NOTE C: MARKETABLE EQUITY SECURITIES

The Company accounts for its marketable securities in accordance with ASC 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 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 (loss).

Marketable equity securities 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 and declines in value judged to be other-than-temporary on available-for-sale 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.

Based upon this evaluation, the Company determined that an impairment charge was

not

necessary for the quarter ended

March

31,

2017.

For the quarter ended

March

31,

2016,

the evaluation resulted in an impairment charge of approximately

$235,000

in the Company’s non-operating income (loss) in its consolidated statements of operations.

The following table sets forth cost, market value and unrealized gains on equity securities as of

March

31,

2017

and

December

31,

2016.

	March 31, 2017		December 31, 2016
	(in thousands)
Fair market value	$	25,520	$	27,621
Cost		14,955		15,569
Net unrealized gains	$	10,565	$	12,052

The following table sets forth the gross unrealized gains and losses on the Company’s marketable securities as of

March

31,

2017

and

December

31,

2016.

	March 31, 2017		December 31, 2016
	(in thousands)
Gross unrealized gains	$	10,686	$	12,161
Gross unrealized losses		121		109
Net unrealized gains	$	10,565	$	12,052

As of

March

31,

2017

and

December

31,

2016,

the total net unrealized gain, net of deferred income taxes, in accumulated other comprehensive income was approximately

$6,554,000

and

$7,476,000,

respectively.

For the quarter ended

March

31,

2017,

the Company had net unrealized gains in market value on its marketable equity securities of approximately

$922,000,

net of deferred income taxes. For the year ended

December

31,

2016,

the Company had net unrealized gains in market value on its marketable equity securities of approximately

$2,166,000,

net of deferred income taxes.

For the quarter ended

March

31,

2017,

the Company recognized dividends of approximately

$221,000

in non-operating income (loss) in its statements of operations. For the quarter ended

March

31,

2016,

the Company recognized dividends of approximately

$259,000

in non-operating income (loss) in its consolidated statements of operations.

There were

reclassifications of marketable securities between trading and available-for- sale categories during the

first

three

months of

2017

2016.

The following table shows the Company’s net realized gains and (losses) during the

first

three

months of

2017

and

2016

on certain marketable equity securities. The cost of securities sold is based on the specific identification method, and interest and dividends on securities are included in non-operating income (loss).

	Three Months Ended
	March 31, 2017		March 31, 2016
	(in thousands)
Realized gain (loss)
Sale proceeds	$	2,367	$	279
Cost of securities sold		585		368
Realized gain (loss)	$	1,782	$	(89	)

Realized gain (loss), net of taxes	$	1,089	$	(55	)

March

31,

2017,

the Company’s investments’ approximate fair value of securities in a loss position and related gross unrealized losses were

$2,127,000

and

$121,000,

respectively. At

December

31,

2016,

the Company’s investments’ approximate fair value of securities in a loss position and related gross unrealized losses were

$1,340,000

and

$109,000,

respectively. As of

March

31,

2017

and

December

31,

2016,

there were

investments that had been in a continuous unrealized loss position for

twelve

months or longer.

The market value of the Company’s equity securities are periodically used as collateral against any outstanding margin account borrowings. As of

March

31,

2017

and

December

31,

2016,

the Company had outstanding borrowings of approximately

$7,768,000

and

$10,358,000,

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 consolidated balance sheets.