Investments

12 Months Ended

Dec. 30, 2023

(3) Investments

Investments include primarily investment-grade corporate bonds, asset-backed securities and U.S.

reasury 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

non-credit-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 losses, net of unrealized gains, on the investments in the bond portfolio were $6,382,000 and $10,763,000 at December 30, 2023 and December 31, 2022, respectively.

The amortized cost and fair values of

available-for-sale

investments are as follows at December 30, 2023 and December 31, 2022 (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 30, 2023
Money market investments	$	16,832	$	—	$	—	$	16,832
Asset-backed securities		16,543		—		2,236		14,307
Corporate bonds and direct obligations of government agencies		118,481		279		4,384		114,376
U.S. Treasury obligations		6,287		2		43		6,246

Total	$	158,143	$	281	$	6,663	$	151,761
December 31, 2022
Money market investments	$	21,910	$	—	$	—	$	21,910
Asset-backed securities		18,905		—		2,889		16,016
Corporate bonds and direct obligations of government agencies		126,134		1		7,775		118,360
U.S. Treasury obligations		2,344		—		100		2,244

Total	$	169,293	$	1	$	10,764	$	158,530

For those

available-for-sale

investments with unrealized losses at December 30, 2023 and December 31, 2022, 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 30, 2023
Asset-backed securities	$	—	$	—	$	14,307	$	2,236	$	14,307	$	2,236
Corporate bonds and direct obligations of government agencies		3,506		42		86,841		4,342		90,347		4,384
U.S. Treasury obligations		—		—		2,305		43		2,305		43

Total	$	3,506	$	42	$	103,453	$	6,621	$	106,959	$	6,663

December 31, 2022
Asset-backed securities	$	—	$	—	$	16,016	$	2,889	$	16,016	$	2,889
Corporate bonds and direct obligations of government agencies		54,031		1,516		62,390		6,259		116,421		7,775
U.S. Treasury obligations		2,244		100		—		—		2,244		100

Total	$	56,275	$	1,616	$	78,406	$	9,148	$	134,681	$	10,764

The Company believes unrealized losses on investments were primarily caused by rising interest rates rather than changes in credit quality. 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.

Short-term investments include $59,661,000 in current maturities of investments held by the Company’s insurance segment at December 30, 2023. The

non-current

portion of the bond portfolio of $92,100,000 is included in other assets. The short-term investments, together with $25,955,000 of

non-current

investments, provide collateral for the $77,054,000 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.