Investments

3 Months Ended

Mar. 26, 2016

Investments

(7) 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 $137,000 at March 26, 2016, while unrealized losses, net of unrealized gains, on the investments in the bond portfolio were $145,000 at December 26, 2015.

The amortized cost and fair values of available-for-sale investments are as follows at March 26, 2016 and December 26, 2015 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 26, 2016
Money market investments	$	8,526	$	—	$	—	$	8,526
Asset-backed securities		4,519		2		61		4,460
Corporate bonds and direct obligations of government agencies		76,398		327		137		76,588
U.S. Treasury obligations		19,210		10		4		19,216
Total	$	108,653	$	339	$	202	$	108,790
December 26, 2015
Money market investments	$	7,594	$	—	$	—	$	7,594
Asset-backed securities		4,523		1		58		4,466
Corporate bonds and direct obligations of government agencies		76,839		190		270		76,759
U.S. Treasury obligations		19,273		5		13		19,265
Total	$	108,229	$	196	$	341	$	108,084

For those available-for-sale investments with unrealized losses at March 26, 2016 and December 26, 2015, 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
March 26, 2016
Asset-backed securities	$	1,684	$	11	$	2,428	$	50	$	4,112	$	61
Corporate bonds and direct obligations of government agencies		20,974		51		3,868		86		24,842		137
U.S. Treasury obligations		12,042		4		—		—		12,042		4
Total	$	34,700	$	66	$	6,296	$	136	$	40,996	$	202
December 26, 2015
Asset-backed securities	$	4,422	$	58	$	—	$	—	$	4,422	$	58
Corporate bonds and direct obligations of government agencies		39,276		217		562		53		39,838		270
U.S. Treasury obligations		15,093		13		—		—		15,093		13
Total	$	58,791	$	288	$	562	$	53	$	59,353	$	341

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 March 26, 2016.