Investments

3 Months Ended

Jul. 31, 2020

Investments, Debt and Equity Securities [Abstract]

Investments

Note 2: Investments

The Company has investments in publicly traded equity securities, state and municipal debt securities, real estate investment trusts, and money markets. The investments in debt securities, which include municipal bonds and bond funds, mature between March 2021 and January 2044. The Company uses the average cost method to determine the cost of equity securities sold with any unrealized gains or losses reported in the respective period’s earnings. Unrealized gains and losses on debt securities are excluded from earnings and reported separately as a component of stockholder’s equity. Dividend and interest income are reported as earned.

As of July 31, 2020 and April 30, 2020, investments consisted of the following:

			Gross		Gross
Investments at	Cost		Unrealized		Unrealized			Fair
July 31, 2020	Basis		Gains		Losses			Value
Municipal bonds	$	5,284,000	$	180,000	$	(38,000	)	$	5,426,000
REITs		112,000		—		(36,000	)		76,000
Equity securities		17,101,000		5,000,000		(628,000	)		21,473,000
Money markets and CDs		682,000		—		—			682,000
Total	$	23,179,000	$	5,180,000	$	(702,000	)	$	27,657,000

			Gross		Gross
Investments at	Cost		Unrealized		Unrealized			Fair
April 30, 2020	Basis		Gains		Losses			Value
Municipal bonds	$	5,271,000	$	80,000	$	(89,000	)	$	5,262,000
Corporate bonds		26,000		—		—			26,000
REITs		112,000		—		(44,000	)		68,000
Equity securities		17,119,000		3,446,000		(1,180,000	)		19,385,000
Money markets and CDs		581,000		—		—			581,000
Total	$	23,109,000	$	3,526,000	$	(1,313,000	)	$	25,322,000

Marketable securities that are classified as equity securities are carried at fair value on the balance sheets with changes in fair value recorded as an unrealized gain or (loss) in the statements of income in the period of the change. Upon the disposition of a marketable security, the Company records a realized gain or (loss) on the Company’s statements of income.

The Company evaluates all marketable securities for other-than temporary declines in fair value, which are defined as when the cost basis exceeds the fair value for approximately one year. The Company also evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized position. When an “other-than-temporary” decline is identified, the Company will decrease the cost of the marketable security to the new fair value and recognize a real loss. The investments are periodically evaluated to determine if impairment changes are required. As a result of this standard, management recorded an impairment loss of $27,000 for the quarter ended July 31, 2020. For the prior quarter ended July 31, 2019, an impairment loss of $34,000 was recorded.

The Company’s investments are actively traded in the stock and bond markets. Therefore, either a realized gain or loss is recorded when a sale happens. For the quarter ended July 31, 2020 the Company had sales of equity securities which yielded gross realized gains of $102,000 and gross realized losses of $126,000. For the same period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $4,000 were recorded. During the quarter ending July 31, 2019, the Company recorded gross realized gains and losses on equity securities of $153,000 and $104,000, respectively, as well as gross realized gains and losses on debt securities of $3,000 and $3,000, respectively. The gross realized loss numbers include the impaired figures listed in the previous paragraph. Proceeds from sales of securities available for sale were $14,000 for the quarter ended July 31, 2020 and were $9,000 for the same quarter the prior year.

The following table shows the investments with unrealized losses that are not deemed to be “other-than-temporarily impaired”, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at July 31, 2020 and April 30, 2020, respectively.

Unrealized Loss Breakdown by Investment Type at July 31, 2020

	Less than 12 months					12 months or greater					Total
Description	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Municipal bonds	$	62,000	$	—		$	342,000	$	(38,000	)	$	404,000	$	(38,000	)
REITs		48,000		(26,000	)		28,000		(10,000	)		76,000		(36,000	)
Equity securities		4,148,000		(478,000	)		1,348,000		(150,000	)		5,496,000		(628,000	)
Total	$	4,258,000	$	(504,000	)	$	1,718,000	$	(198,000	)	$	5,976,000	$	(702,000	)

Unrealized Loss Breakdown by Investment Type at April 30, 2020

	Less than 12 months					12 months or greater					Total
Description	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Municipal bonds	$	2,203,000	$	(42,000	)	$	484,000	$	(47,000	)	$	2,687,000	$	(89,000	)
REITs		43,000		(30,000	)		24,000		(14,000	)		67,000		(44,000	)
Equity securities		5,496,000		(866,000	)		1,651,000		(314,000	)		7,147,000		(1,180,000	)
Total	$	7,742,000	$	(938,000	)	$	2,159,000	$	(375,000	)	$	9,901,000	$	(1,313,000	)

Municipal Bonds

The unrealized losses on the Company’s investments in municipal bonds were caused by interest rate increases. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Company has the ability to hold these investments until a recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at July 31, 2020.

Marketable Equity Securities and REITs

The Company’s investments in marketable equity securities and REITs consist of a wide variety of companies. Investments in these companies include growth, growth income, and foreign investment objectives. The individual holdings have been evaluated, and due to management’s plan to hold on to these investments for an extended period, the Company does not consider these investments to be other-than-temporarily impaired at July 31, 2020.