Investments

9 Months Ended

Sep. 26, 2020

Investments

(9) Investments

Investments include primarily investment-grade corporate bonds and U.S. Treasury obligations having maturities of up to five years (the “bond portfolio”) and money market investments. 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 an allowance for credit loss is necessary. 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 a result of credit-related factors, are to be included as a charge in the statement of income, while unrealized losses considered to be a result of noncredit-related factors 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 $3,350,000 and $1,427,000 at September 26, 2020 and December 28, 2019, respectively.

The amortized cost and fair values of available-for-sale investments are as follows at September 26, 2020 and December 28, 2019 (in thousands):    

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 26, 2020
Money market investments	$	14,456	$	—	$	—	$	14,456
Asset-backed securities		569		—		38		531
Corporate bonds and direct obligations of government agencies		101,090		3,540		289		104,341
U.S. Treasury obligations		2,337		137		—		2,474
Total	$	118,452	$	3,677	$	327	$	121,802
December 28, 2019
Money market investments	$	15,691	$	—	$	—	$	15,691
Asset-backed securities		572		—		1		571
Corporate bonds and direct obligations of government agencies		97,583		1,465		44		99,004
U.S. Treasury obligations		2,335		12		5		2,342
Total	$	116,181	$	1,477	$	50	$	117,608

For those available-for-sale investments with unrealized losses at September 26, 2020 and December 28, 2019, 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
September 26, 2020
Asset-backed securities	$	531	$	38	$	—	$	—	$	531	$	38
Corporate bonds and direct obligations of government agencies		4,277		289		—		—		4,277		289
Total	$	4,808	$	327	$	—	$	—	$	4,808	$	327
December 28, 2019
Asset-backed securities	$	571	$	1	$	—	$	—	$	571	$	1
Corporate bonds and direct obligations of government agencies		8,728		41		4,260		3		12,988		44
U.S. Treasury obligations		1,226		5		—		—		1,226		5
Total	$	10,525	$	47	$	4,260	$	3	$	14,785	$	50

The Company expects to recover, through collection of all of the contractual cash flows of each security, 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, no losses have been recognized in the Company’s consolidated statements of income.