(3) 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 September 29, 2012 and December 31, 2011:


	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(Amounts are in thousands)
September 29, 2012
Tax exempt bonds		$3,047,848	45,269	10		3,093,107
Taxable bonds		1,292,663	21,827	43		1,314,447
Restricted investments		170,000	604	---		170,604
Equity securities		400,511	54,385	9,691		445,205

		$4,911,022	122,085	9,744		5,023,363
December 31, 2011
Tax exempt bonds		$2,488,135	36,657	550		2,524,242
Taxable bonds		1,226,136	20,015	1,514		1,244,637
Restricted investments		170,000	---	3,019		166,981
Equity securities		296,105	35,564	14,274		317,395

		$4,180,376	92,236	19,357		4,253,255

Realized gains on sales of AFS securities totaled $9,209,000 and $18,986,000 for the three and nine months ended September 29, 2012, respectively. Realized losses on sales of AFS securities totaled $5,722,000 and $11,097,000 for the three and nine months ended September 29, 2012, respectively. There were no OTTI losses on AFS securities for the three and nine months ended September 29, 2012.

Realized gains on sales of AFS securities totaled $7,260,000 and $29,996,000 for the three and nine months ended September 24, 2011, respectively. Realized losses on AFS securities totaled $8,148,000 and $10,324,000, including OTTI losses on equity securities of $6,082,000, for the three and nine months ended September 24, 2011, respectively. There were no OTTI losses on debt securities for the three and nine months ended September 24, 2011.

The amortized cost and fair value of AFS securities by expected maturity as of September 29, 2012 and December 31, 2011 are as follows:


	September 29, 2012				December 31, 2011
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Amounts are in thousands)

Due in one year or less	$	731,030		735,018		445,296		447,972

Due after one year through five years		2,809,061		2,851,636		2,492,484		2,524,020

Due after five years through ten years		522,757		534,130		348,427		356,808

Due after ten years		277,663		286,770		428,064		440,079


		4,340,511		4,407,554		3,714,271		3,768,879

Restricted investments		170,000		170,604		170,000		166,981

Equity securities		400,511		445,205		296,105		317,395

	$	4,911,022		5,023,363		4,180,376		4,253,255

Following is a summary of temporarily impaired AFS securities by the time period impaired as of September 29, 2012 and December 31, 2011:


	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)
September 29, 2012
Tax exempt bonds		$ 19,113	10		---	---		19,113	10
Taxable bonds		42,103	43		---	---		42,103	43
Equity securities		57,548	4,787		17,396	4,904		74,944	9,691
Total temporarily impaired AFS securities		$118,764	4,840		17,396	4,904		136,160	9,744

December 31, 2011
Tax exempt bonds		$138,892	536		6,026	14		144,918	550
Taxable bonds		201,538	1,514		---	---		201,538	1,514
Restricted investments		166,981	3,019		---	---		166,981	3,019
Equity securities		86,236	13,899		1,889	375		88,125	14,274
Total temporarily impaired AFS securities		$593,647	18,968		7,915	389		601,562	19,357

There are 200 AFS securities issues contributing to the total unrealized loss of $9,744,000 as of September 29, 2012. Unrealized losses related to debt securities are primarily driven by 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 driven by stock market volatility.