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Investments
 3 Months Ended
Jul. 31, 2015
Investments, Debt and Equity Securities [Abstract]  
Investments

Note 2 - 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 are readily marketable and have a maturity of twelve months or less and are classified as current assets on the Consolidated Condensed Balance Sheets.

 

Equity Securities:

 

Equity securities classified as available-for-sale on the Consolidated Condensed 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 July 31, 2015 and April 30, 2015, the aggregate cost of the equity securities classified as available-for-sale, which consist of investments in the iShares Dow Jones Select Dividend ETF (DVY), SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), PowerShares Financial Preferred ETF (PGF), small, mid and large cap high dividend ETFs, and conservative equity ETFs (VLSM, VLML, VLLV),  certain common shares of equity securities, and inverse equity index ETFs, was $9,607,000 and $9,470,000, respectively, and the fair value was $9,627,000 and $9,632,000, respectively.

 

There were no sales or proceeds from sales of equity securities during the three months ended July 31, 2015 and July 31, 2014. The decrease in gross unrealized gains on equity securities classified as available-for-sale of $142,000, net of deferred taxes of $50,000 was included in Shareholders’ Equity at July 31, 2015. The decrease in gross unrealized gains on equity securities classified as available-for-sale of $131,000, net of deferred taxes of $46,000 was included in Shareholders’ Equity at July 31, 2014.

 

The changes in the value of equity securities investments are recorded in Other Comprehensive Income in the Consolidated Condensed Financial Statements. Realized gains and losses are recorded as of the trade date in the Consolidated Condensed Statements of Income when securities are sold, mature or are redeemed. As of July 31, 2015 and April 30, 2015, accumulated other comprehensive income included unrealized gains of $20,000 and $162,000, net of deferred taxes of $7,000 and $57,000, respectively.

 

The carrying value and fair value of securities available-for-sale at July 31, 2015 were as follows:

                                 
($ in thousands)   Cost     Gross Unrealized Gains     Gross
Unrealized
Losses		     Fair Value  
Common stocks   $ 101     $ 78     $ (28 )   $ 151  
ETFs - equities     4,040       1,433       -       5,473  
Inverse ETFs - equities     5,466       -       (1,463 )     4,003  
    $ 9,607     $ 1,511     $ (1,491 )   $ 9,627  

 

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  

 

Income from Securities Transactions:

 

Income from securities transactions was comprised of the following: 

       
    Three Months Ended July 31,  
($ in thousands)   2015     2014  
Dividend income   $ 43     $ 39  
Interest income     -       3  
Other     8       (1 )
Total income from securities transactions, net   $ 51     $ 41  

 

Investment in Unconsolidated Entities: 

Equity Method Investment:

 

As of July 31, 2015 and April 30, 2015, the Company’s investment in EAM Trust, on the Consolidated Condensed Balance Sheets was $58,154,000 and $58,048,000, respectively. 

 

The value of VLI’s investment in EAM at July 31, 2015 and April 30, 2015 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 Condensed 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 2016 or 2015.

 

The components of EAM’s investment management operations, provided to the Company by EAM, were as follows:

       
    Three Months Ended July 31,  
($ in thousands) (unaudited)   2015     2014  
Investment management fees earned from the Value Line Funds, net of fee waivers   $ 3,838     $ 3,787  
12b-1 fees and other fees, net of fee waivers   $ 1,396     $ 1,360  
Other income / (loss)   $ (9 )   $ 5  
Investment management fee waivers (1)   $ 47     $ 28  
12b-1 fee waivers (1)   $ 371     $ 395  
Value Line’s non-voting revenues interest   $ 1,902     $ 1,833  
EAM’s net income (2)   $ 280     $ 378  

 

(1) During fiscal 2016 and 2015, investment management fee waivers primarily related to the Value Line Core Bond Fund and the 12b-1 fee waivers related to six of the Value Line Mutual Funds.

 

(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. 

                 
($ in thousands)   July 31,
2015		     April 30,
2015		  
    (unaudited)          
EAM’s total assets   $ 60,167     $ 60,159  
EAM’s total liabilities (1)     (3,050 )     (3,104 )
EAM’s total equity   $ 57,117     $ 57,055  

 

(1) At July 31, 2015 and April 30, 2015, EAM’s total liabilities included a payable to VLI for its accrued non-voting revenues and non-voting profits interests of $2,037,000 and $1,951,000, respectively.