased $1,889,000 or 9.8%, for the twelve months ended April 30, 2013, as compared to the prior fiscal year. Print products circulation declined 6.3% as of April 30, 2013 as compared to print circulation at April 30, 2012.  Digital publications revenues increased $261,000, or 2.1%, for the twelve months ended April 30, 2013 as compared to the prior fiscal year. Earned revenues from institutional digital publications increased $349,000 or 4.2%, for the twelve months ended April 30, 2013, as compared to the prior fiscal year. Digital publications revenues from retail subscribers decreased $88,000 or 2.1%, for the twelve months ended April 30, 2013, as compared to the prior fiscal year. Digital products circulation increased 21.7% as of April 30, 2013 as compared to digital circulation at April 30, 2012.  Investment periodicals and related publications revenues were down $1,388,000, or 4%, for the twelve months ended April 30, 2012, as compared to fiscal 2011. Total product line circulation at April 30, 2012 was 4.6% lower than total product line circulation at April 30, 2011. Gross institutional sales orders of $10,586,000 for the twelve months ended April 30, 2012, were $838,000 or 9% above comparable sales orders of $9,748,000, for the twelve months ended April 30, 2011.  Print publication revenues decreased $1,259,000, or 6%, for the twelve months ended April 30, 2012 from fiscal 2011. For the twelve months ended April 30, 2012, earned revenues from institutional print publications increased $182,000 or 19% as compared to fiscal 2011. For the twelve months ended April 30, 2012, print publications revenues from retail subscribers decreased $1,441,000 or 7%, as compared to fiscal 2011. Print circulation decreased 6.8% as of April 30, 2012 as compared to print circulation at April 30, 2011.  Digital publications revenues decreased $129,000, or 1%, for the twelve months ended April 30, 2012 from fiscal 2011. For the twelve months ended April 30, 2012, earned revenues from institutional digital publications increased $59,000 or 1% as compared to fiscal 2011. For the twelve months ended April 30, 2012, digital publications revenues from retail subscribers decreased $188,000 or 4%, as compared to fiscal 2011.  The Company has relied more on its institutional sales marketing efforts, and the increase in institutional combined print and digital revenues is a direct result of a focused effort to sell to colleges, libraries and corporate/investment adviser accounts. The decrease in digital and print retail publications revenues is primarily attributable to the decrease in circulation within the Company's products.  26         The majority of the Company's subscribers have traditionally been individual investors who generally receive printed publications via U.S. Mail on a weekly basis. Consistent with the experience of other print publishers in many fields, the Company has found that its roster of customers has been declining as individuals migrate to various digital services. A modest number of customers who do not qualify for retail prices have chosen to cancel their subscriptions, while the rest have converted to institutional services, at higher prices.  Individual investors interested in digitally-delivered investment information have access to free equity research from many sources. For example, most retail broker-dealers with computerized trading services offer their customers free or low cost research services that compete with the Company's services. Revenues from the Company's current retail online services have also declined because many competing products offer more extensive interactive features.  

Notably in the fourth quarter of fiscal 2013, the Company has increased its efforts on renewing non-institutional subscriptions by increasing the number of renewal notifications including increases in e-mail and telemarketing efforts.

  The Company believes that the volatility of the equity market and the sluggish economic recovery have to some extent eroded retail investor interest in equities. The Company also believes that the negative trend in overall subscription revenue could continue until new products have been developed and marketed and the Company has implemented and adapted customer-contact methods better suited to their changing needs.  The Company has established the goal of developing competitive digital products and marketing them effectively through traditional as well as internet and mobile channels. Towards that end, the Company has been modernizing legacy information technology systems. The Company is not able to predict when these efforts will result in the launch of new products or whether they will be successful in reversing the trend of declining retail publishing revenues.  During the latter part of fiscal 2012, there were a number of technology advances effected in advance of the planned launch of our new product offerings expected to begin in fiscal 2014. In December 2011, the new fulfillment system was placed in service that gives the Company the ability to perform real time order processing and grant immediate access to our digital products, as well as offering multi-tiered entitlements which will come into play in fiscal 2014 with the Company's new product offerings. In December 2011, a new e-commerce platform and a Single Sign On module were launched which directly leverage the new fulfillment system's capabilities for new web order entry and customers' access to their products via a single username and password. Both of these services are a substantial progression from the previous solutions.  In addition, the Company launched a new institutional sales website ValueLinePro.com during March 2012. ValueLinePro.com provides a dedicated Internet destination for investment advisers, portfolio managers, corporate professionals and library patrons who seek to learn how Value Line's proprietary research tools can help them research stocks, mutual funds, options, convertible securities and exchange traded funds ("ETFs"). The site thoroughly describes each of the Company's customized products available to institutions and investment professionals. Targeted digital advertising programs have been a part of the Company's marketing efforts to institutions, generating additional sales leads for our team of experienced sales executives and support personnel.  

Copyright data fees

  The Value Line Proprietary Ranking System information (the "Ranking System"), a component of the Company's flagship product, The Value Line Investment Survey, is also utilized in the Company's copyright data business. The Ranking System is also required to be made available to EAM for specific uses without charge or expense. The Ranking System is designed to be predictive over a six to twelve month period. For the six and twelve months ended April 30, 2013, the combined Ranking System Timeliness™ "Rank 1 & 2" stocks increased by 16.8% and 16.0%, respectively, allowing for weekly changes in Ranks, outperforming an increase of 13.1% and 14.3% in the S&P 500 Index during the comparable periods, respectively.  27         During the twelve months ended April 30, 2013, copyright data fees increased $309,000, or 8.6%, as compared to the prior fiscal year. As of April 30, 2013, total third party sponsored assets were attributable to four contracts for copyright data representing $2.65 billion in various products, as compared to four contracts and $3.43 billion in assets at April 30, 2012. The decrease in assets managed by third party sponsors resulted from a shift in assets in one of the underlying portfolios to a new subadvisor which was beyond Value Line's control. The Company believes the growth of this part of the business is dependent upon the desire of third parties to use the Value Line trademarks and proprietary research for their products. This market has become significantly more competitive as a result of product diversification and increased use of indices by portfolio managers. Management is focusing on potential channels for the copyright data products, while maintaining good cooperation with current third party sponsors. However, the Company cannot predict if these efforts will be successful in reversing the trend of declining future revenues and assets managed by third party sponsors.  During the twelve months ended April 30, 2012, copyright data fees of $3,591,000 were 1% above copyright data fees for fiscal 2011. As of April 30, 2012, total third party sponsored assets were attributable to four contracts for copyright data representing $3.4 billion in various products, as compared to four contracts and $3.5 billion in assets at April 30, 2011, representing a 3% decrease in assets.  

Investment management fees and services - (unconsolidated)

  As of the Restructuring Date, the Company deconsolidated its asset management and mutual fund distribution businesses and its interest in these businesses was restructured as a non-voting revenues and non-voting profits interests in EAM. Accordingly, the Company no longer reports this operation as a separate business segment, although it still 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. Total assets in the Value Line Funds managed and/or distributed by EAM at April 30, 2013, were $2.19 billion, which is $73 million or 3.5% above total assets of $2.11 billion in the Value Line Funds managed by EAM at April 30, 2012. Total assets in the Value Line Funds managed by EAM at April 30, 2012, of $2.11 billion were 5.9% below total assets of $2.24 billion in the Value Line Funds managed by EAM at April 30, 2011. Although sales and inflows for the Value Line Equity Funds are up 20% during fiscal 2013 and 183% during fiscal 2012, the Value Line Funds continue to experience net redemptions for the last three fiscal years albeit at a much slower rate.  The following table shows the change in assets for the past three fiscal years including sales (inflows), redemptions (outflows), dividends and capital gain distributions, and market value changes. Inflows for sales, and outflows for redemptions reflect decisions of individual investors. The table also illustrates the assets within the Value Line Funds broken down into equity funds, variable annuity funds and fixed income funds as of April 30, 2013, 2012 and 2011.  28        Value Line Mutual Funds  Total Net Assets  Asset Flows                                                                                      Fiscal Years Ended April 30,                                                                                                                                      2013         2012                                                                                                                                      vs.          vs.                                                                             2013                2012                2011             2012         2011

Value Line equity fund assets (excludes variable annuity)- beginning $ 1,343,996,918$ 1,398,372,388$ 1,446,104,954 -3.9 % -3.3 % Sales/inflows

252,728,239 210,761,258 74,397,936 19.9 % 183.3 % Redemptions/outflows

(256,633,016 ) (277,655,817 ) (370,072,264 ) -7.6 % -25.0 % Dividend and Capital Gain Distributions

(48,112,709 ) (19,681,858 ) (2,683,333 ) 144.5 % 633.5 % Market value change

164,573,032 32,200,947 250,625,095 411.1 % -87.2 % Value Line equity fund assets (non-variable annuity)- ending

1,456,552,464 1,343,996,918 1,398,372,388 8.4 % -3.9 % Variable annuity fund assets - beginning

$   484,476,017$   520,738,282$   495,004,319         -7.0 %        5.2 % Sales/inflows                                                              

14,173,864 11,869,956 15,170,774 19.4 % -21.8 % Redemptions/outflows

(66,726,410 ) (72,557,743 ) (78,046,318 ) -8.0 % -7.0 % Dividend and Capital Gain Distributions

                                     (4,119,704 )           503,582          (3,815,539 )     -918.1 %     -113.2 % Market value change                                                        

48,513,595 23,921,941 92,425,046 102.8 % -74.1 % Variable annuity fund assets - ending

476,317,361 484,476,017 520,738,282 -1.7 % -7.0 % Fixed income fund assets - beginning (1) (2)

$   217,053,704$   236,526,222$   249,868,326         -8.2 %       -5.3 % Sales/inflows                                                              

11,765,917 41,239,732 27,627,007 -71.5 % 49.3 % Redemptions/outflows

(37,643,781 ) (64,139,184 ) (44,038,991 ) -41.3 % 45.6 % Dividend and Capital Gain Distributions

(4,524,535 ) (1,752,051 ) (1,358,551 ) 158.2 % 29.0 % Market value change

                                                          4,837,224           5,178,985           4,428,430          6.6 %       16.9 % Fixed income fund assets - ending                                         

191,488,529 217,053,704 236,526,222 -11.8 % -8.2 % Money market fund assets - ending (3)

- 67,682,443 89,356,239 -100.0 % -24.3 % Assets under management - ending

$ 2,124,358,355$ 2,113,209,083$ 2,244,993,131          0.5 %       -5.9 %   

(1) On March 21, 2013, the shareholders of the Value Line U.S. Government

Securities Fund approved the tax free reorganization of the Value Line U.S.

Government Securities Fund into the Value Line Core Bond Fund. Shares of the

U.S Government Securities Fund were exchanged into the Value Line Core Bond

    Fund effective March 22, 2013. This transaction is excluded from     sales/redemptions.   

(2) On May 17, 2012, the shareholders of the Value Line New York Tax Exempt Trust

approved the tax free reorganization of the Value Line New York Tax Exempt

Trust into the Value Line Tax Exempt Fund. Shares of the Value Line New York

Tax Exempt Trust were exchanged into the Value Line Tax Exempt Fund effective

May 18, 2012. This transaction is excluded from sales/redemptions.

(3) On October 19, 2012 the Value Line U.S. Government Money Market Fund merged

into the Daily Income Fund U.S. Government Portfolio managed by Reich &

Tang. Assets of $61,917,208 of the Value Line U.S. Government Money Market

Fund are not included in the total assets under management in fiscal 2013.

   29        

While equity assets under management increased 5.7%, four of the six Value Line equity mutual funds, excluding SAM and Centurion are currently experiencing net redemptions and the associated net asset outflows (redemptions less new sales). However, while the Value Line Funds are experiencing net redemptions, there are less net redemptions in the twelve months ended April 30, 2013 than in the prior year due to higher gross sales in the equity/hybrid funds and better retention of existing fund assets. The Value Line Asset Allocation Fund is experiencing net inflows and was added to the Schwab Mutual Fund OneSource Select List® in August 2012. The fund is one of only seven asset allocation funds among the 23 third-party funds selected for the Additional Fund Categories section. During fiscal 2013 Value Line equity mutual funds continued to garner attention from the industry. Publications such as U.S. News and World Report included some of Value Line equity mutual funds in the Best Mutual Funds lists as well as being mentioned in Investor's Business Daily, Street.com, Kiplinger's and other publications.  As of April 30, 2013 three of the eight equity funds are in the top quartile of their respective peer groups for one year and six of the eight are in the top quartile for the three year period according to Lipper.  

Shares of Value Line Strategic Asset Management Trust ("SAM") and Value Line Centurion Fund ("Centurion") 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").

The next table provides a breakdown of the major distribution channels for the Value Line Funds in terms of assets and shareholder accounts as of April 30, 2013.                                                                                                           Percentage of                                                                    Percentage                             Shareholder                                                                   of Assets in       Shareholder          Accounts in Fund Categories                             Aggregate Assets        Category           Accounts             Category  Guardian (SAM and Centurion Funds)         $      476,317,362              21.8 %           24,138                   25.6 % VL Funds direct accounts & other dealers          809,024,029             

37.0 %           34,714                   36.9 % Dealer platforms                                  900,934,172              41.2 %           35,305                   37.5 %                  Total*                    $    2,186,275,563             100.0 %           94,157                 100.00 %   

* Total aggregate assets and shareholder accounts include $61,917,208 of total assets and 2,633 shareholder accounts, respectively, of the Value Line U.S. Government Money Market Fund which merged into the Daily Income Fund U.S. Government Portfolio managed by Reich & Tang on October 19, 2012.

During fiscal 2011 from May 1, 2010 through December 23, 2010, consolidated investment management fees and distribution service fees (which we refer to as "12b-1 fees") from the Value Line Funds amounted to $10,584,000 after giving effect to account fee waivers for certain of the Value Line Funds. These amounts included 12b-1 fees of $2,308,000 earned for the period from May 1, 2010 through December 23, 2010. For the period from May 1, 2010 through December 23, 2010, total investment management fee waivers and reimbursements were $513,000 and total 12b-1 fee waivers were $1,651,000. The Company, EAM LLC and ESI have no right to recoup the previously waived amounts of investment management fees and 12b-1 fees. During the period from May 1, 2010 through December 1, 2010, separately managed accounts revenues were $109,000. Separately managed accounts had $23 million in assets as of December 1, 2010, including $20 million of assets in accounts managed for affiliates of the Company's controlling shareholder AB&Co. During the third quarter of fiscal 2011, the entities affiliated with AB&Co. cancelled their separately managed account agreements with EAM LLC.  30        

EAM Trust - Results of operations before distribution to interest holders

  The overall results of EAM's investment management operations during the twelve months ended April 30, 2013, before interest holder distributions, include total investment management fees earned from the Value Line Funds of $12,773,000, 12b-1 fees and other fees of $3,905,000 and other income of $14,000. For the same period, total investment management fee waivers and reimbursements were $379,000 and 12b-1 fee waivers for nine Value Line Funds were $2,156,000. During the twelve months ended April 30, 2013, EAM's net income was $945,000 after giving effect to Value Line's non-voting revenues interest of $5,781,000, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.  Total results of EAM's investment management operations during the twelve months ended April 30, 2012, before interest holder distributions, include total investment management fees earned from the Value Line Funds of $12,465,000, 12b-1 fees of $3,466,000 and other income of $12,000. For the same period, total investment management fee waivers and reimbursements were $806,000 and 12b-1 fee waivers were $2,257,000. During the twelve months ended April 30, 2012, EAM's net income was $461,000 after giving effect to Value Line's non-voting revenues interest of $5,684,000, but before distributions to voting interest holders and to the Company in respect of its non-voting profits interest.  Total results of EAM's investment management operations for the period from December 23, 2010 through April 30, 2011, before interest holder distributions, include total investment management fees earned from the Value Line Funds of $4,592,000, 12b-1 fees of $1,293,000 and other income of $3,100. For the same period, total investment management fee waivers and reimbursements were $303,000 and 12b-1 fee waivers were $855,000. For the period from December 23, 2010 through April 30, 2011, EAM's net income was $336,000, after giving effect to Value Line's non-voting revenues interest of $2,187,000, but before distributions to voting interest holders and to the Company in respect of its non-voting profits interest.  As of April 30, 2013, eight of the Value Line Funds have all or a portion of the 12b-1 fees being waived, and one fund has a partial investment management fee waiver 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.   As of April 30, 2013, four of the six Value Line equity mutual funds, excluding SAM and Centurion, had an overall four or five star rating by Morningstar, Inc. The largest distribution channel for the Value Line Funds remains the fund supermarket platforms such as Guardian, Charles Schwab & Co., Inc., Fidelity, Pershing and E-Trade.  The Value Line equity fund assets and fixed income fund assets represent 91.0% and 9.0%, respectively, of total fund assets under management ("AUM") as of April 30, 2013. At April 30, 2013, equity AUM increased by 5.7% and fixed income AUM decreased by 12.0% as compared to the prior fiscal year.  During December 2011, the Value Line Convertible Fund merged into the Value Line Income and Growth Fund. The Value Line Convertible Fund had approximately $20 million in assets under management before the merger. In May 2012, the Value Line New York Tax Exempt Trust ($15 million) combined into the Value Line Tax Exempt Fund ($90 million). The combination offers many benefits for fund shareholders.  During October 2012, the USGMMF merged into a third party fund, the Daily Income Fund, managed by Reich & Tang. EAM distributes the Daily Income Fund on behalf of Reich & Tang and maintains the shareholder accounts on behalf of the Value Line Funds' shareholders who invest in the Daily Income Fund, but EAM is no longer subsidizing the expenses of the USGMMF resulting from the low interest rate economic environment. In addition, the merger of the USGMMF eliminated the cost of administration and fund accounting.  31         During December 2012, the Value Line Aggressive Income Trust changed its investment strategy and changed its name to the Value Line Core Bond Fund. In doing so, the Value Line Funds now have a core bond fund offering that still meets the fundamental investment objectives of the Aggressive Income Trust, which is maximization of current income with a secondary objective of capital appreciation, yet have broader appeal and a larger pool of investors to attract assets. Such assets may include existing shareholders of other Value Line Funds as shareholders redeem equities.  

During December 2012, the Value Line Emerging Opportunities Fund changed its name to Value Line Small Cap Opportunities Fund. By changing the name, the strategy of the fund and correct category is clearly defined for investors.

  During March 2013, the Value Line U.S. Government Securities Fund merged into the Value Line Core Bond Fund. This created a core bond fund with $100 million in assets, a critical threshold for many institutional money managers.  

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

  Following the Restructuring Transaction, the Company no longer engages, through subsidiaries, in the investment management or mutual fund distribution businesses. The Company does hold 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. EAM currently has no separately managed account clients.  

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

                                           Fiscal Years Ended April 30,                     Change ($ in thousands)                     2013             2012          2011         13 vs. 12       12 vs. 11 Non-voting revenues interest      $    5,781$    5,684$   2,187             1.7 %         159.9 % Non-voting profits interest              479              206           168

          132.5 %          22.6 %                                   $    6,260$    5,890$   2,355             6.3 %         150.1 %    During the twelve months ended April 30, 2013, the Company recorded revenues of $6,260,000, consisting of $5,781,000, from its non-voting revenues interest in EAM and $479,000, from its non-voting profits interest in EAM without incurring any directly related expenses.  During the twelve months ended April 30, 2012, the Company recorded revenues of $5,890,000, consisting of $5,684,000, from its non-voting revenues interest in EAM and $206,000, from its non-voting profits interest in EAM. During the period from December 23, 2010 (the Restructuring Date) through April 30, 2011, the Company recorded revenues of $2,355,000, consisting of $2,187,000, from its non-voting revenues interest in EAM and $168,000 from its non-voting profits interest in EAM.  32         Expenses                                                          Fiscal Years Ended April 30,                                                                                         Change ($ in thousands)                      2013          2012          2011         13 vs. 12       12 vs. 11 Advertising and promotion           $   4,075$   4,203$   6,673            -3.0 %         -37.0 % Salaries and employee benefits         15,034        15,001        17,242             0.2 %         -13.0 % Production and distribution             5,694         4,894         4,718            16.3 %           3.7 % Office and administration               6,917         7,173         9,504            -3.6 %         -24.5 % Expenses related to restructuring           -             -         3,764             n/a             n/a Provision for settlement                    -             -        (1,767 )

          n/a             n/a   Total expenses                    $  31,720$  31,271$  40,134             1.4 %         -22.1 %   

Expenses within the Company are categorized into advertising and promotion, salaries and employee benefits, production and distribution, and office and administration. Operating expenses of $31,720,000 for the twelve months ended April 30, 2013, increased $449,000, or 1.4%, as compared to the twelve months ended April 30, 2012. The increase in expenses resulted primarily from the additional depreciation and amortization of $828,000 related to software development costs previously incurred.  Operating expenses of $31,271,000 for the twelve months ended April 30, 2012, decreased $8,863,000, or 22%, as compared to the twelve months ended April 30, 2011. This reduction in operating expenses for fiscal 2012 as compared to fiscal 2011 resulted in part from the inclusion of $3,764,000 of expenses related to the Restructuring Transaction partially offset by a revision of $1,767,000 of the estimate for the Provision for Settlement in fiscal 2011, and the inclusion of $8,230,000 of expenses in fiscal 2011 related to the investment management business which was deconsolidated on December 23, 2010.  

Advertising and promotion

Advertising and promotion expenses during the twelve months ended April 30, 2013, were $128,000 or 3.0% below fiscal 2012. The decrease was mainly due to a decrease of $136,000 in media and internet advertising and promotional costs to market the digital products and software products to institutions during fiscal 2012. The remaining decrease for the twelve months ended April 30, 2013, was related to a $60,000 reduction in postage expenses related to renewal solicitation costs which primarily resulted from migrating some renewal efforts to a digital format. These decreases were offset by an $85,000 increase in telemarketing costs as telephone marketing efforts were increased.  Advertising and promotion expenses during the twelve months ended April 30, 2012, decreased $2,470,000, or 37%, as compared to the twelve months ended April 30, 2011. Operating expenses for fiscal 2011 included $2,220,000 of expenses related to the Company's investment management business which was deconsolidated and discontinued on December 23, 2010; these expenses were primarily for promotional payments to independent broker-dealers associated with the distribution of the Value Line Funds. The remaining decrease of $250,000 for the twelve months ended April 30, 2012, was mainly related to reduced media and internet advertising and promotion expenses of $520,000 and a $109,000 reduction in renewal solicitation costs, offset by increased direct marketing and sales commissions costs for publications.  

Salaries and employee benefits

Salaries and employee benefits increased $33,000 or 0.2%, during the twelve months ended April 30, 2013, as compared to fiscal 2012. Increased expenses in salaries and employee benefits were related to the timing of personnel replacements in information technology, marketing, research, quantitative research and sales personnel in institutional sales and were offset by a decrease in profit sharing expense and the additional capitalization of $317,000 for digital project development costs for the twelve months ended April 30, 2013, as compared to the prior year. During the twelve months ended April 30, 2013, 2012 and 2011, the Company accrued profit sharing expenses of $240,000, $447,000 and $500,000, respectively.  33         Salaries and employee benefits decreased by $2,241,000 or 13% during the twelve months ended April 30, 2012, as compared to fiscal 2011. This decrease reflects a reduction of $3,635,000 related to the deconsolidation and discontinuance of the investment management business on December 23, 2010 including $1,049,000 related to direct overhead costs, $1,770,000 for non-cash post-employment compensation expense, and $816,000 related to previously shared costs incurred in order to provide the proprietary Ranking System information and overhead salaries to the investment management business.  Pursuant to the EAM Declaration of Trust, the Company agreed to supply the proprietary Ranking System information to EAM without charge or expense so that, for periods after December 23, 2010, these previously shared costs remain within the Publishing segment subsequent to the Restructuring Date. Salaries and employee benefits in the Publishing segment increased $1,394,000 as a result of the aforementioned reallocation to the Publishing segment of $816,000 for overhead costs previously shared with the Investment Management segment. The increase in salaries and employee benefits related to additional headcount in information technology, fulfillment, marketing and institutional sales was partially offset by the capitalization of $1,346,000 for digital project development costs.  

Production and distribution

  Production and distribution expenses during the twelve months ended April 30, 2013, increased $800,000 or 16.3%, as compared to fiscal 2012. During the twelve months ended April 30, 2013, an increase of $872,000, resulted from additional amortization of internally developed software costs for the upgrade of our fulfillment system, single sign on, website development and new, service oriented production architecture implemented during the third quarter of fiscal 2012 and an increase in systems support of $144,000 related to the offsite relocation of the Company's production computer systems. These increases in expenses were partially offset by a decrease in paper, printing and distribution expenses and lower costs related to outsourced data collection services.  Production and distribution expenses during the twelve months ended April 30, 2012, increased $176,000 or 4% above fiscal 2011. During the twelve months ended April 30, 2012, an increase of $136,000 resulting from additional amortization of internally developed software costs for our new fulfillment system implemented in November 2011, and an increase of $157,000 related to the third party costs to develop the new fulfillment system, which were not capitalized, were partially offset by reduced data feed expenses of $122,000.  

Office and administration

Office and administration expenses during the twelve months ended April 30, 2013, decreased $256,000 or 3.6%, as compared to fiscal 2012. The decrease was primarily due to a $457,000 decline in professional and consulting fees and a $45,000 decrease in utilities costs at the Company's corporate facility. These decreases were partially offset by a $58,000 increase in building operating expenses. In fiscal 2012, office and administrative expense were reduced due to reimbursement of $44,000 received from EAM for the month of May 2011 for rent and certain accounting and other administrative support services provided to EAM during its final month of occupancy at the Company's office facility.  Office and administration expenses during the twelve months ended April 30, 2012, decreased $2,331,000 or 25% below fiscal 2011. This decrease reflects a reduction of $2,375,000 related to the deconsolidation and discontinuance of the investment management business, including $1,845,000 related to direct overhead costs and $530,000 related to previously shared costs incurred in order to provide the proprietary Ranking System information and related administrative services to the investment management business. Pursuant to the EAM Declaration of Trust, the Company agreed to supply the proprietary Ranking System information to EAM without charge or expense so that, for periods after December 23, 2010, these previously shared costs remain within the Publishing segment. Office and administration expenses in the Publishing segment increased $44,000 as a result of the aforementioned reallocation to the Publishing segment of $530,000 of overhead costs previously shared with the Investment Management segment along with an increase of $200,000 in professional and legal fees and an increase of $178,000 in office support related costs. These increased expenses were offset by a decrease of $1,352,000 for office space rental resulting from the classification of $439,000 of the lease payments made during fiscal 2012 as a reduction of the total lease exit obligation in the amount of $914,000 expensed in fiscal 2011 related to EAM's relocation.  34         Lease Commitments  On February 7, 2013, the Company and Citibank, N.A. (the "Sublandlord") entered into a sublease agreement, pursuant to which Value Line will lease approximately 44,493 square feet of office space located on the ninth floor at 485 Lexington Ave., New York, NY ("Building" or "Premises") beginning on or about July 1, 2013 and ending on February 27, 2017 ("Sublease"). Base rent under the Sublease will be $1,468,269 per annum payable in equal monthly installments on the first day of each month, subject to customary concessions in the Company's favor and pass-through of certain increases in operating costs and real estate taxes. The Company provided a security deposit in cash in the amount of $489,423, which may be reduced to $367,067 on March 1, 2015, and to $244,712 on March 1, 2016 and fully refunded after the Sublease ends. This Building will become the Company's new corporate office facility. The Company is required to pay for certain operating expenses associated with the Premises as well as utilities supplied to the Premises. The Sublease terms will provide for a significant decrease in the Company's annual rental expenses.  Value Line reached an agreement with its current landlord and extended the term of the current lease for its current corporate office facility, which was due to expire on May 31, 2013, for a period of three and a half months beginning June 1, 2013 and expiring September 15, 2013 ("Lease Modification") at a rental which approximates the Company's monthly rent payments under the current lease obligation. Management determined the overlap payment of up to two and a half months was a necessary precaution to allow transfer of telecommunications and other technology lines and equipment to the new headquarters, given that Citibank's move out was not pegged to a predetermined date.  

Expenses related to restructuring

  In fiscal 2011, professional fees, including the cost of the proxy solicitation for the Value Line Funds, of $3,764,000 were associated with the Restructuring Transaction that was completed on December 23, 2010. The Company's policy was to expense these costs as incurred.  

Provision for Settlement

  The Company recorded as a liability on its Consolidated Balance Sheet estimated expenses associated with a Fair Fund administration and other costs which the Company was required to pay in connection with a Settlement with the SEC during fiscal 2010 (see Form 10-K for fiscal 2010 filed with the SEC on July 16, 2010). During fiscal 2011, the administrator of the Fair Fund estimated that the remaining costs of administration would be less than originally determined due to a modification in the manner of administration and distribution of the Fair Fund. Accordingly, the Company reduced its liability for the costs of administration of the Fair Fund by $1,767,000 during the fourth quarter of fiscal 2011.  

Segment Operating Profit

Prior to December 23, 2010, the Company's businesses consolidated into two reportable business segments. The investment periodicals and related publications (retail and institutional) and fees from copyright data, including the Proprietary Ranking System information and other proprietary information, consolidated into one segment called Publishing, and the investment management services to the Value Line Funds and other managed accounts were consolidated into a second business segment called Investment Management. Subsequent to December 23, 2010, the date of the Restructuring Transaction, the Publishing segment constitutes the Company's only reportable business segment. Accordingly, the Investment Management segment information reported below reflects activity only through the date of the Restructuring Transaction.  35                                         Investment Periodicals, Publishing & Copyright Data                                       Investment Management                                             Fiscal Years Ended April 30,                                               Fiscal Years Ended April 30,                        2013              2012             2011                 Change                 2013        2012         2011                 Change                                                                                                                                (1) (in thousands)                                                        13 vs. 12       12 vs. 11                                            13 vs. 12       12 vs. 11 Segment revenues from external customers           $    35,840$    36,609$ 37,974            -2.1 %          -3.6 %         -           -     $ 10,693             n/a          -100.0 % Segment profit from operations     $     4,120$     5,338$  8,984           -22.8 %         -40.6 %         -           -     $   (448 )           n/a          -100.0 % Segment profit margin from operations                 11.5 %            14.6 %         23.7 %         -21.2 %         -38.4 %         -           -         -4.2 %           n/a          -100.0 %                   (1) Period from May 1, 2010 through December 23, 2010.    

Investment Periodicals, Publishing & Copyright Data

  During fiscal 2013, publishing revenues from investment periodicals and related publications including copyright data fees were $35,840,000, which is $769,000 or 2.1% below the publishing revenues from fiscal 2012.  During fiscal 2012, publishing revenues from investment periodicals and related publications including copyright data fees were $36,609,000, which is $1,365,000 or 3.6% below the publishing revenues from fiscal 2011.  During fiscal 2013, 2012 and fiscal 2011, the decrease in the operating profit margin and segment operating profits in the Publishing segment resulted primarily from the decline in investment publication and periodicals revenues without a proportionate decrease in expenses for production and administration, including semi-variable and non-variable costs. In fiscal 2013, copyright data's revenues increased 8.6% from fiscal 2012 and in fiscal 2012 they were slightly above fiscal 2011. Costs for the Company's copyright data products are relatively fixed costs for the Company, so that expenses do not increase or decrease proportionately to changes in revenue. The 9.1% decline in the operating profit margin in the Publishing segment in fiscal 2012, as compared to fiscal 2011 was due to decreased revenues in addition to the reallocation of costs previously shared with the Investment Management segment to the Publishing segment.  The Company believes that competition in the form of free or low cost investment research on the Internet and research provided by brokerage firms at no cost to their clients contributed to the decline in revenue in the publishing segment. In fiscal 2011, the recession and continued volatility in the markets also contributed to the decline in subscriptions to the Company's products, as individuals reduced many forms of discretionary spending. Also, some investors may have shifted from equity investments to fixed income investments. The Company provides only limited research on fixed income investments, and this is not a core aspect of Value Line's business.  

Investment Management

Negative operating margins for the investment management business conducted by the Company during the period from May 1, 2010 through December 23, 2010 resulted primarily from the incurrence of expenses related to the Restructuring Transaction and declines in certain asset based revenues with no offsetting expense reductions. Lower management fees from the Value Line Funds for this period resulted from lower average assets under management (through December 23, 2010) and fee waivers. The Company waived management fees of $352,000 for the period from May 1, 2010 through December 23, 2010 in the USGMMF and, due to the low interest rate environment and new regulations restricting investments, that Fund generated insufficient portfolio income to cover its normalized expenses, which were subsidized by the Company. Segment operating profit and the operating profit margin for fiscal 2011 through December 23, 2010, the date of consummation of the Restructuring Transaction, includes $3,764,000 of expenses related to the Restructuring Transaction, $1,770,000 of post-employment compensation expense related to the grant of the voting profits interest in EAM to a former employee in connection with the Restructuring Transaction and $914,000 of operating lease exit costs related to the office space formerly occupied by EAM LLC. These expenses in fiscal 2011 were partially offset by a reduction of $1,767,000 in the estimated cost to administer the Fair Fund.

 36        

Income from Securities Transactions, net

                                                              Fiscal Years Ended April 30,                                                                                          Change ($ in thousands)                            2013        2012        2011        13 vs. 12       12 vs. 11 Dividend income                            $   124$    68$    16            82.4 %         325.0 % Interest income                                  4          16         118           -75.0 %         -86.4 % Realized gains/(losses) on equity and fixed income securities available-for-sale                               -         (11 )       (68 )         100.0 %         -83.8 % Other                                           (2 )        (3 )        (1 )          33.3 %        -200.0 % Total income from securities transactions, net                          $   126$    70$    65            80.0 %           7.7 %    During the twelve months ended April 30, 2013, the Company's income from securities transactions, net, of $126,000, which includes primarily dividend income, was $56,000 or 80.0% above income from securities transactions, net, of $70,000 during the twelve months ended April 30, 2012. During the twelve months ended April 30, 2012, income from securities transactions, net, included $68,000 of dividend income and $16,000 of interest income. During the twelve months ended April 30, 2012, realized gains from sales of equity securities were $11,000 and realized losses from sales of fixed income securities were $22,000.  During the twelve months ended April 30, 2012, the Company's income from securities transactions, net, of $70,000 was $5,000 or 8% above income from securities transactions, net, of $65,000 during the twelve months ended April 30, 2011. There were no sales, or gains or losses from sales of equity securities during the fiscal year ended April 30, 2011. Realized losses from the sales of fixed income securities, were $68,000 during the twelve months ended April 30, 2011.  Effective income tax rate 

The overall effective income tax rates, as a percentage of pre-tax ordinary income for the twelve months ended April 30, 2013, 2012 and 2011 were 37.0%, 38.71% and 38.53%, respectively. The annual effective tax rate will change due to a number of factors 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, new tax laws, new interpretations of existing tax laws and rulings and settlements with tax authorities. The fluctuation in the effective income tax rate during fiscal 2013 is attributable to a higher percentage of income subject to state and local taxes offset by the recognition of the domestic production tax credits and an increase in the dividends received deduction during the current fiscal year.  The change in the effective income tax rate in fiscal 2012 is attributable to the alternative minimum tax on the limitation to the Company's net operating loss carryforward in fiscal years 2012 and 2011, and a slight decrease in state and local tax rate for fiscal 2012 primarily from EAM's geographical income

allocation.  37        

Liquidity and Capital Resources

  The Company had negative working capital, defined as current assets less current liabilities, of $10,721,000 and $8,067,000 as of April 30, 2013 and April 30, 2012, respectively. These amounts include short term unearned revenue of $22,073,000 and $21,548,000 reflected in total current liabilities at April 30, 2013 and April 30, 2012, respectively. Cash and short term securities were $13,522,000 and $15,923,000 as of April 30, 2013 and April 30, 2012, respectively.  The Company's cash and cash equivalents include $6,312,000 and $10,848,000 at April 30, 2013 and April 30, 2012, respectively, invested primarily in Money Market Funds at brokers' accounts, which operate under Rule 2a-7 of the 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 $1,168,000 during the twelve months ended April 30, 2013, compared to cash inflows from operations of $2,376,000 during the twelve months ended April 30, 2012. The change in cash flows from fiscal 2012 to fiscal 2013 was primarily due to the reduction in the cash inflow from earnings, an increase in prepaid expenses and timing of receipt of accounts receivable, offset by the increase in the cash inflows from the receipt of prepaid and refundable income taxes and reduced payments for settlement and restructuring related expenses.  

Cash from investing activities

  The Company's cash outflows from investing activities of $253,000 during the twelve months ended April 30, 2013, compared to cash inflows from investing activities of $11,262,000 for the twelve months ended April 30, 2012. Cash inflows for the twelve months ended April 30, 2012, were higher due to the maturities and sales of fixed income securities. The Company did not hold any fixed income securities during fiscal 2013 and there were no proceeds from sales of equity securities during fiscal 2013. The Company expects that investing activities will provide cash from continued receipts from its non-voting revenues and non-voting profits interest distributions in EAM.  

Cash from financing activities

The Company's cash outflows from financing activities of $6,117,000 during the twelve months ended April 30, 2013, were 27.2% below cash outflows from financing activities of $8,398,000 for the twelve months ended April 30, 2012. Cash outflows for financing activities included $182,000 and $946,000 for the repurchase of shares of the Company's common stock under the September 19, 2012 and the January 20, 2011 board approved common stock repurchase programs, during fiscal 2013 and 2012, respectively. Dividend payments of $0.20 per share during the first three quarters and $0.15 per share during the fourth quarter of fiscal 2012 aggregated $7,452,000 as compared to $5,935,000 in fiscal 2013, which included dividend payments of $0.15 per share for all four quarters. 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 April 30, 2013, retained earnings and liquid assets were approximately $33 million and $14 million, respectively.  38         Seasonality  Our operations are minimally seasonal in nature. Our publishing revenues are comprised of subscriptions which are generally annual subscriptions and/or multi-year subscriptions. Our cash flows from operating activities are somewhat seasonal in nature, primarily due to the timing of customer payments made for subscription renewals, which generally occur more frequently in our fiscal third quarter.  

Recent Accounting Pronouncements

  In June 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-05, Presentation of Comprehensive Income ("ASU 2011-05"), which represents an update to ASC 220, Comprehensive Income.  ASU 2011-05 provides new disclosure guidance for comprehensive income, requiring presentation of each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income and a total amount for comprehensive income.  An entity will have the option to present these items in one continuous statement or two separate but consecutive statements.  An entity will no longer be permitted to present components of other comprehensive income as part of the statement of changes in stockholders' equity.  ASU 2011-05 is effective for fiscal years and interim periods within those years beginning after December 15, 2011.  Portions of ASU 2011-05 were amended in December 2011. The Company adopted the provisions of ASU 2011-5 effective May 1, 2012, and it did not have a material impact on our Consolidated Financial Statements.  In December 2011, the FASB issued ASU No. 2011-11, Disclosures about Offsetting Assets and Liabilities ("ASU 2011-11"), to improve reporting and transparency of offsetting (netting) assets and liabilities and the related affects on the financial statements. ASU 2011-11 is effective for fiscal years and interim periods within those years beginning after January 1, 2013. The Company believes that the implementation of ASU 2011-11 will not have a material effect on its Consolidated Financial Statements.  In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU No. 2011-05 ("ASU 2011-12"). ASU 2011-12 amends certain pending paragraphs from ASU 2011-05. This amendment allows companies to defer the effective date of the change in presentation on the face of the financial statements of reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statements where the components of net income and the components of other comprehensive income are presented. The effective date for all other amendments put forth in ASU No. 2011-05 are unaffected by this update. This update is effective for fiscal years and interim periods within those years beginning after December 15, 2011. The Company adopted this guidance effective May 1, 2012, and it did not have a material impact on our Consolidated Financial Statements.  In July 2012, the FASB issued ASU No. 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment ("ASU 2012-02"), to simplify how entities test indefinite-lived intangible assets for impairment which improves consistency in impairment testing requirements among long-lived asset categories. ASU 2012-02 permits an assessment of qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, these amended standards eliminate the requirement to perform quantitative impairment testing as outlined in the previously issued standards. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, early adoption is permitted. The Company believes that the implementation of ASU 2012-02 will not have a material effect on its Consolidated Financial Statements.  In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income ("ASU 2013-02"), which requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income, if the amount being reclassified is required to be reclassified in its entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required that provide additional detail about those amounts. The amendments in ASU 2013-02 supersede the presentation requirements for reclassifications out of accumulated other comprehensive income in ASU 2011-05 and ASU 2011-12. ASU 2013-02 is effective for reporting periods beginning after December 15, 2012, early adoption is permitted. The Company believes that the implementation of ASU 2013-02 will not have a material effect on its Consolidated Financial Statements.  39        

Critical Accounting Estimates and Policies

  The Company prepares its consolidated financial statements in accordance with 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 Financial Statements:                                 ? Revenue recognition                                      ? Income taxes    Revenue Recognition  The majority of the Company's revenues come from the sale of print and digital subscriptions and fees for copyright proprietary information, and, prior to December 23, 2010, investment management and 12b-1fees. The Company recognizes subscription revenue, net of discounts, in equal amounts over the term of the subscription, which generally ranges from three months to one year or longer, varying based on the product or service. Copyright data fees are calculated monthly based on market fluctuation and billed quarterly. Prior to the Restructuring Date, December 23, 2010, investment management fee and 12b-1 fee revenues for the Value Line Funds were recognized each month based upon the daily net asset value of each Fund.  The Company believes that the estimates related to revenue recognition are critical accounting estimates, and to the extent that there are material differences between its determination of revenues and actual results, its financial condition or results of operations may be affected.  

Income Taxes

The Company's effective annual income tax expense rate is based on the U.S. federal and state and local jurisdiction tax rates on income and losses that are part of its Consolidated Financial Statements. Tax-planning opportunities, non-taxable income, expenses that are not deductible in the Company's tax returns, and the blend of business income, including income derived from the Company's non-voting revenue and non-voting profits interests in EAM and income from securities transactions, will impact the effective tax rate in the various jurisdictions in which the Company operates. Significant judgment is required in evaluating the Company's tax positions.  Tax law requires items to be included in the tax return at different times from when these items are reflected in the Company's Consolidated Financial Statements. As a result, the effective tax rate reflected in the Company's Consolidated Financial Statements is different from the tax rate reported on the Company's tax returns (the Company's cash tax rate). These differences reverse over time, such as depreciation and amortization expenses. These timing differences create deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax basis of assets and liabilities.  As of April 30, 2013 and 2012, the Company had $227,000 and $442,000, respectively, of deferred tax assets. In fiscal 2012, deferred tax assets included $141,000 of short term deferred Federal, State, and local taxes, related to the net operating loss carryforwards of $360,000. In assessing the Company's deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or utilized in the Company's tax filings.  40          In assessing the need for a valuation allowance, the Company considers both positive and negative evidence, including tax-planning strategies, projected future taxable income, and recent financial performance. If after future assessments of the realizability of the deferred tax assets the Company determines a lesser allowance is required, the Company would record a reduction to the income tax expense and to the valuation allowance in the period this determination was made. This would cause the Company's income tax expense, effective tax rate, and net income to fluctuate.  In addition, the Company establishes reserves at the time that it determines that it is more likely than not that it will need to pay additional taxes related to certain matters. The Company adjusts these reserves, including any impact of the related interest and penalties, in light of changing facts and circumstances such as the progress of a tax audit. A number of years may elapse before a particular matter for which the Company has established a reserve is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction. Such liabilities are recorded as income taxes payable in the Company's Consolidated Balance Sheets. The settlement of any particular issue would usually require the use of cash. Favorable resolutions of tax matters for which the Company has previously established reserves are recognized as a reduction to the Company's income tax expense when the amounts involved become known.  Assessing the future tax consequences of events that have been recognized in the Company's financial statements or tax returns requires judgment. Variations in the actual outcome of these future tax consequences could materially impact the Company's financial position, results of operations, or cash flows.  

Off-Balance Sheet Arrangements

The Company is not party to any off-balance sheet arrangements, other than operating leases in the ordinary course of business, which is disclosed below in the table of contractual obligations.

Contractual Obligations

  Below is a summary of certain contractual obligations of the Company ($ in thousands):                                                              Payments due by period                                                  Less than                                        More than

Contractual Obligations Total 1 year 1-3 years

      3-5 years         5 years Long Term Debt Obligations                -               -               -               -                 - Capital Lease Obligations                 -               -               -               -                 - Operating Lease Obligations       $   5,976$     1,816$     2,936$     1,224                 - Purchase Obligations                      -               -               -               -                 -    Total                          $   5,976$     1,816$     2,936$     1,224                 -    41