Related Party Transactions:

12 Months Ended

Apr. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions:

Note 3-Related Party Transactions:

Investment Management (overview):

As discussed previously in Note 1 - Organization and Summary of Significant Accounting Policies, prior to December 23, 2010, the Company’s former direct subsidiary EAM LLC was the investment adviser and manager for  the Value Line Funds, and EAM LLC’s subsidiary ESI was the distributor for the Funds.  EAM LLC earned investment management fees based upon the average daily net asset values of the respective Value Line Funds.  Service and distribution fees were received by ESI from the Value Line Funds in accordance with service and distribution plans under rule 12b-1 of the Investment Company Act of 1940.  These plans are compensation plans, which means that the distributor’s fees under the plans are payable without regard to actual expenses incurred by the distributor, and therefore, the distributor may earn a profit under the plans.  Expenses incurred by ESI included payments to securities dealers, banks, financial institutions and other organizations which provided distribution, marketing, and administrative services (including payments by ESI to VLI for allocated compensation and administration expenses) with respect to the distribution of the Funds’ shares.  Service and distribution fees were received on a monthly basis and calculated based upon the average daily net assets of the respective Funds in accordance with each Fund’s prospectus.

As of the Restructuring Date, December 23, 2010, the Company deconsolidated its asset management and mutual fund distribution businesses and its interest in these businesses was restructured as a non-voting revenues and non-voting profits interests in EAM.  Accordingly, the Company no longer reports this operation as a separate business segment, although it still maintains a significant interest in the cash flows generated by this business and will receive non-voting revenues and non-voting profits interests going forward, as discussed below.  Total assets in the Value Line Funds managed by EAM at April 30, 2012, were $2.1 billion, 6% below total assets of $2.2 billion in the Value Line Funds managed by EAM at April 30, 2011.  Overall assets in the Value Line Funds at April 30, 2012, decreased $132 million since April 30, 2011, as a result of market depreciation and net redemptions primarily within the equity, money market and variable annuity funds.

During the period from May 1, 2010 through December 23, 2010 and the twelve months ended April 30, 2010, investment management fees and distribution service fees (which we refer to as “12b-1 fees”) amounted to $10,584,000 and $18,710,000, respectively, after giving effect to account fee waivers for certain of the Value Line Funds. These amounts included 12b-1 fees of $2,308,000 and $4,124,000, earned for the period from May 1, 2010 through December 23, 2010 and for the twelve months ended April 30, 2010, respectively.  For the period from May 1, 2010 through December 23, 2010 and twelve months ended April 30, 2010, total investment management fee waivers were $513,000 and $898,000, respectively, and total 12b-1 fee waivers were $1,651,000 and $2,642,000, respectively.  With limited exceptions, the Company, EAM LLC and ESI had no right to recoup the previously waived amounts of investment management fees and 12b-1 fees.  Any such recoupment of waived investment management fees is subject to the provisions of the applicable Value Line Funds’ prospectus.  During the period from May 1, 2010 through December 1, 2010, and for the twelve months ended April 30, 2010, separately managed accounts revenues were $109,000 and $222,000, respectively.  Separately managed accounts had $23 million in assets as of December 1, 2010.  Of the $23 million, $20 million was affiliated with AB&Co.  During the third quarter of fiscal 2011, the affiliated entities cancelled their separately managed account agreements with EAM LLC.

The non-voting revenues and 90% of the Company’s non-voting profits interests due from EAM to the Company are payable each calendar quarter under the provisions of the EAM Trust Agreement.  The distributable amounts earned through the balance sheet date, which is included in the Investment in EAM Trust on the Consolidated Balance Sheets, and not yet paid, were $497,000 and $514,000 at April 30, 2012 and April 30, 2011, respectively.

EAM Trust - VLI’s non-voting revenues and non-voting profits interests:

Following the Restructuring Transaction, the Company no longer engages, through subsidiaries, in the investment management or mutual fund distribution businesses.  The Company does hold non-voting revenues and non-voting profits interests in EAM which entitle the Company to receive from EAM an amount ranging from 41% to 55% of EAM’s investment management fee revenues from its mutual fund and separate accounts business.  EAM currently has no separately managed account clients.  During the twelve months ended April 30, 2012, the Company recorded revenues of $5,890,000, consisting of $5,684,000, from its non-voting revenues interest in EAM and $206,000, from its non-voting profits interest in EAM without incurring any directly related expenses.  During the period from December 23, 2010 through April 30, 2011, after the Restructuring Transaction the Company recorded revenues of $2,355,000, consisting of $2,187,000, from its non-voting revenues interest in EAM and $168,000, from its non-voting profits interest in EAM.  During the period from December 23, 2010 until May 28, 2011, EAM occupied a portion of the premises that the Company leases from a third party.  The Company received $189,000 during the period from December 23, 2010 to April 30, 2011, and $44,000 for the month of May, 2011 for rent and certain accounting and other administrative support services provided to EAM on a transitional basis during such period.

On March 11, 2010, VLI and the Boards of Trustees/Directors of the Value Line Funds entered into an agreement providing for VLI to reimburse the Funds in the aggregate amount of $917,000 for various past expenses incurred by the Funds in connection with the SEC Settlement described in Note 15. The payable for this expense reimbursement was included in the reserve for settlement expenses on the Consolidated  Balance Sheet of the Company as at April 30, 2010 and the reimbursement was paid in full by VLI in October 2010.

Transactions with Parent:

For the fiscal years ended April 30, 2012, 2011 and 2010, the Company was reimbursed $268,000, $356,000, and $2,105,000, respectively, for payments it made on behalf of and for services the Company provided to the Parent.  At April 30, 2011, the Receivables from affiliates included  receivables from the Parent of $38,000.  There was no receivable due from the Parent at April 30, 2012.

The Company is a party to a tax-sharing arrangement with the Parent which allocates the tax liabilities of the two Companies between them.  For the years ended April 30, 2012, 2011, and 2010, the Company made  payments to the Parent for federal income tax amounting to $650,000, $348,000, and $1,875,000, respectively. At April 30, 2012, prepaid and refundable income taxes in the Consolidated Balance Sheet included $530,000 of prepaid federal income tax due from the Parent.

From time to time, the Parent has purchased additional shares of common stock of the Company in the market when and as the Parent has determined it to be appropriate.  The Parent may make additional purchases of common stock of the Company from time to time in the future. As of April 30, 2012, the Parent owned approximately 87.2% of the outstanding shares of common stock of the Company.