NOTE C: MARKETABLE EQUITY SECURITIES

The Company accounts for its marketable securities in accordance with Accounting Standards Codification Topic 320, (“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, 2016, the evaluation resulted in an impairment charge of approximately $176,000 in the Company’s non-operating income (expense) in its statement of operations. 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 (expense) in its statement of operations.

For the nine-month period ended September 30, 2016, the evaluation resulted in an impairment charge of approximately $709,000 in the Company’s non-operating income (expense) in its statement of operations. 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.

The following table sets forth cost, market value and unrealized gain/(loss) on equity securities classified as available-for-sale as of September 30, 2016 and December 31, 2015. The Company had no securities classified as trading securities as of September 30, 2016 or December 31, 2015.

	September 30, 2016		December 31, 2015
	(in thousands)
Fair market value	$	25,614	$	24,575
Cost		15,594		16,015
Unrealized gain	$	10,020	$	8,560

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, 2016 and December 31, 2015.

	September 30, 2016		December 31, 2015
	(in thousands)
Available-for-sale securities:
Gross unrealized gains	$	10,116	$	9,893
Gross unrealized losses		96		1,333
Net unrealized gains	$	10,020	$	8,560

As of September 30, 2016 and December 31, 2015, the total net unrealized gain, net of deferred income taxes, in accumulated other comprehensive income was approximately $6,216,000 and $5,310,000, respectively.

For the nine months ended September 30, 2016, the Company had net unrealized gains in market value on securities classified as available-for-sale of approximately $906,000, net of deferred income taxes. For the year ended December 31, 2015, the Company had net unrealized losses in market value on securities classified as available-for-sale of approximately $1,079,000, net of deferred income taxes.

As of September 30, 2016, the Company had no securities that were classified as trading. 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. The following table shows recognized gains (losses) in market value for securities classified as trading for the periods indicated.

	Three Months Ended			Nine Months Ended
	September 30, 2015			September 30, 2015
	(in thousands)			(in thousands)
Recognized gain at beginning of period	$	83		$	146
Recognized gain at end of period		59			59
Net recognized loss	$	(24	)	$	(87	)

Net recognized loss, net of taxes	$	(15	)	$	(54	)

There were no reclassifications of marketable securities between trading and available for sale categories during the first nine months of 2016 or 2015.

At September 30, 2016, the Company’s investments’ approximate fair value of securities in a loss position and related gross unrealized losses were $1,941,000 and $96,000, respectively. At December 31, 2015, the Company’s investments’ approximate fair value of securities in a loss position and related gross unrealized losses were $5,099,000 and $1,333,000, respectively. As of September 30, 2016 and December 31, 2015, there were no investments that had been in a continuous unrealized loss position for twelve months or longer.

The following table shows the Company’s net realized gains during the three and nine months ending September 30, 2016 and 2015 on certain securities which were held as available-for-sale. The cost of securities sold is based on the specific identification method.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(in thousands, except per share data)
Sales proceeds	$	1,271	$	18	$	1,550	$	18
Cost of securities sold		178		3		547		3
Realized gain		1,093		15		1,003		15

Realized gain, net of taxes	$	676	$	9	$	621	$	9

For the quarter ended September 30, 2016, the Company recognized dividends of approximately $279,000 in non-operating income (expense) in its statements of operations. For the quarter ended September 30, 2015, the Company recognized dividends of approximately $288,000 in non-operating income (expense) in its statements of operations.

For the nine months ended September 30, 2016, the Company recognized dividends of approximately $781,000 in non-operating income in its statements of operations. For the nine months ended September 30, 2015, the Company recognized dividends of approximately $788,000 in non-operating income in its statements of operations.

The market value of the Company’s equity securities are periodically used as collateral against any outstanding margin account borrowings. As of September 30, 2016 and December 31, 2015, the Company had outstanding borrowings of approximately $10,597,000 and $11,949,000, 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 and are included in Accrued expenses and other liabilities on our balance sheets.