NOTE D: MARKETABLE EQUITY SECURITIES

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

321,

(“ASC Topic

321”

Investments- Equity Securities

. ASC Topic

321

requires companies to measure equity investments at fair value, with changes in fair value recognized in net income. The Company’s investments in marketable securities consist of equity securities with readily determinable fair values. The cost of securities sold is based on the specific identification method, and interest and dividends on securities are included in non-operating income (expense).

Marketable equity securities are carried at fair value, with gains and losses in fair market value included in the determination of net income. The fair value of marketable equity securities is determined based on quoted market prices in active markets, as described in Note J.

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

June 30, 2018

and

December 31, 2017.

	June 30, 2018		December 31, 2017
	(in thousands)
Fair market value	$	27,860	$	26,664
Cost		20,959		16,640
Unrealized gain	$	6,901	$	10,024

Prior to the Company’s

January 1, 2018

adoption of ASU

2016

01,

unrealized losses in fair market value were presented as a component of Accumulated Other Comprehensive Income in shareholders’ equity, and only realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities, were included in the determination of net income. The cost of securities determined to be in an other-than-temporary loss position were required to be presented net of the amount of the other-than-temporary impairment calculated. Subsequent to adoption of ASU

2016

01,

cost is

longer presented net of other-than-temporary impairment. The

December 31, 2017

cost reflected in the table above was presented net of approximately

$2,314,000

of other-than-temporary impairment.

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

June 30, 2018

and

December 31, 2017.

	June 30, 2018		December 31, 2017
	(in thousands)
Gross unrealized gains	$	7,983	$	10,150
Gross unrealized losses		1,082		126
Net unrealized gains	$	6,901	$	10,024

The following table shows the Company’s net realized gains during the

first

six

months of

2018

and

2017

on certain marketable equity securities.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(in thousands)
Realized gain
Sales proceeds	$	-	$	711	$	-	$	3,079
Cost of securities sold		-		349		-		934
Realized gain	$	-	$	362	$	-	$	2,145

Realized gain, net of taxes	$	-	$	222	$	-	$	1,314

For the quarter ended

June 30, 2018,

the Company recognized dividends of approximately

$254,000

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

June 30, 2017,

the Company recognized dividends of approximately

$272,000

in non-operating income in its statements of operations.

For the

six

months ended

June 30, 2018,

the Company recognized dividends of approximately

$472,000

in non-operating income (expense) in its statements of operations. For the

six

months ended

June 30, 2017,

the Company recognized dividends of approximately

$493,000

in non-operating income (expense) 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

June 30, 2018

and

December 31, 2017,

the Company had outstanding borrowings of approximately

$7,504,000

and

$5,903,000,

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.

During the

second

quarter of

2018,

our marketable equity securities portfolio had a net unrealized pre-tax gain in market value of approximately

$333,000,

which was reported as Non-operating income for the period.