NOTE C: MARKETABLE EQUITY SECURITIES

The Company accounts for its marketable securities in accordance with ASC Topic 320,

Investments-Debt and Equity Securities

. ASC Topic 320 requires companies to classify their investments as trading, available-for-sale or held-to-maturity. The Company’s investments in marketable securities are classified as either trading or available-for-sale and consist of equity securities. Management determines the appropriate classification of these securities at the time of purchase and re-evaluates such designation as of each balance sheet date. The cost of securities sold is based on the specific identification method and interest and dividends on securities are included in non-operating income.

Marketable equity securities classified as available-for-sale are carried at fair value, with the unrealized gains and losses, net of tax, included as a component of accumulated other comprehensive income in shareholders’ equity. Realized gains and losses, declines in value judged to be other-than-temporary on available-for-sale securities, and increases or decreases in value on trading securities, if any, are included in the determination of net income. A quarterly evaluation is performed in order to judge whether declines in value below cost should be considered temporary and when losses are deemed to be other-than-temporary. Several factors are considered in this evaluation process including the severity and duration of the decline in value, the financial condition and near-term outlook for the specific issuer and the Company’s ability to hold the securities.

For the quarter ended September 30, 2015, the evaluation resulted in an impairment charge of approximately $579,000 in the Company’s non-operating income in its statement of operations. For the quarter ended September 30, 2014, an impairment charge was not necessary.

For the nine-month period ended September 30, 2015, the evaluation resulted in an impairment charge of approximately $579,000 in the Company’s non-operating income in its statement of operations. For the nine-month period ended September 30, 2014, the evaluation resulted in an impairment charge of approximately $1,000 in the Company’s non-operating income in its statement of operations.

The following table sets forth cost, market value and unrealized gains on equity securities classified as available-for-sale and equity securities classified as trading as of September 30, 2015 and December 31, 2014.

	September 30, 2015		December 31, 2014
	(in thousands)
Available-for-sale securities
Fair market value	$	24,736	$	24,592
Cost		16,061		14,272
Unrealized gain	$	8,675	$	10,320

Trading securities
Fair market value	$	216	$	303
Cost		157		157
Unrealized gain	$	59	$	146

Total
Fair market value	$	24,952	$	24,895
Cost		16,218		14,429
Unrealized gain	$	8,734	$	10,466

The following table sets forth the gross unrealized gains and losses on the Company’s marketable securities that are classified as available-for-sale as of September 30, 2015 and December 31, 2014.

	September 30, 2015		December 31, 2014
	(in thousands)
Available-for-sale securities:
Gross unrealized gains	$	10,078	$	10,710
Gross unrealized losses		1,403		390
Net unrealized gains	$	8,675	$	10,320

As of September 30, 2015 and December 31, 2014, the total net unrealized gain, net of deferred income taxes, in accumulated other comprehensive income was approximately $5,381,000 and $6,402,000, respectively.

For the nine months ended September 30, 2015, the Company had net unrealized losses in market value on securities classified as available-for-sale of approximately $1,011,000, net of deferred income taxes. For the year ended December 31, 2014, the Company had net unrealized gains in market value on securities classified as available-for-sale of approximately $237,000, net of deferred income taxes.

For the quarter ended September 30, 2015, the Company recognized dividends of approximately $288,000 in non-operating income in its statements of operations. For the quarter ended September 30, 2014, the Company recognized dividends of approximately $238,000 in non-operating income in its statements of operations.

As of September 30, 2015, the Company's marketable securities that were classified as trading had gross recognized gains of approximately $59,000 and no gross recognized losses. As of September 30, 2014, the Company's marketable securities that were classified as trading had gross recognized gains of approximately $89,000 and no gross recognized losses.

The following table shows recognized gains (losses) in market value for securities classified as trading for the periods indicated.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
	(in thousands)					(in thousands)
Trading securities
Recognized gain at beginning of period	$	83		$	57	$	146		$	8
Recognized gain at end of period		59			89		59			89
Net recognized (loss) gain for the period	$	(24	)	$	32	$	(87	)	$	81

Net recognized (loss) gain for the period, net of taxes	$	(15	)	$	20	$	(54	)	$	50

There were no reclassifications of marketable securities between trading and available for sale categories during the first nine months of 2015 or 2014.

The following table shows the Company’s realized gains during the first nine months of 2015 and 2014 on certain securities which were held as available-for sale. The cost of securities sold is based on the specific identification method and interest and dividends on securities are included in non-operating income.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(in thousands)				(in thousands)
Realized gains
Sale proceeds	$	18	$	439	$	18	$	439
Cost of securities sold		4		156		4		156
Realized gains	$	14	$	283	$	14	$	283

Realized gains, net of taxes	$	9	$	171	$	9	$	171

The following table shows the Company’s investments’ approximate gross unrealized losses and fair value of those securities in a loss position at September 30, 2015 and December 31, 2014. These investments consist of equity securities. As of September 30, 2015 and December 31, 2014, there were no investments that had been in a continuous unrealized loss position for twelve months or longer.

	September 30, 2015				December 31, 2014
	(in thousands)
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Equity securities – Available-for-sale	$	5,595	$	1,403	$	3,961	$	390
Equity securities – Trading		-		-		-		-
Totals	$	5,595	$	1,403	$	3,961	$	390

The market value of the Company’s equity securities are periodically used as collateral against any outstanding margin account borrowings. As of September 30, 2015 and December 31, 2014, the Company had outstanding borrowings of approximately $13,280,000 and $11,723,000, respectively, under its margin account. Margin account borrowings are used for the purchase of marketable equity securities and as a source of short-term liquidity.