Note 5 - Financial Instruments Measured at Fair Value

6 Months Ended

Jun. 27, 2020

Notes to Financial Statements

Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring [Text Block]

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 in debt securities 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.

We assess whether unrealized loss positions on available-for-sale debt securities are due to credit-related factors. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in earnings through an allowance account. Unrealized gains and losses that are not due to credit-related factors are included in accumulated other comprehensive income (loss). 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 27, 2020
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses (1)		Value
Foreign government security	$	920	$	-	$	-	$	920

	December 28, 2019
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses (1)		Value
Foreign government security	$	904	$	-	$	-	$	904

(1) As of June 27, 2020 and December 28, 2019, there were no investments in our portfolio in a loss position.

Effective maturities of short-term investments are as follows (in thousands):

	June 27, 2020				December 28, 2019
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	920	$	920	$	-	$	-
Due after one year through three years		-		-		904		904
	$	920	$	920	$	904	$	904

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 financial instruments 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 27, 2020 using:
							Total estimated
	Level 1		Level 2		Level 3		fair value
Cash	$	112,531	$	-	$	-	$	112,531
Money market funds		-		50,197		-		50,197
Foreign government security		-		920		-		920
	$	112,531	$	51,117	$	-	$	163,648

	Fair value measurements at December 28, 2019 using:
							Total estimated
	Level 1		Level 2		Level 3		fair value
Cash	$	147,523	$	-	$	-	$	147,523
Money market funds		-		7,671		-		7,671
Foreign government security		-		904		-		904
	$	147,523	$	8,575	$	-	$	156,098