Investments

All of the Company’s debt and equity securities are classified as AFS and are carried at fair value. The Company evaluates whether AFS securities are other-than-temporarily impaired (OTTI) based on criteria that include the extent to which cost exceeds market value, the duration of the market value decline, the credit rating of the issuer or security, the failure of the issuer to make scheduled principal or interest payments and the financial health and prospects of the issuer or security.

Declines in the value of AFS securities determined to be OTTI are recognized in earnings and reported as OTTI losses. Debt securities with unrealized losses are considered OTTI if the Company intends to sell the debt security or if the Company will be required to sell the debt security prior to any anticipated recovery. If the Company determines that a debt security is OTTI under these circumstances, the impairment recognized in earnings is measured as the difference between the amortized cost and the current fair value. A debt security is also determined to be OTTI if the Company does not expect to recover the amortized cost of the debt security. However, in this circumstance, if the Company does not intend to sell the debt security and will not be required to sell the debt security, the impairment recognized in earnings equals the estimated credit loss as measured by the difference between the present value of expected cash flows and the amortized cost of the debt security. Expected cash flows are discounted using the debt security’s effective interest rate. An equity security is determined to be OTTI if the Company does not expect to recover the cost of the equity security. Declines in the value of AFS securities determined to be temporary are reported, net of tax, as other comprehensive losses and included as a component of stockholders’ equity.

Interest and dividend income, amortization of premiums, accretion of discounts and realized gains and losses on AFS securities are included in investment income. Interest income is accrued as earned. Dividend income is recognized as income on the ex-dividend date of the stock. The cost of AFS securities sold is based on the first-in, first-out method.

Following is a summary of AFS securities as of March 29, 2014 and December 28, 2013:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Amounts are in thousands)
March 29, 2014
Tax exempt bonds	$	3,530,137		24,465		7,346	3,547,256
Taxable bonds	1,692,999			8,051		2,778	1,698,272
Restricted investments	170,000			431		—	170,431
Equity securities	915,071			149,742		4,170	1,060,643
	$	6,308,207		182,689		14,294	6,476,602
December 28, 2013
Tax exempt bonds	$	3,430,028		25,588		9,917	3,445,699
Taxable bonds	1,445,901			7,641		3,863	1,449,679
Restricted investments	170,000			—		86	169,914
Equity securities	790,975			139,119		3,900	926,194
	$	5,836,904		172,348		17,766	5,991,486

Realized gains on sales of AFS securities totaled $6,173,000 for the three months ended March 29, 2014. Realized losses on sales of AFS securities totaled $571,000 for the three months ended March 29, 2014. There were no OTTI losses on AFS securities for the three months ended March 29, 2014.

Realized gains on sales of AFS securities totaled $6,862,000 for the three months ended March 30, 2013. Realized losses on sales of AFS securities totaled $4,203,000 for the three months ended March 30, 2013. There were no OTTI losses on AFS securities for the three months ended March 30, 2013.

The amortized cost and fair value of AFS securities by expected maturity as of March 29, 2014 and December 28, 2013 are as follows:



	March 29, 2014			December 28, 2013
	Amortized Cost		Fair Value	Amortized Cost	Fair Value
	(Amounts are in thousands)
Due in one year or less	$	833,361	837,254	824,780	829,559
Due after one year through five years	3,975,875		3,995,357	3,590,615	3,609,115
Due after five years through ten years	275,075		271,311	295,407	288,421
Due after ten years	138,825		141,606	165,127	168,283
	5,223,136		5,245,528	4,875,929	4,895,378
Restricted investments	170,000		170,431	170,000	169,914
Equity securities	915,071		1,060,643	790,975	926,194
	$	6,308,207	6,476,602	5,836,904	5,991,486

Following is a summary of temporarily impaired AFS securities by the time period impaired as of March 29, 2014 and December 28, 2013:



	Less Than 12 Months				12 Months or Longer			Total
	Fair Value		Unrealized Losses		Fair Value	Unrealized Losses		Fair Value	Unrealized Losses
	(Amounts are in thousands)
March 29, 2014
Tax exempt bonds	$	678,263		5,019	79,159		2,327	757,422		7,346
Taxable bonds	536,084			2,052	42,793		726	578,877		2,778
Equity securities	83,014			3,851	2,182		319	85,196		4,170
Total temporarily impaired AFS securities	$	1,297,361		10,922	124,134		3,372	1,421,495		14,294
December 28, 2013
Tax exempt bonds	$	502,304		6,710	106,985		3,207	609,289		9,917
Taxable bonds	535,233			3,347	19,367		516	554,600		3,863
Restricted investments	169,914			86	—		—	169,914		86
Equity securities	31,400			3,499	3,152		401	34,552		3,900
Total temporarily impaired AFS securities	$	1,238,851		13,642	129,504		4,124	1,368,355		17,766

There are 332 AFS securities issues contributing to the total unrealized loss of $14,294,000 as of March 29, 2014. Unrealized losses related to debt securities are primarily due to interest rate volatility impacting the market value of certain bonds. The Company continues to receive scheduled principal and interest payments on these debt securities. Unrealized losses related to equity securities are primarily due to temporary equity market fluctuations that are expected to recover.