Note C - Investment Securities

12 Months Ended

Sep. 24, 2022

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE C – INVESTMENT SECURITIES

We have classified our investment securities as marketable securities held to maturity and available for sale. The FASB defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the FASB has established three levels of inputs that may be used to measure fair value:

Level 1 Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2 Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and

Level 3 Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

Our marketable securities held to maturity and available for sale consist primarily of investments in mutual funds, preferred stock and corporate bonds. The fair values of mutual funds are based on quoted market prices in active markets and are classified within Level 1 of the fair value hierarchy. The fair values of preferred stock and corporate bonds are based on quoted prices for identical or similar instruments in markets that are not active. As a result, preferred stock and corporate bonds are classified within Level 2 of the fair value hierarchy.

The amortized cost, unrealized gains and losses, and fair market values of our marketable securities held to maturity at September 24, 2022 are summarized as follows:

			Gross		Gross		Fair
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
	(in thousands)
Corporate bonds	$	4,011	$	-	$	21	$	3,990
Total marketable securities held to maturity	$	4,011	$	-	$	21	$	3,990

The amortized cost, unrealized gains and losses, and fair market values of our marketable securities available for sale at September 24, 2022 are summarized as follows:

			Gross		Gross		Fair
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
	(in thousands)
Mutual Funds	$	3,588	$	-	$	742	$	2,846
Preferred Stock		2,816		46		-		2,862
Total marketable securities available for sale	$	6,404	$	46	$	742	$	5,708

The mutual funds seek current income with an emphasis on maintaining low volatility and overall moderate duration. The mutual funds presently generate income of about 3.7% per year. We have invested $3 million in Fixed-to-Floating Perpetual Preferred Stock which generates fixed income to call dates in 2025 and then income is based on a spread above LIBOR if the securities are not called. The annual yield from these investments is presently 5.5%, of which 50% is not subject to income tax. The mutual funds and the Fixed-to-Floating Perpetual Preferred Stock investment securities do not have contractual maturities; however, we classify them as long-term assets as it is our intent to hold them for a period of over one year, although we may sell some or all of them depending on presently unanticipated needs for liquidity or market conditions. We have invested $4.0 million in corporate bonds which generate fixed income to maturity dates in 2022 through 2023, with $4.0 million maturing prior to the end of our fiscal year 2023. The bonds presently generate income of about 3.3% per year based on purchase price. Our expectation is that we will hold the corporate bonds to their maturity dates and redeem them at our amortized cost.

The amortized cost, unrealized gains and losses, and fair market values of our marketable securities held to maturity at September 25, 2021 are summarized as follows:

			Gross		Gross		Fair
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
	(in thousands)
Corporate Bonds	$	12,027	$	123	$	18	$	12,132
Total marketable securities held to maturity	$	12,027	$	123	$	18	$	12,132

The amortized cost, unrealized gains and losses, and fair market values of our marketable securities available for sale at September 25, 2021 are summarized as follows:

			Gross		Gross		Fair
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
	(in thousands)
Mutual Funds	$	3,588	$	-	$	536	$	3,052
Preferred Stock		6,892		175		35		7,032
Total marketable securities available for sale	$	10,480	$	175	$	571	$	10,084

The amortized cost and fair value of the Company’s held to maturity securities by contractual maturity at September 24, 2022 and September 25, 2021 are summarized as follows:

	September 24, 2022				September 25, 2021
			Fair				Fair
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
	(in thousands)
Due in one year or less	$	4,011	$	3,990	$	7,980	$	8,080
Due after one year through five years		-		-		4,047		4,052
Due after five years through ten years		-		-		-		-
Total held to maturity securities	$	4,011	$	3,990	$	12,027	$	12,132
Less current portion		4,011		3,990		7,980		8,080
Long term held to maturity securities	$	-	$	-	$	4,047	$	4,052

Proceeds from the sale and redemption of marketable securities were $12.0 million, $60.9 million, and $73.2 million in the years ended September 24, 2022, September 26, 2021, and September 26, 2020, respectively; with a loss of $0.3 million in 2022, a gain of $0.2 million in 2021 and a gain of $0.1 million in 2020. We use the specific identification method to determine the cost of securities sold. An unrealized loss of $0.3 million and an unrealized gain of $0.8 million were recorded in 2022 and 2021, respectively.

Total marketable securities held to maturity as of September 24, 2022 with credit ratings of BBB/BB/B had an amortized cost basis totaling $4.0 million. This rating information was obtained September 30, 2022.