Note 7 - Related Party Transactions

9 Months Ended

Jan. 31, 2023

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

Note 7 - Related Party Transactions:

Investment Management (overview): 

The Company has substantial non-voting revenues and non-voting profits interests in EAM, the asset manager to the Value Line Mutual Funds.  Accordingly, the Company does not report this operation as a separate business segment, although it maintains a significant interest in the cash flows generated by this business and receives non-voting revenues and non-voting profits interests, as discussed below. 

Total assets in the Value Line Funds managed and/or distributed by EAM at January 31, 2023, were $3.04 billion, 31.1% below total assets of $4.41 billion in the Value Line Funds managed and/or distributed by EAM at January 31, 2022. The reduction in assets was due to a bear market in equities, and particularly in growth stocks in which EAM specializes, and to the termination of a lower-margin business in annuity funds. 

The Company’s non-voting revenues and non-voting profits interests in EAM entitle it to receive quarterly distributions in a range of 41% to 55% of EAM’s revenues (excluding distribution revenues) from EAM’s mutual fund and separate account business and 50% of the residual profits of EAM (subject to temporary increase in certain limited circumstances).  The Voting Profits Interest Holders receive the other 50% of residual profits of EAM.  Distribution is not less than 90% of EAM’s profits payable each fiscal quarter under the provisions of the EAM Trust Agreement.   

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

The Company holds 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 fees.  The Company recorded income from its non-voting revenues interest and its non-voting profits interests in EAM as follows:   

	Three Months Ended January 31,				Nine Months Ended January 31,
($ in thousands)	2023		2022		2023		2022
Non-voting revenues interest in EAM	$	2,512	$	4,120	$	7,917	$	12,532
Non-voting profits interest in EAM		173		535		599		1,820
	$	2,685	$	4,655	$	8,516	$	14,352

At January 31, 2023, the Company's investment in EAM includes a receivable of $2,667,000 representing the quarterly distribution of the non-voting revenues share and non-voting profits share.  That amount was subsequently paid to the Company.

Transactions with Parent:

During the nine months ended January 31, 2023 and January 31, 2022, the Company was reimbursed $232,000 and $243,000, respectively, for payments it made on behalf of and for services the Company provided to the Parent Company, Arnold Bernhard and Co., Inc. ("Parent").  There were no receivables from the Parent on the Consolidated Condensed Balance Sheets at January 31, 2023 and April 30, 2022.  

The Company is a party to a tax-sharing arrangement with the Parent which allocates the tax liabilities of the two Companies between them.   The Company made federal tax payments of $3,327,000 and $2,300,000 to the Parent during the nine months ended January 31, 2023 and January 31, 2022. 

As of January 31, 2023, the Parent owned 91.47% of the outstanding shares of common stock of the Company.