(4) Investments

Investments include primarily investment-grade corporate bonds and U.S. Treasury obligations having maturities of up to five years (the “bond portfolio”). Investments in the bond portfolio are reported as available-for-sale and are carried at fair value. Investments maturing less than one year from the balance sheet date are included in short-term investments and investments maturing more than one year from the balance sheet date are included in other assets in the consolidated balance sheets. Management performs an analysis of the nature of the unrealized losses on available-for-sale investments to determine whether such losses are other-than-temporary. Unrealized losses, representing the excess of the purchase price of an investment over its fair value as of the end of a period, considered to be other-than-temporary, are to be included as a charge in the statement of income, while unrealized losses considered to be temporary are to be included as a component of shareholders’ equity. Investments whose values are based on quoted market prices in active markets are classified within Level 1. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, are classified within Level 2. As Level 2 investments include positions that are not traded in active markets, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. Any transfers between levels are recognized as of the beginning of any reporting period. Fair value of the bond portfolio was determined using Level 1 inputs related to U.S. Treasury obligations and money market investments and Level 2 inputs related to investment-grade corporate bonds, asset-backed securities and direct obligations of government agencies. Unrealized gains, net of unrealized losses, on the investments in the bond portfolio were $378,000 and $1,407,000 at December 28, 2013 and December 29, 2012, respectively.

The amortized cost and fair values of available-for-sale investments are as follows at December 28, 2013 and December 29, 2012 (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 28, 2013
Money market investments	$	2,499	$	—	$	—	$	2,499
Asset-backed securities		4,350		19		72		4,297
Corporate bonds and direct obligations of government agencies		76,786		783		370		77,199
U.S. Treasury obligations		18,524		31		13		18,542

Total	$	102,159	$	833	$	455	$	102,537

December 29, 2012
Money market investments	$	2,865	$	—	$	—	$	2,865
Asset-backed securities		2,175		73		—		2,248
Corporate bonds and direct obligations of government agencies		69,173		1,294		6		70,461
U.S. Treasury obligations		16,782		47		1		16,828

Total	$	90,995	$	1,414	$	7	$	92,402

For those available-for-sale investments with unrealized losses at December 28, 2013 and December 29, 2012, the following table summarizes the duration of the unrealized loss (in thousands):


	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
December 28, 2013
Asset-backed securities	$	3,429	$	72	$	—	$	—	$	3,429	$	72
Corporate bonds and direct obligations of government agencies		22,169		370		—		—		22,169		370
U.S. Treasury obligations		757		13		—		—		757		13

Total	$	26,355	$	455	$	—	$	—	$	26,355	$	455

December 29, 2012
Corporate bonds and direct obligations of government agencies	$	3,387	$	6	$	—	$	—	$	3,387	$	6
U.S. Treasury obligations		770		1		—		—		770		1

Total	$	4,157	$	7	$	—	$	—	$	4,157	$	7

The Company believes that unrealized losses on investments were primarily caused by rising interest rates rather than changes in credit quality. The Company expects to recover the amortized cost basis of these securities as it does not intend to sell and does not anticipate being required to sell these securities before recovery of the cost basis. For these reasons, the Company does not consider the unrealized losses on these securities to be other-than-temporary at December 28, 2013.

Short-term investments include $34,939,000 in current maturities of investments held by the Company’s insurance segment at December 28, 2013. The non-current portion of the bond portfolio of $67,598,000 is included in other assets. The short-term investments, together with $30,819,000 of non-current investments, provide collateral for the $59,182,000 of letters of credit issued to guarantee payment of insurance claims.

Investment income represents the earnings on the insurance segment’s assets. Investment income earned from the assets of the insurance segment are included as a component of operating income as the investment of these assets is critical to providing collateral, liquidity and earnings with respect to the operation of the Company’s insurance programs.