Marketable Securities

All of the Company’s marketable securities, which consist of equity securities and fixed income securities, have been classified as available-for-sale securities and are therefore recorded at their fair values with the unrealized gains and losses, net of tax, reported in accumulated other comprehensive loss in the shareholders’ equity section of the consolidated balance sheet unless unrealized losses are deemed to be other-than-temporary. In such instances, the unrealized losses are reported in the consolidated statements of operations within investment income. Estimated fair value is based on quoted market prices at the balance sheet dates. The cost of securities sold is based on the specific identification method. Interest and dividend income are included in investment income in the consolidated statements of operations.

Marketable securities are carried as long-term assets since they are held for the settlement of the Company’s general and products liability insurance claims filed through CM Insurance Company, Inc. (CMIC), a wholly owned captive insurance subsidiary. The marketable securities are not available for general working capital purposes.

In accordance with ASC Topic 320-10-35-30 “Investments – Debt & Equity Securities – Subsequent Measurement,” the Company reviews its marketable securities for declines in market value that may be considered other-than-temporary. The Company generally considers market value declines to be other-than-temporary if they are declines for a period longer than six months and in excess of 20% of original cost, or when other evidence indicates impairment. We also consider the nature of the underlying investments, our intent and ability to hold the investments until their market values recover, and other market conditions in making this assessment. Based on this assessment, no other-than-temporary impairment charge has been recorded during fiscal 2017, 2016, or 2015.

During the year ended March 31, 2009, because of uncertain market conditions and the duration at which certain securities had been trading below cost, the Company reduced the cost basis of certain equity securities since it was determined that the unrealized losses on those securities were other than temporary in nature. This determination resulted in the recognition of a pre-tax charge to earnings of $4,014,000 for the year ended March 31, 2009, classified within investment (income) loss. There were no other than temporary impairments for the years ended March 31, 2017, 2016, and 2015. Since fiscal 2009, the Company has sold all of these previously written down investments, which resulted in the recognition of gains of approximately $27,000 in fiscal 2015. There were no such gains recorded in fiscal 2017 or 2016.

During fiscal 2017, CMIC obtained approval from New York State Department of Finance Services to loan $6,000,000 to the Company based on arms-length terms and conditions. To fund this intercompany loan, CMIC sold a portion of its marketable security portfolio with a cost of $5,938,000 and a fair value of $6,000,000 resulting in a realized gain of $62,000.

The following is a summary of available-for-sale securities at March 31, 2017 (In thousands):



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Marketable securities	$	7,475	$	248	$	37	$	7,686

The aggregate fair value of investments and unrealized losses on available-for-sale securities in an unrealized loss position at March 31, 2017 are as follows (In thousands):



	Aggregate Fair Value		Unrealized Losses
Securities in a continuous loss position for less than 12 months	$	2,050	$	37
Securities in a continuous loss position for more than 12 months	—		—
	$	2,050	$	37

The Company considered the nature of the investments, causes of previous impairments, the severity and duration of unrealized losses, and other factors and determined that the unrealized losses at March 31, 2017 were temporary in nature.

Net realized gains related to sales of marketable securities are included in investment (income) loss in the consolidated statements of operations and were $161,000, $235,000, and $2,065,000, in fiscal 2017, 2016, and 2015, respectively.

The following is a summary of available-for-sale securities at March 31, 2016 (In thousands):



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Marketable securities	$	18,080	$	253	$	147	$	18,186

The aggregate fair value of investments and unrealized losses on available-for-sale securities in an unrealized loss position at March 31, 2016 are as follows (In thousands):



	Aggregate Fair Value		Unrealized Losses
Securities in a continuous loss position for less than 12 months	$	1,138	$	58
Securities in a continuous loss position for more than 12 months	4,871		89
	$	6,009	$	147

Net unrealized gains included in the balance sheet amounted to $211,000 at March 31, 2017 and $106,000 at March 31, 2016. The amounts, net of related deferred tax liabilities of $74,000 and $37,000 at March 31, 2017 and 2016, respectively, are reflected as a component of accumulated other comprehensive loss within shareholders’ equity.