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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended February 28, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to .
 Commission file number: 0-4957
 EDUCATIONAL DEVELOPMENT CORPORATION
  Delaware
    
    73-0750007(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)10302 East 55th Place, Tulsa, Oklahoma
    
    74146-6515(Address of principal executive offices)
    
    (Zip Code)
 (918) 622-4522
   Common Stock, $.20 par value
  o þ
  o þ
  þ o
 þ
  o o þ
  o þ




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##### Table of Contents



FACTORS AFFECTING FORWARD LOOKING STATEMENTS
    
    
    3PART IItem 1.
    
    Business
    
    
    3Item 1A
    
    Risk Factors
    
    
    5Item 1B
    
    Unresolved Staff Comments
    
    
    6Item 2.
    
    Properties
    
    
    6Item 3.
    
    Legal Proceedings
    
    
    6Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    7PART IIItem 5.
    
    Market For Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    7Item 6.
    
    Selected Financial Data
    
    
    8Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    8Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 8.
    
    Financial Statements and Supplementary Data
    
    
    20Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    20Item 9A.
    
    Controls and Procedures
    
    
    20Item 9B.
    
    Other Information
    
    
    20PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    21Item 11.
    
    Executive Compensation
    
    
    21Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
    
    
    21Item 13.
    
    Certain Relationships and Related Transactions
    
    
    21Item 14.
    
    Principal Accounting Fees and Services
    
    
    21PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    22Consent of Current Independent Registered Public Accounting FirmCertification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906
 2




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Part 1
 
 FORWARD LOOKING STATEMENTS
 This report contains statements that are forward-looking. You should read the following
discussion in connection with our consolidated financial statements, including the notes to those
statements, included in this document. These forward-looking statements are not historical facts
but are expectations or projections based on certain assumptions and analyses made by our senior
management in light of their experience and perception of historical trends, current conditions,
expected future developments and other factors. Actual events and results may be materially
different from anticipated results described in such statements.
 Our ability to achieve such results is subject to certain risks and uncertainties which are
not currently known to us. We caution you not to place undue reliance on these forward-looking
statements, which speak only as of the date that they are made. We do not undertake any obligation
to publicly release any revisions to these forward-looking statements to reflect events or
circumstances after the date of this report.
 
 Item 1. BUSINESS
 a) General Development of Business
   (b) Financial Information about Industry Segments
  
    
    Home Business Division (Usborne Books at Home or UBAH)  This division
distributes books nationwide through independent consultants who hold book showings
in individual homes, and through book fairs, direct sales and Internet sales. The
UBAH Consultants also distribute these titles to school and public libraries.
    
    Publishing Division (Publishing)  This division markets books to bookstores
(including major national chains), toy stores, specialty stores, museums and other
retail outlets throughout the country.
  2007
    
    2006
    
    2005Publishing
    
    
    26
    %
    
    
    26
    %
    
    
    23
    %UBAH
    
    
    74
    %
    
    
    74
    %
    
    
    77
    %Total revenues
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 (c) Narrative Description of Business
 Products
  3




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Seasonality
  Competition
   Employees
  Company Reports
 www.edcpub.com
 4




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Item 1A. RISK FACTORS
 Investors should carefully consider the following risks in addition to the other
information contained in this report. Each of these factors could adversely affect our business,
operating results and financial condition. In addition, these factors could adversely affect the
value of an investment in our common stock.
 Our operations may be adversely affected by general economic conditions
  Our growth is dependent upon attracting and retaining independent sales consultants
  Our business faces a great deal of competitive pressure
   Seasonality of sales
  Our operations are dependent on a single distribution facility
  5




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We have a sole source supplier for our products
  All our products are imported from overseas locations
  Our common stock is thinly traded
  Personnel changes
  Other factors may negatively affect our business
  
 Item 1B. UNRESOLVED STAFF COMMENTS
  
 Item 2. PROPERTIES
  
 Item 3. LEGAL PROCEEDINGS
  6




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Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 Item 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  2007
    
    2006Period
    
    High
    
    Low
    
    High
    
    Low1st Qtr
    
    
    8.85
    
    
    
    6.86
    
    
    
    10.98
    
    
    
    10.062nd Qtr
    
    
    7.90
    
    
    
    6.10
    
    
    
    10.61
    
    
    
    10.053rd Qtr
    
    
    7.88
    
    
    
    6.24
    
    
    
    10.13
    
    
    
    7.954th Qtr
    
    
    7.88
    
    
    
    6.50
    
    
    
    8.57
    
    
    
    7.65
    ISSUER PURCHASES OF EQUITY SECURITIES
 Total # of Shares
    
    
    Maximum # ofPurchased as
    
    
    Shares that MayTotal # of Shares
    
    
    Average Price
    
    
    Part of Publicly
    
    
    be RepurchasedPeriod
    
    Purchased
    
    
    Paid per Share
    
    
    Announced Plan (1)
    
    
    under the PlanDecember 1 - 31, 2006
    
    
    3,175
    
    
    $
    7.01
    
    
    
    3,175
    
    
    
    163,968January 1 - 31, 2007
    
    
    2,000
    
    
    $
    7.10
    
    
    
    2,000
    
    
    
    161,968February 1 - 28, 2007
    
    
    15,029
    
    
    $
    7.44
    
    
    
    15,029
    
    
    
    146,939Total
    
    
    20,204
    
    
    $
    7.34
    
    
    
    20,204
 
 (1)
    
    In April 2004 the Board of Directors authorized us to purchase up to 500,000 additional
shares of our common stock under a plan initiated in 1998. This plan has no expiration
date. 7




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Item 6. SELECTED FINANCIAL DATA
  YEARS ENDED FEBRUARY 28 (29)2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Net Revenues
    
    $
    31,403,500
    
    
    $
    31,788,900
    
    
    $
    31,650,800
    
    
    $
    31,127,300
    
    
    $
    26,869,700Earnings from Continuing
Operations
    
    $
    2,407,100
    
    
    $
    2,398,400
    
    
    $
    2,406,100
    
    
    $
    2,373,500
    
    
    $
    1,996,600Earnings from Continuing Operations
Per Common ShareBasic
    
    $
    .64
    
    
    $
    .64
    
    
    $
    .62
    
    
    $
    .60
    
    
    $
    .52Diluted
    
    $
    .62
    
    
    $
    .62
    
    
    $
    .59
    
    
    $
    .55
    
    
    $
    .48Total Assets
    
    $
    19,701,900
    
    
    $
    18,397,900
    
    
    $
    17,980,500
    
    
    $
    19,112,700
    
    
    $
    17,587,700Cash Dividends Paid
Per Common Share
    
    $
    .20
    
    
    $
    .15
    
    
    $
    .12
    
    
    $
    .10
    
    
    $
    .06
 
 Item 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 MD&A contains statements that are forward-looking and include numerous risks which you
should carefully consider. Additional risks and uncertainties may also materially and adversely
affect our business. You should read the following discussion in connection with our consolidated
financial statements, including the notes to those statements, included in this document. Our
fiscal years end on February 28.
 Management Summary
   Publishing Division
   8




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Publishing Division Sales by Market TypeFY 2007
    
    FY 2006
    
    FY 2005National chain stores
    
    
    39
    %
    
    
    42
    %
    
    
    36
    %All other
    
    
    61
    %
    
    
    58
    %
    
    
    64
    %Total net sales
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    Net
Revenues for Publishing DivisionFY 2007
    
    FY 2006
    
    FY 2005Net Revenues
    
    
    8,121,100
    
    
    
    8,403,700
    
    
    
    7,362,700
  Usborne Books at Home (UBAH) Division
   9




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New Consultants Added During Year
 FY 2007
    
    FY 2006
    
    FY 2005New Sales Representatives
    
    
    7,200
    
    
    
    5,300
    
    
    
    5,600Active Sales Representatives End of Fiscal Year
    
    
    9,800
    
    
    
    8,100
    
    
    
    8,300
  
    
    Consultants
    
    Supervisors
    
    Senior Supervisors
    
    Executive Supervisors
    
    Senior Executive Supervisors
    
    Directors
   Percent of Net Revenues by UBAH Marketing Program
 FY 2007
    
    FY 2006
    
    FY 2005Home Shows
    
    
    42
    %
    
    
    46
    %
    
    
    51
    %Direct Sales
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %School & Library, including Book Fair
    
    
    36
    %
    
    
    36
    %
    
    
    33
    %Internet
    
    
    8
    %
    
    
    5
    %
    
    
    3
    %Transportation Revenue
    
    
    11
    %
    
    
    10
    %
    
    
    10
    %Totals
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Number of Orders by UBAH Marketing Program
 FY 2007
    
    FY 2006
    
    FY 2005Home Shows
    
    
    36,200
    
    
    
    37,000
    
    
    
    41,200Direct Sales
    
    
    7,700
    
    
    
    9,000
    
    
    
    10,100School & Library
    
    
    12,000
    
    
    
    12,100
    
    
    
    11,500Internet
    
    
    40,900
    
    
    
    27,400
    
    
    
    17,60096,800
    
    
    
    85,500
    
    
    
    80,400
  10




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Reach for the Stars
    (1-2) Liquidity and Capital Resources
  11




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(3) Results of Operations
  FY 2007
    
    
    FY 2006
    
    
    FY 2005Net revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    35.9
    %
    
    
    36.6
    %
    
    
    35.8
    %Gross margin
    
    
    64.1
    %
    
    
    63.4
    %
    
    
    64.2
    %Operating expenses:Operating & selling
    
    
    23.6
    %
    
    
    22.3
    %
    
    
    21.7
    %Sales commissions
    
    
    23.6
    %
    
    
    23.7
    %
    
    
    24.9
    %General & administrative
    
    
    5.8
    %
    
    
    5.4
    %
    
    
    5.4
    %Interest
    
    
    0.0
    %
    
    
    0.3
    %
    
    
    0.2
    %Total operating expenses
    
    
    53.0
    %
    
    
    51.7
    %
    
    
    52.2
    %Income from Operations
    
    
    11.1
    %
    
    
    11.7
    %
    
    
    12.0
    %Other income
    
    
    1.2
    %
    
    
    0.3
    %
    
    
    0.3
    %Earnings before income taxes
    
    
    12.3
    %
    
    
    12.0
    %
    
    
    12.3
    %Income taxes
    
    
    4.7
    %
    
    
    4.5
    %
    
    
    4.7
    %Net earnings
    
    
    7.6
    %
    
    
    7.5
    %
    
    
    7.6
    %
 12




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Fiscal Year 2007 Compared with Fiscal Year 2006
  Revenues
 $ Increase/FY 2007
    
    
    FY 2006
    
    
    (decrease)Gross sales
    
    $
    41,920,700
    
    
    $
    42,567,700
    
    
    $
    (647,000
    )Less discounts & allowances
    
    
    (12,358,800
    )
    
    
    (12,367,800
    )
    
    
    9,000Transportation revenue
    
    
    1,841,600
    
    
    
    1,589,000
    
    
    
    252,600Net revenues
    
    $
    31,403,500
    
    
    $
    31,788,900
    
    
    $
    (385,400
    )
     Expenses
 $ Increase/FY 2007
    
    
    FY 2006
    
    
    (decrease)Cost of sales
    
    $
    11,274,600
    
    
    $
    11,651,200
    
    
    $
    (376,600
    )Operating & selling
    
    
    7,509,400
    
    
    
    7,095,000
    
    
    
    414,400Sales commissions
    
    
    7,397,800
    
    
    
    7,526,200
    
    
    
    (128,400
    )General & administrative
    
    
    1,722,900
    
    
    
    1,712,500
    
    
    
    10,400Interest
    
    
    7,600
    
    
    
    83,100
    
    
    
    (75,500
    )Total
    
    $
    27,912,300
    
    
    $
    28,068,000
    
    
    $
    (155,700
    )
  13




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14




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Fiscal Year 2006 Compared with Fiscal Year 2005
  Revenues
 $ Increase/FY 2006
    
    
    FY 2005
    
    
    (decrease)Gross sales
    
    $
    42,567,600
    
    
    $
    41,361,600
    
    
    $
    1,206,000Less discounts & allowances
    
    
    (12,367,800
    )
    
    
    11,324,200
    
    
    
    (1,043,600
    )Transportation revenue
    
    
    1,589,000
    
    
    
    1,613,300
    
    
    
    (24,300
    )Net revenues
    
    $
    31,788,800
    
    
    $
    31,650,700
    
    
    $
    138,100
     Expenses
 $ Increase/FY 2006
    
    
    FY 2005
    
    
    (decrease)Cost of sales
    
    $
    11,651,200
    
    
    $
    11,338,000
    
    
    $
    313,100Operating & selling
    
    
    7,095,000
    
    
    
    6,860,500
    
    
    
    234,400Sales commissions
    
    
    7,526,200
    
    
    
    7,875,900
    
    
    
    (349,700
    )General & administrative
    
    
    1,712,500
    
    
    
    1,719,200
    
    
    
    (6,800
    )Interest
    
    
    83,100
    
    
    
    67,600
    
    
    
    15,400Total
    
    $
    28,068,000
    
    
    $
    27,861,200
    
    
    $
    206,400
 15




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16




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Contractual Obligations
  Payments due by periodLess
    
    
    
    
    
    Morethan
    
    
    
    
    
    then1
    
    1-3
    
    3-5
    
    5Contractual obligations
    
    Total
    
    year
    
    years
    
    years
    
    yearsLong-Term Debt Obligations
    
    
    
    
    
    
    
    
    
    Capital Lease Obligations
    
    
    
    
    
    
    
    
    
    Operating Lease Obligations
    
    
    
    
    
    
    
    
    
    Purchase Obligations

    $2,873,200

    $2,873,200
    
    
    
    
    
    Other Long-Term
Liabilities Reflected on
the Registrants Balance
Sheet under GAAP
    
    
    
    
    
    
    
    
    
    Total

    $2,873,200

 $2,873,200
    
    
    
    
    
    
 Bank Credit Agreement
 Wall Street Journal
  17




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Critical Accounting Policies
 Our discussion and analysis of our financial condition and results of operations are based upon
our consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities.
On an on-going basis, we evaluate our estimates, including those related to our valuation of
inventory, allowance for uncollectable accounts receivable, allowance for sales returns, long-lived
assets and deferred income taxes. We base our estimates on historical experience and on various
other assumptions that are believed 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 from other sources.
 Actual results may materially differ from these estimates under different assumptions or
conditions. Historically, however, actual results have not differed materially from those
determined using required estimates. Our significant accounting policies are described in the notes
accompanying the financial statements included elsewhere in this report. However, we consider the
following accounting policies to be more significantly dependent on the use of estimates and
assumptions.
 Stock-Based Compensation
  Revenue Recognition
   Allowance for Doubtful Accounts
  Inventory
 1 2
 18




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1 2
 New accounting pronouncements
     ®
  19




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Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 Item 9.A CONTROLS AND PROCEDURES
    
 Item 9.B OTHER INFORMATION
  20




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PART III
 
 Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 Identification of Directors
  Identification of Executive Officers
  Compliance with Section 16 (a) of the Exchange Act
  
 Item 11. EXECUTIVE COMPENSATION
  
 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  
 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  Item 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES
  21




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PART IV
 
 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
   PageReport of Current Independent Registered Public
Accounting Firm
    
    26Balance
Sheets  February 28, 2007 and 2006
    
    27Statements of Earnings  Years ended
February 28, 2007, February 28, 2006
and February 28, 2005
    
    28Statements of Shareholders Equity -
Years ended February 28, 2007,
February 28, 2006 and February 28, 2005
    
    29Statements of Cash Flows -
Years ended February 28, 2007,
February 28, 2006 and February 28, 2005
    
    30Notes to Financial Statements
    
    31-39
 
  3.1
    
    Restated Certificate of Incorporation of we dated
April 26, 1968, and Certificate of Amendment thereto dated
June 21, 1968 are incorporated herein by reference to Exhibit 1
to Registration Statement on Form 10 (File No. 0-4957).3.2
    
    Certificate of Amendment of Restated Certificate of Incorporation
dated August 27, 1977 are incorporated herein by
reference to Exhibit 20.1 to Form 10-K for fiscal year ended
February 28, 1981 (File No. 0-4957).3.3
    
    By-Laws as amended are incorporated herein
by reference to Exhibit 20.2 to Form 10-K for fiscal year ended
February 28, 1981 (File No. 0-4957).3.4
    
    Certificate of Amendment of Restated Certificate of
Incorporation dated November 17, 1986,
is incorporated herein by reference to Exhibit 3.3 to Form
10-K for fiscal year ended February 28, 1987 (File No. 0-4957).
 22




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##### Table of Contents



3.5
    
    Certificate of Amendment of Restated Certificate of
Incorporation dated March 22, 1996.
is incorporated herein by reference to Exhibit 3.4 to Form
10-K for fiscal year ended February 28, 1997 (File No. 0-4957).3.6
    
    Certificate of Amendment of Restated Certificate of Incorporation
dated July 15, 2002 is incorporated herein by reference to
Exhibit 10.30 to Form 10-K dated February 28, 2003 (File No. 0-4957)4.1
    
    Specimens of Common Stock Certificates are incorporated
herein by reference to Exhibits 3.1 and 3.2 to Registration
Statement on Form 10-K (File No. 0-4957) filed June 29, 1970.10.1
    
    Usborne Agreement-Contractual agreement by and between
the Company and Usborne Publishing Limited dated
November 25, 1988, is incorporated herein by reference to
Exhibit 10.12 to Form 10-K dated February 28, 1989
(File No. 0-4957).10.2
    
    Party Plan-Contractual agreement by and between the
Company and Usborne Publishing Limited dated March 14,
1989, is incorporated herein by reference to Exhibit 10.13 to
Form 10-K dated February 28, 1989 (File No. 0-4957).10.3
    
    Amendment dated January 1, 1992 to Usborne Agreement -
Contractual agreement by and between the Company and
Usborne Publishing Limited is incorporated herein by reference to
Exhibit 10.13 to Form 10-K dated February 29, 1992 (File No.
0-4957).10.4
    
    Educational Development Corporation 1992 Incentive Stock
Option Plan is incorporated herein by reference to Exhibit 4(c)
to Registration Statement on Form S-8 (File No. 33-60188)10.5
    
    Restated Loan Agreement dated June 30, 1999 between the Company
and State Bank & Trust, N.A., Tulsa, OK, is incorporated
herein by reference to Exhibit 10.24 to Form 10-K dated
February 29, 2000 (File No. 0-4957).10.6
    
    Educational Development Corporation 2002 Incentive Stock
Option Plan is incorporated herein by reference to Exhibit A
to definitive proxy statement on Schedule 14A
dated May 23, 2002 (File No. 0-4957)10.7
    
    Amendment dated November 12, 2002 to Usborne Agreement 
Contractual agreement by and between we and
Usborne Publishing Limited is incorporated herein by reference to
Exhibit 10.24 to Form 10-K dated February 28, 2003 (File No. 0-4957).10.8
    
    Employment Agreement between Randall W. White and the Company
dated February 28, 2004.10.9
    
    Fifth Amendment dated June 30, 2004 to Restated Loan Agreement
between the Company and Arvest Bank, Tulsa, OK
 23




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##### Table of Contents



10.10
    
    Sixth Amendment dated June 30, 2005 to Restated Loan Agreement
between the Company and Arvest Bank, Tulsa, OK10.11
    
    Seventh Amendment dated September 2, 2005 to Restated Loan Agreement
between the Company and Arvest Bank, Tulsa, OK10.12
    
    Eighth Amendment dated June 30, 2006 to Restated Loan
Agreement between the Company and Arvest Bank, Tulsa, OK*23.1
    
    Consent of current Independent Registered Public Accounting Firm*31.1
    
    Certification of the Chief Executive Officer of Educational Development
Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of the Controller and Corporate Secretary (Principal Financial
and Accounting Officer) of Educational Development Corporation pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification pursuant to 18 U.S.C Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Filed Herewith 24




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SIGNATURES
   Date: May 25, 2007
    
    By
    
    /s/ Marilyn Welborn

Marilyn WelbornController and Corporate Secretary(Principal Financial and Accounting Officer)
  Date:  May 25, 2007
    
    /s/ Randall W. White

Randall W. WhiteChairman of the Board
President, Treasurer and
DirectorMay 25, 2007
    
    /s/ John A. ClericoJohn A. Clerico, DirectorMay 25, 2007
    
    /s/ Dean CosgroveG. Dean Cosgrove, DirectorMay 25, 2007
    
    /s/ James F. LewisJames F. Lewis, DirectorMay 25, 2007
    
    /s/ Marilyn WelbornMarilyn WelbornController and Corporate Secretary(Principal Financial and Accounting Officer)
 25




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
 26




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##### Table of Contents



EDUCATIONAL DEVELOPMENT CORPORATION
 
 BALANCE SHEETS
 AS OF FEBRUARY 28
 2007
    
    
    2006ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    1,254,304
    
    
    $
    321,537Accounts receivable, less allowance for doubtful accounts and
sales returns $158,878 (2007) and $185,209 (2006)
    
    
    2,849,329
    
    
    
    2,700,430InventoriesNet
    
    
    12,387,959
    
    
    
    12,159,360Prepaid expenses and other assets
    
    
    95,391
    
    
    
    119,508Income taxes receivable
    
    
    3,374
    
    
    
    Deferred income taxes
    
    
    117,500
    
    
    
    141,700Total current assets
    
    
    16,707,855
    
    
    
    15,442,535INVENTORIESNet
    
    
    459,117
    
    
    
    379,570PROPERTY, PLANT AND EQUIPMENTNet
    
    
    2,385,322
    
    
    
    2,493,929DEFERRED INCOME TAXES
    
    
    149,600
    
    
    
    81,900TOTAL
    
    $
    19,701,896
    
    
    $
    18,397,934LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Note payable to bank
    
    $
    
    
    
    $
    676,000Accounts payable
    
    
    3,308,304
    
    
    
    2,796,905Accrued salaries and commissions
    
    
    560,894
    
    
    
    566,379Income taxes payable
    
    
    
    
    
    
    71,749Dividends payable
    
    
    
    
    
    
    750,785Other current liabilities
    
    
    171,407
    
    
    
    197,486Total current liabilities
    
    
    4,040,605
    
    
    
    5,059,304COMMITMENTS (Note 7)SHAREHOLDERS EQUITY:Common stock, $0.20 par value; Authorized 8,000,000 shares;
Issued 5,791,840 (2007) and 5,771,840 (2006) shares;
Outstanding 3,757,323 (2007) and 3,753,923 (2006) shares
    
    
    1,158,368
    
    
    
    1,154,368Capital in excess of par value
    
    
    7,649,096
    
    
    
    7,577,495Retained earnings
    
    
    17,707,698
    
    
    
    15,300,99926,515,162
    
    
    
    24,032,862Less treasury stock, at cost
    
    
    (10,853,871
    )
    
    
    (10,694,232
    )15,661,291
    
    
    
    13,338,630TOTAL
    
    $
    19,701,896
    
    
    $
    18,397,934
  27




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##### Table of Contents



EDUCATIONAL DEVELOPMENT CORPORATION
 
 STATEMENTS OF EARNINGS
 YEARS ENDED FEBRUARY 28,
 2007
    
    
    2006
    
    
    2005GROSS SALES
    
    $
    41,920,682
    
    
    $
    42,567,648
    
    
    $
    41,361,612Less discounts and allowances
    
    
    (12,358,838
    )
    
    
    (12,367,775
    )
    
    
    (11,324,165
    )Transportation revenue
    
    
    1,841,621
    
    
    
    1,589,017
    
    
    
    1,613,332NET REVENUES
    
    
    31,403,465
    
    
    
    31,788,890
    
    
    
    31,650,779COST OF SALES
    
    
    11,274,571
    
    
    
    11,651,182
    
    
    
    11,338,039Gross margin
    
    
    20,128,894
    
    
    
    20,137,708
    
    
    
    20,312,740OPERATING EXPENSES:Operating and selling
    
    
    7,509,439
    
    
    
    7,094,963
    
    
    
    6,860,540Sales commissions
    
    
    7,397,767
    
    
    
    7,526,184
    
    
    
    7,875,891General and administrative
    
    
    1,722,933
    
    
    
    1,712,469
    
    
    
    1,719,240Interest
    
    
    7,581
    
    
    
    83,054
    
    
    
    67,62016,637,720
    
    
    
    16,416,670
    
    
    
    16,523,291OTHER INCOME
    
    
    386,927
    
    
    
    93,372
    
    
    
    95,625EARNINGS BEFORE INCOME TAXES
    
    
    3,878,101
    
    
    
    3,814,410
    
    
    
    3,885,074INCOME TAXES
    
    
    1,471,000
    
    
    
    1,416,000
    
    
    
    1,479,000NET EARNINGS
    
    $
    2,407,101
    
    
    $
    2,398,410
    
    
    $
    2,406,074BASIC AND DILUTED EARNINGS
PER SHARE:Basic
    
    $
    0.64
    
    
    $
    0.64
    
    
    $
    0.62Diluted
    
    $
    0.62
    
    
    $
    0.62
    
    
    $
    0.59WEIGHTED AVERAGE NUMBER OF
COMMON AND EQUIVALENT SHARES
OUTSTANDING:Basic
    
    
    3,755,608
    
    
    
    3,747,759
    
    
    
    3,902,075Diluted
    
    
    3,875,000
    
    
    
    3,898,737
    
    
    
    4,088,130
  28




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##### Table of Contents



EDUCATIONAL DEVELOPMENT CORPORATION
 
 STATEMENTS OF SHAREHOLDERS EQUITY

FOR THE YEARS ENDED FEBRUARY 28,
 Common Stock(par value $0.20 per share)Number of
    
    
    
    
    
    
    Capital in
    
    
    
    
    
    
    Treasury StockShares
    
    
    
    
    
    
    Excess of
    
    
    Retained
    
    
    Number of
    
    
    
    
    
    
    ShareholdersIssued
    
    
    Amount
    
    
    Par Value
    
    
    Earnings
    
    
    Shares
    
    
    Amount
    
    
    EquityBALANCEMarch 1, 2004
    
    
    5,596,340
    
    
    $
    1,119,268
    
    
    $
    6,518,669
    
    
    $
    12,292,066
    
    
    
    1,570,567
    
    
    $
    (5,686,446
    )
    
    $
    14,243,557Purchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    479,360
    
    
    
    (5,103,255
    )
    
    
    (5,103,255
    )Sales of treasury stock
    
    
    
    
    
    
    
    
    
    
    36,700
    
    
    
    
    
    
    
    (23,100
    )
    
    
    85,800
    
    
    
    122,500Exercise of options
($2.1875$6.00/share)
    
    
    166,000
    
    
    
    33,200
    
    
    
    510,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    543,500Tax benefitstock options
    
    
    
    
    
    
    
    
    
    
    399,178
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    399,178Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    4,639
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,639Dividends paid ($0.12/share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (484,047
    )
    
    
    
    
    
    
    
    
    
    
    (484,047
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,406,074
    
    
    
    
    
    
    
    
    
    
    
    2,406,074BALANCEFebruary 28, 2005
    
    
    5,762,340
    
    
    
    1,152,468
    
    
    
    7,469,486
    
    
    
    14,214,093
    
    
    
    2,026,827
    
    
    
    (10,703,901
    )
    
    
    12,132,146Purchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,500
    
    
    
    (77,250
    )
    
    
    (77,250
    )Sales of treasury stock
    
    
    
    
    
    
    
    
    
    
    48,294
    
    
    
    
    
    
    
    (16,410
    )
    
    
    86,919
    
    
    
    135,213Exercise of options
($2.1875$6.00/share)
    
    
    9,500
    
    
    
    1,900
    
    
    
    47,475
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,375Tax benefitstock options
    
    
    
    
    
    
    
    
    
    
    12,240
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,240Dividends paid ($0.15/share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (560,719
    )
    
    
    
    
    
    
    
    
    
    
    (560,719
    )Dividends declared
($0.20/share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (750,785
    )
    
    
    
    
    
    
    
    
    
    
    (750,785
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,398,410
    
    
    
    
    
    
    
    
    
    
    
    2,398,410BALANCEFebruary 28, 2006
    
    
    5,771,840
    
    
    
    1,154,368
    
    
    
    7,577,495
    
    
    
    15,300,999
    
    
    
    2,017,917
    
    
    
    (10,694,232
    )
    
    
    13,338,630Purchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,616
    
    
    
    (260,664
    )
    
    
    (260,664
    )Sales of treasury stock
    
    
    
    
    
    
    
    
    
    
    10,526
    
    
    
    
    
    
    
    (19,016
    )
    
    
    101,025
    
    
    
    111,551Exercise of options
($2.1875$4.00/share)
    
    
    20,000
    
    
    
    4,000
    
    
    
    51,938
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,938Tax benefitstock options
    
    
    
    
    
    
    
    
    
    
    9,137
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,137Cash dividends  net of accrual
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (402
    )
    
    
    
    
    
    
    
    
    
    
    (402
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,407,101
    
    
    
    
    
    
    
    
    
    
    
    2,407,101BALANCEFebruary 28, 2007
    
    
    5,791,840
    
    
    $
    1,158,368
    
    
    $
    7,649,096
    
    
    $
    17,707,698
    
    
    
    2,034,517
    
    
    $
    (10,853,871
    )
    
    $
    15,661,291
  29




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##### Table of Contents



EDUCATIONAL DEVELOPMENT CORPORATION
 
 STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED FEBRUARY 28
 2007
    
    
    2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net earnings
    
    $
    2,407,101
    
    
    $
    2,398,410
    
    
    $
    2,406,074Adjustments to reconcile net earnings to net cash
provided by operating activities:Depreciation and amortization
    
    
    143,549
    
    
    
    138,023
    
    
    
    125,570Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    4,639Deferred income taxes
    
    
    (43,500
    )
    
    
    (82,000
    )
    
    
    (28,900
    )Provision for doubtful accounts and sales returns
    
    
    1,482,851
    
    
    
    1,323,472
    
    
    
    1,210,272Loss on disposal of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    1,163Changes in assets and liabilities:Accounts and income tax receivable
    
    
    (1,635,124
    )
    
    
    (1,527,661
    )
    
    
    (1,526,421
    )Inventories
    
    
    (308,146
    )
    
    
    (66,402
    )
    
    
    1,893,703Prepaid expenses and other assets
    
    
    24,117
    
    
    
    (16,162
    )
    
    
    43,678Accounts payable, accrued salaries and commissions,
and other current liabilities
    
    
    479,835
    
    
    
    (859,590
    )
    
    
    (54,777
    )Income tax payable
    
    
    (71,749
    )
    
    
    71,749
    
    
    
    Total adjustments
    
    
    71,833
    
    
    
    (1,018,571
    )
    
    
    1,668,927Net cash provided by operating activities
    
    
    2,478,934
    
    
    
    1,379,839
    
    
    
    4,075,001CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment
    
    
    (34,942
    )
    
    
    (229,185
    )
    
    
    (483,358
    )Net cash used in investing activities
    
    
    (34,942
    )
    
    
    (229,185
    )
    
    
    (483,358
    )CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings on revolving credit agreement
    
    
    3,295,000
    
    
    
    14,239,000
    
    
    
    13,235,000Payments on revolving credit agreement
    
    
    (3,971,000
    )
    
    
    (14,991,000
    )
    
    
    (12,201,000
    )Cash received from exercise of stock options
    
    
    55,938
    
    
    
    49,375
    
    
    
    543,500Tax benefit of stock options exercised
    
    
    9,137
    
    
    
    12,240
    
    
    
    399,178Cash received from sale of treasury stock
    
    
    111,551
    
    
    
    135,213
    
    
    
    122,500Cash paid to acquire treasury stock
    
    
    (260,664
    )
    
    
    (77,250
    )
    
    
    (5,103,255
    )Dividends paid
    
    
    (751,187
    )
    
    
    (560,719
    )
    
    
    (484,047
    )Net cash used in financing activities
    
    
    (1,511,225
    )
    
    
    (1,193,141
    )
    
    
    (3,488,124
    )NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
    
    
    932,767
    
    
    
    (42,487
    )
    
    
    103,519CASH AND CASH EQUIVALENTSBEGINNING OF YEAR
    
    
    321,537
    
    
    
    364,024
    
    
    
    260,505CASH AND CASH EQUIVALENTSEND OF YEAR
    
    $
    1,254,304
    
    
    $
    321,537
    
    
    $
    364,024SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:Cash paid for interest
    
    $
    11,449
    
    
    $
    85,933
    
    
    $
    62,533Cash paid for income taxes
    
    $
    1,542,400
    
    
    $
    1,381,106
    
    
    $
    1,117,672SUPPLEMENTAL DISCLOSURE NON CASH
INVESTING AND FINANCING ACTIVITIES:Dividend declared
    
    
    
    
    
    $
    750,785
    
    
    
    
  30




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##### Table of Contents



EDUCATIONAL DEVELOPMENT CORPORATION
 
 NOTES TO FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28, 2007, FEBRUARY 28, 2006 AND FEBRUARY 28, 2005
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature
of Business 
 Estimates 
 Business Concentration 
 Cash and Cash Equivalents 
 Accounts Receivable 
  Inventories 
 31




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##### Table of Contents



1 2
  Property, Plant and Equipment 
 Building
    
    30 yearsMachinery & equipment
    
    3-10 yearsFurniture & fixtures
    
    3 years
 Income Taxes 
 Revenue Recognition 
   Advertising Costs A
 Shipping and Handling Costs 
 Earnings per Share 
 32




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##### Table of Contents



Year Ended February 28,2007
    
    
    2006
    
    
    2005Diluted Earnings Per Share:Net earnings applicable to
common shareholders
    
    $
    2,407,101
    
    
    $
    2,398,310
    
    
    $
    2,406,074Shares:Weighted average shares
outstandingbasic
    
    
    3,755,608
    
    
    
    3,747,759
    
    
    
    3,902,075Assumed exercise of options
    
    
    119,392
    
    
    
    150,978
    
    
    
    186,055Weighted average shares
outstandingdiluted
    
    
    3,875,000
    
    
    
    3,898,737
    
    
    
    4,088,130Diluted Earnings Per Share
    
    $
    0.62
    
    
    $
    0.62
    
    
    $
    0.59
  Fair Value of Financial Instruments 
 Long-Lived Asset Impairment 
 Stock-Based Compensation 
 Reclassifications 
 New accounting pronouncements
       33




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##### Table of Contents



2. INVENTORIES
  February 28,2007
    
    
    2006Current:Book inventory
    
    $
    12,421,419
    
    
    $
    12,186,820Inventory valuation allowance
    
    
    (33,460
    )
    
    
    (27,460
    )Inventories netcurrent
    
    $
    12,387,959
    
    
    $
    12,159,360Noncurrent:Book inventory
    
    $
    808,000
    
    
    $
    657,000Inventory valuation allowance
    
    
    (348,883
    )
    
    
    (277,430
    )Inventories netnoncurrent
    
    $
    459,117
    
    
    $
    379,570
 3. PROPERTY, PLANT AND EQUIPMENT
  February 28,2007
    
    
    2006Land
    
    $
    250,000
    
    
    $
    250,000Building
    
    
    2,124,700
    
    
    
    2,124,700Machinery and equipment
    
    
    1,992,200
    
    
    
    1,957,200Furniture and fixtures
    
    
    66,900
    
    
    
    66,9004,433,800
    
    
    
    4,398,800Less accumulated depreciation and
amortization
    
    
    (2,048,500
    )
    
    
    (1,904,900
    )$
    2,385,300
    
    
    $
    2,493,900
 34




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##### Table of Contents



4. INCOME TAXES
  2007
    
    
    2006Current:Deferred tax assets:Allowance for doubtful accounts
    
    $
    28,500
    
    
    $
    42,700Allowance for slow moving inventory
    
    
    12,700
    
    
    
    10,400Allowance for sales returns
    
    
    31,900
    
    
    
    27,700Accruals
    
    
    44,400
    
    
    
    59,400Stock-based compensation
    
    
    0
    
    
    
    1,500Deferred tax assets
    
    
    117,500
    
    
    
    141,700Deferred tax assetNet
    
    $
    117,500
    
    
    $
    141,700Noncurrent:Deferred tax assets:Allowance for slow moving inventory
    
    $
    222,800
    
    
    $
    138,700Stock-based compensation
    
    
    0
    
    
    
    4,200Deferred tax assets
    
    
    222,800
    
    
    
    142,900Deferred tax liabilities:Property and equipment
    
    
    (73,200
    )
    
    
    (61,000
    )Deferred tax liabilities
    
    
    (73,200
    )
    
    
    (61,000
    )Deferred tax assetNet
    
    $
    149,600
    
    
    $
    81,900
   As of February 28,2007
    
    
    2006
    
    
    2005Current:Federal
    
    $
    1,287,300
    
    
    $
    1,273,200
    
    
    $
    1,300,000State
    
    
    227,200
    
    
    
    224,800
    
    
    
    229,4001,514,500
    
    
    
    1,498,000
    
    
    
    1,529,400Deferred:Federal
    
    
    (37,000
    )
    
    
    (69,700
    )
    
    
    (43,100
    )State
    
    
    (6,500
    )
    
    
    (12,300
    )
    
    
    (7,300
    )(43,500
    )
    
    
    (82,000
    )
    
    
    (50,400
    )Total income tax expense
    
    $
    1,471,000
    
    
    $
    1,416,000
    
    
    $
    1,479,000
 35




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##### Table of Contents



As of Fiscal Year End February 28,2007
    
    
    2006
    
    
    2005Tax expense at federal statutory rate
    
    $
    1,319,000
    
    
    $
    1,297,000
    
    
    $
    1,321,000State income taxnet of federal tax benefit
    
    
    154,000
    
    
    
    151,000
    
    
    
    156,000Other
    
    
    (2,000
    )
    
    
    (32,000
    )
    
    
    2,000Total income tax expense
    
    $
    1,471,000
    
    
    $
    1,416,000
    
    
    $
    1,479,000
 5. EMPLOYEE BENEFIT PLAN
  6. NOTE PAYABLE TO BANK
    7. COMMITMENTS
  8. CAPITAL STOCK, STOCK OPTIONS AND WARRANTS
   36




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##### Table of Contents



2007
    
    
    2006
    
    
    2005Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at
Beginning of Year
    
    
    250,200
    
    
    $
    3.74
    
    
    
    259,700
    
    
    $
    3.79
    
    
    
    424,700
    
    
    $
    3.57Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    10.00Exercised/canceled
    
    
    (20,000
    )
    
    
    (2.80
    )
    
    
    (9,500
    )
    
    
    (5.20
    )
    
    
    (166,000
    )
    
    
    (3.27
    )Outstanding at End of Year
    
    
    230,200
    
    
    $
    3.82
    
    
    
    250,200
    
    
    $
    3.74
    
    
    
    259,700
    
    
    $
    3.79
  Outstanding
    
    RemainingWeighted Average
    
    at February 28,
    
    ContractualExercise Price
    
    2007
    
    Life (Years)$2.19
    
    
    64,000
    
    
    
    3$2.50
    
    
    10,000
    
    
    
    2$3.81
    
    
    5,000
    
    
    
    1$4.00
    
    
    15,000
    
    
    
    1$4.63
    
    
    135,200
    
    
    
    1$10.00
    
    
    1,000
    
    
    
    7230,200
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##### Table of Contents



9. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
  Basic
    
    
    DilutedNet
    
    
    
    
    
    
    
    
    
    
    Earnings
    
    
    EarningsRevenues
    
    
    Gross Margin
    
    
    Net Earnings
    
    
    Per Share
    
    
    Per Share2007First quarter
    
    $
    8,107,000
    
    
    $
    5,227,600
    
    
    $
    696,600
    
    
    $
    0.19
    
    
    $
    0.18Second quarter
    
    
    6,484,400
    
    
    
    3,967,900
    
    
    
    424,000
    
    
    
    0.11
    
    
    
    0.11Third quarter
    
    
    9,820,500
    
    
    
    6,398,900
    
    
    
    798,200
    
    
    
    0.21
    
    
    
    0.21Fourth quarter
    
    
    6,991,600
    
    
    
    4,534,500
    
    
    
    488,300
    
    
    
    0.13
    
    
    
    0.12Total year
    
    $
    31,403,500
    
    
    $
    20,128,900
    
    
    $
    2,407,100
    
    
    $
    0.64
    
    
    $
    0.622006First quarter
    
    $
    8,226,700
    
    
    $
    5,221,900
    
    
    $
    745,200
    
    
    $
    0.20
    
    
    $
    0.19Second quarter
    
    
    6,794,100
    
    
    
    4,054,900
    
    
    
    394,800
    
    
    
    0.11
    
    
    
    0.10Third quarter
    
    
    9,683,000
    
    
    
    6,292,800
    
    
    
    739,100
    
    
    
    0.20
    
    
    
    0.19Fourth quarter
    
    
    7,085,100
    
    
    
    4,568,100
    
    
    
    519,300
    
    
    
    0.14
    
    
    
    0.13Total year
    
    $
    31,788,900
    
    
    $
    20,137,700
    
    
    $
    2,398,400
    
    
    $
    0.64
    
    
    $
    0.622005First quarter
    
    $
    8,553,300
    
    
    $
    5,549,400
    
    
    $
    824,400
    
    
    $
    0.21
    
    
    $
    0.19Second quarter
    
    
    6,992,200
    
    
    
    4,373,100
    
    
    
    452,400
    
    
    
    0.11
    
    
    
    0.11Third quarter
    
    
    9,331,100
    
    
    
    6,110,600
    
    
    
    809,400
    
    
    
    0.21
    
    
    
    0.20Fourth quarter
    
    
    6,774,200
    
    
    
    4,279,600
    
    
    
    319,900
    
    
    
    0.09
    
    
    
    0.09Total year
    
    $
    31,650,800
    
    
    $
    20,312,700
    
    
    $
    2,406,100
    
    
    $
    0.62
    
    
    $
    0.59
 10. BUSINESS SEGMENTS
  
    
    The Publishing Division markets its products to retail accounts, which include book, toy
and gift stores, school supply stores and museums, through commissioned sales
representatives, trade and specialty wholesalers and an internal telesales group.
    
    UBAH markets its product line through a nationwide network of independent sales
consultants using a combination of direct sales, home shows and book fairs. The UBAH
Division also distributes to school and public libraries.
  38




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##### Table of Contents



Publishing
    
    UBAH
    
    Other
    
    Total2007Net revenues
    
    $
    8,121,100
    
    
    $
    23,282,400
    
    
    $
    
    
    
    $
    31,403,500Earnings (loss) before income taxes
    
    
    2,508,400
    
    
    
    4,863,500
    
    
    
    (3,493,800
    )
    
    $
    3,878,1002006Net revenues
    
    $
    8,403,700
    
    
    $
    23,385,200
    
    
    $
    
    
    
    $
    31,788,900Earnings (loss) before income taxes
    
    
    2,833,300
    
    
    
    4,743,000
    
    
    
    (3,761,900
    )
    
    $
    3,814,4002005Net revenues
    
    $
    7,362,700
    
    
    $
    24,288,100
    
    
    $
    
    
    
    $
    31,650,800Earnings (loss) before income taxes
    
    
    2,447,000
    
    
    
    5,172,300
    
    
    
    (3,734,200
    )
    
    
    3,885,100
 11. STOCK REPURCHASE PLAN
  12. SUBSEQUENT EVENT
  13. OTHER INCOME
   39