Investments

12 Months Ended

Apr. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Investments

Note 4-Investments:

Securities Available-for-Sale:

Investments held by the Company and its subsidiaries are classified as securities available-for-sale in accordance with FASB’s ASC 320, Investments - Debt and Equity Securities. All of the Company’s securities classified as available-for-sale were readily marketable or had a maturity of twelve months or less and are classified as current assets on the Consolidated Balance Sheets.

Equity Securities:

Equity securities classified as available-for-sale, consist of investments in common stocks, ETFs that attempt to replicate the performance of certain equity indexes, ETFs that attempt to replicate the inverse of the price performance of certain equity indexes and ETFs that hold preferred shares primarily of financial institutions. As of April 30, 2014 and April 30, 2013, the Company held equity securities consisting primarily of ETFs and select common stock holdings, all classified as securities available-for-sale on the Consolidated Balance Sheets. Additionally, as of April 30, 2014 and April 30, 2013, the Company held non-leveraged ETFs, classified as securities available-for-sale, whose performance inversely corresponds to the market value changes of investments in other ETF securities held in the equity portfolio for dividend yield.

As of April 30, 2014 and April 30, 2013, the aggregate cost of the equity securities classified as available-for-sale, which consist of investments in the iShares Dow Jones Select Dividend Index (DVY), SPDR S&P Dividend (SDY), First Trust Value Line Dividend Index (FVD), PowerShares Financial Preferred (PGF), certain common shares of equity securities and inverse equity index ETFs, was $8,847,000 and $6,295,000, respectively, and the fair value was $9,226,000 and $6,682,000, respectively. Proceeds from sales of equity securities which included capital gain distributions from certain ETF’s were $36,000 during fiscal 2014. There were no sales or proceeds from sales of equity securities during the fiscal year ended April 30, 2013. The decreases in gross unrealized gains on equity securities classified as available-for-sale of $8,000, net of deferred taxes of $3,000, were included in Shareholders’ Equity at April 30, 2014.

Proceeds from sales of equity securities classified as available-for-sale during the twelve months ended April 30, 2012 were $89,000 and the related capital gains of $11,000 were reclassified from Accumulated Other Comprehensive Income in the Balance Sheet to the Consolidated Statement of Income. The increases in gross unrealized gains on equity securities classified as available-for-sale due to changes in market conditions of $256,000 and $24,000, net of deferred taxes of $90,000 and $9,000, respectively, were included in Shareholders’ Equity at April 30, 2013 and 2012, respectively.

The carrying value and fair value of securities available-for-sale at April 30, 2014 were as follows:

			Gross		Gross
			Unrealized		Unrealized
($ in thousands)	Cost		Gains		Losses			Fair Value
Common stocks	$	101	$	47	$	(12	)		$	136
ETFs - equities		3,878		1,280		(2	)			5,156
Inverse ETFs - equities		4,868		-		(934	)			3,934
	$	8,847	$	1,327	$	(948	)		$	9,226
The carrying value and fair value of securities available-for-sale at April 30, 2013 were as follows:
			Gross		Gross
			Unrealized		Unrealized
($ in thousands)	Cost		Gains		Losses			Fair Value
Common stocks	$	103	$	27	$	(16	)		$	114
ETFs - equities		3,878		740		-				4,618
Inverse ETFs - equities		2,314		-		(364	)			1,950
	$	6,295	$	767	$	(380	)		$	6,682

Government Debt Securities (Fixed Income Securities):

Fixed income securities held from time to time consist of government debt securities issued by the United States federal government. There were no fixed income securities as of April 30, 2014 or April 30, 2013.

There were no sales or proceeds from maturities and sales of government debt securities classified as available-for-sale during the fiscal years ended April 30, 2014 and April 30, 2013. During the twelve months ended April 30, 2012, proceeds from maturities and sales of government debt securities classified as available-for-sale were $11,196,000 and losses on sales of fixed income securities of $22,000 were reclassified from Accumulated Other Comprehensive Income in the Consolidated Balance Sheets to the Consolidated Statements of Income.  

Income from securities transactions was comprised of the following:

	Fiscal Years Ended April 30,
($ in thousands)	2014			2013			2012
Dividend income	$	147		$	124		$	68
Interest income		5			4			16
Realized gains (losses) on sales of securities available-for-sale reclassified from Accumulated Other Comprehensive Income		-			-			(11	)
Interest expense		(5	)		-			-
Other (1)		31			(2	)		(3	)
Total income from securities transactions, net	$	178		$	126		$	70

(1) Other amounts include $36,000 which was reclassified from Accumulated Other Comprehensive Income in the Consolidated Balance Sheets to the Consolidated Statements of Income in fiscal 2014.

The changes in the value of equity and fixed income securities investments are recorded in Other Comprehensive Income in the Consolidated Financial Statements. Realized gains and losses are recorded on the trade date in the Consolidated Statements of Income when securities are sold, mature or are redeemed. As of April 30, 2014 and April 30, 2013, gross unrealized gains of $380,000 and $387,000, net of deferred taxes of $134,000 and $136,000, respectively, are recorded in Accumulated Other Comprehensive Income in the Consolidated Balance Sheets.

Investment in Unconsolidated Entities:

Equity Method Investment:

As of April 30, 2014 and April 30, 2013, the Company’s investment in EAM Trust, on the Consolidated Balance Sheets was $57,850,000 and $57,511,000, respectively.

The value of VLI’s investment in EAM at April 30, 2014 and April 30, 2013 reflects the fair value of contributed capital of $55,805,000 at inception, which included $5,820,000 of cash and liquid securities in excess of working capital requirements contributed to EAM’s capital account by VLI, plus VLI’s share of non-voting revenues and non-voting profits from EAM less distributions, made quarterly to VLI by EAM, during the period subsequent to its initial investment through the dates of the Consolidated Balance Sheets.

It is anticipated that EAM will have sufficient liquidity and earn enough profit to conduct its current and future operations so the management of EAM will not need additional funding. Although the distributor had historically received, from the Value Line Funds under the compensation plans it had in place with the Funds, amounts in excess of its actual expenditures, in more recent years the distributor has been spending amounts on promotion of the Value Line Funds in excess of the compensation received from the Funds. Over time, EAM anticipates that its total future expenditures on such promotion will equal or exceed its total future revenues under the Funds’ distribution plans.  However, if that should not occur, EAM has no obligation to reimburse the Value Line Funds.

The Company monitors its Investment in EAM Trust for impairment to determine whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. Impairment indicators include, but are not limited to the following: (a) a significant deterioration in the earnings performance, asset quality, or business prospects of the investee, (b) a significant adverse change in the regulatory, economic, or technological environment of the investee, (c) a significant adverse change in the general market condition of the industry in which the investee operates, or (d) factors that raise significant concerns about the investee’s ability to continue as a going concern such as negative cash flows, working capital deficiencies, or noncompliance with statutory capital and regulatory requirements. EAM did not record any impairment losses for its assets during the fiscal years 2014 or 2013.

The components of EAM’s investment management operations, provided to the Company by EAM, were as follows:

	Fiscal Years Ended April 30,
($ in thousands)	2014		2013		2012
Investment management fees earned from the Value Line Funds, net of waivers shown below	$	14,452	$	12,773	$	12,465
12b-1 fees and other fees, net of waivers shown below	$	5,061	$	3,905	$	3,466
Other income	$	16	$	14	$	12
Investment management fee waivers and reimbursements (1)	$	89	$	379	$	806
12b-1 fee waivers (1)	$	1,683	$	2,156	$	2,257
Value Line’s non-voting revenues interest	$	6,767	$	5,781	$	5,684
EAM’s net income (2)	$	1,464	$	945	$	461

(1) During fiscal 2014 investment management fee waivers and reimbursements primarily related to the Value Line Core Bond Fund and the 12b-1 fee waivers related to seven of the Value Line Mutual Funds. During fiscal 2013 investment management fee waivers and reimbursements related to the Value Line Core Bond Fund and the U.S. Government Money Market Fund (“USGMMF”) which was merged into a third party fund, the Daily Income Fund, managed by Reich & Tang, effective October 19, 2012. In fiscal 2013 the 12b-1 fee waivers related to nine of the Value Line Mutual Funds. In fiscal 2012, investment management fee waivers and reimbursements primarily related to the USGMMF and the 12b-1 fee waivers related to eleven of the Value Line Mutual Funds.

(2) Represents EAM’s net income, after giving effect to Value Line’s non-voting revenues interest, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.

	Fiscal Years Ended April 30,
($ in thousands)	2014			2013
EAM’s total assets	$	59,965		$	59,349
EAM’s total liabilities (1)		(3,158	)		(2,814	)
EAM’s total equity	$	56,807		$	56,535

(1) At April 30, 2014 and 2013, EAM’s total liabilities included a payable to VLI for its accrued non-voting revenues and non-voting profits interests of $1,887,000 and $1,621,000, respectively.