5.	Financial Instruments Measured at Fair Value

Our cash, cash equivalents, and short-term investments consisted primarily of cash and other investment grade securities. We do not hold investment securities for trading purposes. All short-term investments are classified as available-for-sale and recorded at fair value. Investment securities are exposed to market risk due to changes in interest rates and credit risk and we monitor credit risk and attempt to mitigate exposure by making high-quality investments and through investment diversification.

Gains and losses on investments are calculated using the specific-identification method and are recognized during the period in which the investment is sold or when an investment experiences an other-than-temporary decline in value. Factors that could indicate an impairment exists include, but are not limited to: earnings performance, changes in credit rating or adverse changes in the regulatory or economic environment of the asset. Gross realized gains and losses on sales of short-term investments are included in interest income. Realized gains and losses for the periods presented were not significant.

Investments that we have classified as short-term, by security type, are as follows (in thousands):


	June 28, 2014

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

Municipal securities	$	200	$	—	$	—	$	200


	December 28, 2013

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

Municipal securities	$	1,200	$	—	$	—	$	1,200

Effective maturities of short-term investments at June 28, 2014 and December 28, 2013, were as follows (in thousands):


	June 28, 2014				December 28, 2013

	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value

Due in one year or less	$	200	$	200	$	1,200	$	1,200

Our municipal securities include variable rate demand notes which can be put (sold at par) typically on a daily basis with settlement periods ranging from the same day to one week and have varying contractual maturities through 2034. These securities can be used for short-term liquidity needs and are held for limited periods of time. At June 28, 2014 and December 28, 2013 these securities had amortized cost and fair value of $0.2 million and $1.2 million, respectively, and are included in “Due in one year or less” in the table above.

Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. When available, we use quoted market prices to determine the fair value of our investments, and they are included in Level 1. When quoted market prices are unobservable, we use quotes from independent pricing vendors based on recent trading activity and other relevant information, and they are included in Level 2.

The following table summarizes, by major security type, our assets that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):


	Fair value measurements at June 28, 2014 using:
	Level 1		Level 2		Level 3		Total estimated fair value
Cash	$	52,455	$	—	$	—	$	52,455
Municipal securities		—		200		—		200
Money market funds		—		5,514		—		5,514

	$	52,455	$	5,714	$	—	$	58,169


	Fair value measurements at December 28, 2013 using:
	Level 1		Level 2		Level 3		Total estimated fair value
Cash	$	44,165	$	—	$	—	$	44,165
Municipal securities		—		1,200		—		1,200
Money market funds		—		7,503		—		7,503

	$	44,165	$	8,703	$	—	$	52,868