Investments:

9 Months Ended

Jan. 31, 2012

Investments, Debt and Equity Securities [Abstract]

Investments:

Note 2-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 were classified as current assets as of January 31, 2012 and April 30, 2011.

Equity Securities:

Equity securities classified as available-for-sale, consist of investments in common stocks and ETFs that attempt to replicate the performance of certain equity indexes and ETFs that hold preferred shares primarily of financial institutions.

Fixed Income Securities:

Fixed income securities consist of government debt securities issued by the United States federal government. There were no fixed income securities as of January 31, 2012.

The changes in the value of these investments are recorded in Other Comprehensive Income in the Consolidated Condensed Financial Statements. Realized gains and losses are recorded on the trade date in the Consolidated Condensed Statements of Income when securities are sold, mature or are redeemed. As of January 31, 2012 and April 30, 2011, there were unrealized gains net of deferred taxes of $76,000 and $63,000, respectively.

The carrying value and fair value of securities available-for-sale at January 31, 2012 were as follows:

($ in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Common stocks	$	181	$	25	$	(1	)	$	205
ETFs		2,777		114		(20	)		2,871
	$	2,958	$	139	$	(21	)	$	3,076

The carrying value and fair value of securities available-for-sale at April 30, 2011 were as follows:

($ in thousands)	Amortized Cost		Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
FDIC insured commercial paper and U.S.
Treasury securities	$	11,217		$	4	$	(13	)	$	11,208
Common stocks		181			9		-			190
ETFs		1,179			97		-			1,276
	$	12,577		$	110	$	(13	)	$	12,674

Proceeds from maturities and sales of government debt securities classified as available-for-sale during the nine months ended January 31, 2012 and January 31, 2011 were $11,196,000 and $34,024,000, respectively. The average yield on the FDIC insured and government debt securities classified as available-for-sale at April 30, 2011 was 0.24%.

Income from securities transactions was comprised of the following:

	For the Three Months Ended January 31,						For the Nine Months Ended January 31,
($ in thousands)	2012			2011			2012			2011
Dividend income	$	19		$	6		$	46		$	7
Interest income		2			18			16			109
Realized losses on securities available-for-
sale (1)		(17	)		(64	)		(22	)		(64	)
Other		(1	)		-			(6	)		(4	)
Income from securities transactions, net	$	3		$	(40	)	$	34		$	48

(1) These amounts were reclassified from Accumulated Other Comprehensive Income in the Consolidated Condensed Balance Sheets to the Consolidated Condensed Statements of Income.

Investment in Unconsolidated Entities:

Equity Method Investment:

The Company recorded an asset, Investment in EAM Trust, on its Consolidated Condensed Balance Sheet with an initial valuation as of the Restructuring Date of $55,805,000 as a result of the deconsolidation of EAM LLC and ESI, the former asset management and mutual fund distribution subsidiaries. In accordance with the Consolidation Topic of the FASB’s ASC, the Company recognized a pre-tax gain in net income of $50,510,000 measured as the difference between the fair value of the consideration received, including satisfaction of its postemployment compensation obligation of $1,770,000, and the carrying value of the former subsidiaries’ assets and liabilities, which was comprised of $1,180,000 of working capital (cash), transferred pursuant to the Restructuring Transaction. In addition, the Company incurred expenses of $3,764,000 associated with the Restructuring Transaction. The value of VLI’s investment in EAM at January 31, 2012 and April 30, 2011 reflects the fair value, at the Restructuring Date, of the non-voting revenues interest and profits interest received in the Restructuring Transaction, plus $5,820,000 of cash and liquid securities in excess of working capital requirements contributed to EAM’s capital account by VLI on the Restructuring Date, 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 from the Restructuring Date through the balance sheets dates.

The Company utilized the services of valuation consultants to determine the fair value of the EAM asset and the value of the voting profits interest granted to its former employee. The valuation methodologies utilized by the third party valuation consultants included a discounted cash flow analysis and market method calculations to determine the fair value of VLI’s non-voting revenues and profits interest and the fair value of the voting profits interest granted to a former employee. Based upon the results of the valuations and cash and other assets transferred by VLI to EAM in the transaction, the Company recorded a fair value of $55,805,000 for VLI’s non-voting EAM Trust investment.

In accordance with the EAM Trust Agreement and as mentioned above, EAM received $7,000,000 in cash and liquid securities from VLI pursuant to the Restructuring Transaction which included $1,180,000 of working capital deemed needed for operations and $5,820,000 in excess of working capital needs. 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 2012 or 2011.

The overall results of EAM’s investment management operations during the nine months ended January 31, 2012, before interest holder distributions, include total investment management fees earned from the Value Line Funds of $9,296,000, 12b-1 fees of $2,588,000 and other income of $14,000. For the same period, total investment management fee waivers were $636,000 and 12b-1 fee waivers were $1,700,000. During the nine months ended January 31, 2012, EAM’s net income was $240,000 including an estimate of $10,000 for the month of January 2012 and after giving effect to Value Line’s non-voting revenues interest of $4,251,000, but before distributions to voting profits interest holders and to the Company in respect of its non-voting profits interest. At January 31, 2012, EAM’s total assets were $57,808,000, total liabilities were $1,043,000 and total equity was $56,765,000. During the nine months ended January 31, 2012, the Company recorded revenues of $4,251,000 and profits of $120,000 from its non-voting revenues and its non-voting profits interests in EAM without incurring any directly related expenses.