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Investments | 12 Months Ended
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Apr. 30, 2015
Investments, Debt and Equity Securities [Abstract] |
Investments |
Note 4-Investments:
Securities Available-for-Sale:
Investments held by the Company and its subsidiaries are classified as securities available-for-sale in accordance with FASB’s ASC 320, Investments - Debt and Equity Securities. All of the Company’s securities classified as available-for-sale were readily marketable or had a maturity of twelve months or less and are classified as current assets on the Consolidated Balance Sheets.
Equity Securities:
Equity securities classified as available-for-sale on the Consolidated Balance Sheets, consist of investments in common stocks, ETFs that attempt to replicate the performance of certain equity indexes held for dividend yield, ETFs that attempt to replicate the inverse of the price performance of certain equity indexes and ETFs that hold preferred shares primarily of financial institutions.
As of April 30, 2015 and April 30, 2014, the aggregate cost of the equity securities classified as available-for-sale, which consist of investments in the iShares Dow Jones Select Dividend Index (DVY), SPDR S&P Dividend (SDY), First Trust Value Line Dividend Index (FVD), PowerShares Financial Preferred (PGF), certain common shares of equity securities and inverse equity index ETFs, was $9,470,000 and $8,847,000, respectively, and the fair value was $9,632,000 and $9,226,000, respectively. There were capital gain distributions from certain ETF’s of $57,000 and $36,000, respectively, during fiscal years 2015 and 2014. The decreases in gross unrealized gains on equity securities classified as available-for-sale of $217,000, net of deferred taxes of $76,000, were included in Shareholders’ Equity at April 30, 2015. The decreases in gross unrealized gains on equity securities classified as available-for-sale of $8,000, net of deferred taxes of $3,000, were included in Shareholders’ Equity at April 30, 2014. There were no sales or proceeds from sales of equity securities during the fiscal year ended April 30, 2015 or April 30, 2014.
The carrying value and fair value of securities available-for-sale at April 30, 2015 were as follows:
($ in thousands) |  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
Common stocks |  | $ | 101 |  |  | $ | 74 |  |  | $ | - |  |  | $ | 175 |
ETFs - equities |  |  | 3,903 |  |  |  | 1,508 |  |  |  | - |  |  |  | 5,411 |
Inverse ETFs - equities |  |  | 5,466 |  |  |  | - |  |  |  | (1,420 | ) |  |  | 4,046 |
|  | $ | 9,470 |  |  | $ | 1,582 |  |  | $ | (1,420 | ) |  | $ | 9,632 |
The carrying value and fair value of securities available-for-sale at April 30, 2014 were as follows: |
($ in thousands) |  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
Common stocks |  | $ | 101 |  |  | $ | 47 |  |  | $ | (12 | ) |  | $ | 136 |
ETFs - equities |  |  | 3,878 |  |  |  | 1,280 |  |  |  | (2 | ) |  |  | 5,156 |
Inverse ETFs - equities |  |  | 4,868 |  |  |  | - |  |  |  | (934 | ) |  |  | 3,934 |
|  | $ | 8,847 |  |  | $ | 1,327 |  |  | $ | (948 | ) |  | $ | 9,226 |
Government Debt Securities (Fixed Income Securities): |  |  |  |
Fixed income securities held from time to time consist of government debt securities issued by the United States federal government. There were no fixed income securities as of April 30, 2015 or April 30, 2014.
There were no sales or proceeds from maturities and sales of government debt securities classified as available-for-sale during the fiscal years ended April 30, 2015, 2014 and 2013.
Income from securities transactions was comprised of the following: |  |  |
|  | Fiscal Years Ended April 30, |
($ in thousands) |  | 2015 |  |  | 2014 |  |  | 2013 |
Dividend income |  | $ | 157 |  |  | $ | 147 |  |  | $ | 124 |
Interest income |  |  | 3 |  |  |  | 5 |  |  |  | 4 |
Capital gain distribution from ETFs (1) |  |  | 57 |  |  |  | 36 |  |  |  | - |
Exchange loss |  |  | (16 | ) |  |  | - |  |  |  | - |
Interest expense |  |  | - |  |  |  | (5 | ) |  |  | - |
Other |  |  | (75 | ) |  |  | (5 | ) |  |  | (2 | )
Total income/(loss) from securities transactions and other, net |  | $ | 126 |  |  | $ | 178 |  |  | $ | 126 |
(1) Capital gain distributions of $57,000 and $36,000 which were reclassified from Accumulated Other Comprehensive Income in the Consolidated Balance Sheets to the Consolidated Statements of Income in fiscal 2015 and 2014, respectively.
The changes in the value of equity and fixed income securities investments are recorded in Other Comprehensive Income in the Consolidated Financial Statements. Realized gains and losses are recorded on the trade date in the Consolidated Statements of Income when securities are sold, mature or are redeemed. As of April 30, 2015 and April 30, 2014, gross unrealized gains of $162,000 and $380,000, net of deferred taxes of $57,000 and $134,000, respectively, are recorded in Accumulated Other Comprehensive Income in the Consolidated Balance Sheets.
Investment in Unconsolidated Entities:
Equity Method Investment:
As of April 30, 2015 and April 30, 2014, the Company’s investment in EAM Trust, on the Consolidated Balance Sheets was $58,048,000 and $57,850,000, respectively.
The value of VLI’s investment in EAM at April 30, 2015 and April 30, 2014 reflects the fair value of contributed capital of $55,805,000 at inception, which included $5,820,000 of cash and liquid securities in excess of working capital requirements contributed to EAM’s capital account by VLI, plus VLI’s share of non-voting revenues and non-voting profits from EAM less distributions, made quarterly to VLI by EAM, during the period subsequent to its initial investment through the dates of the Consolidated Balance Sheets.
It is anticipated that EAM will have sufficient liquidity and earn enough profit to conduct its current and future operations so the management of EAM will not need additional funding.
The Company monitors its Investment in EAM Trust for impairment to determine whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. Impairment indicators include, but are not limited to the following: (a) a significant deterioration in the earnings performance, asset quality, or business prospects of the investee, (b) a significant adverse change in the regulatory, economic, or technological environment of the investee, (c) a significant adverse change in the general market condition of the industry in which the investee operates, or (d) factors that raise significant concerns about the investee’s ability to continue as a going concern such as negative cash flows, working capital deficiencies, or noncompliance with statutory capital and regulatory requirements. EAM did not record any impairment losses for its assets during the fiscal years 2015 or 2014.
The components of EAM’s investment management operations, provided to the Company by EAM, were as follows:
|  | Fiscal Years Ended April 30, |
($ in thousands) |  | 2015 |  |  | 2014 |  |  | 2013 |
Investment management fees earned from the Value Line Funds, net of waivers shown below |  | $ | 15,014 |  |  | $ | 14,452 |  |  | $ | 12,773 |
12b-1 fees and other fees, net of waivers shown below |  | $ | 5,459 |  |  | $ | 5,061 |  |  | $ | 3,905 |
Other income |  | $ | 34 |  |  | $ | 16 |  |  | $ | 14 |
Investment management fee waivers and reimbursements (1) |  | $ | 192 |  |  | $ | 89 |  |  | $ | 379 |
12b-1 fee waivers (1) |  | $ | 1,518 |  |  | $ | 1,683 |  |  | $ | 2,156 |
Value Line’s non-voting revenues interest |  | $ | 7,346 |  |  | $ | 6,767 |  |  | $ | 5,781 |
EAM’s net income (2) |  | $ | 1,248 |  |  | $ | 1,464 |  |  | $ | 945 |
(1) During fiscal 2015 and 2014 investment management fee waivers and reimbursements primarily related to the Value Line Core Bond Fund and the 12b-1 fee waivers related to six and seven of the Value Line Mutual Funds, respectively. During fiscal 2013 investment management fee waivers and reimbursements related to the Value Line Core Bond Fund and the U.S. Government Money Market Fund (“USGMMF”) which was merged into a third party fund, the Daily Income Fund, managed by Reich & Tang, effective October 19, 2012. In fiscal 2013 the 12b-1 fee waivers related to nine of the Value Line Mutual Funds. Subsequent to April 30, 2015, EAM changed its money market option to the Federated Government Obligations Fund which was added as an option for the direct Value Line Funds’ shareholders to exchange into and is now available in place of the Daily Income Fund. (2) Represents EAM’s net income, after giving effect to Value Line’s non-voting revenues interest, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.
|  | Fiscal Years Ended April 30, |
($ in thousands) |  | 2015 |  |  | 2014 |
EAM’s total assets |  | $ | 60,159 |  |  | $ | 59,965 |
EAM’s total liabilities (1) |  |  | (3,104 | ) |  |  | (3,158 | )
EAM’s total equity |  | $ | 57,055 |  |  | $ | 56,807 |
(1) At April 30, 2015 and 2014, EAM’s total liabilities included a payable to VLI for its accrued non-voting revenues and non-voting profits interests of $1,951,000 and $1,887,000, respectively.

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